ALLAH TAWAKKAL STEEL MILL VS FEDERATION OF PAKISTAN, 2016 PTD-LAHORE-HIGH-COURT-LAHORE 1003 (2015)

(a) Limitation---

----Where limitation had been prescribed for doing an act by an authority, under the law, the same had to be done within such period of limitation, and if the same was not done or undertaken within such period; the act shall be without jurisdiction.

Messrs Shafiq Traders through Proprietor v. Collector of Customs and another 2007 PTD 2092 and 2011 SCMR 967 rel.

(b) Sales Tax Act (VII of 1990)

----S.11(5)---Constitution of Pakistan, Art. 199---Constitutional petition---Assessment of tax---Petitioner taxpayer impugned order of Commissioner under S. 11(5) of the Sales Tax Act, 1990 for assessment of tax----Contention of the petitioner was that impugned order was ultra vires and without lawful authority as the same had been passed beyond a period of 180 days from issuance of show-cause notice to the petitioner---Held, that per S. 11 of the Sales Tax Act, 1990; beyond a period of 120 days of the issuance of the show-cause notice, the Commissioner may extend the period for reasons to be recorded and extended period could not exceed ninety days---Such mandate of law was very clear and intention of the Legislature was that matter of adjudication by officer of revenue should be concluded within a period of 120 days and in case the same was not done, the matter should be referred to Commissioner for an extension who may do so upon valid grounds and for reasons which had to be recorded in writing---Extension of such period was conspicuously missing in the present case and it was not disputed by the parties that the show-cause notice was served upon the petitioner on 28.7.2009 whereas order-in-original was dated 01.07.2010, which was almost one year beyond the period of issuance of show-cause notice---Order-in-original, in the present case, had clearly been passed beyond the time prescribed under S. 11(5) of the Sales Tax Act, 1990---Impugned order-in-original was set aside, and Constitutional petition was allowed, accordingly.

Messrs Shafiq Traders through Proprietor v. Collector of Customs and another 2007 PTD 2092 and 2011 SCMR 967 ref.

2008 PTD 60; Messrs Hanif Straw Board Factory through Proprietor v. Additional Collector (Adjudication) Customs, Central Excise and Sales Tax, Gujranwala and 2 others 2008 PTD 578; Messrs Meraj Din through Partner v. Collector Customs, Excise and Sales Tax (Appeals), Lahore and 2 others 2009 PTD 2004 and Messrs Tanveer Weaving Mills through Director Finance v. Deputy Collector Sales Tax and 4 others 2009 PTD 762 rel.

Muhammad Ajmal Khan for Petitioner.

Muhammad Asif Hashmi for Respondents.

Date of hearing: 6th July, 2015.

JUDGMENT

SHAHID KARIM, J.---This petition under Article 199 of the Constitution of Islamic Republic of Pakistan, 1973 has the following prayer:--

i."It may be declared that the Finance (Amendment) Ordinance, 2010 dated February 6, 2010 is unconstitutional and even otherwise expired on 06-06-2010 and therefore the authorities created under the said Ordinance have no jurisdiction to exercise powers under the Income Tax Ordinance, 2001, Sales Tax Act of 1990 and Federal Excise Act of 2005. By allowing consequential relief impugned notices dated 23-04-2010 and 29-04-2010 being illegal, without lawful authority and of no legal effect may be quashed and

ii.It may also be declared that the respondent No.4 Additional Commissioner has no authority to pass an order after expiry of 180 days from issuance of show cause notice."

2.Both the learned counsel for the parties agree that the relief at clause (1) reproduced above has become infructuous and learned counsel for the petitioner does not press the relief contained in the said clause. The primary reason for this is that the notices which were impugned by the petitioner have culminated into an order-in-original passed by the Additional Commissioner (Adjudication) Inland Revenue, Gujranwala and is dated 01.07.2010.

3.The learned counsel for the petitioner, however, submits that the impugned order dated 01.07.2010 passed by the Additional Commissioner (Adjudication), Inland Revenue, Gujranwala is ultra vires and without lawful authority on account of the fact that the said order has been passed beyond a period of 180 days from the issuance of the show cause notice. In this regard, learned counsel relies upon Messrs Shafiq Traders through Proprietor v. Collector of Customs and another (2007 PTD 2092), a Single Bench judgment of this Court and which was affirmed by the Supreme Court of Pakistan vide reported judgment 2011 SCMR 967. The following observations from the cited judgment of this Court were relied upon by the learned counsel for the petitioner:--

"vii. The objection against maintainability of this petition is also not worthy of serious consideration. The question of limitation in the perspective of the power of an executive authority is always considered to be a question of jurisdiction. Therefore, where an executive authority exercises its jurisdiction after the expiry of the period provided in a statute, such exercise of jurisdiction, without any iota of doubt, is illegal. In re: Nagina Silk Mill, Lyallpur v. The Income Tax Office, A-Ward Lyallpur and others PLD 1963 SC 322 a Larger Bench of the Supreme Court agreed that a writ could issue against the Income tax Office where owing to lapse of time no assessment could in law be made. Since the appellate Forums provided under the Customs Act, 1969 cannot look into that aspect of impugned order this Constitutional petition is very well maintainable.

The final assessment made in this case being not only out of time but also the extension given by the Collector having been made without answering the conditions prescribed for exercise such power shall be set aside as being unlawful and without jurisdiction."

4.Further, the Supreme Court of Pakistan in appeal held as under:--

"(19) As noted above, it was contended by learned counsel, for respondent No.2 that the period of nine months for completion of the final determination under subsection (2) was properly extended by further ninety days pursuant to the proviso thereof Now the proviso applies only if both the conditions stated therein are fulfilled, i.e., (a) there are circumstances of an "exceptional nature" and (b) the Collector has recorded those circumstances. The onus lies on the Department to show that these conditions have been complied with..."

7. In the cases in hand, we find that the order of extension passed by the Collector did not satisfy the parameters laid down in proviso to section 81(2) of the Customs Act to which reference has been made above. In the afore-referred circumstances, we find the impugned judgments of the High Court to be exceptionable."

5.It is clear from the above that it has been held categorically that where a limitation has been prescribed for the doing of an act by an authority under the law, it has to be done within that period and if it is not so done or undertaken within that period, the act shall be without jurisdiction. Although in the cited judgment the provisions of Customs Act, 1969 were in issue but the ratio laid down in the said judgment of this Court and affirmed by the Supreme Court is unexceptionable and applies on all fours with the provisions of Sales Tax Act, 1990. For facility, the provisions of the Act, 1990 are reproduced as under:--

"S.11 Assessment of Tax--

(1)

(2)

(3)

(4)

(5)No order under this section shall be made by on officer of Inland Revenue unless a notice to show cause is given within five years, of the relevant date, to the person in default specifying the grounds on which it is intended to proceed against him and the officer of Sales Tax shall take into consideration the representation made by such persons and provide him with an opportunity of being heard:

Provided that order under this section shall be made within one hundred and twenty days of issuance of show cause notice or within such extended period as the Commissioner may, for reasons to be recorded in writing, fix provided that such extended period shall in no case exceed ninety days:

Provided further that any period during which the proceedings are adjourned on account of a stay order or Alternative Dispute Resolution proceedings or the time taken through adjournment by the petitioner not exceeding sixty days shall be excluded from the computation of the period specified in the first proviso."

6.It is clear from the above that beyond a period of 120 days of the issuance of the show cause notice, the Commissioner may extend the period for reasons to be recorded and which extended period should not exceed 90 days. The mandate of the law is very clear and the intention of the Legislature is that the matter of adjudication by the officer of revenue should be concluded within a period of 120 days. In case, it is not so done the matter should be referred to the Commissioner for an extension who may do so upon valid grounds and for reasons which have to be recorded in writing. It is admitted on all hands that the Commissioner has not extended the period in the instant case and, therefore, that extension of the period is conspicuously missing in the instant case. It is also not disputed by the parties that the show cause notice was served upon the petitioner on 28.7.2009 whereas the order-in-original is dated 01.7.2010 i.e. almost one year beyond the period of the issuance of the show cause notice. In this view of the matter, clearly the order-in-original has been passed beyond the time prescribed under section 11(5) of the Act, 1990 and no extension has been granted by the Commissioner as well. Reference may also be made to another judgment of this Court reported as 2008 PTD 60. This was a case under section 36 of the Act, 1990 (this section has since been repealed and is the predecessor provision for section 11(5) of the Act, 1990) and it was held as under:--

"(i) The claim of the revenue that the prescribed limitation of 45 days for completion of adjudication proceedings as provided through Finance Ordinance, 2000 and enhanced to 90 days by Finance Act, 2003 is merely directory cannot be accepted. It is settled law that where inaction on the part of a public functionary within the prescribed time is likely to affect the rights of a citizen the prescription of time is deemed directory. However, where as public functionary is empowered to create liability against a citizen only within the prescribed time, it is mandatory. The acceptance of contention of the revenue in that regard will make a provision of law redundant and nugatory. Redundancy or superfluity of an Act of Parliament and a provision of law cannot be readily accepted. All the more so when the prescribed limit is beneficial for the citizen and restricts the executive power to touch the pocket of a tax-payer thereby creating certainty that after its expiry even if there was a good case for creation of liability he will not be dragged in.

(ii)The above contention of the revenue is also negated by the ratio settled by the Honourable Supreme Court of Pakistan in re: Nagina Silk Mil, Lyallpur v. The Income Tax Officer and the Income Tax Appellate Tribunal, Pakistan (PLD 1963 SC 322). That case stands on all fours to the facts in hand. Their Lordships were called upon to consider the starting point of limitation of 4 years for the purpose of completion of assessment proceedings as provided in subsection (2) of section 36 of the repealed Income Tax Act, 1922... "

7.This view was affirmed by a Division Bench of this Court in Messrs Hanif Straw Board Factory through proprietor v. Additional Collector (Adjudication) Customs, Central Excise and Sales Tax, Gujranwala and 2 others (2008 PTD 578), Messrs Meraj Din through Partner v. Collector Customs, Excise and Sales Tax (Appeals), Lahore and 2 others (2009 PTD 2004) and Messrs Tanveer Weaving Mills through Director Finance v. Deputy Collector Sales Tax and 4 others (2009 PTD 762). Thus, this seems to be consistent view of this Court.

8.Relying upon the judgments of this Court referred to above and affirmed by the Supreme Court of Pakistan, it is held that the impugned order dated 01.07.2010 is without lawful authority and of no legal effect.

9.In view of the above, this petition is accepted and the impugned order-in-original dated 01.07.2010 passed by the Additional Commissioner (Adjudication) Inland Revenue is set aside.

KMZ/A-90/LPetition allowed.