JEHANZAIB WAHLAH, MEMBER JUDICIAL-III.----Through this common order, we intend to dispose off Appeals Nos. K-917 and 918/2017 directed against Order-in- Originals Nos. 759 and 760/2016-17 dated 22.06.2017 passed by Collector of Customs, Adjudication-I Custom House, Karachi (Respondent No. 4).
2. Since, these appeals are based on similar facts and grounds, therefore, it is needless to reproduce facts of each case separately, hence, facts of Appeal No. K-917/2017 are taken into consideration that the appellant is a commercial importer and during the course of his business activities imported 9 consignments of "Super Absorbent Polymer" against Goods Declaration (GD) Nos. KPPI-HC-19441- 14 1 02014, KPPI-HC-23395- 05112014, KPPI-HC 24974-11112014, K PPI-HC-33441-30122014, KPPI-HC-40981-11022015, KPPI-HC -43586-26022015, KPPI-HC-49284-31032015, KPPI-HC-52913-17042015 and KPPI-HC-6215-04082015.
While claiming benefit of zero rating as contemplated in Section 4 of the Sales TA Act, 1990 (STA) and Serial No. 85 of the Notification No. S.R.O. 1125(1)/2011 dated 31.12.2011 (the notification) The nominated Appraising Officers upon appearance of GDs on their desktop instead of assessing the goods on the strength of transmitted declaration opted to get the goods examined/tested as per the contemplation of Sections 198 and 199 of the Customs Act, 1969 (the Act) and Rule 435 of Sub-Chapter III of Chapter XXI of Custom Rules, 2001 (the Rules) and to proceed with after, adduoing their opinion referred those to the Deputy Collector of Customs, Group-III, MCCA of PMBQ (Respondent No. 2), who gave his assent and transmitted the GDs to the Deputy Collector of Customs, QICT, who marked those to the examiners of his choice, conducted the physical verification of the imported goods and found the same as per declaration and report so prepared were uploaded in the reservoir of the GDs and sample so drawn were forwarded to the Customs Laboratory, which after testing uploaded the same in the reservoir of the GDs reading as "Super Absorbent Polymer in Primary Form". On the strength of which the competent authority defined in Section 2(a) of the Act, in exercise of the power vested upon them through SRO 371(I)/2002 dated 15.06.2002 passed assessment/clearance orders under the provision of Sections 80 and 83 and Rules 438 and 442 of the Act/Rules and the appellant obtained the deliveries from the terminal. After lapse of about 3 years of the clearance of the consignments , the Deputy Director, Directorate of Post Clearance Audit, (Respondent No. 1) issued an audit observation dated 07.12.2017 with the opinion that the appellant imported 21 consignments from MCC of Appraisement-West and Port Qasim of Super Absorbent Polymer falling under PCT 3906.9090 while claiming benefit under Serial No. 85 of Table of SRO 1125(1)/2011 dated 31.12.2011. By paying 2% Sales Tax 2% Additional Sales Tax and 3% Income Tax , whereas the imported goods are infact toed in diapers and benefit of the notification is in admissible and the clearance should had been made after payment of 17% Sales Tax , 3% Additional Sales Tax and 6% Income Tax and this resulted in short payment/evasion of taxes to the tune of Rs.27,659,034.00/-. Which was replied by the consultant vide letter dated 20.12.2016 through which legality of the audit observation was challenged in addition to the jurisdiction/powers of conduction of audit under section 26(2) of the Act and Section 25 of the STA and Section 177 of the Income Tax Ordinance, 2001 (ITO) in the absence of availability of lawful authority and the respondent No. 1 was further abreast that with the mention of Acrylic Polymer at Serial No. 85 of the notification with specific mention of PCT number, the benefit is available to the appellant irrespective of its use, any opinion formed contrary to the intention of legislature is absurd and requested him to withdraw the audit observation.
The reply was ignored and respondent No. 1 framed contravention report and submitted that with the Director, Directorate General of PCA, who after approving that forwarded to respondent No.3, on the strength of which he issued show-cause notice dated 24.02.2017 with the allegation that the appellant obtained the clearance of the goods under the benefit of the notification , which was otherwise not available and as such has short paid/evaded an amount of Rs.16,449,976.00/-. Hence, contravened the provision of Sections 3, 6, 7, and 34 of the STA and Section 148 of the ITO , punishable under clauses (1) and (14) of Section 156(1) of the Act and Section 33(5) of the STA and Sections 148 and 182 of the ITO and Section 7A of the STA and Chapter X of Special Tax Procedure Rules, 2007 (Special Procedure of payment of sales tax by the importer) and under relevant provision of ITO. The consultant of the appellant submitted reply dated 13.03.2017 to the show-cause notice through which he challenged the mode and manner of conduction of audit and the authority of respondents Nos. 1 and 3 in the matter of sales tax and income tax and ignoring the proposition of law enunciated in Section 193 of the Act and denying the benefit of the Sales Tax despite admissible under Serial No. 85 of Table-I of the notification and requested the respondent No. 3 to vacate the show cause notice as of no substance and of legal effect The respondent No.3 without rebutting the arguments submitted in the reply passed order dated 22.06.2017 holding the charges levelled in the show cause notice stand established and ordered payment of short paid/alleged evaded amount of taxes of Its.11,209,059.00/- along with imposed penalty of. Rs.500,000.00/-. Paras 8 to 10 are relevant , hence reproduced: "8. Record of the case has been examined and written as well as verbal arguments of the both the sides have been given due consideration. The respondent Messrs Miannoor Enterprises, Karachi has been alleged to have violated the provision of Sections 3, 6 and 7 read with Section 34 of the Sales Tax Act, 1990 and Section 148 of the Income Tax Ordinance, 2001, punishable under clauses (1), and 14 of Section 156(1) of the Customs Act, 1969, Section 33(5) of the Sales Tax Act, 1990 read with Chapter X, of the Sales Tax Special Procedure Rules, 2007 (Special Procedure for payment of Sales Tax by the importer) and under relevant provision of Income Tax Ordinance, 2001 by way of paying Sales Tax @ 2% Additional Sales Tax @ 2% & Income Tax @ 3% after claiming benefit of SRO 1125(I)/2011 dated 31.12.2011 on his imported 09 consignments of 'Super Absorbent Polymer' under PCT heading 3906.9090. However, as per case making agency the subject goods meant for use in diapers, the benefit of SRO 1125(1)/2011 is inadmissible and Sales Tax @ 17% and corresponding Additional Sales Tax @ 3% and Income Tax @ 6% is applicable.
9. The learned Advocate of the respondent in his written arguments has mainly challenged the power of adjudicating authority and has repeatedly emphasized that being Collector of Customs, Adjudication, the adjudicating authority is not mandated with the power to adjudicate the case. It has also been contended that the authorities /officers of PCA {case making agency), are not designated an officer of Inland Revenue and as such not empowered to carry out the audit in the impugned case on the basis of such pleas and arguments in his written arguments as reproduced in above in this order.
Advocate/respondent has requested to vacate the show-cause notice. It has however, observed that nothing has been presented to prove the respondent importer has not violated the provision of law as coated in the show-cause notice, why the duty and taxes have been evade by him. The case making agency in its comments as reply to show-cause notice has successfully been able to prove that the case of evasion of duty and taxes have been made as per law and facts.
10. Taking into consideration all aspects of the case Show-Cause Notice No. Coll.Adj-1/113/2016- 17(PCA)4525/2016 / Audit dated 24.02.2017, written reply of show-cause notice by the advocate of the respondent and parawise comments from the case making agency, the charges levelled in the show- cause notice are established beyond shadow of doubt. Therefore, the respondent import Messrs Mianoor Enterprise (NTN # 1538939-1), 255, Swami Narayan Street, Trere Road, Karachi are directed to pay evade amount to the tune of Rs.11209,059/- henceforth. A penalty of Rs.500,000/- (Rupees Five hundred thousand only) is also imposed on the respondent importer.
The appellant filed the appeal on the basis of grounds enumerated therein, the consultant/advocates, on the date of hearing, argued the case strictly in accordance with those. No cross objection under subsection (4) of Section 194A of the Act were filed within the stipulated period of 30 days by the respondent No.1 instead comments, which do not in any manner qualify as memo of cross objection, were submitted to be termed as cross appeal filed under subsection (3) by the respondent No. 1 as expressed in aforesaid section. These while considered merely an opinion, having no binding force, are placed on record of the case for perusal and consideration.
3. As the outset, it is noted that the devised procedure of conduction of section 26(2) Of the Act is available in the provision of section 26A, verbatim of which is reproduced here-in-under 26A. Conducting the Audit:- (1) the appropriate officer of Customs conducting any audit under this Act shall proceed in the manner as the Board may by rules prescribe.
(2) Where any audit or inquiry or investigation is to be conducted for the purpose of ascertaining the correctness of any declaration or documents or statement, for determining the liability of any declaration or document or statement, for determining the liability of any person for duty, taxes fees surcharge fines and penalties, or for ensuring compliance with all other laws administered by the Customs , an appropriate officer of Customs may;-
(a) Examine, or cause to be examined upon reasonable notice, any record or any statement or declaration or document described in the notice with reasonable specificity, which may be relevant to such audit, inquiry or investigation:
(b) Summon, by giving a notice and reasonable time,-
(i) The person who imported, or exported or transported or stored or held under customs bond, or filed a goods declaration, drawback or refund claim,
(ii) Any officer, employee or agent of any person described in clause (a); and
(iii) Any person having possession custody or care of records and documents required to be kept under the Act and any other person, as deemed proper, to appear before him at a reasonable time and to produce such records and documents as specified in.
From bare reading of the provision of Section 26A of the Act, it is abundantly clear that the appropriate designated Officer of Customs empowered by the Board , which are officials of Directorate General of PCA /respondent No. 1 for conducting audit of the record of the importer under Section 26(2) is in the manner prescribed by the Board in Rules. Since, no rules to this date are framed /issued by the Board despite insertion of Section 26A in the Act through Finance Act, 2006, resultant, the audit of an importer accounts/record maintained by him under the provision of Section 211 and Chapter XI of Act/Rules Las to be conducted by the Officials of Directorate of Post Clearance Audit or respondent No. 1 as per the mechanism provided in the Section itself, wherein appropriate officer of Customs is empowered to conduct audit or inquiry or investigation of an importer for the purpose of ascertaining the correctness of any declaration or documents or statement, for determining the liability of any declaration or document or statements, for determining the liability of any person for duty, taxes, fees, surcharge, fines and penalties, or for ensuring compliance with all other laws. However, prior to proceeding with the said exercise, the appropriate officer appointed under Section 3DD of the Act for the said purpose and empowered through SRO 500(I)/2009 dated 13.06.2009, which respondent No. 1 have to either summon or give a notice and reasonable time to an importer for the conduction of audit and for the said purpose production of accounts and record as per the expression of clause (b) of subsection (2) of Section 26A of the Act. The first ground taken by the appellant in memo. of appeal is that the respondent No. 1 has not either issued any notice or served summon to/upon him for the purported exercise of audit despite mandated under law. This lapse renders the audit so conducted which is the root cause of the impugned show-cause notice as of no legal effect. Since, no notice is annexed with the memo. of appeal, the representative of respondent No. 1 was asked to place the copy of the notice/summon forwarded/served to the appellant , as the copy of the same would had been available with him in the case file. The query was replied in negative, which flabbergasted us and another query was put to him that how the audit was conducted, without asking for the accounts and record of the import, the answer was on the basis of GD's available in the data reservoir maintained by PRAL under Section 155G and Rule 110 of the Act/Rules, upon this the representative of respondent No. 1 was asked to read out the passage available in Section 26A, wherein audit of any importer is permitted on the basis of the record available in the CCS Module, to this the answer was given in negative, confirming that audit of the importer accounts/book could only be conducted upon presentation of those after receiving notice/summon to do so in the absence of that conduction of audit on the basis of the record available on the CCS Reservoir is not permitted as it is settled proposition of law that a thing has to be done as it has been prescribed to be done , in case of doing the same in any other manner render it illegal and as such void and ab-initio and this have been held in countless reported judgments, reference is 2002 PTD 2457 that " the thing should be done as they are required to be done, or not at all". The Apex Court held in judgment PLD 1971 Supreme Court 61 "neglect of plane requirement of an absolute statutory enactment prescribing how something is to be done, would invalidate thing being done in some other manner" and in PLD 1973 Supreme Court 236 "it is now well established that where an inferior Tribunal or Court has acted wholly without jurisdiction or taken any action" beyond the sphere allotted to the Tribunal by law and therefore outside the area within which to law recognizes a privilege to err" then such action amounts to a "usurpation of power warranted by law" and as such an act is a nullity that is to say the result of a purported exercise of authority which has no legal effect whatsoever" in such a case, it is well established that a Superior Court is not bound to give effect to it." The said ratio was maintained in the case of E.A Avans reported as PLD 1964 SC 536 "where it has been unambiguously and categorically held that if the doing of a thing is made lawful in a manner than doing of that thing in conflict with the manner prescribed will be unlawful." The Honble Apex Court in 2001 SCMR 838 and 2003 SCMR 1505 held that "while considering the impact of violation or non-observance of the method prescribed by law for doing an act in a particular manner or mode, such provision of law is to be followed in letter and spirit and achieving or attaining the objective of performing or doing of a thing in a manner other than provided by law would not be permitted. The same observation has been made by the Hon'ble Supreme Court of Pakistan in the Civil Petition filed by Director General of Intelligence and Investigation and others v. AI-Fait Industries (Pvt.) Ltd. and others reported as 2006 SCMR 129 "if the law had prescribed method for doing of a thing in a particular manner, such provision of law is to be followed in letter and spirit and achieving or attaining the objective of performing or doing of a thing in a manner other than provided by law would not be permitted". The super structure built on such foundation namely audit observation show- cause notice and order-in-original no matter how strong those may be have to fall, reference is made to PLD 1996 Karachi 68 which laid down that "where the initial order or notice was void all subsequent preceding, orders or super structure built on it were also void. In reported judgment 2006 PTD 978 it is held that "the entire proceeding initiated by the Adjudicating authority and further super structure thereon including the order passed by the learned Tribunal are without jurisdiction void and in- operative." The Apex Court in PLD 1971 Supreme Court 184 held that "order of a Tribunal found to be without jurisdiction ---all successive orders based upon it illegal and liable to be quashed".
4. Upon passing of assessment order under Section 80 and Rule 438 of the Act/Rules and thereafter passing of clearance order under section 83 and Rule 442 ibid by the authority defined in section 2(a) of the Act and SRO 371(I)/2001 dated 15.06.2001, it cannot be disturbed by any authority for the purpose of preparing contravention report and adjudication proceeding. The only course left for the respondent No. 1 was to challenge those orders before the Collector of Customs (Appeals) under Section 193 of the Act in exercise of the powers delegated upon him through SRO 500(I)/2009 dated 13.06.2009. In the filed appeal the respondent No. 1 is empowered to incorporate all the apprehension, misreading of the facts and contravention of the provision of the Act/Rules.
The Collector of Customs, upon receipt of the appeal and going through the facts and grounds if thinks fit that the contention of the respondent No. 1 seems to be correct and the duty and taxes has not been either not levied or short paid on the basis of the goods found subsequent to clearance, is empowered to issue show cause notice to the importer (appellant) as expressed in 3rd proviso to subsection (3) of Section 193A of the Act.
Instead of the adhering the prescribed method available in the Act the respondent No. 1 reopened the assessment/clearance order under section 195 of the Act under which no powers are vested with any Officers of the respondent No. 1. When the right of appeal has been accorded by the legislature in the provision of Section 193 of the Act, the provision of Section 195 is un-operational and cannot be exercised even by the authority defined therein and this has been validated by the Hon'ble High Court of Sindh in reported judgment 2014 PTD 1256 Messrs Paramount International (Pvt.) Ltd., Karachi v. Secretary Revenue Division that "department or an Officer of Customs, if aggrieved, by any decision or order passed by an officer of customs below the rank of additional collector could prefer an appeal before the Collector (Appeal) --- 1st order in original passed in the subject matter was an appealable order for both the parties, therefore option to reopen and order pass under the adjudication hierarchy was not available to the Collector. Even the Collector of Customs Adjudication could not oversee or exercise any right of re-opening of any order which has been passed by an officer lower in rank but acting as an adjudicating authority. Impugned order was set-aside and Constitution Petition was allowed." It is also settled proposition of law that in the presence of an appealable order, fresh order cannot be passed even through issuance of show-cause notice under section 180, while exercising powers under the provision of Section 179 ibid. The said act is piling upon yet another order on the existing appealable order not permitted under law as held by Hon'ble High Court of Sindh in reported judgment 2004 PTD 3020 Messrs Smith Kline French v. Pakistan that "once an order is passed, which attain finality the same cannot be subject to a show- cause notice again, considering that no appeal or revision is filed against the first order". By virtue of non filing of appeal as elaborated above. The transaction stood passed and closed and attain finality and cannot be disturbed. For reaching at the decision I have gained strength from the reported judgment 1989 MLD 4310 Messrs World Trade Corporation v. Central Board of Revenue, wherein their lordship of High Court held that "if the order has attained finality through limitation. A fortiori; the Central Board of Revenue could not open up an order that has attained finality, under the Sea Customs Act, 1878 and against which suo motu revision.
Notwithstanding, the act of issuance, of show cause notice and passing of order-in-original in the instant case by the respondent No. 3 also falls under the ambit of "double jeopardy" not permitted under Article 13 of the Constitution of Islamic Republic of Pakistan. Rendering the order passed by respondents Nos. 3 a d 4 for piling upon an existing appealable order are without lawful authority and jurisdiction and as such void and ab-initio and of no legal effect.
5. We have noted with concern that the respondent No. 3 has not invoked provision of section 32 of the Act in the show-cause notice, which is pre-requisite for him for proceeding in the matter and assumption of jurisdiction in the capacity of adjudication authority as contemplated in Section 179 ibid., instead, the entire charges are levelled under the provision of Sections 3, 6, 7 and 34 of the STA and 148 of the ITO, contravention of which according to him is punishable under section 156(I) (14) of the Act , we are dismayed on the competence of the respondent No. 3 and opt to add with great pain that at least he should had gone through the contravention report or the contents of show-cause notice for lending credibility to it and for assumption of power/jurisdiction in the capacity of officer of customs , appointed under section 3 of the Act not under section 30 of STA under which Officers of Inland Revenue are appointed and who have powers to take cognizance of the contravention of the aforesaid provisions of the STA/ITO in case of need. None invoking of Section 32 of the Act and assumption of powers under the provision of STA/ITO , renders the show-cause notice/order-in-original on their face as defective and as such of no legal effect ,hence, void and ab-initio. We are also unable to comprehend with the line of arguments of the respondent No. 1 that appellant obtained clearance of the goods by paying sales tax lesser under the notification as against leviable under Section 3 of the STA as passing of assessment/clearance order under sections 80 and 83 and Rules 438 and 442 of the Act/Rules rest with the sole and exclusive domain of the Customs Officer listed at Serial Nos. 30 and 33 of the SRO 371(1)/2002 dated 15.06.2002. The Officials conducting the examination who confirmed the declarations and who passed assessment/clearance orders while accepting the declaration and claim of zero rating for payment of reduced rates of sales/additional sales tax under the SRO as true and correct. If it is presumed as stated in the show-cause notice that the alleged clearance of the goods imported by appellant were not correct being in derogation of the notification then that could had not been possible unless these officials were having hands in gloves with the appellants. Meaning thereby that they are standing on the same pedestal. Ironically, no charges have been levelled against those Officials, as of appellant nor any departmental proceeding under the Government Servants (Efficiency and Discipline) Rules, 1973 have been initiated to date. This act of the respondents proves that the appellant has not any offence or contravention of the Act nor instrumental in passing of assessment /clearance order. The said fact with clarity proves that the appellant had been met out with partial treatment, which is not permitted under Article 25 of the Constitution of Islamic Republic of Pakistan and the law laid down by the Superior Judicial Fora in reported judgment 2002 SCMR 312 and 2009 PTD 1507 the Hon'ble Superior Courts have observed that "there exists no power to target incidence of tax in such a way that similarly placed person be dealt not only this similarly, but discriminatingly". Whereas, in reported judgment 2005 SCMR 492 the Hon'ble Supreme Court held that "A facility allowed to some one and denied to other is discrimination". The Apex Court further held in reported judgment 2010 SCMR 431 that: "Doctrine of equality, as contained in Art. 25 of the constitution, enshrine golden rules of Islam and status that every citizen, no matter how high so ever, must be accorded equal treatment with similarly situated persons--- State may classify persons and objects for the purpose of legislation and make laws applicable only to persons or objects within a class--- In fact all legislations involve some kind of classification whereby some people acquire rights or suffer disabilities whereas others do not--- What however, is prohibited under principle of reasonable classification, is legislation favouring some within a class and unduly burdening others--- Basic rule for exercise of such discretion and reasonable classification is that all persons placed in similar circumstances must be treated alike and reasonable classification must be based on reasonable grounds in given set of circumstances but the same in any case must not offend spirit of Art. 25 of the Constitution."
6. Ergo, in order to resolve the issue in hand we have scrupulously gone through the provision of Section 4(c) of the STA and the contents of notification and have observed that the respondent No. 1 and his superior completely misread its essence and spirit, which is unambiguous and allows zero rating to the manufacturer, importer, exporter and whole seller of the five sectors on their manufactured/produced, imported/exported or supplied goods as specified in column 2 corresponding to PCT heading appearing in column 3 of Table-I. The goods namely "Acrylic Polymer in Primary Form" falling under PCT Heading 3906.9090 is appearing at Serial No. 85 of the Table-I. The goods imported by the appellant are super absorbent polymer confirmation of which was obtained through test and as such that falls within PCT heading 3906.9090, benefit on import of that is allowed without any exception as evident from the fact that no strings are attached in the notification, due to the said reason benefit was allowed by the respondent No. 2 and his subordinates at the time of passing assessment order's under Section 80 and Rule 438 of the Act/Rules. For disputing allow of zero rating and payment of sales tax on reduced rates, the respondent No. 1 is of the view that since the appellant is a commercial importer he is not entitled to import "Acrylic Polymer in Primary Form" which is binder and ought to be imported by manufacturer beside same is being used solely and exclusively in "Diapers. That as regards to the objection of the respondent No. 1 to the eligibility of entitlement of notification in the capacity of commercial importer stand negated from condition 1 of the notification and the clarification of the Board issued vide letter C.No. 3(2) AT-L&P/2011(Pt.) dated 02.02.2012 stating inter alia that all commercial importers importing goods useable as industrial input are eligible for concession under the impugned notification. Whereas as regards to the assumption/presumption that "Acrylic Polymer in Primary Form" is solely used In "diapers" without any substance, in the absence of availability of tangible evidence in support of the said formed opinion, which has not been placed on record of the Tribunal, neither the names of the buyers manufacturing diapers, to whom appellant supplied/ sold the goods, which is vital for substantiating of their formed opinion. Rendering it absurd and based on assumption/presumption and conjecture and fishing inquiries which is not permitted under law as per law laid down by the Hon'ble Supreme Court of Pakistan in reported judgment PLD 1992 Supreme Court 485, The Assistant Director Intelligence and investigation v. B.R Herman Mohattas (Pvt.) Ltd., Karachi that "it cannot make a rowing or fishing inquiry or issue a notice by merely shooting in the dark in the hope that it will be able to find out some material out of those documents and then charge the party of irregularity or illegality". The said principle was subsequently held by the Superior Judicial Fora in reported judgment (1957) 32 ITR 89, (1967) 64 ITR 516, I.T.As. 2400/2401/KB/91-92, (1995) PTD (Trib.) 580, (1995) PTD (Trib.) 1152, (1982) 1381 ITR 742, 1993 PTD 206,1997 PTD (Trib.) 2209 and 2013 PTD (Trib.) 353.
7. To the contrary, appellant in unequivocal terms stated that the said chemical has multiple uses, such as in continence garments, surgical pads and many other textile items as binder, it is for the said reason that the legislature extended benefits to the said items in Serial No. 85 of the notification, denial on the pretext of usages in nullity to its essence and spirit and the clarification of the Board issued vide C.No.1(140)C(RGST)/2011 (Pt- V)/86102-R dated 14.07.2017 reading as "it may be noted that under SRO 1125(1)/2011, dated 31.12.2011 as amended by SRO 491(1)/2016 dated 30.06.2016, commercial imports of goods useable at industrial input, specified in Table, including fabric were subject to sales tax @ 0% along with 0% value addition tax within the meanings of Sub-Serial (ii) of S.No. 1 of Table-II of SRO. Use of fabric as industrial input particularly in garments industry cannot be denied. Therefore, commercial import of fabric attracted sales tax @ specified above. It needs to be understood that in order to be eligible for 0% sales and 0% value addition tax rates at the import stage, the actual use of fabric as industrial input is not required. It only has to be "useable" as industrial input, which as already mentioned it potentially can be used as industrial input." The fact of matter is the respondent lost sight that the notification not only covers five sectors rather it is also item specific. Had it be as opined by the respondent No. 1 and his subordinates, there was no need to include goods relating to five sectors at serial Nos. (1) (2) (3) (6) and (7) of the Table. Meaning thereby that notification is not only sector specific in the presence of list of items incorporated in Table-I, which deems to be surplus which is against the settled principal of interpretation of "Statute" had the notification was sector specific , there would had been only one rate (zero percent) prescribed in the law. There was no need to prescribe more rates at reduced percentage then standard rate of 17%. The answer to the question that the notification issued under zero rated/reduced rated regime are goods specific or sector is given in SRO 682(1)/2013 dated 26.07.2013 itself. The condition (ixa) of which is reproduce: "goods specified in Table-I, imported or supplied to registered manufacturer, whether or not of the five sectors, for manufacture of goods specified in Table-I or II shall be charged to sales tax @ 2% on their import or supply"
The condition referred above, clarifies that the "goods specified" in Table to the notification decide the rate of sales tax to be paid/charged on import/supply. The import or supply of input "Goods Specified" are entitled for payment of reduced rate of sales tax even if imported or supplied by a person, which does not belong to five sectors if he supplies the "Goods Specified" to the manufacturer of five sectors The said condition was also included in Table-II to the SRO 486(I)/2015 dated 30.06.2015 applicable for the period July 15 to December 15, relevant portion of Table-II is enumerated here-in-under: SR. # Description of goods and point of taxationPCT Heading No.Rate of Sales Tax
1.
1. Goods usable as industrial inputs, specified in Table-I
(i) Import for in-house consumption by registered manufacturers of the five sectors mentioned in condition (i) below ii)Commercial imports iii) Supplies to registered or unregistered persons of the five sectors iv) Supplies to persons outside the said five sectors v) Import by or supply to, registered manufacturers, whether or not of the said five sectors for the manufacturer of goodsAs specified in Column
(3) of Table-I 3% 3% plus 1% value addition tax 3% 17% 3% specified in Table-I or Table-II The conditions reproduced above clearly confirms that the notification issued under zero/reduced rated regime is "goods specific" not only "sector specific". Similar type of issue was raised by the Regional Tax Office Faisalabad in the case of M/s. Power Chemical Industries Ltd., Faisalabad. The Hon'ble Appellate Tribunal Inland Revenue Services, Lahore was of the view as we are and allowed the appeal vide order dated 04.01.2018 in S.T.A. No. 1140(LB)/2017, vires of which were challenged by the Commissioner Inland Revenue through a reference under Section 47 of the STA vide No. STR No. 210738/2018 before the Lahore High Court, Lahore, which rejected that vide order dated 14.05.2018 , while observing that "we find no substance in this Reference, hence decline to exercise our jurisdiction. Reference Application is decided against the Applicant". In our opinion the entire case has been initiated by the respondent No. 1 on misconception and attributing redundancy to the legislature, which is not permitted under law, every word used in the statute must be given its true meaning and the provision construed together in the harmonious manner moreover, it is not legal or proper to apply one provision of the law in isolation from other provision as surplus ages or redundancy cannot be attributed as held by Superior Judicial Fora in PLD 2005 SC 373 , PLD 1997 SC 32 , PLD 1962 SC 90, 2015 SCMR 1303, PLD 2015 SC 401, 2005 SCMR 1166 and 2016 PTD 1675.
8. For the foregoing deliberation/observation and in the light of prescribed law laid down by the Superior Judicial Fora and in adherence of the ratio decidendi, the instant appeal is allowed and conduction of audit and observation by the respondent No.1 are cancelled, inclusive of show-cause notice providing the basis thereof for impugned order issued/passed by respondent No.3 are hereby vacated/set aside with no order as to costs.
9. Order passed and announced accordingly.