MUHAMMAD KHALID ALVI, J.-(1) Brief, facts leading to the instant appeal are that the records of the appellant were audited by Special Auditor. As a result thereof certain discrepancies were found and the matter was reported to respondent No. 2. Respondent No. 2 on 6.2.2001 issued a show cause notice to the appellant for payment of Sales Tax with respect to period 1994-95, 1995-96 and 1996-97 demanding a sum of Rs. 10,48,487/-. The show cause notice was contested by the appellant and after hearing the parties respondent No. 2/Adjudicating Officer vide order dated 24.4.2001 dropped the charge against the appellant with respect to the year 1994-95 on account of it being barred by time, however for the other two financial years an amount of Rs. 9,93,582/- as Sales Tax alongwith additional tax was demanded and the penalty of Rs. 49,679/- was also directed to be paid. This order was assailed by the appellant through an appeal before respondent No. 3 which was dismissed vide order dated 18.11.2002. The same is being assailed through the instant appeal.
2. Learned counsel for the appellant contends with reference to P.T.C.L. 2002 Case Law Page 1 that the impugned show cause notice dated 6.2.2001 did not contain the specific allegation of any collusion or deliberate act on the part of the appellant therefore its case fall under sub-section (2) of Section 36 of the Sales Tax Act for which a period of limitation provided for the issuance of show cause notice is only three years, thus the show cause notice issued by 6.2.2001 was patently barred by time.
3. On the other hand, Learned counsel for the Federal Government contends that the judgment relied upon by the appellant is not applicable in the instant case because the said judgment was rendered by the Honourable Supreme Court under the Customs Act and not under the Sales Tax Act. Further adds that in sub-section (2) of Section 32 of the Customs Act, the word "deliberate" is missing as against section 36 (1) of the Sales Tax Act. Therefore according to him, there is no identity between the provisions of two distinct statutes. It is further submitted that the allegations contained in the show cause notice do indicate the deliberate acts of the appellant attracting the provisions of subsection (1) of Section 36 of the Sales Tax Act.
4. We have considered the arguments advanced by the Learned counsel for the parties. Since the identity and object of section 36 of the Sales Tax Act and Section 32 of the Customs Act requires to be examined on the touch-stone of the case law referred by the Learned counsel for the appellant, therefore, both the provisions are reproduced for ready reference:- "36. Recovery of tax not levied or short-levied or erroneously refunded.--(1) Where by reason of some collusion or a deliberate act any tax or charge has not been levied or made or has been short-levied or has been erroneously refunded, the person liable to pay any amount of tax or charge or the amount of refund erroneously made shall be served with a notice, within five years of the relevant date, requiring him to show- cause for payment of the amount specified in the notice.
Where, by reason of any inadvertence, error or misconstruction, any tax or charge has not been levied or made or has been short levied or has been erroneously refunded, the person liable to pay the amount of tax or charge or the amount of refund erroneously made shall be served with a notice within three years cc the relevant date, requiring him to show-cause for payment of the amount specified in the notice."
"32.Untrue statement, error etc.--( 1) If any person, in connection with any matter of customs,-
(a) makes or signs or causes to be made or signed, or delivers or causes to be delivered to an officer of customs any declaration, notice, certificate or other document whatsoever, or
(b) make any statement in answer to any question put to him by an officer of customs which he is required by or under this Act to answer.
(knowing or having reason to believe that such document or statement is false) in any material particular, he shall be guilty of an offence under this section.
Where, by reason of any such document or statement as aforesaid or by reason of some collusion, any duty or charge has not been levied or has been shot-levied or has been erroneously refunded, the person liable to pay any amount on that account shall be served with a notice within five years of the relevant date, requiring him to show cause why he should not pay the amount specified in the notice.
Where, by reason of any inadvertence, error or misconstruction, any duty or charge has not been levied or has been short-levied or has been erroneously refunded, the person liable to pay any amount on that account shall be served with a notice within three years of the relevant date, requiring him to show cause why he should not pay the amount specified in the notice." The relevant part of the judgment relied upon by the Learned counsel for the appellants i.e. P.T.C.L. 2002 Case Law Page 1 is also reproduced below:- "Show cause notices under sub-sections (2) and (3) of Section 32 of the Act are two distinct and separate types of notices as different grounds and different period for service of notice in each sub-section has been prescribed. Under subsection (2) for non levy, short levy or erroneous refund, specific allegations of any collusion between the assessee and the Customs Staff has to be leveled with proper particulars in the show cause notice which has to be served within three years of the relevant date whereas under subsection (3) if non-levy, short-levy or erroneous refund is done due to inadvertence, error or misconstruction then show cause notice to the importer has to be served within six months of the non/short levy. If such specific particulars are not stated in the notice, the notice would be vague and would not be in consonance with the requirement of subsections (2) and (3) of Section 32 of the Act. and It is necessary under subsection (1) of Section 31 of the Act to show that the declarant had the knowledge or had the reason to believe that declaration or statement made by him was untrue/false and in absence of such allegation notice would be vague and would not be in accordance with law. Similarly, notice under sub-section (2) of Section 32 of the Act must contain the allegation of collusiveness and notice under sub-section (3) of Section 32 of the Act should speak of inadvertence, error or misconstruction and without such allegations the notices would be defective and against law." The show cause notice dated 6.2.2001 which was issued to the appellant by respondent No. 2 was containing the following statement requiring show cause notice: "The respondent did not issue any Debit Note regarding purchases returned rejected. That had resulted in differences in Input Tax claimed by the respondent. These variations were a result of making payment for only those goods which were accepted. However, since the supplier has sent a sales tax invoice pertaining to the total goods dispatched, the respondent claimed input tax on the total amount. As such following input tax adjustments made by the respondent were unlawful and sales tax involved was recoverable alongwith additional tax.
YEAR SALES TAX 94-95 54905 95-96 938593 96-97 54989 1048487/-"
5. Under Section 36 of the Sales Tax Act, 1990, two periods of limitation have been provided for issuance of show cause notice in cases where the tax has not been levied or short levied. Under sub-section (1), the period of limitation is five years and the cases in which this period is applicable are those where the tax payer has either colluded with somebody for such short payment or had made some deliberate acts or omissions for short payment of the tax. Therefore the State has been given a longer period of limitation i.e. Five years so that such a person should not go escort free.
Under sub-section (2) of Section 36, the period of limitation for issuance of show cause notice is restricted to three years only. Under this sub-section, the grounds available for issuance of show cause notice are inadvertence, error or some misconstruction on the part of the tax payer. Meaning thereby that it was due to some innocent act of the tax payer that the tax was either not paid or short paid. Therefore the legislator restricted its limitation to three years as against those persons who had some mala fide intention and were covered under sub-section (1) of Section 36 of Sales Tax Act. It is thus evident from the above analysis of the two sub-sections that the authority who has to issue such a show cause notice, will have to make out a case in the show cause notice itself that under which provision the case falls and will also have to incorporate the grounds and reasons in his show cause notice very clearly and explicitly so that it could be ascertained whether the show cause notice issued falls under sub-section (1) or (2) Section 36 of Sales Tax Act. Failure on the part of authority issuing show cause notice would render the show cause notice invalid and illegal.
6. In the instant case, the words of the show cause notice indicate that the same is a narrative of facts without indicating that whether it was a result of collusion or deliberate act of the tax payer or whether it was a result of inadvertence, error or misconstruction. Therefore for this reason the show cause notice cannot be said to be a show cause notice under sub-section (1) or
(2) of Section 36. At the most, even if this notice is treated to be a valid notice under sub-section
(2) of Section 36, still it is beyond the described period of limitation of three years.
7. Although the word "deliberate" is not used in sub-section
(2) of Section 32 of the Customs Act, 1969 but it contains the element of collusion and some false statement on the part of the importer while sub-section 3 of Section 32 relates to inadvertence error or misconstruction on the part of the importer. Both these sub-sections of the Customs Act carry different limitation periods for issuance of show cause notice as in the Sales Tax Act.
Therefore it is evident that the provisions of Section 32 of the Customs Act, 1969 and 36 of the Sales Tax Act are identical in nature and the object of specifying two different sets of circumstances is also identical. In this view of the matter, the case law referred by the Learned counsel for the appellant is fully applicable in the instant case as well.
8. For what has been stated above, this appeal is allowed, the order dated 18.11.2002 is set-aside.
Resultantly, the show cause notice dated 6.2.2001 is declared to be illegal being barred by time. No order as to costs.