CH. SHAHID IQBAL DHILLON, JUDICIAL MEMBER.--- The titled appeals preferred at the instance of the registered person are directed against the consolidated order passed by the learned CIR (Appeals), Multan dated 09.09.2015.
2. Facts of the case, as per impugned orders, in brief, are that during scrutiny of sales tax profile of the registered person, it transpired that for the periods October, 2013 to August, 2014 the registered person has not charged/paid extra tax and further tax on the supplies made by him amounting to Rs, 76,23,105/- & Rs, 54,56,228/- and thus violated Sections 2(37), 2(46), 3, 3(1A), 6(2), 7A, 23 & 26 of the Sales Tax Act, 1990. On the basis of above allegation, show-cause notices were issued and the case was decided against the registered person. Being aggrieved, the registered person filed appeals before Commissioner Inland Revenue (Appeals), Multan who remanded the case with certain directions for fresh appraisal. In response thereto fresh proceedings were initiated. The registered person attended the proceedings, reiterated his submissions and in support thereof submitted certain documents. However, the adjudicating officer finalized the proceedings by repeating the earlier treatment and passed Order-in-Original Nos, 70/2014-15 & 71/2014-15 dated 13.6.2015 directing the registered person to deposit sales tax amounting to Rs, 76,23,105/- & Rs, 54,56,228/- alongwith default surcharge u/s. 34 & penalty u/s. 33 of the Sales Tax Act, 1990.
3. Still being aggrieved, the registered person again filed appeals and the learned CIR (A), Multan after hearing the arguments decided the same in the following manner:-- "I have considered the grounds of appeal and the arguments adduced by the A.R. of the appellant.
It is observed that the Orders-in-Original No, 70/2014-15 & 71/2014-15 dated 13.06.2015 are the same repetition as earlier. The officer failed to thrash out merits of the case. The direction of the Commissioner Inland Revenue (Appeals). Multan mentioned in the orders in appeals issued vide orders No, 267 & 506 were not followed by the DCIR. It is further observed that no contravention/audit report was issued to the registered person which was the basic requirement of the law. The impugned show-cause notices are thus, coram non judice and without lawful authority, hence, the superstructure built on the same should fall flat. It is further held that no proper opportunity of hearing was awarded. Relying upon case-laws 2001 SCM R 838 = 2005 PTD 152 (Lah. H.C), 1994 SCM R 2232 the impugned orders are hereby annulled with the direction that proper opportunity of nearing be provided and after examining the record, the issue be thrashed out properly.
(Underline is for emphasis)
4. The aforesaid Order of the learped CIR (A) has been assailed in further appeals before the Appellate Tribunal Inland Revenue, Lahore on the following grounds:---
(1) That the learned CIR (Appeals) was not justified to remand the case to the Assessing Officer for de novo assessm ent as in this way the department was allowed to fill in the legal lacunas in the order which was otherwise not maintainable in the eye of law.
Section 45B(3) reads as: In deciding an appeal, the [Commissioner of Inland Revenue (Appeals) may make such further inquiry as may be necessary provided that he shall not remand the case for de novo consideration.
That the learned CIR (Appeals), Multan did not act judicially rather transgressed his jurisdiction while giving directions to proceed the impugned orders are hereby annulled that proper opportunity of hearing be provided and after examining the record, the issue be thrashed out properly, which clearly depicts that the learned CIR (Appeals) was divested of his powers to remand the case for de novo consideration But this Honourable ATIR in terms of Section 132(3) of the Income Tax Ordinance, 2001. is fully empowered to remand the case to the competent authority, as it may deem fit.
(2) That the impugned show-cause notice is defective and deficient and subsequent adjudication order is not only illegal. non-speaking and non-judicial but also perfunctory order based on non- reading of relevant provisions of law and misreading of the documents available on record.
(3) That the impugned adjudication order does not refer any reasoning for the rejection of the contentions raised by the appellant in its grounds and at the most, the impugned order apparently seem a clerical and verbatim reproduction of the show-cause notices without applying independent judicious mind The impugned order proceeds on palpably flawed construction of the law and facts applicable to the instant case and it has failed to advert to the true construction of the entire circumstances affecting the instant case.
It is now settled law that any order which does not contain substantial reasons and does show that it is passed on objective considerations shall always be treated as an illegal and void order.
(4) That the impugned show-cause notice proposing recovery of sales tax under Section 48 of the Act and consequent adjudication order adjudging sales tax liability under Sections 33 and 34 of the Act is illegal, unlawful and without jurisdiction as in case of any evasion of sales tax, recovery can only be adjudged under Section 11(3) of the Act however, any amount adjudged through a proper legal order there-under can be recovered under Section 48 of the Act. Recovery of sales tax can always be adjudged after adhering due process of adjudication under Section 11(3) of the Act, where after, the amount of sales tax so adjudged can be recovered under Section 48 ibid and in no case, recovery can be made without due process of adjudication under Section 11(3) of the Act directly by invoking provisions of Section 48 ibid.
(5) That the appellant is engaged in manufacturing and supply of blended lubricating oil which does not fall under Notification No, S.R.O 896(1)/2013, dated 04-10-2013 therefore, no extra tax was livable on the said product hence, and no recovery can be made from the appellant. It is also pertinent to mention here and in support of the version of the appellant the International Customs Union has adopted "Harmonized Commodity Description and Coding System" for signatory countries including Pakistan. As per plain reading of the relevant chapter, it becomes clear that both the entities are different from each other and have also different PCT Codes and thus is not chargeable to extra tax.
(6)That the appellant has supplied Lithium Grease which is the combination of Soap, Lubricants and Additives does not fall within the ambit of Notification No, S.R.O. 896(1)/2013. dated 04-10-2013 therefore, no extra tax was leviable on the said product. It is well-settled law that whatever is excluded cannot be included an any interpretation of law. It is also pertinent to mention here and in support of the version of the appellant that the International Customs Union has adopted "Harmonized Commodity Description and Coding System" for signatory countries including Pakistan. As per plain reading of the relevant chapter, it becomes clear that both the entities are different from each other and have also different PCT Codes and thus is not chargeable to extra tax.
(7) That as far as, issue of further tax is concerned, suffice it to say that there is no mechanism provided under the Sales Tax Act, 1990 for the taxpayers to find out or discover that the person to whom supply is made to un-registered person as under the provisions of Section 2(25) of the Act, a person who is liable to be registered person is also a registered person. The appellant in the instant case, on the presumption that the persons to whom supplies are made are registered persons, therefore, the appellant has neither charged/collected further tax @ 1% on supplies made to the alleged buyers nor the same was paid. Sales Tax General Order No, 68/2014, dated 11.08.2014 applicable w.e.f 11.08.2014 was not retrospective in effect whereas impugned show-cause notice and consequent adjudication order made thereunder has been found involving liability of extra sales tax of Rs, 2,362, 858/- for the period of April to August, as well. Any tax liability prior to 11th August, 2014 cannot be adjudged under the said notification being not applicable retrospectively.
(8) That the appellant was neither asked to provide the relevant documents and records during the course of adjudication nor he was served with a single notice intimating production of records nor was his explanation sought on any aspect pertinent to subject issues however. the appellant have all the relevant documents which be produced even at this appellate stage for satisfaction of this Hon'ble Court.
(9)That the impugned SRO 89(1)/2013. Dated 04.10.2013 issued by the Ministry of Finance.
Economic Affairs, Statistics and Revenue (Revenue Division) is illegal, without jurisdiction, inconsistent and contrary to the provisions only of the Act, in exercise of the powers conferred by Section 71 of the Sales Tax Act, 1990, Section 71 describe as the Federal Government may, by notification in the official Gazette. Since, neither that this notification is not published in official Gazette, whole proceedings are illegal and nullity in the eyes of law.
(10) Auditor General of Pakistan (AGP) has emphasized that the Federal Board of Revenue (FBR) must place statutory regulatory orders (SR0s) pertaining to exemptions/concessions, issued during Financial Years before the Parliament for approval to avoid loss of public revenue in case SROs are in conflict with Federal Acts/fiscal laws.
(11) That the learned adjudicating authority has imposed penalty and default surcharge under Sections 33 and 34 of the Act but neither specified amount of penalty and default surcharge nor the extent of percentage of penalty in the impugned show-cause notice. Thus, penalty and default surcharge imposed against the appellant. is otherwise not recoverable with the said specification until and unless a lump-sum amount or percentage thereof given in its sub-section Is not confronted in the show-cause notice. It simply means that .he did not apply his judicial mind while imposing penalty and default surcharge which rendered its whole exercise of adjudication as illegal and unlawful, reported case as (2012 PTD (Trib.) 1123).
5. The learned AR argued the case in the light of grounds of appeals. While opening his arguments the learned AR has vehemently assailed the impugned order as unjustified and illegal and submitted that this is the second round of litigation inasmuch as firstly the case was remanded by the learned CIR (A) with certain directions. The adjudicating authority again repeated the earlier treatment but when second time appeals were preferred the learned first appellate authority while annulling the Orders-in-Original remanded the case "with the direction that proper opportunity of hearing be provided and after examining the record, the issue be thrashed out properly" The learned AR contended that the order of the learned CIR (A) is violative of the provisions of sub- section (3) of Section 45B of the Sales Tax Act, 1990 particularly when the appellant was in second round of appeal before him. It was further contended that remand of the case for thrashing out the matter afresh after annulling the orders of the adjudicating authority tantamount to give opportunity to the Revenue to fill in the lacuna which cannot be sustainable under any provision of law. In support of his contention sub-section (3) of Section 45B of the Sales Tax Act is referred which reads as under:--- "In deciding an appeal the Commissioner Inland Revenue (Appeals)' may make such further inquiry as may be necessary provided that he shall not remand the case for de novo consideration".
Reliance in this regard was also placed on the judgment of the Tribunal bearing STA No, 676/LB/2015, dated 12.01.2016 whereby in similar circumstances it Was held that after holding the '"contention of the appellant seems to be correct" the remand of the case by the learned CIR (A) was violative of Section 45B(3) of the Sales Tax Act, 1990 particularly when the appellant has challenged the' action of the adjudicating officer before him in second round of litigation".
6. The learned DR, on the other hand, simply opposed the contentions by supporting the orders of the authorities below but he has not been able to defend the departmental case.
7. After having heard the rival arguments and going through the impugned order we are in consonance with the legal contention advanced by the learned AR for the appellant. We have observed that the learned CIR (A) has annulled the Order-in-Original after observing that since "no contravention/audit report was issued to the registered person which was the basic recquirement of the law. The impugned show-cause notices are thus, coram non judice and without lawful authority, hence, the superstructure built on the same should fall flat" but on the other hand gave direction for thrashing out the matter properly after examining the record which is quite contrary to the provision of Section 45B(3) of the Sales Tax Act, 1990. In the circumstances narrated above the Tribunal has already vacated the orders of the authorities below in its judgment cited supra, the operative part of which reads as under:-- "After having heard the rival arguments we have observed that the learned CIR(A) has remanded the case in a routine manner which is violative of Section 45B(3) of the Sales Tax Act, 1990 particularly when the appellant has challenged the action of the Adjudicating Officer before him in second round of litigation. After holding the contention seems to be correct he should have decided the case in favour of the taxpayer: The issue raised by the taxpayer has already been dilated upon in STA No, 74/LB/2014, dated 29.05.2014 by the Tribunal. In the said case the learned CIR(A) has remanded the case to the Adjudicating Officer by the appellant assailed his action in the second appeal before the Tribunal. A difference of opinion has arisen between the two Members and the Referee Member ultimately held the observations of the learned CIR(A) not in accordance with law and against the provisions of Section 45B(3) of the Sales Tax Act, 1990. Even otherwise it is settled principle of law that remand should not be made in a routine manner and the Appellate Court instead of remanding the case should have decided the case itself. Considering the peculiar circumstances of the case we are of the considered opinion that the learned CIR (A) has erred in law to remand the case. Therefore, the ONO is vacated and the impugned order is annulled".
8. Following the above dictum we are of the considered opinion that the learned CIR (A) was not justified in remanding the case and his action is violative of sub-section (3) of Section 45B of the Sales Tax Act, 1990 particularly when he has annulled the orders of the adjudicating authority after holding the impugned show-cause notices as coram non judice and without lawful authority. In this view of the matter the orders of both the authorities above are vacated meaning thereby the appeals preferred by the registered persons are allowed. Since the appeals are allowed purely on legal ground the other contentions raised in the memorandum of appeals need not be dilated upon.
9. The appeals succeed and disposed of in the manner stated above. Appeals allowed.