MESSRS FAMY LTD. VS COMMISSIONER OF SALES TAX
2002 P T D 102
[Karachi High Court]
Before Zahid Qurban Alavi and Muhammad Mujeebullah Siddiqui, JJ
Messrs FAMY LTD.
Versus
COMMISSIONER OF SALES TAX
S.T.Cs. Nos. 28, 30, 31, 34, 35, 37 and 38 of 1985, decided on 08/08/2001.
(a) Sales tax---
---- Service of notice---Question of fact---Primarily the question pertaining to service of notice on a party is a question of fact, but when an issue pertaining to jurisdictional notice is raised it becomes a mixed question of fact and law.
(b) Sales tax---
---- Service of notice---If an assessee is able to demonstrate that either the jurisdictional notice was not served at all or it was not served on assessee or a person duly authorized by the assessee in this behalf, the jurisdiction acquired by an Assessing Officer, which is contingent on a proper service of notice on the assessee or his legally authorized agent, shall result in vitiation of the entire proceedings.
(c) Sales tax---
---- Service of notice----Assumption of jurisdiction---Assumption of jurisdiction is dependent on service of notice on an assessee---Service of notice on the assessee shall be. a condition precedent for assumption of jurisdiction.
(d) Sales tax---
---- Service of notice---Meaning---Service of notice means a valid and proper service of notice as required under the law and not otherwise.
(e) Sales tax---
---- Service of jurisdictional notice---Question of law---Issue pertaining to service of jurisdictional notice shall become predominantly a question of law, which is, of course dependent on a finding of fact.
(f) Sales tax---
---- Finding of fact---If any Court or Tribunal gives a finding of fact which is not based on the material available on record or is arbitrary and slipshod in nature, without discussing and considering the material available on record it becomes perverse, and a perverse finding of fact which is violative of the established principle of the appreciation of evidence on record is not sustainable in law.
(g) Sales tax---
---- Judicial finding---Every judicial finding should be based on reasons containing the justification for the finding in the order itself.
(h) Sales tax---
---- Judicial order---Every Authority, office or a person making any order is required to give reasons and thus any judicial finding without discussing necessary facts and material on record is not a judicial order and consequently is not sustainable in law.
(I) Sales Tax Act (III of 1951)---
----S. 28---Service of notice---Finding of Tribunal on the point of service of notice under S.28 of the Sales Tax Act, 1951, was not in accordance with the law for the reason that the facts on record had not been considered, therefore, the Tribunal was directed to rehear the issue and after considering the facts on record and discussing the same would give fresh finding on the point of proper service of notice on the applicant company and modify its order accordingly.
1967 PTD 189 rel.
Farogh Naseem for Applicant Shaikh Haider for Respondent
Date of hearing: 8th August, 2001.
JUDGMENT
MUHAMMAD MUJEEBULLAH SIDDIQUI, J.---All the above Sales Tax Cases arise out of same set of facts, and therefore, were heard together and are disposed of by this single consolidated order.
The relevant facts are that the applicant company is running a business of manufacturing marble products, which according to the applicant does not attract payment of sales tax. However, the Sales Tax Officer, issued notice under section 28 of the Sales Tax Act and levied the sales tax. The applicant contested the levy of tax and the initiation of proceedings in pursuance of show-cause notice under section 28 of the Sales Tax Act, 1951. When the matter came before the Income Tax Appellate Tribunal (which at the relevant time had jurisdiction to hear appeals under the Sales Tax Act), the levy of sales tax was assailed on merits and it was further contended that the notice under section 28, were not duly served upon the assessee. It was contended that the notice under section 28 of the Sales Tax Act, 1951, was a Jurisdictional Notice and non-service thereof on the assessee shall render the entire proceedings, on the basis of said notice as illegal and void. There is no dispute on the point that a notice under section 28 is a statutory and jurisdictional notice. The same plea was taken before the Appellate Assistant Commissioner Sales Tax, the First Appellate Authority, who had accepted the plea that the notice under section 28 of the Sales Tax Act, 1951 was not served properly, and therefore, the proceedings in pursuance of the said notice were invalid. However, a Division Bench of the Income Tax Appellate Tribunal, held that the notices were duly served on the assessee on 4-11-1974 and that the learned Assistant Appellate Commissioner was wrong to hold that the proceedings before the Sales Tax Officer, were not valid in law for want of service of notice under section 28 of the Sales Tax Act. The order of Assistant Appellate Commissioner was set aside and the matter was remanded back to the Appellate Assistant Commissioner for deciding the appeals on merits.
Being aggrieved with the above finding, the applicant submitted reference application before the Tribunal, inter alia proposing the following question:---
"Whether in the facts of the case the Tribunal held correctly that a notice under section 28 of the case was served on the assessee? Company, when (A) the Tribunal have not discussed the evidence and facts of service; (b) the Notices allegedly served are on (c) that no one other than the Principal Officer or a person authorized in law could have been properly served with the notice."
Learned Tribunal refused to refer the above question to this Court and consequently the present applications have been filed before this Court.
We have heard Mr. Farogh Naseem, learned counsel for the applicant and Mr. Shaikh Haider, learned counsel for the Revenue.
Mr. Farogh Naseem, learned counsel for the applicant submitted that the learned Tribunal while holding that the notice under section 28 of the Sales Tax Act, 1951, has been served on the assessee, has not discussed the evidence and facts of the service and has not adverted to the facts as to who received the notices and whether the service of notice on any person other than a Principal Officer or any person authorized in this behalf can be a proper service of the notice.
Mr. Shaikh Haider, learned counsel for the Revenue, is not able to rebut the contention. A perusal of impugned order shows that according to learned A. A. C. the notice under section 28 of the Sales Tax Act, 1951, was not served on the appellant-Company. According to learned A.A.C. the notice on record was not served on any person authorized by the company to receive the notice. Reliance was placed in this behalf by the A.A.C., on the judgment of Hon'ble Supreme Court, reported as 1967 PTD 189. The learned Tribunal while considering the issue pertaining to the service of notice on the applicant-Company observed that on perusal of assessment record they were satisfied. that notices under section 28 were served on the applicant-Company. It was observed that "we have verified that all the notices issued under section 28 were duly served upon the assessee at its given address". With this observation the finding of learned A.A.C., that the proceedings were not valid in law for non-service of notice on the applicant-Company and the assessments were liable to be cancelled, was set aside. The cases were consequently remanded back to the Appellate Assistant Commissioner for deciding the first appeals on merits.
Primarily the question pertaining to service of notice on a party is a question of fact, but when an issue pertaining to jurisdictional notice is raised it becomes a mixed question of fact and law. If an assessee is able to demonstrate that either the jurisdictional notice was not served at all or it was not served on assessee or a person duly authorized by the assessee in this behalf, the jurisdiction acquired by an Assessing Officer, which is contingent on a proper service of notice on the assessee or his legally authorized agent, shall result in vitiation of the entire proceedings. The reasons being that whenever assumption of jurisdiction is dependent on service of notice on an assessee, the service of notice on the assessee shall be a condition precedent for assumption of jurisdiction. The service of notice means a valid and proper service of notice as required under the law arid not otherwise. Thus, the issue pertaining to service of jurisdictional notice shall become predominantly a question of law, which is, of course dependent on a finding of fact. Here, another question arises whether any finding on the point of service of notice which is ordinarily a question of fact can become a question of law? Our reply is in affirmative. The reasons being that if any Court or Tribunal gives a finding of fact which is not based on the material available on record or is arbitrary and slipshod in nature, without discussing and considering the material available on record it becomes perverse, and a perverse finding of fact which is violative of the established principle of the appreciation of evidence on record is not sustainable in law. The principle that every judicial finding should be based on reasons containing the justifications for the finding in the order itself is an established principle of dispensation of justice time and emphasized by the superior Courts but not this principle has been given legislative recognition with the insertion of section 24-A of the General Clauses Act, 1897, which reads as follows:--
"24A. Exercise of power under enactments. ---(1) Where, by as under any enactment, a power to make any order or give any direction is conferred on any authority, office as person such power shall be exercised reasonably, fairly, justly and for the advancement of the purposes of the enactment.
(2) The authority, office or person making any Order on issuing any direction under the powers conferred by or under any enactment shall, so far as necessary or appropriate, give reason for making the Order on, as the case may be, for issuing the direction and shall provide a copy of the Order an, as the case may be the observation to the person affected pre judicially."
Now every authority, office or a person making any order is required to give reasons and thus any judicial finding without discussing necessary facts and material on record is not a judicial order and consequently is not sustainable in law.
For the foregoing reasons, the question requiring consideration is replied in negative. Since we have held that the finding of tribunal on the point of service of notice under section 28 of the Sales Tax Act, 1951, is not in accordance with the law for the reason that the facts on record have not been considered, therefore, with the consent of learned Advocates, the Tribunal is directed to re-hear the issue and after considering the facts on record and discussing the same would give fresh finding on the point of proper service of notice on the applicant-?Company and modify its order accordingly.
Since jurisdiction pertaining to the appeals arising out of Sales Tax Act, are now vested with Central Excise, Customs and Sales Tax Tribunal, therefore, the Registrar of this Court is directed to forward copy of this judgment duly sealed to the Registrar of the Central Excise, Customs and Sales Tax Tribunal instead of sending the same to the Income Tax Appellate Tribunal, which had the jurisdiction to hear the appeals in the year 1985.
All the references stand disposed of as above.
C.M.A./M.A.K./F-29/K ???????????????????????????????????????????????????????? References disposed of.