MUHAMMAD SAJID MEIIMOOD SETHI, J. Through instant Reference Application under Section 47 of the Sales Tax Act, 1990 ("the Act of 1990 "), order dated 20.11.2015, passed by Appellate Tribunal Inland Revenue, Lahore Bench, Lahore (" Appellate T ribunal ")has been assailed.
2. At the very outset, learned counsel for applicant department was confronted that show-cause notice ("SCN "), having been passed after lapse of statutory period of five years, was barred by limitation as provided in Section 11 of the Act of 1990, hence, rightly annulled by learned Appellate Tribunal and even the order-in-original was also passed beyond the limitation of 120 days in violation of law laid down in The Collector of Sales Tax, Gujranwala and others v. Messrs Super Asia Mohammad Din and Sons and others (2017 PTD 1756 = PTCL 2017 CL. 736). Learned counsel for applicant-department, despite arguing the case at some length, could not give any satisfactory reply .
3. Arguments heard. Available record perused.
4. The operative part of impugned order reads as under:- "6. We have heard the arguments putforth by the learned representatives of both the sides and have carefully gone through the available record. We deem it more appropriate to first discuss legal contentions raised by the learned.
AR. As regards the first legal objection regarding time-barred show-cause notice, it is observed that as per Section 11(5) of the Sales Tax Act, 1990, the assessing authority was under legal obligation to issue show-cause notice for a period upto five years. It is an admitted fact in this case that show-cause notice C. No. 811 was issued on 28.04.2014. In terms of the above-referred legal provisions, a show-cause notice issued on 28.04.2014 could cover the period only upto 29.04.2009 whereas the impugned notice includes the period of more than five years and the demand was raised for the period upto July 2007. Thus the period from July 2007 to April 2009 was barred by the statutory period of limitation and "entire proceedings emanating from this show-cause notice stand extinguished" as held in the judgment reported as 2010 PTD 251 .
7. Proviso to sub-section (5) to Section 11 of the Sales Tax Act, 1990 prescribes that "an order under this section shall be made within one hundred and twenty days of issuance of show-cause notice or within such extended period as the Commissioner may for reasons to be recorded in writing fix provided that such extended period shall in no case exceed ninety days." In the case under reference show-cause notice was issued on 28.04.2014 and the Officer of Inland Revenue was legally bound to pass the assessment order within 120 days from the date of issuance of show-cause notice or till such extended time as permissible under the law. On perusal of record it reveals that the assessing authority had failed to comply with the provisions of Section 11(5) while passing the impugned assessment order . It has been held by the Honourable Courts in the judgment reported as 2009 PTD 762 and 2009 PTD 2004 that any order passed beyond the period specified in the statute was "totally without jurisdiction". Since in the case under reference the impugned order was passed on 24.1.1.2014, it was obviously barred by time especially when it has not been mentioned anywhere in the order that an extension had been granted by the Commissioner under the first proviso to sub-section (5) of Section 1 1 of the Sales Tax Act, 1990."
5. The above reproduced part of impugned order shows that learned Appellate Tribunal noticed that the SCN was issued beyond the prescribed, limitation under Section 11(5) of the Act of 1990, hence, the appeal of respondent- taxpayer was accepted and orders of lower fora were vacated.
6. It has been held by the Hon'ble Supreme Court of Pakistan in Federation of Pakistan through Secretary , Finance, Islamabad and others v. Mess rs Ibrahim Textile Mills Ltd and others (1992 SCMR 1898 ) that if a law prescribes period of time for recovery of money , after its lapse, recovery is not enforceable through Courts. In the said case, Hon'ble apex Court, while considering the issue of limitation, after expiry of time prescribed for issuance of recovery notice, held as under:- "4. Due consideration was given as to whether the respondents should not pay the short-levied duty and whether the State should suffer in public finance. But the cardinal principle of law is that all are equal before law, whether citizen or State. Secondly if a law prescribes period of time for recovery of money , after its lapse recovery is not enforceable through Courts. Thirdly , while construing a financial statute, its terms are strictly to be followed.
Keeping in view these principles, for short-levied duties on account "of inadvertence, error for misconstruction", section 32(3) of the Customs Act, 1969 provides that for recovery notice shall be served 'within six months'. If that not done, like "a suit for recovery of money after lapse of time prescribed by law of limitation, the recovery becomes unenforceable.."
7. SCN in the present case, having been issued after the prescribed period, is barred by limitation thus, is without lawful authority and of no legal effect. Reference can be made to Collector of Customs, Sales Tax (West), Karachi v. M/s. K & A Industries, Karachi (2006 PTD 537), XEN Shahpur Division v. Collector Sales Tax (Appeals) Collectorate of Customs, Federal Excise and Sales Tax, Faisalabad and 2 others (2008 PTD 1973 ), Messrs Gulistan Textile Mills Ltd., Karachi v. Collector (Appeals) Customs, Sales Tax and Federal Excise, Karachi and another (2010 PTD 251), Messrs Rose Colour Laboratories Nayab No. 1 (Pvt.) Ltd. v.
Chairman, C.B.R. and others (2003 PTD 1047 ), Abdul Sattar v. Federation of Pakistan through Secretary , Revenue Division/Chairman, Central Board of Revenue, Islamabad and others (2006 PTD 1171), Pakistan International Airlines Corporation v. Central Board of Revenue, Islamabad and others (1990 CLC 868) and Assistant Collector Customs and others v. Messrs Khyber Electric Lamps and others (2001 SCMR 838).
Undeniably , order-in-original is also barred by time.
8. In view of above discussion, instant Reference Application is decided against the applicant-department and in favour of the respondent-taxpayer .
9. Office shall send a copy of this order under seal of the Court to the Appellate Tribunal as per Section 47(5) of the Sales Tax Act, 1990.