LAHORE: A cotton processor has secured input tax refund, which was rejected by the sales tax department after the expiry of the stipulated timeframe, said sources.
They said the relevant tax authority had kept referring matter if refund of input tax on various objections raised by the Computerized Risk based Evaluation of Sales Tax (CREST). It was followed by the issuance of show cause notice for rejection of input tax refund after six years of relevant time/period. The competent authority had also passed an assessment order that was maintained by the Commissioner Inland Revenue Appeals.
However, the taxpayer contested the show cause notice on the ground that where an executive authority exercises its jurisdiction after the expiry of the period provided in a statute, such exercise of jurisdiction without any iota of doubt, is illegal and unlawful. He further contended that when a period is provided by a special statute, then any proceedings or actions taken under the provisions of special statute has to be taken within stipulated time.
According to the taxpayer, the show cause notice for rejection of input tax could not be issued beyond the period of five years of the relevant time. He said issuance of show cause notice within five years was a mandatory requirement for an action by the department, which could not be escaped in any case.
Therefore, the show cause notice, in his case, had hopelessly barred by the statutory time limitation and he had acquired vested right of escapement of assessment by lapse of time once limitation had started to run and had come to an end.
It may also be noted that the department had initiated the contravention proceedings in absentia against the taxpayer and culminated in passing an assessment order challenged by the later.
The department had also ignored that the claiming refund of sales tax had incurred in connection with zero-rated supplies clubbed with supportive documents completed in all respects. However, after lapse of many years, the department waked up from inebriated sleep for issuing show-cause notice, which was hopelessly time barred.
Copyright Business Recorder, 2024
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