2010 P T D (Trib.) 1759
[Income-tax Appellate Tribunal Pakistan]
Before Muhammad Arif Moton, Member (Judicial-II)
S.T. Appeal No. K-54 of 2009, decided on 20/05/2009.
(a) Sales Tax Act (VII of 1990)---
----Ss.25 & 30---S.R.O. 1195(I)/90 dated 17-12-1990---Access to record, documents, etc.---Audit by DRRA---Validity---Audit was conducted by DRRA, which was not a competent authority for conducting audit in terms of provisions of S.30 of Sales Tax Act, 1990---Whole exercise conducted by DRRA was a nullity in law since it had acted as coram non judice.
2007 PTD (Trib.) 1600 rel.
(b) Sales Tax Act (VII of 1990)---
----Ss.10(2), 11(2) & 45-B---Sales Tax Rules, 2002, R.6-Excess amount to be refunded---Refund sanction order---Appealable---Refund sanction order passed by the competent authority in terms of S.10(2) of the Sales Tax Act, 1990 read with R.6 of Sales Tax Rules, 2002 and a refund rejection order passed by the competent authority in terms of S.11(2) of the Sales Tax Act, 1990 were both appealable under S.45-B of the Sales Tax Act, 1990---Order so passed attained finality through limitation---Orders attained finality could not be disturbed at any later stage by any authority including Federal Board of Revenue.
2004 PTD 3020 and 1984 MLD 4310 ref.
1989 MLD 4310; 1990 PTD 155 and 2004 PTD 3020 rel.
(c) Sales Tax Act (VII of 1990)----
----Ss.10(2) & 45-A---Excess amount to be refunded---Reopening a refund sanctioned order by the DRRA/Audit Group, Collectorate of Sales Tax & Central Excise (Audit)---Validity ---Act of issuance of show-cause notice was ab initio wrong inasmuch as the competent authority who passed the refund sanction order was satisfied in respect of claims and the concerned Collector having jurisdiction had never filed appeal---On the contrary, authority who issued the show-cause notice was not competent to reopen a past and closed transaction within the framework of Sales Tax Law---In terms of provisions of S.45-A of the Sales Tax Act, 1990 any proceedings under the Act were subject to review either by the Federal Board of Revenue or by the respective Collector, and that too for satisfying themselves in respect of legality or propriety of any decision or order passed by a subordinate sales tax officer---No other provision existed in the Sales Tax Act; 1990 authorizing a sales tax functionary to review or re-open a past or closed transaction---Audit by DRRA and its observation and reporting to Collector of Sales Tax (Audit) regarding procedural impropriety in the subject sanctioned refunds, was tantamount to exercise of authority within the purview of S.45-A of the Sales Tax Act, 1990---Act of sanction or rejection of refund claim fell within the purview of word "proceedings "---All happenings and events before Tribunal or an authority on whom the jurisdiction was conferred by law to dispose of contentious matters were covered by the term "proceedings "---Proper way to dispose of the audit objection was to place the same before Collector of Sales Tax (Enforcement) for initiation of proceedings as per relevant provisions---Audit by DRRA officials and their forwarding report to Collector of Sales Tax Audit, as well as issuance of show-cause notice by the Additional Collector involve assumption of wrong jurisdiction and as such exercise carried out right from audit by the DRRA till passing of order by the Additional Collector was without jurisdiction.
2004 PTD 3020; Appeal Nos.K-2352/99; K-106/03, PLD 1971 SC 14; 1992 ALD 449(1); 2004 PTD 624; PLD 1976 SC 37 and PLD 2001 SC 514 rel.
(d) Sales Tax Act (VII of 1990)---
----Ss.36 & 10---Recovery of tax not levied or short-levied or erroneously refunded---Refund---Deliberate act and collusion--Invocation of S.36(1) of Sales Tax Act, 1990 in the absence of allegations and material confirming "deliberate act" or "collusion" of the registered tax-payer-Validity-Show-cause notice was completely silent in regard to allegations of a "deliberate act' and "collusion "---It was for the Additional Collector before issuing the show-cause notice to examine the veracity, competency and reliability of the audit report and then issue the show-cause notice under respective subsection of S.36 of the Sales Tax Act, 1990---Additional Collector before issuing the show-cause notice had not determined the veracity of the audit report and hurriedly issued the show-cause notice, which was not relevant in the subject case by virtue of wordings of show-cause notice, which did not remotely hint in the direction of the "deliberate act" of submission of false refund application or supportive documents for processing or regarding the "collusion" with the Sales Tax Officers---Such action 'rendered the show-cause notice and the subsequent proceedings void ab initio.
2003 PTD 1275; 2005 PTD 480; 2003 PTD 1593; 2002 MLD 180; PTCL 2001 CL 558 and 1992 SCMR 1898 rel.
(e) Sales Tax Act (VII of 1990)----
----Ss. 36 & 10---Recovery of tax not levied or short-levied or erroneously refunded-Refund-Limitation-Show-cause. notice available on record dated 17-4-2008 for the taxable period of 2003-2004 confirmed with clarity that it was issued after the expiry of stipulated period of three years, rendering same time barred and as such not enforceable.
S.T.A. 274/05; S.T.A. 179/06; 2009 PTD (Trib.) 500; 2007 PTD 117; 2005 PTD 2453; 2008 PTD 981; 1992 SCMR 1898 and 2006 PTD 537 rel.
(f) Sales Tax Act (VII of 1990)---
----Ss.36 & 10---Recovery of tax not levied or short-levied or erroneously refunded---Grounds not mentioned in the charter of show-cause notice could not be subsequently taken up and adjudicated by the adjudicating authority in the adjudication order.
2001 PTD 1449 and 1987 SCMR 1840 rel.
(g) General Clauses Act (X of 1897)---
----S.24---Continuation, of orders, etc, issued under enactments repealed and re-enacted---In terms of S.24 of the General Clauses Act, 1897 every insertion, replacement or amendment runs prospectively and not retrospectively.
PLD 1974 SC 180; 1987 PTD 739; 2009 PTD 1; 2009 PTD 16; 1993 SCMR 73 and 2000 PTD 285 rel.
(h) Sales Tax Act (VII of 1990)----
----Ss.25, 30 & 36---Access to record, documents etc.---Audit by DRRA---Limitation Adjudication order in original as well as order in appeal were palpably illegal and void being based and supportive of audit findings of DRRA not recognized under the Sales Tax Regime and on the grounds not mentioned in the show-cause notice which itself was barred by limitation having been issued beyond the stipulated period of three years---Such orders were set aside and the appeal of the taxpayer was allowed by the Appellate Tribunal.
Nadeem Ahmed Mirza for Appellant.
Talha Muhammad, Sr. Auditor for Respondents.
ORDER
MUHAMMAD ARIF MOTON (MEMBER JUDICIAL).---The appeal, filed by the appellant, is directed against Order-in-Appeal No.48/2009 dated 7-2-2009 passed by the Collector of Customs, Sales Tax & Federal Excise (Appeal) Karachi maintaining the Order-in-Original No.128 of 2008 dated 21-10-2008 passed by the Additional Collector of Customs (Adjudication), Sales Tax & Federal Excise Wings R.T.O., Karachi.
2. Briefly, facts of the case as reported are that during the course of audit of the appellants for the period 2003-2004, it was found that they had claimed sales tax refund against the invoices issued by five (5) blacklisted/suspected registered persons. Therefore, inadmissible amount-of Rs.2,603,885.00 was found recoverable from the appellants along with default surcharge and penalty under sections 36(I), 34 and 33(II) of the Sales Tax Act, 1990. The appellants wereaccordingly charged under the relevant provisions of law as quoted in the impugned order. The operative part of the same reads as under:--
"I have gone through the case record and submissions of the respondent. It has been alleged, that the RP has made purchases involving sales tax of Rs.2,603,885.00 from five blacklisted units. The Registered Person has not contested the charges levelled against him on any other plea but the suppliers from whom he purchased goods were not blacklisted, when he, as per him, got the supplies from them. These five blacklisted suppliers were in fact ghost units and existed only on paper. Since, these blacklisted units never purchased and paid sales tax on goods, therefore, all output invoices were invalid for the purpose of input adjustment or refund of sales tax. The Registered person's contention that the transactions with these blacklisted suppliers were prior to supplier's blacklisting and that refund was sanctioned after due process at the time when these five units were not blacklisted do not carry any credibility for the simple reason that transactions with (blacklisted/ghost) units cannot be anything but paper/fake transaction. When no goods were purchased by the blacklisted units how these could be supplied to the registered person? Any refund sanctioned on fake/flying invoices remains invalid and cannot be termed as close transaction unless the period of five years has elapsed. There is nothing on record which can absolve the registered person of the wrong doing on the basis of foregoing, I order Terry World Textile CD-380, Gabol Town, 16-B, North Karachi, STR//11-00-6302-005-37 to pay inadmissible amount of Rs.2,603,885,00 along with default surcharges under sections 36(I) and 34 of the Sales Tax Act, 1990, respectively. I further impose the penalty of Rs.2603,885.00 under section 33(I1) of the Sales Tax Act, 1990.
3. The order was challenged before Collector (Appeals) who also vide his order dated 7-2-2009 rejected the appeal by observing that:
"I have examined the case record and given due consideration to the arguments made before me. The department's case is based on the premise that five suppliers of the appellants were ghost suppliers and that the appellants had never received any supplies from them. Therefore, the refund obtained by them on the basis of the so-called supplies from the practically non-existent suppliers were unlawful and based on forged documentation. From the record, I find that the appellants have not been able to establish (i) that they actually received any supplies from the disputed five suppliers and (ii) that the disputed five suppliers had deposited the amount in Government Treasury which the appellants had subsequently received as refund. Under the circumstances, I agree with the findings of the adjudicating officer to the effect that the appellants had obtained the impugned refund on the strength of fake invoices issued on behalf of the suppliers who existed only on paper. Even at the appeal stage the appellants have not been able to submit any documents/records to establish bona fides of the refund obtained by them. Therefore, I hold that the impugned order is correct in law and on facts and there is no need to interfere with the same. The appeal is rejected accordingly."
4. Mr. Nadeem Ahmed Mirza appeared on behalf of appellant and put forth the following contentions:
(a) That DRRA was not empowered to scrutinize the record of the appellant under section 25 of the Sales Tax Act, 1990 as its officers are not designated as Sales Tax Officer under section 30 ibid. Being a branch of Auditor General of Pakistan it could only audit the receipt of Federal Government as per its charter of functions given in Notification No.1195(I) dated 17-12-1990. Thus the whole exercise conducted by the DRRA in the case of appellant is coram non judice as held in judgments reported as 2007 PTD (Trib) 1600.
(b) That the processing of a refund claim and thereafter its sanction is an order and it is challengeable in terms of section 10 of the Sales Tax Act, 1990 if the refund of appellant is not in accordance with the provisions of the Sales Tax Act, 1990 or the Sales Tax Refund Rules 2002. The Collector of Sales Tax should have assailed it in the appellate forum which was not done. Resultantly the time for filing the appeal lapsed and the sanction order of refund attained finality, which cannot be disturbed under law as interpreted by Supreme Court of Pakistan in the case reported as 1989 MLD 4310 and various Benches of High Court in their judgments reported as 2004 PTD 3020, 1984 MLD 4310, 1990 PTD 155 and 2004 PTD 3020.
(c) That the refund sanction order could have been reopened by the Collector or Federal Board of Revenue under the provision of section 45A of the Sales Tax Act, 1990 for satisfying legality or propriety of the decision/order passed by the subordinate sales tax officer. The said provisions do not empower any other authority to reopen a lawfully passed order. In the instant case the DRRA and Additional Collector of Customs (Adjudication), Sales Tax & Federal Excise Wings RTO, Karachi reopened the aforesaid refund order in the absence of any authority or jurisdiction. Hence, the impugned order-in-original was without jurisdiction rendering it ab initio void as held by the Honourable Tribunal, High Court and Supreme Court in unreported/reported judgments namely Appeal Nos.K-2352/99, K-106/03, PLD 1971 SC 14 1992 ALD 449 (1) Karachi 2004 PTD 624, PLD 1976 Supreme Court 37 and PLD 2001 Supreme Court 514.
(d) That the issue raised in the instant case relates to the tax period 2003-2004. The relevant record pertaining to this period has already been destroyed by the Appellant for back in the year 2006 as, it was not mandated upon the appellant after 30-6-2006 to keep the said record in terms of then operative section 24 of the Sales Tax Act; 1990. No question can be asked with regards to the said period and neither any allegation can be levelled after the expiry of the stipulated period of (3) years. Resultantly the scrutiny by the DRRA is time-barred and as such no action is warranted on a past and closed transaction in terms of section 24 ibid.
(e) That the show-cause notice speaks about invoking of section 36(1) of the Sales Tax Act, which can only be invoked on a tax payer in case of his "collusion" with the tax officials or due to a "deliberate act". The show-cause notice is completely silent in regards to "collusion" or "deliberate act" on the part of the appellant. Resultantly invoking of section 36(I) of the Sales Tax Act, 1990 is out of context. In the light of levelled allegation in the show-cause notice at the most section 36(2) can be invoked for which a period of 3 years is given for issuance of show-cause notice, which stood time-barred on 30-6-2006, by 20 months (one year and 9 months). No show-cause notice can be issued after the expiry of stipulated period and neither any recovery proceeding can be initiated as per dictum laid down by the Appellate Tribunal/High Court and Supreme Court of Pakistan in numerous decision unreported/reported as S.T.A. 274/05, S.T.A. 179/06, 2009 PTD (Trib.) 500, 2007 PTD 117, 2005 PTD 2453, 2008 PTD 981, 1992 SCMR 1898 and 2006 PTD 537.
(f) That the order by the respondent should have been within the four corners of the show-cause notice. On the contrary, he has travelled beyond the scope of show-cause notice as is evident from a bare reading of the show-cause notice which simply states that the suppliers were either blacklisted or were declared suspected. It does not contain any allegation with regards to wordings of the show-cause notice, (i) that the 5 suppliers were ghost suppliers (ii) the appellant has never received any supplies against the tax invoices (iii) refund obtained against the tax invoices of supplies were unlawful and the supportive documents were forged and (iv) the suppliers has not paid the amount in government treasury, which the appellant paid to them at the time of purchase and the insertion/decision beyond the scope of show-cause notice is not permitted under law and decision on the basis of the fact not incorporated in the show-cause notice. Such orders are being termed palpably illegal as held in judgments reported as 2004 PTD 1449 & 1987 SCMR 1840.
(g) That when the appellant purchased goods from the suppliers, their profile was excellent, they were operational, their issued tax invoices were valid and were verified by the STARR in the year 2003-2004, consequent to which refunds were paid. They were declared as blacklisted units or suspected units at a later stage. Nevertheless, subsequently 4 suppliers namely Messrs Haji Habib & Sons, Messrs Momin Linkds, Messrs Akber Ali & Brothers & Messrs Fair Traders, Karachi were deleted from the list of units declared blacklisted/suspected vide audit completion certificate for the tax period 2003 to 2006, C.No.103/II & P/ST&CE/Enf/2004/748 dated 8-11-2004, C.No.47(01) Inv. Audit/Akber-Ali/STH/Pt/2004-118 dated 11-1-2005 & C.No.3113.Reg.ST.W.2003/1834 dated 21-11-2003. Whereas, Messrs Ayesha Textile was declared blacklisted vide letter C.No.01/Investigative Audit/STE/2003 dated 22-10-2003.
(h) That the order of the black listing deems to be effective prospectively and not retrospectively as expressed in section 24 of the General Clauses Act 1897 besides numerous reported judgments of the High Courts and Supreme Court in field. In conformity with the provision of section 24 of the General Clauses Act 1879 and law laid down, the Federal Board of Revenue issued direction in sub para (iii) of para 1 of Sales tax General Order 6/2003 to its field formations to apply the order of blacklisting from the date of issuance by expressing that "unless the Collector specifies otherwise such orders shall have effect from the date of original blacklisting or suspension of registration/enrolment of the concerned person so that invoices issued by him during the intervening period .." As per said directive, the tax invoices submitted by the appellant of Ayesha Textile are acceptable as these relate to the period prior to the date of black listing and refund against the said invoices is/was admissible under law.
(i) That if the suppliers were declared blacklisted or suspected by virtue of their activities, the respective Collectorates of jurisdiction, which registered them under section 15 and issued certificate under section 17 of the Sales Tax Act, 1990 were empowered to proceed against them under the mechanism provided in sections 11, 36 and subsection (e) of section 37C of the Sales Tax Act, 1990. No provision of the Act directs the respondents to disallow an admissible refund of a claimant as has been done in the instant case. If any action is taken against a claimant in violation of the provision of the Act, it is tantamount to forced constructions of law, which is not permitted as per dictum laid down by the Superior Courts of Pakistan.
5. The departmental representative arguing the appeal submitted as under:
(i) That DRRA is empowered under section 25 to conduct the audit of a registered person by virtue of the fact that it operates under Accountant General of Pakistan, who can audit the accounts of the department under S.R.O. No.1195(I)/90 dated 17-12-1990. Once refund order is being passed by the competent authority sanctioning refund of the claimant and cheque against that has been issued. The said record becomes the record of the department and DRRA can audit that record. DRRA correctly audited the record of the tax payer in accordance with the power vested with it.
(ii) That Sales Tax Officer can conduct Audit of registered person in respect of whom the office of Auditor General has already conducted audit, as per second proviso to subsection (2) of section 25 of the Sales Tax Act, 1990.
(iii) That the refund sanction order cannot be considered as an appealable order. It is computer generated refund payment order (RPO) subject to post refund Audit. As such, there was no need for the department to file an appeal under section 45-B of the Sales Tax Act, 1990.
(iv) That the question of re-opening of refund sanction order under section 45-A is out of context as every refund is subject to post audit under rule 13 of the Sales Tax Refund Rules, 2002 in case no pre-sanction inquiries were made. Even otherwise Refund Sanction Order is open to scrutiny at any time within the stipulated period given in section 36 of the Sales Tax Act, 1990.
(v) That the adjudicating authority correctly invoked section 36(1) of the Sales Tax Act, 1990 as evident from the language of show-cause notice, that the registered tax payer claimed refund against the invoices of blacklisted/suspected registered person. Hence, show-cause notice is not barred by time as it was issued within stipulated period of 5 years.
(vi) That the order of declaring blacklisted/suspected units can be applied retrospectively under the provisions of section 8(A) of the Sales Tax Act, 1990.
(vii) That appellant has given his consent for adjustment of recovery amount through installments vide their written consent.
6. Rival parties heard and case record perused. The following issues are framed for consideration by this Tribunal.
(i)Whether DRRA can have access to the books of accounts and documents for audit under the provisions of sections 25, 30 of the Sales Tax Act, 1990 read with S.R.O. 1195(I)/90 dated 17-12-1990?
(ii)Whether refund sanction order passed by a competent authority under subsection (2) of section 10 of the Sales Tax Act, 1990 read with rule 6 of the Sales Tax Refund Rules, 2002 is an appealable order under section 45-B of the Sales Tax Act, 1990?
(iii)Whether the DRRA/Audit Group-VII, Collectorate of Sales Tax & Central Excise (Audit) or respondent No.1 were empowered under section 45-A to reopen a refund sanction order passed by a competent authority under subsection (2) of section 10 of the Sales Tax Act, 1990?
(iv)Whether section 36(1) of the Sales Tax Act, 1990 can be invoked in the absence of allegations and material confirming "deliberate act" or "collusion" of the claimant/registered tax payer?
(v)Whether show-cause notice is time-barred under the provision of section 36(2) of the Sales Tax Act, 1990?
(vi)Whether a decision can be made outside the scope of show-cause notice?
(vii)Whether an insertion or amendment in a statute, notification or order can run prospectively or retrospectively?
7. The question (i) shows that the audit was conducted by DRRA, which is not a competent authority for conducting audit in terms of the relevant provisions of the Sales Tax Act, 1990 enumerated in section 30 ibid. As such the learned Consultant's contention carries weight that the whole exercise conducted by DRRA is a nullity in law since it has acted as coram non judice. The authorities quoted by the consultant amply demonstrate and support this contention.
8. As regards issue No. (ii) it is observed that a refund sanction order passed by the competent authority in terms of subsection (2) of section 10 of the Sales Tax Act, 1990 read with Rule 6 of Sales Tax Rules 2002 and a refund rejection order passed by the competent authority in terms of subsection (2) of section 11 ibid are both appealable under section 45-B of the Act. The orders so passed attained finality through limitation. A fortiori orders attained finality cannot be disturbed at any later stage by any authority including Federal Board of Revenue. The judgment relied upon by the appellant are relevant on this point and have been reported as 1989 MLD 4310, 1990 PTD 155 and 2004 PTD 3020.
9. As regards issue No. (iii) that the act of issuance of show-cause notice' was ab intio wrong inasmuch as the competent authority who passed the refund sanction order was satisfied in respect of appellants claims and so the concerned Collector of jurisdiction never filed an appeal under section 45-B of the Sales Tax Act, 1990. On the Contrary, the authority who issued the show-cause notice was not competent to reopen a past and closed transaction within the framework of Sales Tax Law.
10. In order to appreciate the proposition raised by the appellant it would be appropriate to reproduce the provisions of sub section (a) of section 45 of the Sales Tax Act, 1990. The same are as under:
"[45A Power 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..."
11. In terms of the aforesaid provisions of section 45-A of the Sales Tax Act, 1990 any proceedings under the Act are subject to review either by the Federal Board of Revenue or by the respective Collector, and that too for satisfying themselves in respect of legality or propriety of any decision or order passed by a subordinate sales tax officer. There is no other provision in the Act authorizing a sales tax functionary to review or re-open a past or closed transaction. Hence, the outcome of audit by DRRA and its observation and reporting to Collector of Sales Tax (Audit) regarding procedural impropriety in the subject sanctioned refunds, is tantamount to exercise of authority within the purview of section 45A of the Sales Tax Act, 1990. The act of sanction or rejection of a refund claim falls within the purview of the word "proceedings". In general parlance all happenings and events before a Tribunal or an authority on whom jurisdiction is conferred by law to dispose of contentious matters are covered by the term proceedings. As such the proper way to dispose of the audit objection was to place it before Collector of Sales Tax (Enforcement) for initiation of proceedings as per aforesaid relevant provisions.
12. In the light of the above discussion in the preceding paras, it is evident that audit by DRRA officials and their forwarding report to Collector of Sales Tax Audit, as well as issuance of show-cause notice by the. Additional Collector in the case involve assumption of wrong jurisdiction and as such exercise carried out right from audit by the DRRA till passing of order by the Additional Collector are without jurisdiction as contemplated in the following unreported and reported judgments of Customs, Excise & Sales Tax Appellate Tribunal, High Court and Supreme Court namely Appeal No.K-2352/99 and K-106/03, PLD 1971 SC 184, 1992 ALD 449(I) Karachi, 2004 PTD 624, PLD 1976 Supreme Court 37, PLD 2001 Supreme Court 514.
13. That as regards issues No.(iv) & (v), section 36(1) apropos allegations of a "deliberate act' and ";collusion". The show-cause notice is completely silent in this context. It was for the Additional Collector before issuing the show-cause notice to examine the veracity, competency and reliability of the audit report and then issue the show-cause notice under the respective subsection of section 36 of the Sales Tax Act, 1990. Contrary, the learned Additional Collector before issuing the show-cause notice has not determined the veracity of the audit report and hurriedly issued the show-cause notice under section 36(1). of the Sales Tax Act, 1990, which is not relevant in the subject case by virtue of the wordings of show-cause notice, which does not remotely hint in the direction of the- "deliberate act" of submission of false refund application or supportive documents for processing or regarding the `collusion" with the Sales Tax Officer. It, therefore, renders the show-cause notice and the subsequent proceeding void ab initio. The same view has been taken by the Superior Courts of the Country in the following Judgments reported as 2003 PTD 1275, 2005 PTD 480, 2003 PTD 1593, 2002 MLD 180, PTCL 2001 CL 558, 1992 SCMR 1898.
4. In view of the above the subject case squarely falls under the ambit of subsection (2) of section 36 of the Sales Tax Act, 1990 for which the period of limitation is three years from the date of its refund. Whereas, show-cause notice available on record dated 17-4-2008 for the taxable period of 2003-2004 confirms with clarity that it was issued after the expiry of stipulated period of three years rendering it time barred and as such not enforceable. The same view has been taken by the Appellate Tribunal, High Courts and Supreme Court of Pakistan in the following cases:---
S.T.A. 274/05,' S.T.A. 179/06,2009 PTD (Trib.) 500, 2007 PTD 117, 2005 PTD 2453, 2008 PTD 981, 1992 SCMR 1898 and 2006 PTD 537.
15. As regards issue No.(vi) it mainly revolves around the fundamental objection raised by the learned Consultant that the following allegations adjudicated in Para (6) of the impugned order-in-original dated 21-10-2008 have not been incorporated in the show-cause notice by the officer of original jurisdiction:
(i)That the (5) suppliers were ghost suppliers
(ii)The appellant has never received any supplies against the tax invoices
(iii)Refund obtained against the tax invoices of supplies were unlawful and the supportive documents were forged and
(iv)The suppliers has not paid the amount in government treasury.
The claim of the consultant is borne out by a bare reading of para (1) of the show-cause notice dated 17-4-2008 where any reference to the aforesaid allegations is non-existent. It is well-settled principle of law that grounds not mentioned in the charter of the show-cause notice cannot be subsequently taken up and adjudicated by the adjudicating authority in the adjudication order. This view has been taken by honourable apex Court in its hallmark judgment reported as 1987 SCMR 1840 and followed by honourable High Court of Sindh in its Judgment reported as 2004 PTD 1449. The impugned order-in-original based on such a deficient show-cause notice which doesn't mention the grounds is palpably illegal and hence void.
16. As regard issue No. (vii) it pertains to whether any insertion or amendment in the statute, notification or order takes effect retrospectively. In terms of section 24 of the General Clauses Act, 1897 every insertion, replacement or amendment runs prospectively and not retrospectively. This principle is fully borne out from the judgment reported as PLD 1974 SC 180, 1987 PTD 739, 2009 PTD 1, 2009 PTD 16, 1993 SCMR 73 and 2000 PTD 285.
17. The foregoing narration and objective analysis on the issues involved in this appeal clearly demonstrate that the impugned adjudication order-in-original as well as Order-in-Appeal are palpably illegal and void being based and supportive of audit findings of DRRA not recognized under the Sales Tax Regime and on the grounds not mentioned in the show-cause notice which is itself barred by limitation having been issued beyond the stipulated period of (3) years. The impugned orders are therefore, set aside and the appeal is allowed accordingly.
C.M.A./95/Tax(Trib.)Appeal accepted.