The titled sales tax appeal has been filed by the registered person against the Order-in-Appeal No.5 dated 23-7-2013 passed by the CIR (Appeals) in the appeal filled by the registered person against the assessm ent order dated 9-4-2013 passed by the DCIR, Audit Unit-01, RTO, Lahore.
2. Brief facts giving rise to the present appeal are that the appellant claimed input tax adjustment amounting to Rs.3,258,205 on account of invoices of blocked/suspended suppliers. Consequently, show-cause notice was issued. The submissions made by the registered person were not found satisfactory. The assessing officer passed an order directing the registered person to deposit sales tax amount of Rs.3,285,205 along with default surcharge under section 34 of the Sales Tax Act, 1990.
A penalty equal to 100% of the amount was also imposed upon the appellant. Being aggrieved the registered person went in appeal before the learned CIR(Appeals-II), Lahore who upheld the treatment given by the DCIR. Hence this appeal before the Tribunal.
3. The learned AR for the registered person submitted that as per 1st proviso of section 11(5) of the Sales Tax Act, 1990 the assessm ent Order No.97/2012 dated 9-4-2013 was required to be made with 120 days of the issuance of show-cause notice or within such extended period as the Commissioner may for reasons to be recorded in writing, fix, provided that such extended period shall in no case exceed 120 days. It was further submitted that as per 1st proviso of subsection (5) of section 11 of the Sales Tax Act, 1990 the order of DCIR shall be passed not later than 120 days from the date of filing of appeal or within such extended period as the DCIR may for reasons to be recorded in writing, fix and such period shall no case, exceed 120 days. The assessment order dated 9-4-2013 was received on 16-4-2013 was passed after a lapse of 241 days from the date of issue of show-cause notice i.e. 15-8-2012. The learned AR submitted that the order passed after the stipulated mandatory period was, therefore, illegal and unlawful. Reliance was made to:-- "Messrs Super Asia Muhammad Din Soris (Pvt.) Limited 2008 PTD 60: Messrs Hanif Sraw Board Factory v. Collector (Adj) Customs Central Excise and Sales Tax, Gujranwala and 2 others 2008 PTD 578 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."
The learned AR also relied on the reported case cited as 2010 PTD (Trib.) 81 whereby it was held as under:-- "If the Central Board of Revenue granted extension on 1-2-2006, it was beyond its jurisdiction, as the extended period 90 days had already expired. Such being so, it remained to answer as to why the Government was revising the limitation period from 45 days to 90 days and then from 90 days to 120 days, if such limitation had no legal consequences - appeal was accepted, order in original as well as the order in appeal were set aside and the show-cause notice was vacated by Appellate Tribunal."
The order passed by the DCIR is hit by limitation and as such barred by time as the first show- cause notice was issued on 15-8-2012 whereas the assessment order was passed on 9-4-2013. The impugned order passed on 9-4-2013 was, therefore, hopelessly barred by limitation. He further argued that it has been settled by almost all forums that time limit under section 36(3) is mandatory because a public functionary is empowered to create a liability against a citizen. The learned DR, on the other hand, could not dislodge the fact that the assessment order was passed after the expiry of prescribed period under the law. The learned DR further submitted that the time limit prescribed in section 36 of the Act is directory and not mandatory.
4. Arguments heard. Record perused.
5. We have observed that in the present case show-cause notice was issued on 15-8-2012 and the assessm ent order was passed on 9-4-2013 while maximum time limit as envisaged section 36(3) of the Sales Tax Act, 1990 already stood expired. The reported judgments relied upon by the learned AR are also on all fours to the case of the registered person. The claim of the revenue that the prescribed limitation for completion of adjudication proceedings is merely directory cannot be accepted. It is settled law that where inaction on the part of a public functionary within the prescribed time is likely to affect the rights of a citizen the prescription of time is deemed directory.
However, where a public functionary is empowered to create liability against a citizen only within the prescribed time, it is mandatory. The acceptance of contention of the revenue in that regard will make a provision of law redundant and nugatory. Honourable Lahore High Court has held in Messrs Super Asia Muhammad Din and Sons v. Collector of Sales Tax cited as 2008 PTD 60 that redundancy or superfluity of an Act of Parliament and a provision of law cannot be readily accepted. All the more so when the prescribed limit is beneficial for the citizen and restricts the executive power to touch the pocket of a tax payer thereby creating certainty that after its expiry even if there was a good case for creation of liability he will not be dragged in.
6. Admittedly the order-in-original in the present case was passed beyond the prescribed maximum time limit, moreover the adjudicating authority had neither fixed any extended period nor has in the instant case recorded any reasons for passing of the order after the period prescribed under the law. It is a settled law that once limitation had started to run and had come to an end the assessee acquires a vested right of escapement of assessment by lapse of time.
Honourable Supreme Court of Pakistan in re: Nagina Silk Mill, Lyallpur v. The Income Tax Officer and the Income Tax Appellate Tribunal, Pakistan (PLD) 1963 SC 322) observed as under:-- "Even if two interpretations are equally possible, the one that saves vested rights would be adopted in the interest of justice, specially where we are dealing with a taxing statute. The appellant herein had already acquired the vested right of escaping assessment, by lapse of time, when the 1960 Ordinance was enforced. In all probability, the Legislature never intended that the period of limitation prescribed in the Act should become variable with the changes in the "financial year" or "year" inserted in the Act for certain. other purposes, namely, to accord with the new accounting years adopted by Government" (underlined for emphasis).
7. In view of the above discussion and the case-law cited supra the appeal is accepted and the impugned assessm ent order being passed after the lapse of statutory period is declared to have been made without lawful authority and of no legal effect.
8. As the impugned order being passed after the lapse of statutory period has been held to be without jurisdiction, the remaining issues do not need to be dealt with as per the principles laid down in the case of "Assistant Collector Customs and others v. Messrs Khyber Electric Lamps and others" 2001 SCMR 838.