KHALID MEHMOOD VS ADDITIONAL COLLECTOR OF SALES TAX, FAISALABAD, 2008 PTD-LAHORE-HIGH-COURT-LAHORE 1531 (2008)

Sales Tax Act (VII of 1990)---

----Ss. 45-B(1) [as amended by Finance Act (VII of 2005), w.e.f. 29-6-2005) & 46(1)(a)]---Constitution of Pakistan (1973), Art. 199---Constitutional petition---Maintainability---Order-in-original passed by Additional Collector as adjudicating authority---Appeal against impugned order at relevant time lay to Tribunal and not to the Collector (Appeals)---Before enforcement of Finance Act, 2005 w.e.f. 29-6-2005, appeal would be to Collector (Appeals), where order-in-original was passed by an officer below in rank of Additional Collector, while orders recorded by Collectors or Additional Collectors were assailable before Tribunal---After enforcement of Finance Act, 2005, all orders recorded by an adjudication authority mentioned in S.45 of Sales Tax Act, 1990 became assailable before Collector (Appeals)---Appeal against order of Collector for not being notified as an adjudicating authority under S.45 of Sales Tax Act, 1990 would lie to Tribunal---Petitioner against impugned order having at the relevant time, an effective remedy of appeal under S.46 of Sales Tax Act, 1990, constitutional petition was dismissed by High Court for being not maintainable.

Laser Parasix Deplies Clinic, Lahore v. Customs, Central Excise and Sales Tax Appellate Tribunal, Lahore Bench 2002 PTD 549 ref.

Nadeem Ahmad Sheikh for Petitioner.

Sarfraz Ahmad Cheema for Respondent-Revenue

ORDER

NASEEM SIKANDAR, J.---This constitutional petition seeks to challenge an order-in-original, dated 10-5-2005 recorded by the Additional Collector Sales Tax, Faisalabad as adjudicating authority.

2. The application of petitioner, Messrs Mehmood Brothers, Faisalabad, for adjustment of Rs.822,012 relating to tax period June, 1999 to December, 1999 was rejected by the Faisalabad Collectorate on 3-11-2004. On the intervention of Federal Tax Ombudsman adjudication proceedings were stated, which culminated in recording of the impugned order. The operative part of that order reads as under:

"(8) I have perused the case record and has taken into consideration arguments and documents produced by the complainant. It is observed that in order to claim input tax which has not been claimed in the relevant tax period an application is to be made within one year from the date of input tax has accrued. Further to verify the genuineness of such claims, the sales tax invoices are got verified from the supplier(s). To keep a reasonable limit time for verification, the legislature has put it to one year. In the instant case, the input tax claimed relates to the period June, 1999 to December, 1999. Since the claim is more than five years old, the supplier is not obliged to keep the record under law. I do not agree with the complainant's contention that the time limit is only for refund. Input tax adjustment or refund are more or less same thing, therefore, time limit of one year also applies to input adjustment. Moreover, in this particular case there is hardly any reason to allow adjustment for a five years' old input tax.

(9) For the reasons stated above, I do not find any justification to allow input tax at this belated stage. I therefore, order the rejection of the input tax of Rs.810,012."

3. Heard learned counsel for the parties. Learned counsel for the respondent-Revenue objects the maintainability of the petition on the ground that a right of appeal to the Appellate Tribunal being available to the petitioner under section 46 (Appeals to Appellate Tribunal) of the Sales Tax Act, 1990 as it existed on the date of passing of the impugned order, this petition cannot proceed.

4. Learned counsel for the petitioner, on the other' hand, claims that under the provisions of section 45-B (Appeals), as these existed at the relevant time, no right of appeal being available to a tax payer/registered person against the orders recorded by Additional Collectors, this constitutional petition is maintainable. In his opinion a right of appeal against such orders was allowed for the first time on 29-5-2005 through Finance Act, 2005 by deleting the phrase "below in rank to Additional Collector" from subsection (1) of section 45-B (Appeals) of the Act.

5. I will not agree. As rightly pointed out by the learned counsel for the respondent-Revenue on the date of passing of the impugned order i.e. 10-5-2005 an appeal laid before the Appellate Tribunal against the orders of Additional Collector (Adjudication) and not before the Collector (Appeals). Therefore, the provisions of sub-clause (a) of subsection (1) of section 46 were relevant and not the provisions of section 45-B as asserted at the bar for the petitioner.

6. The aforesaid sub-clause (a) of subsection (1) of section 46 at the time of passing of the impugned order read as under:

"(a) Any decision or order passed by .a Collector or an Additional Collector of Sales Tax under section 11, 36 or 45."

Accordingly, the claim of the learned counsel that at the relevant time the provisions of section 45-B did not provide for an appeal to the Collector (Appeals) is correct. However, as noted above, it is not a correct statement of law that no right of appeal was available to the petitioner on 10-5-2005 when the impugned order was recorded. On that day an appeal under section 46 of the Act, 1990 laid directly to the Customs, Federal Excise and Sales Tax Appellate Tribunal and not to Collector (Appeals). It was Finance Act, 2005, effective from 29-6-2005, which omitted the words "below in rank to Additional Collector" as used in section 45-B(1) of the Act. The omission of these words was matched by a corresponding omission of sub-clause (a) of subsection (1) of section 46 of the Act. Thus before the appointed date of enforcement of Finance Act, 2005 under section 45-B an appeal laid before the Collector of Sales Tax (Appeals) if the order-in-original was ,recorded by an officer "below in rank to Additional Collector". The orders recorded by the Collectors or Additional Collectors of Sales Tax were assailable directly before the Appellate Tribunal under sub-clause (a) of subsection (1) of section 46, which was omitted by Finance Act, 2005, effective from 29-6-2005.

7. Although not directly relevant to the controversy in hand yet the present legal position regarding appeals to Collector (Appeals) under section 45-B and appeals to the Appellate Tribunal under section 46 of the Act can be stated in these words. After the enforcement of Finance Act, 2005 every order of an officer of the Sales Tax department recorded under section 10, 11, 36, 45 or 66 is amenable to the appellate jurisdiction of Collector (Appeals). The power of adjudication as stated in section 45 (power of adjudication) of the Act has been conferred upon different Sales Tax Officers starting from Additional Collector down to Superintendent Sales Tax and also "Officers of Sales Tax with any other designation". It means that all orders recorded by an adjudication authority mentioned in section 45 are assailable before the Collector of Sales Tax (Appeals). Since the Collector acting under subsection (4) of section 45-A has not been notified as an adjudicating authority under section 45, .an appeal against his order is amenable to appellate jurisdiction of Appellate Tribunal under section 46(1)(a) of the Act. The appellate orders recorded/passed against the orders of adjudicating authorities notified in section 45 are amenable to the appellate jurisdiction of the Appellate Tribunal. The Appellate Tribunal is-also possessed with the powers under sub-clause (b) of subsection (1) of section 46 to sit in judgment as first appellate forum when either the Board or the Collector had proceeded either under subsection (1) in the case of the Board or under subsection (4) in the case of the Collector taking notice of proceedings at their own motion.

8. As discussed in the previous paras before enforcement of Finance Act, 2005 an order passed by the Additional Collector was subject to appellate jurisdiction of the Tribunal as the forum of first appeal while after the enforcement of the Finance Act, 2005 w.e.f 29-6-2005 the order of the Additional Collector (Adjudication) is amenable to the first appellate jurisdiction of Collector (Appeals) and the order recorded on such appeals can be challenged before the Appellate Tribunal as forum of second appeal.

9. That being the legal position the objection qua maintainability of the constitutional petition against the impugned order-in-original, dated 10-5-2005 is sustained. Since the petitioner had an effective alternate remedy of appeal available to it under the provisions of section 46 of the Sales Tax Act, 1990 at the relevant time, this constitutional petition cannot proceed.

10. Before parting with this judgment I would like to observe that in case the petitioner approaches the Appellate Tribunal under the provisions of section 46(1)(a) of the Act, which were relevant on the date of passing of the impugned order along with an application under section 14 (Exclusion of time of proceeding bona fide in Court without jurisdiction) of the Limitation Act, 1908, the Tribunal may consider the same in the light of the ratio settled in re: Laser Paraxis Deplies Clinic, Lahore v. Customs, Central Excise and Sales Tax Appellate Tribunal, Lahore Bench (2002 PTD 549).

11. Petition disposed of in the above terms.

S.A.K./K-19/LOrder accordingly.