[The judgment of the Court was delivered by Abid Aziz Sheikh , J]- Through this application by way of custom reference, the applicant has assailed the order in appeal No. 183/2011 (impugned order) passed by custom appellate Tribunal Lahore ("Tribunal").
2. Brief facts are the appellant assesse imported a consignment consisting 2272 metric ton of indian White sugar ("sugar") from india. The appellant assesse through its clearing agent namely M/s Pak Afghan Clearing agent Lahore sough clearance of the sugar at the declared value US$282 per metric ton vide goods Declaration ("GD") No LDRY-HC-3708 date 10-09-2007 and GD No LDRY- HC-3982 date 14-09-2007 filed at dry port Lahore. The value of imported sugar was assessed manually @US$ 296 per metric ton and accordingly the duties and taxes were levied . The appellant assesse paid the entire assessed amount of duties and taxes under protest. The appellant assesse was subsequently served with two show cause notices dated 04.10.2010 inter alia under provision of section 16 and 32(1) and (2) of the Customs Act, 1969 ("Act"), alleging that value of imported goods for the purpose of levy of sales tax was to be fixed at US$ 440 per metric ton vide SRO 536(1)/2006 dated 05-06-2006 ("SRO"), however, the aforesaid fixed value for the purpose of levy of sales tax was neither declared on the GDs nor the same was applied at the time of assessm ent of duty/taxes, which caused evasion/short payment of duty and taxes. Further alleged that applicant assessee in collusion with clearing agent had deliberately managed manual feeding of GDs instead of normal feeding through computer system of PRAL to evade the levy of sales tax on the fixed value of US$ 440 per metric ton which would have been pointed out under PRAL System before clearance of the consignment. As a consequence of adjudication, the applicant-assessee was directed to pay short paid amount of Rs.2,201,204/- which include sales tax, income tax and additional tax.
3. The applicant-assessee being aggrieved filed appeal before the Collector (Appeal) who vide order dated 20-05-2011 upheld the order in original and dismissed the appeal. The second appeal filed by the applicant assessee before the learned Tribunal met with same fate. The operative part of learned Tribunal's order is reproduced as under:- "We have seen the case record and heard the arguments put forth by both the sides. It has not been denied that the value of the imported sugar for the purpose of levy of sales tax was @ 440 per metric ton vide SRO.536(I)/2006, dated 05.06.2006. This fixed value was neither declared by the importer on the GD nor the same was applied while assessing the impugned consignment.
The appellant's point of view that once the imported goods were allowed out of charge after payment of duty and taxes, it becomes a past and closed transaction is not tenable. All these issues were duly consigned and examined at both the stages of adjudication. The appellants have failed to give any legal basis of their appeal and have also failed to rebut the arguments put forth by the departmental representative."
4. The following questions of law, urged to have emanated from the order of the learned Tribunal:- i.Whether on the fact and in the circumstances of the case, the learned Tribunal without substantiating that the tax was short-levied with connivance of the importer/applicant, could hold such importer responsible for recovery of tax so alleged to have been short levied? ii.Whether on the facts and in the circumstances of the case, the Tribunal has failed to pass a speaking and reasoned order as required under section 24A of the General Clauses Act, 1894? iii.Whether on the facts and in the circumstances of the case, the learned Tribunal without distinguishing cases relied upon by the applicant has erred in deciding the appeal against the applicant? iv.Whether on the facts and in the circumstances of the case, when incidence of taxation having been passed on the ultimate consumer in consequence of an assessment, by short levy, in the circumstances can lawfully be recovered from the importer/applicant?
5. Learned counsel for the applicant argued that correct transactional price was mentioned on the GDs which was US$ 282 per metric ton and the goods were examined and assessed by the custom authorities at US$ 296 per metric ton, therefore, there was no mis-declaration or collusion on the part of the applicantassessee and if at all there was any lapse in not charging duty @ US$ 440 per metric ton under SRO, the same was on the part of custom authorities and not the applicant.
He further submits that once the goods were assessed and duties and taxes were paid and thereafter goods were out of charge, provisions of section 32 cannot be invoked as it become past and closed transaction. Reliance is placed on M/s S.T. Enterprises through Proprietor vs. Federation of Pakistan through Secretary (Revenue Division/FBR), Islamabad and 4 others (2009) 99 Tax 317 (H.C. Lah.) =(2009 PTD 467) and M/s Sunny Traders vs. Federation of Pakistan and 4 others (PTCL 2009 (CL) 470). He concluded by submitting that when incidence of tax by way of short levy has been passed on to the end consumer, it cannot be recovered from the applicant-importer.
6. Conversely the learned counsel for the respondent argued that th&lapplicant-assessee under section 79 of the Act was bound to filb\GDs containing correct and complete price of the goods for assessm ent of duties and taxes. However, the applicant-assessee in collusion with his clearing agent did not mention the correct value of goods given in the SRO for the purpose of duties and taxes including sales tax which resulted into short levy, hence notices u/s 32(1) & (2) of the Act were issued and amount was lawfully adjucated against the applicant-assessee. He further submits that it is admitted that value of sugar was US$ 440 under the SRO but said amount was neither mentioned on GDs nor duty was paid thereon, then evasion being result of collusion, show cause notices u/s 32(2) of the Act were lawfully issued within limitation of 5 year for recovery of short levy.
He adds that where there are allegation of collusion and show cause notice is within prescribed limitation merely because goods are out of charge will not make it a case of past and closed transaction. Reliance is placed on collector of Customs (Preventive), Karachi vs. Pakistan State Oil, Karachi (PTCL 2012 CL 27) and M/s Al-Hamd Edible Oil (P) Ltd. And others vs Collector of Customs and others (2003 PTD 552).
7. We have heard the arguments of learned counsel for the parties and perused the record with their able assistance.
8. There is no dispute between the parties that at the relevant time of import sugar by applicant- assessee, the rate of sugar for the purpose of sales tax assessment at import stage, was US$ 440 per metric on irrespective of the value at which the import was made. For facility, SRO 563(1)/2006 DATED 05.06.2006 is respondent to here Under- In exercise the powers conferred by the second proviso toClause (46)of Section 2 of the Sales Tax Act, 1990, and in supervision the Notification No.SRO 314(1)/2006, dated the1st April,2006 the Central Board of Revenue is pleased to fix the value of white crystalline sugar falling under Heading Nos. 1701.9910 and 1701.9920 of the Fist Schedule to the Customs Act, 1969 (IV of 1969) for the purpose of sales tax assessment at import stage at the rate of US$ 440 per metric ton irrespective of the value at which the import is made".
9. The applicant-assessee admittedly did not mention the value of sugar in the GDs at applicable rate of US$ 440 under the SRO rather declared it at US$ 282 per metric ton which was assessed at US$ 296 per metric ton. Therefore, short levy of duties and taxes payable by the applicant- assessee was obvious. Resultantly, show cause notices interalia under section 32(1) and (2) of the Act were issued and adjudication was made. However, applicant-assessee's claim before us is that even if duty was short levied, no recovery u/s 32(1) and (2) of the Act could be made as goods are out of charge and having been passed on to end consumer. To examine this plea, it is expedient to reproduce section 32(1), (2) and (5) of the Act prevailing at the relevant time, here under:- "32. [Untrue] statement, error, etc. (1) If any person, in connection with any matter of customs, (a)makes or signs or causes to be made or signed, or delivers or causes to be delivered to an officer of customs any declaration, notice, certificate or other document whatsoever, or (b)makes any statement in answer to any question put to him by an officer of customs which he is required by or under this Act to answer, [knowing or having reason to believe that such document or statement is false] in any material particular, he shall be guilty of an offence under this section.
(2). Where, by reason of any such document or statement as aforesaid or by reason of some collusion, any duty or charge has not been levied or has been short-levied or has been erroneously refunded, the person liable to pay any amount on that account shall be served with a notice within five years of the relevant date requiring him to show cause why he should not pay the amount specified in the notice.
(5) For the purpose of this section, the expression "relevant date" means:- (a)in any case where duty is not levied, the date on which an order for the clearance of goods is made; (b)in a case where duty is provisionally assessed under section 81, the date of adjustment of duty after its final assessm ent; (c)In a case where duty has been erroneously refunded, the date of its refund; (d)in any other case, the date of payment of duty or charge. (underlining by us to add emphasis).
10.The language of section 32 is plain and simple and no scholarly interpretation would be needed.
Under sub-section (2) of section 32, by reason of any document, which includes "declaration" or by reason of some "collusion", any duty and charge has not been levied or short levied, the person liable to pay any amount on that account can be served with a show cause notice within five years from the relevant date. The expression relevant date is also defined u/s 32(5)(a) which for purpose of present controversy means the date on which the order for the clearance of goods is made.
Once the applicant/assessee itself admits that on GDs, the applicable rate of sugar for US$ 440 under the SRO was neither declared nor assessed and further in the show cause notices, the short levy is alleged to be result of collusion between applicant and clearing agent in filing manual GDs instead of computerized GDs through PRAL (which would have automatically detected false material particulars in the GDs filed by the applicant-assessee), the provision of section 32(2) of the Act is squarely applicable.
11.Further merely because goods are out of charge will not make it a case of past and closed transaction. Section 32(2) provides period of five years limitation from relevant date for recovery of short levy which is result of mis-declaration or collusion. In our view the transaction only become past and closed when limitation prescribed under the law to open said transaction expires and consequently vested right establishes in favour of the assessee. As long as limits ion to issue notice has not expired, the transaction is not past and closed and any other interpretation will render the statutory limitation period under section 32(2) of the Act redundant and superfluent, which cannot be allowed. Reliance is placed on Nagina Silk Mill, Lyallpur v. The Come Tax Officer etc (1963) 7 Tax 442 (S.C. Pak.)=(PLD 1963 SC 322).
12.We have also gone through the case law relied upon by the learned counsel for the applicant, which is not applicable to the facts and circumstances of the present case. In cases of M/s S.T.
Enterprises also relied upon in M/s Sunny Traders supra, the assessm ent was made by the department and subsequently notices were issued on the ground that assessment was not in accordance with the valuation rulings. The assessee in said case defended the show cause notices on the ground that valuation rulings were not applicable to their case and it was in this context, this Court held that section 32 cannot be invoked to re-evaluate the earlier assessment for generating revenue and it became past and closed transaction. However, in instant case, the facts and circumstances are totally different as here it is not the case of re-evaluation of earlier assessment order, rather case is of mis-declaration by the applicant-assessee without mentioning applicable rate of sugar under the SRO and the show cause notices were issued on the basis of said mis- declaration and collusion between applicant-assessee and the clearing agent. Therefore, section 32(2) is applicable to the present case regardless the goods are out of charge.
13.So far as argument of the applicant that whenever there is short levy, the same cannot be recovered having been passed on to the end consumer is concerned, we found the same to be illogical and irrational, as direct consequence of this argument will be that on one hand applicant- assessee will go scot-free despite not paying duties and taxes and at the same time, consumer will also be benefited but the exchequer will suffer fiscal loss without any mode to recover the admitted amount of short levy. This construction will also make all recovery provisions in the Act unenforceable against the settled law that each and every word of a statute has to be given its meaning and no part of statute can be treated redundant or surplus. Reliance is placed upon Messrs V.N. Lakhani & Company v. M. V. Lakatoi Express and 2 others (PLD 1994 SC 894).
14.Learned counsel for the applicant next argued that there was no collusion as applicant was not required to mention the applicable value of goods under the SRO on the GDs but it was the responsibility of the assessing authorities. To support his contentions, he produced copy of GD No.LDRY-HC 2797 dated 23.08.2007 filed by one M/S Rana Brothers (Mark-A) where originally value of sugar was typed as US$ 440 but subsequently after cutting the figure of US$ 440, the value was declared as US$ 296. We are afraid that this argument is also not tenable. The above referred document itself shows that importer, clearing agent and even custom staff were aware of applicable rate of US$ 440 for sugar prescribed under the SRO but intentionally not mentioned and assessed on manual GDs. It is not the case of the applicant-assessee that department has not suffered any fiscal loss, hence mis-declaration was inconsequential and there was no question of collusion, rather it is admitted position on all hands that rate of sugar was wrongly mentioned in the declaration which was also not correctly assessed, which resulted into fiscal loss to the State. In these circumstances, the element of "collusion" cannot be ruled out for invoking the provision of section 32(2) of the Act.
15.The order passed by the learned Tribunal is well reasoned and grounded in correct interpretation of law, relevant to the facts of the case. For the reasons recorded above, the questions raised are answered in negative and reference application is decided against the applicant-assessee.
16.Office shall send a copy of this order under the seal of the Court to the learned Customs Appellate Tribunal Bench-I, Lahore as per Section 196(5) of the Customs Act, 1969.