KARACHI: A custom appellate bench of High Court of Sindh on Monday vacated 13 out of 14, subject matter of a petition filed by M/s. Micro Innovations and Technologies (Pvt) Ltd being time barred while 14 th notice which was issued in time was up-held with the direction to the respondent to file a proper reply before the custom authority concerned.
As per details fourteen (14) show cause notices issued to the petitioner, all dated 15.5.2020, have been challenged on the ground that they were time barred and thus illegal and are liable to be struck down.
The petitioner is a private limited company engaged in dealing in I.T equipments. During the period 2014-2015 the petitioner imported certain items, which were duly processed by the Department.
However upon the directives of Senate Standing Committee on Commerce and Textile (hereinafter referred to as the Committee) reported dated 23.01.2019.
The Department proceeded to reassess the goods declaration made by the petitioner, by exercising its powers under Section 32 of the Customs Act, 1969. The petitioner, through various show cause notices was called upon to show cause that as to why the amount of taxes mentioned in those show cause notices may not be recovered, in addition to the penal action proposed in the said notices.
Qazi Umair Ali, Advocate has appeared on behalf of the petitioner and at the very outset stated that from the perusal of these show cause notices it is apparent that these were issued on 15.5.2020, which pertained to the goods declaration made by the petitioner imported during the years 2014-2015, hence according to him without going into the merits of the case these show cause notices are time barred and may therefore be vacated. Learned counsel in support of his above contention has placed reliance on a number of cae laws
Mr. Muhabbat Hussain Awan, Advocate appearing for the Department stated that none of the show cause notices were time barred as these were issued to the petitioner on the directives of the Committee dated 23.1.2019, which is to be considered as the date of detection of tax evasion by the petitioner. He stated that the department has the authority under the provisions of Section 32(5) of the Act, to reopen a matter and to require from the petitioner to pay the evaded amount of duties and taxes within five years of the date of the said detection therefore, according to him the notices were timely issued and the petitioner was obliged to file a reply in respect of the said show cause notices.
The counsel for the department further stated that the instant petition is not maintainable and the petitioner may be directed to give a proper reply to the show cause notices issued to the petitioner. He stated that the petitioner has the remedy to file an appeal under 4 Section 193 of the Act in case an assessment or an order-in original is passed by the customs authorities against the petitioner. He therefore, stated that the petitioner may be directed to give proper reply of the show cause notices and to join the adjudication process before the concerned Collectorate and this petition being not maintainable may therefore, be dismissed with cost.
G.M. Bhutto, Assistant Attorney General has adopted the arguments as advanced by Mr. Muhabbat Hussain Awan, Advocate.
The bench after detailed hearing and perusing the record, law and the decisions relied upon by the learned counsel for the petitioner reached to the comnclusion that impugned show cause notices were issued on the directives of the Committee dated 23.1.2019 as the said Committee vide its meeting dated 23.1.2019 has come to the conclusion that the multinational I.T companies should be summoned with regard to under invoices of I.T products imported by them.
It is also noted that apart from this observation of the said Committee no credible information was available with the Department to issue show cause notices to the present petitioner pertaining to different consignments imported by them during the period 2014-2015, as mentioned in para-8 above, 6 for proceeding against the petitioner under Section 32 of the Act for the alleged nonpayment of the duties and taxes.
The bench disagree with Mr.Awan, counsel for the department who submitted that limitation has to be counted from the date of detection, as if this interpretation placed by Mr.Awan, is considered and accepted then the very purpose of providing limitation under Section 32(2) of the Act would become redundant and nugatory. It is a settled proposition of law that no provision of the law is to be read either in isolation or such interpretation be made which would render the other provisions as redundant or nugatory.
In our view Section 32 of the Act do not give powers to the Department that if they detect some error in the G.D of the petitioner even after passage of the limitation period let us say after 10 years they have the authority under Section 32 of the Act to issue show cause notice upto five years from the date of the said detection, which may be falling beyond five years of the relevant date. We are afraid we cannot accept or entertain such type of interpretation placed by Mr. Awan nor this could be the intention of the legislature so as to draft the law in such a manner through which an uncertain position would arise. In our view the obvious intention of the legislature was not to count the limitation period of five years from the relevant date; meaning thereby that the law framers were fully conscious of the fact that even in the event of reopening any matter or issuing show cause notice upon a person time limit has to be counted as five years from the relevant date and not from the detection date, as ascribed by Mr. Awan, the bench held.
The bench said that in its view, for all practical purposes a show cause notice has to be issued within five years of the relevant date and where it is found that the said show cause notice is issued beyond this stipulated time the said show cause notice has to be considered as time barred and of no legal effect. It may be noted that issuance of a show cause notice in a timely manner is a sine uo-non for assuming the jurisdiction vested under the provision of Section 32 of the Act by the Department and where the said show cause notice is issued beyond this period, it has to be considered and declared as null and void.
The bench also referred to an earlier decision by a division bench of SHC wherein it was categorically observed that proceeding culminating in respect of a time barred notice would render the entire proceedings as extinguishable.
It is also a settled proposition of law that in case where a show cause notice is time barred or has been issued as an abuse of process of law the said show cause notice is liable to be vacated (Commissioner Inland Revenue and others .Vs. Jahangir Khan Tareen and others (2022 SCMR 92). 9 16. Thus in light of what has been discussed above, we are of the view that all the show cause notices issued, except the show cause notice which pertains to the G.D of 26.5.2015 (available at page 81-83 of the present petition and duly mentioned in para-8 above) are time barred hence vacated and are declared to be of no legal effect. However, so far as the show cause notice pertaining to the G.D dated 26.5.2015 is concerned the same is found to be within the stipulated time, thus the petitioner is directed to file a proper reply in respect of the said show cause notice in accordance with law, the bench ordered.