SALEEM AKHTAR,J.--1. The petitioner is engaged inter alia in the business of selling mineral water in bottles for which purpose he has acquired land at Nooriabad District Dadu. According to the petitioner he obtains water from 500 feet below the surface level and markets it after bottling the same under the name and style of 'Abe Hayat'. The officials of Central Excise and Land Customs Nooriabad raided the bottling plant of the petitioner and seized the stock- On query the petitioner was informed that the seizure was for recovery of sales tax which the petitioner had not paid. The petitioner filed petition No. 140/1988 which was disposed of on the petitioner's furnishing bank guarantee and the Excise Authorities were to decide the case after issuing proper show cause notice to the petitioner. A show cause notice dated 28th March, 1988 was issued by the Deputy Collector alleging that the petitioner is manufacturing stock of mineral water from July 1987 and its production capacity is about 800 to 1000 bottles of Abe Hayat mineral Water per day. As he has not paid Sales Tax why amount of Rs. 8,593 should not be recovered. Opportunity was given to appear and defend the case by which the petitioner was charged of violation of Rules 7,9,174 and 226 of Central Excise Rules read with Section 3(4) of the Sales Tax Act. The Deputy Collector by order dated 24th October, 1988 held that the petitioner is liable to pay Sales Tax of Rs. 8,593 which was to be adjusted from the bank guarantee. So for violation of Central Excise Rules was concerned no penal action was taken and the petitioner was warned to be careful in future. The petitioner filed an appeal against this order but as according to him it was not an efficacious remedy during the pendency of this appeal Petition No. 1304 of 1988 was filed. It has been alleged that to protect himself from any penal action the petitioner continued to pay Sales Tax demanded by the respondent. The petitioner filed Petition No. 17 of 1989 for a declaration that levy and recovery of Sales Tax is illegal, the recovery may be stayed and Sales Tax paid be ordered to be refunded. This judgment will dispose of both these petitions.
2. We have heard Mr. G.M. Qureshi learned counsel for the petitioner and Mr. S.A. Wadood the learned Deputy Attorney General and Mr. Kazi Hassan for the respondents. The learned counsel for the petitioner has contended that on the petitioner's product no Sales Tax is leviable. It has been also contended that the notice issued by the Deputy Collector of Customs is illegal and without jurisdiction and therefore no proceedings for recovery of Sales Tax can be taken. As this plea had not been raised in the petition and was taken during arguments we adjourned the matter for one week so that the respondents' advocate may not be taken by surprise and to put him on notice.
3. 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 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 the Customs Act and the provisions of the said Act and Rules shall be made applicable, therefore the Deputy Collector of Customs 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. By referring to this provision the Customs Act or the powers of Customs Authority cannot be extended to realise Sales Tax on goods which have not been mentioned in Section 3(l)(b)(d). 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 by name 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 are specified in sub-section (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 sub-section (2) of section 5 of the Sales Tax Act, 1951 In exercise of the powers conferred by sub-section (2) of section 5 of the Sales Tax Act, 1951 (III of 1951), and in supersession of Sales Tax Circular No. 3. Of 1981, dated the 17th May, 1981 the Central Board of Revenue is pleased to appoint the officers specified in column (2) of the table below to exercise the powers of the officers specified in column (3) of that table within their respective areas of jurisdictions.
TABLE (1) (2) (3)
1. Collector of Customs/ Central Excise. Commissioner 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. {{TEXT MISARRNGED}}
2. The officers specified in column (2) shall have exclusive jurisdiction under the said Act with effect from 1st July, 1981.
Notwithstanding anything contained in this Order the officers specified in sub-section (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 ents), pending with such officers on the first day of July, 1981".
4. By this Circular the Officers of Customs mentioned in the table were vested with exclusive jurisdiction under the Sales Tax Act to act as officers of Sales Tax 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 Customs/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 assessm ent and directing fresh assessment to be made. The Inspecting Assistant Commissioner of Sales Tax therefore exercises power only in cases where proceedings are pending or assessm ent 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 Limited. (1989 P. T.D; 594). Under section 28 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 assessment within the period ..Provided by the Act. Thus in cases where any tax has escaped assessment power to issue notice and make assessment is vested in the Sales Tax Officer which power according to the aforesaid Circular can be exercised by Assistant Collector of Customs/Central Excise. Such power cannot be exercised by Deputy Collector I 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. Vs. Pakistan and others.
5. We therefore declare that the notice and the order passed in pursuance 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 ease according to law.