SALEEM AKHTAR, J.--The petitioner is a private company incorporated in Pakistan inter alia carrying on business of importing and selling, Refrigerant Gases known as Frigen Gas. The petitioner imports Frigen Gases in, completely manufactured state in big steel cylinders in hulk and Sales Tax on such imports is duly paid at the point of import by the petitioner. After importing the cylinders filled with Frigen gases they arc told at the premises of the petitioner to the consumers.
After the cylinders have been exhausted they are re-exported for refilling. The petitioner passes Frigen Gases to the consumers from its cylinders, into consumer's containers. The property in the gas passes to the consumers the moment gas passes from cylinders of the petitioner into consumer's containers. The petitioner received a notice from the respondent dated 28-6-1986 in which ill was alleged that decanting of imported Frigen gases into small consumer A containers was a process of manufacturing within the meaning of section 2(f) of the Central Excises and Salt Act, 1944 and section 3(4) of the Sales Tax Act. The 10 petitioner, was called upon to show cause within 10 days why Sales Tax in the sum of Rs. 42,02,749.85 should not be realised with retrospective effect. The petitioner replied pleading that it is not liahic to pay Sales Tax and no provision of law has been contravened. It was also pleaded that the gas is imported in a manufactured condition and selling it from its cylinders to consumer's containers does not involve any process of manufacturing or production. The respondent did not agree with this plea and held that transferring of gas from cylinders into consumers containers involved a process of packing or repacking which is a' process of manufacturer and therefore Sales Tax is leviable tinder section 3(4) of the Act and ordered that the petitioner pay Sales Tax to the extent of Rs. 42,02,749.95 and also imposed a penalty of Rs. 2,02,000. The petitioner has challenged this proceeding and order as illegal and without jurisdiction.
Mr. Kamal Afar has contended that the petitioner is not liable to pay Sales Tax as in selling gas no process or manufacture is involved and further that the impugned proceedings and order are without jurisdiction. During arguments we noted that the respondent has initiated action for recovery of Sales Tax and therefore inquired from the learned Deputy Attorney-General whether he had jurisdiction to issue the impugned notice and assess Sales Tax. Mr. S.A. Wadood pointed out that such a plea has not been taken by the petitioner. As the plea was not specifically raised we adjourned the hearing and fixed it on a date when petitions involving similar question were fixed for hearing. The learned counsel for the parties were put to notice and were asked to argue on point of jurisdiction.
It is an admitted position that the notice was issued by the Deputy Collector of Central Excise and Customs Hyderabad and action was initiated against the petitioner on the basis of this notice. The question arises whether Deputy Collector of Customs/Central Excise can act as Sales Tax Officer for the purposes of issuing notice under section 28 of the Sales Tax Act for recovery of escaped Sales Tax. According to the learned Deputy Attorney-General Section 3(5) of the Sales Tax Act provides that in respect of all the goods imported into Pakistan or exported from Pakistan the duty of Sales Tax shall be payable in the same manner as customs duty under Customs Act and the provisions of the said Act and Rules shall be made applicable, therefore the Deputy Collector of Custom was empowered to issue notice. This provision is of no help to the respondent because for realising Sales Tax it applies the machinery part of the Customs Act in respect of the goods imported in Pakistan or exported from Pakistan. The petitioner had paid Sales Tax at the time of import and therefore no recovery could he made again. The jurisdiction of the Customs Authority to recover Sales Tax emanates from Section 5(2) of the Sales Tax Act provided a Notification in these terms is issued. Under section 5(2) of the Sales Tax Act the Central Board of Revenue is empowered to appoint any person byname or by virtue of office to exercise power of Commissioner of Sales Tax, Appellate Assistant Commissioner of Sales Tax, Inspecting Assistant Commissioner of Sales Tax or Sales Tax Officer in respect of any area or cases or class of cases. Such persons appointed will have concurrent jurisdiction with the officers mentioned above and or specified in subsection (1) of section 5 or they may be vested with exclusive jurisdiction by the Notification. The Central Board of Revenue acting under section 5 issued Sales Tax Circular No. 7 of 1981 which reads as follows: SALES TAX CIRCULAR NO. 7 OF 1981 APPOINTMENT OF OFFICERS UNDER SUBSECTION (2)
OF SECTION 5 OF THE SALES TAX ACT, 1951 TABLE
(1) (2)
1. Collector of Customs/Central ExciseCommissioner of Sales Tax.
1-A. Collector of Customs (Appeals) /Collector of Central Excise (Appeals)Commissioner of Sales Tax (Revision) /Appellate Assistant Commissioner of Sales Tax.
2. Deputy Collector of Customs/Central Excise.Inspecting Assistant Commissioner of Sales Tax.
3. Assistant Collector of Customs/Central Excise.Sales Tax Officer.
2. The officers specified in column (2) shall have exclusive jurisdiction under the said Act with effect from Ist July, 1981.
Notwithstanding anything contained in this Order the officers specified in subsection (1) of section 5 of the said Act shall continue to exercise the powers under the said Act in respect of all assessm ents (including collection of tax against demand raised in pursuance to such assessm ent), pending with such officers on the first day of July. 1981."
By this circular the Customs and Central Excise authorities mentioned in the table were vested with exclusive jurisdiction under the Sales Tax Act to act as officers mentioned against their names. It is to be noted that by this circular Customs Authorities have been given exclusive jurisdiction in the matter. The Deputy Collector of Customs/Central Excise has been vested with the power to act as an Inspecting Assistant Commissioner of Sales Tax while the Assistant Collector of Central Excise has been vested with the power to act as Sales Tax Officer. Therefore obviously the Deputy Collector of Customs/Central Excise cannot act as Sales Tax Officer. The power of the Inspecting Assistant Commissioner is mentioned in section 28-A of the Sales Tax Act. He is empowered to call for and examine the record of any proceedings under the Sales Tax Act and can after notice to the assessee pass order enhancing or modifying assessment or cancelling the assessment and directing fresh assessm ent to be made. The Inspecting Assistant Commissioner of Sales Tax therefore exercises power only in cases where proceedings are pending or assessment has been made by the Sales Tax Officer. Reference can be made to Commissioner of Sales Tax Central Zone `A' Karachi v. A & B Food Industries Ltd. 1989 PTD. Under section 28 of the Sales Tax Act where for any reason any tax in any year has escaped assessment or has been under assessed or assessed at a low rate, the Sales Tax Officer may serve a notice and after making such inquiry as he considers necessary make assessm ent within the period provided by the Act. Thus in cases where any tax has escaped assessm ent power to issue notice and make assessment is vested in the Sales Tax Officer which power according to the aforesaid Circular No. 7 can be exercised by Assistant Collector of Custom/Central Excise. Such power cannot be exercised by Deputy Collector Customs/Central Excise.
Therefore, the proceedings initiated by the respondent was completely illegal and without jurisdiction. Similar view was taken in C.P. No. 366 of 1986 Imperial Chemical Industries Ltd. v Pakistan and others.
We therefore declare that the notice and the order passed in persuance thereof are without jurisdiction and of no legal effect. The proper authority will however be entitled to, issue proper notice to the petitioner and decide the case according to law.