' The titled appeal has been filed under section 46 of the Act at the instance of the taxpayer, assailing Order-in-Appeal No, 258 of 2012 dated 17-7-2012, passed by the learned CIR(A).
Faisalabad whereby he while rejecting the appeal of the taxpayer has upheld the findings recorded by the learned Officer of Inland Revenue, Faisalabad.
2. Before, we proceed in the instant matter; we shall take up the miscellaneous application for additional grounds filed on behalf of the registered person wherein it was requested that some legal objections could not be taken in memo. Of appeal due to inadvertence, mistake and error which may be allowed to be argued at this stage. After having heard both the sides, we are of the considered opinion that any legal issue can be raised at any stage of adjudication of the case and the taxpayer has all rights to raise any new or additional legal issue for the first time before the Appellate Tribunal even though not set forth in memorandum of appeal filed before this Tribunal or even if it had not been raised before the original stage of adjudication or at the time of first appeal before the CIR(Appeals) and when any such new or additional ground is raised before the Tribunal, it is duty bound to entertain that ground and render a decision thereon. The Sales Tax Act, 1990 does not contain any express provision debarring a taxpayer from raising an additional ground for the first time and there is no provision in the Act placing restriction on the powers of appellate authority in entertaining the same and in order to dispense with justice, we therefore allowed the taxpayer to argue the additional legal grounds along with other grounds of appeal already filed for adjudication as by its disallowance, the Courts cannot permit injustice in dispense of justice.
Reliance is placed on the judgment of Hon'ble High Court, Lahore in case of "Messrs Haji Mehr Din v.
Commissioner of Income Tax, Lahore" reported as (2002 PTD 541) and on the judgments of this Appellate Tribunal in case of "Messrs Amtex Ltd, Faisalabad v. C.LR (R.T.0), Faisalabad" reported as 2011 PTD (Trib.) 1140) and in case of "Messrs Naseem Plastic House, Faisalabad v. C.I.R. (RTO), Faisalabad" reported as (2012 PTD (Trib.) 1335).
3. The succinct facts leading to the instant case are that the taxpayer is registered under the Sales Tax Act, 1990 running its business as a manufacturer of paper and paper board. During comparative analysis of his income tax record and sales tax record for the periods 2007 to 2010, it was observed that the taxpayer declared nil sales/ supplies in sales tax records whereas in income tax records, the registered person shows huge sales which established that the registered person has concealed sales/supplies amounting to Rs,199,915,805 and did not charge sales tax worth Rs,31,822,371, Resultantly, a show cause notice bearing C.No, 439 dated 6-10-2011 was issued by the learned DCIR (Zone-II), asking him as to why amount of sales tax worth Rs,31,822,371 may not be recovered under section 36(1) of the Act along with default surcharge and penalty under sections 34-and 33 ibid.
4. Upon submission of written reply to the show-cause notice, the matter was adjudicated by the then Officer of Inland Revenue, who being dissatisfied with the explanation furnished by the appellant/taxpayer upheld the charges as contained therein along with default surcharge under section 34 of the Act and a penalty equivalent to 100% of the amount involved was imposed under section 33(13) ibid vide Order-in-Original No, 07/31 of 2012 dated 3-2-2012. Being aggrieved and dissatisfied with the treatment meted out at adjudication stage, the taxpayer preferred the first appeal before the CIR(A), Faisalabad who also rejected the appeal and now, the taxpayer has come up into the second appeal before this Appellate Tribunal praying for vacation of tax liability.
5. The learned counsel on behalf of appellant has vehemently contended that the impugned show cause notice and consequent adjudication order were passed by the learned adjudicating authorities beyond their pecuniary jurisdiction as provided under S.R.O. 555(1)1 1996. Despite assailing jurisdiction on pecuniary basis to adjudicate upon instant case, the learned counsel further argued that the show cause notice was issued by a higher rank of officer whereas adjudication order was passed thereon by an officer lower in rank therefore, the order was illegal and void ab initio. It was also contended by the learned AR that the huge tax liability has been created merely on the basis of income tax record without having any legal backing for its creation.
He further argued that the impugned show cause notice has been issued under section 36(1) of the Act without, containing any charge-sheet of collusion or deliberate act which renders it nQt only illegal and but also without jurisdiction. At the end, learned counsel, assailed that the impugned orders are not only perverse but also nullity in the eye of law and the same deserves to be quashed because the learned adjudicating authority and the Commissioner (Appeals) without adverting to the questions involved in the case have passed the impugned orders which are not at all speaking orders and cannot be called "judicial orders" within the parameters set up by law. On the contrary, the learned departmental representative appearing on behalf of revenue-department has although opposed the contentions of the learned counsel for the taxpayer but could not bring forth any documentary evidences or case-laws to controvert the contentions of the learned AR and has simply supported the actions of the authorities below
6. We have carefully heard the rival submissions made out by learned, counsel appearing for the respective parties, perused the relevant orders as well as relevant provisions of law and have also considered the case-law cited at bar.
7. From the perusal of record, it appears that in the instant case impugned show cause notice issued by the learned DCIR (Audit-1, Zone-II), RTO, Faisalabad for recovery of sales tax purportedly on account of output tax worked out on sales differential when compared with income tax return and consequent adjudication order passed by the Officer Inland Revenue under section 36(1) of the Act are illegal and without jurisdiction because both the said authorities in its respective designations were not lawfully empowered to adjudicate upon the cases falling under sections 36(1) and 11(2) of the Act beyond their pecuniary limit as provided under Notification No, S R 0.
555(1)196 dated 1st July, 1996 specifying powers of adjudication which was though rescinded vide Notification No, S.R.O 594(1)12012 dated 1st June, 2012 yet was holding the field at the time of adjudication upon the instant case. Subsection (3) of section 36 of the Sales Tax Act, 1990 was very much operative at the time of issuance of show cause notice and passing adjudication order and as such the officer of Sales Tax/Inland Revenue "empowered in this behalf has to issue show cause notice to determine the amount of tax or charge payable by such person and after deletion of section 45 of the Sales Tax Act, 1990, the S.R.O. 555(1)/1996 was_ in field empowering the officers to issue show-cause notice and to adjudicate the matters B under section 36 of the Sales Tax Act, 1990; conversely, in the instant case, impugned show-cause and consequent adjudication order were issued by the officers who were not legally empowered to adjudicate upon the instant case due to its notified pecuniary limits. The impugned show cause notice and consequent adjudication order thus lack jurisdiction and are coram non judice and illegal. It is an elementary principle that if mandatory conditions for exercise of jurisdiction by an Authority, Tribunal or Court are not fulfilled then the entire proceedings which followed become illegal and suffered for want of jurisdiction. Any order passed in continuation of these proceedings in appeal or revision equally suffered from illegality and is without jurisdiction. The learned DCIR as well as Officer of Inland Revenue were not the adjudicating authorities in the cases involving pecuniary amount of more than five hundred thousand and one million rupees respectively under the said notification specifying powers of adjudication. Law favours actions of the E authorities to be confined to their own spheres of jurisdiction conferred by the Statute and any action taken by a tax functionary beyond the ambit of his jurisdiction is a nullity and without jurisdiction. Reliance is placed on the judgment of this Appellate Tribunal in case of "Messrs Chenab Board, Faisalabad v. CIR(A), R.T.O., Faisalabad" reported as (2013 PTD (Trib.) 316). The relevant excerpt of the said judgment is reproduced hereunder: -- "In nutshell, show cause notice and order-in-original passed by the Assistant Commissioner, Inland Revenue, Faisalabad was beyond his pecuniary jurisdiction as mentioned in S.R.O.
555(1)11996 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 ab initio and no action can be taken against the taxpayer in pursuance thereof as held in the case cited as (PLD 1996 Kar. 68) Messrs Kamran Industries v. Collector of Customs (Exports), Karachi and 4 others". In view of above discussions, the appeal is accepted. The impugned order passed by. Learned CIR(A) is set aside and the order-in-original is declared null and void and of no legal consequences.
' The honourable Supreme Court of Pakistan in case of "Faqir Abdul Majeed Khan v. ~Distt Returning Officer and others" reported as (2006 SCMR 1713) has observed as under:-- "By now, it is well settled that any order which suffers from patent illegality or is without jurisdiction, deserves to be knocked down" Re:: (PLD 1958 SC 104), (PLD 1973 SC 326), (PLD 2002 SC 630), (2003 SCMR 50), (2004 SCMR 28), (2004 SCMR 1798)."
8. The impugned show cause notice was issued by the Deputy Commissioner whereas the adjudication order was passed by an Officer of Inland Revenue. Initiation of adjudication proceedings in the form of impugned show-cause notice by an officer having higher rank of Deputy Commissioner and its conclusion in the form of impugned order by an Officer of Inland Revenue having lower rank in designation is not only illegal and unlawful but also against- the settled principle of adjudication as embodied under the special as well as natural laws. Looking the case from the principle of interpretation of Statute i,e, construction by implication, the established principle of law is that where a superior and higher rank authority is exercising its jurisdiction and is of the case, exercise of jurisdiction by a subordinate authority having lower in rank in that case is barred in the absence of any express provision in the Statute to the contrary. The mechanism of exercising powers of the higher authority by that of lower authority in rank is lawfully permitted by the legislation by way of delegation of powers as embodied in the provisions of section 32 of the Act which are very much clear in its tone and tanner that the Board or the Chief Commissioner, with the approval of the Board, may, by an order, empower any officer of lower rank to exercise powers of an officer higher in rank but no written authorization or general delegation of powers giving the specific 'authorization to the Officer of Inland Revenue to exercise powers of the Deputy Commissioner and to adjudicate the case on a show-cause notice issued by the learned DCIR, was brought on record and in the absence of which, it shall be safe to say that the Officer of Inland Revenue had not been delegated with the powers to adjudicate upon the instant case. Even otherwise, through delegation of powers as provided at Clause (D) of subsection (1) of section 32 of the Act, an Officer of Inland Revenue can exercise powers of an Assistant Commissioner Inland Revenue which in no way authorize him to jump into the jurisdiction of Deputy Commissioner IR. In all this, it is to maintain that the learned Officer of Inland Revenue can in no way exercise the powers of a Deputy Commissioner through delegation or otherwise. The learned DR however insisted that the Officer of Inland Revenue can adjudicate the case against a show cause notice issued by an officer higher/senior in rank. The acceptance of contention of the department in this regard will make the provision of law as contained in the section 32 of the Act, redundant and nugatory. Redundancy or superfluity of an Act of Parliament and a provision of law cannot be readily accepted particularly in the cases: where powers are not delegated legally. It is-well- settled principle of law that where a higher rank authority has put his hands to proceed with a case, any attempt by any other authority with lower rank to take cognizance of this matter or to institute proceedings would render the cognizance and proceedings illegal and void ab initio as an authority of lower rank willing to deal with a matter must possess the jurisdiction to deal with the same and if such authority of lower rank does not have that power, the initiation of entire proceedings are liable to be quashed being illegal, ab initio void and coram-non-judice, and whatsoever proceedings in its consequences by way of order-in-appeal shall also become illegal and without jurisdiction. Therefore, proceedings carried out by the learned Officer of Inland Revenue by way of adjudication order is totally in defiance of law and is thus illegal and without jurisdiction.
9. The vital fact in the instant case cannot be ignored that the contravention case has purely been made out merely on the basis of comparison of income tax return with that of sales tax returns for the financial years commencing from 1st July, 2007 ending on 30th June, 2010. Although, there is no bar on an officer of sales tax duly authorized by the Board or the Commissioner under section 38(3) of the Sales Tax Act, 1990 to solicit information of direct or indirect taxes from other revenue divisions or any other department who are legally bound to render necessary assistance in the course of inquiries or investigations yet in the due course, this does not authorize him to use the data or information and figures supplied by the businessman in his income tax, return to be made the basis for assessm ent of sales tax liability however it's the Board who under the provisions of section 38B(3) of the Act may also require in writing any person, department, company or organization, as the case may be, to provide any such information or data held by him for the purpose of formulation of policy or administrating customs, sales tax, federal excise or income tax.
The Board has the powers to administer any direct or indirect tax or to formulate national policy by using the information and data so provided but not its field formations when the provisions of section 38B of the Act are read in conjunction with that of section 38(3) ibid. It is worth mentioning here that the records i,e, "financial statements and income tax return" on which huge sales tax liability was edifice is neither specified as sales tax record under section 22 of the Sales Tax Act, 1990 nor any other provisions of law nor even the appellant was bound to produce such record against notice issued under section 25 of the Act. Therefore, records relating to income tax cannot be made basis for creating sales tax liability against any registered person without any other corroborating material evidences for clandestine removal of goods or receipt of money consideration in the same vein because under the provisions of section 3 of the Act which is the charging section, the sales tax shall be charged, levied and paid on taxable supplies made in Pakistan by a registered person in the course or furtherance of any taxable activity carried on by him and on the goods imported into Pakistan and in the present case, the learned DR has miserably been failed to bring forth any material evidence whatsoever to substantiate its allegation against the appellant. It is a well established principle of law that a party making an allegation must bring material M evidences to prove the same and any action which is based upon no evidence is not permitted by any law of the land. The income tax record can be looked into for the purposes of conducting investigations and if any difference is detected by the detecting agency then it should be substantiated with solid and convincing material evidences by comparing that information with the records maintained under Sales Tax Act, 1990. The department has not been able to produce any material to show that the said amount reflected in the income tax return is in anyway linked with the taxable supplies or with any taxable activities or represent an amount on account of any business activity. Supply of goods is a condition precedent for creating sales tax liability against the taxpayer and without establishing the same and linking nexus of figures shown in financial statement of a taxpayer with that of physical delivery of goods no tax authority can be allowed to create liability of sales tax in a castle build in the air. It is therefore mandatory for the revenue authorities to establish that a transaction falls within the parameters of taxable supplies or in furtherance of any taxable activity, failing which, the sales tax imposed on the basis of some assumption or presumption not warranted in law shall always be struck down. There is no room for any intendment and there is no presumption as to tax. In this context, it is irregular and improper and even illegal to use this data to reassess, impose or collect higher taxes and we find that it is mandatory on the part of the tax authorities to proceed strictly in line with the norms of valuation laid down in the sales tax terms i,e, Taxable Goods defined under section 2(39), Taxable Activity defined under section 2(35), Taxable Supply defined under section 2(41) and Value of Supply defined under section 2(46) of the Sales Tax Act, 1990. These provisions make it obligatory for the tax authorities to proceed in line with and practice the concept of valuation laid down in the aforesaid provisions of law which do not give due weight to factors such as utilizing the information provided in the income tax records, etc for the purposes of sates tax valuation or assessm ent. The income tax information has to be used to determine the correctness of information furnished by a registered person in the sales tax return and it has not to be used for the purpose of calculation of sales tax liability against the registered person. Therefore, assessment of sales tax on the basis of income tax data/record is illegal, unlawful and ultra vires. This principle is very much supported by a judgment of Hon'ble Peshawar High Court in case of "Messrs Al-Hilal Motors Stores and others v. The Collector, Sales Tax and Central Excise (East) Karachi and others" reported as (2004 PTD 868) wherein it was laid down as under:-- "Discovering certain cash credit entities in the books of the appellants without any nexus to taxable supplies cannot be treated as amount received from supplies and therefore is not liable to sales tax. It is apparent that except discovering certain cash credits entries in the books of the appellants, the Revenue Officers have not been able to produce any, material to show that the said amounts are in any way linked with the taxable supplies or with any taxable activities or represent an amount on account of any business activity."
' In the same vein, the honourable Jammu and Kashmir High Court in case of "Muhammad Siddique and others v. Deputy Collector Excise and Taxation, Sales Tax Officer, Mirpur and others" reported as 1990 PTD 1088 has also upheld the similar proposition in the following manners:- "Although in the Writ Petitions, some assessment orders regarding the income tax and some vouchers have been filed by the petitioners to support their claim that their business was in the nature of a small cottage industry. These documents relating to the income tax, in our views, cannot be taken as a valid evidence for the purposes of sales tax. The reason is obvious the income tax is always levied and collected on the basis of income but so far as the sales tax is concerned, it is always to be levied on the goods manufactured and sold by the manufactures."
10. Not superfluously but additionally, no specific charge of 'collusion or deliberate act' has been levelled in the impugned show cause notice under section 36(1) of the Act which renders it illegal and void. In subsection (1) of section 36 of the Act, there are two ingredients viz. (1) !Collusion' or (2) 'deliberate act'; for non-levy or not making payment and merely invocation of section 36(1) of the Sales Tax Act, 1990, without any allegation and material confirming "deliberate act" or "collusion" of the registered taxpayer the impugned notice is illegal and void. For proceeding against the taxpayer under the provisions of section 36(1) of the Act, the show cause notice has to mandatorily specify the reasons of "some collusion or a deliberate act" for the alleged non-levy, short levy or erroneous refund of the sales tax or charge but it is not ascertainable from the grounds and reasons given in the notice whether the appellant knowingly and deliberately not made the payment of sales tax and perusal of show cause reveals that the requirements laid down by section 36 were not met and the department did not allege that the offending acts were deliberate or there stood a collusion, even the allegations are not specific and no evidence to support the same was gathered or provided to the appellant. It is necessary on the part of the department to show that the taxpayers by reason of some collusion or deliberately acted for non-payment of tax.
The impugned show cause notice has failed to reflect whether alleged act of non-payments were the result of collusion or the same was a deliberate step to deceive the 'Government. The onus to prove the allegations of collusion or of a deliberate act lay on the department. When law specifies a particular manner and procedure then it is obligatory for the functionary of the State to adhere to the same and comply with it in all respects and any negligence, failure or omission to do so invalidates the proceedings on account of which whole superstructure raised on such defective foundation automatically crumbles down. As such, the impugned show cause notice being deficient, vague and defective for want of necessary particulars not containing any specific allegations under section 36(1) of the Act and penal clauses attracted thereto, all the subsequent proceedings including order-in-original and order-in-appeal based on such defective and deficient show-cause notice are also illegal, unlawful and coram non judice. The prerequisites for a show cause notice as required by law have not been served to the appellant; therefore, no straightforward demand notice for payment of sales tax could be issued. It is necessary under subsection (1) of section 36 of the Act, to show that the appellant had the knowledge or had the reason to believe that his acts are the result of 'collusion or deliberate' otherwise allegation would be vague and would not be in accordance with law, hence, the impugned show cause notice to this extent cannot be termed a valid show cause notice in its true meanings and the same is liable to be quashed on this ground too. It is the narration of facts in the show cause notice along with the supporting evidences which determines the offence attracted in a particular case and show cause notice is not a casual correspondence or a tool or license to commence a roving inquiry into the affairs of the taxpayer based on assumptions and speculations but is a fundamental document that carries definitive legal and factual vitality upon the department against the taxpayer. The meanings of word deliberate act, clearly establish that for it to be a "deliberate act", the taxpayer must have a premeditated or prearranged plan to evade tax and the evidence must show and establish a calculated stratagem or a game plan behind the transaction tailored for the specific purpose of evading tax. While 'collusion' requires that there must be more than one person scheming to defraud or there must be a conspiracy of a fraudulent act resulting in evasion of tax.
On the whole, unless, there is a deliberate design or collusion between persons to defraud the department and the same is clearly and perspicuously laid out in the show cause notice; mere', mentioning of section 36(1) or mentioning the words 'deliberate act' or 'collusion' in the show 'cause notice will not vest the tax functionaries with the jurisdiction to invoke section 36(1) of the. Act. The legal enforceability and the jurisdictional validity of a show cause notice stems from its contents i,e,, the facts supported by tangible evidences referred to in the show cause notice, and not from cosmetic showcasing of the statutory provisions or statutory key words like 'collusion' or 'deliberate S act' to put on complexion of the show cause notice. The show cause notice is a foundational document, which is to comprehensively describe the case made out against the taxpayer by making reference to the evidences collected in support of the same as also laid down by the Hon'ble High Court, Lahore in case of "Messrs Caretex v. Collector of Sales Tax and Federal Excise and others" reported as (2013 PTD 1506). Validity of a show-cause notice is fundamental to the assumption of jurisdiction by the tax authorities to pass the impugned orders and thus the impugned show-cause notice and subsequent orders have herein been held to be patently devoid of jurisdiction and lawful authority. We further hold that the impugned show-cause notice served upon the appellant by the department was patently illegal and without lawful authority as neither any allegation of 'collusion or deliberate act' as T required and mandatory under section 36(1) of the Act was levelled in the show-cause, notice nor any corroborating and solid evidences proving such collusion with the tax functionaries or deliberate act on the part of a taxpayer itself for evasion of taxes to deceive the government exchequer was given therein, in absence of which, it cannot be said that the show-cause notice has been issued under section 36(1) of the Act therefore, impugned show-cause notice as well as all the subsequent proceedings based thereupon are also liable to be set aside. It is well established principle of law that a person being impeded and penalized with financial burden of taxes must be provided a complete and comprehensive charge-sheet with all evidences in the shoe-cause notice which he could reply and defend as in the financial Statutes money after all does matter. The judgment of honourable Lahore High Court in case of "Messri Inam Packages, Lahore v. Appellate Tribunal Customs, Central Excise and Sales Tax, Custom House, Lahore and 2 others" reported as (2007 PTD 2265) is on all fours to the case of the appellant. The dictum laid down by the Court is 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 reason(s) of 'some collusion or a deliberate act" under subsection (1) of section 36 of the Sales Tax Act or owing to inadvertence or error or misconstruction per subsection (2) thereof and 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-levyshortlevy, or erroneous refund of tax or charge cannot be the 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 reasons which being the dominant factor also determine the period of limitation thereto. In the absence of any of the three conditions or the jurisdictional facts, the taxing authorities shall have no power or jurisdiction to serve a show-cause notice under section 36 ibid."
' The honourable Supreme Court of Pakistan in the case of "Assistant Collector Customs and others v. Messrs. Khyber Electric Lamp and others" reported as (2001 SCMR 838) was also pleased to settle the similar proposition of law i,e, section 32 of the Customs Act (IV of 1969), by holding that:- "Show cause notice under subsections (2) and (3) of section 32 of the Act are two distinct and separate types of notices and different grounds and different period for service of notice in each subsection has been prescribed. Under subsection (2) for non-levy, short-levy or erroneous refund specific allegation of any collusion between the assessee and the Customs Staff has to be levelled with proper particular in the show cause notice which has to be "served within three years of the relevant date whereas under subsection (3) if non-levy, short-levy or erroneous refund is done due to inadvertence, errors or misconstruction then show cause notice to the importer has to be served within six months of the non short levy. If such specific particulars are not stated in the notice, the notice if would be vague and would not be in consonance with the requirement of subsections (2) and (3) of sections 32 of the Act".
' Further that:-- "........It is necessary under subsection (1) of section 32 of the Act to show that the declarant had the knowledge or had the reason to believe that declaration or statement made by him was untrue/false and in the absence of such allegation notice would be vague and would not be in accordance with the law. Similarly, notice under subsection (2) of section 32 of the Act must contain the allegation of collusiveness and notice under subsection (3) of section 32 of the Act should speak of inadvertence, error or misconstruction and without such allegation the notices would be defective and against the law. "- ' In somewhat similar situation and circumstances, this ATIR, Lahore has also declared the show cause notice issued under section 36(1) of the Act as illegal, void and defective in absence of any charge of "collusion or deliberate act" in case of "Messrs Usman Fabrics Pakistan, Faisalabad v.
Collector of Sales Tax, Faisalabad" reported as (2010 PTD (Trib.) 1631). The relevant portion of the judgment is reproduced hereunder:-- "Recovery of tax not levied or short levied or erroneously refunded-Show cause notice--Registered person contended that no charge-sheet with regard to 'collusion or deliberate act' was given in the impugned show cause mace as envisaged under S.36(1) of Sales Tax Act, 1990---Validity--- Proper show cause as envisaged under S.36 of the Sales Tax Act, 1990 was not issued, so proceedings conducted in pursuance thereof could not be held legal proceedings."
11. It is not of least importance that the impugned orders were passed without assigning any reasons and without any material evidences of supply of taxable goods without which these orders cannot be said to have been passed judicially. A plain reading of the impugned adjudication and appellate order passed by the adjudicating and appellate authority show that these are not speaking orders in which all issues raised by the appellant have not been discussed and dealt with properly. A non-speaking and sketchy order cannot be said to meet the requirements of the judicial order, which must contain the contentions raised before the authority by the rival parties and its reasoning based on evidential substance for passing a reasoned order in accordance with the relevant provisions of the Sales Tax Act, 1990 read with section 24-A of the General Clauses Act, 1897. It is now well-settled law that an authority exercising statutory powers of adjudication or appeal affecting valuable rights of the parties act as quasi judicial authority and while exercising these powers must pass a speaking order duly supported by reasoning showing due application of mind to facts as well as law applicable. Any order lacking such criteria is not only illegal and without lawful authority but also of no legal effect. The Superior Courts in number of judgments have time and again disapproved the .Passing of such perfunctory orders in the causes involving valuable rights of the parties and have also settled that in order to maintain the sanctity of both quasi-judicial and administrative proceedings, it is necessary to maintain oversight on the performance of adjudicating authorities whose orders should not be entirely dependent upon the opinions and comments of the reporting officers. The impugned orders are perverse arbitrary fanciful, improper, unfair and based on wrong inference drawn by the learned authorities from the material evidences available on record and thus, the same are illegal, void, non-judicious and non-speaking. The basic ingredients of due process of law for passing a 'judicial order' like notice right of hearing and access to evidences relied upon by the department against the taxpayer and the obligation on the adjudicating authorities to pass a speaking and a well-reasoned written order has now been reinforced as a constitutional command and any determination of rights of a person falling short of due process and fairness of facts is unconstitutional and illegal as also laid down by the. Hon'ble High Court, Lahore in case of "Messrs J.M. Corporation v. Federation of Pakistan, and others" in Writ Petition No,6990 of 2012 dated 12-4-2012.
12. A perusal of show cause notice as well as orders of authorities below show that no case of any tax fraud has been made out whereby the burden of proof can be shifted to the appellant. It has become clear from the definition of "tax fraud" as given under section 2(37) of the Act that in order to attract the provisions of section 2(37) of the Act, initial burden lies on the department to show that the taxpayer, knowingly, dishonestly or fraudulently and without any lawful excuse had done any act or caused any act to be done or has omitted to take any action or has caused the omission to take any action in contravention of duties or obligations imposed under this Act or rules or instructions issued thereunder with the intention of understating the tax liability or underpaying the tax. The initial burden to prove that the provisions of fax fraud were attracted lay on the department and not on the taxpayer and in the instant case, the department has miserably failed to discharge his onus and for this reason charge of tax ,fraud has no legal consequences and the department has been failed to establish any such act against the appellant.
13. In view of what has been discussed above and particularly in the light of law, the whole proceedings are infested with inherent legal infirmities and substantive illegalities tantamount to patent violation of mandatory statutory provisions and that too, in utter disregard of the principles of law settled by the superior judicial fora as quoted supra the impugned show cause notice and consequent orders are set aside being illegal, unlawful and without jurisdiction. Be that as it may, demand created by the department is also held to be illegal, unlawful and is accordingly vacated.
The instant appeal filed by the taxpayer is accepted in the manners and to the extent as dilated supra.
14. Since, we have decided the titled appeal case purely on legal plane therefore, in the presence of legal grounds, there is no need to give our decision or dilate upon the other grounds raised by the appellant.