Titled appeal has been filed at the instance of the taxpayer/appellant, calling in question the impugned Order- in-Original No. ST 37/2002, dated 20.4.2002 passed by the Collector (Adjudication), Collectorate of Customs, Sales Tax & Central Excise (Adjudication), Custom House, Lahore. In addition to the merits of the case, a number of legal objections were raised at the time of hearing i.e. The assumption of jurisdiction u/s. 36 instead of Section 11 of the Sales Tax Act, 1990, issuance of second show-cause notice on the same issue, legality of corrigendum to the show- cause notice and the limitation for passing the impugned order u/s. 36(2) of the said Act.
2. Briefly stated the facts of the case are that a show-cause notice dated 30.6.2000 was issued u/s. 36 of the Sales Tax Act, 1990 and served on 06.7.2000. Whereby it was confronted that the registered person wrongly "adjusted" certain amounts as input tax in the sales tax returns for the months 10/1999, 11/1999, 12/1999 and 2/2000. However, no order was passed thereon within the stipulated period of 45 days in terms of Section 36(3) of the Act. Subsequently, another show- cause notice was issued u/s. 36 of the Sales Tax Act, 1990 which was served on 30.07.2001 whereby, it was confronted that the "registered person adjusted wrong input tax" of certain amounts for the months of 10/1999, 11/1999, 12/1999, 2/2000 and 6/2000. Later-on this show-cause notice was modified through Corrigendum dated 12.12.2001. On the basis of said second show-cause notice dated 25.7.2001 impugned order was passed on 20.4.2002.
3. It was the preliminary objection of the appellant that the first show-cause notice dated 30.6.2000 pertained to four months of 10/1999, 11/1999, 12/1999 and 2/2000 and the respondent failed to pass any order thereon within the stipulated period of limitation of 45 days. To fill-in the said lacuna of limitation, afresh show-cause notice dated 25.7.2001 was issued, wherein a new period of month 6/2000 was added in addition to the four months as covered by the aforesaid first show-cause notice dated 30.6.2000. It was also pleaded by the learned counsel of the appellant that the respondent had no jurisdiction to issue second show-cause notice on the same cause after the lapse of limitation for passing order-in-original. Since, it become past and closed transaction, therefore a vested right was created in favour of the appellant for dropping the proceeding against him. Reliance was placed on the judgment titled as Glaxo Smith Kline Pakistan Ltd. v. Collector of Customs, Sales Tax and Central Excise (Adjudication) reported as 2004 PTD 3020 (Kri) wherein by declaring the proceedings initiated with the issuance of second show-cause notice as without jurisdiction, null and void ab initio, it was observed by their lordships that:- "Re-agitating of the same issue by the Sales Tax Department is against all the principles of administration of justice and fair play. This course of action cannot be allowed because, firstly, it is against the principles of the administration of justice; secondly, it is discriminatory in nature, as any order passed in adjudication not assailed in appeal by the assessee, it always treated to be final and the same principle should be applicable to the Department; thirdly, it militates against the principles applicable to the tax matter, that the issue once settled and accepted by the Department shall not be allowed to be deviated, because it will create uncertainty which has always been deprecated and disapproved by the superior Courts, Legislature as well as the Board itself. Fourthly, in the present case, the issue stands decided by the adjudicating order' The Legislature has gone by enacting Section 65 in the Sales Tax Act, 1990 to the extent of recognizing practice which is result of inadvertence. The learned Tribunal is also aware of the provision, which has been referred in the concluding part of the impugned order; fifthly a vested right has been created in favour of the appellant with the order of the adjudicating authority, which cannot be taken away by the executive branch of the Sales Tax Department by initiating fresh proceeding on the same point."
4. It was further contended by the learned counsel of the appellant that for lawful assumption of jurisdiction and other intends and purposes, the second Show-cause notice dated 25.7.2001 was valid to the extent of month 6/2000. The learned DR could not rebut with concrete reasons the said legal arguments of the learned AR.
5. Keeping in view the arguments at bar and perusal of record, the contention of the learned AR is found correct that the department has acted illegally for curing the new limitation as provided u/s. 36(3) of the Act by issuance of fresh/second show-cause notice dated 25.7.2001 for the period covered by first show-cause notice dated 30.6.2000, which we consider that it is not permissible and tantamount to commit fraud with the statute and therefore cannot he permitted. We, therefore, vacate the show-cause notice dated 25.7.2001 as well as impugned Order-in-Original dated 20.4.2002 to the extent of periods covered by first show-cause notice dated 30.6.2000 i.e. For the months of 10/1999, 11/1999, 12/1999 and 2/2000.
6. As for as the remaining period i.e. For the month of 6/2000 covered by the second show-cause notice dated 25.7.2001 is concerned, the learned AR further argued that the said period also hit by limitation as the limitation for passing order u/s. 36(3) of the Sales Tax Act, 1990 was 45 days and the said period of limitation expired on 09.9.2001 from the date of issuance of second show-cause notice dated 25.7.2001 and thus it become past and closed transaction.
7. On the other hand the learned DR pleaded that at the relevant time first proviso to sub-section
(3) of Section 36 of the Act state that: "Provided that order under this Section shall be made within forty-five days of issuance of show- cause notice or within such extended period as an officer of Sales Tax may, for reasons to be recorded in writing, fix, provided that such extended period shall in no case exceed ninety days." and taken a plea that the Collector (Adjudication) extended period of show-cause notice dated 25.7.2001 for the period of 90 days and the said extended period of 90 days plus original period of 45 days (gross 135 days) had to expire on 08.12.2001 and within that extended period, the Collector (Adjudication) vide letter dated 06.12.2001 applied to the CBR for extension of 90 days u/s. 45 of the Act The same was accorded uptill 31.3.2002 by the CBR vide order dated 01.1.2002. Because, the Collector (Adjudication) could not pass the order till the said extended date therefore, vide letter dated 30.3.2002 he again applied for another extension to the CBR. In the meanwhile said officer passed the impugned order dated 20.4.2002 and the same is protected by the later-on extension allowed by the CBR vide its order dated 03.5.2002 uptill 15.5.2005.
8. Aforesaid instances taken by the learned DR was rebutted by the learned AR on the following reasons:-
(i) Neither the impugned order reflect that the Collector (Adjudication) extended the period of show-cause notice for further period of 90 days nor the respondent department has established through any documentary evidence that the said Collector "recorded in writing" any reasons for extending the period for further 90 days in terms of section 36(3) of the Act.
In alternative without conceding, the learned AR submitted that even if it may be presumed that the Collector (Adjudication) did so for extending the limitation for further 90 days, then the Collector (Adjudication) was required to pass the Order-in-Original within the first extended period by the CBR upto 31.3.2002 granted vide order dated 01.1.2002 with the ceiling that "no further extension will be granted".
(ii) The Collector (Adjudication) vide letter dated 30.3.2002 applied to the CBR for second extension without disclosing the facts that CBR had already granted extension vide order dated 1.1.2002 with the aforesaid ceiling.
(iii) In-fact, the Collector (Adjudication) applied to the CBR for second extension of 90 days on 04.4.2002 (i.e. After the expiry date of first extension allowed by the CBR) and the date 30.3.2002 written on the letter for extension was tempered one. Thus, it become once again past and closed transaction on 31.3.2002.
(iv) The Collector (Adjudication) applied to the CBR for first extension on the reason that "The amount of input tax claimed by the respondents is of of tax period is required to be reconciled."
The finding report of the detecting agency is awaited". Whereas, for further extension the reason given by the Collector was that "the department has to collect and submit evidence". The said both reasons given by the Collector (Adjudication) for obtaining extension did not constitute "exceptional circumstances" as contemplated for granting extension u/s. 45 of the Act.
(v) The CBR had no jurisdiction to further extend the already granted extension or review its earlier extension order, because Section 45 of the Sales Tax Act, 1990 did not stipulate such eventuality. In this regard reference was placed on Section 122(4) of the Income Tax Ordinance, 2001, where the phrase used is "as many times as may be necessary" for amendment of assessm ent.
(vi) It was also submitted by the learned AR that mere application addressed to the CBR for extension would not be treated as "extension allowed", unless the CBR passed a speaking order u/s. 45 of the Act for granting extension and that too prior to the expiry of original period of limitation.
Because, on the expiry date of original limitation, the undergoing act become "past and closed transaction". Reliance was placed on Tanveer Weaving Mills v. Deputy Collector Sales Tax etc. (2009 PTD 762 (Lhr)).
The period for deciding the order-in-original after issuance of a notice under Section 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 the earlier 90 days".
9. A Division Bench of the Hon'able Lahore High Court in the case of Commissioner of Income Tax v.
Fayyaz Ahmad reported as 2008 PTD 773 while discussing the effect of expiry of a limitation provided under repealed law prior to operation of new law observed that:- "No legislation can extend a limitation, which has already expired prior to the operation of the new law".
10. It was also observed by the Supreme Court of India in the case of Assistant Collector Customs v.
Charan Das Malhotra reported as PTCL 1983 CL 46 that the original time of six months or extended time of four months having expired and no order for further extension have been made, it was an obligatory on the Customs to return the goods to person from whose possession they were seized.
There bring such a statutory obligation there was a corresponding statutory right to the person to have them restored to him. Such a right having accrued it could not be defeated by an order passed after the lapse of the period.
11. Both the parties have been heard, relevant record and order perused and also considered the case-law relied by the learned AR.
12. Considering the above weighty legal objections raised by the learned counsel that at the time of passing the impugned order dated 20.4.2002, the proceeding initiated through second show- cause notice dated 25.7.2001 had become "past and closed transaction" as on the said date no extension order was in field and the second extension allowed by the CBR vide order dated 3.5.2002 could not give new life to the said void order dated 20.4.2002, we set aside the Order-in-Original No. ST 37/2002, dated 20.4.2002 passed by the Collector (Adjudication) and the impugned show- cause notice dated 25.7.2001 is also vacated in toto.
13. Since the appeal of the appellant have been accepted on the legal issues as discussed above and for that reason there is no need to extra dilate upon the other legal objections raised by the learned AR and the grounds taken on merits of the case.