DR. MUHAMMAD NAEEM (ACCOUNT ANT MEMBER) :---This appeal has been filed by the registered person calling in question the impugned Order -in-Appeal No. 86/2019 dated 26.03.2019 passed by the learned CIR (Appeals), Faisalabad whereby he while maintaining the Order-in-Original No.37 of 2018 dated 08.10.2018, dismissed the appeal.
2. Brief facts of the case are that during scrutiny of CREST data for the tax period of February-2013, it was found that the appellant adjusted input tax against invoices of blacklisted and a non-filer suppliers who have not shown any sales to him. In this way, the registered person was also charged with violation of sections 2(37), 3, 6, 7, 8(ca), 8(d), 8A, 10, 22, 23 and 26 of the Sales Tax Act, 1990 and was called upon to show-cause as to why sales tax amounting to Rs. 500,233/- may not be recovered under section 11(3) of the Act along with default surcharge under section 34 of the Act and hundred percent penalty under section 33 ibid. In response to show-cause notice, appellant filed detailed written reply on 17-08-2018 but adjudication proceedings were carried out on ex parte basis vide order-in-original dated 08.10.2018 without considering the written submissions of the appellant.
3. Being aggrieved with the said order , the appellant filed the first appeal before learned CIR(A), Faisalabad who dismissed the appeal vide Order-in-Appeal No. 86/2019 dated 26.03.2019 again without considering the relevant record and application of independent judicious mind and approach on legal as well as on factual infirmities and improprieties pointed out in its memo. as also assailed during the course of hearing. The appellant being aggrieved by the said order has now filed the second appeal before this Appellate Tribunal.
4. Before the Tribunal, the learned counsel vehemently contested that the learned CIR(A) has given no exhaustive judgment instead of retrieving to primitive assertions already taken in the adjudication order and neither discussed the grounds filed nor even a single question has been attended to and answered by the CIR(A) while handing down the impugned judgment. Neither the legal objections raised in the appeal and forcefully argued have been considered and appreciated nor answered by the learned CIR(A) which amou nts to condemn the appellant unheard. Learned counsel for the appellant has vehemently contented that the impugned order is erroneous in law and the same is based on misconceived facts. It was however forcefully urged on behalf of the appellant that the impugned show-cause notice dated 17-07-2018 for recovery of sales tax pertaining to the tax period of February , 2013 is hopelessly time barred under section 11(5) of the Act. He has placed relian ce on the judgments of the Apex Court of Pakistan reported as (1992 SCMR 1898 ,) (2006 PTD 537) and judgments of Hon'ble High Court, Lahore reported at (2008 PTD 981 ) and (2008 PTD 1973 ).
5. The learned DR, on the other hand, confronted with the tax situation cited supra, he was unable to advance any argument in support of validity of the show-cause notice however , he has assailed the case on similar grounds and charges as levelled earlier in the impugned show-cause notice as well as adjudged in consequent orders and nothing newel, except to reiterate earlier set of contentions, has been put forth by him and fully supported the orders passed by both the authorities below simply re-endorsing the basis evolved therein.
6. After having heard the arguments of both the rival parties and from the bare perusal of the relevant orders as well as relevant provisions of law and material made available before us, we have found that impugned sales tax liability for February-2013 is hopelessly barred by time for which show-cause notice having been issued on 17-07- 2018 after expiry of statutory limitation of five years. There are clear cut provisions as embodied in section 11(5) of the Sales Tax Act, 1990 that no order shall be made by an Officer of Inland Revenue after expiry of five years and no liability as to sales tax can be adjudged under section 11(3) of the Act unless a notice to show-cause to the person in default is given within five years of the relevant date. It is well-settled law that when a period is provided by a special Statute, then any proceedings or actions taken under the provisions of special statute, has to be taken within the stipulated period. Therefore, where an executive authority exercises its jurisdiction after the expiry of the period provided in a Statute, such exercise of jurisdiction, without any iota of doubt is illegal and unlawful.
7. The show-cause notice issued on 17-07-2018, is hopelessly barred by statuary time limitation as the same was issued after the prescribed time limit of five years under section 11(5) of the Act and the result is that like in the suit for recovery of money , after lapse of time prescribed by law of limitation, the intended recovery has become unenforceable. It is trite law that once limitation had started to run and had come to an end, the taxpayer had acquired vested right of escapement of assessment by lapse of time. The judgm ent of Apex Court of Pakistan in case of "Federation of Pakistan through Secretary , Finance, Islamabad and 4 others v. Messrs Ibrahim Textile Mills Ltd and others" reported as (1992 SCMR 1898 ) is also very relevant to the subject matter whose extract of relevance is given as follows:- "The cardinal principle of law is to be considered for the recovery of short levied duties.--
(1) that all are equal before law whether Citizen or State.
(2) secondly , if a law prescribes period of time for recovery of money , after its lapse recovery is not enforceable through Courts.
(3) thirdly , that while Construing a financial statute, its terms are strictly to be followed."
8. This legal position is also enunciated in the case of "M/s. Joyla Sadat Cotton Industries v. Collector of Customs" by the Hon'ble High Court Lahore reported as (2008 PTD 981). The relevant extract therefrom being reproduced is as under: "We, therefore, observe that instant matter involves the controversy , which is governed under the provisions of section 36(2) of the Sales Tax Act, 1990 . Such action has to be taken within in the period, prescribed by law.
Reopening the case of the petitioner , after the prescribed period of limitation, is not justified. The phrase "shall be served with a notice, within three years of the relevant date" conveys the intention of the legislature that show- cause notice and issuance of the same, within three years, is a mandatory requirement for an action under section 36(2) of the Act of 1990. The term 'shall' used in subsection (2) ibid makes the compliance of provision of law mandatory and there is no escape to it."
9. In view of what has been discussed above, particularly in the light of law and the principles laid by the superior courts in various judgments as referred supra, impugned show-cause notice is declared barred by time limitation and consequent orders passed by both the authorities below in pursuance thereto also are declared to be illegal, ab initio void, without lawful authority and thus are hereby set aside.
10. The appeal filed by the, registered person stands disposed of in the manners as indicated above.