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Writ Petition No. 176 of 1962, decided on 27th February 1975.

(a) Sales Tax Act (III of 1951)

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--S. 28 read with S. 2(20), proviso-Assessment framed on 14-6-1961 for assessment year ending 31-3-1961 (after four years)-Held, not barred by time.-[Limitation].

Hossein Brothers (Pak.) Ltd. v. Sales Tax Officer, Companies P L D 1965 Dacca 28 and Commissioner of Sales Tax, North Zone (West Pakistan), Lahore v. Messrs Hilal Tanneries. Lahore Tax Reference No. 15 of 1965 ref.

Commissioner of Sales Tax v. Messrs Ansar Textile Mills, Lahore P L D 1966 Lab. 505 fol.

(b) Sales Tax Act (III of 1951)-

-- S. 28 read with S. 23-Imposition of penalty-Order imposing penalty passed contemporaneously with main order of assessment Separate show-cause notice, held, not necessary in connection with such a consequential order passed in presence of assessee in same proceedings.

Javaid Hashmi for Petitioner.

Sh. Abdul Haq and Muhammad Afzal Lone (absent on 3-2-1975) for Respondents.

Dates of hearings 30th, 31st January, 3rd and 6th February 1975.

The Sales Tax Officer (Investigation), Lahore, respondent No. 1, vide his order dated 14-6-1961, created a demand for Rs. 50,332 under section 10(3) of the Sales Tax Act, 1951 (hereinafter called the Act) for the assessment year 19 6-57 upon the petitioner firm, and by another order passed on the same date, viz. 14-6-1961, imposed upon it a penalty of Rs. 20,000 under section 33(1)(a) of the Act. By this writ petition the validity of these two orders is questioned.

2. Several grounds, including those of Constitutional nature, were taken in the wait petition, but as these questions have since been settled by the judgment of the Supreme Court in Messrs Noorani Cotton Corporation v. The Sales Tax Officer "A" Ward, Lyallpur (P L D 1965 S C 161) only two contentions have been pressed before me, namely

(a) that the impugned assessment was barred by time, because the period in which the assessment could be framed under section 28 of the Act was four years from the end of the assessment year. In so far as the assessment year in this case ended on 31-3-1957 the assessment could be framed at the latest by 31-3-1961, hence the assessment framed on 14-6-1961 was out of time; and

(b) that the order imposing the penalty had been passed without issuing notice to the petitioner firm and providing it with an opportunity of being heard, hence it was a nullity.

3. In reply, so far as the first contention is concerned, it is submitted that on account of the proviso added by the Finance Ordinance, 1959 XV of 1959) to the meaning of the word "year", defined by subsection (20) of section 2 of the Act "that as respects the period beginning on the first day of April 1959, and ending on the thirtieth day of June 1960, the said period shall be deemed to be a "financial year" and all the provisions of this Act shall be construed accordingly," the financial year 1959-60 will be deemed to have been extended to a year of fifteen months ending on 30th June 1960 instead of 30th March 1960, therefore, the next financial year became the year beginning on 1-7-1960 and ending on 30th day of June 1961. The assessment framed on ;14th June 1961 for the assessment year 1956-57 would, therefore, be within 'time. Attention is also invited to section 8(4) of the Finance Act, 1964 (V of 1965), whereby section 28 of the Sales Tax Ac was amended in the following terms :---

"Section 28 shall be renumbered as subsection (1) of section 28, the proviso to the said subsection (1), shall be omitted and after said sub section (1), the following new subsection shall be added and shall be deemed to have been added on the thirty-first day of March 1955, namely :-

(2) Notwithstanding anything to the contrary contained in sub section (1), the assessment for the tax payable for any one quarter or more quarters than one of the period beginning on the first day of April 1954, and ending on the thirtieth day of June 1961, may be made at any time before the thirtieth day of June 1965, after issuing a notice to the assessee and making such enquiry as the Sales Tax Officer considers necessary and no assessment or re-assessment made, any other proceeding taken or notice issued shall be called in question by any Court, tribunal or any authority merely on the ground that at the time the assessment or re-assessment was made, proceeding taken or notice issued the time within which such assessment or re-assessment should have been made, proceeding taken or notice issued under this section, as in force before its amendment, had expired."

4. On the above submissions it is argued that the assessment has been framed within limitation. Reliance has also been placed on Hossein Brothers (Pak.) Ltd. v. Sales Tax Officer, Companies (P L D 1965 Dacca 28) and. Commissioner of Sales Tax v. Messrs Ansar Textile Mills, Lahore (P L D 1966 Lah.505).

5. As for the other contention, it is submitted that the second order dated 14-6-1961 is a consequential order and was passed at the same time as the main order and the petitioner firm was duly heard before it was passed. In these circumstances, no separate show-cause notice was necessary, before passing the said order.

6. In his final reply, the learned counsel for the petitioner firm submitted that a different view had been taken by this Court of the proviso added to subsection (20) to section 2 to that taken in Hossein Brothers (Pak.) Ltd. v. Sales Tax Officer, Companies, in a recent case entitled Commissioner of Sales Tax, North Zone (West Pakistan), Lahore v. Messrs Hilal Tanneries, Lahore (Tax Reference No. 15 of 1965), decided on 12-7-1973. In that case the assessment for the charge year 1957-58 made on 20th May 1962 was found to be barred by time and the view taken in Hossein Brothers (Pak.) Ltd. v. Sales Tax Officer, Companies was dissented from. The learned counsel further pointed out that by section 7(10) of the Finance Act, 1973 (Act L of 1973), sub sections (2) and (3) of section 28 have been omitted. Hence no reliance can be placed on the, provisions of subsection (2) of section 28 of the Sales Tax Act.

7. After having carefully considered the submissions of either side I consider that there is no force in this petition. The question which falls for determination is identical to the question that arose in Commissioner of Sales Tax v. Messrs Ansar Textile Mills, Lahore, and the following passage from that judgment may be reproduced hereunder with advantage

" The proviso to clause (20) of section 2 of the Sales Tax Act makes it clear that the definition of the "year" must yield to the context and on account of this expressed provision of the law the period of limita tion mentioned in section 28 has to be construed accordingly. Their Lordships of the Supreme Court have remarked in Nagina Silk Mill's case that the limitation seems to have extended by three months but only in respect of one assessment year, I.e., 1954-55 but the attention of the Supreme Court was not invited to the definition of the "year" as amended by Finance Ordinance of 1959 which governs the definition of the "year" in section 28 also, nor the definition of term "year" was subject-matter of interpretation before their Lordships. The proviso to section 28 is not an independent provision but has to be read subject to the definition clause where the year beginning on the first day of April 1959, and ending on the 30th day of June 1960 has been defined as a financial year. No doubt the proviso to section 28 has extended the period of limitation by 3 months in respect of the assessment year 1954-55 but a similar extension for subsequent year was not necessary because by virtue of the proviso to section 2(20) the financial year 1959-60 ended on the 30th day of June 1960, instead of 30th day of March 1960. Therefore, the next financial year became the year beginning on the first day of July 1960, and ending on the 30th day of June 1961. In the case of the financial year 1959-60 it will be deemed to have been extended to a year of 15 months ending on the 30th of June 1960. On a careful perusal of the two provisos, already referred to, we are of the opinion, that the Legislature has expressed in clear terms their intention that the year of 1959-60 will be a year of 15 months. The "year" under section 28 of the Sales Tax Act on the simple construction of the language is "financial year". The limitation, therefore, stands automatically extended by three months and as such the assessment of the respondent for the charge year 1957-58 made on the 11th of April 1962, was within the period of four years."

The above-mentioned judgment of a Division Bench of this Court, which in my humble opinion lays down the correct law, was not noticed in the case of Commissioner of Sales Tax, North Zone (West Pakistan), Lahore v. Messrs Hilal Tanneries, Lahore (Tax Reference No. 15 of 1965), decided on 12-7-1973.

8. So far as the omission of subsections (2) and (3) of section 28 are concerned it has no effect. The action was already complete and had taken effect. Under the provisions of section 6 of the General Clauses Act (X of 1897), the repeal of a law shall not affect the previous operation of any enactment repealed. or anything duly done thereunder. Hence the omission in 1973 of subsection (2) of section 28 was immaterial. In fact Act V of 1965 had outlived its utility and served its purpose. It was superfluous and the provisions of the Finance Act L of 1973, therefore, merely performed an act of scavenging.

9. So far as the point regarding hearing before the imposition of penalty is concerned, I agree with the learned counsel for the respondents that in connection with an order passed contemporaneously with the main order and in fact as a consequence of it, issuance of any separate show-cause notice was not necessary. It would indeed be too much to demand service of a show-cause notice from the Sales Tax Officer in connection with a consequential matter, when the assessee is sitting across the table and the impugned order as well as the consequential order is being passed in the same proceedings.

10. The result is that this writ petition fails and is hereby dismissed with costs.

S. Q. Petition dismissed.

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