MESSRS STATE CEMENT CORPORATION OF PAKISTAN (PVT.) LTD. VS THE CUSTOMS, EXCISE AND SALES TAX APPELLATE TRIBUNAL, 1998 PTD-KARACHI-HIGH-COURT-SINDH 3058 (1998)

1998 P T D 3058

[Karachi High Court]

Before Wajihuddin Ahmed, C.J. and Sabihuddin Ahmad, JJ

Messrs STATE CEMENT CORPORATION OF PAKISTAN (PVT.) LTD.

Versus

THE CUSTOMS, EXCISE AND SALES TAX APPELLATE TRIBUNAL

and another

S.T.C. Application No.250 of 1997, decided 3rd February, 1998.

Sales Tax Act (III of 1951)---

----Ss.36 & 45-A---General Clauses Act (X of 1897), S.14---Payment of sales tax---Demand for---Demand of sales tax in terms of S.36 of Sales Tax Act, 1951 need not be a single demand at the level of a specified officer-- More than one demand in terms of S.36 of Sales Tax Act, 1951 at the level of same officer could not easily be ruled out unless manifest injustice and palpable inequity was the result thereof---Even otherwise, in terms of S.14 of the General Clauses Act, 1897, any power conferred by a Federal Statute may be exercised from time to time.

Zamiruddin Ahmed for Applicant.

Fariduddin for Respondent No.2.

ORDER

WAJIHUDDIN AHMED, C.J.---The facts of this sales tax case are simple. The applicants, State Cement Corporation of Pakistan, submitted two bills of entry on 30-5-1993 in relation to certain imports made by them but because an exemption pertaining to payment of sales tax, operating in their favour, had since lapsed an undertaking to obtain a matching exemption from the Central Board of Revenue was tendered. Since the period of three months, stipulated in the undertaking, drew near expiry and the exemption was not produced the Collector of Customs, through a letter dated 13-9-1993, requested the Chairman of the applicant-corporation to arrange payment of a sum of Rs.3,48,16,627, which on account of the projected obstinany of the exemption were not collected earlier on. It is the applicants case that, in response, on 29-1-1994 the applicants paid sales tax at the rate of 12-1/2% ad valorem, totalling Rs.3,41,78,399. However, in course of time, the collector realised that because payment of sales tax was not made at the time it ought to have been made the rate at which tax was leviable would have been the prevalent rate at the time of actual payment, which incidentally stood enhanced to the level of 15 % ad valorem as against the earlier levy at 12-1/2%. Such resulted in a demand being raised at the level of the collector on 25-3-1995 for making good the short levy worked out to be Rs.35,1,431. The applicants challenged this demand before the Customs, Excise and Sales Tax Appellate Tribunal through an appeal but the appeal was dismissed on 11-6-1996. Then the applicants applied to Tribunal for making a reference to this Court but such application was also turned down per order dated 29-5-1997. Hence the present sales tax case.

The principal plea of the learned counsel for the applicants is based on section 36 of the Sales Tax Act, 1990, and such is that a demand pertaining to the non-levy, non-payment or short-levy or short-payment of sales tax can only be made once and not repeatedly. As apparently occurred through the successive notices dated 13-9-1993 and 25-3-1995 issued one after the other by the same officer namely, the collector. It is further urged that if a second demand was to be made, the same could not be made by the officer who made the first demand but ought to have occasioned in exercise of revisional powers by the Board of Revenue, in the instant case because the first demand had originated from the Collector. For ready reference sections 36 and 45-A are reproduced herein:

"36. Recovery of tax short levied.---(1) When for any reason the tax due has not been levied or paid or has been short-levied or short paid or any tax has been erroneously refunded, the person liable to pay the tax or to whom such refund has been erroneously made shall pay the tax due on written demand made within five years from the date on which the tax became due or was paid or adjusted in the account-current, if any, or from the date of making the refund:

Provided that where for any reason a tax due has not been levied or paid or has been short-levied or short-paid or any tax has been erroneously refunded under the substituted provisions of the Sales Tax Act, 1951 (III of 1951), the period of five years shall commence from the first day of July, 1990:

Provided further that where a show-cause notice under sections 3 and 28 of the substituted Sales Tax Act, 1951 (III of 1951), had been issued to a person before coming into force of the Sales Tax Act, 1990, it shall be deemed that such notice was issued under the provisions of the Sales Tax Act, 1990.

2. In case person liable to pay tax objects in writing to the demand of tax, he shall be provided an opportunity of being heard.

45-A. Powers of the Board and Collector to call for records.---(1) The Board may, of its own motion, call for and examine the record of any departmental proceedings under this Act or the rules made thereunder for the purpose of satisfying itself as to the legality or propriety of any decision or order passed therein by an Officer of Sales Tax, it may pass such order as it may think fit:

Provided that no order imposing or enhancing any penalty or fine requiring payment of a greater amount of sales tax than the originally levied shall be passed unless the person affected by such order has been given an opportunity of showing, cause and of being heard.

(2) No proceeding under subsection (1) shall be initiated in a case where an appeal under section 45 or section 46 is pending.

(3) No order shall be made under this section after the expiry of three years from the date of original decision or order of the subordinate officer referred to in subsection (1).

(4) The collector may exercise the powers conferred on the Board by subsection (1) in respect of any case decided by an officer subordinate to him. "

In the first place, it does not seem factually correct that two successive demands in terms of section 36 were raised by the Collector. The first of these was certainly not a demand in terms of section 36, aforesaid, because that pertained neither to a non-levy nor to a non-payment nor to a short payment. At the time the initial payments pursuant to the bills of entry were made by the applicants everyone knew that the payment was due but the payment was deferred because the applicant, being a State-run organization was provided an opportunity to obtain an exemption against payment of sales tax much the same way as it had enjoyed earlier on. Thus, in this view, the first demand upon discovery of a short levy and short payment was made only on 25-3-1995 when a realization drawned upon the customs that recovery at the rate of twelve and-a-half per cent only had been made when the rate applicable was no less than fifteen per cent ad valorem.

Even otherwise, interpreting section 36 of the Sales Tax Act, we cannot be unmindful of the provision of section 14 of the General Clauses, Act, 1897, which postulates that where, under a federal statute, any power is conferred then, unless a different intention appears, such power may be exercised from time to time as occasion requires. Thus, a demand in terms of section 36 in the Sales Tax Act need not be, a single demand at the level of a specified officer. Fairly and beneficially stated the proposition would be that more than one demand in terms of section 36 at the level of the same officer cannot easily be ruled out unless manifest injustice and palpable inequity is the result thereof which, of course, is not the position here.

For the aforesaid reasons, we find no merit in this sales tax case and dismiss it.

M.B.A./S-160/KCase dismissed.