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Petitioner: ASIF TEXTILE TRADING VS Respondent: DIRECTORATE GENERAL OF INTELLIGENCE AND INVESTIGATIONHonorable Justice Muhammad Nadeem QureshiNadeem Ahmed Mirza,Farhat Jafferi
2016 P T D (Trib.) 969
[Customs Appellate Tribunal]
Before Muhammad Nadeem Qureshi, Member (Judicial-I) and Muhammad Yahya, Member (Technical-I),
Messrs ASIF TEXTILE TRADING
Versus
DIRECTORATE GENERAL OF INTELLIGENCE AND INVESTIGATION and 2 others
Customs Appeal No.K-982 of 2012, decided on 4th December, 2015.
(a) Customs Act (IV of 1969)---
----Ss. 9, 80, 83, 2(a), 193 & 195---S.R.O. No.371(I)/2001, dated 15-06-2001---SRO No.586(I)/2007, dated 9-6-2007---Import of goods---Goods declaration---Collector of appraisement, powers of---Appeal, right of---Scope---Contention of importer was that consignment which had already been cleared by officials of Collector of Appraisement after completion of all codal formalities from Port/terminal as defined in S.9 of Customs Act, 1969 were lawful and legal and stood ousted from the act of "smuggling" and fell within the domain of prescribed duties of officials of Collector of Appraisement---Validity---Upon passing of assessment order under S.80 of Customs Act, 1969 and R.438 of Customs Rules, 2001 and thereafter passing of clearance order under S.83 of Customs Act, 1969 and R.442 of Customs Rules, 2001 by authority defined in S.2(a) of Customs Act, 1969 and SRO No.371(I)/2001 dated 15-6-2001, it could not be disturbed by any authority including officials of department for preparing contravention report and connected proceedings therewith---Only recourse left for officials of department was to challenge the said orders before Collector of Customs (Appeals) under S.193 of Customs Act, 1969 which empowered the Directorate General of Investigations in terms of SRO No.586(I)/2007 dated 9-6-2007 to file appeals---When the right of appeal had been accorded by legislature under provision of S.193 of Customs Act, 1969, provision of S.195 of Customs Act, 1969 was un-operational and could not be exercised even by authority defined therein.
Messrs Paramount International (Pvt.) Ltd., Karachi v. Secretary Revenue Division 2014 PTD 1256 rel.
(b) Customs Act (IV of 1969)---
----Ss.9, 80, 83, 2(a), 193 & 195---Sales Tax Act (VII of 1990), S.30A---Income Tax Ordinance (XLIX of 2001), Ss.230, 207 & 230A---SRO No.776(I)/2011 dated 19-8-2011---Import of goods---Directorate General of Intelligence and Investigations, powers of---Upon perusal of S.30A of Sales Tax Act, 1990 and S.230 of Income Tax Ordinance, 2001 it was clear that Directorate General of Investigations had not even been appointed/designated as Officer of Inland Revenue by legislature, instead Directorate General of Intelligence and Investigations had been delegated powers under SRO No.776(I)/2011 dated 19-8-2011 for exercising under different Sections of Sales Tax Act, 1990 and under S.207 of Income Tax Ordinance, 2001 and for overseeing collection of withholding tax at import stage---Directorate General of Withholding Taxes had been established under S.230A of Income Tax Ordinance, 2001 meaning thereby that Directorate General of Intelligence and Investigations was not at all appointed/designated as Officer of Inland Revenue, thus, rendering the entire act of preparation of contravention report in the matter relating to Sales Tax and Income Tax without powers/jurisdiction and as such corum non judice.
Waseem Ahmed and others v. FOP and another 2014 PTD 1733 and Muhammad Measum and others v. FOP and others 2015 PTD 702 rel.
(c) Customs Act (IV of 1969)---
----Ss.80, 83, 193 & 195---Income Tax Ordinance (XLIX of 2001), Ss. 148, 148(5) & 162(I)---Import of goods---Advance tax, collection of---Recovery in case of default, powers of---Double jeopardy---Scope---Person could not be tried on the same offence by two forums, and he could be tried only where clear cut provisions of law were available---According to S.148 of Income Tax Ordinance, 2001 power of recovery in case of default vested with Income Tax Department and Commissioner of Income Tax as prescribed officer could go for recovery---Power to collect advance Income Tax under S.148(5) of Income Tax Ordinance, 2001 could not have the effect of converting Income Tax into Customs duty---Merely by providing the manner of collection advance tax under any tax enactment the nature of said tax could not be changed, hence, short recovery of any tax collectable under Ss.148(5) & 148(6) of Income Tax Ordinance, 2001 to a person in form of short collected, short levied or not so collected, either on account of mis-declaration of importer or on account of error, inadvertence or under mistake vested with Commissioner of Income Tax under S.162(I) of Income Tax Ordinance, 2001---Collector of Customs did not have the authority to go for recovery of said tax and it was the Commissioner of Income Tax who could start proceedings of recovery against the person in case of default on short collected, short levied or not so collected, either on account of mis-declaration of importer or on account of error, inadvertance or under mistake, hence, adjudication by Customs Officials to the point of recovery of Income Tax against the import was illegal, unjustifiable and not tenable in the eye of law.
Messrs Global Marketing Services and another v. Model Customs Collectorate and another 2010 PTD (Trib.) 2086; M. I. Traders v. Additional Collector of Customs 2014 PTD (Trib.) 299; Al-Hajj Industrial Corporation (Pvt.) Ltd., Peshawar v. Collector of Customs (Appraisement) 2004 PTD 801; Agro Industry (Pvt.) Ltd. v. Collector of Customs and 8 others 2014 PTD 1963; 2005 PTD 23; Xen Shahpur Division v. Collector of Sales Tax (Appeal), Collectorate of Customs, Federal Excise and Sales Tax, Faisalabad 2008 PTD 1937 and Collector of Sales Tax and Federal Excise v. Messrs Qasim International Container Terminal Pakistan Ltd., 2007 PTD 250 rel.
(d) Customs Act (IV of 1969)---
----Ss. 80, 83, 180 & 193---Customs Rules, 2001, Rr.438 & 442---S.R.O. No.371(I)/2002 dated 15-6-2002---Constitution of Pakistan, Art.13---Double jeopardy---Appeal, right of---Limitation---Import of goods---Checking of goods declaration by customs---Consignments had undergone procedure of assessment/clearance under provisions of Ss.80 & 83 of Customs Act, 1969 and Rr.438 & 442 of Customs Rules, 2001 by authority defined in S.2(a) of Customs Act, 1969 in exercise of powers conferred upon by Federal Board of Revenue through SRO No.371(I)/2001 dated 15-6-2001---Such orders were appealable and could be assailed either by importer or department under S.193 of Customs Act, 1969 within 30 days of said orders---No appeal was in fact filed and resultantly, said orders attained finality through limitation and could not be disturbed by any authority, however, department, in the present case, opted to issue show-cause notice under S.180 of Customs Act, 1969---Validity---Department was not empowered to issue said show-cause notice because such an act tantamounted to piling upon yet another order on existing assessment orders passed by competent authority under S.80 of Customs Act, 1969---Once an order was passed, which had attained finality, the same could not be subject to another show-cause notice, considering that no appeal or revision was filed against the first order---By virtue of non-filing appeals by department against assessment orders within stipulated period, the said transaction stood past and closed and had attained finality and could not be disturbed through subsequent order-in-original because it was not permitted under the law and also such exercise was also an act of double jeopardy barred under Art.13 of the Constitution---Impugned show-cause notice was set aside---Appeal was allowed, accordingly.
Messrs World Trade Corporation v. Central Board of Revenue 1989 MLD 4310 and Messrs Smith Kline French v. Pakistan 2004 PTD 3020 rel.
(e) Administration of justice---
----Being custodian of law, courts were required to maintain the norms of justice and equity, and litigants were to be respected not on account of court's power to legalize injustice on technical grounds but to remove injustice.
Nadeem Ahmed Mirza, Mirza Muhammad Abeer and Obayd Mirza for Appellants.
Farhat Jafferi, S.I., for Respondent No.1.
Muhammad Azam, A.O. for Respondent No.2.
Date of hearing: 29th September, 2015.
JUDGMENT
MUHAMMAD NADEEM QURESHI, MEMBER (JUDICIAL-I).---By this order, we intend to dispose off Customs Appeal No.K-982/2015 filed by the appellant against Order-in-Original No. 552/2014-2015 dated 22.05.2015 passed by the Collector of Customs, Adjudication-I (here-in-after to be referred as respondent No. 3) through this single order.
2. Briefly facts as stated by the appellant and Directorate General of Intelligence and Investigation-FBR, Karachi (here-in-after to be referred as respondent No. 1), are that the appellant is a manufacturing unit of textile, registered with FBR vide NTN No. 02844457-5 and STRN-12-00-3903-003-28, during the course of his business activities he imported 72 consignments between 19.12.2013 to 03.01.2014 of polyester filament yarn and upon receipt of import documents his clearing agent transmitted Goods Declaration under the provision of Section 79(1) of the Customs Act, 1969 and Rule 433 of Sub-Chapter (III) of Chapter XXI of the Customs Rules, 2001 with the MCC of Appraisement under supervisory control of Collector (here-in-after to be referred as respondent No. 2) while claiming payment of sales tax and income tax on reduced rates in terms of Notification No. S.R.O. 1125(I)/2011 dated 31.12.2011. The clearance of all consignment was allowed by the subordinate of respondent No. 2 after due verification that the appellant manufacturing unit is one of the five sector as enunciated in Table I of the Notification, he is duly registered with the Inland Revenue and his status is "Active Tax Payer", after passing valid and legal assessment/clearance orders under Sections 80 and 83 and Rules 438 and 442 ibid., after going through the examination report carried out under the provision of Section 198 of the Customs Act, 1969 and Rule 435 of Customs Rules, 2001 in the month of May 2014 the respondent No.1 blocked clearance of two consignments of the appellant corresponding to Goods Declaration No. KEPW-HC-147133 dated 09.05.2014 and KEPW-HC-149319 dated 13.05.2014. Resultant, the appellant approached the Officials of respondent No. 1, which informed him that his registration is "suspended". Since, the status appearing on the Portal of FBR was contrary, the appellant filed C.P. No. 2899/2014 with the High Court of Sindh, against respondent No. 1, which upon notice of the Hon'ble High Court of Sindh submitted comments, in which it stated that a show cause notice dated 28.12.2006 was issued to the appellant, against which order-in-original was passed and demand was created, therefore the User ID of the appellant was blocked and the registration was suspended. In the light of the comments and Annexures, the appellant approached the Commissioner Inland Revenue, Zone-I, RTO for supply of the impugned show cause notice and order-in-original enabling him to assail the vires of those before the forum set-forth in the Sales Tax Act, 1990. Ironically, he was not having either show cause notice or order-in-original. Resultant, the Chief Commissioner, RTO forwarded letter dated 14.10.2014 to the Collector of Customs, MCC of Export for supply of the copy of the show cause and order-in-original, who informed through letter dated 24.10.2014 that the appellant had not availed any facility of DTRE as per their records, hence no information can be supplied in this regard in addition to the impugned Order-in-Original No. 06 dated 19.05.2007, which is non-existent and as such cannot be supplied due to suffer of lack of availability. After receipt of the said reply the Commissioner, Zone-1, RTO inspite not warranted in the given circumstances of the case directed the appellant to submit a bank guarantee for the sake of regularization and to securing the amount said to be adjudged against the appellant through the impugned Order-in-Original No. 6 dated 19.05.2007, amounting to Rs. 3,762,050.00.
3. Since, the appellant consignment were lying in the Terminal and suffering container detention/rental and terminal demurrage/storage charges, he submitted the same through bank guarantee dated 21.11.2014. Consequent to which the Commissioner Inland Revenue, Zone-1, RTO restored Sales Tax Registration of the appellant vide order dated 24.11.2014. Inspite of the fact that no proceeding can be initiated against the appellant in the given circumstances of the case, the respondent No. 1 framed contravention report and forwarded to Collector of `Customs, (Adjudication-I) (here-in-after to be read as respondent No. 3) with the allegation that the appellant inspite of having status of non active and suspended w.e.f. 30.06.2013 imported the consignment valuing to Rs. 268,456,049.00 referred in para supra and managed to obtain their clearance with the benefit of payment of sales tax and income tax at reduced rates under Notification No. 1125(I)/2011 dated 31.12.2011. Inspite non entitlement and as such evaded 15% sales tax 3% additional sales tax and consequential 4.5% with-holding tax on the said import amount of which have been worked out to Rs. 40268,407/-, Rs. 8,053,681/- and Rs. 14,255,016/- totaling to Rs. 62,577,105/-, this act of his is in violation of the provision of Section 32(1) and (2) of the Customs Act, 1969, Sections 3, 4, 6, 7A, 8(1b), 34, 36 and 71 of the Sales Tax Act, 1990 read with Section 148 of the Income Tax Ordinance, 2001,punishable under clauses (14) of Section 156(1) of the Customs Act, 1969 read with Sections 33 and 34 of the Sales Tax Act, 1990. Who issued show cause notice dated 26.11.2014, which was replied by the appellant vide letter dated 07.01.2015 in addition to attendance of hearing fixed for 12.01.2015 and 21.01.2015. Since, inspite lapse of 03 months from the date of last hearing no order was issued by respondent No. 3, the appellant engaged consultant, who submitted addendum to the reply to the show cause notice through letter dated 30.05.2015, which was acknowledged by the respondent No. 3 on 01.06.2015. Inspite receipt of addendum on 01.07.2015 the respondent instead of considering that passed order on the same day but dating 22.05.2015 and dispatched the same to the appellant through consignment note No. K-180358982 dated 01.06.2015, paras 4 and 5 of the order are relevant, which are reproduced here-in-below:--
4. I have gone through the record of the case and considered the written reply of the respondent and verbal arguments of both sides, it is an accepted position that Messrs Asif Textile Trading (NTN-284457) office No. 303, 3rd Floor, Textile Plaza, M.A. Jinnah Road, Karachi was suspended from the Active Tax Payer list since 30.06.2013 and all imports stated in the show cause notice are for the period of their suspension, condition (i) of S.R.O. 1125(I)/2011 dated 31.11.2012 stated as under:--
The benefit of this Notification shall be available only to the person doing business in textile (including jute), carpets, leather, sports and surgical goods sector, who are registered as manufacturer, importer, exporter or whole-seller under the Sales Tax Act, 1990 and appears on the Active Tax Payer list ATL) on the website of Federal Board of Revenue." (emphasis added) (sic).
5. Since it is un-equivocally and clearly stated in the aforesaid condition that the benefit of S.R.O. 1125(I)/2011 dated 31.12.2011 is only available if the person's name appears on active tax Payer List (ATL) which in the case of M/s. Asif Textile Trading (NTN-284457), Office No. 303, 3rd Floor, Textile Plaza, M.A.Jinnah Road, Karachi was under suspension, therefore, I hold that they were not eligible for the benefit of S.R.O. 1125(I)/2011 dated 31.12.2011 and are liable to pay duty and taxes at statutory rates. Accordingly, the charges as enumerated in the show cause notice stand established. I therefore, order M/s. Asif Textile Trading (NTN-284457), Office No. 303, 3rd Floor, Textile Plaza, M.A. Jinnah Road, Karachi to immediately deposit the short paid amount of Rs. 67,109,814/- (Sales Tax amounting to Rs. 43883008/- Additional Sales Tax amounting to Rs. 8776601/- and With Holding Tax amounting to Rs. 14450205/- ) in Government Treasuring in terms of Section 32(2) of the Customs Act, 1969. A penalty of Rs. 2,000,000/- (Rs. 02 Millions) is also imposed under clause (14) of Section 156(1) of the Customs Act, 1969 for violation of Section 32(1) ibid, on the respondent M/s. Asif Textile Trading (NTN-284457), Office No. 303, 3rd floor, Textile Plaza, M.A.Jinnah Road, Karachi.
4. Being aggrieved and dissatisfied with the impugned Order-in-Original, the appellant filed instant appeal before the Tribunal on the grounds incorporated in memo of appeal and which are:--
(i) That after passing of clearance and assessment order under Sections 80 and 83 Rules 438 and 442 of Sub-Chapter III of Chapter XXI of Customs Rules, 2001 by the authority defined in Section 2(a) ibid and 'out of charge' of the consignments, the appropriate authority to conduct audit of the cleared consignments rests with the Officials of 'Directorate General of Post Clearance Audit', formed under the provision of Section 3DD of the Customs Act, 1969 and empowered under Notification No. 500(I)/2009 dated 13.06.2009 and to issue audit observation and thereafter prepare contravention report for the purpose of adjudication by the competent authority empowered under the provision of Section 179 of the Customs Act, 1969, after issuance of proper Show Cause Notice under Section 180 ibid. The Officials of respondents Nos. 1 and 2 figure nowhere in the respective provision of the Customs Act, 1969, nor in the Notification No. 500(I)/2009 dated 13.06.2009. By laying hands on the consignments which have been cleared after passing of valid assessment and clearance order by the competent authority under the referred in above provisions of the Act/Rules, 2001, the respondents tried to conduct audit of the consignments after clearance for which they are not empowered. By transgressing the powers and jurisdiction of the Directorate General of Post Clearance Audit, they acted without powers/jurisdiction rendering their acts ab-initio void and as such coram-non-judice. Reliance is placed on PLD 2001 Supreme Court 514, PLD 1976 Supreme Court 514, PLD 1971 SC 184, 2006 PTD 2237, 2001 SCMR 1822, PLD 2004 Supreme Court 600, PLD 2005 Supreme Court 842, 2009 PTD 1083, PLD 1995 Kar. 587, PLD 1973 SC 236, PLD 1971 SC 197
(ii) The Officials of respondent No. 1 are not designated as "Officers of Inland Revenue" under Section 30A of the Sales Tax Act, 1990 and Section 230 of the Income Tax Ordinance, 2001 under which "Directorate General Investigation, Inland Revenue" has been designated as Officer of Inland Revenue and they had been delegated powers under different Sections of the Sales Tax Act, 1990 through Notification No.S.R.O.776(I)/2011 dated 19.08.2011 and Section 207 of the Income Tax Ordinance, 2001. Resultant, Officials of respondent No. 1 acted without powers/jurisdiction, rendering their act of preparation of contravention report, without power and jurisdiction, hence "coram non-judice" as held in reported judgment Major Syed Walayat Shah v. Muzaffar Khan and 2 others (PLD 1971 SC 184), Omer and Company v. Controller of Customs, (Valuation): (1992 ALD 449 (1) Karachi AAA Steel Mills Ltd. v. Collector of Sales Tax and Central Excise Collectorate of Sales Tax (2004 PTD 624), PLD 1976 Supreme Court 514 Ali Muhammad v. Hussain Buksh and others and PLD 2001 Supreme Court 514 Land Acquisition Collector, Noshehra and others v. Sarfraz Khan and others, 2006 PTD 2237, Pak Suzuki Motors Company Ltd, Karachi v. Collector of Customs, Karachi, 2009 PTD (Trib.) 1996 and 2010 PTD (Trib.) 832.
(iii) The Officials of respondent No. 1 have no powers under Sections 32 and 195 of the Customs Act, 1969 as notified in S.R.O. 486(I)/2007 dated 09.06.2007 issued by the Board through which powers have been delegated. Intercepting consignment after clearance on the pretext of mis-declaration on the basis of feeding of status ATL despite not by the FBR in its portal. The Officials of respondent No. 1 acted beyond their notified powers/jurisdiction, rendering their act as transgression to the vested powers under the respective Section otherwise not vested to them by the Board. In these circumstances the impugned contravention report and show cause notice and all the subsequent proceeding there on deems to be illegal and void. No body is allowed to act beyond his jurisdiction and all the acts or deeds beyond the scope of jurisdiction are null and void in the eyes of law. Reliance is placed on the reported judgments 2008 PTD 981, PLD 1971 Supreme Court 61, PLD 1973 Supreme Court 236, PLD 1964 SC 536, 2001 SCMR 838 and 2003 SCMR 1505, In PLD 1996 Karachi 68, 2006 PTD 978 and PLD 1971 Supreme Court 184.
(iv) That on conclusion of transaction, under the provision of Sections 80 and 83 of the Customs Act, 1969 and Rules 438 and 442 of Customs Rules, 2001, the order so passed under the said provision of the Act become appealable order before Collector of Customs (Appeals) under Section 193 of the Customs Act, 1969 and the Officials of respondent No. 1 are empowered under the said Section through Notification No. 486(I)/2007 dated 09.06.2007. If they had any reservation against the passed assessment order, the appropriate course of action was to assail the said order before the Collector of Customs Appeals. Which had not been done within the stipulated period and order so passed by the competent authority defined in Section 2(a) under Section 80 of the Customs Act, 1969 final and that cannot be disturbed by any authority.
(v) That upon filing of the appeal by the Officials of respondent No.1 before the Collector of Customs Appeals under Section 193 of the Customs Act, 1969 emanating the facts of the case and the relevant provision of law. Upon taking up the appeal it is mandated on him to go through the fact and ground of the appeal and thereafter if he think fit that in the case under adjudication correct duty and taxes has not been either not levied or short paid on the basis of found goods, is empowered to issue a notice under Section 32 of the Customs Act, 1969 to the importer (applicant) and after receipt of reply to the said notice the Collector of Customs has to decide the appeal in the light of the issued show cause notice and reply. In the instant case no appeals has been filed by the Officials of respondent No. 1 despite mandated under law, instead assumed the powers under Section 195 of the Customs Act, 1969 and reopened a valid passed order under Section 80 ibid. The Officials of respondent No. 1 are not empowered to reopen an order, hence acted without power/jurisdiction, rendering their act of preparing contravention report is without any lawful authority and as such ab-initio, null and void as held by Superior Judicial Foras in umpteenth reported judgments e.g. 2014 PTD 1256 M/s. Paramount International (Pvt.) Ltd. v. FOP and others.
(vi) That the respondent No.3 has invoked in the show cause notice Sections 3, 4, 6 7A, 8 (1b), 34, 36 and 71 of the Sales Tax Act, 1990 and Section 148 of the Income Tax Ordinance, 2001 contrary to the fact that none of the Sections of Sales Tax are applicable on the appellant with the exception of Section 36 ibid, which stood omitted through Finance Act, 2012. Likewise Section 148 is equally not a charging Section instead a machinery Section empowering the Officer of Customs, to collect the leviable income tax at import stage. No show cause notice can be issued under the said Sections, rendering the show cause notice void and ab-initio and of no legal effect as held in reported judgments Asst. Collector v. Khyber Elec. Lamps 2003 PTD 1275, D G Khan Cement v. Collector of Customs 2005 PTD 480, Caltex v. Collector 2003 PTD 1593, Union Playing Card Company v. Collector of Customs 2002 MLD 130, Atlas Tyres v. Addl. Collector 2002 MLD 180, State Cement v. Collector PTCL 2001 CL 558, Kashmir Sugar v. Collector 1992 SCMR 1898, Rose Color v. Chairman, CBR and 2013 PTD 813 Sarwar International v. Addl. Collector of Customs.
(vii) That apart from the above, it is imperative to state that respondent No. 3 is also not designated as Officer of 'Inland Revenue' under the provisions of clause (c) subsection (3) of Section 25 of the Sales Tax Act, 1990 and Section 207 of the Income Tax Ordinance, 2001 thus not empowered to issue a 'Show Cause Notice'(SCN), in the matters of Sales Tax under Section 11 (mentioned as 36 without realizing/consulting the Act that it stood deleted through Finance Act, 2012) of Sales Tax Act, 1990 and Section 162(1) of the Income Tax Ordinance, 2001. By doing so, respondent No. 3 usurped the powers of officers of 'Inland Revenue'. In other words, even very issuance of SCN is in…
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