' The registered person has impugned Order-in-Appeal No, 19 of 2005 dated 19-10-2005 by Collector (Appeals), who upheld. Order-in-Original No, 72 of 2005 dated 21-5-2005.
2. Facts briefly are that during audit for tax periods April, 1999 to January, 2004, tax profile of the appellant appeared abnormal. The audit authority found that appellant was registered on 29-4- 1999 with an opening capital of Rs,100,000 whereas sales of Rs,7.91 million were shown during the period under scrutiny. Such a huge turnover was considered not possible with an opening capital of just Rs,100,000. This fact led to believe that appellant might have been involved in issuance of fake/flying invoices. Consequently declared business premises was visited but the appellant was not found there. The appellant was stately blacklisted under section 21(4), as a result. As noted in the orders below, appellant was served with several notices including affixation under section 56(b) of Sales Tax Act, 1990. A Power of Attorney was noted to have been received, but no one turned up either in person or through counsel. The order-in-original, therefore, was passed ex parte, believing that appellant was involved in issuing fake/flying invoices and that no physical transaction was made. Appellant was directed to pay whole amount of tax involved in the relevant period, along with additional tax and penalty was also imposed equal to 50% of the evaded sales tax.
3. This order was unsuccessfully challenged before first appellate authority. Perusal of impugned order shows that appellant was represented before Collector (Appeals). It is recorded that certain documents were produced like; sales tax return, purchase and sale invoices and purchase register.
Genuineness of the transactions was not accepted by Collector (Appeals) for not producing transportation documents, inward/outward gate passes etc. Pleading of the appellant, that supplies were made to confirmed buyers like, "Bata Pakistan Ltd." and "Services Sales Corporation" was also discarded. It was noted in the impugned appellate order that maximum portion of the supplies was made to Messrs Tayyab Imran Tanneries, whose name was 'enlisted in negative list for having been involved in issuing dubious invoices. Relevant part from the Order-in-Appeal is reproduced:-- "The case was fixed for hearing on 12-9-2005 and 19-9-2005. Mr. Ahmad Rehmani, consultant appeared on behalf of the appellants. Mr. Shehzad Ahmad Auditor appeared on behalf of the department. The consultant for the appellants stated that they had not issued any fake invoices nor have committed any tax fraud. Supplies have been made to confirm buyers like Bata Pakistan Ltd. And Service Sales Corporation. Invoices amounting to Rs,1,05,930 only have been issued to Messrs Tayyab Imran Tanneries whose work was done on labor rate and no material was supplied to them. Mr. Shehzad Ahmad stated that Messrs Tayyab Imran's name was enlisted in the negative list. As such, Messrs Tayyab Imran involved in issuing of dubious invoices. The consultant for the appellants was directed to produce the relevant record showing the authenticity of their supplies.
' I have gone through the case record. During the course of hearing on 12-9-2005, the appellants were directed to produce complete requisite record as required under section 22 of the Sales Tax Act, 1990 showing the authenticity and genuineness of the supplies but they failed to furnish the requisite sales tax record except sales tax returns, purchase and sale invoices and purchase register even after a lapse of 20 days which do not justify the genuinely of purchases since neither the documents showing physical supply such as bill/transportation documents/ inward/outward gate passes etc. Have been provided nor the mandatory record including inventory and payment proof were shown. This attitude of non-cooperation on the part of the appellants shows that they are not interested in pursuing their case properly and merely adopting delaying tactics in one way or the other."
4. The appellant has challenged both orders below with an affidavit of Mr. Muhammad Ahmad Rehmani, ITP, who represented appellant in first appeal. It is solemnly affirmed in the affidavit that complete record as required under sections 22 and 23 of Sales Tax Act, 1990 was produced before first appellate authority. Appellant has also raised a fresh ground of limitation, submitting that show-cause notice was issued on 2-7-2004 and order-in-original was passed on 30-5-2005, hence was passed beyond the period of limitation, provided under section 11 of Sales Tax Act, 1990.
5. Learned counsel for the appellant opened his argument, pleading fresh ground of limitation first.
He relied on a judgment by Apex court in CIT v. Hakim Ali Zardari's case reported as 2006 PTD 271, to contend that question of limitation could be raised at any stage. The ground of limitation was urged saying the Order-in-Original was passed beyond the stipulated period of 180 days from the date of show-cause notice. He also pleaded that evidence produced before first appellate stage was not considered- judiciously. DR. Opposed the appeal, submitting that question of limitation was not raised before first appellate authority, therefore, could not be taken for the first time, in second appeal, particularly when appellant himself avoided representation at adjudication stage.
6. Record is perused and law examined in light of the arguments made. For determination of the appeal, facts of the case are gravely important. It appears that appellant did not represent before the Adjudicating Officer despite repeated notices except submitting power of attorney and getting adjournment. However, representation of the appellant was acknowledged in first appeal, as documents submitted by the appellant, in defense, were accepted for consideration. The findings by first appellate authority, therefore, are based on evidence. However, findings by adjudicating authority were based on presumption drawn due to non-representation. The defect was subsided by accepting evidence in first appeal, which was continuation of the original proceeding.
7. Findings of the first appellate authority, on the basis of documents presented, are not convincing.
Main reason for denying relief appears that appellant failed to produce documents showing physical supply without giving any finding on the submitted documents like, sales tax returns, purchase & sale invoices and purchase register. No finding is given on the assertion that supplies were made to confirmed buyers like "Bata Pakistan Ltd." and "Service Sales Corporation". Finding on supplies to Messrs Tayyab Imran Tanneries are also defective. Mere reason that name of the supplier was in negative list was not sufficient to discard the transactions. To arrive at a just conclusion, it was incumbent upon the first appellate authority, to verify the documents presented before it, either himself or through revenue authorities. The verification could be made by comparing the presented documents with the record of the registered person, by whom, the supplies were asserted to have been made. Such registered persons could also be asked, directly, to confirm the transaction. In absence of any such exercise, the findings and decision by the first appellate authority are held to be passed without exercise of judicious mind, hence not sustainable.
8. Now we advert to the fresh ground of limitations. Before discussing the issue, relevant part from the judgment relied upon is reproduced i,e,, from CIT v. Hakim Ali Zardari's Case (2006 PTD 271):-- "From the pronouncements made by this Court in the afore cited cases the undeniable conclusion/inference which can be had/is that a higher forum would be competent to examine the question of limitation in filing the proceedings before the original lower forum, if such issue was raised and agitated before the Tribunal and the Tribunal had discussed the same at length. In view of the pronouncement of this Court the Tribunal was justified in doing so and violation of Rules 10 and 14 of Income Tax Appellate Tribunal Rules, 1982 would in no way render the action and the finding of the Tribunal as illegal or contrary to law."
' Facts, based on which, this judgment was passed were that notice under section 17 of Wealth Tax Act, 1963 was barred by time, as stipulated in the provisions of the sections 17(1)(a) and (b). The question of limitation though not raised before first appellate authority was entertained and decided by the Tribunal. Honourable Supreme Court before giving the reproduced verdict had placed reliance on its earlier judgment in case of Haji Ghulam Rasul and others v. Government of Punjab and others (2003 SCM R 1815). Relevant part reproduced by Supreme Court is also reproduced hereunder: -- "This Court has decided the question of limitation in Muhammad Ishaq v. Shah Muhammad 1985 SCMR 799 wherein it was observed that "it would be necessary for appellate or revision forum where Limitation Act whether the proceedings instituted before itself are within limitation. But it would not be under any legal obligation like the one visualized by section 3 of the Limitation Act to do so if the plea of limitation raised before it related to the institution of the original case/suit in the trial forum and/or the institution of any other matter before a lower forum. Thus if a question of limitation is raised before the High Court in connection with the institution of an appeal before itself beyond the period of limitation it will be the duty of the High Court to examine the same notwithstanding the fact that the other party did not raise or having raised, did not press the bar of limitation. But if the argument is that the High Court did not examine the question of limitation relatable to the filing of a suit/case before a lower forum then the High Court would not be obliged to examine the same unless it is raised before it because section 3 of Limitation Act does not place any such responsibility on the High Court regarding the proceedings of the lower forum, when exercising its power of review in appellate or other jurisdiction. The same would apply to the discretionary writ jurisdiction". In the same judgment, it was observed that "it is no doubt the duty of the forum/Court wherein a matter is instituted to examine the question of limitation, but same cannot be said about the higher forum as that would also depend upon the attitude of the party which wanted the question of limitation vis-a-vis the lower forum. If it fails to agitate it before the higher forum, it would not then be essential on its own part, for the next higher forum to examine the question suo motu."
(Underlining is ours for emphasis)
9. Perusal of the Apex Court's dictum as enshrined in the above quoted judgments leads to conclude that a higher forum is bound to look into the question of limitation only when the question is raised before it Secondly, the duty of higher forum relates to the question of limitation regarding initiation of main proceedings, as envisaged by legislature in section 3 of the Limitation Act. Thirdly, the attitude of the party, pressing the question of limitation before the higher forum is also relevant.
10. Reverting to the facts of this appeal, the same are distinguishable with facts of the case relied upon. Limitation, under consideration, is not of initiation of proceeding because issuance of show- cause notice was admittedly within time. Limitation to conclude proceedings is challenged, for the first time, before us. Attitude of the appellant can also not be overlooked while determining the question of limitation. As noted supra, appellant did not represent before the Adjudicating Officer despite submitting power of attorney and getting adjournment. As noted in para. 4 of the Order-in- Original eleven dates of hearing were fixed. In backdrop of such attitude, appellant could not challenge that the proceedings were not concluded in time and that too in second appeal for the first time. We, therefore, decline to entertain the question of limitation.
11. To conclude our findings, it is reiterated that the evidence produced by the appellant was not considered and verified properly, therefore, we are inclined to direct the first appellate authority to reevaluate the evidence produced by the appellant, in light of our observations and reservations noted above and pass a speaking and judicious order. It may be observed that there is no room for presumption in adjudication of factual controversy. Revenue authorities cannot escape from their duty to verify the produced documents before accepting or rejecting the same. Since prima facie case of fraud was not made out, therefore, burden of proof under section 2(37) of Sales Tax Act, 1990 was not shifted to the appellant in this case. Revenue is bound to prove its allegation contained in the show-cause notice. Order-in-Appeal is set aside and case is remanded to the first appellate authority with direction given above.
' Disposed of.