Present: CH. SHAHID IQBAL DHILLON (JUDICIAL MEMBER).--(1). The titled appeal has been filed under section 46 of the Sales Tax Act, 1990 at instance of registered person calling in question the impugned Order-in-Appeal No, 105/2015 dated 16-02-2015 of the learned CIR (Appeals), Faisalabad.
2. Brief facts of the instant case are that during scrutiny of sales tax returns, tax profile, sales and purchases summaries and information retrieved from STARR data, it has transpired that appellant has purportedly received refund of input tax pertaining to the tax periods of March-2011 and May-2011 on the strength of invoices issued by M/s. King Packages, Multan whose registration was suspended. Based on the said omission/irregularities, adjudication proceedings were initiated by the taxation officer by way of issuance of show cause notice dated 25- 09-2014 for recovery of already refunded amount of sales tax asking him to pay back the amount of tax under section 11(3) of the Act against which explanation tendered by registered person was treated unsatisfactory.
Resultantly, adjudication proceedings were culminated in passing of an order dated 26-11-2014 which was challenged before the learned CIR(A) who also upheld the liability against the appellant despite submission of relevant records and documents inter alia input tax invoices, inward gate passes, sales tax returns alongwith summary statements as a proof for physical transfer of goods and crossed cheques vis-a-vis bank statements as an evidence of financial veracity of transactions as also admitted by the learned CIR(A) in Para No, 9 at Page No, 11 of the impugned order. The appellant being discontented with treatment met out by both the authorities below, has filed the second appeal before this Tribunal assailing the treatment accorded by both the lower fora.
3. Learned counsel appearing on behalf of appellant has vehemently contested that impugned adjudication concluded under section 1 1(3) of the Act is illegal, and without jurisdiction as neither legislation has given any retrospective ef fect 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. Support in this regard was also sought from the case law reported as (2015 PTD (T rib.) 416 ) and unreported case law in ST A No, 490/LB/2013 dated 04- 04-2014. Learned counsel argued that recovery of sales tax as adjudged against invoices of M/s. King Packages has already been adjudicated and vacated by the learned CIR(A) vide order dated 15-05-2013 in the first round of litigation in another case of the appellant therefore, creation of same demand in the instant case amounts to double jeopardy and double taxation not permissible by any law of the land causing harassment to the appellant and the same may therefore be vacated in the larger interest of natural justice. To support his contention, case laws reported as (2015 PTD (T rib.) 1839) and (PTCL 2005 CL 62) was referred to by the learned counsel for the appellant. Learned counsel further pointed out that though the department has filed an appeal before this Tribunal against the order dated 15-05-2013 passed by the learned CIR(A) in favour of appellant in the first round of litigation yet the department has not challenged the relief given against invoices of M/s. King Packages, Multan which has attained finality and has binding ef fect on the department. At the end, learned counsel while summing up his arguments contented that it is categorically provided in the Act that to pay sales tax is liability of the supplier , if supplier had defaulted, amount defaulted is to be recovered from him and not from the buyer/appellant. To strengthen his arguments, learned counsel placed reliance on (2011 PTD (T rib.) 2619), ( PTCL 1999 CL 827) and (PTCL 2001 CL 237). Learned counsel on merits contented that 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 registers and summary statements 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 sub-section (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. On the other hand, when departmental representative confronted with the tax situation cited supra, in counter arguments, he has assailed the case on similar grounds and charges as leveled earlier in impugned show cause notice as well as adjudged in consequent orders and nothing newel, except to reiterate earlier set of contentions, has been put forth by him and fully supported the orders passed by both the authorities below simply re-endorsing the basis evolved therein.We have heard arguments of both the rival parties and also carefully examined the relevant provisions of law as well as the case laws cited at the bar.
After carefully examining the relevant provisions of law and record, we hold that recovery of refunded amount of sales tax for the months of March-2011 and May-2011 has been adjudged under section 11(3) of the Act which came into being w. e.. 1st July, 2012 by virtue of the Finance Act, 2012 and its provisions have not been made applicable retrospectively by the legislation consciously as the provisions of section 36(1) providing limitation of five years and section 36(2) providing limitation of three years respectively for issuance of show cause notice in different tax situations have been kept intact for all recovery cases for the periods prior to 1st July, 2012. Despite deletion of section 36 from the Statute Book, we have currently found its existence in section 25(3) for audit and adjudication purposes and in section 45B for appeal before the CIR(A) in all such old recovery cases as pertained to the periods before its deletion. No saving clause for cases of section 36 has been provided in section 11(3) of the Act, therefore, in all old cases, recovery of sales tax has to be adjudged under section 36(1) or as the case may be, under section 36(2) ibid. It is well settled principle of law that in absence of clear intention of the legislature to apply a provision of statute with retrospective effect, it would always be deemed that it would be applicable prospectively.This principle has been highlighted by the Apex Court of Pakistan incase of "The Federation of Pakistan and others vs. Haji Muhammad Sadiq and others" reported as (PTCL 2007 CL 114). Even otherwise, provisions of section 11(3) are not deemed to be curative, remedial and beneficial in nature as it curtails right of a registered person not to be called upon to show cause notice after expiry of time limitation under section 36(2) of the Act by impeding him with tax liabilities beyond three years in case of inadvertence, error and misconstruction as well, hence, cannot be made applicable retrospectively on this general principle of law. As such, learned adjudicating authority has erred in invoking provisions of section 11(3) of the Act for recovery of sales tax for the periods prior to its insertion in all cases squarely falling under section 36(1) or as the case may be under section 36(2) of the Act. Reliance is placed on the judgments of Division Benches of this Tribunal propounded in cases of "M/s. Kamal Ltd, Faisalabad vs. The CIR(A) and others STA No, 490/LB/2013 dated 04-04-2014" and "M/s. Asghar Surgical Works, Daska vs. The C.I.R. (ZONE-I), R.T.O, Sialkot" reported as (2015 PTD (Trib.) 416).
6. We have also found that payments in respect of alleged transactions have been made through banking channel as requisitioned under section 73 of the Act and that alleged supplier namely M/s. King Packages was also found operative at the time of transaction however , its registration was suspended subsequently on 03-07-2013 as per computer profile dated 20-01-2015 and also available at e-portal of Federal Board of Revenue and it is reasonable to hold that any past liability of input tax cannot be created against the appellant upon subsequent inclusion of his supplier in that very list of suspended persons. In this regard, it will suf fice to refer to the judgments of Hon'ble Supreme Court of Pakistan in case of "Army W elfare Sugar Mills Ltd and others vs. Federation of Pakistan and others" ( 1992 SCMR 1652 ) and in case of "Government of Pakistan vs. M/s. V illage Development Organization"
(PTCL 2005 CL 138) wherein it has been laid down as under:-- "It is 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 effect or invade upon vested right cannot be applied with retrospective effect."
Notwithstanding above, recovery of sales tax for the months of March-2011 and May-2011 on the strength of invoices issued by M/s. King Packages, Multan is illegal and unlawful particularly in the presence of an earlier show cause notice C.No, 59 dated 03-08-2012 inter alia including invoices of same supplier for the same tax periods issued by the learned ACIR (Audit Unit-5, Zone-II), Faisalabad on the same charges, for the same amount of sales tax is not only duplicate but also equivalent to impede the D appellant with double taxation and jeopardy as adjudication of the matter at hand has already been concluded vide Order-in- Original No, 07/2012 dated 25-10-2012 against which an appeal filed by the appellant has also been succeeded in his favour vide Order-in Appeal No, 413/2013 dated 15-05-2013 passed by the learned CIR(A), Faisalabad in first round of litigation who has not only vacated the same liability of sales tax but also exonerated the appellant from the same charges as leveled in this case. There is no denying the fact that issuance of second show cause notice regarding the same tax periods amounts to imposition of double taxation and double jeopardy which could not be given legal credence but also offends and defies the fundamental rights set out E in Article 13 of the Constitution of Islamic Republic of Pakistan, 1973 which provides that no person shall be prosecuted or punished for the same offense more than once. Reliance is placed on the judgment of this Tribunal in case of "M/s. Ahsan Enterprises, Faisalabad vs. The CIR(A), Faisalabad and others" reported as (2015 PTD (Trib.) 1839). The issues once settled and accepted by the department shall not be allowed to be deviated, because it will create uncertainty which has always been deprecated and disapproved by the Superior Courts as well as the Legislature therefore, any subsequent proceeding initiated with issuance of second show cause notice dated 25-09-2014 and adjudication and appellate orders dated 26-1 1-2014 and 16-02-2015 thereon are thus patently illegal, null and void ab initio having no legal effect at all.
Itis also an admitted fact that department had filed an appeal bearing ST A No, 825/LB/2013 against an earlier order of the learned CIR(A) dated 15-05-2013 before this Tribunal which is currently pending adjudication but surprisingly , demand of sales tax against invoices of M/s. King Packages, Multan had not been challenged thus, earlier order of CIR(A) passed in favour of appellant, in first round of litigation, had attained finality and become a past and closed transaction and has now binding effect on the Sales Tax Department. 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 ratio settled in the judgment of Hon'ble Sindh High Court in case of "M/s. Galaxo Smith Kline Pakistan Ltd, Karachi vs. The Collector of Customs, Sales Tax and Central Excise (Adjudication), Karachi" as reported at (PTCL 2005 CL. 62) is the most relevant in all fours to the case at instance of the registered person. The relevant extract of the judgment is reproduced as under:-- "For the foregoing reasons, it is held that the Sales T ax Department could not reagitate a matter which has been decided against it vide Order -in-Original No, 9 of 2000. The said order could be assailed in appellate or revisional proceedings which were not initiated and therefore, it holds the field and in the presence of the earlier order dated 04-02-2000, another order contrary to the said order cannot be allowed to hold the field for the simple reason that two contrary orders cannot exist at one and at the same time. All the subsequent proceedings commencing with the issuance of letter dated 22-06-2001 issued by the Senior Auditor and further proceedings on the basis of second show cause notice dated 17-10-2001 are without jurisdiction and void ab initio.
In view of what has been discussed hereinabove, particularly in the light of law and the principles laid by the superior courts in various pronouncements quoted supra, impugnedshow cause notice as well as consequent orders of both the authorities below are declared to be illegal, ab initio void and are hereby set aside.
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