JAWWAD S. KHAWAJA.-- Learned counsel for the petitioner contends that initial the petitioner's purchases and sales of bitumen were governed by the provisions of the Sales Tax Act of 1951. The petitioner according to him, purchased bitumen from two refineries. Sales tax and central excise duty were paid a the time of such purchase. The petitioner did not engage ii any manufacturing activity before making onward sale of tie bitumen to customers.
2. He has referred to a decision dated 20.1.1972 rendered by the Central Board of Revenue which supports his connection vis-a-vis the previous Sales Tax Act. Another decision dated 3.12.1972 was also rendered by a Deputy Collector of the Central Excise and Land Customs Department accepting the petitioner's contention. Thereafter it appears that the matter was once again agitated before the relevant functionary of the Central Excise and Sales Tax at Lahore, namely, the Deputy Collector (South). The said Deputy Collector also accepter, the contention of the petitioner vide her order dated 22.3.1994 and thereby vacated the show cause notice which had earlier been issued to the petitioner. The Deputy Collector .(South), however, did hold that the respondent department, should examine the activity being undertake by the petitioner for the purpose of determining if a taxah? Activity was, indeed, being undertaken by the petitioner.
3. Subsequently, it appears the on 21.3.1995 the respondent department conducted a raid on the petitioner's premises instead of proceeding in the manner indicated by the Deputy Collector (South) in her order dated 22.3.1994 referred to above, It is with the object of assailing the said raid and the subsequent demand in respect of sales tax raised by the respondent Department that the present writ petition was filed.
4. Learned counsel has informed the Court that subsequent to the filing of the writ petition, on 28.10.1999 a show-cause notice has been issued to the petitioner by the competent Adjudicating Authority under the Sales Tax Act. In view of this changed circumstance, learned counsel for the petitioner has contended that the petitioner would be ready to participate in the show-cause proceedings before the Adjudicating Authority but submits that the said Authority be directed to proceed in accordance with the precedent in the case of Central Board of Revenue, Islamabad and others v. Sheikh Spinning Mills Ltd., Lahore and others (1999 PTD 2174). More specifically he requests that the Adjudicating Authority be directed to first decide the question as to whether or not the petitioner is indulging in a taxable activity as envisaged under the Sales Tax Act, 1990, and only after a determination adverse to the petitioner, should the Adjudicating Authority proceed to determine the amount, if any, which may be due from the petitioner.
5. Learned counsel appearing for the respondents has stated that the show-cause notice dated 28.10.1999 is a composite notice which necessarily includes therein the question relating to the nature of the petitioner's activity. He, however, has not raised any serious objection to the submission made by learned counsel for the petitioner. I also cannot see any valid objection if the Adjudicating Officer is directed, firstly, to decide the question relating to the activity being undertaken by the petitioner and to determine as a preliminary issue as to whether or not the petitioner is engaged in a taxable activity. Only if the Adjudicating Authority comes to the conclusion that the petitioner is, indeed, engaged in a taxable activity, should the said Authority proceed to determine the liability of the petitioner.
6. In view of the above discussion, I am of the view that the matter should be decided by the Adjudicating Authority in the show cause proceedings and not in the present writ petition. I would, however, direct that the Adjudicating Authority shall first decide the question as to whether or not the petitioner is engaged in a taxable activity before proceeding further as indicated in the preceding paragraph. With this observation, this writ petition is disposed of.