Law: Sales Tax Act, 1990

Section: 11(5),22,25,25(1),33,33(9),37,38,38A,38B,40,72B

Law: Income Tax Ordinance, 2001

Section: 170(10)

 SUMMARY;The appellant challenged the Order-in-Original No. 2021 dated 19.11.2021 passed by the Deputy Commissioner Inland Revenue, and the subsequent appellate order (No.71/2021 dated 22.12.2021) of the CIR (Appeals-I), Islamabad. The core issues revolved around:Whether the assessing officer could proceed ex-parte under Section 25 of the Sales Tax Act, 1990 without first obtaining the prescribed records from the appellant.Whether the issuance of a show-cause notice dated 05.10.2021 for the tax period January 2016 to December 2016 was time-barred under Section 11(5) of the Act.Key facts:The appellant’s case was selected for audit via parametric computer ballot under Section 72B for the tax period Jan-Dec 2016.The audit proceedings were initiated, and the appellant failed to provide records as required under Section 22.The assessing officer proceeded to issue a show-cause notice under Section 11 and subsequently passed an ex-parte order.The appellant argued that the proceedings were void ab-initio, as Section 25 does not empower ex-parte proceedings without following due process under Sections 37, 38, 38A, and 40.The appellant also contended that the show-cause notice dated 05.10.2021 was issued beyond the five-year limitation period under Section 11(5) of the Act for the tax periods from January 2016 to August 2016.Held:The tribunal ruled that the assessing officer could not proceed ex-parte under Section 25 without obtaining records and following the prescribed procedure under the Act. The Sales Tax Act does not contain provisions (like Section 177(10) of the Income Tax Ordinance, 2001) to empower best judgment assessments in the absence of records under Section 25.The proper recourse, upon failure to obtain records, was to invoke powers under Sections 33, 37, 38, 38A, 38B, and 40 before proceeding further under Section 25.The show-cause notice dated 05.10.2021 was time-barred for the tax periods January 2016 to August 2016 under Section 11(5). Consequently, the proceedings for those periods were held to be void ab-initio.The tribunal relied on case law including Byco Petroleum Pakistan Ltd v. Federation of Pakistan (2021 PTD 1386), M/s Gulistan Textile…