CH. SHAHID IQBAL DHILLON, (JUDICIAL MEMBER).---The instant appeal has been filed on behalf of appellant against an order C.No, CIR/RTO/FSD/1185 dated 19-06-2017 passed by the learned CIR (Chenab Zone) RTO, Faisalabad whereby the appellant was blacklisted under section 21(2) of the Sales Tax Act, 1990.
2. Succinctly stated, the facts of the case are that the appellant is registered under the Sales Tax Act, 1990 running its business as an authorized distributor of Messrs Century Engineering Industries (Pvt.) Ltd. (formerly Phoenix Batteries) and Messrs Exide Pakistan Ltd dealing with storage batteries, etc. It was alleged that appellant having no genuine business activities is involved in tax evasion and paper transactions with bogus units to avoid payment of sales tax. Resultantly, the learned CIR (Chenab Zone) through his order C. No, 891 dated 16-03-2017 while exercising powers conferred upon him under section 21(2) of the Act read with Rule 12 of the Sales Tax Rules, 2006 as amended vide S.R.O. 494(1)/2015 dated 30-06-2015, suspended registration of the appellant and subsequently, a show-cause notice C. No, 847 dated 21-03-2017 was issued, asking the appellant as to why he may not be blacklisted. Whereupon, an order C.No, 1185 dated 19-06-2017 for blacklisting the appellant was issued under section 21(2) of the Act read with Rule 12 of the Sales Tax Rules, 2006 as amended vide S.R.O. 494(1)/2015 dated 30-06-2015. Learned counsel appearing on behalf of appellant has termed the suspension/blacklisting proceedings concluded by the learned CIR (Chenab Zone) to be illegal, without jurisdiction, arbitrary and contrary to the facts of the case. Initiating the arguments, learned counsel has vehemently contested that whole exercise of suspension/blacklisting carried out by the learned CIR (Chenab Zone), RTO, Faisalabad is illegal and without lawful jurisdiction as jurisdiction over the case of the appellant vests with the CIR (Lyallpur Zone), RTO, Faisalabad as per Order No, 05 dated 06-09-2016. Learned counsel vociferously contented that the appellant is an authorized distributor of Messrs Century Engineering Industries (Pvt.) Ltd. and Messrs Exide Pakistan Ltd. and sales tax at the rate of 17% along with 2% extra sales tax is paid at the time of purchases and its subsequent supplies are exempt from payment of sales tax under sub-rule (5) of Rule 58T of the Chapter-XIII (Special Procedure for Payment of Extra Sales Tax on Specified Good) and the principal companies have also verified all the purchases through certificates dated 01-08-2016 and 08-09-2017 therefore, charge of tax fraud, tax evasion and paper transactions is illegal and unfounded when due amount of sales tax along with extra sales tax have already been deposited in the national exchequer by the respective suppliers. Conversely, when the learned DR was confronted with the situation cited supra, in counter arguments, he has assailed the case on similar grounds and charges as leveled earlier in the impugned orders and has failed to put forth any explanation to justify any deviation from the arguments advanced by the learned AR and has fully supported the suspension and blacklisting orders of the learned CIR, simply re-endorsing the basis evolved therein and nothing newel is put forth except to reiterated earlier set of contentions.
3. After having heard both the rival parties and carefully examining the relevant record and relevant provisions of law as well as the case law cited at the bar, we find that whole exercise carried out by the learned CIR (Chenab Zone), RTO, Faisalabad for suspension of registration and blacklisting the appellant is illegal and without lawful jurisdiction as jurisdiction over the case of the appellant vests with the learned CIR (Lyallpur Zone), RTO, Faisalabad as per Order No, 05 dated 06- 09-2016 assigning jurisdiction for suspension and blacklisting of a registered person under section 21(2) of the Act falling under respective territorial and legal jurisdiction. The jurisdictional order clearly reveals that all cases or classes of cases, persons or classes of persons of non-corporate whose place of business is situated within the limit of "Maher Sadiq Market" shall be the jurisdiction of Lyallpur Zone. Learned counsel for the appellant has invited our attention towards online application for change in the business address of the appellant duly accepted/approved by the FBR on 08-12-2015, showing new business address of appellant "Shop No, 6, Khan Plaza, Maher Sadiq Market, Railway Road, Lyallpur Town, Faisalabad". and resultantly, this new business address was also updated by the FBR on 'Taxpayer Online Verification'. Learned counsel, in support of his stance, has placed on record, the copies of jurisdictional order dated 06-09-2016, application for change in particulars of registration along with online approval of FBR as well as latest computer profile of the appellant showing current business address of the appellant. While confronted with such factual and legal position, learned DR has candidly conceded to the legal position as stated hereinabove. We are of the considered view that it is the CIR (Lyallpur Zone) who was legally empowered to proceed under section 21(2) of the Act for suspension of registration and blacklisting of the appellant therefore, whole proceedings of suspension and blacklisting being illegal and without jurisdiction are infested with inherent legal infirmities and substantive illegalities.
It is a well-settled principle of law that power vested in any authority can only be exercised by that authority, in default whereof, the entire action would be without jurisdiction, void ab initio and of no legal effect. In this regard, reliance is placed on the judgment of Apex Court of Pakistan reported as (PLD 2005 SC 482) while observing the issue of jurisdiction, it was observed that the question of jurisdiction in forum is always considered to be very important and any order passed by a Court or a forum having no jurisdiction, even if it is found to be correct on merits, is not sustainable under law.
4. We also derive strength from the ratio settled by the Hon'ble Supreme Court of Pakistan in case of "Izhar Alam Farooqi v. Sheikh Abdul Sattar" reported as (2008 SCM R 240). The relevant excerpt of the said judgment is reproduced as under:-- "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."
5. In view of the foregoing facts and law, we have no hesitation to hold that suspension and consequent blacklisting of the appellant has been passed by the CIR (Chenab Zone) without lawful jurisdiction as its jurisdiction vests with CIR (Lyallpur Zone), hence, the impugned orders are annulled. Since the appeal is accepted on point of jurisdiction other grounds need not to be dilated upon.
6. Since, the main appeal of the appellant/registered person has been decided in his favour therefore, stay application has become infructuous.