CH. MUNIR SADIQ (JUDICIAL MEMBER), - This sales tax appeal has been filed at the instance of the assessee/registered person calling in question the impugned order dated 30.04.2008 passed by the Collector of Sales Tax, Faisalabad. A number of grounds were urged through the memo, of appeal, however at the time Of hearing of the case, learned counsel for the appellant has raised a preliminary objection that the order 1.1 original passed by the Assistant Collector is time-barred in view of the provisions of Section 36(3) of the Sales Tax Act, 1990.
2. Facts in brief are that during the audit of the registered person various discrepancies were noted the details whereof have been duly recorded in the impugned order. The Assistant Collector issued a "Show-Cause Notice on 10.03.2006 as to why refund claim amounting to Rs. 1,0234,644 may not be rejected under Section 10(4) & 11(2) of the Sales Tax Act, 1990 and why penal action should not be taken against the registered person u/s. 33(4) of the Sales Tax Act, 1990. The reply submitted to Show-Cause Notice did not find favour and the Assistant Collector (Refund) passed the impugned order dated 20.04.2007 which is now in appeal before this Tribunal.
3. At the very outset the learned AR of the assessee raised a preliminary objection and contended that as per provisions of Section 36(3) of the Sales Tax Act, 1990, the order passed by the Collector of Sales Tax is hit by limitation and is barred by time as the Show-Cause Notice was issued on 10.03.2006 and the Order-in-Original was passed on 20.04.2007. It was argued that initial limitation of 90 days expired on 09.06.2006 and no further extension was sought at all. He further argued that it has been settled by almost all forums that time limit u/s. 36(3) is mandatory because a public functionary is empowered to create a liability against a citizen. He referred to the order of the President of Pakistan in re: CBR/Sales Tax Department v. M/s. Pace International, Rawalpindi cited as PTCL 2005 CL. 841 wherein it was held as below:- "The department contends that the time limit under Section 36(3) ibid was merely directory and not mandatory. The contention does not seem to be valid. Where inaction on the part of a public functionary within the prescribed time is likely to affect the rights of a citizen, the prescription of time is deemed directory but where a public functionary is empowered to create liability against a citizen only within the prescribed time it is mandatory. The FTO's decision must be sustained."
Reference was also made to the reported judgments of the Honourable Lahore High Court cited as PTCL 2010 CL 1113 PTCL 2008 CL 1, PTCL 2010 CL 137 and 2009 PTD 762. The earned DR, on the other hand, has supported the orders of the authorities below for the reasons mentioned therein and further submitted that the time limit prescribed in Section 36 of the Act is directory and not mandatory.
4. Arguments heard. Record perused.
5. It would be appropriate to quote the proviso to sub-section (3) Section 36 of the Sales Tax Act as it was during the period under consideration.
Proviso to sub-section (3) of Section 36..... ...Provided that order under this Section shall be made within ninety days of issuance of Show-Cause Notice or within such extended period as the Collector of Sales Tax may, for reasons to be recorded in writing, fix, provided that such extended period shall in no case exceed ninety days.
I have observed that in the present case Show-Cause Notice was issued on 10.03.2006 and the order was passed after 400 days on 20.04.2007 while maximum time limit as per Section 36(3) of the Sales Tax Act, 1990 stood expired on 07.09.2006. The reported judgment relied upon by learned AR is also on all fours to the case of the registered person. The relevant extract from the reported judgment cited as PTCL 2010 CL. 137 is as follows:- "As is clear from the language of the above proviso, it has limited the scope of the exercising of the jurisdiction after issuance of notice to basically 90 days or such extended period as the Collector after duly recording proper reasons in writing has fixed. However, it is again subject to the limitation in the manner that the said extension also cannot be for more than 90 days. The period for deciding the order in original after issuance of a notice u/s. 36(1) and (3) thus is maximum 180 days including earlier 90 and extended 90 days. Obviously if the extension has been given by the Collector before the expiry of earlier 90 days."
It is settled law that where inaction on the part of a public functionary within the prescribed time is likely to affect the rights of a citizen the prescription of time is deemed directory. However, where a public functionary is empowered to create liability against a citizen only within the prescribed time, it is mandatory. The acceptance of contention of the learned DR in that regard will make a provision of law redundant and nugatory. Honourable Lahore High Court has held in re: M/s. Super Asia Muhammad Din & Sons v. Collector of Sales Tax cited as PTCL 2008 CL 1 that redundancy or superfluity of an Act of Parliament and a provision of law cannot be readily accepted. All the more so when the prescribed limit is beneficial for the citizen and restricts the executive power to touch the pocket of a taxpayer thereby creating certainty that after its expiry even if there was a good case for creation of liability he will not be dragged in. CBR had also admitted in its letter No. 5(4)/CEJ/2000, dated 23.12.2000 that the aforesaid provisions of law are mandatory. The relevant para thereof reads as under:- "It has been observed with concern in the Board that at present a huge number of cases as reported by the Collectorates (Adjudication) are pending adjudication. Collector (Adjudication) are aware that provisions relating to adjudication of cases in the Customs, Sales Tax & Central Excise Law which bind the adjudicating authorities to decide the cases within 45 days of the issuance of the Show-Cause Notice or within such extended period, for which reasons shall be recorded in writing and that such extended period shall in no case exceed 90 days in all. The Member (Central Excise) while expressing concern over the huge. The back log has directed that all out efforts be made to ensure due compliance of the aforesaid mandatory provisions of the law and decide the pending cases within the prescribed time limit of 45 days to avoid any legal complications."
6. Admittedly the order in original in the present case was passed beyond the prescribed time limit of 90 days moreover the adjudicating authority had neither got any extension in the stipulated period from the Collector Sales Tax nor has in the instant case recorded any reasons for passing of order after 90 days. Even if the Collector had fixed any extended period the order in original being passed after lapse of 180 days would have become time-barred, It is a settled law that once limitation had started to run and had come to an end the assessee acquires a vested right of escapement of assessm ent by lapse of time. Honourable Supreme Court of Pakistan in re: Nagina Silk Mill, Lyallpur v. The Income Tax Officer and the Income Tax Appellate Tribunal, Pakistan (PLD 1963 SC. 322) observed as under:-- "Even if two interpretations are equally possible, the one that saves vested rights would be adopted in the interest of justice, specially where we are dealing with a taxing statute. The appellant herein had already acquired the vested right of escaping assessment by lapse of time, when the 1960 Ordinance was enforced. In all probability, the Legislature never intended that the period of limitation prescribed in the Act -should become variable with the changes in the "financial year" or "year" inserted in the Act for certain other purposes, namely, to accord with the new accounting years adopted by Government" (underlined for emphasis).
7. In view of the above discussion and the case- law cited supra the appeal is accepted and the impugned order being passed after the lapse of statutory period is declared to have been made without lawful authority and is hereby annulled.