JAHANZAIB WAHLAH, MEMBER JUDIC IAL-III .----Through this order , I intend to dispose off Appeal bearing No. K-776/2019 directed against Order-in-Orig inal No. 370/2018-19 dated 21.05.2019 passed by Collector of Customs (Adjudication-II), Karachi.
2. Brief facts of the case are, appellant during the course of his business activities imported 13 consignments of "Cheese" of PCT heading 0406.1010 on different dates through Goods Declarati on (GD) Nos. KAPE-HC-10184- 07.08.2013, KAPE-HC-38521-051 12013, KAPE-HC-43996-231 12013, KAPE-HC-55492-27122013. KAPE-HC- 65457- 25012014, KAPE-HC-79709-10032014, KAPE-HC-91972-15042014, KAPE-HC-101830-13052014, KAPE- HC-1 17800-25062014, KAPE-HC-4355-12072014,KAPE-HC-42646-20102014,KAPE-HC-64048-05122014 and KAPE-HC-1 15365-20032015, while claiming benefit/exemption under SRO 501(I)/2013 dated 12.06.2013 and Serial No.79 of Sixth Schedule to the Sales Tax Act, 1990 (STA). The nominated Appraising Officers upon appearance of GDs on their workstations instead of assessing the goods on the strength of transmitted declarations opted to get the goods examined, wherein goods were found as per declaration. On the strength of which the competent authorities defined in Section 2(a) of the Customs Act, 1969 (Act) in exercise of the power vested upon them through SRO 371(1)/2 002 dated 15.06.2002 passed assessment/clearance orders under the provision of Sections 80 and 83 of the Act, and Rules 438 and 442 of Sub-Chapter (III) of Chapter XXI of Customs Rules, 2001 (Rules) and the appellant's clearing agent obtained the deliveries from the terminals. After lapse of about 4 to 5 years of the clearance of the consignments, the Deputy Directo r, Directorate General of Post Clearance Audit, Karachi (respondent No.1) issued an audit observation dated 12.01.2017 with the opinion that the appellant imported 13 consignments from MCC of Appraisement-East of Cheese were actually grated and shredded filling under PCT 0406.2000 on which sales tax is payable at 17% in addition to 6% income tax as against declared PCT Heading 0406.1010. The said act was construed to be mis-declaration, instrumental in short payment/evasion of taxes to the tune of Rs.7,266,505/-. Which was replied.by the consultant vide letter dated 27.02.2017 through which legality of conduction of audit under section 26(2) of the Act and subsequent proceeding, inclusive of jurisdiction/powers of conduction of audit tinder 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 the claimed benefit/exemption under serial No.79 of the Sixth Schedule to the STA being admissible was rightly allowed/extended by the respondent No.2 and his subordinates. Hence, the formed opinion 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 forwarded that to respondent No.3, who on the strength of which issued show-cause notice dated 04.12.2019 with the allegation that the appellant obtained the clearance of the goods consignments under the benefit under serial No.79 of the Sixth Schedule of the STA, which was otherwise not available and as such has short paid/evaded amount of Rs.7,266,505/-. Hence, contravened the provision of Sections 32(1), (2), 32(3A), 32(5) of the Act and 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. The advocate of the appellant submitted reply dated 18.02.2019 to the show- cause notice through which he challeng ed 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.79 of the Sixth Schedule to the STA 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 21.05.2019 holding the charges levelled in the show-cause notice stand establishe d and ordered payment of short paid/alleged evaded amount of taxes of Rs.7,266,505/- along with imposed penalty of Rs.1.000,000/, Paras 9 to 18 are relevant, which read as follows:
9. I have examined the case record and considered written/verbal arguments put forth by both sides. It has been alleged by the Directorate of Post Clearance Audit (Customs), Karachi that respondent importer imported (13) consignments of "Shredded/Grated Cheese" and got cleared from the Model Customs Collectorate of Appraisement-East, Custom House Kara chi through their clearing agent by mis-declaring the classification under PCT Heading 0406.3000 in order to avail inadmissible benefit/exemption of Sales Tax under 6th Schedule of the Sales Tax Act, 1990. The impugned goods are appropriately classifiable under PCT 0406.2000 and are chargeable to sales tax @ 17% and corresponding income tax 0.6% hence, Messrs Rotech Enterprises, Karachi has evaded the amount of taxes Rs.7.266,505/- (sales tax Rs.6740,524/- income tax Rs.525,981/-).
10. During the course of proceedings before the undersigned, the respondents agitated power of adjudicating authority being the officer of Sales Tax. He asserted that the Custom Officers although are empowered to collect sales Tax and Income Tax at import stage but have no jurisdiction/powers for the recovery of short levied sales tax and income tax at import stage and in this regard he has relied on a judgment of Sindh High Court in the Case of M/s. Lucy Cement, Karachi, the Hon'ble Sindh High Court however , on the same matter had decided that the Customs Officer are empowered to recove r short levied income tax and sale tax. This judgment is given in the case of Messr Al-Haj Industrial Corporation Ltd. Alam Gujra Road, Dara Khyber Agency , Peshawar , N.W.F.P., wherein it is said as under: "The question for the consideration whereof the appeal was admitted to regular hearing is answered in terms that a Tribunal has rightly upheld the recovery of evaded tax under section 50(5) of the Income Tax Ordinance, 1979.
Which is within the competence of Customs Authorities by virtue of provision contained in Section 50(5) of the Income T ax Ordinance, read with section 202 of the Customs Act, 1969"
11. Not only that, the specialized law, the Customs Act, 1969, in its section 32 very clearly lays down that short levy "of any duty, taxes or charge has to be paid by the liable person" and in this regard show-cause notice has to be issued to him by the competent authorities of the Customs. Actually , this is payment of short paid amount which was required to be paid at the import stage and this is a kind of collection of tax which was not collected at the time of import. Attention is invited to other sections of the Customs Act, 1969 such as section 179 which clearly lays down power of adjudication for recovery of "duty and other taxes not levied short levied or erroneously refunded".
Another section 02 of the Customs Act, 1969, which also empowers customs officers "to recover any tax duty or other levy being collected in the same manner as the customs duty are collected. "If the same is due against liable person. The section 6 of the Sales T ax Act, 1990 read as under .
"Time and manner of payment: -
(i) The tax in respect of goods imported into Pakistan shall be charged and paid in the same manner and at the same time as if it were a duty of customs payable under Customs Act, 1969 and the provisions of the said Act including section 31A thereof, shall so far as they relates to Collection, payment and enforcement of the tax under this Act on such goods where no specific provisions exist in this Act, apply .
12- Similarly , section 148 subsections (5) and (6) also clearly laid down as under:
(5) Advanced tax shall be collected in the same manner and at the same time as the custom duty payable in respect of the import or if the goods are exempt from custom-duty at the time custom duty would be payable if the goods were dutiable.
(6) The provision of Customs Act, 1969 (IV of 1969) in so far as relevant, shall apply to the collection of the tax under this section.
13- Beside, Federal Board of Revenue vide its clarification C.No. 3(32) Tax--I/90 dated 06082012 has circulated the legal opinion of Ministry of Law vide letter No. F.242/2012-Law-I, dated 11.07.2012 and on the basis of which it has been clarified that: - "the relevant officer of Customs may, therefore, continue the adjudication proceeding already' initiated and take cognizance of all case of FED, Sales T ax and withholding tax"
14. It is further added that Hon'ble Lahor e High Court in Writ Petition No. 67182 of 2017 as held that by virtue of Sections 32 and 179 of the Customs Act, 1969 or competent to Act as officer of Sales and Income Tax. For case of reference the relevant paragraph are reproduced below:-
22. As adumbrated, there is a chronology of event which clearly depict a conscience attempt on the part of the legislature to add the word "taxes" in the scheme and structure of the Act, 1969.
For instance, section 179 prior to its amendment by Finance Act, 2012 so far as relevant did not conferred jurisdiction on the Officer of Customs, in respect of recovery of duty and other taxes not levied, short levied and erroneously refunded. Thus by the amendment brought about in the year 2012 the jurisdiction of officer of Customs was expanded to include adjudication of cases relating to recovery of duty and other taxes and did not remains confined to cases involved in confiscation of goods and imposition of penalty "under this Act or the Rules made there under" (underlining supplied). Thus, the power of Adjudication was materially expanded not only to include the power of recovery of duty but also other taws. At that rime section 2 did not time well with the amended section
179. This was realized by the legislature and through Finance Act, 2014 Section 32 was amended in such a way that the word "taxes" was added so as to conferred jurisdiction on the officers of Customs for making adjudication in respect of taxes which had been levied or had been short levied. It cannot be urged by the petitioners that this was without any purpose or done throughtlessly by the legislature. If by over sight section 179 had been amended to include the word "taxes" the legislature ought to have become wider by excluding the word "taxes" from Section 179 rather than making its intention clear to the contrary by adding the word section 32 as well for, it is futile to conferred the power of adjudication on the officer of customs while failing to make and corresponding change in the substantive provision and which also prescribes the procedure for carrying out the adjudication proceeding by the officials of Customs. Thus there is not doubt that the word "taxes" was included in the scheme of the Act, 1969 with the purpose and deliberately . It is admitted on all hands that no taxes are levied under the provisions of the Act, 1969 and only charged which has been imposed is the duty of customs under section 18 of the Act, 1969, which prescribed the goods are liable to imposition of Custom Duty prescribed in the first schedule. The provision of section 18 also envisaged the levy of regulatory duty as well as additional custom duty. However , the entire Customs Act, 1969 does not referred to levy of taxes to which a reference could be made or a relation could be established vis a vis section 32 and sectio n 179. As stated above, in the preceding paragraph not only the Income Tax Ordinance, 2001 but also Sales Tax Act, 1990 required the levy and recove ry of withholding tax as well as sales tax imposed on the imported goods and for their recovery to be effected at the time of imposition by the Officer of Customs. The officers of customs, therefore, act as the collecting agent for the income tax as well as sales tax authority from every importer of the goods on the value of the goods of the rates specified. It was perhaps though anomalous by the legislature that the recovery if any effected or short levied be recovered by the adjudicative process in the Act, 1990 or the Ordinance, 2001. Rather than the one prescribed in the Act, 1969. In my opinion the amended which have been brought about merely served to reconcile the powers or the officer of Customs and not only conferred the power to recovery , the importation stage but also conferred the power of adjudication under section 32 of the Act, 1969".
15. In view of the above judgment, unambiguous provision of section Act, 1969, the Sales Tax Act, 1990 and Income Tax Ordinance, 2001 and classification/legal opinion of Federal Board of Revenue and Ministry of Law it is clear that the Customs Officers are empowered to collect short paid amount of Income tax actually payable at the time of import.
16. Coining to the core issue of contravention, it is imperative to look into the definition of term "Grated and Shreded". The concise Oxford English Dictionary , 12th Edition (2012 print), define the verb grate as "reduced food to small shred by rubbing it on a grater" the term shred as noun is defined strip of material that has been torn, cut are scrapped from something larger; while shred as a verb is to tear or cut into shred. Reading above definitions together , it is abundantly clear anything shredded also cover same thing grated as well. The complete case record including description of the goods as well as the examination report supported images available in the system clearly shows that the imported case was in the from of shred, regarding classification of cheese Pakistan Customs Tariff both for 2013-2014 as well as 2014-2015 provide following HS Code for cheese product.
04.06 Cheeses and Curd (Fresh unripened or uncured cheese, including Whey cheese card)
0406.1010 Cheese 0406.1020 ...... Curd 0406.1090 others 0406.2000 Grated or powdered cheese of all kinds 0406.3000 processed cheese not grated or powdered
17. The above clarification is ambiguous in suggesting that grated cheese-which by the definition given above also cover shredded--is classifiable under HS Code 0406.2000 therefore it is held that the department has correctly classified the shreded cheese imported under impugned GDs as mentioned at serial number "e" the table given in paragraph-1 of this order . The contention of the respondent regarding available exemption sales tax has been examined on critical perusal of SRO 501(1)/2013 dated 22.06.2013 (Entries at S.# 8 and 9 of the table said SRO) as well as entries at serial Nos. 79 and 80 of the 6th Schedule of Sales Tax Act, 1990 it is manifest that HS Code 0406.2000 is not exempt from sales tax as claimed by the respondent meaning thereby shredded cheese is classifiable under HS Code 0406.2000 attracting sales tax as pointed out by the department. Hence, the contention of the respondent is not tenable.
18. In the light of foregone, I am convinced that the charge of mis-declaration' and commission of offence under sections 32(1), 32(2) 32(3A) of the Customs Act, 1969 stand established. According ly, I do hereby order recovery of sales tax of Rs.6,740,524/- and Withhold ing Tax of Rs.525,981/- (totaling to Rs.7266,505/-) from Messrs Salman Enterprises NTN-3786675-3) G-1, Arfat Arcade, Block-7/8. CP and Berar Housin g Society , Karachi. Beside the default surcharge to be calculated, is also to be recovered in terms of section 34 of the Sales Tax Act, 1990 for committing offence as concluded above a penalty of Rs.1,000,000/- (Rupees One million only) is also imposed on the importer . Messrs Salman Enterprises NTN-3786675-3) G-1, Arfat Arcade, Block-7/8, CP and Berar Housing Society , Karachi in terms of clause 14 of section 156(1) of the Custom Act, 1969.
3. The appellant filed the appeal on the basis of grounds enumerated therein, the consultant of the appellant argued the case strictly in accordance with the ground enumerated therein. No cross objections under Section 194A(4) of the Act have been submitted within the stipulated period of 30 days by the respondent No.1, resultant, lost right of cross appeal within the contemplation of section 194A(3) ibid. However , comments were submitted by respondent No.1, which does not qualify as cross objection, instead are to be construed as opinion having no warrant of law. Hence, kept in record of the case for perusal. Likewise, respondent No.2 has also not submitted cross objection supported by affidavits. Non submission of counter affidavit whether by will or default forfeit the respondent No.2 right to deny assertion made in the affidavit as has been held by the Superior Judicial Fora reported at (1974) 94 ITR-I, 1980 PLC (C.S.) 350, 1982 PLC (C.S.) 757, 1986 CLC 745 KAR., (1984) 146 ITR 140, (1985)53 Taxation-I (Trib.), 1986 CLC 1119, 1986 CLC 1408 KAR, AIR, 1991 MLD 1243 , 992 SC 317 (sic), 1993 SCMR 662, PLD 1996 Karachi 68, 1986 PLC (C.S.) 560, 2003 PTD 2118. However , on the date of hearing the representative of respondent No.1 supported the orders passed by the responde nt No.3 stating inter-alia that is correct in fact and law . Hence, same may be maintained and appeal be dismissed being devoid of merit/substance.
4. Heard and case record perused and the relied upon documents/judgments by the appellant's. Prior to dilating upon other factual and legal aspect of the case, it is noted that no online procedure for conducting audit under the provision of Section 26(2) and Section 155M of the Act of the consignment cleared through CCS through Rules as contemplated in Section 26A (1) ibid. in the framed Rules, incorporated in Chapter XXI of Rules. Resultant, any audit desired to be conducted should and ought to be as per the enunciation made in Chapter XVIA inserted in the Act with the caption reading as "Provision relating to the Customs Computerized System and Audit and access to documents". Section 155M(1) expresses that a notice in writing to be served on the importer . The emphasis is in writing, which means that it should be in writing, section 26A further validate the said mechanism of conducting audit under section 26(2), verbatim of which is reproduced here-in-under: 26.A. 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,-
(c) The person who imported, or exported or transported or stored or held under customs bond, or file the goods declaration, drawback or refund claim,
(d) Any officer , employee or agent of any person described in clause (a); and
(e) 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.
5. 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, has 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 statement, 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(1)/2009 dated 13.06.2009. Respondent No.1 has 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 me 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 perm itted 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/surtun on 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 settle d 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 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 Hon'ble 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. Messrs Al-Faiz 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".
6. Upon perusal of Section 228 of the ITO, it has been observed by me that the respondent No.1 has not been appointed/designated as Officer of Inland Revenue by the legislature, instead under the aforesaid Section, the Directorate General of Internal Audit has been formed and their officers are empowered to conduct audit of a tax payer/importer relating to the income tax, whereas, for overseeing the collection of withholding Tax, Directorate General of Withholding Taxes has been established under Section 230A of the ITO, meaning thereby that the respondent No.1 is not at all appointed/designated as Officer of Inland Revenue. Resultant neither Directorate General of PCA nor respondent No.1 are empowered to exercise the powers of an Officer of Inland Revenue under Section 207 for conducting audit under Section 177 of the [TO. Rendering the entire act of audit in the matter of Income Tax by the respondent No.1 without powers/jurisdiction and as such coram non judice. My opinion stands vindicated from the latest reported judgment (2014 PTD 17331 Waseem Ahmed and others v. Federation of Pakistan and another , where it has been held in clear terms that "unless the officer of DGI&I)-FBR are not appointed and an officer of Inland Revenue, powers under the different subsection of the Sales Tax Act, 1990 cannot be delegated through any SRO with that the Hon'ble High Court of Sindh declared Notification No. 775(1)/201 1 ultra vires to the Sales Tax Act, 1990".
7. The respondent No.1 is indeed appointed as Officer of Inland Revenue under Section 30DD of the STA and has delegated powers upon him through SRO. 42(1)/2010 dated 23-1-2010 under different Sections of the STA incorporated in column (4) of SRO, subject to exercise of those under the designation of authorities given in column (3), which are (i) Chief Commissioner/C ommissioner , Inland Revenue (ii) Additional Commissioner of Inland Revenue (iii) Deputy Commissioner Inland Revenue and (iv) Assistant Commissio ner Inland Revenue and not in the capacity or designation of (i) Director General/Director--PCA (ii) Additional Director--PCA (iii) Deputy Director --PCA and (iv) Assistant Director--PCA. In the instant case the entire communication including the audit observations and contravention reports were prepared and served in the capacity of Deputy Director of PCA, which is non-existent in column No. (3) of SRO. 42(I)/2010 dated 23.01.2010, rendering the same without power/jurisdiction. Hence ab-initio void and coram non judice. Therefore, entire proceeding right from Audit, audit observations, contravention reports are of no legal effect. Any super structure built thereon no matter how strong it may be have to crumble down 1 as held by Superior Judicial Fora in umpteenth reported judgment PLD 1971 SC 197 Chittaranjan Cotton Mills Ltd v. Staff Union, Raunaq Ali's PLD 1973 SC 236, SBLR 2002 Karachi 5 in Messrs Unitex Tower Factory v. The Collector of Customs (Appeals) and others, K-106/03 in Messrs Silver Corporation v. The Additional Collector of Sales Tax (Adjudication), Karachi III, Major Syed Walayat Shah v.
Muzaf far Khan and 2 others (PLD 1971 SC 184), Omer & Company v. Controller of Customs, (Valuation): 1992 ALD 449 (1) Karachi AAA Steel Mills Ltd. v. Collector of Sales Tax and Central Excise Collectorate of Sales Tax (2004 PTD 624), PLD 1976 Supreme Court 37 Ali Muhammad v. Hussain Buksh and others and PLD 2001 Supreme Court 514 Land Acquisition Collector , Noshehra and others v . Sarfraz Khan and others .
8. I have also noticed with great concern that the respondent. No.3 in the show-cause notice have invoked Sections 3, 6, 7, 33 and 34 of the STA and 148 of the ITO without realizing that Section 3 while indeed being a charging section cannot be invoked by anyone other than an Officer of Inland Revenue whereas Section 6 contains machinery provision laying down the procedure for collection of Sales Tax as like custom duty at the import stage by the customs authorities hence cannot be used to charge anyone including the appellant for an offence under the said section with the exception of official of Clearance Collectorate, upon whom charge under the said section can be invoked. Section 7 speaks about the determination of tax liability at the time of filing of sales tax return cum payment challan under Section 26 of STA, this is also a machinery section. Section 33 contains penal clauses synonymous to section 156(1) of the Act and section 34 speaks about imposition of default surcharge, to be paid by the tax payer upon confirmation of the charges levelled in the show-cause notice issued by the officer of the Inland Revenue under the respective Section of the STA. Section 148 of the ITO is also a section containing machinery provision akin to Section 6 of the STA, empowering custom authorities to collect levied income tax alike custom duty on the imported goods. "Provision which provides a mechanism/mode of collection are not to be construed as charging provisions even through inapt interpretation as it could neither abridge nor expand the scope of a charging section in an Act/Ordinance". Reference is made to the decision of Hon'ble Supreme Court of Pakistan in 2019 SCMR 282 Pakistan Television Corporation, Ltd. v. Commissioner Inland Revenue (Legal), LTU, Islamabad and others . Resultant, the aforesaid deliberated sections are independent and cannot be used to invoke a charge.
Since, these sections are irrelevant/erroneous in the matter of customs, no show-cause notice can be issued by a custom officer under these section, render the issued show-cause notice and passed order-in-original palpably illegal and as such void and ab-initio as held in the following reported judgments: Asst. Collector v. Khyber Elec.
Lamps 2003 PTD 1275, D.G. Khan Cement v. Collector of Customs 2005 PTD 480, Caltex v. Collector 2003 PTD 1593 , Union Playing Card Company v. Collector of Customs 2002 MLD 130, Atlas Tyres v. Addl.
Collector 2002 MLD 180, State Cement v. Collector PTCL 2001 CL 558, Kashmir Sugar v. Collector 1992 SCMR 1898 , Rose Color v. Chairman, CBR and 2013 PTD 813 Sarwar International v. Addl. Collector of Customs.
9. Similarly , respondent No.3 in the capacity of adjudicating authority despite being an officer of customs appointed under section 3 of the Act issued show-cause notice to the appellant while invoking irrelevant sections of the STA and ITO as deliberated in preceding para in the matter of sales tax and income tax without going through the expressions of Section 30 of STA and respective Sections of ITO, wherein, any designation of Collector of Customs, least exist. Confirming that he has not being appointed through a money bill by the legislature as an Officer of Inland Revenue, resultant, not been conferred with the powers under Section 31 of STA and Section 207 of the ITO. Hence, not empowered to initiate any action either for short/non paid Sales Tax and Income Tax under the provision of section 11 of STA and Section 162(1) of ITO. In order to lay the issue to its logical conclusion, it is apt for me to refer to Section 6 of the STA and 148 of the ITO through which the Clearance Collectorates are empowered to collect the Taxes on the imported goods as like custom duty on the value determined under Section 25 of the Act in the capacity of collecting agent. These sections least empower the Officers of Customs including the respondent No.3 to initiate adjudication/recovery proceeding for the short collected/paid Sales Tax and Income Tax either due to conclusion or connivance or inadvertent, error or misconstruction. Proceeding for these type of recovery a show-cause notice has to be issued by the Officer of Inland Revenue of the specific designation as circumscribed under Section 30 of STA and Section 207 of ITO, under the contravening provision of Section 11 of STA and 162(1) of the ITO, even insertion of word tax in Section 179 of the Act through Finance Act, 2012 was for empowering the adjudicating authorities expressed therein to assume jurisdiction/powers for the purpose of adjudication on the basis of the amount of duty and taxes involved not on the amount sans taxes. Likewise insertion of word taxes in the Act through Finance Act, 2014 in section 32, was solely for the purpose of empowering the Customs officers to charge importer/exporter for the act of mis-declaration and calculation of loss to the exchequer to the extent of evaded duty and taxes. Insertion of word taxes in sections 32 and 179 of the Act does not automatically empowered an officer of customs to act as officer of Inland Revenue for recovery of short levied/paid taxes under the substantive provision of Section 11(3)(4) of the STA and 162(1) of the ITO. It has to be kept in mind that there is a distinction between the expression 'function' and 'power'. Functions can only be performed by a person who is already conferred with the powers and jurisdiction. Hence, it is pertinent for me to examine the definition of expressions 'powers', 'function' and 'jurisdiction' so as to explain the distinction between the said expression. The Eight Edition of Black's Law Dictionary defiance 'powers', 'function' and 'jurisdiction' as follows: "Powers1. The ability to act or not act esp. a person's capacity for acting in such a manner as to correct someone else's, response 2 dominance, control, or influence over another; control over one's subordinate. The legal right or authorization to act or not to act; a person's or organization's ability to alter by an act of bill, the rights, duties liabilities, or other legal relations either of that person or of another"
"Function No.1. Activity that is appropriate to a particular business or profession < a court's function is to administer justice > . To office; duty; the occupation of an office < presidential function> [cases : officers and public employees 1 10. C.J.S. Officers and public employees 234 -.245]"
"Jurisdiction, No. 1. A government general powers to exercise authority over all persons and things within its territory; esp. a state's powers to create interests that will be recognized under common-law principals as valid in other states <New Jersey's jurisdiction > . [cases : State 1. C.J.S. States 2,16] 2. A court's 'a powers to decide a case or issue a decree < the Constitution grant of Federal-question jurisdiction> . - also termed (in sense 2) competent jurisdiction: (in both senses corm non judice (cases; courts 3: Federal Courts 31, 161, CX.J.S. Courts 9,18]".
10. It is therefore, obvious from the above definition that the three expressions are distinct and separate. The powers or jurisdiction conferred on an officer of Inland Revenue precedes the performance of functions. The conferment of powers or jurisdiction is a pre-condition for the performance of function. By no stretch of imagination, the respondent No.3 could himself assum e that he has been appointed as an Officer of Inland Revenue under the provision of Section 30 of STA and the respective section of ITO by the legislature. Hence, cannot exercise powers under the provision of Section 11 of STA and Section 162(1) of ITO. Which empow ers Officer of Inland Revenue in accordance with his designation and Commissioner of Inland Revenue. Therefore, it is my considered opinion that the Clearance Collectorates does have the authority to collect Sales Tax and Income Tax at import stage in the capacity of collecting agent in terms of Section 6 of STA Section 148 of ITO sans recovery proceeding. Clearance Collectorates are also empowered to recover escaped/short paid Custom Duty and Regulatory Duty levied on the imported goods under Section 18 of the Act in exercise of the powers conferred under Section 202 of the Act after due process of law, but have no powers in any case to adjudicate the cases of short levied/paid Sales Tax and Income Tax under Section 11 of STA and Section 162(1) of ITO. They are also empowered to recover from the amount of importer lying with them, arrear of Sales Tax and Income Tax only after receipt of notice from the Officer of Inland Revenue and Commissioner of Income Tax under Section 48 of STA and Section 140 of the ITO of the adjudged amount through a valid adjudication order passed by the competent authority in terms of Section 11 of STA and Section 162(1) of ITO, rendering the adjudication proceeding initiated by respondent No.3 under the aforesaid sections a the STA and ITO is not legal, justifiable and tenable in the eyes of the law, hence coram non judice nor in consonance with the reported/unreported judgments of Superior Courts.
11. The opinion formed by respondent No.3 in para 15 of the order that he is empowered to adjudicate the case of short recovery of sales tax and income tax on the strength of clarification of the Board bearing No. C.No. 3(32)T AR- 1/90 dated 06.08.2012 on the basis of legal opinion given by the Ministry of Law through letter No.F.242/2012-Law- 1 dated 11.07.2012, least lend no help to the Respondent No.3 as neither Board nor Ministry of Law have mandate to interpret the provision of the Act or amend the provision they can only give opinion, it is for the judicial fora to interpret the provision of statute as held in 2005 PTD 2462 Messrs Lever Brother Pakistan Ltd. v. Customs Sales Tax and Central Excise Appellat e Tribunal, Karachi that "CBR has no place to in the Schem e of Law, conferred with the jurisdiction to interpret any law, statutory or in exercise of any deliberate authority i.e. subordinate legislation" and in the case of Central Insurance Co. v. Central Board of Revenue (reported as 1993 SCMR 1232 ) The Hon'ble Supreme Court clearly held that "Board's view as to the interpretation of, law do not have the force of law and the exception would be, where a fiscal statute is involved , which should be implemented with strict impartiality ." Hence, any action taken in the absence of availability of powers has been passed without jurisdiction/powers, which have been taken in the present case renders the show-cause notice and order-in-original as ab-initio, null and void, as held by their Lordship of Supreme Court of Pakistan that "it is an element to principle that if a mandatory condition for the exercise of jurisdiction by Court, Tribunal or Authority is not fulfilled then the entire proceeding which follows become illegal and suffer from want of jurisdiction/powers. Any order passed in continuation of these proceedings in appe als or revisions equally suffers from illegality and-are without jurisdiction".
For validation see reported judgments M/s. AGP (Pvt.) Ltd. v. Additional Collector of Customs, Karachi 2011 PTD (Trib.) 116, M/s. Global Marketing Services and another v. Model Customs CoRectorate and another 2010 PTD (Trib.) 2086 , 2014 PTD (Trib.) 299, M.I. Traders v. Additional Collector of Customs, 2004 PTD, 801 Al-Haaj Industrial Corporation (Pvt.) Ltd., Peshawar v. Collector of Customs (Appraisement), Messrs Lucky Cement Ltd. v. Federation of Pakistan and others, C.P. No. D-216/2013, 2014 PTD 1963 Shujabad Agro Industry (Pvt.) Ltd. v. Collector of Customs and 8 others, 2015 PTD 702 Muhammad Measum and others v.
Federation of Pakistan and 02 others, 2016 PTD (Trib.) 925 Abdul Aziz Brothers, Karachi v. Director-ate; General I&1-FBR, 2016 PTD (Trib.) 969 Asif Textile Trading v. Directorate General I&I-FBR, 2016 PTD (Trib.)
843 Muhammad Ilyas v. Director General of PCA, Karachi, 2016 PTD (Trib.) 1008 Phillip Morris (Pakistan)
Ltd. Karachi v Additional Collector of Customs.
12. In reaching the instant irresistible decision, I have also been indebted from the judgment given in the case of Khyber Tractors (Pvt) Ltd. v. Government reported as PLD 2005 SC 482, wherein, it has been observed that the question of jurisdiction is always considered to be very important and no order passed by a court or a forum having no jurisdiction, even if it is found to be correct on merits, is not sustainable. The Jurisdiction of a court lays down a foundation stone for jurisdiction or as quasi judicial functions to exercise its powers/authority and no sooner the question of jurisdiction is determined in negative. The whole edifice of such defective proceedings is bound to crumble down. It is also an elementary principle of law that if the mandatory cond ition for exercising of jurisdiction by a Court, Tribunal or authority is not fulfilled then the entire proceedings so followed become illegal and suffers from want of jurisdiction. Any order passed in continuation of these proceedings in built or revisions equally suffers from illegalities and are without jurisdiction. It is one of the mandatory requirement if the statute enacts with certain action shall be taken in certain manner and courts are required to do justice between the parties in accordance with the provisions of law, as the litigant who approach the court for the relief is bound to substitute with the procedure had been adopted by him in accordance with law, because it is elementary principle of law that if a particular thing is required to be done hi particular manne r it must be done in that manner , otherwise it shall not be done at all. In the present case, proceedings caused, created and conducted during hierarchy of the customs are without any warrant of law .
13.. The show-cause notice also contain 05 five GDs bearing Nos. KAPE-HC-10184 dated 07.08.2013, KAPE-HC- 38521 dated 05.11.2013, KAPE-HC-4399 6 dated 23.11.2013, KAPE-HC-55492 dated 27.12.2013 and KAPE-HC- 65457 dated 25.01.2014, which are not covered under law as those relates to the period between 07.08.2013 to 20.03.2015 against which show-cause notice under the provision of Section 32(3A) of the Act has to be issued within 05 years from the date of clearanc e of the goods, whereas in the instant case show-cause notice has been issued on 04.02.2019 against those after lapse of 05 years. Rendering its barred by time. Hence, without power/jurisdiction as held by the Superior Judicial Fora in reported Judgments STA 274/05 in Sattar Brothers v.
Collector of Customs (Appeals), Hyderabad and others. STA 179/06 in Dadab uoy Sack Ltd. v. The Collector of Customs, Sales Tax and Federal Excise (Appeals) Hyderabad and others, 2009 PTD (Trib.) 500 in Shah Murad Sugar Mills and others, 2007 PTD 117, Messrs Ghandhara Nissan Diesel Ltd. v. The Collector of Customs, Karachi, 2005 PTD 2453 PSIC Cutlery , Wazirabad v. Collector of Sales Tax. and Central Excise, Gujranwala and others, 2008 PTD 981 Joyla Sadat Cotton Industries v. Collector of Customs 1992 SCMR 1898 Federation of Pakistan v. Messrs Ebrahim Textile Mils Ltd. and others, 2006 PTD 537 Collector of Customs, Sales T ax (W est) Karachi v . K&A Industries, Karachi .
14. The order passed by the respondent No.3 is palpably illegal, by virtue of the fact that while passing order he travelled beyond the charter of show-cause notice as evident from commentary made by him in pant 17 in regards to entry 8 and 9 of SRO 501(1)/2003 dated 12.06.2013 reading as "The contention of respondent regarding available exemption of sales tax has also been examined. On critical perusal of SRO 501(1)/2013 dated 12.06.2013 (entries at serial Nos. 8 and 9 of the Table said SRO) as well as entry at serial Nos. 79 and 80 of the Sixth Schedule of the Sales Tax Act, 1990, it is manifest that HS Code 0406.2000 is not exempt from sales tax as claimed by the respondent". SRO 501(1)/2013 dated 12.06.2013 and entries 8 and 9 are not available in the show- cause notice, instead allegation is about claiming of benefit/exemption under Sixth Schedule of the- STA.
Rendering the order beyond the charter of show-cause notice. Such type of order are always declared by the Superior Judicial Fora being passed without any lawful authority by virtue of the fact that no order can be passed outside the charter of show cause notice, this defect render the order-in-original void and ab-initio. Reference is made to the judgment reported at Collector Excise and Land Customs and others v. Rehm Din reported at 1987 SCMR 1840 and Adam v. Collector of Customs, Karachi PLD 1969 Supreme Court 446, Muhammad Sadgain v. Collector of Customs (Appraisement) 2006 PTD 2742 and Messrs Exide Pakistan Ltd. v. Deputy Collector of customs (Adjudication-Ill ), Karachi, 2004 PTD 1449 , "wherein it has been held that "Order of adjudication, being ultimately based on a ground which was mentioned in the show-cause notice is palpably illegal on the face of it
15. The delivery of the consignments by the terminal operator is being effected upon receipt of online gate out message on their user ID home page after passing of assessment/clearance order under the provision of Sections 80 and 83 and Rules 438 and 442 of the Act/Rules, which are pre-requisite. Orders passed by the competent authorities defined in Section 2(a) of the Act in exercise of the powers conferred upon them through SRO 371(1)/2002 dated 15.06.2002. Those orders were/are appealable order as per the contemplation of Section 193(1) of the Act, verbatim of which is reproduced here-in-under: 193(I) Appeals to Collector (Appeals): Any person including an officer of Customs aggrieved by any decision or order passed under sections 33, 79, 80 and 170 by an officer of Customs before below the rank of Additional Collector may prefer appeal to the Collector (Appeals) within thirty days of the date of communication to him of such decision or order .
16. Upon perusal of GDs of the appella nt, I have observed that these pertains to the period of 07.08.2013 to 20.03.2015, against each GD valid and legal assessment/clearance orders- were passed under the aforesaid provisions of the Act/Rules. Those cannot be disturbed by any authority for the purpose of preparing contravention report and adjudication proceeding. The only course available with the respondent No.1 was to challenge those orders before the Collector of Customs, (Appeals) under the provision of section 193 of the Act in exercise of the powers, delegated upon him through Notification 500(1)/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, (Appeals) upon receipt of the appeal and going through the facts and grounds of those, if thinks fit that the contention of the respondent No.1 seems to be correct and the duty and taxes have not been either levied or short paid. He is empowered to issue show-cause notice to the importer (appellant) as expressed in 3rd proviso to the section 193A (3) of the Act. Instead of the adhering the prescribed method available in the Act, the respondents Nos.1 and 3 reopened the assessment/clearance orders under section 195 of the Act in the absence of availability of power as the power vested therein are for either Board or Collector . None of the respondent figure anywhere, rendering the show-cause notice without power/jurisdiction and as such ab-initio void, the superstructure built thereupon as well ab-initio void. Moreover , it is to be noted that when 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 exercis e 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" and the High Court of Balochistan in 2019 PTD 1712 titled as Collector of Customs, MCC, Quetta v. Al-Habib Enterprises and Engineering and others , while dismissing the SCRA of the department held that "after assessment of leviable duty and taxes under Section 80 of. Customs Act, 1969 and payment thereof and after clearing the vehicle under Section 83 of the Customs Act, 1969, the available remedy of filing appeal under Section 193 of the Customs Act, 1969 was not availed by the concerned officials of the Collectorate of Customs, Additional Collector of Customs, (Adjudication) had no jurisdiction under the provision of Customs Act, 1969 to issue show-cause notice and to pass order-in-original. No question of law having arisen out of the impugned of the judgment passed by Appellate Tribunal warranting interference by High Court under Section 196, Customs Act, 1969. Reference were dismissed in circumstances. "It is also settled proposition that in the presence of 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 due to non-filing of appeal within the stipulated period of 30 days, the same cannot be subject to a show-cause notice due to limitation and the transaction stood passed and closed 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 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 orders passed by respondents Nos.3 and 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 ef fect.
17. The appellant obtained clearance of the imported cheese under PCT 0406.1010 and 0406.3000 which were found correct and exempted under entry numbers 8 and 9 of SRO 501(I)/2013 dated 12.06.2013 and entry numbers 79 and 80 of Sixth Schedule to the Sales Tax Act, 1990 and was allowed being correct and admissible by the respondent No.2 and his subordinates, who passed assessment orders under section 80 and Rules 438 and 442 of the Act/Rules and thereafter passed clearance order under section 83 ibid. Ironically , they are let off scot free, despite standing on the same pedestal. The treatment given to the appellant by the respondents Nos.1 and 3 is nothing more than a partial and differential treatment. A person placed at the same pedestal cannot be treated differently as it would constitute a negation of Articles 4 and 25 of Constitution of Islamic Republic of Pakistan. The Hon'ble High Court of Sindh in its reported judgment 2002 PTD 976 held that "vacating the show-cause notice in one case and taking action against another person in similar situation, is amount to discrimination which is hit by Article 25". 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 dis-similarly , but discriminatingly". Whereas, in reported judgment 2005 SCMR 492 the Hon'ble Supreme Court held that "A facility allowed to someone and denied to other is discrimination". The apex Court further held in reported judgments 2010 SCMR 431 that: "Doctrine of equality , as contained in Art.25 of the constitution enshrine golden rules of Islam and states that event citizen, no matter how high so ever, must be accorded equal treatment with similarl y 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 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 Article 25 of the Constitution."
18. The Entry Nos.79 and 80 of the Sixth Schedule were inserted through Finance Act, 2014. Meaning thereby prior to 01.07.2014 these two entries were non-existent in the Sixth Schedule, rather were falling within the ambit of SRO 501(1)/2013 dated 12.06.2013, the goods imported by appellant were attracting entries numbers 8 and 9 of the Act, reading as "Cheese (PCT Heading 0406.1010 and Processed Cheese not grated or powdered (PCT Heading 0406.3000) and as such were exempted without any exception. Resultan t, 09 GDs bearing Nos. KAPE- HC-10184-07.08.2013, KAPE-HC-38521-05.1 1.2013, KAPE-HC-43996-23.1 1.2013, KAPE-HC-55492-27.12.2013, KAPE-HC-65457- 25.01.2014, KAPE-HC-79709-10.06.2014, KAPE-HC-91972- 15.04.2014, KAPE-HC-101830- 13.05.2014 and KAPE-HC-1 17800- 25.06.2014 stood ousted from the audit observation/show-cause notice and any proceeding initiated against those have no warrant of law .
19. Notwithstanding, to the above legal deficiencies in the conduction of audit, audit observation and show-cause notice / order-in-original, one has to familiar with the definition of the "Shreded and Grated which as per the definition available for grate in Cambridge Dictionary is as "to rub food against a grater in order to cut it into a lot of small pieces." And Dictionary .com defines it as "to reduce to small particles by rubbing against a rough surface or a surface with many sharp-edged openings." In contrast to which the definition of Shredding is "to cut or tear something roughly into thin strips" and piece cut or torn off, especially in a narrow strip". The key differences being that when something is grated it is reduced to small particles by rubbing against a rough surface or a surface with sharp edged opening in stark departure to shredding where it is cut or torn roughly (or not) into thin or narrow strips. The images of the goods in the instant consignments substantiate the status of the goods as they display the cheese in long strips instead of small particles and the examination report further validates the stance.
20. Whereas, the other stark differences between grated and shredded cheese as available at Google Search Engine (hups://dif ferenee.guru/dif ference-between-shredded-and-grated-cheese are : "While shredded cheese and grated cheese are technically both cheese, there are still key differences on the appearance, ingredients, method of consumption, and method of preparation.
Appearance Shredded cheese looks like thin strips of cheese while grated cheese looks like powdered cheese.
Ingredients Shredded cheese is usually made of cheddar , Edam, or mozzarella cheese. Packed shredded cheese may contain potato starch, powdered cellulose, and natamycin. On the other hand, grated cheese is usually made of parmesan or romano cheese.
Method of Consumption Grated cheese is usually used as a toppi ng on pizzas, pasta or salads. While shredded cheese can also be used as a topping, it is also used in baking cheese scones and cooking mac and cheese.
Method of Preparation Shredded cheese requires a grater to be made while grated cheese required a Microplane, box grater , or food processor ."
21. The cheese imported by the appellant is shredded mozzarella cheese, which falls under PCT heading 0406.1010 by virtue of being unripe cheese according to the Codex Alimentarius, on which benefit/exemption under Serial No.79 of Sixth Schedule to the STA was/is available to appellant and was rightly allowed by the respondent No.2 and his subordinate at the time of passing assessment orders under Section 80 and Rule 438 of the Act/Rules. The opinions of respondents Nos.1 and 3 are on the basis of 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. 2400/240I/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 (T rib.) 353 .
22. The respondents Nos.1 and 3 inaptly interpreted the expression of PCT heading 4006.2000 "grated and powdered cheese of all kind" as shredded, definition of which is pole apart from the definition of the word "grated" and "powdered". The word shredded is not available in PCT heading 0406.2000, which is to be read as it has been drafted and inserted in the First Schedule of the Act. The respondents Nos.1 and 3 imported the word "shredded" in the PCT Heading 0406.2000, despite not existing. This is not permitted under law as "in interpreting the taxing statute the customs must look to the words of the statute and interpret in the light of what is clearly expressed. It cannot imply anything which is not expressed, it cannot import provision in the statute so as to support assumed deficiency . There is no room for intendment. There is no equity about a tax. There is no presumption as to tax nothing is to be read in, nothing is to be implied. One only look fairly at the language used nothing else to be done" as held, by High Court and Supreme Court of Pakistan in their reported judgments Abbasi Steel Industries Ltd. v.
Collector of Customs 1989 CLC 1463 to Messrs Fazal Ellahi v Additional Collector of Customs, 2011 PTD (Trib.)
79. It is settled principle of law that "Tax cannot be charged and levied unless it falls squarely within the purview of the charging provision". Taxing laws are not to be extended by the implication beyond the clear import of language used. To hold otherwise would violate another principle of interpretation of taxing statute: that tax law should be construed in favour of the citizen and against the Government. This principle is based on the fact that taxation is a process which interferes with the personal and property right of the people, although it is necessary inference. But it does take from the peop le portion of their properties. The tax law must be construed in favour of the tax payer PLD 2017 SC 99 Chairman, Federal Board of Revenue, Islamabad v. Al-Technique Corporation of Pakistan, Ltd. and others , and "no tax could be levied against a person beyond the scope of a charging section and it had to be construed and applied strictly---before taxing any person, it must be shown that he fell within the ambit of charging section by clear words used therein. If the case did not falls within the four corners of the charging section, not tax could be imposed by inference, analogy or trying to probe into the intention of the legislature" (2017 SCMR 884) Collector of Customs, Sales Tax and Central Now Federal Excise v. Haji Mahmood Essa & Co. and another . No sales tax is payable at import stage on either imported "Cheese" of heading 0406.1010 or "Processed Cheese not grated or powered" of PCT 0406.3000, as these are exempted under Serial Nos.79 and 80 of the Sixth Schedule to the ST A, verbatim of which are reproduced here-in-under: "79- Cheese, excluding that sold In retail packing under a brand name04.06.1010 80 Processed Cheese not grated or powdered, excluding that sold in packing under the brand name."0406.3000
23. What has been discussed hereinabove, particularly the interpretation of law, legal propositions and observations made thereon and to follow the ratio decidendi observed by the Superior . Courts. annul the audit observations/contravention report issued/framed by respondent No.1 on the strength of that and set aside the order passed by respondent No.3 in totality being illegal, ab-initio, null and void. Appeal is allowed accordingly , with no order as to cost.
24. Order passed and announced accordingly .