' The instant appeal has been filed by Messrs Kamal Limited against Order-in-Appeal No, 347 of 2013 dated 02-05-2013 passed by the learned CIR(A), Faisalabad whereby he while maintaining the Order-in-Original No, 119/2013 dated 30-01-2013 passed by the learned ACIR, has upheld the demand raised 'against the appellant and dismissed the appeal.
2. Brief facts of the instant case are that the appellant is an enlisted public limited company incorporated in Pakistan under the Companies Ordinance, 1984 and also registered under the Sales Tax Act, 1990 as manufacture-cum-exporter engaged in making of zero-rated supplies of textiles and textile articles thereof. The officials of department conducted post audit of appellant's refund files for the months from August, 2010 to June-2Q12 and observed that he has illegally claimed received refund of input tax on the strength of invoices issued by Messrs Al-Makkah A Packages, Faisalabad whose registration was suspended vide Order bearing C. No, 436 dated 01-08-2012 which was subsequently, blacklisted vide Order bearing C. No, 3330 dated 12-02-2013. Resultantly, a show-cause notice bearing C. No 264 dated 17-10-12 for recovery of already refunded amount of sales tax worth Rs, 4,142,560/-was issued asking him to pay back the amount of tax under section 11(3) of the Act which was inadmissibly sanctioned. In response thereto, written submissions along with supportive documents containing 609 pages filed by the appellant against due acknowledgement dated 24-10-12 could not convince the adjudicating authority and in result thereof, an order dated 30-01-2013 was passed against the appellant. The said order was challenged by way of appeal before the learned CIR(A) who also dismissed the same by relying upon the provisions, of sections 2(14), 8A, 73(3), 33(11)(c) and 34 of the Act without examining the legal and factual aspects of the controversies in its true perspective. Now, the appellant has come up before this Tribunal by arguing that the impugned adjudication concluded under section 11(3) of the Act is illegal, and without jurisdiction as neither legislation has given any retrospective effect to its provisions nor any saving clause is given therein for protection of cases of recovery under the omitted provisions of section 36 ibid prevalent at that juncture of time. Learned counsel on merits further contented that impugned show-cause notice, adjudication order and first appellate order are based on false and baseless allegations made by the department and no evidence whatsoever has been placed on record to prove the allegations leveled against him as he procured the alleged goods under the coverage of proper sales tax invoices issued in terms of section 23 of the Sales Tax Act, 1990 duly incorporated in supplier's sales register and summary statement and his supplier has duly discharged his sales tax liabilities under section 7 of the Act in his monthly sales tax returns for period in question, hence, the instant set of transactions are not hit by clause (ca) of subsection (1) of section 8 ibid therefore, the appellant was legally entitled for refund of input tax under section 10 of the Act and too the alleged supplier at the time of making transactions was operative/active and all the payments against those transactions were also made through banking channel as required under section 73 of the Act. Learned counsel further contented that the impugned show-cause notice and consequent adjudication order passed by the learned ACIR (PRA) is illegal and without jurisdiction under. Rule 36 of the Sales Tax Rules, 2006.
On the other hand, learned DR appearing on behalf of revenue department has opposed the contentions of learned counsel for the appellant and supported the orders of authorities below for the reasons recorded therein. At the end, leaned DR has put emphasis on the provisions of section 2(14), 8A subsection (3) of sections 73 and 21(3) of the Act but in support of his contentions, he could not bring forth any documentary evidences despite clear directions given by this Tribunal from time to time.
3. The arguments of the learned representatives of both the rival parties have been heard, the orders of the authorities below as well as relevant provisions of law and the case laws cited by the learned AR of the taxpayer have also been perused carefully.
4. Instantly and instantly, legal issue of utmost importance is taken at the first assailing the impugned show-cause notice and adjudication order pertaining to the tax periods from August- 2010 to June-2012 are illegal and without jurisdiction because amendment in section 11(3) of the Act took effect from 1st July, 2012, would not be applicable to cases, where the default has been committed in the tax periods prior to this amendment. The law applicable is the provisions of section 36 of the Act when amount of input tax was refunded and not as it stood &ling the period when show-cause notice and adjudication order was issued at belated stage. After perusal of relevant provisions of law, we are of the firm opinion that by virtue of Finance Act, 2012, provisions of section 36 were deleted and a new section 11(3) was inserted to the Sales Tax Act, 1990 in such cases, where any recovery of inadmissible and illegal refund was requisitioned. By deletion of section 36 and insertion of section 11(3) to Sales Tax Act, 1990 without its any retrospective application and saving clause for protection of recovery cases under section 36 for the period prior to this insertion, there remained a statutory gap for the cases of recovery where amount of refund was erroneously or illegally sanctioned prior to 1st July, 2012. In the instant case, the department has miserably invoked the provisions of newly inserted section of 11(3) of the Act which is applicable prospectively not retrospectively and even no saving clause for protection of such omitted provisions as contained in section 36 is given therein without which the recovery proceedings initiated under section 11(3) of the Act for the cases prior to 1st July, 2012 is illegal, ab initio void and without jurisdiction. There cannot be any two opinions that the law and rules applicable at the point of time when a default was committed, shall always to be applied. The amendment made in section 11(3) of the Act which took effect from 1st July, 2012, would not be applicable to cases where the default was committed in August-2010 to June-2012 before the amended Act came into force, and that the provisions of section 36 of the Act for such defaults by way of amount refunded erroneously is the law, as it stood at the time when amount of input tax was refunded and not as it stood during the period when impugned show-cause notice and adjudication order was issued at belated stage. It is not needless to mention here that a single limitation period of five years for all cases is given under section 11(3) of the Act for issuance of show-cause notice whereas section 36 provides two separate limitation periods of five years and three years for different cases of recovery falling under its subsection (1) and its subsection (2) respectively depending upon the situation as to whether tax evasion is a result of collusion or deliberate act, or due to some inadvertence, error or misconstruction. That is why provisions of section 11(3) of the Act cannot be applied retrospectively to the cases prior to its insertion having no retrospective application and saving clause for protection of recovery cases falling under section 36(1) or as the case may be under section 36(2) of the Act. No doubt, provisions of section 36 all along with all its subsections were omitted from the Act by insertion of section 11(3) to the Act through Finance Act, 2012 but a notion of section 36 of the Act has been found in section 25(3) of the Act, despite its omission, where under the officers of inland revenue has been kept empowered to pass an order under section 36 ibid and the rationale behind its existence in section 25(3) of the Act plainly empowers the tax authorities to adjudicate upon all the cases falling under section 36 providing two different time limitations under its subsections (1) and (2) of the Act and to pass an order thereunder and provisions of section 11(s) providing a single. Time limitation has always to be applied prospectively in all cases falling within its domain. It is wholesome principle of law that a law in force on the date of commission or omission of an act and the date on which a right accrues to a person, the relevant law is applicable and not the law as in force at, the time of issuance of show-cause notice and passing of adjudication order particularly in cases where no retrospective effect or any saving clause in the newely inserted statutory provisions is consciously given by the legislation therefore, law applicable is the law, as on date when default occurred and not the law as amended. Any right or vested interest accrued to a party under a raw cannot be snatched away or curtailed by any subsequent addition and deletion in law. A right of law existing on a day on which a omission or commission was made is a vested right and this right is governed by the law prevailing on that day and not by the law prevailing on the date of its decision and this vested right can be taken away only by a subsequent amendment if it so provides expressly or by necessary intendment. It is a trite proposition of law that a case is to be decided In accordance with the law prevalent at that moment of time when an omission or commission was made.
5. Primarily provisions of section 73 were incorporated in the Sales Tax Act, 1990 in order to promote the documentation of economy and it imposes an obligation on the buyer to make payments to the seller by means of crossed cheque bank draft, pay-order or any other banking instrument crossed in the name of supplier within 180 days of a tax invoice. The appellant in the instant case has transacted all payments to his supplier through banking channel by complying with the mandatory provisions of the Act, 1990 which is the sole obligation on the buyer to, ensure veracity of transactions in addition to verifying normal and operative status of his supplier. Both, the necessary condition of verifying genuineness of supplier from e-portal of FBR for its operative status and sufficient condition of making payments through banking channel to ascertain the varsity of such transactions was also complied with by the appellant therefore, the legislature has consciously given a right to a buyer in such cases to reclaim input tax so paid, where registration of the supplier has been suspended or has been declared blacklisted, either as a refund or by way of adjustment by inserting the words in section 21(3) of the Act that; 'unless the registered buyer has fulfilled his responsibilities under section 73. This proposition was duly enacted to the Sales Tax Act, 1990 by the legislation by way of insertion of subsection (3) to section 21 of the Act through Finance Act, 2011 which was omitted vide Finance Act, 2013. Therefore, adjustment/ refund of input tax against invoices of any registered supplier cannot be denied on its subsequent suspension or blacklisting if the same was found operative at the time of transactions and in its respect, payment was also, made through banking channel as envisaged under section 73 of the Act. Reclaim of input tax paid is an alienable right of a taxpayer, which cannot be denied on any subsequent default of someone else particularly in the cases where due vigilance is observed at the time of making payments in compliance of section 73 of the Act against invoices of such person whose registration was suspended or even blacklisted subsequently. This connotation is very much supported by the judgment of this Appellate Tribunal Inland Revenue, Lahore Bench in case of " The CIR (Zone-Ill), R.T.
0., Faisalabad v. Messrs Kamal Fabrics, Faisalabad" reported as (2012 PTD (Trib.) 453).
6. Conversely, the learned DR has forcefully contented that the provisions of section 21(3) of the Act was added in the statute book in Finance Act, 2011 w,e,f, 1st July, 2011 and the instant refund claims pertain to the periods much prior to this amendment and therefore, the appellant is not entitled to claim the benefit of this amended provision of law. We are of the firm opinion that the said amendment in section 21(3) of the Act being beneficial and remedial is applicable in alt pending cases and in the instant case as well and such amendment made in section 21(3) of the Act would be effective and applicable only to cases, wherein assessment had not been completed by the Assessing Officer or where matter was pending in appeal before CIR(A) or Tribunal or even High Court and Supreme Court at the time of amendment and the cases which attained finality (i,e, past and closed transactions) could not take its benefit. All remedial and curative legislations when they provide a relief and are beneficial to the Interest of the taxpayer, shall always apply retrospectively on all pending cases. The remedial and curative amending legislations shall always be construed in a manner to advance the remedy, as provided in the statute and not in a manner to defeat the legislative intendment. Indeed, all beneficial, curative and curative legislations are retrospective in effect and apply to all pending assessments, proceedings and appeals. This principle is fully borne out from the judgments reported as "C. S.T. v. Messrs Kruddsons" (PLD 1974 SC 180), "CIT v. Messrs Olympia" (1987 PTD 739), which was confirmed by the Apex Court in "CIT v.
Messrs Shahnawaz Ltd." (1993 SCMR 73) and "Messrs Dawood Cotton Mills v. CIT" (2000 PTD 285).
7. It is needless to say that in cases, where payments are made by the buyer through cheques crossed in the name of the supplier from the business bank account other than a "business bank account declared to the Commissioner in whose jurisdiction he is registered after fulfilling all other conditions as specified therein particularly when such payments are received by the supplier in his 'declared business bank account', it leaves nothing more than a procedural lapse. Ostensibly, no payment has been made clandestinely as it is duly transacted at 'declared business bank account of the supplier therefore, the condition of making payments from the 'declared business bank account' as provided under subsection (3) of section 73 of the Act appears to be rationale fulfilled as its other end is visualized on the declared business bank account of his supplier. Making payments by a registered buyer to his registered supplier from the business bank account not declared to the Commissioner in whose jurisdiction he is registered cannot be termed as "tax fraud" and does not attract the provisions of section 2(37) of the Act particularly when no clandestine transactions is established on either part. Even otherwise, in case, buyer is making payments from his business bank account other than declared one, is just a procedural lapse on his part, entailing no revenue loss to the national exchequer nor it carries any adverse revenue implications therefore, this procedural omission is condoned to maintain his inalienable right of input tax and the appellant cannot be deprived of from his statutory right of input tax due to any procedural omissions whatsoever because neither any procedural mistake affect legal entitlement nor this lapse of procedural in nature has caused any prejudice to the department. It is now well- settled principle of law that acts of inadvertence on part of a taxpayer duo to any procedural mistake would not create demand of sales tax.
8. The condition of physical transfer of goods is nowhere expressly provided under the Sales Tax Act, 1990 or the rules made thereunder however, its inference has been found available in sub- clause (a) of clause (14) of section 2 of the Act and this is how, the detecting agency has created liability of sales tax on lack of physical transfer of goods or any documentary evidence in its respect by stretching the words "on the supply of goods received by that person" as given therein.
The provisions of section 2(14)' of the Act being a definition clause have no legal impact and effect on input tax adjustment/credit under section 7 vis-a-vis section 8 of the Act providing a mechanism for entitlement of input tax to a registered person even otherwise these stretched and implied connotations was also omitted by the Finance Act, 2008 as assented on 26th June, 2008.
As per sacred statute of book, the statute requires no proof of physical transfer of goods from supplier to buyer as a pre-condition for making an input tax adjustment or as the case may be refund. The new mechanism of sales tax value added laws as embodied in the Sales Tax Act, 1990, by its inception, abolished the primitive fiscal laws of the Excise and Inland Customs having physical inherent obstacles on easy transportation, transfer, delivery and movement of goods by introducing fiscal and financial control of all such transactions. The detecting agency, stepping into its past, has not changed its behavior of physical control even after transitional requirement of receiving goods by that person was also omitted consciously from the Statue Book by the legislation on the rationale of free trade and fair business. It is a well settled principle of law that a past and closed transaction cannot be reopened especially when a beneficiary has no role in the irregularity committed by the other party. The learned CIR(A) has erred in equating physical transfer of goods with that of entitlement of input tax adjustment, credit or refund thereon under section 2(14) of the Act and made the first one condition precedent for the second one without catering into provisions of section 2(44) of the Act wherein definition of 'time of supply' is given E and according to its definition as envisaged under section 2(44) of the Act, a supply is deemed to have been taken place when 'goods are delivered' or 'made available to the recipient of supply' or 'when any payment is received in respect of that supply whereas condition of physical transfer of goods only covers the first situation encompassing 'time of delivery of goods' and not caters the second proposition of 'time of making availability of goods to its recipient' and the third phenomenon 'time when any payment is received against that supply'. The contention of the learned DR is also found not justified in equating delivery of goods with adjustment of input tax, credit or refund thereof as this equation appears to be unfounded' when a supply is made under 'hire purchase agreement' which by itself is excluded from the definition of time of supply, wherein no delivery of goods is made or physical transfer of goods is taken place at all however its ownership of use or property of rights is transferred to the buyer against certain money consideration paid for the same and tax point is created when money consideration is paid by the recipient user of the goods. Upon this departmental connotation, how the fate of input tax adjustment, credit or refund will be determined in case when any payment is received in advance against certain supply and its delivery is made at belated stage or in case of 'hire purchase agreement' where no physical delivery of goods is involved at all meaning thereby that physical transfer of goods cannot be made basis for input tax adjustment or as the case may be credit or refund on will and wishes of any tax official beyond statutory provisions of law as contained in the Sales Tax Act, 1990. That is how; the Board in exercise of powers conferred under section 55 of the Act vide its clarification bearing C.No,1(2)STM/2004/151922 dated 8th November, 2013 has removed difficulties being faced by various quarters of business communities that documents and record of physical delivery/transfer of goods like gate passes and transport receipts, etc shall not be demanded by the subordinate tax functionaries during any proceedings against a registered person and cannot be made basis for disentitlement of his right of credit of input tax until and unless specially permitted by the Board. The issue of physical transfer of goods purportedly under section 2(14) of the Act has already been decided and dilated upon by this Appellate Tribunal in case of "The CIR (Zone-Ill), R.T.O., Faisalabad v. Kamal Fabrics, Faisalabad" reported as (2012 PTD (Trib.) 453). The ratio settled in the said judgment is as under:- "As per amended sub-clause (a) of Clause (14) of Section 2 of the Act, it is easy to maintain that the condition of physical transfer of goods was neither specified prior to amendment nor it was made mandatory thereafter---It is now easy to maintain that the condition of physical transfer of goods was neither specified prior to the said amendment nor it was made mandatory thereafter. However, an inference of physical transfer of goods was available in sub-clause (a) .Of clause (14) of section 2 of the Act but by virtue of said amendment, this implied expression has also been omitted from the said section. Therefore, the departmental plea that without any physical transfer of goods, the respondent was not entitled for input tax credit is of no help by reading of the said provisions of law."
9. The sales tax liability was created against the appellant (hereinafter "the buyer") mainly on the ground that the purchases were made from the supplier party who is not traceable and genuine one. After going through the case record, we have found that the learned adjudicating and the first appellate authorities have wrongly placed and shifted the burden on the appellant to establish genuineness and veracity of transactions made with his supplier particularly in the circumstances when the initial burden has already been discharged by the appellant by producing sales tax invoices duly issued under section 23 of the Act and registration certificate of his supplier issued under section 14 of the Act. More so, when the department has not been able to confirm that the person to whom registration certificate issued did not exist at the time of, issuing registration certificate or at the time of purchases made by the appellant. The order blacklisting the supplier party was belated issued much after transaction of purchases and therefore, on the basis of this order, the department cannot state that the purchases of the appellant were not genuine as the time of suspension/blacklisting and the time of transaction is, not same but different. The knowledge gained by the department upon suspension/blacklisting of the supplier was not available with the buyer at the time of transactions to have reason to believe that the supplier will go into default subsequently. Had the department nipped the evil in the bud by not granting the supplier with the sacred registration certificate if he had some reason to believe that the supplier will commit any tax fraud subsequently or if the same was allotted in good faith then vigilance should have been catered from very inception by apprehending practice of any tax fraud. Even before or after blacklisting the supplier, it seems that no enquiry lies been made by the department instead it adopted a very convenient way of raising a huge liability against the appellant as it is always the buyer from whom coins can be jeopardized in ease. If such an enquiry would have been made and facts would have been brought on record that the supplier did not exist at the time of supplies to the appellant then the action of department recovering amount of input tax refund from the appellant could have been justified. The duty to issue registration certificate after due verification of antecedents and particulars of the supplier was very much lied on the department and if he has not taken care to issue registration certificate after due satisfaction and has gone on issuing certificate to bogus, fake and non-existent party, the responsibility entirely lies upon the department. It is now well-settled principle of law that a party should not be made to suffer on account of act/omission on the part of the court or other state functionaries. There is no justifiable material on record on the basis of which any contrary conclusion could be drawn. We are therefore of the view that it is the department who should have been required to trace out the supplier and asked for recovery of sales tax evaded and the burden in this case is throughout on G the tax officials of inland revenue as they had issued the registration certificate and the adverse action of department to impose sales tax against the appellant is not only illegal and unlawful but also harsh and unjustified. If one needed, reference can be made to the judgments of the Hon'ble Sindh High Court, Karachi in case of "Messrs Silver Cotton Mills Ltd., v. Commissioner of Sales Tax (West), Karachi" reported as 1984 PTD 216 and "M/s. Ju iter Textile Mills Ltd. v. Commissioner o Sales Tax (Central), Karachi" reported as 1984 PTD 133 and "Commissioner of Sales Tax v. Messrs Sultan Textile Mills Ltd." reported as (1973 PTD 216).
10. No doubt that the instant case is wholly made out on third party basis by invoking provisions of section 8A of the Act, meaning thereby, over suspecting the input tax invoices of the supplier of appellant that the alleged supplier is involved in claiming huge input tax against invoices issued by the blacklisted, suspended and suspected units who have not any backup of purchases and all transactions of these suppliers were mere paper transactions and no physical transfer of goods has been carried out. The provisions of section 8A simply requires that the buyer should have the knowledge and reasonable grounds to suspect that the supplier will not eventually deposit the sales tax in the national exchequer paid by him and in order to attract the provisions of section 8A of the Act, initial burden lies on the department to establish that the taxpayer had prior "knowledge" and "reasonable grounds" to suspect the supplier that sales tax paid to him shall be remained unpaid in its eventuality and then proceed against the taxpayer. The legislation has consciously made a registered person while receiving a taxable supply obligatory to have knowledge or to have any reasonable grounds to suspect at the time of making payment of sales tax to the supplier that in chain of supply, certain tax will go unpaid. In the instant case, the alleged supplier was very much found operative at the time of transactions at e-portal of FBR showing hundred percent compliance level in his computer profile. The appellant receiving taxable supplies was legally obliged to check validity and veracity of the supplying person i,e, "his supplier" through electronic verification which was obviously done at the time of transactions however; there is no mechanism at all to check whether the persons on back chain of appellant's supplier have also been running similar business reputation and fair play. It was the appellant's supplier receiving supplies from his suppliers to check their status and to suspect that any of tax paid to them would go unpaid. Conversely, in this case, onus of responsibility and obligation resting upon ie appellant's supplier has intricately been shifted on the shoulders of the appellant which is clear violation of the provisions of section 8A of the Act. The department instead of taking any adverse action against those suppliers like conduction of audit, issuance of show-cause notice, suspension of registration and its blacklisting has initiated recovery proceedings against the appellant dragging him into undue tax liabilities therefore, in absence of all this, no recovery could be made and jumped over to appellant heaving under the burden of undue tax liabilities.
11. We have further observed that the learned ACIR (PRA) has wrongly assumed jurisdiction to make out and to adjudicate upon the instant case under the Refund Rules, 2006 whereunder he is not an appropriate adjudicating authority having jurisdiction over cases of post refund audit scrutiny for inadmissible and illegal sanction of sales tax refunds as under Rule 36 of the Sales Tax Rules, 2006 notified vide S.R.O. 555(1)/2006 dated 5th June, 2006 he can conduct post audit of refund files not by its own accord but upon forwarding of all such relevant files of refunds by an officer-in-charge of refund division to him for post-sanction audit scrutiny thereof and after its due completion, he being an officer-in-charge of Post Refund Audit Division shall resend such files with his findings to the concerned office-in-charge of Refund Division for further necessary action as required under law.. Where a statute directs that certain acts shall be done by a specified person, his I performance by any other person is impliedly prohibited. NO power under the said rules has been given to the learned ACIR (Post Refund Audit) to issue a show-cause notice and to adjudicate upon the matter of refund inadmissibly sanctioned being beyond his statutory domain therefore, whole exercise of issuance of show-cause notice and passing of adjudication order by the learned ACIR (PRA) is declared to be illegal, void ab initio and without lawful jurisdiction. The learned DR appearing on behalf of revenue department has contended that though, impugned show-cause notice and consequent adjudication order should have been issued by the office-in-charge of Refund Division yet the case has been decided on merits and mere a technicality does not affect the merits of the case being a technical defect. It is very astonishing to note that how this legal lacuna remained un-redressed at the initial level of adjudication and no attempt appears to have been made to cure this defect. It is a trite law that any transgression of jurisdiction not being a J' technical defect would render entire exercise of authority to be illegal and ab initio void. We get strength from the judgment authored by his lordship Mr. Justice Iftikhar Muhammad Chaudhry in case of "Messrs Khyber Tractors (Pvt.) Ltd. v. Government of Pakistan" reported as (PLD 2005 SC 482) while observing the issue of jurisdiction. It has been observed that the question of jurisdiction in forum is always considered to be very important and any order passed by a court j or a forum having no jurisdiction, even if it is found to be correct on merits, is not sustainable under law. It is also a well-settled principle o law that where a particular authority has exclusive jurisdiction to proceed with a case, any attempt by any other authority to take cognizance of the matter or to institute proceedings would render cognizance and proceedings illegal, void ab initio and of no legal effect.
12. The vital fact in the instant case cannot be ignored that at the time of making transactions; alleged supplier was enjoying his status as an "operative person" having normal behavior at e- portal of Federal Board of Revenue showing hundred percent compliance level at the time of transactions and upon his subsequent inclusion in the list of suspected, suspended and blacklisted units cannot be made effective retrospectively. A notification, executive order and instruction can be given retrospective effect if it goes to the benefit of the taxpayer but if it is detrimental or prejudicial to the interest of a taxpayer imposing liability or obligation will always operate prospectively.In our considered opinion, there is no provision in the Sales Tax Act, 1990 and the rules framed thereunder empowering the revenue authorities to recover the amount of , tax refunded to a buyer due to subsequent suspension of registration and blacklisting of his supplier. In this regard, we gain strength from the landmark judgments of Supreme Court of Pakistan in case of "Messrs Army Welfare Sugar Mills Ltd. And others v. Federation of Pakistan and others" reported as (1992 SCMR 1652) and in case of "Messrs Anoud Power Generation Limited and others v. Federation of Pakistan and others" reported as (PLD 2001 SC 340) wherein it has been laid down as under:-- "At this juncture, another important aspect of the retrospectively of notification may also be noted that if the notification has been used for the benefit of the subject then It can be made operative retrospectively but if its operation is to the disadvantage of a party who is the subject of the notification then it would operate prospectively."
' The principle laid down by the honourable Supreme Court in the above referred judgments was affirmed in case of "Government of Pakistan v. Mis. Village Development Organization" ref: (2005 SCMR 492) in the following terms:- "It is a well-settled principle of law that the executive orders or notifications, which confer right and are beneficial, would be given retrospective effect and those which adversely affect or invade upon vested right cannot be applied with retrospective effect."
13. We must add here that it is the duty of the adjudicating and the first appellate authorities to weigh conflicting evidences and to draw their own inferences and conclusions in order to administer substantial justice but in the instant case, we have observed that both the learned adjudicating authority and the first appellate authority have turned a deaf ear to the assertions and grounds made by the appellant and have miserably failed to take notice of the departmental illegalities and they have not given findings on the issues separately rather in just one sentence in summary manners which rendered their whole exercise of adjudication illegal and ab initio void.
There is onerous duty on the part of adjudicating and appellate authorities to discuss all issues and dispose of what has been argued. The learned CIR(A) ought to have acted as an unbiased and impartial umpire, otherwise, it will be very hard for him to escape from the allegations of mala fide and mal-administration and when any such illegal action will flow from a tax functionary in fiscal matters particularly, it will certainly be tainted with mala fide and malpractice putting a speck on its function. The passing of a summary order has been held to be devoid a lawful authority and of no legal force by the learned Judges of the Lahore High Court in a case reported as (PLD 1975 Lah. 44) wherein their Lordships had in their mind a pronouncement of the Supreme Court of Pakistan reported as (PLD 1970 SC 173), adjudging an order disposing of the matter in a summary manner, having no spelled out reasons, as 'not lawful'. Weighing on this scale, set up by the superior courts, we hold that the decisions of the learned adjudicating authority and first appellate authority now impugned before us are not speaking orders and have no imprint if the effort, if any, made by them to decide the case in a judicious manner. The orders impugned before us are thus clearly devoid of lawful authority, non-speaking, non-judicious, illegal, void ab initio and of no legal effect.
14. The additional demand of default surcharge under section 34 of the Act and hundred percent penalty of amount of tax involved under section 33(11)(c) of the Act is by all means is a tax of punitive nature as such, until and unless, it is established by the department that the taxpayer has either acted deliberately in defiance of the law, or is guilty of contumacious or dishonest conduct, or acted in conscious disregard of its obligation or the default was conscious, willful, mala fide and in the absence of all these mandatory conditions, imposition of penalty and default surcharge is illegal, unlawful and harsh. Further, in absence of any charge of "collusion or of a deliberate action", levy of default surcharge and penalty was not called for, for the reason that the show-cause notice does not disclose whether there was a willful evasion of tax and default on the part of the taxpayer and unless, the assessing authority was satisfied that there was an intentional and deliberate failure on the part of the taxpayer to evade payment of due tax or to receive refund fraudulently, no default surcharge and penalty could be imposed and thus accordingly deleted being harsh, illegal and unjustified. Reliance in this regard can safely be placed on the judgments of the honourable Supreme Court and High Courts of Pakistan reported as 1995 PTD 91, (1999 PTD 1308), (PTCL 2002 CL 224(sic), 2004 SCMR 456 = 2004 PTD 1179, 2004 PTD 1048, (2006 SCMR 626) and (2009 PTD 1112).
15. In view of what has been stated, particularly in the light of law and legal propositions discussed hereinabove, we hold that the whole proceedings are infested with inherent legal infirmities and substantive illegalities tantamount to patent violation of mandatory statutory provisions and that too, in utter disregard of the principles of law settled by the superior judicial fora as quoted supra, the impugned show-cause notice as well as consequent orders are declared to be illegal, ab initio void, without jurisdiction, nullity in the eyes of law and are hereby set aside. The instant appeal filed by the taxpayer is accepted in the manners and to the extent as dilated supra.