(1). The titled appeal has been filed at the instance of M/s. Khyaban Packages, Faisalabad against order bearing C. No. CIR/RTO/FSD/156 dated 25-07-2014 passed by the learned R T.O., Faisalabad whereby registered person was blacklisted from the date of its registration.
2. The pivotal facts as emanating from the case record are that the appellant is registered under the Sales Tax Act, 1990 running its business as a manufacturer engaged in making of taxable supplies of paper cones and accordingly adjusting and crediting sales tax paid on its input goods under law. It was alleged that as per provisions of section 73 of the Act, a registered person is bound to make all payments through declared business bank account otherwise, he is not entitled to claim input tax adjustment and further revealed that declared business bank accounts of the appellant are either closed or inactive therefore, it is apprehended that he has violated provisions of section 73 of the Act and also defrauded the department by providing false information.
Resultantly, the learned CIR(Zone-III) through his order bearing C. No. 1409 dated 06-05-2014 while exercising powers conferred upon him under section 21(2) of the Act read with STGO No. 35/2012 dated 30-06-2012, suspended registration of the appellant from the date of his registration and subsequently, a show cause notice bearing C. No. 1435 dated 09-05-2014 was issued asking the appellant as to why he may not be blacklisted. Whereupon, an order bearing C. No. 156 dated 25- 07-2014 for blacklisting the appellant from the date of its registration was issued under section 21(2) of the Act read with Clause 'N' of STGO No. 3 of 2004 dated 12-06-2004 as amended vide STGO No. 35/2012 dated 30-06-2012. Learned counsel appearing on behalf of the registered person has termed the blacklisting proceedings concluded by the learned CIR(Zone-III) to be illegal, void, without jurisdiction, arbitrary and contrary to the facts of the case. Initiating the arguments, learned counsel for the appellant has vehemently contested that the provisions of section 21(2) of the Act clearly provides that where the Commissioner is satisfied that a registered person is found to have issued fake invoices or has otherwise committed tax fraud, he may blacklist such person or suspend his registration in accordance with such procedure as the Board may, by a notification in the official Gazette, prescribe. Learned counsel appraised the Court that neither any statutory regulatory order/notification is issued by the Board nor the same is duly published in Official Gazette as per mandatory requirement of section 21(2) of the Act therefore, whole proceedings are void, illegal and nullity in the eyes of law. Counsel placed reliance on (PLD 2011 SC 347), (PLD 2005 SC 605) and (PLD 1983 Kar. 297). Learned counsel contented that there are no provisions in section 21(2) of the Act empowering revenue authorities to suspend or blacklist a registered person merely on account of violation of section 73 of the Act. Learned counsel vociferously contented that an application was filed to the CIR(Zone-111), Faisalabad received on 21-08-2014 wherein all the business bank accounts were duly declared. Counsel further argued that without establishing factum of tax fraud and issuance of fake invoices, no action of suspension of registration and blacklisting can be taken against the appellant. Reliance was placed on (2012 PTD (Trib.) 337). At the end, learned counsel while summing up his arguments assailed that no opportunity of hearing was given to the appellant before passing an adverse order of suspension of his registration which is an inalienable right of every taxpayer under the Constitution of Pakistan as well as given under the natural laws and also enacted under the special laws. Reliance in this regard was placed on (2005 SCMR 1814), (2005 SCMR 678), (2012 SCMR 1235) and (2012 CLC 1236). On the other hand, when the learned DR was confronted with the situation cited supra, in counter arguments, he has opposed the contentions of learned counsel for the appellant and supported the suspension and blacklisting orders of learned CIR for the reasons recorded therein and reiterated almost the same arguments as advanced earlier at time of adjudication and fully supported the impugned orders simply re-endorsing the basis evolved therein.
3. The arguments of the learned representatives of both the rival parties have been heard, the impugned orders as well as relevant record and relevant provisions of law and the case laws cited by the learned AR of the taxpayer have also been perused carefully.
4. After going through the case record and relevant provisions of law, we are of the firm opinion that the impugned General Order No. 35/2012 dated 30-06-2012 issued by the FBR is illegal, without jurisdiction, inconsistent and contrary to the provisions of section 21(2) of the Act which clearly laid down that the FBR can make procedure for blacklisting or suspension of registration only by a "notification in the official Gazette" but contrarily, the Board has issued general order which cannot be equated with the statutory regulatory order/notification, which is always issued for regulation of statutory provisions whereas general order is issued for administrative purposes. An executive order can not be equated with a notification published in the official Gazette. The condition of issuance of a notification duly published in the official Gazette is pre-requisite for prescription of procedure for suspension of registration or blacklisting thereon without which any such prescription is made by way of any other instrument whether a general order, a circular, a directive, an executive order or an instruction through published or not published in the official gazette cannot be deemed to be a statutory regulatory order or a notification. The FBR through Notification No. S.R.O. 555(1)/2006 dated 02-06-2006 prescribed the procedure for suspension and blacklisting which was also notified in the official Gazette and the said SRO was rescinded in June-2012.
Subsequently, the Board issued STGO No. 35/2012 to regulate the procedure of suspension and blacklisting, etc which has not been notified in the official Gazette as provided under section 21(2) of the: Act therefore, is not stricto senso in accordance with law. In this state of affair, we have no option but to hold that until and unless, a statutory regulatory order/notification is not issued and published in the official gazette, the legal infirmity would prevail therefore, whole proceedings carried out under general order dated 30-06-2012 being not in accordance with the provisions of section 21(2) of the Act are declared illegal and without jurisdiction having no legal effect at all. The Hon'ble Supreme Court of Pakistan in such like situation in case of "Government of Sindh through Secretary Agriculture and Livestock Department and others vs. M/s. Khan Ginners (Pvt.) Ltd and 57 others" reported as (PLD 2011 SC 347) has laid down as under:-- "The case of 'Muhammad Sideman and others vs. Abdul Ghani' (PLD 1978 SC 190) throws sufficient light on the legal position that issuance of a Notification is not of any significance or legal importance, till it is published in an official gazette. According to section 2(41) of the General Clauses Act, 1956, a 'Notification' means a notification published under proper authority in an official Gazette. In this view of the matter before its publication in the official Gazette, the notification relevant to the present appeals could not be even be lawfully termed as a notification. In these peculiar circumstances of this case, we have not been able to take any legitimate exception to the declaration made by the learned Division Bench of the High Court of Sindh, Karachi that notices of demand issued against the respondents on 02-10-1998 were without lawful authority and of no legal effect. These appeals are, therefore, dismissed with no order as to costs."
5. Learned counsel for the appellant quoted the judgment of honourable Supreme Court of Pakistan in ref: "M/s. Fecto Belarus Tractor Ltd vs. Government of Pakistan" (PLD 2005 SC 605) which contains elaborate and comprehensive discussion on the issue of lack of publication of authorization letter in official Gazette. The rule enunciated in the said judgment is as under:-- "The second reason for not granting relief to the petitioner is lack of publication of authorization letter dated 26th June, 1996 in official gazette as held in "Province of East Pakistan vs. Hasan Askary" (PLD 1971 SC 82) and "Moosa and Co. vs. Collector of Customs, Karachi" (PLD 1977 Kar.
710). Thus, it can be conveniently held that authorization letter dated 26th June, 1996 was not issued by the relevant executive authorities of the Federal Government in accordance with the provisions of Article 90 of the Constitution of Islamic Republic of Pakistan read with Rule 12 of the Rules of Business, 1973 coupled with the reasons that authorization letter was not gazetted in order to make it public in light of the judgments noted herein above, therefore, it could have not furnish basis for granting relief to the petitioner vide judgment dated 19th February, 2001."
6. There is no iota of doubt that whole edifice of the instant case has been built up on the sole allegation that the appellant has violated provisions of section 73 of the Act by not declaring his business bank accounts to the department. Suffice it to say that if a registered person violate provisions of section 73 of the Act by not declaring his business bank accounts to the Commissioner concerned as prescribed under explanation to sub-section (3) of C section 73 of the Act, such person shall pay only a penalty of five thousand rupees under clause (16) of section 33 of the Act and no adverse action of suspension and blacklisting is warranted under section 21(2) of the Act therefore, whole proceedings of suspension and blacklisting being illegal and without jurisdiction are infested with inherent legal infirmities and substantive illegalities tantamount to patent violation of mandatory statutory provisions. There are no provisions in section 21(2) of the Act empowering the tax functionaries to suspend registration or blacklist a registered person merely due to non-compliance of the D provisions of section 73 of the Act.
7. Even otherwise, if at all violation of non-notifying the changes of material nature in the particulars of registration is admitted for the sake of argument even then it does not attract the provisions of section 21(2) of the Act attributing to suspension of registration or blacklisting rather it attracts the penal provision of section 33(4) of the Act which provides a penalty of Rupees 5,000/- only. The provisions of clause (4) of section 33 of the Act are very much clear that if a registered person fails to notify the changes of material nature in the particulars of registration of taxable activity as provided under Rule 7(1) of Chapter-I of the Sales Tax Rules, 2006, such person shall pay only a penalty of five thousand rupees and though, the appellant could not make changes well in time for declaring his business bank accounts to the Commissioner concerned yet this offence neither warrant adverse action of suspension of registration or blacklisting under section 21(2) of the Act nor falls under the purview of tax fraud under section 2(37) of the Act hence, suspension of registration and ultimate blacklisting of the appellant is utter violation of mandatory provisions of law. Act of non-declaring business bank accounts by a registered person to the Commissioner in whose jurisdiction he is registered cannot be termed as "tax fraud" as defined under section 2(37) of the Act and does not attract the provisions of section 21(2) of the Act. It is now well-settled principle of law that acts of inadvertence on part of a taxpayer due to any procedural mistake would not cause any adverse action.
8. Notwithstanding above, provisions of section 21(2) of the Act has empowered the revenue authorities to suspend and blacklist a registered person in certain cases where element of "tax fraud or issuance of fake invoices" for embezzlement of public revenue is established conversely, in the instant case, none of the violations of any of above referred incidences of tax fraud or issuing of fake invoices have been established against the appellant in the impugned orders and in the absence of any material evidence establishing incidence of committing tax fraud or issuance of fake invoices as laid down under section 21(2) of the Act, whole proceedings for suspension of registration and ultimate blacklisting thereon stand illegal and ab initio void. Action of suspension of registration or blacklisting is an extreme step having paralyzing effect on business of any commercial enterprises and on its financial reputation as well and this type of action should be taken as last resort after establishing the gross violations entailing 'tax fraud' and 'tax evasion'. It is now well-settled principle of law that if the doing of a thing is made lawful in a particular manner then doing of that thing in conflict with the manner prescribed will be illegal and unlawful as per maxim "Expression Facit Cessare Taciturn". Reliance can safely be placed on the judgment of a Division Bench of this ATIR, Lahore in case of "M/s. R.J. Cotton Waste Factory, Faisalabad vs. The CIR (Zone-III), (R. T. 0), Faisalabad" reported at (2012 PTD (Trib.) 337) wherein it was held as under:-- "S.21(2)--General Clauses Act (X of 1897), S. 24--Blacklisting and suspension of registration-- Grounds fir--Blacklisting as well as non-restoration of registration was an extreme step having paralyzing effect on business of any commercial enterprises and on its financial reputation as well and such type of action should be taken as last resort after establishing the gross violations of main factors i.e. "(i) if registered persons was found to have committed tax fraud, (it) evaded tax and (iii) registered person had failed to deposit the tax due on his supplies despite having recovered it from respective buyers."
9. We have further noted that the appellant has declared three business bank accounts in the Income Tax Returns but due to inadvertence, error and bona fide mistake, the same were not entered and incorporated in an earlier application made for change in the particulars of registration but upon acquainting with this bona fide mistake and error, he has filed another application to the learned CIR(Zone-lII), Faisalabad which was duly received by the department on 21-08-2014 whereby he declared three business bank accounts as per law hence, the whole proceedings of suspension of registration and blacklisting carried out against the appellant are not only unjustified but also illegal and unlawful.
10. The learned departmental representative attempted to negate the assertions of the counsel for the appellant that no notice for opportunity of hearing is mandatory before proceedings of suspension of registration under STGO No. 35/2012 dated 30-06-2012. This contention of the learned DR has no substance in it and cannot be accepted even on its face value because suspension of registration of a taxpayer does result in prejudice to him therefore, we are of the firm view that the principle enshrined in maxim "Audi Alteram Partem i.e. no body should be condemned unheard" has to be applied in all judicial and non-judicial proceedings notwithstanding the fact that right of hearing has not been expressly provided by the Statute governing the proceedings. Admittedly, in the instant case, appellant was not given an opportunity of being heard before passing an adverse order for suspension of his registration thus, the due process and rights of the appellant guaranteed under the Constitution of the Islamic Republic of Pakistan have gravely been prejudiced. Issuance of such adverse order detrimental to the interest of any taxpayer is illegal and void in the eye of law. The Hon'ble Supreme Court of this country has very graciously mandated that provision of notice to the person against tax functionaries propose to proceed, has to be read in every Statute irrespective of the fact that no such M provision is incorporated therein.
We do not think that mere absence of a provision as to notice can override the principle of natural justice that the order affecting the rights of a person cannot be passed without providing opportunity of hearing to that person.
The Courts have even gone to hold that even if the law does not provide opportunity of hearing to a person before condemning him or deciding the matter in which he becomes an aggrieved party, this principle shall be considered to be as a part of law. The Hon'ble Supreme Court of Pakistan in ref: "Nazir Ahmad Panhwar vs. Government of Sindh through Chief Secretary, Sindh and others" (2005 SCMR 1814) has held that an adverse order passed without affording an opportunity of personal hearing is to be treated as a void order. The Apex Court in another case of "Hazara (Hill Tract) Improvement Trust through Chairman and others vs. Mst. Qaisra Elahi and others" reported as (2005 SCMR 678) has laid down that the principle of natural justice enshrined in the maxim "audi alteram partem" is one of the most important principles and its violation is always considered enough to vitiate even most solemn proceedings. Where adverse action is contemplated to be taken against the person/persons, he/they would have a right to defend such action, notwithstanding the fact that the Statute governing their rights does not contain provision of the principles of natural justice and even in absence thereof, it is to be read/considered as a part of such Statute in the interest of justice. It is important to note that the principles of natural justice are now made inbuilt part of civil contracts. The principle of natural justice has to be applied in all kinds of proceedings strictly and departure therefrom, would render all subsequent actions illegal and void in the eye of law.
11. After incorporation of Article 10-A in the Constitution of the Islamic Republic of Pakistan, 1973, a 'fair trial' and 'due process' has now become a fundamental right of every litigant but in the instant case, registration of the appellant was suspended without any prior notice, affording him with an opportunity of hearing and confronting evidences collected by the department which is fundamental right of a person guaranteed under Article 10-A of the Constitution of Islamic Republic of Pakistan, 1973. Any determination of rights of a person falling short of due process and fairness of facts is illegal and unconstitutional and any adverse order passed or action or proceedings taken by any forum in violation of fair trial' and 'due process' of course, is illegal, null and void. The Hon'ble High Court, Lahore in W.P. No. 6990/2012 dated 05-04-2012 in case of "M/s. J.M Corporation vs. The Federation of Pakistan, etc" while dealing with the same nature of case has held that basic ingredients of "due process of law" for passing a 'judicial order' like notice, right of hearing and access to evidences relied upon by the department against the taxpayer and the obligation on the Commissioner (IR) to pass a speaking, judicial and a well-reasoned written order has now been reinforced as a constitutional command under Article 10-A of the Constitution of Islamic Republic of Pakistan, 1973., In this regard, we also gain strength from the landmark judgment of Hon'ble Supreme Court of Pakistan in ref: "Babar Hussain Shah and another vs. Mujeeb Ahmed Khan and another" (2012 SCMR 1235) wherein it was held as under:-- "Although, from the very inception, the concept of fair trial and due process has always been the golden principles of administration of justice but after incorporation of Article 10-A in the Constitution of the Islamic Republic of Pakistan, 1973 vide 18th Amendment, it has become more important that due process should be adopted for conducting a fair trial and order passed in violation of due process may be considered to be void."
12. In another case of "Shabir Ahmed vs. Kiran Khursheed and others" reported as (2012 CLC 1236), the Hon'ble Court held as under:-- "The government always has the obligation of providing a neutral decision maker one who is not inherently biased against the individual or who has not personal interest in the outcome.
Due process is now available to every person as a fundamental right and underscores procedural fairness and propriety in determining his civil or criminal rights. The procedure adopted in determining the rights of the parties must at every step-pass the test of fairness and procedural propriety and at all times must honour the law and the settled legal principles.
Article 10-A of the Constitution is not limited to a judicial trial in its strict sense but requires fairness from any forum which determines the rights of a person."
13. In view of what has been discussed hereinabove, we are of the firm opinion that the, suspension and consequent blacklisting of the present appellant without fulfilling the mandatory formalities of law, has resulted into deprivation of his business activity and amounted to commercial killing of the company having multiple implications including the infringement of his fundamental rights. Be that as it may, impugned suspension order, consequent show cause notice and blacklisting order are declared to be illegal, void ab initio, without jurisdiction and thus hereby set aside with the direction to restore his status from the date of registration immediately.
14. The instant appeal filed by the registered person is accepted in the manners as indicated above.