ABDUL SHAKOOR, J. Petitioner has filed the present Sales Tax Reference under section 86 of the Khyber Pakhtunkhwa Finance Act, 2013, ("Act"), wherein it seeking opinion of this Court on the following questions of law: a) Whether on facts and under the circumstances of the case, the Tribunal was justified in accepting the general condonation by KPRA in violation of the judgment of Hon'ble Supreme Court of Pakistan? b) Whether on facts and under the circumstances of the case, the Tribunal was justified in accepting the distortion and re-opening of a past and closed transaction in violation of judgments of the Hon'ble Supreme Court? c) Whether on facts and under the circumstances of the case the Tribunal was justified in remanding back the case of Assessing Authority for curing defects in show-cause notice and order-in-original in violation of judgment of Hon'ble Supreme Court of Pakistan and Hon'ble Higher Courts of the Country? d) Whether on facts and under circumstances of the case the Tribunal was justified in ignoring the judgments of higher judicial fora that were binding upon it under Articles 189 and 201 of the Constitution of Pakistan?
2. The facts divulge from the instant reference are that petitioner-bank filed return of sales tax on services in respect of different Tax: Periods. That, the respondent No.3 issued Show-Cause Notice No. 7, dated 24.04.2018, under section 40 read with 68 of the Act, wherein, it was alleged that applicant claimed input tax, amounting to Rs.6,931,661/-, against the output tax which is not permissible on account of receipt of services from the persons not registered with Khyber Pakhtunkhwa Revenue Authority (KPRA), thereby, disallowed input tax adjustment along with imposing liability of ibid amount on account of failure to withhold tax on ibid amount, thus, creating a total tax demand amount to Rs.13863322/- under section 27(2) read with sections 19(2) and 20(2) of the Act. The petitioner-bank rebutted the said assertions of respondent No.3 in its first reply to show-cause notice by claiming the input tax which attract withholding tax under KP Sales tax on Services Special Procedures (Withholding) Regulation, 2017 ("Regulation of 2017"), did not involve the said regulation. The petitioner submitted second reply to the notice, dated 20.03.2019, wherein issue of limitation was raised, however, the respondent No. 3 by ignoring the point of limitation passed the Final Assessment Order (ONO) No.628/2019, dated 21.06.2019, imposing liability of sales tax amounting to Rs.13586426/- along with default surcharge and penalty.
3. Being aggrieved, petitioner filed appeal before the Collector (Appeals)/Respondent No.2, who rejected the appeal of the petitioner vide judgment No. C(A)-33/2019, dated 25.09.2019. The petitioner feeling not satisfied with the aforesaid order of Collector (Appeals)/Respondent No.2, preferred an appeal before, the learned Appellate Tribunal for Sales Tax on Services/Respondent No. 1, who instead of deciding a very serious question of limitation on the basis of which petitioner was of the opinion that the assessme nt order was barred by time by setting aside the two orders of the authorities of KPRA remanded the matter of appeal of the petitioner to them for a decision a fresh on merits vide Order No.1-ATSTS-2020, dated 17.02.2021 ("Impugned Order"), hence, the instant reference.
4. Learned counsel appearing on behalf of the petitioner vehemently argued that the learned Tribunal has unjustly remanded the case to the authority of KPRA for decision afresh without first deciding whether or not the assessme nt order was barred by time, particularly keeping in view the judgment of Apex Court in case "Additional Commissioner Inland Revenue v. Messrs Eden Builders Limited and others" (2018 SCMR 991), wherein, it was held that the law of limitation so far as it regulated the period in which one person could avail a remedy against another was not to be lightly disturb as the certainty created by limitation was necessary for the success of trade and business, moreso, when such limitation governed tax matters. He further contended that the authority under section 99 of the KP Finance Act, 2013, was having no lawful authority to condone the delay caused in not passing assessment order by Additional Collector/respondent No.3 within the time limit set under subsection (3) of section 40 of the ibid Act; since, the Additional Collector was to pass the assessm ent order under subsection (1) of section 40 of the ibid Act within 120-days of issuance of show-cause notice or within such extended period as he may for reason to be recorded in wiring fix and under proviso of subsection (3) of section 40 he was authorized to extend period which shall ordinarily not exceed 60-days, thus, it is crystal clear the respondent No.3 has not exercised its jurisdiction which was vested in it for extending the time limit for passing the impugned assessm ent order, but, the learned Tribunal while remanding the case to Additional Collector for disposal the same afresh has not adverted it attention towards such a serious legal issue raised before it, hence, it has not adhered to the principle laid down by the Superior Courts of the country that it is a paramount duty of Court/Tribunal to decide the lis, fairly, justly and rightly in accordance with the law.
5. On the other hand, learned counsel appearing on behalf of the respondent-department fully supported to the judgment of Tribunal by contending that it has committed no legal error in remanding the case to the Additional Collector for decision afresh; in this way, petitioner shall be having every right to raise the same point before it which he has agitated before this Court today.
He further contended that in terms of section 99 of the ibid Act, the authority was having lawful authority to condone the delay caused in passing Assessment Order by the Additional Collector after issuance of show-cause notice to the petitioner, thus, the learned counsel appearing on behalf of the applicant-petitioner was not justified to lay much stress that the assessment order was barred by time.
6. We have seriously considered the submissions of the learned counsel for the parties and minutely examined the order of the learned Tribunal viz-a-viz the provision of KP Finance Act, 2013.
7. Before proceeding further to look into the question raised herein for our determination, we feel it highly pertinent and advantageous that section 40 and section 99 of the Khyber Pakhtunkhwa Finance Act, 2013, be reproduce hereunder for our appreciation:- "40. Assessment of tax.----(1) Where on the basis of any information acquired during an audit, inquiry, inspection or otherwise, an officer of the Authority is of the opinion, that a registered person has not paid the tax due on taxable services provided by him or has made short payment, the officer shall make an assessm ent of the tax actually payable by that person and shall impose a penalty and charge default surcharge in accordance with sections 64 and 65.
(2) No order under subsection (1) shall be made unless a notice to show-cause is given to the person in default within five years from the end of the tax period to which the assessment relates specifying the grounds on which it is intended to proceed against him and the said officer shall take into consideration the representation made by such person and provide him an opportunity of being heard if the person so desires.
(3) An order under subsection (1), shall be made within one hundred and twenty days of issuance of the show-cause notice or within such extended period as the officer may, for reasons to be recorded in writing, fix: Provided that such extended period shall ordinarily not exceed sixty days.
(4) In computing the period specified in subsection (3), any period during which the proceedings are adjourned on account of a stay order or proceedings under section 89 or the time taken through adjournments by the person shall be excluded.
(5) An order passed under subsection (1), may be further amended as may be necessary when on the basis of any information acquired during an audit, inquiry, inspection or otherwise, the officer is satisfied that-
(a) any tax has been under-assessed or assessed at a low rate; or
(b) any taxable service provided by the person has escaped assessment,
(6) The Collector may amend, or further amend any order passed under subsection (1) or (5), if he considers that the order is erroneous or pre judicial to interest of Justice.
(7) The provisions of subsections (2), (3) and (4) shall be applicable to an order passed under subsections (5) and (6).
(8) Notwithstanding anything contained in this Act, the Authority may prescribe thresholds, parameters, standards and basis for assessment of supply value and the assessment of tax."
99. Condonation of time-limit.---(1) Where any time or period has been specified under any of the provisions of this Act or the rules within which any act or thing, including submission of an application, filing of a return or payment of tax, is to be done, the Authority may permit such application to be made or such act or thing to be done within such time or period as it may consider appropriate.
(2) The Authority shall not condone a time limitation which results in increase of any tax payable, penalty or default surcharge levied unless the tax payer has been given a reasonable opportunity of being heard.
(3) The Authority may, by notification in the official Gazette, and subject to such limitations or conditions as may be specified therein, empower any Collector or an officer of the Authority to exercise the powers under subsection (2) in any case or class of cases.
8. The combined study of subsection (3) of section 40 and section 99 of the ibid Act would reveal the scope of subsection (3) of section 40 and section 99 is quite a part to each other. When legislators have authorize the assessment officer under subsection (3) of section 40 to condone the delay caused in making assessment order after issuance of the show cause notice to the defaulter who has not deposited the amount of sales tax due to the authority under the law, then the authority in terms of section 99 could not extend the delay, if any, caused by the assessment officer in passing assessm ent order within time set out under subsection (3) of section 40 after show-cause notice to the delinquent person/company.
9. In order to appreciate as to whether or not the delay has been caused in passing an assessment order by the Additional Collector/respondent No.3, after issuance of the show-cause notice, we have thoroughly examined the record available on the case file. Admittedly, the Additional Collector/respondent No.3 has passed assessment order after the lapse of 237-days from the date of issuance of show-cause notice to the petitioner. Now question arises when Additional Collector/respondent No.3 was having a jurisdiction under subsection (3) of section 40 to extend the time for making an assessm ent order then why he has approached the authority to condone the delay caused in passing assessment order within time as visualized in aforesaid provision of the ibid Act. We are also failed to understand as what prevailed with authority to condone the delay of 237-days caused in making assessment order by the Additional Collector/respondent No.3 after issuance of show-cause notice to petitioner in exercise of its jurisdiction under section 99 of the ibid Act. As in our view, the authority while condoning the delay, has out rightly ignored the provision of subsection (3) of section 40, as under it the Additional Collector/respondent No.3, was having the jurisdiction to extend the time by assigning reason thereof for making an assessment order in the case of petitioner. We are sorry to say that the learned Tribunal has not adverted its attention to a very serious legal, issue raised before it by the petitioner that the assessment order was barred by time and thus, in our view, the question Nos.(c) and (d) are arising from the judgment and order of the Tribunal for our determination. In view of what has been discussed above, the learned Tribunal has committed a serious legal error as it after observing that petitioner was of the view that assessm ent order was being barred by time became past and closed transaction, therefore, could not be reopened, without answering the same has remanded the matter to Additional Collector for passing fresh reassessment order. Hence, the aforesaid two questions of law are answered positively and thereby the instant reference is returned as positive.
10. Consequently, the judgment/order of the learned Tribunal stands set-aside and the appeal decided by the Tribunal shall be deemed pending before it for answering the aforesaid legal question raised by the petitioner before it. Office is directed to send a copy of this judgment under seal of the Court to the Appellate Tribunal for Sales Tax on Services; Khyber Pakhtunkhwa, Peshawar.