' NAZIR AHMAD (JUDICIAL MEMBER).---The above titled appeal at the instance of the registered person has been directed against the ex parte Order-in-Appeal No, 248/ST of 2007, dated 8-2- 2007 recorded by the Collector (Appeals), Collectorate of Customs, Sales Tax and Central Excise, Lahore.
2. Facts in brief emanating from record leading to the instant appeal are that on pursuance of an information, the staff of Collectorate of Sales Tax and Central Excise, Lahore raided the premises of Messrs' Gulberg Kabana (Pvt.) Ltd., 19-A, Main Boulevard, Gulberg, Lahore, bearing Registration No, 03-04-9801-032-82 and NTN No, 07-02-1733645. On demand, the Manager Sales and Marketing presented prescribed Sales Tax and Central Excise record along with private record regarding supplies of goods. The scrutiny of the record revealed the appellants had calculated, sales tax payable excluding the amount of service charges. It has been alleged that no bills were issued for the food served in the hotel rooms and value of supplies, involving sales tax amounting to Rs,509,053 were not shown in the sales tax record. The detecting agency had alleged that the respondent had evaded and not paid sales tax amounting to Rs,509,053 and contravened the provisions of sections 2(37), 3, 6, 7, 22, 23 and 26 of the Sales Tax Act, 1990 (hereinafter called the Act). The matter was reported for adjudication. As a consequence of adjudication, the appellants were directed to pay sales tax amounting to Rs,509,053 under sections 11 and 36 of the Act, along with default surcharge (to be calculated at the time of deposit) under section 34 ibid. A penalty of Rs,25,475 was also imposed on the appellants under section 33(2)(cc) of the Act. Feeling aggrieved, the registered person/ appellant preferred appeal before Collector (Appeals), who allowed relief to the registered person/appellant by setting aside the penalty and default surcharge whereas rest of the treatment meted out by the Deputy Collector vide order-in-original was upheld. Still discontented, the registered person/appellant has come up in appeal before this Tribunal.
3. At the very outset, learned counsel has opted to assail the impugned order-in-original (ONO) on the point of limitation. He has apprised the Court that show-cause notice in the instant case issued on 12-4-2000, against which order-in-original was passed on 28-12-2006, contrary to the provisions contained in sections 11(4) and 36(3) of Sales Tax Act, 1990 (hereinafter called the Act).
According to the said provisions, the Sales Tax Authorities are bound to pass order-in-original within 45 days of the issuance of notice. Explaining this, he has maintained that mandatory period for passing the order-in-original after issuance of show-cause notice in that particular time was 45 days and if the order, due to any reason, could not be passed by an officer of sales tax, he was, under the law, bound to obtain extension within that stipulated 90 days but as per learned counsel of the appellant, the same has not been done and this fact is evident from the order-in-original. So he has vehemently asserted that the order is barred by time and has got no value in the eyes of law and the same merits cancellation. In order to lend credence to his submissions, he has referred before us the following reported judgments:-- 2009 PTD 1978, 2009 PTD 2004 (H.C. Lah.), 2009 PTD 762 (H.C. Lah.) and 2008 PTD 578.
4. On the other hand, learned DR appearing on behalf of the department has fully supported the impugned order by reiterating the basis evolved therein and contended that the legal point regarding limitation was also raised before the learned Collector who has by relying on a judgment of learned Customs and Sales Tax Appellate Tribunal vide Appeal No, 154/ST/1B of 2005 has rejected the plea of time-barred and has held that the time limit is directory and not mandatory.
5. We have heard the arguments advanced by rival parties and also carefully gone through the record available on file along with relevant provisions of the Act. As far as passing of order-in- original beyond the time limitation as provided in section 36 and whether the time limit is directory or mandatory is concerned, before we dilate on these issues and refer to the case-laws relied on by the learned counsel, relevant sections 11(4) and 36(3) of the Sates Tax Act are reproduced as under: Section 11(4)
(4) No order under this section shall be made by an officer of Sales Tax unless a notice to show cause is given within five years to the person in default specifying the grounds on (which it is intended to proceed against him and the officer of Sales Tax shall take into consideration the representation made by such person and provide him with an opportunity of being heard: 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 [the Collector [x x x x] may, for reasons to be recorded in writing, fix provided that such extended period shall in no case exceed [ninety] days.
Section 36(3)
(3) The officer of Sales Tax empowered in this behalf shall, after considering the objections of the person served with a notice to show cause under subsection (1) or subsection (2), determine the amount of. Tax or charge payable by him and such person shall pay the amount so determined: ' 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 [the Collector] [x x x xxxxxx x] may, for reasons to be recorded in writing, fix, provided that such extended period shall in no case exceed [ninety] days,
6. The perusal of above section clearly transpires that after issuance of show-cause notice, the authority is legally bound to pass order-in-original within 45 days of the issuance of show cause notice and if due to any reason, he fails to pass the order, then he is legally bound to seek extension for further period, which shall not in any case exceed 90, days and it is also to mention here that such extension must be in writing and the reasons for delay must be incorporated in it. The show- cause notice in the instant case was issued on 12-4-2000 and the order in-original was passed on 28-12-2006 whiles time limitation of ninety days as per section 36(3) stood expired on 12-7-2000.
The case-laws relied on by the learned counsel of the appellant adequately support his contention.
The honourable High Court in the case of Super Asia Muhammad Din and Company v. Collector Sales Tax reported as 2008 PTD 60 has once for all settled the issue that whether the limitation as prescribed in sections 11(4) and 36(3) is mandatory or directory. Moreover, the Honourable High Court in a number of judgments has held the passing of order-in-original after the statutory time limitation as nullity in the eyes of law. Extracts from some of the judgments are reproduced for the sake of reference:--
(1) Super Asia Muhammad Din and Sons v. Collector of Sales Tax 2008 PTD 60 ' The claim of the Revenue that the prescribed limitation of 45 days for completion of adjudication proceedings as provided through. Finance Ordinance, 2000 and enhanced to 90 days by Finance Act, 2003 is merely directory cannot be accepted. It is settled law that where inaction on the part of the 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 Revenue in that regard will make a provision of law redundant and nugatory.
Redundancy or superfluity of an Act of Parliament and a provision of law cannot be readily accepted. All the moreso, 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."
(ii) Messrs Tanvir Weaving Mills v. Deputy Collector Sales Tax 2009 PTD 762. (H.C. Lah.)
"As is clear from the language of the above proviso, it has limited the scope of 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 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."
(iii) 2009 PTD 1978 "Regarding the actual controversy that the case having been assessed after the expiry of limitation, the provision of section 11(4) read with section 36(3) have been referred. In this case show-cause notice having been issued on 28-6-2003 the reply of which was filed on 14-7-2003 keeping the case pending for almost over 19 months is against the legal requirement. So far as the facts of the case is, concerned, neither the same are controverted nor even otherwise there can be any dispute about that as the same stand further confirmed by the order in the case of F.T.O.
' Under section 11(4) of the Sales Tax Act, the competent officer could decide a case within the 90 days from the date of issuance of a notice. Law provides for extension of the same through a formal order for another 90 days. Meaning thereby it has to be finalized within 180 days after obtaining extension from the higher competent authority by due mentioning reasons therein. The order-in-original having been passed after delay over 19 months is barred by time."
7. As evident from the above, the order-in-original in the case in hand was passed beyond the prescribed time limit of 45 days, moreover the adjudicating authority, as is evident from the order- in-original has neither fixed any extended period nor recorded any reasons for passing the order after 45 days. Keeping in view, the settled legal position on the issue of limitation, we have no hesitation to accept the appeal by declaring the order-in-original as time-barred, therefore, nullity in the eyes, of law. The impugned order is vacated on this score.
8. Without going into the details of the facts and merits of the case, the appeal is decided only on the legal issue, because law point precedes the facts. Consequently, the appeal is accepted, the impugned order set aside and the show cause notice vacated.