The appellant/Registered person through the titled appeals has called in question the two separate orders passed by the learned Commissioner Inland Revenue Appeals in a manner that S.T.A. No.402/LB/2013 is directed against the CIR (A)'s Order-in-Appeal No.268/2013 dated 11-4-2013, whereas the S.T.A. No.403/LB/2013 is directed against the learned CIR(A)'s Order-in-Appeal No.235 of 2013 dated 8-4-2013. By this consolidated order titled both the appeals are being disposed as under.
2. Commonly facts in brief are that, as a result of inquiry/ investigation by the Intelligence and Investigation Wing of FBR against the suppliers of the registered person, that the proceedings for conducting the audit were also undertaken by the RTO Faisalabad against the appellant/registered person on the recommendation of Intelligence and Investigation wing FBR.
3. The audit proceedings against the appellant/registered person were separately concluded for the Tax Periods from July 2006 to June, 2010 by passing the Order-in-Original No.21/2012 dated 24- 8-2012 and for the Tax Periods July 2010 to June 2011 by a separate Order-in-Original No.22/12 dated 18-9-2012. Prior to passing these two Orders separate two show-cause notices each dated as 2-5-2012 and 31-5-2012 were issued respectively for each order-in-original. In these show- cause notices inter alia the issue of illegal/ unlawful adjustment of input tax was the predominant issue.
4. During the course of audit proceedings, the record as called for/ requisitioned was duly provided so statedly discrepancies were discovered. The learned Commissioner Inland Revenue (Appeals) rejected the appeals of the registered person/appellant except on the issue of late filing of monthly sales tax returns where the stance of the appellant/registered person was accepted.
5. Precisely the undisputed facts and issues arising from record and from the submissions of both the parties are as under:--
(I) The Sales Tax affairs of suppliers of the appellant/registered person were subjected to investigation by the Intelligence and Investigation Wing of FBR. Due to detection of certain discrepancies in the record of suppliers of the appellant/ registered person that the admissible input tax claimed by the appellant/registered person was not merely disallowed but demand was created without denying that payment by the appellant/registered person has already been made to such suppliers. The reason for it was given that the suppliers have not deposited the sales tax in the Government treasury an amount equal to the input tax claimed by the appellant/registered person, so again the amount was ordered to be deposited by the appellant/registered person.
The charges of collusive arrangements with the suppliers, element of fraud and non deposit of sales tax are not levelled against the appellant/ registered person.
(II)The show-cause notices were issued by the Assistant Commissioner Inland Revenue whose assumption of jurisdiction on the point of quantum of tax involved was challenged due to pecuniary jurisdiction expressed in S.R.O. 555(I)/96 dated 1-7-1996.
(III)All the suppliers of the appellant/registered person were compliant and active on the FBR portal in the impugned tax periods when supplies were made by issuing the sales tax invoices to the appellant/registered person.
(IV)It is much later to making of supplies and issuing of sales tax invoices that suppliers were black listed or suspension of registration took place.
6. The learned AR firstly on the issue of recovery of inadmissible input has made submission by drawing our attention to recent judgment of Honourable Lahore High Court in a Writ Petition No.3515 of 2012 titled as DG Khan Cement Company v. FOP and others dated 2-8-2013, whereby the provisions section 8(1)(ca) of Sales Tax Act, 1990 have been struck down by holding the same as unconstitutional. This submission was particularly made in reference to S.T.A. No. 403/LB of 2013. The learned AR has further made submission that show-cause notices clearly suffer from the defect in assumption of jurisdiction as the Assistant Commissioner Inland Revenue exceeded the limitation/ authority expressed in S.R.O. 555(1)/96 dated 1-7-1996, as its authority was restricted to adjudication of the cases were sales tax involved do not exceed Rs.500,000, here in both these appeals the show-cause notices issued far exceeded prescribed mandatory limit. The SRO ibid was rescinded on 1-6-2012 vide S.R.O. 594(1)/2012 which was made effective from 2nd June 2012, secondly with the insertion of section of 72A in the Sales Tax Act, 1990 the designation of the Assistant Collector was to be read as Assistant Commissioner Inland Revenue. The learned AR concluded this submission that with this back ground of the issue both the show-cause notices have become illegal void ab initio so may be declared as cancelled and withdrawn. In support of these arguments the learned AR referred to number of orders of this Tribunal.
7. The learned AR has further argued that at the time of making the supplies, the suppliers were compliant active operational registered persons and were not black listed; their registration was not even suspended, so adversely affecting retrospectively the appellant/registered person without any fault on its part is not permissible in law. The learned AR referred to a Judgment of Honourable Supreme Court of Pakistan in the case Government of Pakistan v. Messrs Village Development Organization cited as 2005 SCM R 492. The respondent department has failed to establish any violation of sales tax law on the part of appellant/registered person. The learned AR has forcefully argued that the appellant/registered person has been victimized as a result of investigation carried out regarding the affairs of its suppliers. Despite failure to discover any instance of not paying the amount of sales tax to the suppliers, yet recovery of sales tax was enforced on the appellant/registered person which amounts to twice recovery of sales tax, thus the admissible input sales tax claimed by the appellant/registered person was unlawfully/illegally disallowed for the reason that suppliers of the appellant/ registered person have not deposited its amount of tax which has been claimed as input tax. The learned AR further pointed out that it is by way of a bald allegation that the appellant/registered person had been made liable to pay sales tax which has already handed over to the suppliers, importantly, the incident of which has not been challenged. The learned AR by referring to principles of consistency and stare decisions argued for following the early orders of this Tribunal for allowing the relief claimed by particularly referring to an earlier order with S.T.A. No. 638/LB/2012 dated 12-10-2012. The learned AR read out before us the relevant paras in support of arguments advanced by him. The learned AR in support of his contention also produced Photo copies of orders in S.T.A. No. 317/LB/2011, S.T.A. No.135/LB/2011, S.T.A.
No. 434/LB/2011, S.T.A. No.435/LB/2011 and S.T.A. No.1402/LB/2008 dated 5-9-2009.
8. On the other the learned DR supported the order passed by the learned Commissioner (Appeals) and also each and every action in the form of show-cause notices and the subsequent orders. The learned DR argued that pecuniary jurisdiction has lost its relevance with the omission of section 45 from the Sales Tax Act 1990. The learned DR submitted that S.R.O. 555(I)/96 dated 1-7-1996 is only in respect of officers of Collectorates and not the officer of Inland Revenue.
9. The arguments and the counter arguments have been heard. The available record has been perused. The case-law cited before us has been minutely studied.
10. To avoid the repetition of facts and arguments, here it is very pertinent and relevant to mention that earlier when exactly identical issues were brought before this Tribunal that it is by elaborately stating the facts that orders were passed. As far as the facts are concerned there is no variance with the facts of appeals which are in hand for adjudication.
11.At the very outset we feel no hesitation in pointing out that the issues which have come before us in the instant both the appeals have already been adjudicated by the earlier orders of this Tribunal.
For quick reference and easy comprehension the concluding part i.e. para 6 of the order passed in S.T.A. No.638/LB/2012 dated 12-10-2012 is reproduced as under:-- "6. We have heard the learned counsel for the registered person as well as learned DR, perused the record and the case-law cited at the bar. The show-cause notice and the adjudication were held in term of section 11(2) and section 36 of the Sales Tax Act, 1990. The board in exercise of powers conferred by subsection (2) of section 11 and section 36 of the Sales Tax Act, 1990 had authorized the officers of the Sales Tax specified in the said notification to adjudicate the cases involving assessm ent of sales tax, charging of additional tax, imposition of penalty and recovery of amount erroneously refunded subject to limitation and conditions as specified in S.R.O. 555(1)/1996 dated 1- 7-1996. According to the said notification, the Assistant Commissioner, Inland Revenue was competent vide Serial-2 of the Table to said S.R.O. to adjudicate cases falling under sections 11(2) and 36 of the Sales Tax Act, 1990 provided that the amount of tax involved does not exceed five hundred thousand rupees. The designation Assistant Collector, Additional Collector and other officers of the sale tax where-ever appearing was to be read as Assistant Commissioner Inland Revenue, Additional Commissioner Inland Revenue etc by virtue of section 72A of the Sales Tax Act, 1990 which reads as under:- "72A. Reference to authorities...Any reference to collector, Additional Collector, Assistant Collector, Assistant Collector, Superintendent, Senior Auditor and an officer of Sales Tax, where-ever occurring, in this act and the rules, notifications, clarifications, general orders or orders made or issued thereunder, shall be construed as reference to Commissioner Inland Revenue, Additional Commissioner Inland Revenue, Assistant Commissioner Inland Revenue, Superintendent Inland Revenue, Inland Revenue Audit Officer and an officer of Inland Revenue, respectively."
Perusal of the aforesaid provision clearly shows that the Assistant Collector appearing at serial-2 of the Table to S.R.O. 555(1)/1996 dated 1-7-1996 shall be construed and read as Assistant Commissioner, Inland Revenue and as such the objection of the learned DR that since the Assistant Collector was mentioned in the said notification, thus, it would not apply to the Assistant Commissioner, Inland Revenue is without any substance. It is an admitted position that the tax involved in this case was much beyond the monetary limit prescribed for adjudication of the cases by the Assistant Commissioner Inland Revenue as serial-2 of the Table to S.R.O. 555(1)/1996 dated 1-7-1996 and the said S.R.O. remained as the field till 1-6-2012 when it was rescinded by the Federal Government vide S.R.O. 594(1)/2012 dated 1-6-2012. While rescinding S.R.O. 555(1)/ 1996 dated 1-7- 1996, the Federal Government specifically mentioned that the rescinded S.R.O. shall take effect on and from the 2nd day of June, 2012 meaning thereby that the earlier notification prescribing the pecuniary jurisdiction of the various officers was very much in the field till 1-6-2012 and the contention of the learned counsel for the registered person that the show-cause notice and superstructure built there upon by way of original order and the impugned order was without jurisdiction and coram non judice has force and the case law relied by him fully supports his contention as the Hon'ble Supreme Court of Pakistan in case "Izhar Alam Farooqi, Adovate v. Sheikh Abdul Sattar Lasi and others" (2008 SCM R 240) has held that the institution specifically barred to adjudicate any matter to the extent of certain mandatory limits shall not be competent and had no jurisdiction to deal with any such matter exceeding such mandatory limit subscribed under the law. Honourable Supreme Court of Pakistan has held in case of Sardar Ahmed Yar Khan Jogezal v.
Province of Balochistan 2002 SCM R 122 that "where essential feature for assumption of jurisdiction is contravened or forum exercises powers not vested in it, or exceeds authority beyond limits prescribed by law, the judgment is rendered coram non judice and inoperative". Honouable Supreme Court of Pakistan in re" Faqir Abdul Majeed Khan v. Distt. Returning Officer and others 2006 SCM R 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 SCM R 50, 2004 SCM R 25, 2004 SCM R 1798."
It is further pointed 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 another 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.578/LB of 2011 and Messrs Ibrahim Steel Casting, Dewab Nagar Road, More Emanabad, Gujranwala v. Commissioner Inland Revenue (Appeals)" vide order dated 6-4-2012 passed in S.T.A. No. 55/LB/2012. In the said cases, it was held that the show-cause notice issued by the Assistant/Deputy Commissioner was beyond his pecuniary jurisdiction in term of S.R.O. 555(1)/1996 dated 1-7-1996 and we find ourselves in full agreement with the aforesaid judgments. In nutshall, show-cause notice and order in original passed by the Assistant Commissioner, Inland Revenue, Lahore were beyond his pecuniary jurisdiction as mentioned in S.R.O. 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 ab initio and no action can be take n against the taxpayer in pursuance thereof as held in the case cited as 1996 SCM R 153 "Messrs Kamran Industries v. Collector of Customs (Exports), Karachi and 4 others".
12.In this quoted order it is by following the Judgments of the Honourable superior judiciary and orders of the Tribunal that the appeal of the registered person was accepted and relief prayed for was allowed. In this order dated 12-10-2012 in S.T.A. No. 638/LB/2012 the show-cause notices exactly in identical situations have been held to be without jurisdiction and coram non judice and without law full authority, so by following our early orders we hold that both the show-cause notices as coram non judice and without law full authority, the super structure built on such show-cause notices is also to meet the same fate and are held as of no legal consequence, the order passed by the learned CIR(A) could hardly be taken as an order because it is simply repetition of working of Intelligence and Investigation Wing of FBR, and reproduction of what is given in the show-cause notices and orders in original, the factual and legal controversies has not been resolved, no finding have been recorded for establishing the correctness of department's stance. The contentions taken by the registered person in support of its stance have been left unattended and also the applicability of the relevant provisions of law have been left to be sorted out by this Tribunal.
13.On the facts, it is essential to clearly record our findings that the department has not brought out any case for making the appellant/ registered person liable to impugned sales tax demand due to its nonpayment to suppliers or committing any fraud against the Government.
14.Keeping in view the findings supra the appeals are accepted. Both the Impugned orders passed by the learned CIR(A) are set aside, the show-cause notices are held to be illegal without jurisdiction so both the orders in original are declared null and vide and of no legal consequence.
Both appeals succeed.