COMMISSIONER INLAND REVENUE, ZONE-II REGIONAL TAX OFFICE-II VS SONY TRADERS WINE SHOP, 2015 PTD-KARACHI-HIGH-COURT-SINDH 2287 (2015)

Sales Tax Act (VII of 1990)---

----S. 47---Income Tax Ordinance, (XLIX of 2001), S.133---Customs Act (IV of 1969), S. 196---Reference to High Court---New Question of fact---Authorities were aggrieved of finding of Appellate Tribunal and raised new pleas which were not raised before forums below--- Validity--- While hearing reference application either under S.47 of Sales Tax Act, 1990, or under S. 133 of Income Tax Ordinance, 2001, and under S. 196 of Customs Act, 1969, High Court could not exercise powers of appellate or revisional court or a Constitutional court---High Court had limited powers to examine and submit response only to substantial question of law which could arise from order passed by Appellate Tribunal---Question which was neither raised nor there had been any finding recorded by Appellate Tribunal, such question could not be raised for the first time before High Court in Reference---Order passed by Appellate Tribunal did not suffer from any factual or legal error, whereas decision was based on finding of fact, which did not suffer from any error or perversity and depicted correct legal position---High Court declined to interfere in order passed by Appellate Tribunal---Reference was dismissed in circumstances.

Commissioner of Income Tax v. Electronic Industries Ltd. Karachi 1988 PTD 111 and E.M. Oil Mills and Industries Ltd. v. Commissioner of Income Tax, Audit Division II, Companies III, Karachi 2011 PTD 2708 rel.

Pervaiz A. Shams Memon for Applicant.

ORDER

AQEEL AHMED ABBASI, J.---Through instant Special Sales Tax Reference Application, following questions have been proposed,' which according to learned counsel for the applicant, are questions of law arising from the impugned order dated 22-10-2014 passed by the Appellate Tribunal Inland Revenue (Pakistan) Karachi in MA(A.G.) No.04/KB/2Q12 (under Section 131) S.T.A. No. 359/KB/2009 (under Section 46):--

"(a) Whether in the circumstances and on the facts of the case, the learned Appellate Tribunal Inland Revenue was justified to hold that the order of the adjudicating officer is hit by limitation of five years?

(b) Whether in the circumstances and on the facts of the case, the learned Appellate Tribunal Inland Revenue was justified to annul the order by declaring that the same has been passed after 72 days i.e. after expiry of 120 days prescribed limit without considering the adjournment sought by the taxpayer?

(c) Whether in the circumstances and on the facts of the case, the learned Appellate Tribunal Inland Revenue has erred in not considering that the time taken through adjournment by the petitioner be excluded from the computation of the limitation period specified under section 11 of the Sales Tax Act, 1990?"

2. Learned counsel for the applicant has read out the Order-in- Original as well as impugned order passed by the Appellate Tribunal Inland Revenue and submits that the learned Tribunal has erred in law by holding that the order passed by the Adjudicating Officer for the period 1999-2000 is beyond the period of limitation of five years as provided under section 36(1) of the Sales Tax Act, 1990, whereas, according to learned counsel, the learned Tribunal has not taken into consideration the period for which adjournments were sought by the respondent. Per learned counsel, such period is required to be excluded while calculating the period of limitation under Section 36 read with Section 11 of Sales Tax Act, 1990.

3. We have heard the learned counsel for the applicant, perused the impugned order passed by learned Appellate Tribunal Inland Revenue and the Order-in-Original passed by the Officer Adjudication in the instant case. Record shows that a Show-Cause Notice was issued on 5-1-2005 by the Additional Collector (Adjudication-III) in respect of the period commencing from 1999-2000 till 2002-2003, pursuant to which, Order-in-Original No.222 of 2005 was passed on 16-7-2005, wherein, by invoking the provisions of sections 34 and 36 of the Sales Tax Act, 1990 as well as the provisions of section 33(2)(cc) of the Sales Tax Act, 1990, the amount of sales tax, additional sales tax and penalty was imposed on the respondent for the aforesaid period. The respondent filed appeal before the Appellate Tribunal Inland Revenue (Pakistan) Karachi against such order of adjudication for the aforesaid period, who vide impugned order dated 20-10-2014 allowed the appeal of the respondent to the extent of order pertaining to the period of 1999-2000. It will be advantageous to reproduce the finding of the Appellate Tribunal on the subject controversy as recorded in the paras 5 to 8 of the impugned order, which reads as follows:--

"5. The learned AR also submitted Additional 'Grounds pertaining to passing of the order-in-original by the adjudicating authority after lapse of the prescribed time limit. He argued that the Sales Tax Act, 1990 provides in its section 36(1) that in case of recovery of tax not levied or short levied the person liable to pay any amount of tax or charge or the amount of refund erroneously made, shall be served with a notice, within five years of the relevant date, requiring him to show cause for payment of the amount specified in the notice. Section 26(3) of the Sales Tax Act, 1990, however, provides that: " the Officer of Inland Revenue empowered in this behalf shall, after considering the objections of person served with a notice to show cause under subsection (1) or subsection (2), determine the amount of tax or charge payable by him and such person shall pay the amount so determined; 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 sat), days". He further argued that the notice in the present case was issued on 5-1-2005 and the impugned Order was completed on 16-7-2005, meaning thereby that the said Order was passed after a lapse of 70 days of expiry of limitation period of 120 days for passing order-in-original. The learned AR further argued that it is also not apparent from the record that the adjudicating authority got any extension from the Collector in the stipulated time period. According to the said provisions of law, no adjudication proceedings could be completed after 4-5-2005 after the expiry of 120 days of issuance of show-cause notice. While order for the period 1999-2000 is also beyond the period of five years as provided in section 36(1) of the Sales Tax Act, 1990.

6. While arguing his case, the learned counsel contended that once limitation has started to run and had come to an end, the assessee had acquired a vested right of escapement of assessment by lapse of time. He placed reliance on case-law reported as 2008 PTD 60 LHC, 2001 SCMR 838, PLD 1980 Lahore 47 and 2011 PTD (Trib.) 2216 and unreported judgments bearing Sales Tax Appeal No. H-252/04 dated 23-3-2006. After perusal of the above reported and unreported judgments -of Honourable Supreme Court, High Court and this Tribunal, we find that these case-law are squarely applicable to the case of the registered person/taxpayer. The gist of these case-law is that; once limitation has started to run and had come to an end, the assessee had acquired a vested right of escapement of assessment by lapse of time.

7. On the other side, the learned DR supported the order-in-original passed by the learned Additional Collector (Adjudication-III), Karachi. On the limitation point, the learned DR could not provide any evidence from the record that the Collector had given any extension of time to the adjudicating officer.

8. In view of above, the order of the adjudicating officer, being hit by limitation of five years, while passing of order after 72 days i.e. after expiry of 120 days' prescribed limit, being time-barred, illegal and against the norms of justice, is not permissible in the eye of law and is, therefore, annulled. The Appeal filed by the taxpayer/registered person is allowed accordingly."

4. From perusal of hereinabove finding as recorded in the instant case, it is clear that a definite finding has been recorded by the Appellate Tribunal with regard to the period of limitation, which admittedly expired in the instant case, as the order of adjudication was passed beyond the period of limitation provided under Section 36 of the Sales Tax Act, 1990, according to which, limitation of five years has been provided for the recovery of amount of tax which was not levied or short levied, whereas, another period of 120 days provided for passing an order from the date of Show-Cause Notice has also expired in the instant case. The contention of the learned counsel for the applicant while referring to question 'c' as proposed through instant reference application relating to exclusion of the time taken through adjournment while computing period of limitation is misconceived in fact and law as no finding in this regard has been recorded either by the adjudicating officer nor by the Appellate Tribunal Inland Revenue in the instant case for the reason that such plea was never raised by the applicant before the forums below. We are of the opinion that such dispute regarding facts of the case cannot be allowed to be raised for the first time before this Court under its reference jurisdiction, particularly, when no such ground was either raised before the forums below, whereas, no material whatsoever has been placed by the learned counsel for the applicant before this Court in support of such ground, which may' show that the expiry of limitation period as provided under Section 36 of the Sales Tax Act, 1990, also includes the period for which the respondent sought adjournment. It is well established that while hearing a reference application either under Section 47 of the Sales Tax Act or Section 133 of the Income Tax Ordinance, 2001 and Section 196 of the Customs Act, 1969, this Court does not exercise powers of Appellate and Revisional Court or a Constitutional Court and has limited power to examine and submit response only to substantial question of law, which may arise from the order passed by the Appellate Tribunal, whereas, a question which was neither raised nor there has been any finding recorded by the Appellate Tribunal on such question, cannot be raised for the first time before this Court under its reference jurisdiction, particularly, a question which involves scrutiny of disputed facts. Reference in this regard can be made to the case(s) of Commissioner of Income Tax v. Electronic Industries Ltd. Karachi (1988 PTD 111) and E.M. Oil Mills and Industries Ltd. v. Commissioner of Income Tax, Audit Division II, Companies III, Karachi (2011 PTD 2708).

5. In view of hereinabove facts and circumstances of the case we are of the opinion that the impugned order passed by the Appellate Tribunal Inland Revenue in the instant case does not suffer from any factual or legal error, whereas, the decision is based on finding of fact, which does not suffer from any error or perversity and depicts correct legal position, hence does not require any interference by this Court under its reference jurisdiction in terms of Section 47 of the Sales Tax Act, 1990. Accordingly, instant Reference Application being devoid of any merits is hereby dismissed in limine along with listed application.

MH/C-8/SindhReference dismissed.