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S.T.A. No.19/LB of 2003, decided on 8th January, 2003.

----S.2(46)(d)---Value of supply---Under valuation of taxable supplies. and suppression of taxable supply by shortage of stocks were confronted by issuing a show-cause notice claiming sales tax, additional tax and penalties---Adjudicating Officer found that amount recalculated was greater than the amount claimed in the show-cause notice which rendered the show-cause notice a nullity in the eyes of law---Validity---Claim of greater amount than claim in the show-cause notice rendered show-cause notice a nullity in the eye of law---During the adjudication if greater amount was found to be recoverable from a person then the Adjudication Officer was duty bound to issue notice to the person seeking explanation as to why this greater amount should not be recovered from him---Mere greater claim after recalculation did not render the show-cause notice a nullity in the eyes of law rather the law bestowed upon the adjudicating authority to claim such greater amount after giving notice to the concerned person---Order-in-Original was set aside by the Appellate Tribunal with the direction that Adjudicating Officer may issue a notice to the registered person for the amount recalculated by the department and after hearing the registered person decide the matter afresh.

----S.2(46)(d)---Customs Act (IV of 1969), S.25---Value of supply---Value of imported goods would be the value determined by the customs authorities under S.25 of the Customs Act, 1969. Ms. Nya Batool, D.R. and Muhammad Afzal Malik, S.A. for Appellant. Mudassar Shuja for Respondent. Date of hearing: 7th January, 2008.

This Department"s Sales Tax Appeal is directed against an order-in-original dated 16-10-2002 passed by Additional Collector (Adjudication), Faisalabad, whereby the show-cause notice issued to the registered person was vacated. 2. Facts of the case briefly state are that during the audit of Messrs Hassan Impex, discrepancies with regard to under-valuation of taxable supplies and suppression of taxable supply by shortage of stocks were recorded which were confronted to the registered person by issuing a show-cause notice dated 11-7-2002 claiming sales tax, additional tax and penalties. The show-cause notice was contested by the registered person stating that the calculations under the first charge were not correct and that the stock was not short as alleged in the show-cause notice rather it were transit shortages which could be verified. 3. During adjudication the Adjudicating Officer after hearing both the parties as well as noting the instructions of C.B.R. and referring the case-law held that the amount recalculated was greater than the amount claimed in the show-cause notice which rendered the show-cause notice a nullity in the eye of law and on the charge of shortage of stock the adjudicating officer relied upon the short shipment certificate and thus vacated the show-cause notice. The department feeling aggrieved by the said determination has assailed the order-in-original in the present appeal. 4. It is argued by the departmental representative that the registered person had not accounted for the assessed value of the imported goods for valuation purposes thus had violated the provisions of section 2(46)(d) of the Sales Tax, Act, 1990 and the registered person had also claimed, input tax on the assessed value. On the second charge it was also contended that the registered person had claimed input tax on the assessed value and there is no evidence on the file that the stock was not short at the spot, thus finding recorded by the Adjudicating Officer is not proper. The arguments have been rebutted by the respondent by asserting that the value assessed at the time of import is actually a notional value that might not be the transactional value of an importer in order to fulfil the conditions of section 25 of the Customs Act, 1969, the duties and taxes are paid on such notional value as determined by the Customs authorities, therefore, the finding recorded by the adjudicating officer was in accordance with law 5. We have considered the submissions made by the parties and examined the record. The learned adjudicating officer perhaps is not conscious of his jurisdiction when he recorded that the claim of greater amount than claimed in the show-cause notice rendered show-cause notice a nullity in the eye of law. It is general principle of law that during the adjudication if greater amount is found to be recoverable from a person then the Adjudicating Officer is duty bound to issue notice to the person seeking explanation as to why this greater amount should not be recovered from him. Mere greater claim after recalculation does not render the show-cause notice a nullity in the eyes of law rather the law bestows upon the adjudicating authority to claim such greater amount after giving notice to the concerned person. Further the approach of the learned adjudicating officer in holding that in the C.B.R"s. directive only section 2(46) of the Sales Tax Act, 1990 is mentioned is erroneous for the reason that it is the duty of the adjudicating officer to apply correct law to the facts of a given case. In the case is hand the matter relates to import of the goods and section 2(46)(d) of the Sales Tax Act, 1990 deals with it by mentioning that value of the imported goods would be the value determined by the Customs authorities under section 25 of the Customs Act, 1969. Similarly the finding of the learned adjudicating officer on the charge of shortage of stocks is not tenable for the reason that the learned adjudicating officer has ignored the fact that the registered person had claimed input tax on his assessed value leaving no room for the shortage of stocks. 6. The upshot of the discussion is that the Order-in-Original passed by the Additional Collector (Adjudication), Faisalabad is not sustainable in the eyes of law and is liable to be set aside. 7. For the foregoing reasons, the appeal is accepted by setting aside the impugned order and the case is remanded to the adjudicating authority for de novo trial within statutory period of time. The adjudicating officer may issue a notice to the registered person for the amount recalculated by the department and after hearing the registered person decide the matter afresh. Parties be informed through registered post or by UMS. 8. File be consigned after completion. C.M.A./116/Tax(Trib.) Case remanded.

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