WAK LIMITED, MULTAN ROAD, LAHORE Versus COLLECTOR CENTRAL EXCISE AND SALES TAX LAHORE (NOW COMMISSIONER INLAND REVENUE LTU, LAHORE)

1. MUHAMMAD SHAFI SIDDIQUI, J.--- The primary question which requires prior consideration is as to whether the timeframe provided for passing orders, post issuance of show cause notices was followed as required under the relevant statutes.

2. We have heard the learned counsel for the parties and perused the material available on record. The record reflects as under:

2. Civil Appeal No. 634/2018 [relating to sales tax recovery]:

3. Show Cause Notice Date

4. :

5. 30.06.2000

6. Corrigenda Dates

7. :

8. 14.11.2000 and

9. 18.05.2002

10. Period between SCN and 1st Corrigendum

11. :

12. 136 days (4 months and 14 days)

13. Period between SCN and 2nd Corrigendum

14. :

15. 686 days

16. Period in between Corrigenda

17. :

18. 1 year 4 months 17 days (549)

19. Order-in-Original passed on

20. :

21. 02.02.2001

22. Period between SCN and Order-in-Original

23. :

24. 216 days

25. Civil Appeal No. 635/2018 [relating to excise duty]:

26. Show Cause Notice Date

27. :

28. 07.09.1999

29. Corrigendum Date

30. :

31. 18.05.2002

32. Period between SCN and Corrigendum

33. :

34. 2 years, 8 months and 10 days.

35. Order-in-Original Passed on

36. :

37. 25.01.2000

38. Period between SCN and Order-in-Original

39. :

40. 139 days.

41. Civil Appeal No. 636/2018 [relating to sales tax recovery]:

42. Show Cause Notice Date

43. :

44. 12.12.2001

45. Order-in-Original passed on

46. :

47. 20.04.2002

48. Period between SCN and Order-in-Original

49. :

50. 128 days

51. Despite two corrigendum issued, the events to invoke either sections 36(1) and 36(2) of the Sales Tax Act, 1990 ( ST Act ) were not disclosed. It is only in the second corrigendum that section 36(1) of the Act with disclosing event required under the relevant law, was introduced for the first time. Nonetheless, the record reflects that under second proviso to section 36(3) of the Act, the order under the relevant subsection shall be made within 120 days of the issuance of the show cause notice or within such extended period as the Commissioner may, for the reasons to be recorded in writing, fix, provided that such extended period in no case shall exceed 60 days. In the first chart, the show cause notice was issued on 30.06.2000 and in consideration thereof the order in original was passed on 02.02.2001, which is much beyond the timeframe required under the law. However, in appeal (Civil Appeal No. 636 of 2018) (3rd chart), relating to sales tax there is no extension in timeframe within section 36(3) of the Act; thus, the order in original should have been passed in 120 days. The orders in original were time barred.

3. Civil Appeal No. 635 of 2018 (2nd chart) related to excise duty under Central Excises Act, 1944 ( the Act ) and related rules. Timeframe provided in the Act and related rules for passing order post show cause notice is 45 days under section 33(3), which is flouted, hence the order in original in the appeal too is time-barred.

4. For what has been discussed above and in view of the judgment of the Larger Bench in Wak Case 1 , the provisions prescribing timeframe for passing order in original, consequence to a show cause notice, are held to be mandatory. The orders-in-original, were barred by time and hence, in view of the dicta laid down, the consequential effect must also fail. Applying the ratio of the cited judgment passed by the Larger Bench, these appeals are allowed and the impugned judgments are set-aside.

52. UN/W-8/SC Appeals allowed.

53. 1 Wak Limited Multan Road, Lahore v. Collector Central Excise and Sales Tax, Lahore (2025 SCMR 1280).