Law: Sales Tax Act, 1990

Section: 11,36,45A(4)

Sales Tax Act (VIII of 1990)---Ss. 11, 36 & 45-A(4)---Complaint against illegal adjudication of sales tax demand---Complainant company was subjected to Sales Tax audit for 2001-2006 that carried on for over four years from 2007 to 2011---Show-cause notice was issued to the company under Ss.11 & 36 of Sales Tax Act, 1990 informing that the company was liable to pay sales tax on account of detection of taxable sales made in that period, including sales of excess stock of raw material---Documentation pertaining to stocks of raw material having not been produced by the company, adverse inference was drawn against the company and order-in-original was passed raising sales tax demand---Department had acknowledged that the calculation of sales tax liability was wrongly communicated to the complainant due to clerical error---No comment was made by the department on the protracted audit proceedings---Under first proviso to S.36(3) of the Sales Tax Act, 1990 order-in-original was required to be passed within 120 days of the issuance of the show-cause notice, but same was passed after more than four months---Time limitation specified in the statute invariably required that the cut off date should be adhered to strictly---Complainant had acquired a vested right to benefit from expiry of limitation period and avoid incidence of taxation, should the department fail to finalize proceedings on the due date within the limitation period---Department was duty bound to finalize proceedings in time---Apart from the expiry of limitation deadlines and adjudication made in excess of the pecuniary limit laid down in the notification, the sales tax demand raised in the order-in-original attributed to alleged sales and excess stocks of raw material to unregistered person was without any corroborative evidence---Besides said lapse, the format of the order-in-original was almost replication of the earlier format of order-in-original---Departmental actions in year 2005-2006 were tantamount to maladministration under the Establishment of Office of the Federal Ombudsman Ordinance, 2000 for the reasons of issuance of time-barred show-cause notice; issuance of time-barred…

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