Messrs R.M. GULISTAN ENGINEERS AND CONSTRUCTORS (PVT.) LTD. vs The

ORDER

1. The instant Appeal arises from the order No CIR/A/IV/07 dated 20.12.2012, passed by Ld. CIR (Appeals-IV) Karachi, whereby the Appeal was dismissed and the Order-in-Original No, 01/2012 dated 10.05.2012 passed by Officer Inland Revenue, Unit-2, Zone-1, RTO-II, Karachi was upheld by the Ld.CIR (Appeals).

2. Brief facts of the case are that the appellants namely Messrs R.M. Gulistan Engineers and Constructors (Pvt.) Ltd. Bearing STR No, 1100999976755 were alleged for short payment of duty and taxes on import of Seamless Steel Pipes/Tubes and the goods declaration/record showed wrong application of S.R.O. 575(I)/2006 at the time of clearance of goods. In this regard the two show cause notices dated 28.03.2012 and 21.04.2012 were issued by the officer of Inland Revenue UNIT-02 ZONE-I, RTO-II, Karachi to the appellants for recovery of alleged dues. A show cause notice issued vide letter No,545 dated 28.3.2012 was issued to the Appellants which is reproduced below for the sake of convenience: "SHOW CAUSE NOTICE Examination of Goods Declaration/record reveals that you had imported seamless steel pipes/tubes classified on which you have not paid Sales Tax and F.E.D. As the time of imposed in this regard the observation as under: The Appellants had got assessed/cleared their goods i.e, Ductile Cast Iron Pipes under H.S. Code 7303.0000 instead of H.S. Code 7304.3900 at the lower rate of Custom Duty along with inadmissible benefit of serial Nos.1(J) and 6 of the S.R.O. 575(I)/2006 dated 5.6.2006 despite the fact that the impugned goods do not fall within the ambit of machinery and equipment.

2. Therefore, on the above grounds, it is established that the Appellants namely Messrs R.M. Gulistan Engineers and Constructors ( Pvt.) Ltd. Of Karachi willfully, intentionally and knowingly evaded duty and taxes in the respect of sales tax amounting to Rs, 11,531,519/= and amounting to Rs, 69,306/-in respect of FED. iv. Therefore, the Appellants namely Messrs R.M Gulistan Engineers and Contractor ( Pvt.) Ltd. Are hereby called upon to show cause under Section 36(1) of the Sales Tax Act, 1990 and under Section 14 of the Federal Excise Act, 2005 as to why the above noted short paid amount of Sales Tax and Federal Excise amounting to Rs,11,600,825/- in violation of sections 2(6),3,6 ibid may not be recovered from the Appellant along with default surcharge under Section 34 and penalty under Section 33 of the Sales Tax Act, 1990 and Sections 3, 15 of the FED Act, 2005 may not be recovered from you along with default surcharge under Section 8 and penalty under Section 19 ibid. Second Show Cause Notice No,741 dated 21.4.2012 was issued to the Appellants which states as under:- Examination of Goods Declaration/record reveals that the Appellants have imported seamless steel pipes/tubes classified on which the Appellants have not paid Sales Tax and F.E.D as the time of imposed in this regard the observations are as under:- The Appellants namely Messrs R. M. Gulistan Engineers and Constructors (Pvt.) Ltd. Had got assessed/cleared their goods i.e, Ductile Cast Iron Pipes under H.S Code 7303.0000 instead of H.S. Code 7304.3900 at the lower rate of Customs Ditty along with inadmissible benefit of serial Nos.1(3) and 6 of the S.R.O. 575(1)/2006 dated 5.6:2006 despite the fact that the impugned goods do not fall within the ambit of machinery and equipment. Iii. Therefore, on above grounds it is established that the Appellants Messrs R.M.Gulistan Engineers and Constructors (Pvt.) Ltd., Karachi willfully, intentionally and knowingly evaded duty and taxes in respect of Sales Tax and FED of the following period of which detail is as under:-- S. No.G.B.

3. No.DATE (PERIOD) DESCRIPTION SALES TAX SHORT PAIDFED SHORT PAID

1. 198818 270207 (Feb. , 2007)Ductile cast iron Pipe H.S. Code No.7303Rs.15,124/- -----

2. 242380160407 (Apr., 2007)Ductile cast Iron Pipe H.S. Code No.7303Rs.2,365,360 -----

3. 437768011107 (Nov.,2007)Ductile cast Iron Pipe H.S. Code No.7303Rs.3,252,248 -----

4. 605886100408 (Apr., 2008)Ductile cast Iron Pipe H.S. Code No.7303Rs.5,625,786Rs.69,306 Rs.11,531,518 Rs.69,306 iv. Therefore, the Appellants are hereby called upon to show cause under Section 36(1) of the Sales Tax Act, 1990 and under Section 14 of the Federal Excise Act, 2005 as to why the above noted short paid amount of sales tax and federal excise amounting to Rs,11,600,824/- in violation of sections 2(6), 3,6, ibid may not be recovered from the appellant along with default surcharge under section 34 and penalty under section 33 of the Sales Tax Act, 1990 and sections 3, 15 of the FED Act, 2005 may not be recovered from them along with default surcharge under Section 8 and penalty under Section 19 ibid.

3. The impugned Order-in-Original No, 01 of 2012 dated 10.5.2012 was issued by the officer of Inland Revenue/S.O. (Mac-Unit -02) Zone-1 Regional Tax Office-II, Karachi where the officer of Inland Revenue finalized the assessm ent under Section 36(1) of the Sales 'Tax Act, 1990 on the basis of issues confronted vide above referred show cause notices.

4. The Appellants filed an Appeal before Ld. Commissioner Inland Revenue (Appeals-IV) Karachi who vide impugned order No, CIR/AV/07 dated 20.12.2012 dismissed the Appeal of the Appellant and upheld the Order-in-Original No, 01 of 2012 dated 10.5.2012 passed by the OIR. The Appellants feeling aggrieved of have thus filed present appeal under section 46 of Sales Tax Act, 1990 before this Tribunal against the impugned order No,CIR/A-IV/07 dated 20.12.2012 passed by Ld. CIR(A). The grounds mentioned in the Memo of Appeal are reproduced below as under:-- 1) That this Appeal is directed against Order-in-Appeal No, CIR/AIV/07 dated 20.12.2012 passed by the Commissioner Inland Revenue (Appeals-IV) Karachi to the extent of charging of alleged Sales Tax amounting to Rs,11,531, 518/- and Federal Excise Duty amounting to Rs,69,306/-holding that same was payable on imports made of Ductile Iron Pipes during tax periods Five years ago pertaining to the months of February, April, November 2007 and April 2008.

4. ' That the aforesaid impugned Order-in-Appeal dated 20.12.2012 and also the impugned Order-in- Original No,01/2012 dated 10.5.2012 are unlawful, illegal, coram non judice and void ab initio having being passed on the basis of misunderstanding of law and facts on the part of Respondents Nos.1 and 2. As such aforesaid impugned Order-in-Appeal and as well as impugned Order-in -Original being against the law and facts are liable to be set aside inter alia on the following grounds:--- 3) That the impugned Order-in-Appeal dated 20.12.2012 passed by Respondent No,1 to the extent of aforementioned charges of Sales Tax and Federal Excise is not tenable in law since the same matter in respect of the same imports of the Appellants and pertaining to same Goods Declarations of the same import period have been adjudicated by Officers of two different revenue departments namely Additional Collector of Customs Model Customs Collectorate of PACCS Custom House Karachi and officer of Inland Revenue / SO, MAC Unit - 02 Zone I, RTO-II Karachi. This in complete derogation of the provisions enshrined in Article 13 of the Constitution of the Islamic Republic of Pakistan 1973 and also constitutes an act of "Double Jeopardy". It makes the whole proceedings unlawful, illegal, coram non judice and ab initio null and void.

5. 4) That Show Cause Notice bearing No,MCC /SCN -21/PCA/ LHR/ Audit-C/148/STEEL PIPE/GULISTAN/ADC/ADJ/PACCS/2011 dated 19.12.2011 was issued by Additional Collector of Customs Model Customs Collectorate of Paces Custom House, Karachi in wake of Contravention Report C.

6. No Case No, (2/2011) PCA/LHR/AUDIT-C/148/2011/667 dated 25.11.2011 instituted by Appraising Officer and forwarded by Deputy Director Directorate of Post Clearance Audit Lahore under the Authority of Directorate General Post Clearance Audit Islamabad vide his letter C.NO PCA/ AUDIT/ PERMISSION/ 70/2011 dated 29.11.2011 addressed to Member Customs Federal Board of Revenue Islamabad and Copies endorsed to SA to Chairman Federal Board of Revenue Islamabad and Member (IRS)

7. Federal Board of Revenue Islamabad and Chief Collector of Customs (South), Custom House, Karachi. The matter therefore became sub judice before Customs Authorities where jurisdiction was lawfully exercised by a Revenue Department serving under the domain of Federal Board of Revenue Islamabad. The case has since been adjudicated by Additional Collector of Customs MCC PACCS Custom House Karachi and Order-in-Appeal No,7001 dated 23.1.2013 has been issued by learned Collector of Customs (Appeals) against which an Appeal is filed before the Honourable Customs Appillate Tribunal Karachi Bench Karachi by the Appellants.

8. 5) That subsequently two Show Cause Notices No,OIR/MAC UNIT-02/Zone-1/RT0-11/Kyc/ 2012/545 dated 28.3.2012 and No,OIR/AC-/MAC/RTO-II/Kyc/2012/741 dated 21.4.2012 were issued to the Appellants by Respondent No, 2 in respect of the same matter which is arbitrary, unlawful and illegal exercise of power and against the established norms of natural justice, equity and fair play.

9. Issuance of multiple show cause notices by the same authority has been deprecated by the Superior Judicial Fora. The Appellant needs to bring it on record that neither of the aforesaid two show cause notices dated 28.3.2012 and 21.4.2012 of the Inland Revenue has so far been withdrawn by Respondent No 2. In addition to the above, the issuance of aforesaid two show cause notices subsequent to the issuance of Show Cause Notice dated 29.12.2011 by Additional Collector of Customs MCC Paccs Custom House, Karachi is tantamount to a clear cut violation of Article 13 of the Constitution being also an act of " Double Jeopardy" to the detriment of the Appellants and is therefore null and void ab initio and all subsequent acts and proceedings conducted there under are also .Unlawful, illegal, coram non judice and ab inito null and void.

10. ' That the issuance of aforesaid two show cause notices dated 28.3.2012 and 21.4.2012 by Respondent No,2 comes within the ambit of a fishing and roving enquiry in terms of Honourable Apex Court of Judgment in the case of Assistant Director Intelligence and Investigation v. Messrs B.R. Herman PLD 1992 SC 485. The incurable legal lacunae of a Show Cause Notice cannot be cured through issuance of another Show Cause Notice to the same tax payer on the same subject.

11. ' That the jurisdiction exercised by Additional Collector of Customs MCC Paccs Custom House Karachi for adjudication of the subject matter is within the four corners of law as substantiated by the following documents on record. Legal opinion / Adjudication of cases relating to Levy and Collection of Federal Excise Duty, Sales Tax and withholding tax on imported goods issued by Ministry of Law, Justice Government of Pakistan vide their office Memorandum F. 242/ 2012-Law / I dated 11.7.2012 forwarded by Secretary (Tariff -I) Federal Board of Revenue Islamabad vide his letter C.No,3(32) TAR-I/90 dated 6.8.2012 and further forwarded to Directors Post Clearance Audit Karachi and Lahore by Additional Director Head quarter Director General Post Clearance Audit Islamabad vide his Letter C.No,PCA/ Head quarter/Circulation/2012-1394 dated 23.8.2012. These aforesaid letters inter alia clarified that officers of Customs are competent to take cognizance of any short paid amount of Sales Tax and Federal Excise Duty at import stage and adjudicate such cases in view of the provisions of Sales Tax and Federal Excise Act.

12. 8) That the act of "Double Jeopardy" through issuance of multiple show cause notices and adjudication proceedings by Officers of Model Customs Collectorate of Paccs Custom House Karachi and Inland Revenue Services has been acknowledged by officer of Inland Revenue Unit-02 Zone I RTO-II Karachi vide his letter No, OIR/ Unit-02 /Zone-I / RTO-II / KHI / 2012/ 06 dated 16.11.2012 addressed to Commissioner Inland Revenue-RTO -II Karachi. Reference is made to Para 2 of the aforesaid letter which in so many words substantiate the claim of the Appellant in respect of the act of "Double Jeopardy" committed by the officer of Inland Revenue who proceeded the adjudication proceedings in the subject matter much after the issuance of show cause notice by Additional Collector of Customs MCC Paccs Custom House, Karachi. The doctrine of "Double Jeopardy" corresponds to the principle of "autrefois acquit and autrefois convict" and it prohibits a duplicate trial and a duplicate punishment for the same offence. Reliance is placed upon the judgment of the Honourable High Court of Sindh at Karachi in the case of Messrs Mehran Motor Car Company v. Collector of Customs Appraisement reported as 2004 PTD 1482 wherein it has been held that: "Where the recovery of tax short levied and imposition of the penalty in appropriate cases, operated into different fields and their areas of operation were distinct, then the question of double jeopardy. Would not arise. If after the enforcement of demand on account of short levy, the Authority, through separate proceedings again called upon the importer to pay the short levied amount, then the same would be a case of double jeopardy."

13. ' Similarly, the superior judiciary has laid down certain principles which were well taken by the Honourable High Court of Sindh at Karachi in a case reported as 2004 PTD 3620 in the following manner: "Neither any appeal was preferred by the Sales Tax Department assailing the findings nor any revisional proceeding were initiated. The effect was that the order passed by the Additional Collector of Adjudication, attained finality having binding effect on the Sales Tax Department.

14. Reagitating of same issue by the Sales Tax Department is against all the principles of administration of justice and fair play. This course of action cannot be allowed because, firstly, it is against the principles of administration of justice, secondly it is discriminatory in nature, as any order passed adjudication not assail in appeal by an assessee, is always treated to be final and the same principal should be applied to the department; thirdly, it militates against the principles applicable to the tax matters, that the issues once settled and accepted by the department shall not be allowed to deviated, because it will create uncertainty which has always been deprecated and disapproved by the Superior Courts, Legislature as well as the Board itself".

15. 9) As such the action of Respondent No,2 subsequent to the issuance of Show Cause Notice by the Additional Collector of Customs MCC (Paccs) Karachi is a negation of the ratio decidendi determined by the Superior Judicial vide their above referred to Judgments.

16. 10) That the learned Respondents Nos.1 and 2 were not justified to pass the impugned Order- in - Appeal No CIR -/A -IV/ 07 dated 20.12.2012 and impugned Order-in-Original No, 1 of 2012 dated 14.5.2012 on the basis of show cause notices dated 28.3.2012 and 21.4.2012, which itself was issued on incorrect appraisal of facts and were defective in nature. In that the learned officer Inland Revenue did not know the vires of duties and taxes leviable or about various PCT Headings under which the exemption was available to the Appellants at the time of import almost five years ago and was duly granted earlier by the customs authorities upon submission of all requisite documents and fulfilling all the formalities of relevant PCT Heading and nothing as such has been discussed by him in the impugned order.

17. 11) From the perusal of Item description of goods as mentioned on each GD, it can be seen that the goods imported being "Ductile Cast Iron Pipes" were project specific, meant for use in the project of Pakistan Defence Officers Housing Authority for which certificate from the said Authority was also required to be produced along with Pakistan Engineering Council License at the time of import. This fact is unanimously to be recorded in the column for "Item Description of goods" in each GD.

18. 12) That the goods imported being project specific were not available in the local market and had no commercial value in the market. The left over pipes imported by the appellant registered persons are still lying in the Appellants Godown. The exemption/concession granted by the legislature was therefore conditional and prevailing at the time of import around five years back and the learned officer Inland Revenue was not justified to revert such exemption earlier granted by the legislature vide S.R.O. 575(I)/2006, without establishing on record any misdeclaration on the part of the Appellant registered person and that also after a period of five years, which is simply a negation of average human comprehension and common sense on the part of Respondents Nos.1 and 2.

19. 13) The learned Respondents Nos.1 and 2 while passing the impugned order-in-Appeal and impugned order-in-original were not justified to dispute a closed and past transaction beyond a period of three years which they were not authorized to do so as provided under Section 32(3) of the Customs Act, 1969.

20. 14) As regard the issue of jurisdiction taken by the Authorized Representative before Respondent No,1 and rebutted by learned Respondent No,1 it is submitted that once the Audit Observations were issued under the authority Director General Directorate General of Post Clearance Audit Islamabad the matter brought to the knowledge of Chairman Federal Board of Revenue Islamabad, Member Customs FBR Islamabad, Member IRS FBR Islamabad, Contravention Report prepared and Show Cause Notice issued by the Additional Collector of Customs Model Customs Collectorate of PACCS Custom House Karachi, the Officer of Inland Revenue Department Zone-1 RTO-II Karachi should have refrained himself from issuing multiple show cause notices to the Appellant and could have sought orders from Federal Board of Revenue Islamabad. It is not a question of competency or exercise of greater lien on part of the Customs Authorities to have taken up the case for alleged recovery of escaped amount of Sales Tax and Federal Excise Duty but a subtle proposition of law involving "Doctrine of Double Jeopardy" and blatant violation of the provision of Article 13 of the Constitution. If jurisdiction has been vested concurrently in the hands of two revenue departments as per documents on record, clarification needs to be issued by Federal Board of Revenue Islamabad together with appropriate amendments made in the relevant statutes to avoid such confusion by two Revenue Departments working under its Domain. The interpretations placed by quasi judicial officers of both revenue departments may not serve any purpose and the litigation may never end up. The end result would be that the tax payer has to suffer the brunt of concurrent jurisdiction awarded to two revenue departments by the legislature in the form of litigation, cost of legal counsels, and mental agony for no fault of their own. It was logical on the part both the Revenue Departments to have tackled up this anomalous situation with average human comprehension common sense and restrain rather than entangling into an unwarranted never ending competition nothing more than a wild goose chase.

21. 15) Set aside the impugned order passed by Respondent No,1 and impugned Order-in-Original No, 1 of 2012 dated 10.5.2012 passed by Respondent No,2 as these orders are against law and facts and being ab initio null and void and coram non judice.

5. The perusal of record shows that during the pendency of present Sales Tax Appeal No, (STA No, 15/KB/2013) in this Tribunal, the appellants filed a C.P. No,D-2065 /2014 in the High Court of Sindh at Karachi. Through the petition, the Appellant had impugned the order dated 10.04.2014 passed by the Appellate Tribunal Inland Revenue in M.A. (Stay) No, 18/KB12014 (STA No, 15/KB/2013), whereby the application of the Appellant seeking stay of recovery of demand during pendency of the appeal before the Tribunal had been declined. The subject petition before Hon'ble High Court was finally fixed for hearing on 11.03.2015 and disposed of with following directions:- 'Accordingly instant petition is being disposed of with the directions to the Customs Appellate Tribunal (Inland Revenue), Karachi Bench to decide the appeal of the petitioner bearing S.T.A No, 15 of 2013 within a reasonable time preferably within a month from the order of this Court provided no further adjournment will be sought by any party; and till disposal of the appeal by the Customs Appellate Tribunal (Inland) Revenue, Karachi, the petitioner shall not enforce the recovery of impugned demand. Accordingly instant petition is disposed of along with listed applications."

6. We have given a patient lengthy hearing to both parties. Ld. AR of the appellant has also placed written arguments for consideration before this Tribunal which are reproduced as under:- a) That the case was originally initiated by Director General of Post Clearance Audit Federal Board of Revenue Islamabad vide his letter C. No, PCA/Audit/ Permission/70/2011 dated 29th November 2011 to Member (IRS) FBR Islamabad, wherein it was alleged that the Appellants Messrs R.M. Gulistan Engineering and Constructors (Pvt.) Ltd. Willfully, intentionally and knowingly evaded duty and taxes to the tune of Rs,23,335,392/- (Customs Duty Rs,10417619/- Sales Tax Rs,11531519/- and Income Tax Rs,1316948/- Federal Excise Duty Rs,69306/-. That the aforesaid letter of Director General PCA Islamabad was forwarded to Chief Commissioner RTO-II, Karachi by Director (I & I IR (HQ) vide his letter C.No, 2 (71) BTB-PCA/11- ) 173245-R dated 21.12.2011 whereby the Chief Commissioner RTO-II, Karachi was apprised that an amount of Rs,12.917 Million has been worked out as short payment of Sales Tax, Income Tax and Federal Excise Duty. The Chief Commissioner was further advised to obtain detail contravention reports either from the concerned Collectorate or from Directorate General (PCA) before initiation of recovery proceedings. In pursuance of the aforesaid letter of Director (I&I) IR HQ Additional Commissioner IR (HQs) from the office of Chief Commissioner Inland Revenue Regional Tax Office-II, Karachi vide his letter No, CCIR/RT0-11/Audit/SO-V/2011- 2012/5473 of dated 2.4.2012 requisitioned a detailed contravention report and Import Data of the Appellants for initiating necessary recovery proceedings for the period from 1.7.2008 to 30.6.2009, 1.7.2009 to 30.6.2010 and 1.7.2010 to 30.6.2011. The Additional Commissioner IR (HQs) Karachi upon receipt of the requisite information from the office of Director, Post Clearance Audit, Custom House, Karachi vide his letter No, CCIR/RT0-11/Audit/SO-V/2011-2012/5794 dated 12.4.2012 informed the Director (I & I IR HQ), Islamabad that show cause notices to recover short paid Sales Tax, Income Tax and Federal Excise Duty on the basis of Contravention Report and Import Data provided by Director Directorate General of Post Clearance Audit Custom House, Karachi were being issued to the Appellants for making alleged aforesaid short recovery. The Additional Commissioner IR (HQs) also informed Director I & I IR (HQ) vide his letter No, CCIR/RTO-II/Audit/SO-V/ 2011-2012/6450 dated 12.5.2012 regarding short realization of duty and taxes on import of seamless steel pipes/tubes by the Appellants Messrs R.M. Gulistan Engineering and Constructors (Pvt) Ltd Karachi.

22. ' That in wake of the above proceedings the officer Inland-MACUnit-02-Zone-1,RTO-II, Karachi issued two Show Cause Notices bearing No, OIR/MAC/UNIT-02/ZONE-1/RTOII/KYC/ 2012/545 dated 28.3.2012 and Show Cause Notice No, OIR/AC/MAC/RTO-II/KYC/2012/741 dated 21.4.2012 to the Appellants for recovery of alleged short paid amount of Sales Tax and Excise Duty amounting to Rs,11,600,825/-. The Appellants deem it imperative to bring it on record that the Show Cause Notices issued by the Inland Revenue Officer MAC-Unit-02-Zone-I, RTO-II, Karachi were completely based upon the contravention report Case No, 02/2011PCA/LHR/ Audit-C/148/2011/667 dated 25.11.2011 initiated by the office of Directorate of Post Clearance Audit ( PCA) Lahore.

23. ' That the Appellants at this stage may like to register their first preliminary legal objection in respect to the jurisdiction of the officers of Directorate General of Post Clearance Audit who have no legal mandate under the Sales Tax Act, 1990 or the Federal Excise Act, 2005 for initiating cases of short recovery of Sales Tax or Federal Excise Duty. d) That the officers of Directorate General of Post Clearance Audit are indeed designated as officer of Inland Revenue under section 30DD of Sales Tax Act, 1990 and they are delegated with the powers of an officer of Inland Revenue through notification No,S.R.O. 42(1)/2010 dated 23.01.2010 subject to exercise those powers in the capacity of Chief Commissioner/Additional Commissioner Inland Revenue/Assistant Commissioner Inland Revenue under the provision of the Sales Tax Act, 1990 listed in column (4) of the notification but not in the capacity of Director General, Director, Additional Director, Deputy Director and Assistant Director. In the instant case of the appellant the respondents exercise the powers under the provision of Sales Tax Act, 1990 in the capacity of Director General, Director, Additional Director, Deputy Director, rendering their acts nullity to the provision of Section 30DD of Sales Tax Act, 1990 and Notification No, S.R.O. 42(1)/2010 dated 23.01.2010, without power/jurisdiction, hence void and ab-initio as held in the reported judgments PLD 1971 SC 197 Chittaranjan Cotton Mills Ltd. v. Staff Union, Raunaq Au '5 PLD 1973 SC 236, 2002 PTD (Trib.) 889 in Messrs Unitex Tower Factory v. The Collector of Customs (Appeals) and others, K- 106/03 in Messrs Silver 'Corporation v. The Additional Collector of Sales Tax (Adjudication), Karachi III, Major Syed Walayat Shah v. Muzaffar Khan and 2 others (PLD 1971 SC 184), Omer and Company v.

24. Controller of Customs, (Valuation): (1992 ALD 449(1) Karachi AAA Steel Mills Ltd. v. Collector of Sales.

25. Tax and Central Excise Collectorate of Sales Tax (2004 PTD 624), PLD 1976 Supreme Court 37 All Muhammad v. Hussain Buksh and others and PLD 2001 Supreme Court 514 Land Acquisition Collector, Noshehra and others v. Sarfraz Khan and others. The above position also gets strength from a recent judgment of Honourable High Court of Sindh at Karachi in C.P. No,D-2V3 of 2011 whereby 485 Constitutional Petitions have been decided. These Petitions were basically filed by the Petitioners against various notifications/SRO whereby Powers were entrusted to the officers of Director General of Intelligence and Investigation Federal Board of Revenue. e) That the (Directorate General of Post Clearance Audit) are not designated as officers of Inland Revenue under the provision of Section 29 of the Federal Excise Act, 2005. Irrespective of this, the Board delegated power to respondent vide Notification No, 165(1)/2011 dated 03.03.2011 under section 29 of the Act, without realizing that under subsection (3) of Section 29 it is empowered to delegate powers by name or designation. The person/authority listed at clauses (a) to (d) in subsection (3) of section 29 of the Federal Excise Act, 2005 are not the Director General/Director/Additional Director/ Deputy Director/Assistant Director and have not been designated as officers of Inland Revenue by name or designation. The aforesaid notification is therefore in contradiction with the provision of subsection (3) of Section 29 ibid and therefore ultra vires the Act and hence null and void. The powers for post importation audit have to be exercised under Section 46 of the Federal Excise Act, 2005 by the officers of Inland Revenue. Thus the whole exercise conducted by the Directorate General of Post Clearance Audit is coram non judice, hence null and void ab initio. f) Even otherwise the appraising officer Mr. Muhammad Imran of Directorate of Post Clearance Audit Lahore has invoked Section 3-A of the Federal Excise Act, 2005 read with Sections 8, 19(1) and 2 ibid. He had no jurisdiction to invoke these sections in terms of S.R.O.

26. 165(1)/2011 dated 3.3.2011 since his legal mandate is limited to invoke only Sections 23 and 46 read with Chapter XIII and XIV of Federal Excise Rules, 2006. The contravention report dated 25.11.2011, therefore becomes without jurisdiction. g) That regarding the initiation of Audit Proceedings by the Directorate of Post Clearance Audit Lahore in respect of the Appellants vide Audit Observation C.

27. No, PCA/NICHR/C/144/ 15/2010/1439 dated 12.8.2010 the Director Post Clearance Audit Lahore had no jurisdiction to conduct Audit for clearances of imported consignments of the Appellants pertaining to Model Customs Collectorate of PACCS Custom House, Karachi in terms of Para 1 clause (iii) (a) of C.G.0 III of 2009 dated 13.6.2009 since under the aforesaid C.G.0 prior special authorization needed to be procured from Director General PCA Islamabad in the first place. In this case the Audit observation Was issued by Deputy Director Post Clearance Audit Lahore on 12.8.2010 whereas the special authorization was issued by the Director General Post Clearance Audit on 16.10.2012 much after the issuance of the Audit Observation. This fact has been incorporated in the Para 3 of the Show Cause Notice dated 29.12.2011 issued by the Additional Collector of Customs Model Customs Collectorate of PACCS Custom House, Karachi. Hence, all the proceedings conducted by the office of Director Post Clearance Audit Lahore are without jurisdiction, coram non judice and hence ab initio null and void. h) That the Appraising Officer Mr. Muhammad Imran of the office of Directorate of Post Clearance Audit Lahore has initiated and signed the subject contravention report dated 25.11.2011 already appended at for contravention of provisions of Section 32(1) (2) of the Customs Act, 1969 in utter violation of the S.R.O. 500(1)/2009 dated 13.6.2009 since the aforesaid S.R.O. At Serial No,6 of the Table appended to the S.R.O. 500(1)/2009 dated 13.6.2009 empowers an Appraiser to exercise the powers and discharge duties of the officers of Customs relating to provisions of the Customs Act, 1969 pertaining to Sections 25,26, 26A, 26B,91,92, 161,168,169 and 171.

28. The powers to initiate and make out cases under Sections 32, 32A and 32B have only been assigned to senior officers appearing in Serial Nos.1 to 4 of the table to the aforesaid S.R.O. As such all the proceedings and actions initiated by adjudicating authorities upon contravention report dated 25.11.2011 given by officer not authorized to do so would be completely coram non judice, ab initio and void. Similar would be the outcome of subsequent orders based upon such unlawful adjudication proceedings. This has been held by the Customs, Excise and Sales Tax Appellate Tribunal while deciding. Cases of Sales Tax in their orders reported as 2009 PTD (Trib.) 2074 and 2009 PTD (Trib.) 500. Reliance is also placed on the judgments of, the Superior Judicial Fora reported as PLD 1995 Karachi 587, PLD 1972 SC 271 and PLD 1997 Lahore 1.

29. ' That the two show cause notices bearing No OIR/MAC/ UNIT02/ZONE 1/RT0-11/KYC/2012/545 dated 28.3.2012 and Show Cause Notice No,OIR/AC/MAC/ RT0-11/KYC/2012/741 dated 21.4.2012 on record issued to the Appellants for recovery of alleged short paid amount of Sales Tax and Excise Duty amounting to Rs,11,600,825/-were issued by Officer Inland Revenue on the basis of contravention report dated 25.11.2011 prepared by Directorate of Post Clearance Audit Lahore. Since the audit proceedings and contravention report initiated by Directorate of Post Clearance Audit Lahore and his subordinate 1, officers were without jurisdiction in preceding paras, all the I subsequent proceedings including the aforesaid two Show Cause I I Notices dated 28.3.2012 and 21.4.2012 issued by officer inland revenue were also without jurisdiction and hence null and void. It was further held in the case of Cittaranjan Cotton Mills Ltd v. Staff Union reported as 1971 PLC 499 that: ' Question relating purely to the jurisdiction of the Court should be raised at any stage of the proceedings. In this connection, the following observation is relevant:--- 'Where the Court is not properly constituted at all the proceedings must be held to be coram non judice and, therefore, non-existent in the eye of law. There can also be no doubt that in such circumstances 'it could never be too late to admit and give affect to the plea that the order was a nullity; as was observed by the Privy Council in the case of Chief Kwane A'stane Tredahone v. Chief Kwame 9 DLR 686 (PC)." j) That the act of assuming of jurisdiction is of great importance and power has to be exercised within the allotted sphere, acting contrary to that is incurable rather fatal for the health of the case and this has been countless time held by the Honourable Supreme Court of Pakistan that in case of assuming wrong jurisdiction the structure built thereon ought to crumble down, reference is placed on the reported judgment 2001 SCMR 1822 Ali Muhammad v. Chief Settlement Commissioner, wherein the Honourable Chief Justice of Pakistan Mr. Iftikhar Muhammad Chaudhry presiding a bench in the capacity of Judge of Supreme Court held that:-- "Whenever orders are passed by an officer without caring whether jurisdiction vests in him or not, it prima-facie reflects on his conduct as well as competency. It is also to be noted that whenever authority is exercised in such manner then no other inference can be drawn except that the functionary has transgressed his jurisdiction for the consideration other than judicial one and the courts seized with such orders may recommend any action against the said officer because neither the executive authorities nor judicial forum will pass a wrong order because the jurisdiction in both the capacities is conferred upon such authorities to discharge their function in accordance with law which has bestowed upon them to function in that capacity and if there is abuse of power by such officer then no hesitation should be felt in passing stringent structure against officer, keeping in view of norms of justice. k) Their lordships also held in reported judgment PLD 2004 Supreme Court 600 All Pakistan Newspaper Society and others v. FOP and others that "determination of jurisdiction by Court seized with the matters is one of the important element in administration of justice as if justiee has been providing basing upon coram non judice order then same would have no legal sanction behind." And in PLD 2005 Supreme Court 842 Khybsr Tractor (Pvt.) Ltd. v. Pakistan through Ministry of Finance, Revenue and Economic Affairs that" question of jurisdiction of a forum is always considered to be very important any order passed by a Court or a forum having no jurisdiction, even if it is found to be correct on merit is not sustainable. Jurisdiction of a Court lays down a foundation stone for a judicial or quasi judicial functionary to exercise its power/authority and no sooner the question of jurisdiction is determined in negative the whole edifice built on such defective proceeding, is bound to crumble down. I) In the light of the above legal position the subject Show Cause Notices dated 28.3.2012 and 21.4.2012, the impugned Order- in-Original No, 1 of 2012 dated 21.4.2012 and the impugned Order-in-Appeal No, CIR/A-IV/07 dated 20.12.2012 are not sustainable in the eyes of law being ab initio null and void. Reliance is placed on the reported judgment of the Honourable Apex Court cited as 2008 SCMR 240, wherein it has been held that: "If a mandatory condition for the exercise of a jurisdiction before Court, Tribunal or Authority is not fulfilled, then the entire proceedings which follow become illegal and suffer from want of jurisdiction. Any order passed in continuation of these proceedings in appeal or revision equally suffers from illegality and is without jurisdiction." m) In the same situation the Honourable Sindh High Court at Karachi in the case reported 2010 PTD 465 it was held that:-- "The exercise of jurisdiction by an authority is a mandatory requirement and its non-fulfillment would entail the entire proceeding to be coram non judice". n) The Honourable Supreme Court of Pakistan in the case reported as 2001 SCMR 1822 has taken a serious view of wrong exercise of jurisdiction and has equated it with abuse of power by the concerned authority demanding action against it by judicial forums. This judgment of the Honourable Apex Court being relied upon by the Honourable Inland Revenue Appellate Tribunal Pakistan in their case reported as 2011 PTD (Trib.)

467. The relevant extract of the above judgment of the Honourable Supreme is reproduced as under:- "Whenever orders are passed by an officer without caring whether jurisdiction vests in his or not, it prima facie reflects on his conduct as well as competency. It is also to be noted that whenever authority is exercised in such a manner then no other inference can be drawn except that the functionary has transgressed his jurisdiction for the consideration other than judicial one and the courts ceased with such order may recommend any action against the said officer because neither the executive authorities nor judicial forums will pass a wrong order because the jurisdiction in both the capacities is conferred upon such authorities to discharge their functions in accordance with law which has bestowed authority upon them to function in the capacity and if there is abuse of power by such officer then no hesitation should be felt in passing stringent structure against officer keening in view norms of justice." o) The same position was taken by the Honorable Supreme Court in the case of Rashid Ahmad v.

30. The State reported as PLD 1972 Supreme Court 271. The relevant extract from the aforesaid judgment reads as under: "It has been held by this Court in the above-mentioned case that if a mandatory condition for the exercise of a jurisdiction before a. Court, tribunal or authority is not fulfilled, then the entire proceedings which follow become illegal and suffer from want of jurisdiction. Any order passed in continuation of these proceedings in appeal or revisions equally suffers from illegality and are without jurisdiction."

31. ' Same position was taken by the Honorable Supreme Court in the case of Nawab Syed Raunaq Ali v. Chief Settlement Commissioner and others reported as PLD 1973 Supreme Court 236. The relevant extract from the aforesaid judgment is as under: "It is now well-established that where an inferior tribunal or Court has noted wholly without jurisdiction or taken any action "beyond the sphere allotted to the tribunal by law and, therefore, outside the area within which the law recognizes a privilege to err, then such action amounts to a "usurpation of power unwarranted by law" and such an act is a nullity; that is to say "the result of a purported exercise of authority which has no legal effect whatsoever". In such a case, it is well- established that a Superior Court is not bound to give effect to it, particularly where the appeal is to the latter's discretionary jurisdiction. The Court would refuse to perpetuate, in such circumstances, something which would be patently unjust or unlawful." q) Even otherwise Tribunal is the last fact finding authority/ forum. It is therefore under a statutory legal obligation to decide us with due application of mind. Such was the observation of the Honourable Peshawar High Court in their judgment reported as 2012 PTD 708. The relevant extract is reproduced as under:-- "The Tribunal being a final Court of fact was also required to see what was the correct provision of law applicable to the facts and circumstances of the case and whether the show cause notice issued to the respondent was issued under the correct provision of law? It is being the most important forum in the hierarchy was required to decide the lis with due application of mind instead of blindly following the track chosen by the Additional Collector. If a forum at the lowest level goes wrong the next higher can step in to correct that. That is what such forum has been established for". r) In the case of E.A. Evans v. Muhammad Asharaf PLD 1964 SC 536 has unambiguously and categorically held "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 unlawful as per maxim "Expressum facit cessaretaciturm". This proposition has also been followed in the hall mark judgment of the Honourable Supreme Court of Pakistan in the case of Director, Directorate General of Intelligence and Investigation and others v. Messrs Al-Faiz Industries (Pvt). Ltd. Reported as 2006 SCMR 129. s) It is yet another settled law that pure question of law can be raised at any stage of proceedings as law laid down by this Court in Haji Abdullah Khan's case PLD 1965 SC 90. It is basic principle that if a mandatory condition for the exercise of jurisdiction by a court is not fulfilled, then the entire proceedings which follow become illegal and suffer from want of jurisdiction as laid down by this Court in Mansib Au 's case PLD 1971 SC 124. It has been held by this Court in Muhammad Sarwr v.

32. The State PLD 1969 SC 278 that "a Judge must know the adage that a Judge must wear all the laws of the Country on the sleeve of his robe and failure of the counsel to properly advise him is not a complete excuse in the matter". t) It was further held in the case of Chittaranjan Cotton Mills Ltd v. Staff Union reported as 1971 PLC 499 that: "Question relating purely to the jurisdiction of the Court should be raised at any stage of the proceedings." In this connection, the following observation is relevant:- "Where the Court is not properly constituted at all the proceedings must be held to be coram non judice and, therefore, non -existent in the eye of law. There can also be no doubt that in such circumstances 'it could never be too late to admit and give affect to the plea that the order was a nullity; as was observed by the Privy Council in the case of Chief Kwane Astane Tredahone v. Chief Kwame 9 DLR 686 (PC)." u) That since the case pertaining to short recovery of Customs Duty, Sales Tax, Federal Excise Duty and Income Tax was adjudicated and passed by Additional Collector of Customs (PACCS)

33. Customs House, Karachi in terms of Section 179 of the Customs Act, 1969 vide impugned Order-in- Original No,110 of 2010 dated 19.5.2012, the only statutory course of filing Appeal against the aforesaid impugned order was before Collector of Customs Appeals under Section 193 of the Customs Act, 1969. The same directive was incorporated in Para 2 of the preamble of the impugned Order-in-Original No,110 of 2010 dated 19.5.2012 and which is reproduced below for ease of reference:- ' Para 2:- "An appeal against this order lies with the Collector of Customs (Appeal) Karachi, within 30 days from the date of communication of this order. The appeal shall be accompanied by a fee of Rs,1000/- (One Thousand Only) to be paid in the manner prescribed by the Board."

34. ' The relevant extract that is subsection (1) of Section 193 of the Customs Act, 1969 regarding filing of Appeals to Collector of Customs (Appeals) is reproduced as under:- 'APPEALS TO COLLECTOR (APPEALS). ---[(1) Any person aggrieved by decision or order passed under this Act by an officer of customs lower in rank than a Collector of Customs [ other than a notice of demand served under section 202], may appeal to the Collector ( Appeals) within thirty days of the date of the communication to him of such decision order.

35. 'Whereas in the Finance Act, 2012-2013 the Federal Government made amendment which is reproduced below:-

(9) in section 193 , for subsection (1), the following shall be substituted namely:-

(1) Any person including an officer of customs aggrieved by any decision or order passed under sections 33,79, 80 and 179 of this Act by an officer of Customs below the rank of an Additional Collector may prefer appeal to the Collector (Appeals) within thirty days of the date of communication to him of such decision or order: ' A notification was issued vide S.R.O. 1022(1)/2012 dated Nil August 2012 issued by the Member (Legal) Government of Pakistan Revenue Division Federal Board of Revenue Islamabad which stated:- ' In exercise of the powers conferred by section 3 of the Customs Act, 1969 (IV of 1969), the Federal Board of Revenue is pleased to direct that [in its Notification No, S.R.0 248(1)/2010, dated the 14th April, 20101 the following amendments shall be made, namely:---

(a) In the preamble for the word "upto" the word "below" shall be substituted; and

(b) After the Table the following proviso shall be added, namely:- "Provided that all appeals, against the orders passed by the Additional Collector, filed upto the 30th June, 2012 shall be decided .By the respective Collector of Customs (Appeals)." v) Even otherwise there in no provision in Customs Act, 1969 for filing an Appeal before Commissioner of Inland Revenue (Appeals) Karachi against the order of Additional Collector of Customs passed under Section 179 of the Customs Act, 1969 in the hierarchy of remedies available to litigants under the Customs Act, 1969. The issue of jurisdiction raised by the department on these premises is therefore not legally tenable. w) That again there is no provision in Customs Act, 1969 to file Appeal to Appellate Tribunal Inland Revenue Pakistan against orders passed by Collector of Customs (Appeals) Karachi in cases decided under Section 193 of the Customs Act, 1969. The orders passed by Collector of Customs (Appeals) under Section 193 ibid are to be challenged and argued by way of filing Appeal before Customs Appellate Tribunal under Section 194-A of the Customs Act, 1969. The relevant extract from Section 194-A ibid regarding filing of Appeals to the Customs Appellate Tribunal is as follows:--- '194-A. Appeals to the Appellate Tribunal- (1) Any person [or an officer of Customs] aggrieved by any of the following orders may appeal to the Appellate Tribunal against such orders:-

[ab) an order passed by the Collector of Customs (Appeals) under section I93;]. x) The same directive of filing Appeal against the order of Collector of Customs (Appeals) has been incorporated in the impugned Order-in-Appeal No, 7001/2013 dated 23.1.2013 passed by Collector of Customs (Appeals) Karachi is incorporated in clause (ii) of its preamble and its reproduced below for ease of reference:- "An appeal against the order lies to the Appellate Tribunal, Customs, Central Excise and Sales Tax, Karachi, within sixty days from the date of receipt of this order. An appeal should bear a court fee stamp of Rs,1000/- (Rupees one thousand) only as prescribed under Schedule-II item 22 of the Court Fee Act, 1870 and must be accompanied by a copy of this order."

36. ' Even otherwise there is no provision of filing Appeal against order of Collector of Customs (Appeals) before Appellate Tribunal Inland Revenue Pakistan under the hierarchy of remedies available to litigants under the Customs Act, 1969. As such the objection of the Respondent that the Appellants should have filed an Appeal before Appellate Tribunal Inland Revenue Pakistan against the order of Collector of Customs (Appeals) in respect of short recovery of alleged amount of Sales Tax and Federal Excise Duty is completely out of context and against statutory provisions enumerated in the Customs Act, 1969.

37. ' Conversely, the statutory provisions enumerated in Sections 45-8 and 46 of the Sales Tax Act, 1990 in respect of Appeals to Commissioner Inland Revenue (Appeals) and Appellate Tribunal Inland Revenue, Pakistan do not provide any remedy to litigants to file Appeals to these appellate forums against adjudication orders of Customs Officers or Collector of Customs (Appeals). These appellate forums only entertain preferred by litigants against orders passed under Sections 10, 11, 25, 36, 66 or 45B of the Sales Tax Act, 1990. The Appellants are in 100% agreement with the admitted position that Customs Department is the principle revenue collecting agency of Federal Board of Revenue 'Islamabad in respect of amounts of Customs Duty, Income Tax, Sales Tax and Federal Excise Duty regarding goods imported into Pakistan. The escaped or short recovered amount of Income Tax, Sales Tax and Federal Excise Duty can only be demanded, adjudicated and recovered by Inland Revenue Authorities in view of the recent authoritative judgments pronounced by Honourable High Court of Sindh and Honourable Islamabad High Court while interpreting the relevant statutes vide C.P. No,261/2013 and Customs Reference Application No, Nil 2012. The earlier view point nurtured by the Appellants and his previous Tax Consultant was based upon the legal opinion bearing C. No, F.242/2012-Law-1 dated 11th July of the Government of Pakistan Ministry of Law Justice which was duly endorsed by the Federal Board of Revenue vide letter C.No,3 (32) TAR- I/90 dated 6th August 2012 issued Secretary Tariff-1 in respect of adjudication of cases relating to levy and Collection of Federal Excise Duty, Sales Tax and withholding tax on imported goods circulated by Federal Board of Revenue Islamabad vide their letter C. No,32 TAR/I/90 dated 6.8.2012.

38. The crux of the ongoing discussion illustrates the Appellants claim that no factual or legal mistake has been committed by either the Appellant or his Advocate in contesting the demand of short recovery of Sales Tax, Federal Excise Duty and Income Tax before the forums designated by the legislature in the Customs Act, 1969 under the hierarchy of remedies available to litigants thereunder. Even otherwise an Appellant may not be made to suffer on account of mistakes act or omission either committed by Court of Law or state functionaries. Reliance is placed upon the judgment of Honourable Supreme Court of Pakistan in their judgments reported as 2010 SCMR 1972 and 1997 SCMR 209. The relevant extract from the judgment reported as 1997 SCMR 209 is reproduced below:-- "An error committed by the Court cannot be utilized for the benefit of the respondents. A party cannot be non suited on account of an erroneous order of the court". This judgment also relied upon the extract from the judgment of the Privy Council Jai Behram v. Kedar Nath AIR 1992 PC 269:- - "One of the first and highest duties of all Courts is to take care that the act of the Courts does not cause injury to any of the suitors and when the expression 'the act of the Court'.... Is used, it does not mean merely the act of the Primary Court, or of any intermediate Court of Appeal, but the act of the court as a whole from the lower court which entertains jurisdiction over the matter up to the highest Court which finally disposes of the case." z) That again reverting to the jurisdictional aspect of the Customs Appellate Tribunal Karachi Bench Karachi contested by the Respondents it is hereby submitted that the impugned Order-inAppeal No,7001 of 2012 dated 23.1.2013 legally, lawfully and 'patently passed with jurisdiction in terms of Section 194-A of the Customs Act 1969 since it has been passed against the Order of Collector of Customs (Appeals) passed under Section 193 of the Customs Act, 1969. Both the orders are against the prescribed remedies provided by the legislature under the hierarchy of Customs as incorporated in Customs Act, 1969. The only reason that the order of the Customs Appellate Tribunal adversely affected the short recovery of Sales Tax and Federal Excise Duty and Income Tax does not render it without jurisdiction. Even otherwise the short recovery of Sales Tax, Federal Excise and Income Tax was rendered ab initio null and void as the basic audit proceedings along with or, contravention report dated 25.11.2011 issued by the Directorate of Post Clearance Audit Lahore were adjudged to be without jurisdiction in view of clause iii (c) sub-heading functional/territorial of Customs General Order 3 of 2009 dated 13.6.2009 and Serial No,6 of the table appended to S.R.O.

39. 500(1)/2009 dated 15.6.2009 discussed in detail in preceding paras. Aa) The observations of the Customs Appellate Tribunal with respect to the jurisdiction of Directorate of Post Clearance Audit Lahore ' in absence of prior authorization by Director General PCA Islamabad and absence of legal mandate/jurisdiction to the Appraising Officer of the Directorate of Post Clearance Audit Lahore in terms of Serial No, 6 of table appended to S.R.O. 500(1)/2009 dated 15.6.2009 constitute mixed observations of fact and law in rem to be followed by all other revenue benches working under the domain of Federal Board of Revenue Islamabad. Even otherwise, in terms of Doctrine of Stare Dicisis or Law of Binding Precedents order passed by one division bench of a revenue tribunal working under the domain of Federal Board of Revenue Islamabad cannot be interfered or disregarded by the other revenue bench also working under the domain of Federal Board of Revenue, Islamabad.

40. In this regard reference to hall mark judgments of the Supreme Court of India from the Indian Jurisdiction reported as AIR (1960) SC 936 and AIR (1962) SC 83 is relied upon whereby the Indian Supreme Court in unequivocal terms ruled that in case of conflict between two division benches the matter needs to be referred to a full bench without taking upon the latter bench to decide the matter to the contrary. The same view was followed by a larger bench of the Honourable Lahore High Court Lahore and Honourable Mr. Justice Wahiuddin Ahmed speaking for the larger bench observed that referring the matter to the larger bench in cases of dissent between two division benches of the same High Court is necessary in the interest of promoting doctrine of judicial certainty. Even some decisions from English jurisdiction and privy council were also cited and ultimately held that the following principles emerge which can be safely adopted by the High Court:-

(i) That in order to maintain the judicial decorum and propriety the decision of a Division Bench on a question of law should be followed by other bench. If they differ from it the proper course to adopt would be to refer the question for the decision of a full bench.

(ii) The decision of one division bench on a question of fact is not binding on the other Division Bench.

(iii) If the decision of one Division Bench has not come to notice of the other division bench and a different view is taken in the subsequent 'division bench case, when such two conflicting decisions are placed before the Bench, proper procedure to follow in such case would be for the Bench hearing the case to refer the matter to a Full Bench in view of the conflicting authorities without deciding the question itself.

(iv) In my opinion, if the above principles are not followed, it is bound to create not only uncertainty but contusion in the minds of the litigants public and subordinate courts about judicial decision of the Court. It will also not enhance the prestige of this Court."

(v) The same principles, have been approved by the Honourable Supreme Court of Pakistan in a recent judgment Mu'aline Associates v. Ardeshir Cowasji PLD 1965 SC 42"; wherein it has been held as under:- "In such circumstances, legal position which emerges is that second Division of the High Court should not have a finding contrary to the findings of the 1st Division Bench of the said court on the same point and should have adopted the correct method by making a request for constitution of a larger Bench, if a contrary view had to be taken. In support reference can be made to the case of the Province of East Pakistan v. Dr. Azizul Islam (PLD 1963 SC 296) and Sindheswa r Ganguly v. State of West Bengal (PLD 1958 SC (Ind.) 337), which is a case of Indian Jurisdiction. We, therefore, hold that the earlier judgment of equal bench in the High Court on the same point is binding upon the second bench and if a contrary view had to be taken, the request for constitution of a larger bench should have been made." bb) The doctrine of binding precedents is all the more necessitated to be implemented in the subject appeal under consideration since the Appellants before both benches namely Customs Appellant Tribunal Karachi Bench-II Karachi and Appellate Tribunal Inland Revenue Karachi Bench Karachi is the same Appellant namely Messrs R.M Gulistan Engineering and Constructors (Pvt.) Ltd.

41. And both the cases are based upon audit proceedings and Contravention Report C.No, (Case No,2 /2011) PCA/LHR/ Audit-C/148/2011/667 dated 25.11.2011 initiated by Directorate of Post Clearance Audit Lahore and is in respect of same (4) consignments of "Ductile Cast Iron Pipes and fittings' imported by the Appellants from China during the same period 2007-2008 and involving same amounts of short recovered revenue. The Customs Appellate Tribunal Karachi Bench-H Karachi has decided the Appeal vide Customs Appeal No,K-230/2013 dated 19.9.2013 filed by the present Appellant in the same matter after framing of five questions of law out of which questions Nos.3, 4 and 5 are relevant in as much as they pertain to the legal mandate/jurisdiction of the Directorate of Post Clearance Audit Lahore and its subordinate officers and the last question dealing with the admissibility of exemption of Customs duty and Sales Tax under serial No,6 of the S.R.O. 575(1)/2006 dated 5.6.2006. The aforesaid two relevant issues decided by the Customs Appellate Tribunal Karachi Bench-II, Karachi hit at the very root/foundation of the contravention case initiated by Directorate of Post Clearance Audit Lahore and are reproduced below for ease of reference:- 'ISSUE NO.3: INCORPORATED IN THE ORDER OF CUSTOMS APPELLATE TRIBUNAL IN CUSTOMS APPEAL NO.K-230/2013 DECIDED ON 19.9.2013.

(iii) Whether Audit Observation dated 12.8.2010 was beyond jurisdiction of Deputy Director Post Clearance Audit Lahore in terms of clause (c) of sub-heading functional/territorial of COO 3 of 2009 dated 13.6.2009, since authorization from Director General Post Clearance Audit Islamabad was subsequently accorded on 6.10.2010 as incorporated in Para (3) charter of the Show Cause Notice dated 29.12.2011.

42. ' As regards question No, (iii) as to whether the issuance of Audit Observation dated 12.8.2010 including the subsequent proceedings conducted by Director Post Clearance Audit Lahore were without prior authorization from Director General Post Clearance Audit Islamabad and hence without jurisdiction in terms of Customs General Order No,3 of 2009 dated 13.6.2009. It is observed that this factual position asserted by the Appellants is clearly evident from Paras 1 and 3 of the Show Cause Notice H dated 29.12.2011. The relevant portions being as under:-- ' Therefore, an audit observation was issued to the importers advising them to deposit the short paid amount of duty and taxes, vide C.No,PCA/NLHR/C/44/15/2010/1439 dated 12.8.2010, in term of Para 1 (iii) (c) of CGO 03 of 2009 dated 13.6.2009."

43. "Whereas in term para 1 (iii) (c) of C.G.0 3 of 2009 dated 13.6.2009 the Director General PCA, Islamabad is authorized to assign any audit to any Directorate and in this case special authorization was granted to conduct audit of the importers by the DG, PCA to Director PCA, Lahore vide order dated 06.10.2010."

44. ' A plain reading of the above extracts from the Show Cause; Notice 29.12.2011 in unequivocal terms show that authorization from Director General Post Clearance Audit Islamabad was accorded on 6.10.2010 subsequent to the initiation of the Audit 1 Proceedings by the office of Director Post Clearance Audit Lahore which is a blatant violation of the relevant provision of, clause iii (c) of sub- heading functional/ territorial jurisdiction. The relevant extract is as follows:-- a) In case of the goods imported into or exported from Pakistan and cleared from any of the Customs Collectorate in Karachi, Hyderabad, Gawadar and Quetta. The functions of post clearance audit shall be performed by the Director, Post Clearance Audit (South), Karachi. b) In case of the goods imported into or exported from Pakistan and cleared from any of the Customs Collectorates in Lahore, Rawalpindi, Multan, Faisalabad, Sialkot (Sambrial) and Peshawar.

45. The functions of post clearance audit shall be performed by the Director, Post Clearance Auclit (North), ' Lahore. c) The Board or the Director General, Post Clearance Audit, may assign the audit of any importer or exporter or a class of importers or exporters to any Directorate of Post Clearance Audit, as deemed appropriate. d) In view of the above the Audit proceedings conducted by the officers of Directorate of Post Clearance Audit Lahore are without jurisdiction and hence null and void ab initio. In case of Mansab Ali Amir and 3 others reported as PLD 1971 SC 124, it has been observed by the Honourable Supreme Court as:- "It is an elementary principle of law that if a mandatory condition for the exercise of jurisdiction by a Court, Tribunal or authority is not fulfilled, then the entire proceedings which follow become illegal and suffers from want of jurisdiction. Any order passed in continuation of these proceedings in appeal or revisions equally suffer from illegality and are without jurisdiction."

46. ' Originally, the order was passed by Principal Appraiser Custom so the order passed by the said functionaries, can only be reopened by Collector of Customs while exercising the jurisdiction under section 1'95 of the Customs Act. Learned counsel appearing on behalf of the respondent department submitted that the order passed by Deputy Collector is strictly in accordance with law.

47. The learned Counsel, when asked to refer to any law or citation in support of their contention, the learned counsel could not cite any provision of law which empowers the Deputy Collector to reopen the matter passed by Principal Appraiser (Customs). The language of Section 195 of the Act is sufficient to understand that the Collector of Customs can only revise the order, if any illegality or irregularity is committed by the Principal Appraiser (Customs) or its subordinate and obviously the order passed by the Deputy Collector is without jurisdiction. In these circumstances, the order impugned herein, is declared illegal, unlawful and without lawful authority. The Superior Judiciary has always maintained that a thing required by law to be done in a certain manner as prescribed by law is to be done accordingly. Reliance is placed in reported case of Messrs Khyber Electric Lamp MFG Company Ltd. 2001 PTD 838 and Messrs Atta Muhammad Qureshi PLD 1971 SC 61 which stipulates "If the statute enacts that certain action shall be taken in a certain manner and in no other manner, it has been held that requirements are absolute and that negate to attend them will invalidate the whole procedure". As such the order passed by the officer of original jurisdiction and subsequent proceedings are without jurisdiction and nullity in the eyes of law as categorically held by superior courts of law in the cases reported as PLD 1995 Kar. 687, PLD 1975 SC 331, PLD 1971 SC 197 and PLD 1973 SC 236. As such Question No, (iii) is answered in affirmative.

48. 'ISSUE NO.IV INCORPORATED IN THE ORDER OF CUSTOMS APPELLATE TRIBUNAL IN CUSTOMS' APPEAL NO.K-230/2013 DECIDED ON 19.3.2013

(iv) Whether the Contravention Report dated 25.11.2011 on the basis of Audit under Section 32 (1)&

(2) of the Customs Act, 1969 is defective in material particulars due to non-insertion of relevant subsection (3A) of Section 32 and also without jurisdiction being issued by an unauthorized officer in terms of serial No,6 of title appended to S.R.O. 500(1)/2009 dated 13.6.2009.

49. ' As regards question No,(iv) a plain reading of the Contravention Report dated 25.11.2011 prepared by the officer of Directorate of Post Clearance Audit Lahore indicates that Column No,7 of its preamble mentions Section 32(1) and (2) of the Customs Act, 1969 under the heading provisions of law contravened. The case has solely being made on the basis of audit conducted by Directorate of Post Clearance Audit Lahore and should have mandatorily included the relevant subsection 32(3A) of the Customs Act, 1969 since the case has been reopened on the basis of Audit of the Appellants conducted by Directorate of Post Clearance Audit Lahore. The contravention report is therefore deficient in material particular that is insertion of relevant Section 32(3A) ibid which is not mentioned anywhere in the whole contravention report. As such the Contravention Report is defective and hence null and void and the whole proceedings based upon such a defective Contravention Report are also of no legal value. As that the Contravention Report dated 25.11.2011 has not been signed by the authorized officer, it is observed from a plain reading of the relevant S.R.O. 500(1)/2009 dated 13.6.2009 that the officers of the Post Clearance Audit who have been appointed to be the officer of Customs and to exercise the powers and discharge duties of the officers of Customs and who may be assigned the function's of the appropriate officer under Section 32 are senior officers of the Directorate General Post Clearance Audit appearing at Serial Nos. 1, 2, 3 and 4 of the table -appended to the aforesaid S.R.O. Namely Director General, Director, Additional Director, Deputy Director or Assistant Director. On the contrary in this case the Contravention Report dated 25.11.2011 in terms of Section 32 of the Customs Act, 1969 has been initiated and signed by an Appraising Officer who has not been entrusted with legal mandate x to institute cases under Section 32 of the Customs Act, 1969. The proper exercise of jurisdiction is always derived from a legislative mandate rather it is a sine qua non a condition precedent. The above position is also supported by Customs General Order No, 13/ 2002 dated 4th July 2002 regarding Procedure for Assessm ent/ Classification of Plant and Machinery. Para (i) (b) of the aforesaid Customs General Order (CGO) states as under:- "(b) .... It is not unusual in case of project imports to import plant and machinery in unassembled / disassembled form by way of partial shipments from different sources. It is not only incorrect but undesirable to classify individual shipments separately with disregard to intent and purpose of whole machinery. It is therefore advisable that the components of a machinery whether presented together or separately, be classified under one heading appropriate to the machinery unless specifically excluded under Chapter Notes".

50. ' The contravention Report dated 25.11.2011 is defective on the following counts .... a) That the relevant Section 32(3A) of the Customs Act, 1969 along with Section 32(1) ibid has not been invoked by Directorate of Post Clearance Audit Lahore instead Section 32(2) of the Customs Act, 1969 has been invoked therein which makes the contravention report dated 25.11.2011 defective being deficient in "material particulars." The insertion of Section 32(3A) is mandatory requirement of the Customs Act, 1969 in the Contravention Report dated 25.11.2011 unlawful being without legislative mandate and jurisdiction. b) That the Appraising Officer Mr. Muhammad Imran of the office of Directorate of Post Clearance Audit Lahore has initiated and signed the subject contravention report dated 25.11.2011 for Contravention of provision of Section 32(1)(2) of the Customs Act, 1969 in utter violation of the S.R.0.500(I)/ 2009 dated 13.6.2009 since the aforesaid S,R.O. At Serial No,6 of the Table appended to the S.R.O. 500(1)/2009 dated 13.6.2009 empowers an Appraiser to exercise the powers and discharge duties of the officers of Customs relating to provisions of the Customs Act, 1969 pertaining to Sections 25, 26, 26A, 26B, 91, 92, 161, 168, 169 and 171.

51. The powers to initiate and make out cases under Sections 32, 32A and 32B have only been assigned to senior officers appearing in Serial Nos.1 to 4 of the table to the aforesaid SRO. As such all the proceedings and actions initiated by the adjudicating authorities upon contravention report dated 25.11.2011 given by the officer not authorized to do so would be completely coram non judice, ab intio void. Similar would be the outcome of subsequent order based .Upon such unlawful adjudication proceedings. This has been held by the Customs, Excise and Sales Tax Appellate Tribunal while deciding cases of Sales Tax in their orders reported as 2009 PTD (Trib.) 2074 and 2009 PTD (Trib.) 500. Reliance is also placed on the judgments of the Superior Judicial Fora reported as PLD 1995 Karachi 587, PLD 1972 SC 271 and PLD 1997 Lahore 1.

52. ' In addition to the above a perusal of the item description of the goods as mentioned in all the Commercial Import Documents including the Goods Declaration that the goods imported being Ductile Cast Iron Pipes were Project specific meant exclusively for use in the project of Pakistan Defence Officers Housing Authority, Karachi and for which a letter dated 24.10.2007 addressed Collector Model Customs Collectorate Custom House, Karachi was also produced along with Pakistan Engineering , Council Licence at the time of the subject import. As such the subject goods also being meant for expansion of the existing cogent Desalination Plant squarely falls within the meaning of Equipment as mentioned at Serial No,6 of relevant S.R.O. 575(1)/2006 dated 5.6.2006.

53. We get the strength from the judgment authored by Mr. Justice Iftikhar Muhammad Chaudhery, the case Khyber Tractors (Pvt.), Ltd. v. Government of Pakistan published in PLD 2005 SC 482, while observing the issue, of jurisdiction. It has been observed that the question of jurisdiction in form is always considered to be very important and no order passed by a court or a forum having no jurisdiction, even if it is found to be correct on merits, is not sustainable. The Jurisdiction of a court lays down a foundation stone for jurisdiction or as quasi judicial junctions to exercise its powers/ authority and no sooner the question of jurisdiction is determined in negative. The whole edifice of such defective proceedings is bound to crumble down. It is also an elementary principle of law that if the mandatory condition for exercising of jurisdiction by a Court, Tribunal or authority is not fulfilled then the entire proceedings follow become illegal and suffer from want of jurisdiction. Any order passed in continuation of these proceedings in built or revision equally suffers from illegalities and are without jurisdiction. It is one of the mandatory requirement if the statute enacts with certain action shall be taken in certain manner and courts are required to do justice between the parties in accordance with the provisions of law, as the litigant who approach the court for the relief is bound to substitute with the procedure had been adopted by him in accordance with law.

54. As such question No,(iv ) is answered in affirmative. d) The Appellants at this juncture may bring it on record that the above two questions of law are not based upon per incuriam decisions or obiter dicta but are based on Customs Statutes and their interpretation by Superior Courts of the country which have a binding effect of ratio decidendi as per principles settled in respect of binding effect of decision of one division bench upon the other division bench as per judgment of the Honourable Apex Court mentioned at Para 15 Supra. In all fact and fairness that while deciding the Appeal of the Appellants filed under the statutory provisions of Section 194-A of the Customs Act, 1969 against the order passed by the Collector of Customs (Appeals) Karachi the Customs Appellate Tribunal has no where either touched the merits of the case or has dilated upon the short recovery of Sales Tax Federal Excise Duty and Income Tax as incorporated in the contravention report prepared by officers of Directorate of Post Clearance Audit Lahore but has declared the whole audit proceedings as well as contravention report dated 25.11.2011 initiated by Directorate of Post Clearance Audit Lahore to be without legal mandate/ jurisdiction and hence coram non judice and ab-inito null and void in terms of clause (iii)(c) of sub-heading functional / teriltorial of CGO 3 of 2009 dated 13.6.2009 and in terms of Serial No,6 of the table appended to S.R.O. 500(I)/2009 dated 13.6.2009. The Appellants feel it imperative to bring it on record by reiterating their principal stance that the decision of the learned Customs Appellate Tribunal Bench-II, Karachi in respect of aforesaid lack of jurisdiction is based upon statutes, rules and relevant courts judgments and is therefore binding upon the present learned Appellate Forum in terms of the judgment of Honourable Supreme Court of Pakistan in the case of Khyber Tractors (Pvt.) Ltd. v. Government of Pakistan reported as PLD 2005 SC 482 held that "the question of jurisdiction in form is always considered to be very important and no order passed by a court or a forum having no jurisdiction, even if it is found to be correct on merits, is not sustainable. The jurisdiction of a court lays down a foundation stone for jurisdiction or as quasi judicial function to exercise its powers/ authority and no sooner the question of jurisdiction is determined in negative, the whole edifice of such defective proceedings is bound to crumble down.

55. ' It is also an elementary principle of law that if the mandatory condition for exercising of jurisdiction by a Court, Tribunal or authority is not fulfilled then the entire proceeding are follow become illegal and suffers from want of jurisdiction. Any order passed in continuation of these proceedings in built or revision equally suffers from illegalities and is without jurisdiction. Cc) That apart from aforesaid issues of Jurisdiction even the show cause notices 28.3.2012 and 21.4.2012 issued by the officer of Inland Revenue / S.O. MAC-Unit-02, Zone-1, RTO-II, Karachi are also incompetent being issued under inapplicable/irrelevant Section 36(1) of the Sales Tax Act, 1990 when no collusion or deliberate act of misdeclaration of any material particulars viz origin, description, weight, quantity value etc has been committed by the Appellants. All the material particulars viz description, quantity, weight, origin, value had been correctly declared by the Appellants only the controversy existed with respect to PCT Headings which is of academic nature.

56. Even otherwise there is not allegation of collusion incorporated in the charter of aforesaid Show Cause Notices dated 28.3.2012 and 21.4.2012 issued to the Appellants nor any evidence brought on by the department on record and no disciplinary action taken against any concerned officer.

57. Reliance is placed upon the judgment of the Honourable Lahore High Court in the case of Care Tex v. Collector Sales Tax and Federal Excise and others reported as 2013 PTD 1536. The citation of particular PCT heading in the GD does not amount to misdeclaration within the meaning of Section 32 of the Customs Act, 1969. It is a well settled principle of law in Customs Jurisprudence through a series of judgment of judicial fora of Indian and Pakistani jurisprudence starting with the case of Monno Industries Ltd. v. Government of Pakistan reported as Pet-D199/194. The Appellants at this juncture may point out that incorrect claim to PCT Heading does not tantamount to an act of misdeclaration in the light of a number of judgments delivered by the Superior Courts in the case of Messrs State Cement Corporation of Pakistan v. Collector of Customs and another 2002 MLD 180 which has been upheld by the Honourable Supreme Court of Pakistan in the case of Collector of Customs Karachi v. Messrs State Cement Corporation of Pakistan in Civil Appeals Nos.2590 to 2608/2001 dated 20.12.2005 and in the case of Collector of Customs, Karachi v. Messrs Power Electronic Pakistan (Pvt.) Ltd. Lahore reported as 2011 PTD 2837. dd) That in the light of above para the show cause notices dated 28.3.2012 and 21.4.2012 are patently deficient in respect of incorporation of correct and appropriate legal provisions relating to Section 36 and are therefore defective. The Honorable High Court of Lahore while deciding the Sates Tax Appeal reported as 2003 PTD 1797 (D.C. Khan Cement Co. Ltd., Lahore v. Collector of Customs, Sales Tax and Central Excise Multan) in respect of deficient vague, incomplete and unspecified Show Cause Notice. Also the Judgment of the Honourable Appellate Tribunal India in the case reported as 1985 (19) ELT 285 Tribunal (Crystic Resins (India) (Pvt.) Ltd. Faridabad v.

58. Collector of Central Excise, New Delhi is applicable to the facts and circumstances of the case. Ee)

59. The above view also gains strength from the Judgment reported as 1984 ECR 645 Bombay (The Calcutta Manufacturing Co. Ltd., v. The Assistant Collector of Customs) is applicable to the facts and circumstances of the case. d) Also a hallmark Judgment of the Honorable High Court of Sindh at Karachi in the case of Messrs Kamran Industries v. Collector of Customs reported as PLD 1996 Karachi 68 is applicable to the facts and circumstances of the case and observed as follows:- "Where Show Cause Notice is defective all subsequent proceedings will be void including the appellate orders. Therefore, show cause notices should not be issued mechanically, but should exhibit a proper application of mind by the issuing authority."

60. ' Adjudication and appellate proceedings based upon such a defective and deficient show cause notice are void ab initio. Ff) That the aforesaid Show Cause Notices dated 28.3.2012 and 21.4.2012 are time barred in terms of applicable Section 36(2) of the Sales Tax Act, 1990 where the period of limitation is three years. The subject Goods Declarations mentioned in Para 3 of the Show Cause Notice dated 21.4.2012 pertain to the period February 2007, April 2007, November 2007 and April 2008 and are therefore admittedly time barred since issued beyond the period of limitation of three years incorporated in the aforesaid Section 36(2) of the Sales Tax Act, 1990 and therefore of no legal value being ab initio null and void. Reliance is also placed upon the judgment of the Honourable Supreme Court of Pakistan in the case of Messrs Dewan Cement Limited v. Collector of Customs and Sales Tax and another reported as 2009 SCMR 1126. Reliance is also placed upon the judgment of the Honourable Supreme Court of Pakistan reported as 2011 PTD 2220 Collector of Customs (Preventive) Karachi v. Pakistan State Oil Karachi. Reliance is also placed upon the judgment of the Honourable High Court of Sindh at Karachi in Special Customs Reference Application No,466 of 2011. Dated 20.12.2012 in the case of Messrs Sarwar International and Messrs Telecard Limited v. Additional Collector of Customs MCC, Preventive, AFU and others held in Para 11 of the Order. The Honourable Supreme Court of Pakistan in cases titled Collector of Customs (Preventive) Karachi v. Pakistan State Oil, Karachi (2011 SCMR 1279), Federation of Pakistan v. Messrs Ibrahim Textile Mills (Pvt.), Limited (1992 SCRR 1898 and 2011 PTD 2220) and Messrs Cargill Pakistan Seeds (Pvt.) Limited v. Customs, Excise and Sales Tax Appellate Tribunal Lahore (2004 PTD 26) have held that a show cause notice is to be issued within the prescribed period of limitation. Gg) That apart from aforesaid jurisdictional and legal considerations relating to defective/ time barred show cause notices the subject goods namely "Ductile Cast Iron Pipes" are also on merits admissible for exemption of Customs Duty and Taxes in terms of S.R.O. 575(1)/2006 dated 5.6.2006. This aspect of the case has exhaustively and aptly discussed in detail by the learned Customs Appellate Tribunal Karachi Bench while dealing with question No,5 in their Order-in-Customs Appeal No,K-230/2013 dated 19.9.2013. The observations of the learned Customs Appellate Tribunal Karachi Bench are based upon the ratio decidendi of judgments of the Superior Courts including the Honourable Apex Court reported as PLD 2005 Supreme Court 577, 2003 PTD 986, 2007 PTD 60 and 2011 PTD 569 and therefore have a- binding effect has per doctrine of binding precedent in terms of the various judgments of the Superior Courts including the Apex Court as discussed in Para 15 Supra. The Appellants for ease of reference and understanding deem it imperative to reproduce the extract of Issue No, (v) decided by the Honourable Customs Appellate Tribunal Bench-II Karachi in Customs Appeal No, K-230/2013 vide their order dated 19.9.2013 which is reproduced below:- ' ISSUE NO.V INCORPORATED IN THE ORDER OF CUSTOMS APPELLATE TRIBUNAL IN CUSTOMS APPEAL NO.K-230/2013 DECIDED ON 19.9.2013.

(V) Whether the goods imported i.e, "Ductile Cast Iron Pipes" are admissible for exemption of duty and Sales Tax under S.R.O. 575(1)/2006 dated 5.6.2006 or otherwise caused misdeclaration.

61. ' As regards question No, (v) as to whether the goods imported i.e, Ductile Cast Iron Pipes are admissible for exemption of customs duty and Sales Tax under S.R.O. 575(1)/2006 or otherwise caused misdeclaration is tantamount to misdeclaration within the ambit of mischief of Section 32 of the Customs Act, 1969, a careful study of Section 32 in juxtaposition with Section 79 ibid is deemed appropriate to interpret and comprehend the matter in its true perspective. The provisions incorporated in clause (a) to subsection (1) of Section 79 of the Customs Act, 1969 make it incumbent upon the owner of the goods to file a true declaration of goods, giving, therein complete and correct particulars of such goods,- duly supported by Commercial Invoice, Bill of Lading or Airway Bill, packing list or any other document required for clearance of such goods in such form and manner as the Board may prescribe. The correct particulars inter alia include the factual material details which are known to the owner of the goods or his agent. Such material particulars mainly consist of description of goods, its transaction value, quantity or weight, origin etc. These particulars being factual and incorporated in various commercial documents are in the knowledge of the owner of the goods. Any misstatement in respect of these particulars would constitute an act of misdeclaration within the ambit of Section 32 of the Customs Act, 1969 if the same are submitted knowingly or having reason to believe that such document or statement is false. In this case the Appellants has per documents on record have correctly declared the description, value, quantity and origin of the goods to the Customs Authorities. These material particulars since jotted down in all the Commercial Documents if misdeclared by the owner of the goods would attract the mischief of misdeclaration within the ambit of Section 32 of the Customs Act, 1969. On contrary, classification of any particular goods under the most appropriate heading of Pakistan Customs Tariff is more of an academic issue rather than being a statement of an incontroveralple fact. It is common knowledge that controversies crop up in respect of PCT Classification of diversified merchandise before Customs Authorities as a matter of routine on daily basis. The matter of classification when disputed is referred to Classification Committee, Classification Centre, Federal Board of Revenuer Islamabad or even to International Customs Organization. In view of the volatility of determination of appropriate PCT Heading an incorrect claim to PCT Heading may not constitute an advertent, intentional, and deliberate act of misdeclaration when the Tax Payer has declared all other material particulars correct in all commercial and customs documents including the Goods Declaration and such incorrect claim to PCT is always construed to be in good faith. This view is fortified by the judgment of the Honourable Sind High Court in the case of Collector of Customs Karachi v. Messrs Power Electronic Pakistan (Pvt.) Ltd., Lahore reported as 2011 PTD 2837.

62. The relevant extract is as under:-- ' A comparison of two PCT Headings, which are in dispute, show that they can be misinterpreted and on the basis of such misinterpretation the goods in question can be declared under any of these PCT Headings and, therefore, we are of the opinion that it has been proved that the alleged misdeclaration was not intentional and deliberate. As far as claim of exemption is concerned we are of the opinion that they may fall within the ambit of such exemption and it is a settled law that claim of exemption in good faith if it is disallowed then penal action cannot be taken for the lesser payment of taxes due to the claim of such exemption." b) Another judgment of the Honourable Sindh High at Karachi in the case of Collector of Customs v.

63. Shaikh Sha keel Ahmed reported as 2011 PTD 495 also supports the aforesaid view. Relevant extract is as under:-- "It is a settled law that in cases where a wrong interpretation of a section is made and tax or duty has been short paid due to misconstruction or misinterpretation of the relevant law in good faith such shortfall cannot be termed as misdeclaration and will therefore not be liable to levy of penalty." c) In view of the above an incorrect claim to PCT Heading whether under self automation clearance system or otherwise may not constitute an act of misdeclaration in terms of Section 32 of the Customs Act, 1969 read with Section 79 ibid when the importer has declared all the material particulars viz description, value, quantity; weight, origin etc in all Commercial and Customs Documents including Goods Declaration presented to the Customs Authorities. The subject "Ductile Cast Iron Pipes" qualify for exemption under concessionary S.R.O. 575(1)/2006 dated 5.6.2006, the Advocate of the Appellants in the memo of the Appeal as well as his verbal arguments put forth before this forum and observations made in above Paras 9, 10, 11, 12, 13 and 14 of this order to bring home the arguments of exemption of Customs Duty and Taxes with the help of judgments of the Honourable Apex Court, High Courts and definition of word Plant, Machinery and Equipment from authoritative dictionaries. As per these various judgments Catalyst, Epoxy Grout, especially paints, dump, trucks, fiber, cans roving bobbins, drawings, designs charts, pre-fabricated building structures, PVC Conduit Pipes, Housing Electrical Wiring etc imported either for initial installation, balancing, modernization, replacement or expansion have been adjudged to be either equipment or part of the plant. As such question No, (v) is answered accordingly in above terms, in affirmative.

64. Ii) The observations of the learned Customs Appellate Tribunal Karachi Bench are based upon the ratio decidendi of judgments of the Superior Courts including the Honourable Apex, Court reported as PLD 2005 Supreme Court 577,. 2003 PTD 986, 2007 PTD 60 and 2011 PTD 569 and therefore have a binding effect as per doctrine of binding precedent in terms of the various judgment of the Superior Courts including the Apex Court.

7. We have also heard Ld. DR in detail on all the material points raised by the appellant in instant appeal. Ld. DR while arguing on the issues of jurisdiction and merits of the case reiterated his arguments which were put forth before Commissioner Inland Revenue (Appeals). Ld. DR on the issue of jurisdiction contended that the objection of taxpayer regarding exercise of the powers by the Inland Revenue Officer for retrieval of Taxes (sales tax and I.Tax and FED) short lined/ short deducted at import stage is incorrect as Section 11 read with 36 of Sales Tax Act, 1990, section 162 of the Income Tax Ordinance 2001, Sections 14 and 14-A of the F.E.D. Act, 2005 as under such provision the Inland Revenue Officer can written the short paid taxes. Ld. DR contended that the reference of Ld. AR to the office memorandum of the Ministry of Law and Justice, letter and F.B.R. Letter No,3(32)

65. TAR-1/90 dated 6.8.2012 is misplaced because in the light of those clarifications, in addition to action by Inland Revenue Officer, the officer of Customs could also take action for recovery of non collected/short collected/non .Deducted/short deducted taxes. It does not mean that Inland Revenue authorities are totally debarred from action for assessment/recovery of taxes (Sales Tax/ F.E.D. And Income Tax). Furthermore, the reference to the Customs Act, 1969 by Ld. AR is again not correct. As it is just for assessm ent of Taxes and valuation of taxes however, the unpaid or short paid taxes could be recovered under the relevant provision of Sales Tax Act, 1990 FED Act, 2005 and Income Tax Ordinance, 2001. The assertion of the tax payers, that the Custom Collectorate has more lien on Sales Tax, FED and I. Tax is not correct. It is true that on similar issue, the Custom Collectorate has also passed Order-in-Original 110/ 2012 dated 29.5.2012, against which appeal has also been filed before the Collector Appeal. The Tax payers was asked to pay adjudged amount of Tax adjudicated by this Department or provide copy of payment of Tax (Sales Tax, FED, I.Tax) adjudged by Custom Authority so that the order passed by this department could be rectified to that extent. However, neither it has been paid the Tax adjudged by Inland Revenue Officer, nor Tax adjudged by Customs Authorities. The Tax Payer is harping on the same strings that no order on similar issue has been passed. However it is avoiding payment of Tax. The order passed by the Inland Revenue Officer is prior to order (29.05.2012) passed the Custom authorities and thus has more lien than the order passed by the Custom Authorities. While arguing on the contention of the Taxpayer that he has been allowed considerable time and ample opportunities to defend their case and therefore, the order-in-original is illegal on the principle of Audi-Alterm Partem; Ld. DR contended that this contention of the Taxpayer is again incorrect as it was confronted with the valid show cause notice and in consequence thereof, a comprehensive and detailed order has been passed. While arguing on merits Ld. DR contended that the contention of the Tax Payer that the imported items (tubes pipes and halo steel) falls under the Categorization of' Plant and machinery is totally incorrect as in the common parlance the same are not item which can be categorized as machinery, the tax payer availed the inadmissible benefits of S.R.O. 575(1)/2006 dated 6.6.2006 on the basis of declaration imported i.e, Ductile Cost Iron Pipes and Fittings are classifiable under PCT 7303.0000 against PCT. Heading 7304.3900 at lower rate of Customs Duty, Sales Tax, FED and Income Tax despite the fact that the imported goods do not fall within the ambit of machinery and equipment. Moreover even an item with the connivance of Customs authorities is cleared under misclassification can be reopened under the relevant provisions of law as has been elaborately discussed in Order-in-Original. The following are the memorandum of cross objections which are on record and reproduced below for ease of reference. i. The matter under adjudication before the learned Appellate Tribunal Inland Revenue is regarding non levy of Income Tax and Sales Tax on the basis of Customs Duty, on the import of seamless steel pipes/tubes under PCT Heading /304.3900 by the taxpayer. Ii. The Customs Department and Inland Revenue department both adjudicated the matter simultaneously against the taxpayer and orders were also upheld by the first Appellate forum of both the departments. iii. The taxpayer filed appeals before the learned ATIR against the order of the CIR (Appeals) and before the Customs Tribunal against the Collector (Appeals). iv. The Customs Tribunal accepted the plea of the appellant that the goods imported were part of machinery and equipment, which were rightly classified by the taxpayer under the HS Code 7304.

66. The Customs Tribunal upheld that the classification applied by the Customs authorities under HS code 7308 was held to be unjustified as a result the appeal of the taxpayer was accepted. v. From the above, it is now clear that the matter as to non levy of withholding Income Tax and Sales Tax at import stage is before you. In this respect the following submissions are made for your kind consideration and appraisal. a) Withholding Income Tax at the import stage is leviable on Customs value of goods at the given rates in every case except where the exemption from withholding tax is allowed under any provision of Income Tax Ordinance, 2001. Exemption Certificate is issued by concerned Commissioner Inland Revenue. b) In this case neither could the taxpayer refer to any relevant provision of law allowing exemption from withholding nor a certificate issued by the Commissioner IR. c) Any exemption from Custom duty does not entitle a person to claim exemption from Income Tax or Sales Tax. d) The classification of HS code accepted by the Custom Tribunal is still sub-judice, since the Customs department still has time to file an appeal in reference to the Honourable High Court. e) The findings of the Customs Tribunal regarding classification of HS code has not attained finality since two appellate forums available have not been exhausted. f) Moreover, as a matter of fact, the imports are classifiable explicitly under PCT heading 7304 being steel in nature as steel differs from ductile cast iron in various aspect of chemical composition.

67. ' It is humbly prayed that the order passed by the Department, upheld by the Commissioner-IR (Appeals) may kindly be upheld in the interest of Justice.

8. We in the present appeal are obliged to observe that originally, the order was passed by the Principal Appraiser Customs and said order was ultimately adjudicated by the Ld. Customs Appellate Tribunal Karachi Bench-II Karachi vide Customs Appeal No,K-230/2013 dated 19.09.2013 filed by present appellant in the same matter. Ld. Customs Appellate Tribunal Karachi Bench-II Karachi decided this appeal after framing five questions of law out of which questions Nos.3, 4 and 5 are relevant in as much as they pertain to the legal mandate/jurisdiction of the Directorate of Post Clearance Audit Lahore and its subordinate officers and the last question dealing with the admissibility of exemption of Customs duty and Sales Tax under serial No,6 of the S.R.O. 575(1)/2006 dated 5.6.2006. The Appellant before Customs Appellate Tribunal Karachi Bench-II Karachi and present Appellate Tribunal Inland Revenue Karachi Bench Karachi is same and one namely Messrs R.M Gulistan Engineering and Constructors (Pvt.) Ltd., and both the cases are based upon audit proceedings and Contravention Report C. No, (Case No,2 /2011) PCA/LHR/ Audit-C/148/2011/667 dated 25.11.2011 initiated by Directorate of Post Clearance Audit Lahore and in respect of same consignments of "Ductile Cast Iron Pipes and fittings" imported by the Appellants from China during the period 2007-2008 and involving same contention of' short payment of tax. The aforesaid relevant issues already stand decided by the Customs Appellate Tribunal Karachi Bench-11, Karachi thereby thrashing out the issues from the root/foundation of the contravention report initiated by Directorate of Post Clearance Audit Lahore. It is implied there from in the said order that the Show Cause Notice dated 29.12.2011 indicate that authorization from Director General Post Clearance Audit Islamabad was accorded on 6.10.2010 subsequent to the initiation of the Audit Proceedings by the office of director Post Clearance Audit Lahore which is a blatant violation of the relevant provision of clause iii (c) of sub-heading functional/territorial jurisdiction. The relevant extracts quoted hereby 'Ld. AR in its written arguments vide [a) to d)] are convincing rendering the issue as res adjudication.

9. In the light of above para the show cause notices dated 28.03.2012 and 21.04.2012 are patently deficient in respect of incorporation of correct and appropriate legal provisions relating to Section 36 and are therefore defective. The Honorable High Court of Lahore while deciding the' Sales Tax Appeal reported as 2003 PTD 1797 (D. G. Khan Cement Co. Ltd Lahore v. Collector of Customs, Sales Tax and Central Excise Multan) decided the issue in favour of the taxpayer in respect of deficient vague, incomplete and unspecified Show Cause Notice. It has been held there that "failure on the part of authority for non-mentioning the grounds available for issuance of show cause notice under Section 36(1)(2) would render the show cause notice invalid and illegal. "The above view also gains strength from a hallmark Judgment of the Honorable High Court of Sindh at Karachi in the case of Messrs Kamran Industries v. Collector of Customs reported as PLD 1996 Karachi 68 which is applicable to the facts and circumstances of the case and observed as follows:-- "Where Show Cause Notice is defective all subsequent proceedings will be void including the appellate orders. Therefore, show cause notices should not be issued mechanically, but should exhibit a proper application of mind by the issuing authority."

10. Adjudication and appellate proceedings based upon such a ,defective and deficient show cause notice are void ab initio. As far as the facts of present case are concerned the aforesaid Show Cause Notices dated 28.03.2012 and 21.04.2012 seem to be time barred in terms of applicable Section 36(2) of the Sales Tax Act, 1990 where the period of limitation is three years. The subject Goods Declarations mentioned in Para 3 of the Show Cause Notice dated 21.04.2012 pertain to the period .February 2007, April 2007, November 2007 and April 2008 and are therefore admittedly time barred since issued beyond the period of limitation of three years incorporated in the aforesaid Section 36(2) of the Sales Tax Act, 1990 and therefore of no legal value being ab initio null in void'.

68. The appellant in this regard has correctly placed reliance upon the judgment of Honourable Supreme Court of Pakistan in the case of Messrs Dewan Cement Limited v. Collector of Customs and Sales Tax and another reported case as 2009 SCMR 1126. Reliance has also been placed upon the judgment of Honourable Supreme Court of Pakistan reported as 2011 AID 2220 Collector of Customs (Preventive) Karachi v. Pakisstan State Oil Karachi. Reliance has also been placed upon the judgment of Honourable High Court of Sindh at Karachi in Customs Reference Application No, 466 of 2011 dated 20.12.2012 in the case of Messrs Sarwar International and Messrs Telecard Limited v. Additional Collector o Customs MCC Preventive AFU and others held in Para 11 of the Order.

69. Honourable Supreme Court of Pakistan in cases titled Collector of Customs (Preventive) Karachi v.

70. Pakistan State 011 Karachi (2011 SCMR 1279), Federation of Pakistan v. Messrs Ibrahim Textile Mills (Pvt.), Limited (1992 SCMR 1898 and 2011 PTD 2220) and Messrs Cargill Pakistan Seeds (Pvt.) Limited v. Customs, Excise and Sales Tax Appellate Tribunal Lahore (2004 PTD 26) has held that a show cause notice is to be issued within the prescribed period of limitation.

11. Owing to the above discussion we are convinced with the plea of appellant that the show cause notices dated 28.03.2012 and 21.04.2012 issued by the officer of Inland Revenue/S.O. MAC-Unit-02, Zone-1, RT0-11, Karachi issued under Section 36 of the Sales Tax Act, 1990 are inconsistent, invalid and illegal when no collusion or deliberate act of misdeclaration of any material particulars viz. Origin, description, weight, quantity value etc. Has been alleged against or shown to have had committed by the Appellants. Even otherwise, there is no allegation of collusion incorporated in the aforesaid Show Cause Notices dated -28.3.2012 and 21.4.2012 issued to the appellants nor any evidence has been brought on record by the department and no disciplinary action is shown to have had taken against any concerned officer. Reliance is placed upon the judgment of the Honourable Lahore High Court in the case of CareTex v. Collector Sales Tax and Federal Excise and others reported as 2013 PTD 1536. The citation of particular PCT heading in the GD does not amount to misdeclaration within the meaning of Section 32 of the Customs Act, 1969. The Appellants at this stage have adequately discharged their duty by pointing out that incorrect claim to PCT Heading does not tantamount to an act of misdeclaration in the light of a number of judgments delivered by the Superior Courts viz, in the case of Messrs State Cement Corporation of Pakistan v. Collector of Customs and another 2002 MLD 180 which has been upheld by the Honourable Supreme Court of Pakistan in the case of Collector of Customs Karachi v. Messrs State Cement Corporation of Pakistan in Civil Appeals Nos. 2590 to 2608/2001 dated 20.12.2005 and in the case of Collector of Customs, Karachi v. Messrs Power Electronic Pakistan (Pvt.) Ltd., Lahore reported as 2011 PTD 2837. In these circumstances, the order impugned herein, is declared to be inconsistent, unlawful and unsustainable in law. The Superior Judiciary has always maintained that a thing required by law to be done in a certain manner as prescribed by law is to be done accordingly. Reliance is placed in reported case of Messrs Khyber Electric Lamp MFG Company Ltd. 2001 PTD 838 and 'Messrs Arta Muhammad Qureshi's case PLD 1971 SC 61 which stipulates "If the statute enacts that certain action shall be taken in a certain manner and in no other manner, it has been held that requirements are absolute and that negate to attend them will invalidate the whole procedure'. As such the order- in-original and subsequent proceedings in the shape of impugned order are held to be without jurisdiction and are accordingly annulled. The appeal stands allowed solely ,on these legal points and as such there is no need for recording further observations on other points in this appeal.