The captioned appeal has been directed against the Order-in-Appeals Nos, 340 and 341 dated 21-8-2013 passed by the Commissioner Inland Revenue (Appeals) Multan on the following grounds: --
(1) "That the Commissioner Inland Revenue, (Appeals) was not justified to uphold the order-in- appeal, as framed by the assessing officer on mere assumptions without applying an independent and judicial mind and hence the order is contrary to the provisions of law as well as facts of the case, which merits deletion.
(2)That the order-in-appeal, as framed by the Commissioner Inland Revenue, (Appeals) is just on mere assumptions and without considering the submissions of the appellant, which is contrary to the norms of justice.
It is pertinent to mention that the para-wise comments, as submitted by the department, has been reproduced by the worthy Commissioner Inland Revenue, (Appeal), without considering the submissions of the appellant.
(3)That the Commissioner Inland Revenue, (Appeals), once again, was not justified to hold that the appeal filed by the taxpayer is barred by time, as the order-in-original was not served to the appellant and hence the order is unjustified and contrary to the provisions of law, which merits deletion.
Please note that the attested copy of order was issued to the taxpayer on 30-5-2013; which is duly evident from the copy of order-in-original Reliance is also placed on judgment of the Honourable Appellate Tribunal Inland Revenue, vide S.T.A. No, 84/IB/2011 dated 4-12-2012 wherein it has been held that "the registered person filed an appeal within the prescribed time on receipts of certified copy of order-in-original"
(4)That the assumption of jurisdiction by the Additional Collector of Customs, Sales Tax and Central Excise, Multan, to frame the order under section 36(I) of the Sales Tax Act 1990 is illegal and unlawful, as Rule 6 of Special Procedure for Ginning Industries Rules, 1996 does not allow him to frame an order against the appellant without having its jurisdiction over the case and hence the order as framed by the Additional Collector, is without jurisdiction, which is not tenable in the eyes of law.
It is pertinent to mention that the appellant is registered within the jurisdiction of Collectrate of Sales Tax, Faisalabad".
(5)That Collector of Customs, Sales Tax and Central Excise, Multan may frame the order to direct the "ginners" not to supply ginned cotton to the buyers, against the contravention of sub-rule (3), as contemplated in the provisions of sub-rule (5) of Rule 6 of Special Procedure for Ginning Industries Rules 1996 and hence the order is contrary to the provisions of law and merit deletion.
(6)That the order-in-original, as framed by the Additional Collector of Customs, Sales Tax and Central Excise, Multan, is just on mere assumptions, without providing an opportunity of being heard and hence the ends of justice are not met by the ex-parte order.
(7)That the show-cause notice, as issued to the taxpayer, is invalid and contrary to the provisions of law, as the same does not disclose any specific transaction, against which the alleged sales tax is payable by the appellant and hence the notice is invalid and unlawful.
Reliance is also placed on a judgment of the Honourable Inland Revenue Appellate Tribunal reported as (2011 PTD 808).
(8)That the Additional Collector of Customs, Sales Tax and Central Excise, Multan was not justified to put the allegation of deliberate act, as envisaged under section 36(1) of the Sales Tax Act, 1990, without any proof of collusion or deliberate act and hence the charge of Sales Tax under section 36(1) is unjustified and unreasonable.
Reliance is also placed on judgments of the honourable Customs, Central Excise and Sales Tax Appellate Tribunal reported as [GST 2002 CL 270] ((CESTAT. Bench-11, Lah.), wherein it has been held that: "In the absence of any details or allegations regarding collusion or deliberate act being cause of short levy, it could not be said that notice has been issued under section 36(1), ".
(9) Without prejudice to the grounds 1 to 8 above, the Additional Collector of Customs, Sales Tax and Central Excise, Multan was not justified to charge the Sales Tax under section 36(1), amounting to Rs,6,638,742 in terms of Rule 6 of Special Procedure for Ginning Industries Rules, 1996, on mere assumption which is contrary to facts as well as provisions of law and hence merit deletion.
It is pertinent to mention that the "catton", as alleged in the notice, was never procured by the taxpayer and hence the order is contrary to the facts as well as provisions of Law.
Without prejudice to the grounds 1 to 8 above, the Additional Collector of Customs, Sales Tax and Central Excise, Multan was not justified to impose penalty under section 33(4), on mere assumption which is contrary to provisions of law and hence not tenable in the eyes of law."
2. The facts leading to the filling of both the appeals are that the appellant has not paid the sales tax against the procurement of ginned cotton from various ginners, under the Special Procedure for Ginning Industries Rules, 1996 during the relevant months. Show-Cause Notice was issued on 26-12-2006 and 13-5-2006 respectively and orders in original were framed on 8-2-2007 and 27-7- 2007 respectively on ex parte basis and levied sales tax to the tune of Rs,6,638,742 for the tax period September, 2001 to May, 2004 and Rs,320,289 for the tax period April 2004 respectively under sections 11(2) and 36(1) along with default surcharge under section 34 and penalty under section 33(19) of the Sales Tax Act, 1990. Being, aggrieved by the said order the appellant filed appeal before this Tribunal.
3. We have heard the learned counsel for the appellant and have also gone through relevant orders and case-laws cited. The learned A.R has vehemently argued that the Commissioner Inland Revenue (Appeals) was not justified to uphold the order-in-original on mere assumptions, without applying an independent and judicial mind. He further added that worthy Commissioner Inland Revenue (Appeals) was not justified to hold that the appeals filed by the appellant are barred by time, as the orders A were not served to the taxpayer and that the appeals were filed well in time after the receipt of attested copies of orders-in-original. Reliance, in this regard, was also placed on the judgment of this tribunal in S.T.A. No, 84/LB/2011 dated 4-12-2012. The learned A.R. further contended that the assessing authority erred in law while passing the impugned order and the order has been passed without jurisdiction. He contended that the order framed by the assessing officer is illegal and unlawful, as Rifle 6 of Special Procedure for Ginning Industries Rules, 1996 does not allow him to frame an order against the appellant without having its jurisdiction over the case and hence the orders as framed by the assessing officers are without jurisdiction. A.R. stated that the appellant unit was registered in RTO Lahore for income tax purpose and RTO Faisalabad for sales tax purposes. For his stance A.R. produced a letter from RTO Faisalabad which confirms the stance of appellant. He further added that the Collector of Customs, Sales Tax and Central Excise, Multan may frame the order to direct the "ginners" not to supply ginned cotton to the buyers, against the contravention of sub-rule (3), as contemplated in the provisions of sub-rule (5) of Rule 6 of Special Procedure for Ginning Industries Rules, 1996 and hence the orders-in-original are contrary to the provisions of law. To substantiate his arguments with regard to the issue of the case, the learned A.R. relied upon various Judgments including 2002 SCM R 122, 2008 SCM R 240.
The A.R further stated that the order-in-original is time barred and issued SCN is vague and defective. Further added by the A.R. that the appellant did not procure any ginned cotton from alleged suppliers so the action of assessing officer is based on mere assumptions. The learned AR contended that the output liability against the spinning of yarn has duly been discharged by the appellant during the relevant tax periods and nothing was left outstanding, which could have been adjusted against input tax.
4. The learned D.R. on the other hand, has opposed the arguments advanced by the learned A.R.
The learned D.R. argued that the orders-in-originals, as framed in the case, are in accordance with the provisions of law, as the appellant did not respond to notices issued by the assessing officer and hence the action of the assessing officers is justified.
5. Both the parties have been heard and relevant record perused. After perusal of record it reveals that the first appellate authority did not apply his independent judicious mind while adjudicating the issue of limitation of filing of appeals. It is observed that the date of service of order-in-original, as mentioned by the first appellate authority in his appellate order i,e, "receipt No, 617 dated 26-12- 2006" is contrary to the facts of the case, as the same is in fact the date of issuance of "show cause notice" and not order-in-original, which is duly evident from the copy of show-cause notice available on file. It is worth mentioning that the show-cause notice, bears C.No, 123/2006/Adj/ST/Add1/7823 dated 26-12-2006, whereby it is crystal clear that the date of service of order-in-original, i,e, 26-12-2006, as recorded in the appellate order is just misleading and contrary to the facts of the case. It is an admitted fact that the attested copies of orders-in-original were issued to the appellant on 30-5-2013 and hence appeals filed by the appellant with the Commissioner Inland Revenue (Appeal) are well in time. Moreover, it is also observed that the first appellate authority did not consider the submissions of the appellate and just reproduced the para-wise comments filed by the department during the course of appeal proceedings in the case. Further there was no allegation of collusion or deliberate act; hence the conditions laid down in the section 36 have not been complied with. Taking up the issue with regard to the issuance of the SCN under section 36 of the Act, we are constrained to observe that the conditions, as laid down in section 36 ibid have not been complied with at all. At this juncture, it would not be out of place to reproduce section 36(1) which is as follows:-- "Where by 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 or the amount of refund erroneously made shall be served with a notice, within five years of the relevant date, requiring him to show cause for payment of the amount specified in the notice."
6. Bare perusal of the aforesaid section clearly shows that there is no allegation of collusion or deliberate act as provided in section 36 of the Act. In this respect, judgment of the Lahore High Court reported as 2007 PTD 2265 is also on all fours to the case of appellant, wherein it has been held that:-- "10. To put it succinctly, show-cause notice can only be served under section 36 ibid, (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 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 jurisdictional facts, the taxing authorities shall have no power or jurisdiction to serve a show-cause notice under section 36 ibid"
7. We must observe that following the ratio laid down in the aforesaid judgment, we have no option but to conclude that proper show cause as envisaged under section 36 was not issued, so proceeding conducted in pursuance thereof could not be held legal proceedings.
8. As for the issue of jurisdiction is concerned it transpires from the order that impugned orders were passed against the appellant by the Additional Collector/Deputy Collector of Customs, Sales Tax and Central Excise, Multan. It has been observed that Collector of Customs, Sales Tax and Central Excise, Multan could have framed orders, to direct the "ginners" not to supply ginned cotton to the buyers, in contravention of sub-rule (3), as contemplated in the provisions of sub-rule (5) of Rule 6 of Special Procedure for Ginning Industries Rules, 1996 and hence it is crystal clear that "Ginning Industries Rules 1996" does not authorize him, to create the sales, tax demand against the taxpayer, against whom the jurisdiction does not lies with him. The E assessing officer could have passed on the information to the concerned collectorate (Faisalabad). As the unit was existing at Faisalabad Collectorate for sales tax purposes, hence it seems a clear violation of law has been done by the adjudicating officer. In this regard reliance was also placed on judgments cited as 2002 SCM R 122, wherein the Hon'able Supreme Court held that:-- "Where essential feature for assumption of jurisdiction is contravened or forum exercise powers not vested in it, or exceeds authority beyond limits prescribed by law, the judgment is rendered coram non judice and inoperative". In case 2006 SCMR 1713 it has been observed " By now it is well settled that any order which suffers from patent illegality or is without jurisdiction, deserves to be knocked down" PLD 1958 SC 104, PLD 1973 SC 326, PLD 2002 SC 630, 2003 SCMR 50, 2004 SCMR 28, 2004 SCMR 1798 in this regard has also been referred."
In nutshell, order passed by the Assessing Officer is declared without jurisdiction and hence is illegal, null and void. Since the instant appeal has been decided purely on legal premises, we do not feel the necessity to dilate upon the merits of the case.
9. For the foregoing discussion and in view of all aspects the appeal is disposed of as above.