' The instant appeal has been filed by the appellant/registered person against Order-in-Appeal No. 449 of 2014 dated 4-6-2014 passed by the learned CIR(A), Faisalabad whereby he while maintaining the Order-in-Original No.58/2013 dated 17-2-2014 passed by the learned ACIR (PRA), has upheld the demand raised against the appellant and dismissed the appeal.
2. The facts giving rise to this appeal as stated, are that the appellant is a registered person and engaged in making of zero-rated supplies of textiles and textile articles thereof. As per report of audit team of Post Refund Audit, the appellant has illegally received refund of input tax pertaining to the months from July, 2010 to January, 2013 on the strength of Invoices issued by suspended/blacklisted units. Based on the said omission/irregularities, adjudication proceedings were initiated by the taxation officer by way of issuance of show-cause notice for recovery of already refunded amount of sales tax under section 11(2) of the Act against which explanation tendered by the registered person was treated unsatisfactory. Resultantly, adjudication proceedings were culminated in passing of an order dated 17-2-2014 which was challenged before the CIR(A) who upheld liability of sales tax amounting to Rs.311,505 against invoices of Messrs Fine Pack and Messrs Al_Madina Plastic Works without application of independent judicious mind and approach on legal as well as on factual infirmities and improprieties pointed out in its memo.
Learned counsel appearing 'on behalf of the registered person has termed the actions of authorities below to be illegal, unlawful, arbitrary and contrary to the facts of the case., Initiating the arguments, learned counsel for the appellant has vehemently argued that the impugned show- cause notice and consequent adjudication order issued under section 11(2) of the Act are illegal, void ab initio and without jurisdiction as recovery of erroneously refunded amount of sales tax can be made under the provisions of section 11(3) of the Act providing recovery of any tax or charge has not been levied or made or has been short-levied or has been erroneously refunded whereas assessm ent of not paid or short paid tax liability is provided under section 11(2) ibid hence, whole proceedings carried =out under section 11(2) of the Act are illegal and unlawful. Learned counsel further contented that the tax functionaries were not legally empowered to conduct audit of appellant's record for a period more than one year as no permission of FBR for conducting an audit for a period more than one year was got by the department therefore, whole audit exercise becomes illegal, 'futile, baseless and consequent impugned show-cause notice and orders on its basis also stands ab initio void, illegal and without jurisdiction. Counsel stated that the instructions and directions issued by Federal Board of Revenue are binding on Sales Tax Authorities under section 72 of the Act and they were not mandated with the power of not following the instruction/direction dated 23-5-2009 and by doing this, they have acted not in accordance with law and hence, their action cannot be approved and passing the impugned orders in disregard to the same is clearly illegal and unlawful. At the end, learned counsel while summing up his submissions assailed that recovery of sales tax to the extent of Rs. 138,118 in case of Messrs Al- Madina Plastic Works for the month of June-2011 has already been adjudicated and vacated by the learned CIR(A) in another case of the appellant therefore, creation of same demand in the instant case amounts to double jeopardy not permissible by any law of the land causing harassment to the appellant and the same may therefore be vacated in the larger interest of natural justice and in case of Messrs Fine Pack, counsel produced a copy of computer profile dated 10-10-2011 showing its status as an operative unit and hundred percent compliance level at e-portal of FBR and was blacklisted subsequently on 3-7-2013. On the other hand, in counter arguments, learned DR appearing on behalf of revenue-department has opposed the contentions of learned counsel for the appellant and supported the orders of authorities below for the reasons recorded therein and reiterated almost the same arguments as advanced earlier at time of adjudication and fully supported the orders passed by both authorities below simply re-endorsing the basis evolved therein.
3. The arguments of the learned representatives of both the rival parties have been heard, the orders of the authorities below as well as relevant provisions of law and the case-laws cited by the learned AR of the taxpayer have also been perused carefully.
4. Instinctly and instantly, legal issue of utmost importance is taken at the first assailing that the impugned show-cause notice and consequent adjudication order issued under section 11(2) of the Act for recovery of erroneously refunded amount of sales tax are illegal and ab initio void. There is no iota of doubt that in the instant case, the impugned show-cause notice and consequent adjudication order passed under section 11(2) of the At are illegal, void ab initio and without jurisdiction as recovery of erroneously refunded amount of sales tax can be made under the provisions of section 11(3) of the Act providing recovery of any tax or charge has not been levied or made or has been short-levied or has been erroneously refunded whereas assessment of tax liability not paid or short paid is provided under section 11(2) ibid. The instant case is neither a case of assessm ent of tax on the basis of any short-payment nor of non-payment therefore, assumption of jurisdiction under section 11(2) of the Act by way of issuing subject show-cause notice and passing adjudication order for recovery of erroneously refunded amount of sales tax without invoking mandatory provisions of section 11(3) ibid are illegal and without jurisdiction. A comparative study of the provisions of section 11(2) and section 11(3) of Sales Tax Act, 1990 clearly reveals that where a tax due on supplies has not been paid or has been short paid or has been claimed as input tax credit or refund, which is not admissible under the Act, proceedings are to be initiated under section 11(2) of the Act however, section 11(3) of the Act deals with the situation where any tax or charge has not been levied or made or has been short levied or any amount which has been refunded due to some collusion or deliberate act, the person liable to pay any amount of tax or charge or the amount of refund erroneously made shall be served with a notice requiring him to show cause for payment of the amount specified in the notice. In the present case, amount has already been refunded to the appellant hence, the case was to get covered under section 11(3) of the Sales Tax Act, 1990 and not under section 11(2) ibid. Any order passed under section 11(2) of the Act can be equated with an assessment order determining the amount of tax actually payable by a registered person and in no way, can be purported to be a judgment for adjudging any recovery of tax or charge, non-levied or made or has been short levied or has been erroneously refunded in its legal semantics and jurisprudence. It is well-settled law that if the Statute enacts that certain action shall be taken in a certain manner and in no other manner, such requirement is absolute and that negate to attend or non-compliance will invalidate the whole proceedings.
5. After due consideration, we have also found that although, the appellant produced the requisite sales tax records for the periods in question to the revenue department for audit purpose against proper receipts in pursuance of its letters C.No. 206 dated 20-9-2011, C.No. 88 dated 11-8-2011, C.No. 108 dated 11-8-2011, C.No. 66 dated 9-6-2011 and C.No. 300 dated 28-11-2012, yet these notices issued under section 25 of the Act for production of records beyond the period of one year are illegal, unlawful and without jurisdiction as much as the FBR vide its letter bearing C.No. 1(9)/STM/2009 dated 23rd May, 2009 suspended its operation with immediate effect and in case, audit of appellant's records was required to be conducted on a specific information about tax evasion/fraud for the period more than a year, then the Collector should have sought for permission from the Federal Board of Revenue. Conversely, in the appellant's case, neither such permission was sought for nor the same was ever granted by the Federal Board of Revenue therefore, in absence of this, the whole audit exercise becomes illegal, futile, baseless and consequent impugned show-cause notice, adjudication and appellate orders on its basis also stands ab initio void, illegal and without jurisdiction. It is well-settled and established principle of law that if the doing of a thing is made lawful in a particular manner then doing of that thing in conflict with the manner prescribed will be-illegal and unlawful as per maxim "Expression Facit Cessare Taciturn". For reference, the said letter of FBR is reproduced hereunder:-- "I am directed to refer to Board's letter of even number dated 27-4-2009 on the subject cited above and to say that the notice issued by RTO/LTU for audit of the registered persons for more than one year will remain suspended with immediate effect till further order. In case, the Collectors are in receipt of specific information about tax evasion/fraud, they may go beyond one year's period with permission of the Board".
6. On careful analysis of set of laws on the subject matter, it is crystal clear beyond any shadow of doubt that the officers of the sales tax or other persons employed in the execution of the Sales Tax Act, 1990, are not empowered under the law to raise any objection to the clarifications, circulars, instructions, directions, orders and guidelines issued by the FBR from time to time and are legally bound under section 72 of the Sales Tax Act, 1990 to follow and implement the same as these carrying binding force could not be disregarded by the field formations on one pretext or the other.
In order to maintain better discipline, the subordinate officers should not venture to circumvent or flout the instructions and directions of the FBR. It does not need any, mentioning to say that the clarifications, circulars, instructions, directions, orders and guidelines of the FBR being the highest administrative authority in the tax administration of the Federation are binding on all its subordinate authorities in terms of section 72 the Act. It is a very clear and settled issue; however, for the one who may need reference to judgments of "Messrs Julian Hoshang Dinshaw Trust and others v. Income Tax Officer, South Zone, Karachi and others"1992 PTD 1 = 1992 SCM R 250, "The Collector of Customs (Appraisement)" Customs House, Karachi v. Messrs Civil Aviation Authority, Karachi and another" 2004 PTD 3005, "The Commissioner (Legal) Inland Revenue v. Messrs E.F. U.
General Insurance Ltd." (2011 PTD 2042) and "The Central Insurance Company v. CBR" (1993 SCM R 1232) can be made. The relevant extract of the judgment reported as (2002 PTD 720) in case of "The CIT v. Muslim Commercial Bank Ltd." is as follows:-- "The beneficial view taken up by the CBR, which is not patently violative of any statutory enactment, but it merely aimed at mitigating the rigors of law or implementing the law keeping in view the pragmatic consideration, requires all respect and is binding on the functionaries employed in the execution of Ordinance, including the Assessing Officers while involved in the assessment proceedings. The CBR is apex Administrative Authority in the tax administration of the Federation, and thus, occupies every important position. The CBR by virtue of the position occupied by it and the duties assigned to is not only supposed to implement and execute the revenue laws of the Federation and to supervise the tax administration, but is further supposed to oversee and watch that the law is justify and properly applied and implemented. In performance of this function, the CBR is empowered to issue clarifications, circulars and guidelines containing orders, instructions and directions, which are of binding nature."
7. Notwithstanding above, recovery of sales tax to the extent of Rs.138,118 on the strength of invoices issued by Messrs Al-Madina Plastic Works bearing STRN 08-01-6305-006-73 pertaining to the month of June, 2011 as adjudged in the impugned adjudication and first appellate orders is duplicate causing double jeopardy to the taxpayer as the same has already been adjudicated and vacated by the learned CIR(A), Faisalabad vide Order-in-Appeal No. 258/2013 dated 11-4-2013 in the first round of litigation. There is no denying the fact that issuance of second show-cause notice regarding the same tax period amounts to imposition of double taxation and double jeopardy which could not be given legal credence but also offends and defies the fundamental rights set out in Article 13 of the Constitution of Islamic Republic of Pakistan, 1973 which provides that no person shall be prosecuted or punished for the same offense more than once. The doctrine of "double jeopardy" which corresponds to the principle of "autre fois acquit and autre fois convict" always prohibits a duplicate trial and a duplicate punishment for the same offence. The "second" show-cause notice, adjudication order and appellate order in presence of the "first" appellate order to the same person for the same charges against invoices of same supplier involving same amount of tax concurring the same offence is not only illegal, unlawful and devoid of any merits but also amounts to double jeopardy in defiance of principles of natural justice. Re-agitating of the same issue by the tax functionaries is against all the principles of administration of justice and fair play. In the presence of earlier order of the learned CIR(A), another order of the learned adjudicating authority and the CIR(A) is contrary to the first orders to hold the field for the simple reason that two contrary orders cannot exist at one and at the same time and any subsequent proceedings initiated with issuance of second show-cause notice and adjudication thereon are therefore patently illegal, null and void ab initio having no legal effect at all. This act is not only against the provisions of sales tax laws but against the norms of natural justice and also in violation of Article 13 of the Constitution of Islamic Republic of Pakistan, 1973, under which a person cannot be vexed twice for the same matter. It is well settled principle of law that no one can be condemned and punished twice on the same cause of action and offence.
8. In view of what has been stated hereinabove, the titled appeal is accepted by way of vacating the orders passed by both the authorities below being devoid of legal substance. The instant appeal filed by the registered person is succeeded as prayed for and indicated above.