MR. MUHAMMAD ASLAM, TECHNICAL MEMBER.-(l). This appeal has been filed By M/s. Ali Soap Factory, Faisalabad against the remand orders No. 347/98 of the learned Collector Appeals, Central Zone, Lahore, which were passed by him on 6th July 1998.
2. Brief facts of the case are that the staff of Sales Tax, Faisalabad, visited the appellants unit for checking of their record. Scrutiny of the appellants record revealed that the appellants were manufacturing and supplying taxable goods i.e. Laundry soap block without getting themselves registered with the Sales Tax Department and without payment of sales tax. The visiting staff detected 88 blocks of soap in frames and 306 block ready for supply weighing 18640 kgs total weight 23640 kgs worth Rs. 4,41,700 involving sales tax of Rs. 55,212. Scrutiny of the appellants record further revealed that the appellants were engaged in the supply of soap blocks on an average of 20 blocks per day since 1-7-1996. It was alleged that the appellants during the period 1- 7-1996 to 31-12-1996 cleared 1,44,000 kgs valuing @ 5% amounting to Rs. 1,27,600 and during period 1-1-1997 to 30-6-1997 cleared 144000 kgs worth Rs. 25,52,000 involving sales tax @ 10% amounting to Rs. 2,55,200. The appellants were, therefore, alleged to have evaded sales tax amounting to Rs.
4,38,012. The appellants were charged with violation of section 3, 6, 14 of the Sales Tax Act, 1990. The additional Collector of Sales Tax, Faisalabad while adjudicating the case ordered payment of sales tax amounting to Rs. 4,38,012. Penalty of Rs. 50,000 was also imposed on the appellants.
3. While pleading their case before the first appellate authority the appellants mainly contended that the whole proceedings conducted in the matter were ultra vires of law as the staff of the Sales Tax Department which visited their factory had not been so authorized either by the Board or the Collector of Sales Tax, Faisalabad, as per the requirement of law contained in section 38 of the Sales Tax Act, 1990. It was also contended that the appellants had already been registered with the Department of Sales Tax vide Registration Certificate No. 04-05-1522-00737 with effect from 22-6- 1996 and that the detecting authorities had wrongly alleged in this behalf that they were carrying on the business of manufacturing of soap without having any sales tax registration. The appellants pointed out that the valuation of the goods found in the factory and that pertaining to the period from 1-7-1996 to 30-4-1997 had been done in an arbitrary and whimsical manner and not on the basis of any tangible evidence.
4. After examining the case record and considering the view points of both sides, the first appellate authority deemed it more appropriate to remand the case back to the Additional Collector, Sales Tax, Faisalabad for de-novo consideration on merit with the direction that he should pass a fresh order after meeting the points raised by the appellants.
5. The appellants have reiterated before us that as the visiting staff had no authority to enter their factory-premises, all what they did was illegal, null and void and not maintainable in the eye of law.
Further to that, they also maintain that, even otherwise, the so-called liabilities have been worked out in an arbitrary and whimsical manner and not on the basis of any substantive and tangible evidence. All this warrants that the orders passed by the lower Forums need to be quashed as such and the appeal accepted.
6. When the learned Departmental Representative was asked to verify from the Collectorate of Sales Tax, Faisalabad as to whether any authorisation had been given to the staff by the Central Board of Revenue or the Collector to visit the premises of the appellants, he stated that no such permission was available on record. As a matter of fact, he straight-away conceded that the action of the Department in this respect was totally illegal and ultra-vires of law.
7. When we asked the appellants as to why they had filed the second appeal instead of availing the opportunity granted to them to plead their point of view before the original authority, they stated that they did not expect that justice would be done in the matter by the lower Forums.
8. We have seen the case record, heard both sides in detail and also addressed ourselves to the relevant provisions of law and hold that as the staff of the Collectorate of Sales Tax Faisalabad entered the factory-premises of the appellants without any lawful authority, the case made out by them and the proceedings subsequent conducted in this behalf are automatically rendered null and void and of no legal effect. We declare these to be so and set aside the orders passed against the appellants by the lower Forums and accept the appeal.