' Through these two titled Sales Tax Appeals the appellant registered person under section 46 of the Sales Tax Act, 1990 has assailed the two separate impugned orders of the learned Commissioner Inland Revenue (Appeals-III), Islamabad bearing Order-in-Appeal No,50 of 2011 dated 13-8-2012 and 193 of 2011 dated 2-1-2012 which are arising out of the Order-in-Original No,50 of 2011 dated 25- 1-2012 and No,153 of 2011 dated 1-6-2011 respectively.
2. Regarding the above titled S.T.A. No,327/12 following grounds of appeal and prayers have been framed:-- "4.1 That the impugned order passed by the respondent No,3 is non-speaking, illegal, incorrect against the facts as well as against the law.
4.2 That the respondent No,3 was duty bound to pass speaking order but he passed the impugned order without answering the legal grounds which is - against the natural as well as administration of justice.
4.3 That respondent No,3 misdirected himself and passed order that no evidence of payment of tax by the supplier has been provided. It is significant to mention here that appellate has no any access on the records of suppliers, the respondent No,3 himself admitted that suppliers of the appellant has declared the name of the appellant in his monthly sales tax return which fulfill the requirement of law. It is also wroth important to mention here that it is a case of claim of input tax against the invoices issued by the Blocked and suspended units. In the instant case no proof of tax payments made by the suppliers of the appellant as required. Only one thing which required in the instant case is that at the time of transactions the suppliers of appellant were active or not.
4.4. That the contention of the respondents Nos.2 and 3 that appellant claimed input tax against fake invoices is not correct and against the facts of the case. The word "fake invoice" has not been defined in anywhere in the Sales Tax Act, 1990. The dictionary meaning of "fake invoice" is false invoice, counterfeit invoices, forged invoice, phony invoice or sham invoice. But in the instant case our invoices are neither false nor counterfeit nor forged. If concerned department failed to recover the sales tax amount from our suppliers at the relevant time, the demand of the same amount from appellant is against the natural justice as well as against the Constitution of Islamic Republic of Pakistan, 1973.
4.5. That contention of the respondents Nos.2 and 3 the appellant claimed Input Tax adjustment on the basis of fake flying invoices and no any physical transfer of goods have been taken place is without any concrete evidence and based on assumptions.
4.6. That the contention of the respondents Nos. 2 and 3 regarding using of pin and password of other registered persons (suppliers of Appellant) for claiming of input tax is based on assumption and contradictory to the facts. The respondent No,2 was duty bound to disclose their evidence before alleging the shameful allegation regarding using of pin and passwords of different registered person. It is correct, intelligence wind has discovered a gang who were engaged in the business of sales and purchases of, invoices but appellant suppliers have no concern with the said gang.
4.6. That it was the duty of the respondent No,2 and also a legal requirement that before passing the impugned order, respondent No,2 was required to disclose the statement of registered persons whore pin an passwo rd has been used by appellant. It is a stalled principle of law that in all proceedings by whomsoever held, whether Judicial or administrative the principle of Natural Justice and administration of justice have to be observed if the proceedings might result in consequences affecting "the person or property or other right of the parties concerned.
4.7. That Article 117, Qanun-e-Shahadat Order, 1984 has laid down general principle that any person dependent upon existence of the fact, then he has to prove those facts. In the instant case the respondent No,2 claimed that the appellant used the pin and passwords of the different suppliers and claimed input tax but respondent No,2 failed to prove their assertion with credible evidence. It is pertinent to mention here that statement of registered person whose pin and passwords was used by the appellant are very important, so the burden to prove their assumptions is on respondent No,2, because it is settled and fundamental principle of law of evidence that whosoever alleges existence of a particular fact must prove same.
4.8. That no proper hearing, providing to the applicant and no any material evidence has also been shared with the applicant.
4.9. That the sections 7, 8 and 8A read with section 73 of the Sales Tax Act, 1990 are not charging sections and is a fundamental principal of law that without creating a charge tax could not be recovered.
4.10. That sections 8(1)(d), 8(1)(ca) and section 8A is against Articles 4, 8, 18 and 77 read with entry 49 of the Fourth Schedule of legislature list the Constitution of Islamic.
4.11. That before invoking the section 8(1)(ca) of the Sales Tax Act, 1990 it is the duty of the prosecution to prove that supplier of the respondent has not declared the sales of respondent in their monthly Sales Tax Returns. Whereas the appellant supplier's has declared their sales in the name of appellant, so the invoking of section 8(1)(ca) is illegal.
4.12. That before invoking the section 8(1)(d) of the Sales Tax Act, 1990, it is the duty of the Prosecution to establish that the invoices issued by the supplier are fake. It is worth important to mention here that under Article 117 of the Qanun-e-Shahadat, 1984 the burden of, proof ,is on the shoulders of prosecution/ adjudicating authority. In the instant case prosecution failed to prove, their, assertion as required under the law.
4.13. That before invoking the section 8A, it is the duty of the prosecution to establish that the respondent was in the knowledge or has reasonable grounds to suspect that some or all of the tax payable is unpaid. In the instant case prosecution failed to prove the same.
4.14. That the charge of tax fraud has no legal consequence in the light of chain of judgments of superior courts, wherein it has been laid down "in order to attract the provision of tax fraud the initial burden lies on the department and no on the accused person" (2004 PTD 868).
' In view of the above it is respectfully prayed that the appeal may kindly be accepted and declare the impugned Order-in-Appeal No,50 of 2012 as well as Order-in-Original No,50 of 2011 illegal, incorrect as well as against the facts up to the extent of this appeal."
3. While regarding the S.T.A. No,50 of 2012 following grounds and prayer have been agitated:-- "(5) That the impugned Order is illegal, incorrect against the natural as well as administration of justice up to the extent that suppliers mentioned in the para 10 of impugned order has failed to declared their sales in annex-c of their monthly Sales Tax Return.
(6) That the contention of the respondent No,2, that the suppliers of the appellant are dummy/factitious, blocked/inactive is illogic, due to the reason that all suppliers of the appellant was registered by the concerned tax department after complete verification/inspection as required under the Sales Tax Registration Rules. The said department was responsible to conduct the audit of said registered person on annual basis. If concerned department failed to recover the sales tax amount from our suppliers at the relevant time, the demand of the same amount from appellant is against the natural justice as well as against the Constitution of Islamic Republic of Pakistan, 1973.
(7) That it is without any shadow of doubt, the tax department having authority to monitor whether the tax has been paid/ deposited by the taxpayer or not. In case of any default, tax department have, complete mechanism of recovery from the defaulter. It is significant to mention here that applicant have no any authority to check whether tax has been deposited by the supplier or not. It is also worth important to mention here that payment of Sales Tax due on monthly basis, so how it is possible for a buyer to verify the payment of sales tax at the time of purchases.
(8) That it is a stalled principle of law that in all proceeding by whomsoever held, whether Judicial or administrative the Principle of Natural Justice have to be observed if, the proceedings might result in consequences affecting "the person or property or other right of the parties concerned.
(9) That the contention of the respondent No,2 that the appellant claiming input Tax adjustment on the basis of fake flying invoices is without any concrete evidence and based on assumptions. The respondent No,2 was required to refer/ mention the Order-in-Original numbers of our Suppliers regarding suspension of registration is very important in the instant case.
(10) That Article 117, Qanun-e-Shahadat Order, 1984 has lays down general principal that any person dependent upon existence of the fact then he has to prove those facts. In the instant case the respondent No,2 claimed that the Suppliers of applicant are blocked / inactive but failed to prove their assertion with credible evidence. It is pertinent to mention here that date of blocking/suspension of the units are very important, whether blocking or suspension is after of before the date of transactions with appellant, so, the burden to prove their assertions is on respondents Nos.1 and 2, because it is settled and fundament principle of law of evidence that whosoever alleges existence of particular fact must prove same.
' Reliance on 1988 CLC 578, 1990 ALD 619, 1988 MLD 552, PLD 1988 Kar. 28, 1982 CLC 1286, 1990 ALD 142(2), 1995 MLD 690, PLD 1997 Kar. 6, 2000 MLD 720, 2000 PLC 172, 2000 PLC 194, 2000 YLR 801, 2001 CLC 1922, 2001 MLD 159, and many more.
(11) That the sections 7, 8 and 8A read with section 73 of the Sales Tax Act, 1990 are not charging sections and it is a fundamental principal of law that without creating a charge tax could not be recovered.
(12) That sections 8(1)(d), 8(1)(ca) and section 8A is against Articles 4, 8, 18 and 77 read with entry 49 of the fourth Schedule of legislative list the Constitution of Islamic.
Merit
(13) That the contention of the respondent No,3 regarding suppliers mentioned in para 10 of impugned Order is not correct, due to the reason that appellant has complete record of each suppliers for the satisfaction of this Tribunal. The suppliers vise submissions are as under.
(a) Education Division ' The education division is a department of Allama Iqbal Open University Islamabad and appellant purchased waste paper from said university after payment of due sales tax amount. The copies of Sales Tax payment challans are attached as ANNEX-D
(b) Bina Paper Printing ' As per our record we purchase waste paper from Messrs Hamdan Paper Printing Converting Industries Sales Tax Registration Number 17504800000382. The name of Bina Paper Printing mentioned in the impugned order with same sales tax registration number is incorrect. Copies of Sales Tax invoices attached as ANNEX-F
(d) Dua Traders ' As per our record we purchased waste paper from Messrs IJ Traders Sales Tax Registration Number 0303999921291. The name of Dua Trader mentioned in the impugned Order with same amount Rs,311,317 is incorrect. The appellant purchased waste paper from U Trader and Sales amount was involved Rs,311,317 Copies of Sales Tax Return attached as ANNEX-F.
(e) Can Punjab Industries ' The Sales Tax Registration number was not correctly mentioned. Copies of Sales Tax Invoices attached ANNEX-G.
(f) Waste Paper ' As per our record we purchased from Messrs Data Enterprises, Sales Tax Registration Number 0701470700182. The name of Waste Paper mentioned in the impugned Order with same sales tax registration number is incorrect. Copies of Sales Tax Returns attached as ANNEX-H.
(g) Total Package ' We have complete record of purchases from Messrs Total Package which is attached as ANNEX-I.
In view of the above it is respectfully prayed that the-appeal may kindly be accepted and declare the impugned Order illegal, incorrect as well as against the facts up to extent of this Appeal."
4. The appellant has filed Additional grounds of appeal in both the matters. In S.T.A. No,327/12 following additional grounds have been farmed:-- "(1) That the appellant filed an appeal on 25-9-2012 before your lordship which was' fixed on 14-12- 2012.
(2) That as per proviso of section 36(3) of the Sales Tax Act, 1990 order under the said provision of law shall be made within 120 days of issuance of show cause notice or within such extended period as the Collector may for reasons to be recorded in writing, fix, provided that such extended period shall in no case exceed 120 days. Further as per proviso of section 45-B(2) of the Sales Tax Act, 1990 the order of the Commissioner (Appeals) shall be passed out later than 120-days from the date of filling of appeal or within such extended period as the Commissioner (Appeals) may for reasons to recorded in writing, fix and such period shall in no case, exceed 120 days. In the case under reference, order-in-original dated 25-1-2012 has been passed after a lapse of almost 47 days from the date of issue of show-cause notice, i,e, 8-8-2011 from the date of issuance of show-cause notice. In this way the impugned order has been passed after the- expiry of stipulated mandatory period, therefore, the same are illegal and unlawful in the eyes of law and liable to be set aside.
Reliance is made to:- "Messrs Super Asia Muhammad Din Sons (Pvt.) Ltd. v. The Collector of Sales Tax, Gujranwala 2008 PTD 60; Messrs Hanif Straw Board Factory v. Collector (Adj) Customs Central Excise and Sales Tax, Gujranwala and 2 others 2008 PTD 378 and Messrs Syed Bhai Lighting Limited, Lahore v. Collector of Sales Tax and Federal Excise, Lahore 2009 PTD (Trib.) 1263, Messrs Kay Chemist, Karachi v. Collector of Customs, Central Excise and Sales Tax (Appeals) Karachi-III, 2011 PTD (Trib.) 408 and 2008 PTD 2025.
(3) That at the outset, respondent No,2 had no authority either to raise demand or to issued show- cause notice or to pass order at adjudication side because he being Deputy Commissioner can only issue show-cause notice and adjudicate matters under section 36 of the Sales Tax Act, 1990 involving the amount of tax not exceeding one million rupees (Rs,1,000,000) in terms of S.R.O.
555(1)/96, dated 1-7-1996 (Annexure-A) read with section 72-A of the Sales Tax Act, 1990 whereas he has adjudicated the case of the appellant involving the amount of tax exceeding the aforesaid limit.
(4) That perusal of S.R.O.555(I)/1996 dated 1-7-1996 read with section 72-A clearly shows that respondent No,2 had no jurisdiction either to issue show-cause notice or to adjudicate the matter or to pass the original order dated 8-8-2011 which is patently void, illegal, without jurisdiction and of no legal effect.
(5) That it is settled law that if the initial act and action is illegal and without jurisdiction, the subsequent proceedings and orders passed would also void and illegal. Reliances are as under titled as--
(i) (PLD 1991 (SC) 630), Collector of Customs (Preventive) and 2 others v. Muhammad Mahfooz
(ii) (2003 PTD (SC) 1034) Federation of Pakistan through Ministry of Finance Islamabad v. Master Enterprises (Pvt.) Ltd. And 4 others.
(iii) (2004 PTD 1731), Messrs Food Consults (Pvt.) Ltd., Lahore v. Collector (Central Excise and Sales Tax), Lahore and 2 others
(iv) (2004 PTD (DB) 2952), N.P. Water Proof Textiles Mills (Pvt.) Ltd. Through Director, Karachi v.
Federation of Pakistan through Secretary Revenue Division/Chairman Central Board of Revenue, Islamabad and another.
(v) (2005 PTD 1200), Messrs Zikeria Enterprises v. Muhammad Musharaf and 7 others.
(vi) (2005 SCMR 17), Collector of Customs Lahore and another v. Universal Gateway Trading Corporation and another.
(vii) (2006 PTD 1884), A.R.R. Textiles through Proprietor v. Federal of Pakistan through Ministry of Finance, Islamabad and 4 others.
(viii) (2006 PTD 1884), Messrs Haq Cotton Mills (Pvt.) Ltd., v. Chairman Central Board of Revenue and 2 others.
(ix) 2007 PTD 2356, Collector of Sales Tax and others v. Messrs Food Consults (Pvt.) Ltd., and Messrs Diplex Beauty Clinic and others.
(x) (2007 PTD (SC) 1351), and Chairman CBR and others v. Haq Cotton Mills (Pvt.) Ltd.
(xi) (S.T.A. No,531/LB/2011)
(xii) (S.T.A. No,578/LB/2011) PRAYER That in view of the foregoing submissions, it is prayed:--
(i) That the impugned Show-Cause Notice No,25 dated 8-8-2011 as well as assessment Order No,50 of 2012 dated 25-1-2012 and the appellate Order No,50 of 2012 dated 13-8-2012, are being illegal, unlawful, and without jurisdiction, may be vacated absolving the respondent all the charges framed therein;
(ii) Any other relief that this Hon'ble Court may deem fit to grant in the circumstances and on the facts of the case."
5. While in S.T.A. No,50 of 2012 following additional grounds have been framed:--
(1) That the appellant filed an appeal on 15-2-2012 before your lordship which was fixed
(2) That the order of first appellate authority to remand the case back to the officer Inland Revenue is illegal and unlawful as the first appellate authority is not competent to provide a chance to the officer Inland Revenue to improve his case.
(3) That the respondent No,3 decided the case against the spirit of basic statute of Sales Tax Law, operative part of which is reproduced below:- II "For the foregoing reasons, the order passed by the Adjudicating Officer is reduced to the extent of Rs,2,329,321 and remaining amounts vacated with the observation that if it is proved that registration of the suppliers was suspended or blocked prior to the purchases or if they have been black listed or are black listed subsequently, the department would be at liberty to start fresh proceedings against the appellant, in accordance with the provisions of law".
(4) That the study of the above operative part of the impugned appellate order reveals that the same are totally illegal and unlawful orders and are liable to be set aside because subsection (3) of section 45-B of the Sales Tax Act, 1990 has not given powers to remand back the case with any observation.
' Para (3) of section 45-B "In deciding an appeal, the/Commissioner InlandRevenue/(Appeals) may make such further inquiry as may be necessary provided that he shall not remand the case for de novo consideration".
(5) That in the case-law reported as which are decided in favour of the tax payers as follows:-- 1997 SCMR 526, PLD 1994 SC 52, 1993 SCMR 216, 1993 SCMR 133, 1993 SCMR 221 and PTR No,2 LHC DB.
' And also on judgments in I.T.A. No,1078/LB/2010, I.T.A. No:1079/LB/2010
(6) That at the outset, respondent No,2 had no authority either to raise demand or to issued show- cause notice or to pass order at adjudication side because he being Deputy Commissioner can only issue show-cause notice and adjudicate matters under section 36 of the Sales Tax Act, 1990 involving the amount of tax not exceeding one million rupees (Rs, 1,000,000) in terms of S.R.0.555(1)/96 dated 1-7-1996 (Annexure-A) read with section 72-A of the Sales Tax Act, 1990 whereas he has adjudicated the case of the appellant involving the amount of tax exceeding the aforesaid limit.
(7) That perusal of S.R.0.555(1)/1996 dated 1-7-1996 read with section 72-A clearly shows that respondent No,2 had no jurisdiction either to issue show-cause notice or to adjudicate the matter or to pass the original order dated 8-8-2011 which is patently void, illegal, without jurisdiction and of no legal effect.
(8) That it is settled law that if the initial act and action is illegal and without jurisdiction, the subsequent proceedings and orders passed would also be void and illegal. Reliance's are as under titled as.
(i) (PLD 1991 (SC) 630), Collector of Customs (Preventive) and 2 others v. Muhammad Mahfooz.
(ii) (2003 PTD (SC) 1034) Federation of Pakistan through Ministry of Finance Islamabad v. Master Enterprises (Pvt.) Ltd. And 4 others
(iii) (2004 PTD 1731), Messrs Food Consults (Pvt.) Ltd., Lahore v. Collector (Central Excise and Sales Tax), Lahore and 2 others
(iv) (2004 PTD (DB) 2952), N.P. Water Proof Textiles Mills (Pvt.) Ltd., through Director, Karachi v.
Federation of Pakistan through Secretary Revenue Division/Chairman Central Board of Revenue, Islamabad and another.
(v) (2005 PTD 1200), Messrs Zikeria Enterprises v. Muhammad Musharaf and 7-others.
(vi) (2005 SCMR 17), Collector of Customs Lahore and another v. Universal Gateway Trading Corporation and another.
(vii) (2006 PTD 1884), A.R.R. Textiles through Proprietor v. Federal of Pakistan through Ministry of Finance, Islamabad and 4 others.
(viii) (2006 PTD 1884), Messrs Haq Cotton Mills (Pvt.) Ltd. v. Chairman Central Board of Revenue and 2 others.
(ix) 2007 PTD 2356, Collector of Sales Tax and others v. Messrs Food Consults (Pvt.) Ltd., and Messrs Diplex Beauty Clinic and others.
(x) (2007 PTD (SC) 1351), and Chairman CBR and others v. Haq Cotton Mills (Pvt.) Ltd.
(xi) (S.T.A. No,531/LB/2011)
(xii) (S.T.A. No,578/LB/2011) PRAYER That in view of the foregoing submissions, it is prayed that:--
(i) That the impugned Show-Cause Notice No,25 dated 8-8-2011 as well as assessment Order No,50 of 2011 dated 25-1-2012 and the appellate Order No,50 of 2012 dated 13-8-2012 are being illegal, unlawful, and without jurisdiction, may be vacated absolving the respondent all the, charges framed therein;
(ii) Any other relief that this Hon'ble Court may deem fit to grant in the circumstances and on the facts of the case."
6. Facts leading for disposal of the instant case are that the appellant is engaged in the supplies of waste paper and paper scrap (Wholesaler) etc. Having Sales Tax Registration No,7-02-4707-002-
55. During the audit proceedings, it was observed by the authorities that the appellant had illegally claimed input tax of Rs,18,441,777 on invoices issued by blocked/suspended and dummy/fictitious registered person in violation of sections 2(14), 2(37), 3, 7, 8 and 8A read with section 73 of the Sales Tax Act, 1990 which is the subject matter of the above titled S.T.A. No,50 of 2012.
7. On the basis of the aforesaid facts, the appellant registered person was called upon to show cause as to why the evaded amount of Sales Tax amounting to Rs,18,441,777 may not be recovered under section 36(1) of the Sales Tax Act, 1990 along with default surcharge and as to why penal action may not be initiated under section 34(1) of the Sales Tax Act, 1990. In response thereto a detailed reply was given. However, the reply tendered by the appellant could not convince the Deputy Commissioner and he, therefore, remarked that the detecting agency has rightly noticed the illegalities and the discrepancies in the instant case. Thus, charges to the extent of Rs,18,441,777 under section 36(1) of the Sales Tax Act, 1990 stand established. Moreover, penalty equal to 5% of the principal amount of tax involved has also been imposed under section 33(5) of the Sales Tax Act, 1990. Against this treatment, appeal was filed before the learned Commissioner Inland Revenue (Appeals-III), Islamabad who has decided the matter with following observations:-- "In the instant case, it has been observed that the appellants claimed input tax of Rs,9,383,023 instead of Rs,18,441,777 during the period 7/2008 to 6/2009. Copies of sales tax returns are placed on record Examination of the data available on FBR's web portal reveals that none of the supplier is blacklisted and purchases have been made prior to blocking/suspension of the registration of the suppliers and that the suppliers have filed the sales tax returns for the relevant tax periods to the extent of Rs,7,053,702 showing the supply of subject goods, in annexure- C of the return. The transactions are cross verifiable from the returns filed by the purchases and suppliers through FBR's web portal. It is therefore, presumed that tax has also been paid on the goods supplied to the purchasers. However, an amount of Rs,2,329,321 have not been reflected in Annexure-C of returns detail of which is as under:-- S. No. Name of Unit STRN Tax Period Amount involved
1. Bilal Murtaza Packg 175048000078738/2008 238,076
2. Bina Paper Printing 1750480000382 7/2008 678,545
3. Can Punjab 03929999089377/2008 27,730
4. Dua Traders 1700999926473 9/2008 311,317 S. No. Name of Unit STRN Tax Period Amount involved
7. Total Packages 07014808002467/2008 to 6/200941,289
8. Waste Paper 0701470700182 8/2008 113,188 Total Rs.2,329,3215. Education Division 0400999902164 8/2008 to 6/2009616,776
6. Muhammad Saleem 1120999904119 10/2008 302,400 Now the appellant has agitated the above findings of the learned CIR(A) on the grounds reproduced in this above paras of this order before this Tribunal.
8. The learned counsel appearing on behalf of the appellant contended that the show-cause notice dated 10-2-2011 has been issued by the Deputy Commissioner Inland Revenue, on the basis of contravention report by the Audit-III, RTO, Rawalpindi on assumption, surmises, whims and on illegal basis which is liable to be set aside/struck down. Other contention was that section 2(37) has wrongly been invoked in the impugned notice and upholding the same by the first appellate authority in not sustainable in the eye of law because this section has been totally misread by the said authorities. To invoke this section, pre-requisite to allege the registered person that he has committed tax fraud, is that he has acted knowingly, dishonestly or fraudulently and without any lawful excuse. To refute this allegation, the learned counsel pointed out that all raw materials purchased by the appellant from the registered persons and the invoices issued under the provisions of section 23 of the Act were also obtained. Moreover, status of those suppliers was also checked and verified from the website of the FBR (www.Fbr.Gov.Pk) and it was reported by it to be active. Further, all the payments were made by the appellant, after adhering to the provisions of section 73 of the Act. Besides, the suppliers were also submitting copies of their monthly Sales Tax Returns and the summaries of the relevant period to the Department. It was also added by the learned counsel, that the appellant did all the possible precautions and endeavors as well as used all the official resources to verify status and genuine-ness of the suppliers. Such acts clearly speak for themselves that the appellant discharged all his legal and the ethical responsibilities to bring the truth at the door in a good faith. Further all the requisite conditions as are laid down in sections 7 and 73 of the Act for claiming in put tax and paid the tax to the suppliers were fulfilled bona fide.
Also stressed that in the given situation the entire liability of depositing the tax in terms of section 3(3) of the Act, was the exclusive responsibility of the suppliers who are or were duly registered at the relevant time and were regularly filing their monthly returns and summaries with Sales Tax Department. In fact, it was the sole duty of the Sales Tax Department to check and find out as to whether the suppliers are depositing their sales tax in the government exchequer or not. As the department has failed to fulfill its official obligations rather shifting it is responsibilities on the appellant's shoulder which is highly unwarranted and uncalled for. Also vehemently contended that the appellant has been alleged to contravene the provisions of subsection (a) of section 8.
This allegation in not only contrary to the facts but is also against the normal business practice.
When the appellant, under the prescribed mechanism of VAT, has made payment of input tax to the supplier, he in no way can force of compel the supplier to deposit the tax in the exchequer. It is imperative to state here by the learned counsel that the appellant does not have any source to verify that the supplier has actually made payment in the Government treasury. Moreover, when status of the suppliers has been checked from the website of the department, which indicated to be active, in such eventuality how it can come into one's mind that the supplier is issuing fake or un-genuine invoices. In this backdrop, provisions of section (a) of section 8 are not attracted on the transactions made by the appellant. Further stressed that how could be appellant be held to be jointly liable under section 8A of the Act particularly when the suppliers were registered with the department and were submitting their monthly sales tax returns and the summaries regularly.
Thus, in the given circumstances, the impugned show-cause notice has illegally been issued and the order passed there under is also liable to be set aside.
' On the other side learned D.R. Is supporting the impugned orders of the officers below on the basis of reasons given in the impugned orders of the officers below and has requested to uphold the impugned orders.
9. We have heard the learned representatives from both the sides and have perused the impugned orders and the relevant record. We have observed that the appellant is engaged in the business of wholesaling of waste paper and supply thereof to the verified purchases since long and also enjoys a very good reputation amongst the business circle as contended by the learned counsel.
The main allegation levelled by the audit authorities is that the appellant is involved in a sales tax fraud by claiming illegal input tax adjustment of Rs,9,383,023 and in this manner the provisions of sections 2(14), 2(37), 3, 7, 8, and 8A read with section 73 of the Sales Tax Act, 1990 have been violated. During the court proceedings, the learned counsel for the appellant pressed all the grounds, as are enumerated in the above paras of this order, out of which some are legal while others are factual. To consider the legal grounds, we would like to reproduce section 2(37) which defines "tax fraud":-- 2(37) "Tax Fraud" means knowingly, dishonestly or fraudulently and without any lawful excuse (burden of proof of which excuse shall be upon the accused).
(i) Doing of any act or causing to do any act; or
(ii) Omitting to take any action or causing the omission to take any action, including the making of taxable supplies without getting registration under this act; or
(iii) Falsifying [or causing falsification] the sales tax invoice, in contravention of duties or obligations imposed under this Act or rules or instructions issued there under with the intention of understanding the tax liability [or underpaying the tax liability for two consecutive tax periods] or overstating the entitlement to tax credit or tax refund to cause loss of tax; It is abundantly clear from reading the above definition of "tax fraud" that the mandatory condition put forth for committing tax fraud is that the alleged person should have done any act knowingly, dishonestly or fraudulently and without any lawful excuse. Reverting to the facts of the instant case, there is not an iota of evidence whatsoever where from it could be deduced that the appellant has knowingly or dishonestly or fraudulently committed tax fraud by claiming input tax adjustment against the sales tax invoices issued by the allegation fraudster gang. Even the audit/contravention report could not be establish with any concrete reasoning that the appellant was involving in tax fraud by claiming illegal sales tax input tax of Rs,18,441,777 and have in any way violated the provisions of section 2(37). In fact the department has miserably failed to fasten blame at the appellant's door. On going through the audit/contravention report, we are convinced that the entire edifice has been built, to hold the appellant as fraudulent, on conjectures and surmises and whimsical inference has been drawn against the appellant on the so called set of facts. On the other hand, the record proves that there was ample justification with the appellant to claim adjustment of input tax. Such as all the suppliers were registered persons and their status was active as per FBR Website. They are regularly submitting their sales tax returns and summaries thereof. All the payments were made by the appellant in accordance with the provisions of section 73 of the Sales Tax Act, 1990. The appellant did not have any prior knowledge about fakeness of the sales tax invoices issued by the suppliers. We also deem it appropriate to reproduce section 36(1) which reads as under:-- "Where the reason of some collusion or a deliberate act any tax or charge has not been levied or made or has been short levied or has been erroneously refunded, the person liable to pay any amount of tax or charge of the amount of refund erroneously made shall be served with a notice, within five years of the relevant date, requiring him to show cause notice for payment of the amount specified in the notice".
Premises of this section is that show-cause notice can only be issued where non levy, short levy or erroneous refund has been caused by the reason of some collusion or a deliberate act. On going through the facts available on record, the department could not prove its allegation of collusion of the appellant with the supplier nor could bring on record any evidence that the appellant has done fake transaction with deliberate act The Honourable High Court in a case reported as 2007 PTD 2265 while interpreting section 36 observed as under:-- "10. To put it succinctly, show-cause notice can only be served under section 36 ibid if;
(a) Any tax or charge has not been levied or has been short-levied or has been erroneously refunded.
(b) Such non-levy, short-levy, or erroneous refund has been caused by the reasons(s) of "some collusion or a deliberate act" under section (1) of section 36 of the Sales Tax Act or owing to inadvertence or error or misconstruction per subsection (2) thereof and;
(c) Within the period of five years under subsection (1) and three years under subsection (2) of section 36.
' The unarguable conclusion thereto is that mere non-levy, short levy, or erroneous refund of tax or charge cannot be basis for a show-cause notice. It has to be founded upon non-levy, short levy, or erroneous. Refund caused by any of the above reason which being the dominant factor also determine the period of limitation thereto, in the absence of any of the three conditions or the jurisdiction facts, the taxing authorities shall have no power or jurisdiction to serve a show-cause notice under section 36(1) ibid".
10. Coming to the next issue which relates to section 73 of the Sales Tax Act, 1990. We have noted that the appellant supplied material i,e, waste paper etc. Which are only local purchases to support this assertion monthly wholesale supplies during the tax period 7/2008 to 6/2009 and the sales tax returns for the corresponding months showing supplies made to verified purchases, were submitted to prove that the suppliers were operative and supplied the same goods. Now, it is imperative to state here that the appellant purchased the raw material and supplied the same and supplied the goods to other verified purchases and in all this eventuality there hardly seems any fraud and dishonestly. We have also noted that the appellant made all the payments against the said purchases after fulfilling all the legal requirements of provisions of section 73 of the Act, 1990.
11. Coming to the issue which relates to section 8A, the joint and several liabilities of registered persons in supply chain where tax is unpaid. During the court proceedings, the learned counsel for the appellant contended that this fact was never in the knowledge of the appellant that the supplier is not making payment of the tax due to him since July, 2008 and even the department was unaware that the supplier are not making payment of tax whereas the alleged fake suppliers were duly registered with the department and were regularly submitting their monthly sales tax returns and summaries. Therefore, the appellant cannot be evolved as a joint liable and induction of contravention does not qualify. Such non-speaking order has been declared null and void by the superior court. The reference in this regard has been made on the reported decisions GST 2001 CL 71, GST 2004 CL 562 and GST 2004 CL 79.
12. Regarding the additional grounds the learned counsel of appellant contended that the order of first appellate authority to remand the case back to the officer Inland Revenue is illegal and unlawful as the first appellate authority is not competent under subsection (3) of section 45-B of the Act, to provide a chance to the officer Inland Revenue to improve his case.
' Counsel of the appellant also reiterated that the respondent No,3 decided the case against the spirit of basic statute of Sales Tax Law who confronted para. 11 of the Order-in-Appeal operative part of which is reproduced below:- "II. For the foregoing reasons, the order passed by the Adjudicating Officer is reduced to the extent of Rs,2,329,321 and remaining amounts vacated with the observation that if it is proved that registration of the suppliers was suspended or blocked prior to the purchases or if they have been black listed or are black listed subsequently, the department would be at liberty to start fresh proceedings against the appellant,- in accordance with the provisions of law".
' Learned counsel in this regard has referred the sub-para (3) of section 45-B according to which:- - "In deciding an appeal, the (Commissioner Inland Revenue) (Appeals) may make such further inquiry as may be necessary provided that he shall not remand the case for de novo consideration".
' The AR of the appellant has vehemently contested that the learned First Appellate Authority lacked jurisdiction to remand the case. It was argued that even otherwise remand order was legally unsustainable as the impugned orders were void ab-initio and liable to be annulled.
Regarding the lack of jurisdiction of the Commissioner (Appeals) to remand the case, it was pointed out that the Finance Act, 2005, brought about amendment in section 129 of the Income Tax Ordinance and the provision empowering the First Appellate Authority to set aside the assessment order will the directions to made new assessment order had been deleted. Besides, the 'amendment conferred extensive powers to the Commissioner (Appeals) to `examine evidence and to undertake further enquiries to decide the case instead of remanding to for denovo assessm ent proceedings. The judgment of the Hon'ble Supreme Court of Pakistan cited as PTCL 1992 CL 363 in the Federation of Pakistan v. Messrs Noorani Trading Corporation (Pvt.) Ltd. And others was referred to support the submissions which in it is held that:- "Indeed, the mere fact that the legislature enacts amendment is of itself an indication of an intention, as a general rule, to alter the pre existing law...".
' Counsel for the appellant has also relied on judgments of Hon'ble superior Courts as follows:-- ' 1997 SCMR 526, PLD 1994 SC 52; 1993 SCMR 216, 1993 SCMR 133, 1993 SCMR 221, PTR No,2 LHC DB, and also on judgments in I.T.A. No,1078/LB of 2010, I.T.A. No,1979/LB of 2010.
13. As regards 2nd Issue relating to pecuniary jurisdictions of the Deputy Commissioner, Inland Revenue, Lahore the learned counsel for the registered person contended that issuance of show- cause notice and on the basis thereof passing the order-in-original was without jurisdiction as having been issued/passed by an officer of Inland Revenue not competent in terms of S.R.O.
555(I)/1996, dated 1-6-1996 holding the field at the relevant time on omission of section 45 of the Sales Tax Act, 1990 vide Finance Act, 2010. He submitted that the pecuniary jurisdiction of the Deputy Commissioner was to deal with the cases involving amount of tax not exceeding one million rupees whereas the show-cause notice was issued for alleged inadmissible input tax adjustment exceeding such limit, thus, the Deputy Commissioner, Inland Revenue, was not competent to issue to show-cause notice or adjudicate the matter or pass original order being beyond the said monetary limit provided in the above referred S.R.O. He further contended that the said S.R.O. Remained dormant till the omission of section 45 of the Sales Tax Act, 1990 and from the date i,e, 5-6-2010 the said S.R.O. Become applicable on omission of said section. He contended that S.R.O.555(I)/ 1996, dated 1-7-1996 was alive and holding the field till 1-6-2012, the date it was rescinded vide S.R.O. 594(I)/2012 dated 1-6-2012. He contended that if the S.R.O.' 555(I)/1996 was not in the prior and after omission of section 45 of the Sales Tax Act, 1990, there was no reasons to rescind the same on 1-6-2012 after about 2 years on omission of section 45 of the Sales Tax Act, 1990. He relied on judgment of Hon'ble Supreme Court of Pakistan in case "Izhar Alam Farooqi, Advocate v. Sheikh Abdul Sattar Lasi and others" reported as (2008 SCMR 240) and the consolidated judgment dated 11-10-2012 of this Tribunal in Appeals No, S.T.A. No,530/LB of 2011 and S.T.A. No,578/LB of 2011 and judgment dated 6-4-2012 passed in S.T.A. No,55/LB of 2011. He also contended that S.R.O. 555(1)/1996, dated 1-7-1996 was very much in the field because the said S.R.O. Was rescinded on 1-6-2012 vide S.R.O. 594(I)/2012 dated 1-6-2012. He contended that till 1-6- 2012, the Notification S.R.O. 555(1)/1996 dated 1-7-1996 containing the pecuniary jurisdiction of the officers was in the field and as such the findings of the Deputy Commissioner, Inland Revenue, as well as Commissioner, Inland Revenue (Appeals), Lahore was erroneous being without any legal backing resultantly the show-cause notice and the original order passed by un-authorizeci officer were a nullity in the eyes of law. Since the show-cause notice and original order were without jurisdiction, thus, the impugned order is also illegal and without jurisdiction as held in case "Messrs Kamran Industries v. Collector of Customs (Exports), Karachi and 4 others" reported as PLD 1996 Kar.
68.
14. The learned DR on the other hand while opposing the arguments advanced by the learned counsel for the appellants supported the impugned order and contended that there was no need to obtain authorization from the commissioner Inland Revenue and no omission of 'section 45 from the Sales Tax Act, 1990, every officer of Inland Revenue was competent to issue show-cause notice and adjudicate the cases irrespective or pecuniary jurisdiction. He further contended that the show-cause notice was rightly issued under section 36 of the Sales Tax Act, 1990 and the Deputy Commissioner, Inland Revenue, was competent to adjudicate the matter.
15. In rebuttal, the counsel for the registered person submitted that S.R.O. 555(1)/1996 dated 1-7- 1996 was very much applicable because section 72A inserted vide Finance Act, 2010 clarified the position of the said S.R.O. Stating that any reference to Collector, Additional Collector, Deputy Collector, Assistant Collector, Superintendent, Senior Auditor and an officer of Sales Tax where-ever occurring in this Act and the rules, notifications clarification, general order made or issued thereunder shall be construed as reference to Commissioner Inland Revenue, Additional Commissioner Inland Revenue, Deputy Commissioner Inland Revenue, Assistant Commissioner Inland Revenue, Audit Officer and an officer of Inland Revenue respectively meaning thereby the reference to Deputy Collector in the S.R.O.555(I)/1996, dated 1-7-1996 shall be read as Deputy Commissioner, Inland Revenue. He further argued that subsection (3) of section 36 of the Sales Tax Act, 1990 was very much in the field when the show-cause notice was issued and as such the officer of Sales Tax/Inland Revenue "empowered in this behalf" can only issued show-cause notice to determine the amount of tax or charge payable by such person. He contended that after omission of section 45 of the Sales Tax Act, 1990, the S.R.0.555(I)/1996 was in field empowering the officers to issue show-cause notice and to adjudicate the matters in terms of section 36 of the Sales Tax Act, 1990.
16. We have found that the appellant under the prescribed mechanism of VAT, made payment of the input tax to the suppliers and the appellant had no access to confirm that the supplier had made the payment in the Government Treasury or not? In fact, this was the duty of the revenue to check as to whether the supplier has made payment of tax due to him especially when he was filing his monthly sales tax returns and summaries with the department. We have also observed that the learned Commissioner Inland Revenue (Appeals) had passed the G impugned order under the influence of revenue side without application of his independent and judicious mind.
Since the show-cause notice was issued and the impugned order passed there under on the strength of concocted and fabricated facts, therefore, such notice and the order are not sustainable in the eye of law. We are of the considered view that after adopting the method for making the payment as is prescribed by the law, the appellant has discharged his onus, so no responsibility lies on the appellant's shoulders to haunt his suppliers for depositing his liability in the government exchequer or not.
' We also find force in the contention put forth by the learned counsel and found that the appellant have clean tax history which Clearly depicts that huge payments of tax is being made towards the national exchequer. There is no evidence on record wherefrom it could be determined that appellant has violated section 73.
' It is further pointed out that the issue regarding jurisdiction of the officer of Inland Revenue to adjudicate tax matters has already been decided by this Tribunal in case "Messrs Global (Pvt.) Ltd and others v. Commissioner Inland Revenue, RTO, Multan" vide order dated 11-10-2011 passed in S.T.A. No,530/LB of 2011 and S.T.A. No,579/LB of 2010 "Messrs Worldcall Telecom Limited v.
Commissioner Inland Revenue (Appeal-I), Lahore" vide order dated 18-10-2012 and S.T.A. No,578/LB of 2011, S.T.A. No,531/LB of 2011 and "Messrs Ibrahim Steel Casting, Dewab Nagar Road, More Emanabad, Gujranwala v. Commissioner Inland Revenue (Appeals), Lahore" vide order dated 6-4- 2012 passed in S.T.A. No,55/LB of 2012. In the said cases, it was held that the show-cause notice issued by the Deputy Commissioner was beyond his pecuniary jurisdiction in terms of S.R.O.
555(I)/1996 dated 1-7-1996 and we find ourselves in full agreement with the aforesaid judgments.
' The learned DR when confronted with the aforesaid observation of the Commissioner, Inland Revenue (Appeals-III), Islamabad was unable to controvert the assertion made by the learned counsel for-the appellant.
In nutshell, the orders passed by the respondents were without jurisdiction being violation of the mandatory provisions contained in section 36 of the Sales Tax Act, 1990. The show-cause notice and order in original passed by the Deputy Commissioner, Inland Revenue, Rawalpindi were beyond his pecuniary jurisdiction as mentioned in S.R.0.555(1)/1996 dated 1-7-1996 and being so it was an order coram non-judice and without lawful authority. It is further held that the acts of omission and commission taken without jurisdiction are illegal, void abinitio and no action can be taken against the taxpayer in pursuance thereof as held in case cited as PLD 1996 Kar. 68, "Messrs Kamran Industries v. Collector of Customs (Exports) Karachi and 4 others".
' In view of the above discussion, the SCN, orders of the authorities below are hereby annulled and the appeal of the appellant/ registered person stands accepted.
17. Regarding the appeal against the Order-in-Appeal No,50 of 2012, dated 13-8-2012 the facts of the case are that during the audit proceedings, it was observed by the authorities that the appellant had illegally claimed input tax of Rs,21,944,300 on the strength of fake invoices ,issued by the fraudster gang. Thus contravened sections 8(1)(ca)(d), 8(1)(d) and 8A of the Sales Tax Act, 1990.
' On the basis of the aforesaid facts, the appellant registered person was called upon to show- cause as to why the evaded amount of Sales Tax amounting to Rs,21,944,300 may not be recovered under section 36(1) of the Sales Tax Act, 1990 along with default surcharge and as to why penal action may be initiated under section 34(1) of the Sales Tax Act, 1990. In response thereto a reply was given. However, the reply' tendered by the appellant could not convince the Deputy Commissioner and he, therefore, remarked that the detecting agency has rightly noticed the illegalities and the discrepancies in the instant case. Thus, charges to the extent of Rs,16,6691,453 under sections 11(2) and 36(1) stand established. Besides, penalty equal to 100% of the amount of tax involved has also been imposed under sections 11(c) and 13 of the section 33 of the Sales Tax Act, 1990. Against this treatment, appeal was filed before the Learned Commissioner Inland Revenue (Appeals-II), Lahore, who by virtue his order dated supra rejected the appeal of the appellant being devoid of any merits. Now, the appellant has come up in further appeal this fore.
18. The learned counsel appearing on behalf of the appellant contended that the Show-Cause Notice No,25 dated 8-8-2011 has been issued by the Assistant Commissioner Inland Revenue, on the basis of contravention report of the Deputy Director Investigation Officer, Allama Iqbal Town, Lahore on assumption, surmises, whims and on illegal basis which is liable to be set aside/struck down. Other contention was regarding that section 2(37) which according to him in this case also has wrongly been invoked in the impugned notice and upholding the same by the first appellate authority in not sustainable in the eye of law. In this respect he has advanced same arguments which have been mentioned in the above paras of this order. He has contended that in this case all raw materials purchased by the appellant was from the registered persons and the invoices issued under the provisions of section 23 of the Act were also obtained. Moreover, status of those suppliers was also checked and verified from the website of the FBR (www.Fbr.Gov.Pk) and it was reported by it to be active. Further, all the payments were made by the appellant, after adhering to the provisions of section 73 of the Act. Besides, the suppliers were also submitting copies of their monthly Sales Tax Returns and the summaries of the relevant period to the Department. It was also added by the learned counsel, that the appellant did all the possible precautions and endeavors as well as used all the official resources to verify status and genuineness of the suppliers. Such acts clearly speak for themselves that the appellant discharged all his legal and the ethical responsibilities to bring the truth at the door in a good faith. Further all the requisite conditions as are laid down in sections 7 and 73 of the Act for claiming input tax and paid the tax to the supplier were fulfilled. He has also stressed that in the given situation the entire liability of depositing the tax in terms of section 3(3) of the Act, was the exclusive responsibility of the suppliers who are or were duly registered at the relevant time and were regularly filing their monthly returns and summaries with Sales Tax Departmental. According to him, in fact, it was the sole duty of the Sales Tax Department to check and find out as to whether the suppliers are depositing their sales tax in the government exchequer or not. As the department has failed to fulfill its official obligations rather shifting its responsibilities on the appellant's shoulder which is highly unwarranted and uncalled for.
He has contended that the appellant has been alleged to contravene the provisions of subsection (1)(d) and (a) of section 8. This allegation in not only contrary to the facts but is also against the normal business practice. According to him when the appellant, under the prescribed mechanism of VAT, has made payment of input tax to the supplier, he in no way can force to compel the supplier to deposit the tax in the exchequer and even does not have any source to verify that the supplier has actually made payment in the Government treasury. Moreover, when status of the suppliers has been checked from the website of the department, which indicated to be active, in such eventually how it can come into one's mind that the supplier is issuing fake or un-genuine invoices. He has contended that in this backdrop, visions of sections 8(1)(ca), 8(1)(d) and 8A of section 8 are not attracted on the transactions made by the appellant. He has submitted that in the given circumstances, the impugned show cause notice has illegally been issued and the order passed there under is also liable to be set aside.
19. Regarding the additional grounds, the counsel of appellant argued that as per proviso of section 36(3) of the Sales Tax Act, 1990, the order under the said provision of law shall be made within 120 days of issuance of show-cause notice or within such extended period as the Collector may for reasons to be recorded in writing, fix, provided that such extended prior shall in no case exceed 120-days. He has further submitted that as per proviso of section 45-B(2) of the Sales Tax Act, 1990 the order of the Commissioner (Appeals) shall be passed not later than 120 days from the date of filing of appeal or within such extended period as the Commissioner (Appeals) may for reasons to recorded in writing, fix and such period shall in no case, exceed 120-days. In the case under reference, Order-in-Original dated 25-1-2012 has been passed after a lapse of almost 147- days from the date of issue of show cause notice i,e, 8-8-2011 from the date of issuance of Show- cause notice. In this way the impugned 'order has been passed after the expiry of stipulated mandatory period, therefore, the same are illegal and unlawful in the eyes of law and liable to be set aside. Reliance is made to the case titled:-- "Messrs Super Asia Muhammad Din Sons (Pvt.) Limited v. The Collector of Sales Tax, Gujranwala reported as 2008 PTD 60; Messrs Hanif Straw Board Factory v. Collector (Adj) Customs Central Excise and Sales Tax, Gujranwala and 2 others reported as 2008 PTD 578 and Messrs Syed Bhai Lighting. Limited Lahore -v. Collector of Sales Tax and Federal Excise, Lahore reported as 2009 PTD (Trib.) 1263, Messrs Kay Chemist, Karachi v. Collector of Customs, Central Excise and Sales Tax (Appeals) Karachi-III, reported as 2011 PTD (Trib.) 408 and PTCL 2009 CL 35,".
20. As regards issue relating to pecuniary jurisdictions of the Deputy Commissioner, Inland Revenue, Lahore the learned counsel for the registered person contended that issuance of show- cause notice and on the basis thereof passing the order-in-original was without jurisdiction as having been issued/passed by an officer of Inland Revenue not competent in terms of S.R.O.
555(1)/1996, dated 1-6-1996 holding the field at the relevant time on omission of section 45 of the Sales Tax Act, 1990 vide ,Finance Act, 2010. He submitted that the pecuniary jurisdiction of the Deputy Commissioner was to deal with the cases involving amount of tax no exceeding one million rupees whereas the show-cause notice was issued for alleged inadmissible input tax adjustment exceeding such limit, thus, the Deputy Commissioner, Inland Revenue, was not competent to issue to show cause notice dr adjudicate the matter or pass original order being beyond the said monetary limit provided in the above referred S.R.O. He has in this respect advanced the same arguments which have been already discussed in above paras of this order. The learned DR has also argued on the same grounds which has been discussed in the above paras.
21. The learned representatives from both the sides have been heard at a great length and the relevant available record has been perused. We have observed that the main allegation levelled by the audit authorities is that the appellant is involved in a sales tax fraud by claiming illegal input tax adjustment of Rs,21,944,300 and in this manner the provisions of sections 3, 6, 8, 8A, 11, 14, 22, 22, 23, 25, 26, 38 and 73 of the Sales Tax Act, 1990 have been violated. During the court proceedings, the learned counsel for the appellant pressed all the grounds, as are enumerated in the paper book, out of which some are legal while the others are factual. Regarding the issue of Tax Fraud we have already discussed the matter at length and do not want to dilate further.
Coming to the next issue which relates to section 73 of the Sales Tax Act, 1990. We have noted that the appellant as contended by the learned A.R, uses material i,e, waste paper etc. Which are locally purchased and processed. To support this assertion monthly electricity bills for the months 8/2006, 10/2009, 11/2009, 12/2009, 2/2010, 3/2010 and 4/2010 and the sales tax returns for the corresponding months showing supplies made to verified purchases, were submitted to prove that the manufacturing unit was operative and consumed the raw material. Now, it is imperative to state here that the appellant purchased the raw material and consumed the same and supplied the manufactured goods to other verified parties and in all this eventuality there hardly seems any fraud and dishonesty. We have also noted that the appellant made all the payments against the said purchases after fulfilling all the legal requirements of provisions of section 73 of the Act, 1990.
' Coming to the last issue which relates to section 8A, the joint and several liabilities of registered persons in supply chain where tax is unpaid, during the court proceedings, the learned counsel for the appellant contended that this fact was never in the knowledge of the appellant that the supplier is not making payment of the tax due to him since July, 2006 and even the department was unaware that the supplier are not making payment of tax whereas the alleged fake suppliers were duly registered with the department and were regularly submitting their monthly sales tax returns and summaries. We are, therefore, of the view that the appellant cannot be evolved as a joint liable and the induction of the appellant's contravention does not quality. Such non-speaking orders have been declared null and void by the superior courts. Reliance in this respect is placed on the judgment reported as GST 2004 CL 71, GST 2003 CL 562 and GST 2004 CL 79.
We have also find force on the contention of the learned counsel of the appellant that the application of any rule/law is always applicable prospectively and not retrospectively.
' Following case-law regarding Blacklisted Suppliers/Blocked/ Suspended has also been referred.:- - 2011 PTD (Trib.) 2822, 2011 PTD (Trib.) 866 and 2010 PTD (Trib.) 1631.
' The issue of pecuniary jurisdiction of the officers of Inland Revenue under S.R.0.555(1)/1996 dated 1-6-1996 has already been settled by another bench of this Tribunal in S.T.A. No,531/LB of 2011 and S.T.A. No,578/LB/2011 and we concur with the findings in the said judgment. Consequently, it is held that the Deputy Commissioner Inland Revenue and Assistant Commissioner Inland Revenue who issue the show cause notice and passed by order-in-original therefore, cannot be assumed to have been passed under the particular statute and is held to be void ab initio.
The nut shell of above discussion is that the investigation audit conducted by the officials of the Directorate General Intelligence and Investigation was without jurisdiction, in defiance of Board's instructions issued vide letter dated 15-11-2010; the officials of the Directorate General Intelligence and Investigation cannot exercise powers of Inland Revenue Officers unless notification under section 30A of the Sales Tax Act, 1990 is issued appointing such officers; and the show-cause notice and order-in-original passed by the Deputy Commissioner Inland Revenue and Assistant Commissioner Inland Revenue were without pecuniary jurisdiction in terms of S.R.0.555(1)/1996. It is further held that acts of omission and commission taken without jurisdiction are illegal and void ab initio and no action can be taken against the taxpayer in pursuance thereof.
' Consequently, the CNS, orders of the authorities below are hereby annulled and the appeal of the appellant registered person stands accepted.
22. Both the appeals and the two applications regarding additional grounds stand disposed of in the manner referred above.