Appeal Case No.STA-711-A/PB of 2002, decided on 5th October, 2002. Versus Appeal Case No.STA-711-A/PB of 2002, decided on 5th October, 2002.

S. M. KAZIMI, MEMBER (TECHNICAL). ‑‑‑This judgment disposes of the appeal filed by Messrs SAC Group of Industries Ltd., Hattar, against the Order‑in‑Original No. 11 of 2002, dated 20‑3‑2002 passed by the learned Additional Collector of Customs (Adjudication), Peshawar.

2. Briefly, the facts of the case are that while auditing the record of Messrs SAC Textile Mills Ltd., Hattar, the audit team of the Directorate General of Audit Revenue Receipt (DGARR), Lahore, observed that during the period from 11/98 to 4/99, the said registered person had made supplies of sales taxable goods to Messrs Crescent Textile Mills Ltd., Faisalabad, free of sales tax under S.R.O. 826(I)/98, dated 21‑7‑1998 despite the fact that the operation of the said notification had been suspended by the Central Board of Revenue vide its OMC. No.2(19)/STM/98, dated 7‑12‑1998, resulting in short‑realization of sales tax amounting to Rs.6,222,171. Vide Notice C. No.ST/Audit/65/99/5124, dated 23‑6‑1999, the Additional Collector of Sales Tax, Peshawar required Messrs SAC Textile Mills Ltd. Hattar, to show‑cause why the said amount of Rs.6,222,171 alongwith the additional tax due, should not be recovered from them besides penal action under section 33 of the Sales Tax Act, 1990. On creation of Adjudication Collectorates, the Additional Collector (Adjudication) heard Mr. Ali Ahmad, Assistant Manager of Messrs SAC Textile Mills Ltd., Hattar, and found that the Special Exemption Certificate of Messrs Crescent Textile Mills Ltd. was not re‑verified and was, therefore, doubtful...He, therefore, passed the impugned order holding that amount of Rs,6,222,171 was payable by Messrs SAC Textile Mills Ltd., Hattar, alongwith the additional tax due thereon. He also imposed a penalty of 5% of the tax involved on Messrs SAC Textile Mills Ltd., Hattar, under section 33 of the Act. Hence this appeal.

3. During the course of hearing before us, the learned counsel for the appellant stated that Notification No.S.R.O. 826(I)/98, dated 21‑7‑1998 was rescinded with effect from 1‑7‑1999 vide Notification No.543(I)/99, 7‑5‑1999. He produced Letter C. No. IV‑ST(4)107/98/1291, dated 24‑6‑2002 from the Assistant Collector, Audit‑IV and 'Registration, Faisalabad, confirming that the Special Registration Certificate No.08‑01‑5209‑000‑02 was issued on 31‑10‑1998 by the Collector to Messrs Crescent Textile Mills Ltd. Faisalabad, under S.R.O. 826(I)/98, dated 21‑7‑1998. He argued that supplies made by the appellant, to Messrs Crescent Textile Mills Ltd. during the period from 31‑10‑1998 to 30‑6‑1999 (i.e. the validity of that Special Registration Certificate No.8‑1‑5209‑000‑02) was free of sales tax under the then provisions of section 60 of the Sales Tax Act, 1990, read with S.R.O. 826(I)/98 dated 21‑7‑1998. He prayed for setting aside the impugned order and for acceptance of the appeal.

4. The learned Law Officer stated that supplies made after suspension of the operation of the said notification by the Central Board of Revenue on 7‑12‑1998 was not lawful. In reply to a query, he admitted that S.R.O. 826(1)/98, dated 21‑7‑1998 was rescinded with effect from 1‑7‑1999 vide notification. No. S.R.O. 543(I)/99, dated 7‑5‑1999. He prayed for rejection of appeal at least for the period from 7‑12‑1998 i.e. the date when the operation of S.R.O. 826(I)/98, dated 21‑7‑1998 was suspended by the Central Board of Revenue.

5. Having heard the parties and on perusal of record of the case, we find that the provisions of section 21 of the General Clauses Act, 1897 (No. X of 1897) state as follows:‑‑‑.

"(21). Power to make to include power to add to amend vary or rescind orders, rules or bye‑laws. ‑‑‑Where by any General Act or Regulation, a power to issue notification, orders, rules or bye‑laws is conferred, then that power includes a power, exercisable in the like manner and subject to the like sanction and conditions (if any), to add to, amend, vary or rescind any notification, orders rules or bye‑laws, so issued."

6. The aforesaid provisions of section 21 of the General Clauses Act, 1897, clearly show that only Federal Government, through a notification in the official Gazette of Pakistan, could validly add to, amend, vary, or rescind the Federal Government's Notification No. S.R.O. 826(I)/98, dated 21‑7‑1998 issued in exercise of the powers conferred by the then provisions of section 60 of the Sales Tax, 1990. Therefore, it is only the Federal Government's Notification No. S.R.O. 543(I)/99, dated 7‑5‑1999 which validly rescinded the Federal Government's Notification No. S.R.O. 826(I)/98, dated 21‑7‑1998. Central Board of Revenue's Letter C. No.2(19) STM of 1998, dated 7‑12‑1998 is only an administrative instruction to its Collectors informing that S.R.O. 826(I)/98, dated 21‑7‑1998 is under review by the Federal Government and, therefore, no new/further Special Registration Certificates should be issued by the Collectors under S.R.O. 826(I)/98. In fact Central Board of Revenue's that letter states that the Special Registration Certificate issued under S.R.O. 826(I)/98 should not exceed 12 (i.e. 17 Special Registration Certificates issued by various Collectors minus the 5 such Special Registration Certificates surrendered by the parties). Again in paragraph 3 of C.B.R.'s subsequent Letter C. No.3(28)STP/98, dated 2‑4‑1999, it was clarified that "since the 12 persons, mentioned in Col (6) of paragraph 5 of the Board's aforesaid letter, dated 7‑12‑1998 have acquired a vested right for the year 1998‑99 in terms of rule 3(5) of the S.R.O. 826(I)/98, they have the option to continue availing of the benefits thereof until 30‑6‑1999. However, no new Special Registration Certificate should be issued under S.R.O. 826(I)/98." C.B.R.'s aforesaid letters do not deny the benefits of S.R.O. 826(I)/98, dated 21‑7‑1998 to the .12 Special Registration Certificate holders if they acquired such certificate under the said S.R.O. 826(I)/98 on any date prior to 7‑12‑1998 and did not surrender it prior to 1‑7‑1999 when the said S.R.O. 826(I)/98 stood rescinded in terms of S.R.O. 543(1)/99 in accordance with section 21 of the General Clauses Act, 1897. Since the prosecution have not shown any case that Special Registration Certificate No.8‑1‑5209‑000‑02 issued by the Collector of Sales Tax, Faisalabad, on 31‑10‑1998 in favour of Messrs Crescent Textile Mills Ltd., Faisalabad under S.R.O. 826(I)/98, dated 21‑7‑1998 was surrendered or cancelled by the said Collector of Sales Tax, Faisalabad on any date before 1‑7‑1999, the impugned order has no force of law and is set aside accordingly. The appeal stands disposed of as accepted.

7. Inform all concerned accordingly.

8. Announced.

C.M.A./557/Tax(Trib.) ???????????????????????? ??????????????????????????????????? Appeal accepted.