'Vide this sales tax appeal, the registered person has assailed Order-in-Original No,234/2004 passed by the learned Additional Collector(Adjudication), Faisalabad dated 21-4-2004 on the following grounds:-
(1) That the combined order for the years 1999-2000 and 2000-2001 passed by the worthy additional collector (adjudication) is capricious, arbitrary and contrary to the facts and circumstances of the case and having no force in the eyes of law.
(2) That the worthy Additional Collector (Adjudication) Faisalabad was not justified to upheld the following issues raised, by sales tax auditor. Inadmissible input adjusted against purchase invoices Suppression of sales
(3) That the worthy Additional Collector (Adjudication) Faisalabad was not justified to maintain the inadmissibility of claim of input sales tax at Rs,97,816 on the basis of contravention of section 23 and section 3AA of the Sales Tax Act, 1990 without any cogent reasons.
(4) That the worthy Additional Collector (Adjudication) Faisalabad was not justified to maintain the disability of input tax claimed at Rs,97,816 on the invoices of Sultan Sons. Lahore as this amount has already been paid. This creates double taxation against a single transaction which has been condemned by Apex Courts many a times.
(5) That the worthy Additional Collector (Adjudication) Faisalabad was not justified to confirm the suppression of sales at Rs,523,608 and charged sales tax at Rs,94,249 for the year 1999-2000 without any plausible reason.
(6) That the worthy Additional Collector (Adjudication) Faisalabad was not justified to confirm the suppression of sale at Rs,1,721,108 and charged sales tax at Rs,309,800 for the year 2000-2001 without any plausible reason.
(7) That the worthy Additional Collector (Adjudication) Faisalabad was not justified to confirm the chargeability of sales tax at Rs,94,249 for the year 1999-2000 and Rs,309,800 for the year 2000-2001 as both the amounts were properly, adjusted/ deposited subsequently.
(8) That the worthy Additional Collector (Adjudication) Faisalabad was not justified to maintain the suppression of sales tabulated by auditor on the basis of income tax record which has been condemned by higher courts.
(9) That the worthy Additional Collector (Adjudication) was not justified to charge penalty of Rs,5000 under section 33(2cc) and to maintain chargeability of additional tax under sections 36(3) and 34 of the Sales Tax Act, 1990 under the head inadmissible input against purchase invoices.
(10) That the worthy Additional Collector (Adjudication) was not justified to charge penalty @ 3% under section 33(2cc) and to maintain chargeability of additional tax under sections 36(3) and 34 of the Sales Tax Act, 1990 under the head suppression of sales.
(2) Facts in hand are that the staff of Faisalabad collectorate audited the record of Messrs Al- Haseeb Corporation, 90-Mehar Sadiq Market, Railway Road, Faisalabad for the period 05/99 to 09/2002 and two discrepancies were found i,e, inadmissible input adjustment against purchase invoices and suppression of sales. On the basis of the above facts, the registered person were charged with the contravention of sections 3, 6, 10, 22 and 26 read with sections 34 and 36 of the Sales Tax Act, 1990 and were called upon to show-cause as -to why sales tax amounting to Rs,97817 and Rs,404,049 totalling Rs,501,866 may not be recovered from them along with additional tax and as to why penal action be not taken against them under section 33 ibid. The case was fixed for hearing on different dates and finally on 21-4-2004 the learned counsel for the registered person submitted written reply which could not satisfy the Additional Collector. The adjudication proceedings culminated in passing of an Order-in-Original No,234/2004 dated 21-4-2004 wherein an amount of Rs,97,817 and Rs,404,049 totalling Rs,501,866 was ordered to be recovered along with additional tax under sections 36(3) and 34 of the Sales Tax Act, 1990. A penalty equivalent to 3% of the amount of tax involved was also imposed under section 33 (2cc) ibid. Against this treatment, the registered person preferred appeal before this Tribunal.
3. At the time of hearing, the learned AR vociferously contended that the worthy Additional Collector (Adjudication) Faisalabad was not justified to maintain the inadmissibility of claim of input sales tax at Rs, 97,816 on the basis of contravention of section 23 and section 3AA of the Sales Tax Act, 1990 without any cogent reasons. His main thrust is that the worthy Additional Collector (Adjudication) Faisalabad was not justified to confirm the chargeability of sales tax at Rs,94,249 for the year 1999-2000 and Rs,309,800 for the year 2000-2001 as both the amounts were properly adjusted/deposited subsequently. He also vehemently contended that the worthy Additional Collector (Adjudication) was not justified to charge penalty @ 3% under section 33(2cc) and to maintain chargeability of additional tax under sections 36(3) and 34 of the Sales Tax Act, 1990 under the head suppression of sales. In support of his contention he also relied upon various reported and unreported judgments of the Hon'ble High Court and the learned Tribunal cited as 2004 PTD 1614, 2008 PTD (Trib.)- 541, 2009 PTD (Trib.) 966 and S.T.A. No,515/LB of 2012 decided on 5- 3-2013: He added that the order-in-original was barred by time limitation prescribed under section 36(3) of the Sales Tax Act, 1990. He contested that the show-cause notice was issued on 16-5-2003 under section 36 of the Act. Under proviso to section 36(3) ibid, the order should be passed within ninety days and in exceptional circumstances such period can be extended. By Collector for a further period of ninety days after recording reasons in writing. Learned counsel agitated that the impugned order in the instant case was issued on 12-6-2004 which means after a period of more than one year which is much beyond than the: limitation prescribed under the law and as such the original order has no legal sanctity in the eyes of Jaw. To strengthen his arguments, the, learned counsel for the appellant has also submitted the relevant documents and the plethora of reported and un-reported judgments cited as 2011 PTD (Trib.) 2216, 2010 PTD (Trib.) 2670, 2010 PTD (Trib.) 2117, 2009. PTD (Trib.) 1263, 2008 PTD '2025 (Islamabad High Court), 2008 PTD 60 and STR No,68 of 2006.
For convenience and ready reference the relevant extract of some reported judgments are as follows:-- 2008 PTD 60 The claim of the Revenue that the prescribed limitation of 45 days for completion of adjudication proceedings. As provided through Finance Ordinance, 2000 and enhanced to 90 days by Finance Act, 2003 is merely directory cannot be accepted. It is, settled law that .Where inaction on the part of the 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.
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 taxpayer thereby creating certainty that after its expiry if there was a good case for creation of liability he will not be dragged in.
2011 PTD (Trib) 2216 Ss.36(3) & 45B (2)--- Recovery of tax not levied or short-levied or erroneously refunded--- Limitation---Taxpayer contended that order-in-original should have been passed within 90 days of the issuance of show- cause notice be within such extended period as the Commissioner may, for the reasons to be recorded in writing, provided that such extended period should in no case exceed 90 days; admittedly the show-cause notice was issued on 9-10-2004 and the order-in- original was passed on 15-11-2006; which was clearly time barred having not been passed within the prescribed time limit by law-Validity-Limitation provided by law under S.36(3) of the Sales Tax- Act, 1990 was mandatory and the order under said section should have been passed within such time period--- Since the order-in-original was passed beyond the limitation provided in law, it was not sustainable and had to be struck down--- Show-cause notice as well as orders were set aside by the Appellate Tribunal; and orders of the authorities below were vacated and the demand created was deleted.
2010 PTD (Trio.) 2670 ----Ss. 11(2), 13, 36(3) & 46-Refund claim--- Collector (Refund) after examination of supportive documents in respect of refund claims, partly accepted said claim of assessee-- Assessee being aggrieved had filed appeal before the Collector who upheld treatment given by Assistant Collector (Refund)---Validity--- Order of Collector (Refund) was filed after about 5 months of issuance of notice, whereas under provisions of S.36(3) of Sales Tax Act, 1990, time limit was 90 days which had expired---Where inaction on the part of a public functionary within the prescribed limit was likely to affect the right of a citizen, the prescription of time was deemed directory---Where a public functionary was empowered to create liability against a citizen only within the prescribed time, it was mandatory When the prescribed limit was beneficial for the citizen and restricted the executive power to touch the pocket of a taxpayer thereby creating certainty that after its expiry even if there was a good case for creation of liability, he would not be dragged in--- - In the present case, order-in-original was passed beyond the prescribed time limit of 90 days, moreover the adjudicating authority had neither sought any extension from the competent Authority nor had recorded any season for passing of order after 90 days, order passed by the Collector being made after the lapse of statutory period was declared to have been made without lawful authority--- Order was annulled by the Tribunal.
7. It Was after the Finance Ordinance, 2003 that the tax invoice is qualified to be by a registered persons. Input tax is a spices of Sales Tax and it is paid only once. The adjustment of the input tax at the time of payment of output tax is co-related with the journey of raw-material to the finished products. The provisions of the Sales Tax have to be construed strictly to avoid any possibility of double taxation. In case against the valid tax invoice showing the payment of input tax if the respondent is not allowed adjustment of output tax, it would lead to double taxation which is not sustainable under the present scheme of Sales Tax Act, 1990.
2008 PTD (Trib.) 541
4. The case of the department is also weak on the second point for the reason that it is consistently held by the Superior Courts of the country that the income tax record cannot be made basis for adjudging the liability under Sales Tax Act, 1990. In view of this situation, the orders passed by both the lower forums are the result of non-appreciation of the law therefore, are liable to be set aside.
2009 PTD (Trib.) 966
7. It has already been held by different benches of this Tribunal and the Honourable High Court of Jammu and Kashmir that the sales tax liability cannot be created on the basis of information collected from the income tax authorities which was furnished by the appellant to the income tax department. In view of above discussion, I find force in the arguments of learned counsel and appeal in view of the same is accepted.
S.T.A. No,515/LB of 2012
4. Under the law, the adjudication officer is under legal obligation to pass the order within the specified period of 120 days. The show-cause notice in the instant case was issued on 3-2-2011 and the adjudication officer was under legal obligation to pass the order upto 3-6-2011 which he had failed to do as the order in the case was passed on 28-7-2011 which is clearly beyond the time limitation provided under section 36(3) of the Sales Tax Act, 1990.
' The learned DR strongly opposed the contentions of the learned counsel and defended the orders passed by the learned fora. Despite affording of opportunity, she failed to rebut the contentions of the learned AR or to produce any judgment by the superior courts contrary to the decisions cited by the learned counsel.
4. We have given anxious thought to the arguments advanced by the rival parties and the relevant available record perused. After having gone through the relevant record aforementioned discussion as well as bare reading of the reported judgments cited supra and the annexed documents produced by the registered person, we are of the view that the contentions raised by the learned counsel for the registered person carries weight. It is significant to state here that where basic action/order is without lawful authority, then superstructure built on it have to fall on the ground automatically. Further observed that the order-in-original in the present case was passed beyond the prescribed time limit of 90 days. Moreover the DR has failed to produce any evidence showing that the adjudicating authority had sought any extension from the competent authority. Even if it is presumed that the extension for the permissible period of 90 days had been obtained, still the order-in-original was issued much beyond than the statutory period.
Consequently, we have no ambiguity in our mind that the order-in-original was passed after the prescribed time limit as provided under Section 36(3) of the Sales Tax Act, 1990, therefore, the appeal of, the registered person is accepted. Consequently, we have no ambiguity in our mind to vacate the Order-in Original No,234/2004 dated 21-4-2004 of the Additional Collector which had wrongly been passed and accept the appeal of the registered person on legal plane. Since the appeal has been decided purely on legal grounds, we do not feel the need to adjudicate upon the other grounds raised by the appellant.
5. Order accordingly.