S. T. AS. NOS. 46 (KB), 50 (KB) AND 67 (KB) TO 70 (KB) OF 1979-80, DECIDED ON 18TH DECEMBER, 1982. Versus S. T. AS. NOS. 46 (KB), 50 (KB) AND 67 (KB) TO 70 (KB) OF 1979-80, DECIDED ON 18TH DECEMBER, 1982.

ORDER

1. ABRAR HUSSAIN NAQVI (MEMBER) .‑There are six appeals filed by s private limited company and relate to assessment years 1972‑73 to 1977‑78,

2. The brief facts of the case are that the assessee is a manufacturer of abrasive tools which were liable to payment of sales‑tax. However, the assesses neither filed any return under section 10(1) nor any sales tax was paid. Subsequently the Sales Tax Officer after making enquiries completed the assessments for the years under consideration.

2. Assessment years 1972-73 and 1973‑74.

3. For these years the Sales Tax Officer issued notices to the assessee under section 28 on 11‑5‑1977 to appear before him or. 23‑5‑1977. Another notice was issued on 4‑b‑1977 for the yean 1967‑68 to 19-12‑73 for compliance on 10‑6‑1977. On this date the assessee filed detailed reply to the notices in which it was claimed that the goods manufactured by him were exempt from the payment of sales tax. The assessing officer duly considered the assessee's plea but rejected it on the ground that the assesses had taken up the matter with the Central Board of Revenue and the latter rejected the claims of the assesses. Admittedly assessments were completed for both then years on 18‑6‑1978 which would be barred by tine if subsection (7) is applied to these assessments. The alternate agreement of the counsel, was that even if the assessment be considered under swoon 28 it is ab initio void as notice under section 28 is a condition precedent for initiating proceedings under that section. Notice under section 28 could only be given to Form S.S.T. 15 which being statutory notice prescribed that the proceedings initiated under section 28 were 'illegal. '

3. The assessee has taken up two grounds to attack the impugned orders. Firstly that it was the case of accepted assessments, therefore, could have been completed under section 28 but the assessing officer passed the order under section 10(3). Secondly under section 28 notice could be issued under S.S.T. 1S under which minimum of 35 days notice was to be given to the assesses. In the notice issued by the assessing officer only 12 days notice was given. In regard to the first plea the learned counsel argued that section 10 and section 28 ere two independent sections and assessments could either be made under section 10 or under section 28 in the given circumstances of the case. The assessing officer finalised the assessments under section 10, subsection (7) of which limited the period within which the assessments could framed by the assessing officer." Under hat subsection the assessment could be made within three years from the end of the year in which the sales were. made. Admittedly assessments were completed for both theca years on 18‑6‑1978 which would be barred by time if subsection (7) is applied to theta assessments. The alternate argument of the counsel was that even if time assessment be considered under, section 28 it is ab initio void as notice under section 28 is a condition precedent for initiative proceedings under that section. Notice under section 28 could only be given in Form S.S.T. 15 which being statutory notice prescribed 35 minimum days to be given to the assessee. The notice which bad given only 12 days to the assesses was, therefore, illegal and all the subsequent proceedings taken by the Sales Tax Officer were, therefore void ab initio.

4. We have given due consideration to the arguments of the learned counsel but we are not persuaded to agree with him for the reasons to follow. Admittedly the assesses did not file any return under section 10(1) nor any tax was paid. Therefore, this was the case of escaped assessment The only provision under which an assessment in such circumstances could be made is section 28. Section 10 is in regard to normal assessment where the assessee known and he either filed his return or has not filed return. Assessment proceeding in respect of escaped assessment, therefore, could only be initiated and completed under section 28. This being so mere fact that the Sales Tax Officer has mentioned section 10 in the assessment order does not change either the factual position or legal effect on it. Here misdiscription of a section in an order does not change the nature of the order nor does it invalidate the proceedings. If an authority is needed the case of N. B. v. S. (P L D 1970 Lah. 770) and may be cited. Since essentially this was a case of escaped assessment therefore, for all intents and purposes the assessment could be and would deemed to have been completed under section 28. Therefore, the argument that the bar of limitation provided by subsection (7) of section 10 is attracted in these proceedings has no merits.

4. As for the second contention the only argument taken was that notice was invalid as prescribed number of days had not been given to the assesses. This argument in turn is based on the misconception that S.S.T. 15 is a statutory notice Form and mandatory in nature and its violation invalidates the whole proceedings We have gone through the relevant provisions and sales tax rules and find that section 39 of the Sales Tax Act empowers the Central board of Revenue to make rules to carry out the purposes of the Act. Subsection (2) of that section enumerates various subjects on which rules could be framed. Clause (d) of subsection (2) reads as under :‑

5. "(d) . . generally regulating procedure to be followed and the forms to be adopted in proceedings under this Act."

6. Consequently rules were framed vide Notification No. 20‑6‑1951. Rule 3 defines various words and clause (b) thereof defines the Form as under :‑

7. "'Form' means form appended to these rules."

8. Appended to these rules were form S. S. T. 1 to S. S. T. 14 and each form bad the sanction and backing of the corresponding rule. Various rules mentioned the number of the forms under which certain proceedings were to be taken. The last Form S. S. T. 14 was prescribed under rule 45. There is no rule under which the Form S. S. T. 25 have been prescribed It appears that‑1 the Form from S. S. T. 15 to S.S.T. 25 have been issued by the Central Board of Revenue for general guidance. They have not been prescribed under any Rule. As such these Forms have no legal sanctity behind them in as much the Forms had been defined by rules as those Forms which are appended to these rules. Even otherwise the Form had to be prescribed under section 3 of the Sales Tax Act, stated above none of the sales tax rules have prescribed Form S. S. T. 15 to S. S. T.

25. This being so these forms are neither statutory in nature nor are mandatory in effect so as to invalidate any proceedings if they are violated. Now reverting back to section 28 the proceedings could be initiated in the following circumstances

(i) if for any reason tax has escaped assessment,

(ii) tax has been under assessed,

(iii) or assessed at rate lower than provided under this Act,

(iv) excessive relief or refund has been allowed.

9. The cases of these categories have been broadly divided into two categories

(a) where return has been filed.

(b) other cases.

10. In category (a) those cases are covered in which assessments had been framed which is evident from the plain reading of the clause. In category (b) are the cases where no return had been filed nor any assessment had been framed. The ass's case within first category. Again there are two requirements to initiate the proceedings, firstly notice has to be served and secondly an enquiry has to be conducted. It has been shown above that no statutory Form has been prescribed for the service of notice. Admittedly a notice was served on the assessee and enquiry had been conducted. The assesses was given due opportunity of being beard and a detailed reply was filed by the assessee. The case was duly processed and then assessment was framed after enquiry. The only plea of the assesses was that the goods manufactured by the assessee were exempt from payment of the sales tax. No prejudice was caused to the assessee and, therefore, for all intends and purposes requirement of section 28 had been complied with notwithstanding the fact that the assessing officer by inadvertance or by ignorance of law has misdescribed the section and mentioned section 10 instead of section 28, in the assessment orders. Therefore the plea of the assessee that the required notice of 35 days prescribed under Form S. S. T having not been given the whole Proceedings are vitiated has no legal basis and cannot, therefore, be accepted.

11. For the years 1974‑75 and 1977‑78 no notice under section 28 (in Form 5. S. T. 15) had admittedly been served on the assessee. The proceedings (or re‑opening of the case of the assessee were started by issuing combined notice in Form S. S. T. 24 on 13‑1‑1979 for 27‑1‑1979 for the years 1974‑75 and 1976 77. Another combined notice was issued for the years 1974‑75, 1975‑76 and 1976‑77 in Form S. S. T. 24 on 23‑3‑1979 for 7‑4‑1979. Still another notice in Form S. S. T. 24 was issued by the Sales Tax Officer on 10‑6‑1979 for the years 1977‑78. In reply to these notices the assessee on 8-4‑1979 filed returns and declared sales for the years 1974‑75 at Rs. 5,76,319 for the year 1975‑76 at Rs. 5,19,492 and for the year 1976‑77 at Rs. 4,48,472. However, the assessee claimed exemption from payment of tax in regard to these sales. On 7‑4‑1979 the assesses did appear in reply to the aforesaid notices and also filed written arguments claiming exemption from payment of tax. The Sales Tax Officer however vide his order, dated 7‑4‑1979 directed the assesses to file return in compliance of which the assessee filed return for the years 1974‑75, 1975‑76 and 1976‑77 on 8‑4‑1979 declaring sales as noted above. Assessments for these years were completed by the Sales Tax Officer on 25‑6‑79 and on the heading of the assessments it was mentioned as assessed under section 10(3).

12. The learned counsel has objected to theft assessments on three ground, (1) that assessment was made under section 10(3) which was barred by time and section 10(7) of the Act, t2) quarterly returns are required to be filed by assesses but yearly returns halve been filed by him for the years 1974‑75 to 1976‑77 and therefore no assessment could be made on the basis of the returns, (3) no notice under section 28 having been issued the proceedings were ab initio volid. As for the first objection it has already been dealt with by while discussing the appeals for the years 1972‑73 and 1973‑74. There could be no doubt that this case of escaped assessment and, therefore, the assessment could only be made under section 28 and not under section 10. But mo wrong quotation of section does not invalidate the assessment proceeding and the same argument and reasons as have been given for the years 1972‑73 and 1973‑74 held good for these years as well. As for the filing of return since we have already held that assessments could not be framed under section 10 therefore, this objection becomes irrelevant inasmuch as the act of returns has no connection with the legality or otherwise of the proceedings under section 28. Section 28 does not require the Sales Tax Officer make direction for filing of return. The act of the assessing officer could be ignored an superfluous. However, it should not be taken to mean that if the Sales Tats Officer dad require the assesses to file returns that would in any way invalidate the proceedings under section 28. Section 28 empower the assessing officer to make such enquiry as be considers necessary. Therefore, in process of making an enquiry if he directs the assessee to file certain statement or even returns it could not be considered that the Sales Tax Officer had exceeded his powers under section 28. In this context the filing of returns whether quarterly or yearly loses its significance. In regard to the last objection the precise question which emerges is as to whether in the facts and circumstances of the case there was sufficient to compliance to section 28 of the Sales Tax Act. We have already discussed at length that Form S. S. T. 15 is not a statutory horn. As a matter of fact no form is prescribed under Sales Tax Rules for issuing notice under section 28. The wording in section 28 (1)(a) is too wide to em power the Sales Tax Officer to issue such notice in such forms and make such enquiry as be deems fit. There are two requirements which have to be fulfilled by the S. T. O. Firstly the notice is to be served. Since no period of limitation has been prescribed, the notice should give a reasonable time to assess, Secondly an enquiry has to be conducted. The S. T. O. issued the notice in form S. S. T. 24, photostat copy of which has been produced by them, and is reproduced below

FINAL NOTICE

13. FORM SUMMONS UNDER THE SALES TAX ACT, 1951.

14. To,

15. Messrs National Commercial and Industrial Enterprises Ltd., Hyderabad.

16. Whereas your attendance is necessary to give evidence.

17. Whereas the following documents,

18. All books of accounts for sales tax are required with reference to an inquiry under Sales Tax Act, 1951 now pending before me.

19. Assessment years for 1974‑75, 1975‑76, 1976‑77 and 1977‑78, you are. hereby summoned to appear in person before me on 18th day of June, 1979 at 10 o'clock at Hyderabad (Place) (and, not to depart thence until permitted by me.)

20. Given under my hand and seal this 10th day of June.

21. (Sd.)

22. Official Designation

23. Sales Tax Officer,

24. Cos. Circle‑I, Hyderabad.

25. From perusal of the above notice it is clear that the assessee was not prejudice in any way by the issuance of notice in Form S. S. T 24. On receipt of the aforesaid notice the assessee knew as to what was the nature of the proceeding taken against him and he did make detailed reply to the aforesaid notice and for the year 1974‑75 to 1976‑77 be also filed returns on the direc tion of the assessing officer. The assessee's only plea before the assessing officer was that the sales made by him were exempt for the payment of salon tax. Therefore, prejudice was caused to the assesses. The assessing officer completed the assessment after hearing the assesses and after conducting enquiry. The provision of section 28 were thus duly complied with by the Sales tax Officer. The remarks on the service notice at the starting point of the proceedings under section 2 are that the limitation point for the completion of assessment `tarts from the service of the notice and, therefore, the initiation of proceedings under section 28 is sine qua non.

26. We now come to the case law which has been relied upon by the learned counsel. The main reliance was placed by him on the case decided' by the Tribunal and reported as (1970) 37 Tax.

52. In that case it was held as under :‑‑

27. "Therefore, in order to assure jurisdiction for such escaped assessment notice under section 26 to condition precedent. In the instant case however no notice under section 28 of the Act was issued to the respondent at any stage of the proceedings still their assessment was framed under section 19(3). We are clear in our mind that even if the return was filed and notice on Form S. S. T. 24 was complied with the absence of jurisdiction persisted and rendered the whole structure of proceeding void ab initio. For reaching this conclusion we back on the decision of the Tribunal reported as (1962) 6 Tax. 92 (Trib.) Moreover, this precise issue was decided by the learned Judge of the Lahore High Court in Muhammad Hussain's case. Therefore the earlier decision of the Tribunal reported as (1970) 21 Taxation 21 (Trib.) had little applicability as the facts are distinguishable inasmuch as in the present case respondent was under no obligation to f le return."

28. As for the proposition that notice under section 28 is condition precedent for assuming jurisdiction for the escaped assessment there could be hardly any dispute. We have already held that notice under section 28 is sine qua non for assumption of jurisdiction under section 28. The case relied upon by the Tribunal in the case under reference also support this view. However, the observation of the Tribunal in the case quoted above that even if the, notice in S. S. T. '24 is issued and complied with, still the absence of jurisdiction persists, does not find support from any of the authorities relied upon. In the case reported as (1962) 6 Taxation 92 (Trib.) the facts of the case were that notice was issued by the Sales Tax Officer, B‑Ward while the jurisdiction vested with the Sales Tax Officer, A‑Ward. On objection being taken by the asseseee before the Sales Tax Officer, B‑Ward the file was transferred to Sales Tax Officer A‑Ward, who, without issuing fresh notice completed the assess ment under section 28. It was in that context that the Tribunal held the Assessment as void as the Sales Tax Officer who had jurisdiction to make assessment, did not issue any notice under section 28. Similarly in Muhammad Hussain's case ((1974) 29 Tax. 44) no notice under section 28 had been issued. The Lahore .M Court held as under :‑‑‑

29. Section 28 provides for assessment or re‑assessment within prescribed time if the tax has escaped assessment or has been under‑assessed after issuing notice to the assessee. But evidently in the instant case no such notice under section 28 of the Act was issued to the assessee for payment of tax in question and for this reason as well the assessment made on the assesses with respect to import of partly manufactured goods in question does not seem to have been made in accordance with process of law."

30. It is therefore clear that the facts and circumstances of the present case are entirely different. Even in the case reported as 37 Taxation 5.2, it is not cleat as to whether notices on Form S. S. T. 24 were issued or not. It appears that the observation made by the Tribunal .was in the nature of obiter dictum. The relevant case was in fact (1970) 21 Taxation 21 (Trib.). In that case the facts are absolutely identical as in the‑ present case. Therefore, that case still holds the field notwithstanding the observation of the Tribunal in the case reported as 37 Taxation 52. In that case too the assessing officer while re‑opening the case under section 28 issued notice in Form S. S. T.

24. Before the Tribunal for the first time legal objection was taken that since no notice under section 28 was issued by the Sales Tax Officer he did not acquire the jurisdiction to make the assessment. The Tribunal relying on the case reported as (1966) 13 Tax. 220 held as under :‑

31. "However, according to the learned Judges of the High Court the Form of notices under sections 10(4) and 28 which are statutory form are o: directory nature and mandatory in the sense that departure from the prescribed for will not render the assessment illegal. In the case before the High Court notice had been issued to the assessee in Form S. S. T. 24 requiring his presence or by an A. R. or pleader duly instructed and able to answer ail the questions relating to assessment and to produce all documents relating to assessment. In the view of the High Court sufficient compliance had been made with the relevant provisions of law by issuing this notice and it was ruled that defects in form of notice had no effect on the assessment. Following the High Court's judgment it must be held that in the instant case the Sales Tax Officer has by issuing of notice in Form S. S. T. 24 duly complied with the provisions of law under section 28 of the Sales Tax Act and the validity of assessment could not be successfully challenged on the ground that he had no jurisdiction to assess without issuing notice under section 28."

5. In view of the above discussion we do not find any force in the argument of the learned counsel for all the years under consideration. For the year: 1972‑73 and 1973‑74 notice under section 28 had been issued and since Form; S. S. T. 15 is not a statutory form and in any case is not mandatory in nature therefore, sufficient compliance of section 28 was made. The notice issued; were legal notices and assessment proceedings had, therefore, rightly beer initiated under section 28. For the assessment years 1974‑75 to 1977‑78 also assumption of jurisdiction was rightly acquired by the Sales Tax Officer under section 28 as sufficient compliance of issuing notice, though in Form S. S. T. 2.4, had duly been made, we, therefore, do not find any force in all these appeals which are dismissed.

32. MUHAMMAD MAZHAR ALI (CHAIRMAN). -‑I agree with the reasoning and the order proposed to be passed by my learned brother. Mr. A H. Naqvi, Judicial Member. I would, however, like to add a few word of my own as : have in several appeals, such as. S. T. A. No. 84 KB of 1972‑73, dated 5‑6‑1974 (1976) 35 Tax. 36 (Trib.), S. T. A. No. 337/KB of 1.973‑74, dated 17‑9‑1975, S. T. A. 317/KB of 1973‑74, dated 17‑10‑1975, S. T. A. No. 535/KR of 1973‑74 etc., dated 23‑10‑1975, express ed the view that Form S. S. T 15 having been framed under the Rules made under section 39 of the Act is a statutory Form. I am also fully aware of the fact that some larger Benches of the Appellate Tribunal, as well as West Pakistan High Court (Lahore Seat) in the case reported as (1966) 13 Taxation 220 have taken tae view that Form of Notice (S: S. T. 15) is a statutory Form. Consequently, the period of 35 days prescribed therein was held by the Appellate Tribunal to be a mandatory provision of law. The erstwhile High Court of West Pakistan (Lahore Seat), however, described it to be statutory Form of a directory nature. In these cases it was never urged on behalf of the revenue that S. S. T. 15 was not a statutory Form. It was only in the recent past that Mr. Muqtada Karim, the then Accountant Member of the Tribunal, who had a personal knowledge of it (on account of his having worked in C. B. R.) sitting with no on the Bench, suo motu, pointed out that it was not a statutory Form. It is under the aforesaid circumstances that this issue had again come up for reconsideration and decision before this Larger Bench. The learned counsel for the appellant was unable to urge that Form S. S. T. 1 5 was ever appended to the Sales Tax Rules, 1951 framed by the Federal Government. in exercise of the powers conferred on it by sec!: ~:l, 39 of the Sales Tax Act, 1951. A reference to the Form S. S. T. 1. to h S. T. 15 appended to the Rules manifestly indicates, as rightly posted out b~ my learned brother, the Judicial Member, that each Form has been made with reference to a specific rule. There is no Rule which speaks of Form S.S.T. 15 nor it is appended to the Rules published on page 439 of the Gazette of Pakistan, Extraordinary, 1951 or the Sales Tax Manual, issued under the authority of the Central Board of Revenue, Government of Pakistan the above proposition is elaborated through the following chart

33. Sales Tax Form Made Vide Rule

34. S. S. T. 1 (R) Rule 4(a)

35. S. S. T. 2 Rule 5

36. S. S. T. 3 (R) Rule 4(4)

37. S. S. T. 4 Rule 5(4)

38. S. S. T. 5, S. S. T. 6 Rule 39

39. S. S. T. 7, S. S. T. 8, S. S. T. 14 Rule 45

40. S. S. T. 11, S. S. T. 12, S. S. T. 13 Rule 45

41. S. S. T. 9 Rule 27

42. S. S. T. 10 Rule 31

43. S. S. T. 10‑A Rule 31‑B

44. It may further be noted that Form S. S. T. 15 onwards for the first time appeared in the publication of the Law of Sales Tax in Pakistan by S. M. Raza Naqvi (Second Edition, August 1961). The author has, however, not disclosed the source from which he obtained these Forms nor has he referred to any Issue of the Gazette of Pakistan where these were published. It is also to be noted that Sales Tax Manual issued under the authority of Central Board of Revenue (corrected up to 1st March, 1962) again did not contain S. S. T.

15. Far; let' representatives, as already stated, have been unable to contend that Forms S. S. T. 15 Inwards were ever published in the official Gazette.

45. It is thus now manifestly clear to us that Form S. S. T. 15is not a 'statutory Form and hence the period of 35 days prescribed therein for delivery of the return on receipt of the said notice is not a statutory period. It could, there fore, be curtailed without doing violence to the statutory provision of law.

46. I would further add that the West Pakistan High Court In its aforesaid reported decision has also clearly observed :

47. "No particular form is provided for notice in the section and unlike section 34 of the Act, no reason could be mentioned in it. It is intended that the assessee should have an opportunity of being heard before the assessment is completed, which is provided for both in section 10(4) and section 28 of the Sales Tax Act. Form of the Notice under bath the sections is provided for in the Rules framed under section 39 which, when published in the official Gazette, have effect as enacted under, the Act. The Form will, therefore, be taken as statutory Form, but on the above analysis of sections 10 and 28 they are of directory nature and not mandatory in the sense that a departure from the prescribed Form will render an assessment illegal."

48. The appeals stand disposed of in terms of the order passed by my learned brother.

49. M. A. K. Appeal dismissed.