AJMAL MIAN, J.--1. This is an appeal with the leave of the Court against the order dated 19th June, 1989 passed by a learned Single Judge of the Lahore High Court upon Review Application Na 25 of 1989, filed by the appellant in Writ Petition No. 5054 of 1988, seeking the review of the judgment dated 5th April, 1989, dismissing the same. Leave to appeal was granted to consider the following two questions:--
(1) The question of law on which leave to appeal has already been granted in The Electric Lamp Manufacturers of Pakistan v. The Assistant Collector of Central Excise and Land Customs and others (1986 SCM R 604).
(2) Whether the department's construction itself of section 4 of the Central Excises and Salt Act, 1944, has not been consistent in view of the Deputy Collector's demand notices, in case of Glass Sheet cases (placed on record)?
2. The brief facts are that the appellants manufacture Caustic Soda which was subject to levy of central excise duty up to 25th July, 1976, whereafter it was exempted from central excise duty, but was liable to sales tax during the relevant period. It seems that the appellants were assessed under section 10 of the Sales Tax Act, 1951, hereinafter referred to as the Act, by the Sales Tax Officer in respect of their liability of sales tax for the period expiring on 30th September, 1979. The appellants were served with a show-cause notice dated 5th February, 1980 by the Deputy Collector, Central Excise and Land Customs, Lahore (i.e. Respondent No. 3), alleging therein that on checking of the record from 23rd November, 1974 to 28th May, 1976 and It November, 1978 to 30th September, 1979 by the Revenue Audit Team No. 1, Central Excise Headquarters, it was observed that the appellants did not include freight, octroi, handling charges, and development charges from 14th July, 1979 to 30th September, 1979 on Caustic Soda on the assessable value as required under section 4 (1) of the Central Excises and Salt Act, 1944, hereinafter referred to as Act of 1944, and by this way they did not pay excise duty and sales tax amounting to Rs. 5,63,272.32 and Rs. 42,12,875, respectively, in contravention of the provision of section 4(1) of Act of 1944, read with Rules 9 and 198 of the Central Excises Rules, 1944, hereinafter referred to as the rules. They were called upon to show-cause within 10 days as to why (i) penal action under Rules 198 and 210 of the Rules should not be taken against them on this account, and why (ii) excise duty and sales tax amounting to Rs. 5,63,272.32 and Rs.
42,12,875, respectively, be not recovered from them under Rule 7 read with Rule 10 of the Rules. The above show-cause notice was replied to by the appellants, firstly, through their letter dated 27th February, 1980 and, secondly, through their Advocate's letter dated 29th may, 1980, in which inter alia it was averred that the freight and octroi were not to be included in the price of Caustic Soda for the purpose of sales tax inter alia for the following reasons, mentioned in their Advocate's above letter dated 29th May, 1980:- "(i) The maximum price of Caustic Soda has been fixed by the Controller-General of Prices and Supplies on ex-factory basis.
(ii) Sales are made on ex-factory basis.
(iii) Section 4(1) of the Central Excises and Salt Act, 1944, as clarified in General Order No. 53 of 1967 contemplates inclusion of charges up to the stage of sale.
(iv) Charges incurred after sale or post-sale expenses are not to be included in the assessable value under section 4(1).
(v) Prices at the stage of delivery are not contemplated in section 4(1) of the Act, obviously for the reason that it will lead to multiplicity of prices."
3. However, respondent No. 3 through his order dated 22nd October, 1980, held that the above two items were liable to be included in the price of the Caustic Soda for the purpose of computing excise duty and sales tax. Consequently, the appellants were called upon to pay excise duty and sales tax amounting to Rs. 3,45,539.15 and Rs. 14,18,604, respectively. Against the above order, the appellants filed appeal in which first time they raised the plea that respondent No. 3 was not competent to issue show-cause notice in respect of the alleged short levy of sales tax besides impugning the inclusion of above two items in the price of the Caustic Soda. However, the above appeal was dismissed by respondent No. 2 i.e. The Collector, Central Excise and Land Customs (Appeals), through his order dated 18th October, 1981. On the question of jurisdiction as to the recovery of sales tax, the following conclusion was arrived at:- "The second point is whether the Central Excise Officer was competent to issue a demand of arrear of sales tax relating to the period prior to It July, 1981. The plea of the Advocate is not acceptable because section 3(4) of the Sales Tax Act was amended by Finance Act, 1958 and the proviso was also amended by Finance Act, 1974 which inter alia provides that the tax shall be payable at the same time and in the same manner and the duty of excise and the provision of the said Act relating to the payment of duty, short levy of duty, rectification of mistakes and the removal of goods, so far as may be, applied to the payment of tax, as they apply for the purpose of the said Act. The above amendment clearly shows that the Deputy Collector has made a decision correct on facts and also in law. The appeal is therefore dismissed.
4. Thereafter, the appellants filed revision, which was dismissed by the Additional Secretary, Government of Pakistan, Central Board of Revenue, i.e. Respondent No. 1 by his order dated 18th February, 1988. Thereupon, the appellants filed above writ petition, which was dismissed by a learned Single Judge of the Lahore High Court by his aforesaid judgment dated 5th April, 1989. After that, the appellants filed the above review application, which was also dismissed by the learned Judge in chamber. Then the appellants approached this Court by way of petition for leave to appeal, which was granted to consider the above questions.
5. Before taking up the contentions of the learned counsel for the parties, it may be pertinent to point out that upon the filing of the above petition for leave to appeal, the office raised an objection to the effect that the petition for leave to appeal was barred by time' In response to the above objection, the learned Advocate-on-Record for the appellants through his letter dated 3rd September, 1989 stated that the appellants had filed above petition for leave to appeal against the above order dated 19th June, 1989 passed upon appellant's above review application. We have, therefore, to confine ourselves to the question, whether the above order passed in review is sustainable in law.
6. In support of the above appeal, Mr. Zaheer Ahmad Khan, learned A.S.C, appearing for the appellants, has contended that the learned Judge in chamber erred in not allowing the review application as the grounds for review were made out, inasmuch as the determination of the price of Caustic Soda was not in terms of section 4(1) of Act of 1944, and that respondent No. 3 on 5th February, 1980 had no jurisdiction to re-open the assessment order competently made by the Sales Tax Officer under section 10 of the Act, as first notification under sub-section (2) of section 5 of the Act conferring power inter alia on respondents Nos. 2 and 3 was issued on 17th May, 1981, which notification was substituted by a notification dated 1st July, 1981.
On the other had, Ch. Muhammad Faruq, learned Deputy Attorney-General appearing for the respondents, has urged that the mere fact that the learned Judge might have taken erroneous view on the above two points, would not have warranted interference by the learned Judge in chamber in exercise of the review jurisdiction. His further submission was that the question, whether the items of freight and octroi were to be included in the price was a question which was decided by all the forums including the learned Judge in chamber against the appellants for cogent reasons and, therefore, the above question could not have been re-opened in exercise of review jurisdiction.
7. As regards the jurisdiction of respondent No. 3 to issue the above show-cause notice and thereupon to pass the impugned order, his submission was that by virtue of the proviso to sub- section (4) of section 3 of the Act, which was amended by the Finance Act, 1974, the above respondent was competent in law to issue the impugned show-cause notice and to pass the impugned order.
8. We are inclined to agree with Ch. Muhammad Faruq, learned Deputy Attorney-General, that no case was made out by the appellants to review the finding concurred by the learned Judge in chamber that the items of freight and octroi were to be included for the purpose of computing the price under section 4(1) of the Act of 1944 for the purpose of assessment of excise duty and sales tax.
9. The questions, whether there is a general body of retail traders for the purpose of determining the wholesale cash price under sub-section (1) of section 4 of the Act of Caustic Soda, and whether the above two items, namely, freight and octroi are incidental to sale, involved factual investigation and, therefore, the above matters could not have been re-opened in exercise of review jurisdiction keeping in view that all the forums decided against the appellants, It may be observed that even according to the averments contained in the memo, of petition for leave to appeal, it is evident that the entire Caustic Soda is not sold to the manufacturers.
10. We may observe that respondent No. 2 was competent to initiate the proceedings for the short levy of the excise duty and, therefore, no jurisdictional question was involved as to the demand in respect of the excise duty short levied. The only v question which needs examination is, as to whether the learned Judge in chamber was justified in declining the appellant's review in respect of the above short levy of sales tax. In this / regard, it may be pertinent to refer to the relevant provisions of the Act and Act of 1944.
It may be observed that section 3 of the Act is the charging section relating to sales tax. The proviso to sub-section (4) provides that in case of goods mentioned in clause (a) of subsection (1) of section 3 (i.e. All goods produced or manufactured in Pakistan in respect of which sales tax is payable by the manufacturer or producer), where the Board so directs, the sales tax shall be levied and collected as if it were a duty of excise leviable under section 3 of Act of 1944, and all provisions thereof and the rules made thereunder shall so far as may be and with necessary modification apply notwithstanding the provisions of Act of 1944.
It may further be observed that sub-section (1) of section 5 of the Act provides that "Every Commissioner of Income-tax, Appellate Assistant Commissioner of Income-tax, Inspecting Assistant Commissioner of Income-tax, Tax Recovery Officer and Income Tax Officer shall exercise the powers of a Commissioner of Sales Tax, Appellate Assistant Commissioner of Sale Tax, Inspecting Assistant Commissioner of Sales Tax, Tax Recovery Officer and Sales Tax Officer, respectively, under this Act and in relation to the same area and cases as he exercises under the Income Tax Ordinance, 1979."
Whereas, sub-section (2) of section 5 of the Act lays down that "Notwithstanding anything contained in sub-section (1), the Board may appoint any person by name or by virtue of office to exercise the powers of a 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 in respect of any case or class of cases and a person so appointed shall have concurrent jurisdiction with the authority mentioned in sub-section (1) or exclusive jurisdiction as the Board may direct." It may also be observed that section 10 empowers the Sales Tax Officer to assess the sales tax amount on the basis of the return which is to be filed by the manufacturer or producer and every licensed wholesaler.
11. It appears that pursuant to above proviso to sub-section (4) of section 3 of the Act, the Central Board of Revenue issued a notification dated 19th October, 1978, which reads as follows:-- "I am directed to refer to Central Board of Revenue's Order C. No. 50/19-CET/78, dated the 11th October, 1978 on the above subject (copy enclosed) and to state that collection of sales tax if leviable under the Sales Tax Act, 1951 on the items specified below is to be taken over by Central Excise Department with effect from 1st November, 1978:- (1)Caustic Soda, all sorts Item 33 (2)Cellophane, Plastic & Resin Materials Item 33 (3)Products of Rubber and Synthetic and Artificial RubberItem 34 (4)Paper , all sorts Item 37 (5)Paper Board, all sorts Item 37 (6)Steel Furniture and Fixtures Item 54 (7)Electrical goods, apparatus and appliances Item 58 (8)Syrup & Squashes and fruit juices, all sorts Item 6
2. The tentative proposals as to the department of staff in the units relating to above items arc provisionally approved but Collectors should feel free to carry out such re-adjustment as they may deem fit under information to Board. Necessary instructions to field officers in this regard may also be issued. All arrangements on the ground must be completed by 23rd October, 1978 and compliance reports sent to the Board."
12. The question, therefore, arises, as to whether by virtue of the above proviso to sub-section (4) of section 3 of the Act read with the above notification respondent No. 3 had the jurisdiction to issue the above show-cause notice. In this behalf, it may be pertinent to point out that there is a marked distinction between the levy of sales tax and the collection thereof. The process of levy involves the Assessm ent of the liability by the Sales Tax Officer specified in sub-section (1) of section 5 of the Act and, therefore, unless and until the Central Board of Revenue issues a notification under above subsection (2) of section 5 of the Act which empowers it to appoint any person by name or by virtue of the office to exercise the powers of Commissioner of Sales Tax, Appellate Assistant Commissioner of Sales Tax or Inspecting Assistant Commissioner of Sales Tax, Sales Tax Officer in respect of any area or in respect of any case or class of cases, no other person than the persons specified under sub-section (1) of section 5 of the Act, could discharge the functions under the Act.
13. The process of collection is different from the process of assessment. It may be observed that under the above proviso to sub-section (4) of section 3 of the Act, the Central Board of Revenue has been empowered to direct that the sales tax shall be levied and collected as if it were a duty of excise leviable under section 3 of the Act of 1944. The above-quoted notification dated 19th October, 1978 only authorises the Central Excise Department to collect the sales tax if leviable under the Act in respect of the items mentioned therein, which include Caustic Soda, all sorts. In our view, neither the above proviso to subsection (4) of section 3 of the Act without a notification authorising the levy of sales tax nor the above notification which authorises only collection of the sales tax by the Central Excise Department, was sufficient to confer jurisdiction on respondent No. 3 to issue the impugned show-cause notice and to pass the impugned order pursuant thereof. In this regard, it may be pertinent to point out that in terms of above proviso to sub-section (4) of section 3 of the Act, the Central Board of Revenue issued Circular No. 3 of 1983 though above notification dated 17th May, 1981 and Sales Tax Circular No. 7 of 1981 through the above notification date It July, 1981. It will suffice to reproduce the latter circular, which reads as follows:-- "SALES TAX CIRCULAR NO. 7 OF 1981 SUBJECT: APPOINTMENT OF OFFICERS UNDER SUBSECTION (2) OF SECTION 5 OF SALES TAX ACT, 1951. In exercise of the powers conferred by sub-section (2) of section 5 of 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 jurisdiction; Amended retrospectively vide Circular No. 1 of 1982. TABLE (1) (2) (3)
(1) Collector of Customs/Central Excise.Commissioner of Sales Tax.
(1-A) Collector of Customs (Appeals)\Collector of Central Excise (Appeal)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 Of ficer.
2. The officers specified in column (2) shall have exclusive jurisdiction under the said Act with effect from It July, 1981.
3. 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.
(Sd.)
(SHAHID BASHIR), SECOND SECRETARY."
A perusal of the above Circular indicates that the Central Board of Revenue in exercise of powers conferred on it by above sub-section (2) of section 5 of the Act, appointed officers specified in Column (2) of the Table for the purpose of exercising the powers of the officers specified in Column (3). The Assistant Collector of Customs/Central Excise is to exercise the power of the Sales Tax Officer. It is also evident that under para. 2; the officers mentioned in Column (2) have the exclusive jurisdiction under the Act with effect from It July, 1981. It may also be noticed that under para. 3 it has been provided that notwithstanding anything contained in the above Order, the officers specified in sub-section (1) of section 5 of the Act shall continue to exercise the powers under the said Act in respect of all assessm ents (excluding collection of tax against demand raised in pursuance to such assessm ents) pending with such officers on the first day of July, 1981. The above notification has been subject-matter of interpretation by this Court in the judgment dated 9th May, 1991 in the case of The Electric Lamp Manufacturer of Pakistan Limited v. The Assistant Collector, Central Excise and Land Customs, Karachi, and others (Civil Appeal No. 139-K of 1985), which has arisen out of the leave granting order reported in 1986 SCM R 604 ant! Referred to in question No. 1 in the present case, on which leave was granted. In the above unreported judgment, inter alia, the following contention was raised by the learned counsel for the appellants:- "(i) that as the respondents were conferred jurisdiction under the notification date It July, 1981, they had no power to raise any demand in respect of the period expiring prior to the above date of notification;" The above contention was dilated upon as follows:-- "(5) Adverting to the above first submission of Mr. Abul Khair Ansari, we may observe that we are inclined to agree with the reasoning which prevailed with the High Court in respect of the above contention quoted hereinabove. Admittedly, the show-cause notice was served on the appellant and the demand was raised after the issuance of the notification and, therefore, the officials named in the notification had the jurisdiction. The question of enforcing the notification retrospectively is not involved in the present case."
14. The ratio of the above judgment seems to be that after the above notification officers named therein are competent to take action for the short levied amount of sales tax even in respect of the matters which were concluded prior to the notification. In the present case, respondent No. 3, issued the impugned show-cause notice and the impugned order prior to the above notification i.e. On 5th February, 1980 and 22nd October, 1980, respectively, and, therefore, the ratio of the above case is not applicable to the present case.
15. We may refer to the case of M/s. Ulbricht Pakistan Ltd. v. Deputy Collector II, Central Excise & Land Customs, Karachi and 3 others 1991 PTD 551 in which the facts were that the petitioner was served with a show-cause notice dated 2nd November, 1980 by the Deputy Collector-I of Central Excise and Land Customs, Karachi, calling upon them to pay the sales tax amount. The above show-cause notice was impugned through a Constitutional petition on the ground that the Deputy Collector had no jurisdiction to issue the show-cause notice. Reliance was placed by the official respondents on the amendment brought about by section 4 of the Finance Ordinance, 1979 (Ordinance XXX of 1979) in the Sales Tax Act, 1951, whereby section 3 was amended and first and second provisos to sub-section (4) of section 3 were substituted, but the High Court held as follows:- "The goods being exempt from the duty of excise, the proviso (b) is attracted. The said proviso (b) provides that in respect of goods which are for the time being exempt from the payment of duty of excise, the tax (i.e. Sales tax) shall where the Board has so directed be payable at the same time and in the same manner as duty of excise, would have been payable, had the goods not been exempt and the provisions of the Central Excises and Salt Act and the Central Excises Rules relating to the matter specified in clause (a) shall, so far may be and with the necessary modification, apply to the payment of tax under the Sales Tax Act as they apply for the purposes of the Central Excises and Salt Act. Neither the direction of the Central Board of Revenue has been placed before us as envisaged under proviso (b), nor it has been contended by the respondents that the said direction was issued by the Board.
In this view of the matter it is obvious that the sales tax was not recoverable by the Central Excise and Land Custom Authorities, and therefore, the show-cause notice issued by them and subsequent proceedings initiated thereon were nullity in law and without jurisdiction."
16. Reference may also be made to the case of S.M. Saleem v. Deputy Collector, Central Excise and Land Customs and another (PTCL 1990 CL. 335), in which a Division Bench of the High Court of Sindh, headed by Saleem Akhtar, J. (as his Lordship then was), while construing the above Sales Tax Circular No. 7 of 1981 date It July, 1981, held that the Deputy Collector of Customs was not competent to issue show- cause notice under section 28 of the Act on the ground that any tax in any year has escaped assessm ent or has been underassessed. It may be advantageous to reproduce the relevant portion of the judgment, which reads as follows:-- "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 Ltd. 1989 PTD 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 of 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."
17. Even if we were to apply the above Sales Tax Circular No. 7 of 1981 date It July, 1981 which in fact is not applicable, even then the Deputy Collector had no jurisdiction to issue the impugned show- cause notice as he was notified as the Inspecting Assistant Commissioner of Sales Tax under the above notification and not a Sales Tax Officer.
18. We are, therefore, inclined to hold that the learned Judge in chamber has not taken into consideration the relevant provisions of the Act and the notification in order to determine the question, whether the Deputy Collector had the power to issue the impugned show-cause notice for the recovery of short levy of sates tax and, therefore, it was a fit case for review of the judgment dated 5th April, 1989 on the above question.
19. Then it was contended by Ch. Muhammad Faruq, learned Deputy Attorney-General, that since all the forums have held that the appellants had evaded the payment of the sales tax amounting to Rs. 14,18,604, this Court should not exercise discretionary writ jurisdiction as it would not foster the cause of justice. Reliance was placed by him on the case of Nawab Syed Raunaq Ali etc. v. Chief Settlement Commissioner and others PLD 1973 SC 236, the case of Begum Shams-un-Nisa v. Said Akbar Abbasi and another PLD 1982 SC 413, and the case of Muhammad Baran and others v.
Member (Settlement and Rehabilitation), Board of Revenue, Punjab and others PLD 1991 SC 691.
20. The ratio of the above cases seems to be that the High Court may decline to press into service its Constitutional jurisdiction even when the impugned order is illegal and without jurisdiction, if invoking of the same will result in perpetuating fraud or injustice instead of fostering the cause of justice. The above principle of law cannot be invoked in aid in the present case as interference in exercise of Constitutional jurisdiction will neither perpetuate any fraud nor will result in miscarriage of justice. There is no equity in favour of recovery of a tax levied without jurisdiction.
21. We would, therefore, allow the above appeal to the extent of declaring that the impugned show- cause notice and the orders passed thereon in respect of recovery of Rs. 14,18,604/sales tax are without jurisdiction and are of no legal effect. However, if it is legally permissible, it will be open to the competent authority to issue fresh show-cause notice. However, there will be no order as to costs.