DR. SHAHID SIDDIQ, ACCOUNTANT M EM BER. Titled appeal has been referred at the instance of the appellant/tax payer directed against the impugned appellate order dated 17.07.2023 for tax period July, 2019 to June, 2021.
2. Brief facts giving rise to this case are that the taxpayer is an individual deriving income from business with the name and style of M/s. Rehmani Dawakhana. Thereafter, a show-cause notice was issued vide Show-Cause C. No. 367 dated 19.12.2022, wherein it was alleged that the tax payer had declared turnover of Rs.94,200,316/- in its income tax return turn for the tax period July-2019 to June-2021, rendering him liable for sales tax registration and payment of sales tax on supplies under the above provisions of law. That thereafter the assessing officer passed an assessment order under section 11(2) of the Sales Tax Act, 1990 by creating a demand of Rs.16,014,054/-.
3. Taxpayer being aggrieved with the order of the assessing officer field an appeal before the CIR(A) who partially accepted the appeal of the taxpayer. Appellant being dissatisfied with the orders of the authorities below has filled the instant appeal before the Tribunal.
4. Learned AR of the appellant firstly argued that the order has been passed beyond the show- cause notice as the tax has been created without confronting the same to the taxpayer, therefore the order is illegal. In this regard, he placed reliance on Judgments reported as 2022 PTD 1153, 2013 PTD 1001, 2010 PTD 451, 2011 PTD 1883and 2011 PTD 2538. He further stated that no demand could have been created without first confronting the same to the taxpayer in the show-cause notice. He further asserted that the CIR(A) had written a letter to the OIR specifically confronting the said issue, however, the OIR did not respond to the same. It had been established before CIR(A) that the order has been passed beyond the show-cause notice the CIR(A) nevertheless, he remanded the case to the CIR(A) which is illegal in terms of section 45B(3) of the Sales Tax Act, 1990.
5. The learned DR, on the other hand, opposed the contentions advanced by the learned counsel for the taxpayer for the reasons assigned by the authorities below.
6. We have given due consideration to the arguments advanced by rival parties and perused the relevant available record. It is observed that no invoice or allegations as levied in the assessment order were confronted to the taxpayer. It establishes from the show-cause notice dated 19.12.2022.
For reference relevant part of Show-Cause Notice dated 19.12.2022 is reproduced as under:- "During scrutiny of tax record of M/s. Rehmani Dawakhana bearing NTN 2582376-7 has declared turnover of Rs.94,200,316/- in its income tax returns for tax period July, 2019 to June, 2021, rendering him liable for sales tax registration and payment of sales tax on supplies under the above provision of law. But the taxpayer did not get himself registered in sales tax regime. Therefore, he was issued STR-06 for compulsory registration. Subsequent to non-compliance of the notice, the taxpayer has been compulsory registered vide STRN.3277876276593 dated 14.06.2022 and are called upon to show-cause as to why sales tax Rs.16,014,054/- along with further tax under section 3(1A) on supplies of Rs.94,200,316/- may not be recovered from M/s. Rehmani Jawakhana under the provisions of section 11(2) of the Sales Tax Act along with default surcharge under section 34(1)
(c) and penalty section 33(5) of the Said Act, 1990 for violation of sections 2, 3, 3(1A), 6, 7, 14, 23 and 26 of Sales Tax Act. 1990."
From the above, it is evident that the show-cause notice is totally silent and has not mentioned any allegation as have been mentioned in the said order. The CIR(A) also noticed the illegality in and mentioned it on page No.10 of his order and in this regard he wrote letter to seek opinion of department however, no appeared on behalf of department. It appears that the order has been passed beyond the show-cause notice. Therefore, respectfully following the judgments 2022 PTD 1153, 2013 PTD 1001, 2010 PTD 451, 2011 PTD 1883 and 2011 PTD 2538 we hold that the proceedings initiated and consequently finalized under section 11(2) of the Act are not according to law. The proceedings initiated on the basis of illegal notices and superstructure constructed thereon in the shape of amended order under section 11(2) is nullity in law.
7. Keeping in view the facts of the present case and the above contentions, we have no hesitation in holding that the order dated 13.04.2023 is beyond the show-cause notice dated 19.12.2022 in the case of the taxpayer appellant is not sustainable in the eyes of law. Once we have held that the show-cause notice was defective, the consequences thereof are the super structure built thereon cannot be sustained either. Therefore, the impugned order of the learned CIR(A) is vacated and the amended order passed by the assessing officer under section 11(2) of the Act is annulled by declaring to have been passed against the spirit of Sales Tax Act, 1990.