BEFORE THE APPELLATE TRIBUNAL SINDH REVENUE BOARD APPEAL NO. 112/2015 M/s Service Sales Corporation Appellant Versus The Commissioner-I, SRB& others Respondent Mr. Nadeem A. Faruqi ITP for Appellant Mr. Zamir A. Khalid Dy. Commissioner SRB,Karachi Ms. Rafia Urooj Ac Unit No.21 Date of hearing 1.07.2015 Date of Order 18.09.2015 ORDER Justice (R) Nadeem Azhar Siddiqi This appeal has been filed by the appellant challenging the Order No. 140/2014 dated 18.12.2014 passed by the Commissioner Appeals in Appeal NO. 140/2014 confirming the Order in Original No. 357/2013 dated 10.01.2014 passed by the Assistant Commissioner-21 SRB,Karachi. 1. In short, the facts of the case as stated in the order in original are that the appellant are engaged in retail of foot wear under "Service" brand. It was further stated that the appellant is advertising on the television channels, covering almost every channel which falls under tariff heading 98.02 (and the sub heads and description thereunder) of Second Schedule of the Sindh Sales Tax on Services Act, 2011 (herein after referred to as the ACT) and is chargeable to Sindh Sales Tax & 16% of the value of service w.e.f. 1 st July, 2011. 2. The allegation against the appellant is that it despite issuance of several notices for recovery, the appellant neither submitted any relevant documents/information nor deposited the withheld amounts of SRB's service providers. Show cause was issued to the l O-JZ-'
appellant demanding Sindh sales tax in the sum of Rs. 20,661,274/=. The appellant had submitted its reply with the Adjudication Officer and has challenged the jurisdiction of SRB on the ground that the appellant have its registered office at Lahore and provisions of Sindh Sales Tax on Services Act, 2011 is not applicable and provisions of Punjab Sales Tax on Services Act, 2012 are applicable. 3. The Assessing Officer in para 15 has held as under:- "ln addition to above, Rule 2(2) of Sindh (withholding) Rules, 2011 defines the "advertisement" within the context of taxable services listed in the Second Schedule of the Act, hence, the company under reference is a withholding agent covering definition specified in 2(8) and categorize as rule 1(2)(f) of Sindh Sales Tax Special Procedure (withholding) Rules, 2011, moreover within the meaning of subsection (1) of section 3 of Sindh Sales Tax on Services Act, 2011, taxable service is defined and explained under the legal provisions of Sindh Sales Tax on Services Act, 2011 reproduced hereunder for ready reference". 4. The Assessing Officer in the next para has further held as under:- "Therefore, in terms of the clause (f) of sub rule (2) of Rule 1 and as per rule 3 (4) of Sindh Sales Tax Special Procedure (withholding) Rules, 2011, the withholding agents or recipients of the advertisement service from the SRB registered service providers are responsible to deduct the amount of sales tax from the value of taxable service at the applicable rate i.e. 16% and shall e-deposit the' withheld amounts of Sindh Sales Tax in Sindh Government's head of account ((B-02384" in the manner and by due date prescribed in the Sindh Sales Tax Special Procedure (Withholding) Rules, 2011". 5. The Assessing Officer in para 17 of the order in original directed the appellant to request Member (Inland) FBR for transfer of amount of Rs.16,551,143/= for the tax period from August, 2011 to April 2013 and also make an application to PRA for transferring an amount of Rs.3,680,832/= for the tax period from August, 2012 to April 2013 (in addition to this amount company should also bifurcate and provide all the withheld Sindh Sales Tax from July 2011 to November 2013 on ~
the basis of services received from SRB-registered persons, along with all CPRs and Returns}. In para 18 the Assessing Officer ordered the appellant to deposit Rs.138,621 along with default surcharge and has also imposed penalty of Rs.15,OOO/=. 6. The said order of the Assessing Officer was challenged by way of filing appeal before the Commissioner Appeals, who dismissed the appeal and confirmed the order of Assessing Officer, and while dismissing the appeal has also withdrawn the concession allowed by Assessing Officer to appellant regarding making application to FBR and PRA for transfer of amount of Sindh Sales Tax to the account of Government of Sindh, hence this appeal. 7. The learned Representative for the Appellant at the very out set challenged that the Show Cause Notice dated 18.06.2013 was issued by Assistant Commissioner SRB, who had no jurisdiction and' authority to issue such notice and referred to Notification No. Notification No. SRB-3-4/7/530/2011 dated zs" September, 2011, available on page 321 of book titled Sindh Sales Tax Act, 2011 4th Edition by Tariq Najeeb Chaudary Advocate and Consultant and contends that the cases of adjudication of withholding tax was not assigned to any officer of SRB. He then submits that on the date of issuance of Show Cause Notice Dated 18.06.2013 no notification under section 34 is available authorizing the Officer of SRB to deal with the cases of withholding tax. He then submits that Notification dated 15.07.2013 was issued after issuance of Show Cause Notice dated 18.06.2013 and further submits that is not known whether the said notification was published in official gazette or not. 8. He then submits that the Order in appeal was time bared as the same was announced beyond the time limit prescribed for deciding appeals by Commissioner Appeals and submits that the appeal was filed on 14.02.2014 and order was announced on 18.12.2014 beyond the period of 120 days provided under Section 59 (5) of the Act. He then submits that the order in original was also time bared as the show cause notice was issued on 18.06.2013 and the order in original was ~
issued on 10.01.2014 beyond the period of 120 days provided under section 47 (5) of the Act. He contends that the Commissioner Appeals travels beyond the order in original and the show cause notice and enhanced the tax amount from Rs.20,631,926/= to 27,249,270/= without giving an opportunity of showing cause against such increase. He then contends that the Commissioner Appeals has gone outside the context of order in original and without filing of appeal by the Department recalled/set aside the concession allowed by the Adjudicating Officer for transfer of f amount from FBRand PRA to the account of Government of Sindh and directed the appellant to deposit the amount again. 9. Ms. Rafia Urooj the learned Assistant Commissioner submits that the Show Cause Notice and order in original was passed under proper authorization and referred to last entry of the Notification No. SRB-3-4/10/2013 dated 15.07.2013 available on page 338 of book titled Sindh Sales Tax Act, 2011 a" Edition by Tariq Najeeb Chaudary Advocate and Consultant. She then submits that on 5.9.2013 she issued corrigendum of show cause notice Dated 18.06.2013 which was not objected. She then submits that the order in original was passed with in the extended period as provided under sub section (3) of section 47 of the Act after excluding the time taken through adjournment by the appellant as provided under sub section (4) of the above section. She further submits that the order in appeal was also passed with in the extended period as provided under sub section (5) of section 59 of the Act after excluding the time taken through adjournment by the appellant as provided under sub section. (6) of the above section. She then submits that the Commissioner Appeals has not travel beyond the show cause notice and under sub section (1) of section 59 of the act is fully empowered to vary and alter the decision/order in original. 10. Mr. Zameer Khalid the learned Deputy Commissioner SRB contends' that all proceedings were taken under proper authority and there is a t ~' presumption of correctness attached to official acts and burden is
upon the appellant to prove that show cause notice and further proceedings were taken without jurisdiction. He then submits that point of jurisdiction was not raised before the two forums below and this point cannot be taken first time before the tribunal. He also refers to the notification available on page 338 of the above book and submits that AC-21 is fully authorized to deal with the cases of withholding tax. 11. Mr. Nadeem Faruqi the learned representative of the Appellant while exercising right of rebuttal submits that powers under section 47 cannot be exercised unless the officer of SRB is duly authorized by notification in terms Section 34 of the Act and in absence of notification to this effect it cannot be said that show cause notice and subsequent proceedings were taken properly and with jurisdiction. The learned representative of the appellant relied upon the following reported cases. (i) Izhar Alam Faruqi Advocate versus Sheikh Abdul Sattar Lasi and. others 2008 SCMR 240. In this judgment the Honb. Supreme Court has held that jurisdiction cannot be assumed with the consent of parties and notwithstanding the raising of such an objection by the parties, the forum taking cognizance of the matter must at the first instance decide the question of its jurisdiction. It was further held that There can be no exception to the principal that an order passed or an act done by a court or a tribunal not competent to entertain the proceedings is without jurisdiction and that it is mandatory for the court or tribunal as the case may be to attend the question of jurisdiction at the commencement of the proceedings because. the jurisdictional defect is not removed by mere conclusion of trial or enquiry and objection to the jurisdiction can be raised at any subsequent stage. The Honb. Supreme Court has relied upon the reported case of Rashid Ahmad versus State PLD 1972 SC 271 in which it was held that if a mandatory condition for the exercise of a jurisdiction before a court, tribunal or authority is not fulfilled, then the entire proceedings which ~
follow become illegal and suffer from want of jurisdiction. Any orders passed in continuation of these proceedings in appeal or revision equally suffer from illegality and are without jurisdiction. (ii) Ms. Aluminum processing Industrial International (Pvt) Ltd. Versus Pakistan through Chairman Central Board of Revenue 2011 PTD 2128. In this case the Honb. High Court of Sindh had held that the authority dealing with a matter must possess the jurisdiction to deal with the same and if such authority does not have the power the initiation of proceedings are liable to be quashed being coram-non-judice and non-est in the eyes of the law. (iii) Collector of Customs, Lahore versus South East Trading 2014 PTD 199 (DB Lahore High Court). In this case it has been held with reference to section 179 (1) of the Customs Act 1969 that any transgression to the responsibility assigned within the parameter of section 179 (1) of the Customs Act would render the entire exercise of authority to be ab-initio void and illegal. (iv) Mis Tanveer Weaving Mills through Director Finance versus Deputy Collector Sales Tax and 4 others 2009 PTD 762 (SB Lahore High Court) 12. We will first examine the point of jurisdiction raised by the learned Representative of the appellant. Section 34 of the Sindh Sales Tax on Services Act, 2011 (hereinafter referred to as the Act) provides that for the purpose of this Act, the Board may, by notification in the Official Gazette, appoint any person in relation to any area, any case or class of cases specified in the notification to act as an officer of the Board. Section 35 of the Act provides that any officer of the SRB appointed under section 34 shall exercise such powers and discharges such duties as, are conferred or imposed upon him under this act and rules made thereunder. Section 36 of Act provides that Board may, by notification in the official gazette and subject to such limitations or conditions as may be specified therein, empower by. name or designation authorize the Officers of SRBto exercise powers.
The perusal of the above provisions of the Act it appears that the powers can be entrusted upon the officers of SRB by the Board by notification in the official gazette. The First notification in exercise of powers under section 34 of the Act was issued by the Board on 26.09.2011 by which the powers and functions of officers of SRB were assigned to the officers (Assistant Commissioners) specified in the column (2) of the notification in respect of functions and description, specified in column (3) of the notification. The notification is silent about the officer who can exercise jurisdiction in relation to withholding tax. The Show Cause Notice was issued by Mr. Kaleemullah Siddiqui Assistant Commissioner SRB on 18.06.2013 whereas the other notification available is dated 15.07.2013 by which. notification the Officers of SRB were assigned function and jurisdiction and entry NO.4 relates to withholding Tax and AC SST Unit 21 was assigned jurisdiction. At the relevant time when show cause notice was issued there was no notification authorizing Mr. Kaleemullah to exercise jurisdiction. The learned Ac states that since corrigendum to SCN dated 18.06.2013 was issued by her on 15.09.2013 which was not objected hence, the same cannot be objected at subsequent stage. The exercise of jurisdiction under the Act is subject to issuance of notification in the official gazette by the Board without which the officers cannot exercise jurisdiction. The issuance of notification for exercise of jurisdiction appears to be mandatory condition which cannot be waived or ignored. Mere issuance of corrigendum dated 15.09.2013 to show-cause notice dated 18.06.2013 after issuance of Notification dated 15.07.2013 do not cure the defect of jurisdiction in issuance of SCN dated 18.06.2013. The judgment cited by the learned representative of the Appellant and quoted above are fully applicable upon the facts of the case. Since the Show Cause Notice was issued without lawful jurisdiction issuance of corrigendum and passing of order in original and order in appeal have no significance and could not cured the defect. The Honb. High Court of Sindh In the reported case of Aluminum Processing Industrial International (Pvt) Ltd. supra had held that the authority dealing with a matter must possess the ~
jurisdiction to deal with the same and if such authority does not have the power the initiation of entire proceedings are liable to be quashed being coram-non-judice and non-est in the eyes of the law. In the reported case of Rashid Ahmad versus State supra the Honb. Supreme Court had held that if a mandatory condition for the exercise of a jurisdiction before a court, tribunal or authority is not fulfilled, then the entire proceedings which follow become illegal and suffer from want of jurisdiction. Any orders passed in continuation of these proceedings in appeal or revision equally suffer from illegality and are without jurisdiction. The same is the position in this case as the show-cause notice was issued without lawful authority and as such the issuance of corrigendum and passing of order in original and order in appeal do not cure the defect. 13. We are satisfied that the show-cause notice was issued without lawful authority and all proceedings initiated or undertaken in consequence thereof are without lawful authority. The appeal is.allowed and in consequence thereof the order-in-original and orderin-appeal are set-aside and we remand the case to the jurisdiction of the Assessing Officer to decide the case fres after issuance of fresh rp -' show cause notice subject to limitatio provided under section 47 or~ the Act and after providing proper right of hearing to the Appellant. In view of the above, discussion on the other points raised by the learned representative of appellant are not necessary. (Justice R) Nadeem Azhar Siddiqi) CHAIRMAN Karachi. Dated.18.09.2015 Copies Supplied to: 1) The Appellant through Authorized Representative
2) The Deputy Commissioner (Legal) SRB 3) The Assistant Commissioner, SRB for compliance Copy for Information 4) The Commissioner Appeals, SRB 5) Guard File 6) Office File