2016 P T D (Trib.) 22
[Customs Appellate Tribunal]
Before Muhammad Nadeem Qureshi, Member (Judicial-I)
Messrs NORTH WEST CORPORATION, KARACHI
Versus
SUPERINTENDENT, DIRECTORATE GENERAL OF INTELLIGENCE AND INVESTIGATIONS-FBR and 2 others
Customs Appeals Nos.H-728 and H-671 of 2014, decided on 8th May, 2015.
(a) Customs Act (IV of 1969)---
----Ss. 18, 32 & 202---Sales Tax Act (VII of 1990), Ss. 6 & 11---Income Tax Ordinance (XLIX of 2001), S. 162(1)---Collection of sales tax and income tax by Customs authorities as "recoveries"---Procedure---According to S. 6 of Sales Tax Act, 1990 and S.140 of Income Tax Ordinance, 2001, Customs Department was empowered to collect taxes on imported goods in the capacity of collecting agent and recover escaped/short payment customs duty and regulatory duty levied on imported goods under Ss. 18 & 202 of Customs Act, 1969 after due process of law---Law did not empower the Department to initiate adjudication/recovery proceeding for short collected/paid sales tax and income tax either due to collusion or connivance or inadvertence, error or misconstruction---In order to initiate adjudication/recovery proceeding, a show cause notice had to be issued under S. 11 of Sales Tax Act, 1990 and S. 162(1) of Income Tax Ordinance, 2001 by Officer of Inland Revenue and Commissioner of Income Tax---Customs Department had no powers to adjudicate the cases of short recovery of Sales Tax and Income Tax under S. 11 of Sales Tax Act, 1990 and S. 162(1) of Income Tax Ordinance, 2001.
M/s. Moon Enterprises v. Collector of Customs MCC (PaCCS) and others Customs Appeal No. K-903/2011; M/s. Fort Tiles v. Additional Collector of Customs, MCC of PaCCS and another K-236-270/2012; M/s. M.I. Traders, Lahore v. Additional Collector, MCC of PMBQ, Karachi K-460 2012 MCC of Paces and another 2014 PTD (Trib.) 299, Collector of Customs, Rawalpindi v. Global Marketing and Services and others Customs Reference No. 01/2010; Customs Appeal No. 187/CU/IB/2008 dated 31.07.2009 and M/s. Lucky Cement Ltd. Karachi v. Federation of Pakistan and others C.P.No.D-216/2013 rel.
(b) Customs Act (IV of 1969)---
----Ss. 32(1), 32(2) & 32A---False statement---Show-cause notice---Nature and scope---Mere mentioning of Ss. 32(1), 32(2) & 32-A of Customs Act, 1969, in show-cause notice would not vest adjudicating authority with jurisdiction to invoke S. 32(1), S. 32(2) & 32-A of Customs Act, 1969---Validity of show-cause notice would depend on its context that was facts supported by tangible evidence referred to in show-cause notice and not from cosmetic show-cause of statutory provisions or from use of statutory key words in show-cause notice---Sections 32(1) & 32(2) of Customs Act, 1969, could not be invoked in absence of strong evidence of mens rea and mis-declaration in description, value, quantity, origin etc.---Section 32 of Customs Act, 1969 would be applied where collusion was established and action against delinquent staff/officers had been taken by department.
(c) Customs Act (IV of 1969)---
----S. 179(3)---Order-in-original was time barred---Department issued a show-cause notice on 31-10-2013 whereas order was passed on 8-5-2014---Importer contended that order was barred by time by 7 months---Held, that when a period was provided by a special statute, it had to be taken within stipulated period and within the parameters of such statutory provisions---Department passed an order after prescribed period of limitation which was not justified, and was without jurisdiction and of no legal effect---Appeal disposed of, accordingly.
2009 PTD 2004; 2009 PTD 1978; 2009 PTD 762; 2008 PTD 2025; 2008 PTD 981; 2008 PTD 60; 2007 PTD 1337 and Federation v. Ibrahim Textile 1992 SCMR 1898 rel.
(d) Interpretation of statutes---
----Financial statute---If a law prescribed period of time for recovery of money, after its lapse recovery was not enforceable through courts---While construing a financial statute, its terms were strictly to be followed.
(e) Administration of justice----
----Court, being custodian of law was required to maintain norms of justice and equity---Litigants were to be respected not on account of court's power to legalize injustice on technical grounds but to remove injustice.
Nadeem Ahmed Mirza along with Obaydullah Mirza for Appellants (in Customs Appeal No.H-728 of 2014).
Jahanzaib FOR Respondents (in Customs Appeal No.H-728 of 2014).
Jahanzaib for Appellant (in Customs Appeal No.H-671 of 2014).
Nadeem Ahmed Mirza along with Obaydullah Mirza for Respondents (in Customs Appeal No.H-671 of 2014).
Date of hearing: 28th January, 2015.
2016 P T D (Trib.) 107
[Customs Appellate Trbiunal]
Before Adnan Ahmed Member (Judicial-II)
Messrs QAZI CNG FILLING STATION, GUJRAT and another
Versus
DIRECTORATE GENERAL OF INTELLIGENCE AND INVESTIGATIONS-FBR, KARACH and 2 others
Customs Appeals Nos.K-3138 and 3139 of 2013, decided on 30th June, 2014.
(a) Customs Act (IV of 1969)---
----S.194-B(2)---Rectification of mistake---Scope---Error/mistake floating on surface of order was not at all restricted to clerical error or arithmetical mistake instead all types of errors whether factual/legal or substantive or procedural fell within ambit of "apparent mistake floating on surface of an order" and could be rectified within one year from the date of order by Tribunal being final facts finding forum.
Case Law referred.
(b) Customs Act (IV of 1969)---
----Ss. 79, 80, 83, 195, 16 & 32 ---- Declaration and assessment of home consumption warehousing---Section 79 of Customs Act, 1969 was a machinery section and defined procedure for filing of goods declaration by importer---Section 80 of Customs Act, 1969 empowered Customs officer to complete assessment order against imported goods, after levy of duty and taxes---After such payment, Principal Appraiser would pass a clearance order under S. 83 of Customs Act, 1969---Board or Collector was empowered to re-open the assessment order passed under S. 80 of Customs Act, 1969 in exercise of power conferred upon under S. 195 of Customs Act, 1969---Held, that Board had not delegated powers to department under Ss. 16, 32, 79, 80, 83 &S. 195 of Customs Act, 1969---Department had no power under said sections to lay hands on consignment which had been lawfully released by Competent officer under Ss. 80 & 83 of Customs Act, 1969 after passing of valid and legal assessment/clearance order.
(c) Customs Act (IV of 1969)---
----Ss. 2(a) & 80---SRO No. 371(I)/2002, dated 15-6-2002---Adjudicating officer---Scope---Department's plea was that consignment was not cleared as the same was not delivered and still was within reach of Department---Validity---Held, that consignment had undergone procedure of clearance by an appropriate officer in capacity of adjudicating authority defined in S. 2(a) of Customs Act, 1969 in exercise of powers vested upon him under S. 80 of Customs Act, 1969 and SRO No. 371(I)/2002, dated 15-6-2002--- After clearance of goods, department became functus officio and delivery of goods had to be effect by Port Authority/Terminal Handler and not by Department.
Case law referred.
(d) Customs Act (IV of 1969)---
----S. 179(3)---Order-in-original---Limitation---Show-cause notice was issued to importer on 6-2-2013---Order under S. 179(3) of Customs Act, 1969 was mandated to be passed within 120 days i.e. 6-6-2013 or within further extended period of 60 days (prior to extension of initial period of 120 days with reason to be recorded for expiry)---No extension was accorded by Department and extension granted vide order by Department was not based on mandated requirement of law---Extension granted was in omni bus manner and failed the test of judicial scrutiny---Order passed by department was barred by 55 days, hence, without power/jurisdiction and enforceable under law.
Case law referred.
(e) Notification---
----Rescinding of notification---Mode---Notification could be rescinded/amended through a notification only and not through any communication---In absence of amendment of Notification, clarification issued by department could only be termed as opinion and it would not at all amend the notification.
Case law referred.
(f) Interpretation of statutes---
----Notification---Scope---No other meaning could be given to expression of notification being in consonance of its spirit---Nothing could be added or subtracted to suit ones opinion as that would amount to redundancy which had to be avoided.
Case law referred.
(g) Constitution of Pakistan---
----Art. 201---"Order of High Court was binding on all courts subordinate to it and quasi-judicial forums, under Art. 201 of the Constitution"---Any deviation to the said expression would tantamount to defiance beside contempt of court.
(h) Customs Act (IV of 1969)---
----S.194-C---Procedure of Appellate Tribunal---Order of Bench of Tribunal was binding on other Benches of the Tribunal and no deviation was permitted.
Case to referred.
(i) Customs Act (IV of 1969)---
----Ss. 80, 83 & 198 ---- Assessment of duty---Clearing agent only provide service to importer on nominal charges and assistance to department in conducting examination under S. 198 of Customs Act, 1969 and on basis of which department passes assessment/clearance order under Ss. 80 & 83 of Customs Act, 1969---Department was to assess goods for levy of duty and taxes under S. 80 of Customs Act, 1969 which include correctness of particular imports including declaration---Importability of goods fell within ambit of "declaration/ assessment" and clearing agent was not an entity under S. 80 of Customs Act, 1969.
Case law referred.
(j) General Clauses Act (X of 1897)---
----S. 24A---Speaking Order---Essentials---Order which did not contain rebuttal on ground advanced and judgments relied upon by appellant and also were not containing substantial reasons and did not show that these were passed on objective consideration would be treated as illegal, void and arbitrary and result of misuse of authority vested in public functionary---No room was available for such illegal, void, arbitrary and perverse order---Perverse finding of fact was violative of principles of appreciation of evidence and as such not sustainable in law---Every judicial or quasi-judicial finding should be based on reasons containing justification for finding in order---Order being in violation of basic principles of good governance and mandatory requirements of S. 24A of General Clauses Act, 1897, , appeal was allowed in circumstances.
Obayd Mirza and Nadeem Ahmed Mirza (Consultant) for Appellants.
Saud Ahmed Khan, I/O (for Respondent No.1).
M. Farooq Khan, Appraiser (for Respondent No.2).
Dates of hearing: 6th, 22nd, 29th and 30th April, 2014.
2016 P T D (Trib.) 384
[Customs Appellate Tribunal]
Before Adnan Ahmed, Member (Judicial-II)
Messrs FORT TILES
Versus
ADDITIONAL COLLECTOR OF CUSTOMS, MCC OF PaCCS and another
Customs Appeals Nos.K-236 to 270 of 2012, decided on 2nd July, 2014.
(a) Customs Act (IV of 1969)---
----Ss. 162 & 163---Search warrant and arrest without warrant, powers of---Every search under S. 163 of Customs Act, 1969 had to be made by officer concerned strictly in accordance with spirit of its expression after exhausting recourse of obtaining a search warrant in terms of S.162 of Customs Act, 1969, from Judicial Magistrate on basis of an application by a Gazetted Officer of the Department, stating the grounds of his belief that goods liable to be confiscated or documents or things, which in his opinion should be useful evidence in proceeding under the Customs Act, 1969 and those were hidden in some secret place where search had to be made---Judicial Magistrate after going through such request, if he deems appropriate; would issue search warrant, which had to be executed in same way and had same effect as of search warrant issued under Criminal Procedure Code, 1898.
Messrs Ihsan Yousaf Textile Mills v. Federation of Pakistan 2003 PTD 2037; N.P Water Proof Textile Mills (Pvt.) Limited v. Federation of Pakistan 2004 PTD 2952; Collector of Sales Tax and Central v. Messrs Mega Tecch (Pvt.) Ltd. 2005 PTD 1933; Federation of Pakistan v. Messrs Master Enterprises (Pvt.) Ltd. 2003 PTD 1034; Collector of Customs (Preventive) v. Muhammad Mahfooz PLD 1991 SC 630; A.M.Z. Spinning and Weaving Mills (Pvt.) Ltd. v. Federation of Pakistan 2009 PTD 1083 and 2007 SCMR 1039 rel.
(b) Customs Act (IV of 1969)---
----S. 163---Issue of search warrant, dispensation of---Scope---Requirement for issuance of search warrant by Judicial Magistrate could be dispensed with under S. 163 of Customs Act, 1969 which empowered Assistant Collector of Customs or any other officer of like rank to make search without warrant---If the officer was satisfied that there was danger of removal of goods, if search warrant was obtained then he had to record such reason in statement so prepared in writing containing grounds of his belief.
(c) Customs Act (IV of 1969)---
----Ss. 26A, 26B, 32, 32(3)(A), 179, 80 & 83---Customs Rules, 2001, Rr. 438 & 442---S.R.O. No.500(I)/2009 dated 13-6-2009---Audit---Post clearance audit---Sections 26A, 26B, 32 & 32(3)(A) of Customs Act, 1969 had delegated powers to Post Clearance Audit Department to conduct audit of goods declaration through S.R.O. No. 500(I)/2009 dated 13-6-2009---Department was competent to conduct audit, issue audit observations and thereafter prepare contravention report for purpose of adjudication by competent authority empowered under S.179 of Customs Act, 1969---Officials of MCC of PaCCS, by laying hands on goods declaration through framing of contravention report in initiation of adjudication/Appellate proceedings, corresponding to consignments which had been cleared after passing of valid assessment and clearance orders by competent authority defined in S. 2(a) under Ss. 80 & 83 of Customs Act, 1969 and Rr. 438 & 442 of Sub-Chapter III of Chapter XXI of Customs Rules, 2001 tried to conduct audit of consignments after clearance to which they were not empowered----Officials transgressed the jurisdiction of Post Clearance Audit Department and rendered their act without powers/jurisdiction and as such coram non judice.
Major Syed Walayat Shah v. Muzaffar Khan and 2 others PLD 1971 SC 184; Omer and Company v. Controller of Customs, (Valuation): 1992 ALD 449 (1); Karachi AAA Steel Mills Ltd. v. Collector of Sales Tax and Central Excise Collectorate of Sales Tax 2004 PTD 624; PLD 1976 SC 514, Ali Muhammad v. Hussain Buksh and others PLD 2001 SC 514; Land Acquisition Collector Noshehra and others v. Sarfraz Khan and others 2006 PTD 2237 and Pak Suzuki Motors Company Ltd, Karachi v. Collector of Customs, Karachi 2009 PTD (Trib.) 1996 and 2010 PTD (Trib.) 832 rel.
(d) Customs Act (IV of 1969)---
----Ss.25, 25A, 32 & 202---CGO 12 of 2002, dated 15-6-2002, para 44---Directorate General Valuation had been delegated powers under Notification No. 495(I)/2007 dated 9-6-2007 to adjudicate cases falling under Ss. 25, 25A & 32 of Customs Act, 1969 and to initiate action for recovery of government dues thereafter under S. 202 of Customs Act, 1969 read with CGO 12 of 2002 dated 15-6-2002, para 44--- Held, that in Notification No. 495(I)/2007 dated 9-6-2007 department was figured nowhere and by laying hands on matter relating to Ss. 25 & 25A of Customs Act, 1969 and issuance of order for recovery under S. 202 of Customs Act, 1969, department encroached specific notified territory of Directorate General of Valuation---Order passed by the department were declared as ab initio, null and void.
Major Syed Walayat Shah v. Muzaffar Khan and 2 others PLD 1971 SC 184; Omer and Company v. Controller of Customs, (Valuation): 1992 ALD 449 (1); Karachi AAA Steel Mills Ltd. v. Collector of Sales Tax and Central Excise Collectorate of Sales Tax 2004 PTD 624; PLD 1976 SC 514, Ali Muhammad v. Hussain Buksh and others and PLD 2001 SC 514; Land Acquisition Collector Noshehra and others v. Sarfraz Khan and others 2006 PTD 2237 and Pak Suzuki Motors Company Ltd, Karachi v. Collector of Customs, Karachi 2009 PTD (Trib.) 1996 and 2010 PTD (Trib.) 832 rel.
(e) Customs Act (IV of 1969)---
----S.202---Recovery of government dues---Contention of importer was that department had taken into account leviable amount of Sales Tax and Income Tax by invoking S. 33 of Sales Tax Act, 1990 and S. 148 of Income Tax Ordinance, 2001 while ignoring the fact that S. 33 of Sales Tax Act, 1990 contained pitch of penalties to be imposed on contravention of respective provision of charging section of Sales Tax Act, 1990 and was synonymous to S. 156(I) of Customs Act, 1969---On the other hand, S. 148 of Income Tax Ordinance, 2001 specifically dealt with collection of duty and taxes at import stage, hence, department was empowered to collect Income Tax and Sales Tax at import stage under S. 6 of Sales Tax Act, 1990 and S. 148 of Income Tax Ordinance, 2001 and were not empowered to adjudicate cases of Sales Tax and Income Tax under S. 36 of Sales Tax Act, 1990 and S.162(I) of Income Tax Ordinance, 2001---Validity---According to S.6 of Sales Tax Act, 1990 and S. 148 of Income Tax Ordinance, 2001, it was established that department was empowered only to collect taxes on import of goods as like customs duty on value determined under S. 25 of Customs Act, 1969---Said sections had not empowered department to initiate adjudication/recovery proceeding for short collected/paid Sales Tax and Income Tax either due to collusion or connivance or inadvertent, error or misconstruction---Inland Revenue and Commissioner of Income tax were empowered for proceeding for such types of recoveries through a show-cause notice issued under S. 36 of Sales Tax Act, 1990 and S. 162(1) of Income Tax Ordinance, 2001.
Major Syed Walayat Shah v. Muzaffar Khan and 2 others PLD 1971 SC 184; Omer and Company v. Controller of Customs, (Valuation): 1992 ALD 449 (1); Karachi AAA; Steel Mills Ltd. v. Collector of Sales Tax and Central Excise Collectorate of Sales Tax 2004 PTD 624; PLD 1976 SC 514, Ali Muhammad v. Hussain Buksh and others and PLD 2001 SC 514; Land Acquisition Collector Noshehra and others v. Sarfraz Khan and others 2006 PTD 2237 and Pak Suzuki Motors Company Ltd, Karachi v. Collector of Customs, Karachi 2009 PTD (Trib.) 1996 and 2010 PTD (Trib.) 832 rel.
(f) Customs Act (IV of 1969)---
----Ss.32 & 80---Qanun-e-Shahadat (10 of 1984), Arts. 117 & 121---Burden of Proof---Scope---Ultimate burden of proof was upon department---Department had to prove allegations in terms of Arts.117 & 121 of Qanun-e-Shahadat, 1984.
(g) Customs Act (IV of 1969)---
----Ss. 80, 193, 195 & 195(2)---Constitution of Pakistan, Art. 13---Assessment orders passed by department under S. 80 of Customs Act, 1990 and R. 438 of Customs Rules, 2001 were appealable orders under S.193 of Customs Act, 1969---Prior to amendment through Finance Act, 2012, no right of appeal was available under S. 193 of Customs Act, 1969---Only recourse left was to reopen assessment orders by department in exercise of powers conferred upon it under S.195 of Customs Act, 1969 within two years as expressed in S.195(2)---Assessment order was passed on or before 19-08-2008 and period for reopening of orders expired on 18-10-2010---Initial assessment order attained finality by virtue of expiry of stipulated period expressed in S.195(2) of Customs Act, 1969 and as such held field---No subsequent order was allowed to pile upon initial assessment order as it was not permitted and would tantamount to double jeopardy barred under Art. 13 of the Constitution.
Messrs World Trade Corporation v. Central Board of Revenue 1989 MLD 4310; Messrs Glaxo Smith Kline Pakistan Limited Karachi v. Collector of Customs, Sales Tax and Central Excise (Adjudication), Karachi-III, Government of Pakistan, Karachi 2004 PTD 3020 and Messrs Edulji Dinshaw Limited v. Income Tax Officer 1990 PTD 155 ref.
(h) Customs Act (IV of 1969)---
----Ss. 32 & 195---Contention of Department was that S. 32 of Customs Act, 1969 overlapped with S. 195 of Customs Act, 1969---Validity---Both Ss. 32 & 195 of the Customs Act, 1969 were independent of each other---Section 195 of Customs Act, 1969 was a machinery section containing procedure for reopening of an order not charging, whereas S. 32 was a charging section under which charge had to be levelled---Under S. 195 of Customs Act, 1969 Department was empowered to reopen decision/order of his subordinate for determination of legality and propriety---If an order was re-opened, for passing fresh order, a show-cause notice had to be issued under S. 195(2) of Customs Act, 1969---Department could invoke any of charging sections of Customs Act, 1969 as it thought fit on the basis of fact of case in show-cause notice.
(i) Customs Act (IV of 1969)---
----S. 32---False Statement---Scope---Contention of importer was that department had invoked S. 32 of Customs Act, 1969 without specifying relevant subsection despite its pre-requisite---Non-mentioning of relevant subsection rendered the show-cause notice vague, defective and not in conformity with law, therefore same had no legal effect.
Assistant Collector v. Khyber Elec. Lamps 2003 PTD 1275; D.G. Khan Cement v. Collector of Customs 2005 PTD 480; Caltex v. Collector 2003 PTD 1593; Union Playing Card Company v. Collector of Customs 2002 MLD 130; Atlas Tyres v. Additional Collector 2002 MLD 180; State Cement v. Collector PTCL 2001 CL 558; Kashmir Sugar v. Collector 1992 SCMR 1898; CBR and Sarwar International v. Addl. Collector of Customs 2013 PTD 813 rel.
(j) Customs Act (IV of 1969)---
----Ss. 155A, 155C, 155E, 155F & 25---Charge of misdeclaration of value---Contention of importer was that Ss. 155A, 155C, 155E & 155F of the Customs Act, 1969 had been invoked in show-cause notice by department without realizing that no charge could be made under said section as these were machinery sections and defined procedures---No charge under S. 25 of Customs Act, 1969 had been invoked inspite of the fact that whole charge revolved around misdeclaration of value---Such inapt approach rendered show-cause notice palpably illegal and as such void ab initio by virtue of invoking erroneous sections instead of invoking the correct provision.
(k) Customs Act (IV of 1969)---
----S. 179(3)---Order-in-Original, passing of---Limitation---Show-cause notice was issued on 22-03-2011---Order under S. 179(3) of Customs Act, 1969 had to be passed by department within 120 days i.e. on or before 20-07-2011 from date of show-cause notice or within further extended period of 60 days by department, prior to lapse of initial period of 120 days and after serving a notice to importer and thereafter recording reasons for extension---Contention of department was that extension was granted by Collector under S. 179(3) of Customs Act, 1969 as mentioned in the order---Order was silent as to whether prior to extension, any notice was served on importer as per mandated requirement of law and whether extension was granted prior to expiry of initial 120 days and whether there were exceptional circumstances and those were recorded by department---Order being not in accordance with essence of S. 179(3) of Customs Act, 1969 was declared void, ab initio and barred by time.
Khalid Mahmood v. Collector of Customs 1993 SCMR 1881; Messrs Super Asia Muhammad Din Sons (Pvt.) Ltd. v. Collector of Sales Tax, Gujranwala 2008 PTD 60; Messrs Hanif Strawboard Factory v. Additional Collector (Adjudication) Customs, Sales Tax and Central Excise Gujranwala 2008 PTD 578; Messrs Tanveer Weaving Mills v. Deputy Collector Sales Tax and 4 others 2009 PTD 762; Messrs Syed Bhai Lighting Limited, Lahore v. Collector of Sales Tax and Federal Excise, Lahore and 2 others 2009 PTD (Trib.) 1263; Leo Enterprises v. President of Pakistan and others 2009 PTD 1978; Innovative Impex, v. Collector of Customs, Sales Tax and Federal Excise (Appeal) 2010 PTD (Trib) 1010; Fazal Ellahi v. Additional Collector of Customs, MCC of PaCCS 2011 PTD (Trib) 79; Unique Wire Industries v. Additional Collector of Customs, MCC of PaCCS 2011 PTD (Trib) 987; Kaka Traders v. Additional Collector of Post Clearance Audit 2011 PTD (Trib.)1146; Pak Electron Ltd. v. Collector of Customs, Lahore and others 2012 PTD (Trib.) 1650 and 1990 SCMR 1072 ref.
(l) Customs Act (IV of 1969)---
----S. 193A---Order-in-appeal, passing of---Limitation---Importer filed appeal on 04-11-2011---Order under S. 193-A(3) of Customs Act, 1969 had to be passed within 120 days from date of filing of appeals i.e. on or before 04-03-2012 or within further period of 60 days prior to expiry of initial period of 120 days with reasons to be record for extension---No extension was granted by department and order was passed on 15-03-2012 after expiry of 11 days of initial period, thus, order was without powers/jurisdiction and barred by time.
Messrs Super Asia Muhammad Din Sons (Pvt.) Ltd. v. Collector of Sales Tax, Gujranwala 2008 PTD 60; Messrs Hanif Strawboard Factory v. Additional Collector (Adjudication) Customs, Sales Tax and Central Excise Gujranwala 2008 PTD 578; Messrs Tanveer Weaving Mills v. Deputy Collector Sales Tax and 4 others 2009 PTD 762; Messrs Syed Bhai Lighting Limited, Lahore v. Collector of Sales Tax and Federal Excise, Lahore and 2 others 2009 PTD (Trib.) 1263; Leo Enterprises v. President of Pakistan and others 2009 PTD 1978; Innovative Impex, v. Collector of Customs, Sales Tax and Federal Excise (Appeal) 2010 PTD (Trib) 1010; Fazal Ellahi v. Additional Collector of Customs, MCC of PaCCS 2011 PTD (Trib) 79; Unique Wire Industries v. Additional Collector of Customs, MCC of PaCCS 2011 PTD (Trib) 987; Kaka Traders v. Additional Collector of Post Clearance Audit 2011 PTD (Trib.) 1146 and Pak Electron Ltd. v. Collector of Customs, Lahore and others 2012 PTD (Trib.) 1650 rel.
Nadeem Ahmed Mirza and Obaydullah Mirza for Appellant.
Kauser Hussain (Appraiser) for Respondents.
Dates of hearing: 28th April, 20th and 23rd May, 2014.
2016 P T D (Trib.) 536
[Customs Appellate Tribunal]
Before Chaudhary Muhammad Tariq, Chairman and Khalid Mehmood, Member Technical
Messrs CREATIVE ELECTRONICS (PVT.) LTD.
Versus
COLLECTOR OF CUSTOMS and another
Appeal No.K-657/CU of 2014, decided on 22nd January, 2015.
Customs Act (IV of 1969)---
----Ss. 16, 18, 19, 25, 32, 156(1), 9, 10-A, 14, 179(3) & 194-A---SRO No.575(I)/2006, dated 5-6-2006---Allegations of evasion of duty and taxes by mis-declaration of description of imported goods---Confiscation of goods and imposition of penalty---Appellant/importer, was alleged to be involved in evasion of duty and taxes by means of mis-declaration of description; and claiming illegal benefit of concession under S.R.O. No.575(I)/2006, dated 5-6-2006 and out of 22 consignments, 8 consignments had been imported by the appellant under illegal claim of concession under S.R.O. No.575(I)/2006 dated 5-6-2006, while rest of 14 consignments were cleared under mis-classification of PCT Heading 9028-9010 instead of actual PCT Heading 9028-9020---Appellant, in circumstances was found to have allegedly claimed exemption from duty and taxes for which he was not entitled---Amount so evaded was worked out to Rs.72,717,871, cognizable under Ss.16, 18, 32 of the Customs Act, 1969, and punishable under Ss.156(1), 9, 10-A, 14 read with S.R.O. No.575(I)/ 2006 dated 5-6-2006---Appellant being engaged in manufacturing of Electric Meter had imported the accessories and other parts of electric meter---Said imported parts were used in the manufacturing of single as well as three phase electric meters, which had been enjoying concessionary duty under Serial No.21 of S.R.O. No.575(I)/2006 dated 5-6-2006---Import of appellant, in circumstances, was in consonance with provisions of SRO in question and not otherwise as alleged by the authorities---Allegation in the show-cause notice was not based on cogent reasons, but a result of a misleading assumption, which was bad in the eye of law---Provisions invoked against appellant, and impugned order-in-original were not sustainable in the eye of law---Authorities had failed to point out or produce any evidence that out of 22 consignments, 8 were imported by the appellant under inadmissible claim of concession of SRO, while the rest 14 consignments were cleared by mis-declaration as alleged by the authorities---Under provisions of S.179(3) of Customs Act, 1969, order was to be passed within 180 days of issuance of show-cause notice, but in the present case impugned order was passed after lapse of 75 days which was an inordinate and unexplained delay, even after deducting the period of six months of stay order---Second show-cause notice served upon the appellant, was in respect of same goods and the same period---Such practice being not warranted under the law, was void ab initio---Order-in-original passed by Collector Customs (Adjudication), was set aside along with show-cause notice, in circumstances.
M. Afzal Bhatti for Appellant.
Muhammad Saleem, A.O. for Respondents.
Date of hearing: 7th January, 2015.
2016 P T D (Trib.) 659
[Customs Appellate Tribunal]
Before Adnan Ahmed, Member Judicial-II
Haji SAEED AHMED and another
Versus
ANTI-SMUGGLING ORGANIZATION and another
Customs Appeals Nos.K-123 and K-122 of 2014, decided on 21st July, 2014.
(a) Customs Act (IV of 1969)---
----S. 177---S.R.O. No. 188(I)/83, dated 12-2-1983---S.R.O. No.581(I)/83, dated 18-6-2013---Registration on the possession of goods in certain areas---Seizure of goods/consignment from the possession of carrier---No provision in Customs Act, 1969 or any notification existed in field empowering department to either intercept or detain any goods transported by any person or through public carrier within territory of Pakistan with exclusion of area expressed in S. 177 of Customs Act, 1969 read with S.R.O. No. 188(I)/83 dated 12-2-1983 nor in regards to demand of import or purchase documents either from driver of carrier or from owner of transported goods through public carrier---Stretching of powers by department beyond provision of Customs Act, 1969 and S.R.O. No. 581(I)/83, dated 18-6-2013 which was not permitted under law.
Case-law referred.
(b) Customs Act (IV of 1969)---
----Ss. 26, 215 & 215(b)---Department sought verification under S. 26 of Customs Act, 1969 of purchase bills submitted by importer against transported goods---Importer confirmed genuineness of bills through a proper reply with an exception that reply had not been received as per expression of S. 215 of Customs Act, 1969 as it was not dispatched through a registered post or through corrier service but was hand delivered in office---Delivery by hand fell within the ambit of "any manner" expressed in S. 215(b) of Customs Act, 1969, department's plea therefore, was without any substance.
(c) Customs Act (IV of 1969)---
----Ss.26(d) & 187---Qanun-e-Shahadat (10 of 1984), Arts.117 & 121---Importer was never questioned with regards to goods and bills in accordance with S. 26(d) of Customs Act, 1969 by department which confirmed that transported goods were lawfully purchased through valid bills---Held, that Importer had discharged burden of proof laid upon him under S. 187 of Customs Act, 1969 and department had failed to prove charge of smuggling or transportation or smuggled goods---Department despite mandated under Arts. 117 & 121 of Qanun-e-Shahadat, 1984 failed to discharge burden of proof as same stood shifted on its shoulders---Person levelling allegation was supposed to prove the charge---With submission of valid purchase bill and verification sought by department from importer after serving notice under S. 26 of Customs Act, 1969, burden laid upon importer stood discharged and there was no cause or reason for Department to only release half of the lot instead of whole lot.
(d) Sales Tax Act (VII of 1990)---
----S.3---Income Tax Ordinance (XLIX of 2001), S.4---Customs Act (IV of 1969), S.18---Demanding duty---Goods dutiable/taxable taxes for second time i.e. from buyer/seller was in derogation of proposition of law and amounted to double taxation which was prohibited under Customs Act, 1969, Sales Tax Act, 1990 and Income Tax Ordinance, 2001.
Case-law referred.
(e) Customs Act (IV of 1969)---
----S.180---Issuance of show-cause notice---Additional Collector of Customs was duty bound to determine fact of case and applicable provision of law upon receipt of contravention report, independently without any influence and fairly---Additional Collector of Customs, in the present case, had entirely relied upon version of his subordinate and mechanically signed show-cause notice on basis of contravention report---Show-cause notice issued was nullity in law and without any substance---Adjudicating authority was supposed to apply its mind while issuing show-cause notice.
Case-law referred.
Obaid Ahmed Mirza and Nadeem Ahmed Mirza (Consultant) for Appellants.
Malik Safdar (P.O.) for Respondent.
Date of hearing: 16th April, 2014.
CORRIGENDUM
ADNAN AHMED, MEMBER (JUDICIAL-II).---Due to typographical mistake the word "194-B(2)" has been typed instead of "194-A (1)" in the order dated 03-07-2014. Therefore in partial modification in aforesaid order the word "194-B(2)" shall be substituted by word "194-A(1)" after the word "under section" appearing at line No.3 of para 1 of the aforesaid order.
Brief, facts of the case as stated in the impugned order are that a credible information was received on 04.09.2013 that smuggled/non duty paid LED/LCD TV are brought at inter City Bus Terminal, Yousuf Goth, Karachi from Quetta for onward supply to the other cities of Sindh using a modus oprendi that the smuggled/non duty paid LED/LCD TV's are firstly taken to Saddar Market and then refrigerators are loaded in the back of the vehicle to cover the LED/LCD TV's and also a receipt of a wholesale shop is made and kept in the vehicle to show lawful possession. It was further informed that LED/LCD TV's were being loaded on a Mazda Vehicle bearing registration No. JY-0080. Pursuant to the said information ASO Team posted at Mobile Squad Check Post super Highway near Tool Plaza was alerted to foil the attempt. Reportedly the said loaded vehicle was taken from Yousuf Goth to Hashoo Centre, Sadder, Karachi from where 3 refrigerators were loaded on the vehicle to disguise the law Enforcement Agencies. At about 2:00 pm the said vehicle was squaded near Toll Plaza heading towards Hyderabad. Accordingly, the said vehicle Mazda bearing Regn No.JY-0080 loaded with cartons of foreign origin/assorted LCD/LED TV's and refrigerators duly covered with "Tarpal" was intercepted. The occupant/driver/owner of the vehicle identified as Noor Muhammad S/o Muhammad Bux was asked about the goods loaded on the vehicle to which he replied that refrigerators were loaded on the vehicle being dissatisfied with his statement and having specific information a search was made in the presence of Mushirs namely Farhan Khan and Muhammad Danish which revealed that the foreign origin assorted LED/LCD TV's and refrigerators were loaded/kept on the vehicle. The 03 refrigerators were kept in the back of the vehicle to cover LED/LCD TV's so as to camouflage the Law Enforcement Agencies, therefore the driver/owner of the vehicle was asked about the legal import documents or any other documents to substantiate lawful possession/purchase/ importation of the said goods to which he produced one receipt of M/s. Whole Sale Point A/5, Hashoo Centre, A.Haroon Road, Saddar, Karachi in the name of SS. Hyderabad dated 04.09.2013 and told that one Haji Saeed was the owner of the goods and he has loaded the goods on his vehicle against hire. However, as there existed specific information and being dis-satisfied with the receipt produced the goods so recovered were taken into possession to ship the same ASO, HQ NMB- wharf Karachi along with the said occupant/driver/owner of the vehicle to complete further legal formalities. The seizing officer examined the LED/LCD TV's and refrigerators off loaded from Mazda bearing Registration No. JY-0080 which resulted in recovery of 107 numbers of foreign Origin LED/LCD TV's and 03 Refrigerators . The occupant/driver/owner of the vehicle was asked to call the owner of the goods but no body came forward to claim the goods. As there existed and specified information that the goods were loaded from intercity bus terminal Yousuf Goth RCD, Highway, Karachi and the fact that non duty paid goods were brought into country through unauthorized routes other then the routes as declared under Sections 9 and 10 of the Customs Act, 1969, therefore aforesaid goods valuing to Rs. 2,967,069.00 involving duty and taxes CD Rs. 42,998.00 Sales Tax 31675.00 AST - 6540.00 and Income Tax 11227.00 totaling Rs. 1,913, 645.00 were seized along with conveyance/vehicle under section 168 of the Customs Act, 1969 for violation of Sections 2(s) 16 and 156 (2) and 157(2) of the Customs Act, 1969 punishable under clauses (8) (89) and (90) of Section 156(1) ibid read with Section 3(1) of Imports and Exports Control Act, 1950. Notice under Section 177 of the Customs Act, 1969 was served upon the owner of the goods care of occupant driver/owner of the vehicle and the occupant driver/owner of the vehicle accordingly.
The respondents Nos. 2 and 3 submitted the reply to the show cause notice issued by respondent No. 3 substantiated with purchase receipt and verified by the seller upon receipt of notice under section 26 of the Customs Act, 1969 from the subordinate of appellant. The respondent No. 3 after conducting multiple hearing passed order-in-original dated 26.12.2013. Para 12 of the order is relevant, same is reproduced here-in-under:---
"I have gone through the case record and heard the arguments of both sides in detail. The emerging facts of the case are that the department have seized LED/LCD/Plasma TV's 107 Nos. and Refrigerators 03 Nos. along with conveyance/vehicle. It has been mainly contended on behalf of the respondent/owner of the goods that all these goods were purchased from local market in Karachi City for his sale point/retail shop which he owns in the name of S.S. Electronics, Hyderabad. He also produced various cash memos in this behalf. It has been further stated that these cash memos were produced also before the Seizing Agency on which they carried out verification as well. However, the department did not own such verification during adjudication proceeding, therefore the department was asked to verify the memos. The department issued notices under Section 26 to the shop keepers in reply the shop keepers acknowledged that all these goods were sold by them. The department as such does not deny that the goods were bought from the local market. However, stand of the department is this that these are foreign origin imported goods and are to be dealt under section 156(2) of the Act. According to which the onus of discharging the burden of proof rest on the respondent. It is important to observe that these goods have not been seized on the border. The department has reported the seizure at Toll Plaza, and has stated that the goods were en-route to Hyderabad having been loaded from Karachi. It is therefore clear that these were being transported from Karachi city. Keeping the seized TV's and the fridges in view it is also clear that in order these should be taken to be smuggled, prima facie these should be of foreign origin. In this context the seize goods appears to be in 02 categories. Part of the goods shows the foreign origin as Thailand, Malaysia etc. Whereas, the remaining parts only shows the name of the company as "Samsung" without any indication of foreign country where it was made. It is well known that many locally made goods bearing name of foreign brands/logos are found selling openly in the market without indicating the origin. The people buy these for these brands on much cheaper price although it is also known that such goods are manufactured locally. In this case the department has initiated contravention/seizure proceeding on the charges of 2(s) i.e. of smuggling, whereas the impugned/seized goods i.e. LED/LCD TV's etc partly show only the name of the company and do not show the manufacturing origin as such. It is also the fact that the Samsung LED/LCD TV's are being manufactured in Pakistan by M/s. Orient, Lahore. Beside this LG and Haier range of product including air conditioners and refrigerators are being also manufactured in Pakistan. Where only the name of the companies are indicated without showing manufacturing origin. The impugned TV's LED/LCD are the same as the Make and Models. Being manufactured by M/s. Orient, Lahore in the name of Samsung Co. in Pakistan. Given this position I cannot agree with the smuggling charges with respect to the items which are being made by the local manufacturer in the name of Samsung and Haier bearing the same appearance with regards to Design, Model and Logo etc. How can the section 156(2) ibid be invoked for the goods which are being manufactured locally? How would any buyer know that these can be smuggled when the manufacturing of these goods and the market sale is well established? In the specific circumstances/fact of this case in order to invoke Section 156(2) ibid there must be some prima facie foreign origin indication with respect to foreign manufacturing country on the goods only then the goods can be differentiated from the those locally made. I therefore hold that the seized goods i.e. TV's and Fridges which do not show foreign manufacturing origins and the likes of which are already been manufactured in Pakistan, can not be brought in the fold of Section 156(2). All such tv's, fridges were therefore identified immediately and relief. However, the other parts of the seized goods where foreign origin is indicated on the goods such as "Made in Thailand, Malaysia etc." the burden of proof lies on the respondent to bring forth the evidence that these were duty paid and brought legally in Pakistan. The respondent hold the cash memo which were verified by the department from which it can be gathered that the respondent has bought these from the market in good faith, however, these goods clearly bear the foreign manufacturing origin. Therefore, the evidence for legal imports of these goods is required which he has not able to do so. Therefore, the charges raised in the Show Cause notice in respect of these goods stand established. These goods are accordingly confiscated along-with conveyance Mazda Truck Reg. No: JY-0080's since TV's are notified items under Section 2(s) therefore these cannot be redeem on fine in terms of S.R.O. 499(I)/2009 dated 13.06.2009. The confiscation is therefore outright. A penalty of Rs.25000.00 (twenty five thousand) is also imposed on the respondent. As for the seized conveyance it is allowed to be redeemed on payment of fine equal to 20% of its assessed value in terms of S.R.O. 466(I)/2009. Dated 13.06.2009 a penalty of Rs.10,000.00 (Ten thousand) is also imposed on the owner/claimant of the vehicle.
(i) The respondent No. 2 in order dated 26.12.2013 failed to distinguish or discuss the law, instead made academic discussion of personal nature in regards to fiscal statute, which is not sustainable in comparison to the Law and the judgment of Hon'ble Superior Courts of Pakistan. Hence erred in passing the order and the same is not sustainable in law as the same is clearly contrary to the Law/Rules, being erroneous and not in consonance of law, equity and natural justice.
(ii) That upon receipt of the contravention report, it was mandated upon the respondent No. 2 to look into the actual facts of the case and the applicable provision of the Act, Rules and Regulation independently and fairly. Instead he completely relied upon the version of the officials of respondent No. 1 and mechanically signed the show cause notice on the basis of the contravention report forwarded to him by the official of the respondent No. 1, rendering it nullity to the law laid down by the Superior Courts of Pakistan. Reliance is placed on the reported judgment 2004 PTD 369 Messrs Zeb Traders, v. Federation of Pakistan. Wherein their lordship of the High Court held in unambiguous terms that:
"The proceeding before Adjudicating Officer, under the Customs Act, 1969 are in the nature of quasi judicial proceedings and issuance of notice under section 180 of the Customs Act, is very important documents. The decision to issue show cause notice is to be taken by the Collector, Adjudication, by application of independent mind and not merely signing the draft show cause notice submitted by the investigation agency separate from the Adjudication Department and each category of officers are required to perform their respective functions/duties under the law. The practice to submit draft show cause notice by the Director General of Intelligence and Investigation to the Collector Adjudication is depreciated."
(iii) That the respondent No. 2 instead of determination of the fact that as to whether the goods were lawfully purchased or smuggled by the appellant ventured into determination of the origin of the goods, which was not warranted in the given circumstances of the case. Therefore, while doing so the case in question stood ousted from his power/jurisdiction as in terms of Notification S.R.O No. 886(I)/2012 dated 18.07.2012, in the cases involving technical violation of import export restrictions without any involvement of any evasion of duty and taxes as evident from Sub-Para (d) of Para 3 of the Notification. In the instant case there deems to be no revenue loss as evident from the charter of Order-in-Original, wherein respondent deliberated on the origin of the goods as against the charge of smuggling, which was not the subject matter of show cause notice. While laying hand on the instant case the respondent has transgressed the authority vested with the Officer of the Executive Collectorate. Beside ventured outside the scope of show cause notice, rendering the issuance of show cause notice and Order-in-Original being in-flagrant violation of law and as such coram non judice, hence void and ab-initio as held in reported judgments 2002 PTD 2457, PLD 1971 Supreme Court 61, PLD 1973 Supreme Court 236, PLD 1964 SC 536, 2001 SCMR 838 and 2003 SCMR 1505, In PLD 1996 Karachi 68, 2006 PTD 978 and PLD 1971 Supreme Court 184, 1987 SCMR 1840 and 2004 PTD 1449.
(iv) That it is pre-requisite to serve notice prior to seizure of the goods under Section 171 of the Customs Act, 1969. No notice under section 171 of Customs Act, 1969 has been served either on the appellant or the Truck driver. This is in complete derogation of Article 4 of the Constitution of Islamic Republic of Pakistan and the expression of section 171 ibid rendering the seizure and subsequent proceeding illegal as held in reported judgment 1983 PCr.LJ 19; 1983 CLC 786; 1985 PCr.LJ 286, 2004 PCr.LJ 1958, 1983 PCr.LJ 620 and 1983 PCr.LJ 623.
(v) That intercepting goods transported with in the territory of Pakistan, by the respondent No. 1 is tantamount to abuse of power as no interception can be made unless a provision exist in the Act or any notification is in field directing the appellant to provide documents of import or purchase prior to booking of the goods meant for transportation within the territory of Pakistan and the driver of the carrier should contains those documents during the journey. No such section is available in the Act and nor any notification is in field. Resultant interception of the transported goods at Truck Stand near Custom House by the officer of respondent No. 1 is patently illegal rather confirms without any ambiguity abuse of power and high handedness.
(vi) That irrespective of the referred in above illegality it is appropriate for the appellant to state that it was mandated upon the respondent No. 1 to act within the frame work of the definition of the word "smuggle" given in subsection 2(s) of the Customs Act, 1969. For ease verbatim of the same is reproduced here-in-under:
(a) "smuggle" means to bring into or take out of Pakistan in breech of any prohibition or restriction for the time being in force, or evading payment of customs duties or taxes leviable thereon, (i) Gold bullion, silver bullion, platinum, palladium, radium, precious stones, antiques, currency, narcotics and narcotic and pyschotropic substances; or
(ii) Manufactures of gold or silver or platinum or palladium or radium or precious stones, and any other goods notified by the Federal Government in the official Gazette, which, in each case, exceed [one hundred and] [fifty thousand rupees] in value or
(iii) Any goods by any route other than a route declared under section 9 or 10 or from any place other than a customs station and includes an attempt, abetment or connivance of so bringing in or taking out of such goods; and all cognate words and expressions shall be construed accordingly.
(b) That customs ports etc. as expressed in clause (iii) of Section 2(s) are notified through various notifications in terms of Section 9 of Customs Act, 1969. Whereas, the border area of Pakistan Territory, whereas restriction on the possession of goods in certain areas (borders) as expressed in Section 177 ibid is also notified vide Notification No. S.R.O. 118(I)/83 dated 12.02.1983, ear marking the area of 5 miles adjacent to the Frontier of Pakistan with India and Iran to be the area to which Section 177 of the Customs Act, 1969 shall apply.
(vii) That the goods purchased and transported by the appellant were within the territory of Pakistan and those were not brought into Pakistan in breach of any prohibition or restriction for the time being in force under the Import Policy Order, 2013 or while evading payment of customs duties leviable thereon as expressed in clause (a) of Section 2(s). Nor were brought into Pakistan by any other route then the routes expressed in section 9 or 10 of the Customs Act, 1969 or from any other place then a customs station as per clause (a)(iii) of Section 2(s) instead were transported from Karachi to Hyderabad and those cannot be considered as smuggled by any stretch of imagination. Hence interruption of carrier loaded with the goods, their detention and seizure subsequently for the purpose of adjudication is nullity to the definition of the word "Smuggle" rendering the entire act of the respondent No. 1 and the respondent No. 2 right from interruption till issuance of show cause notice and subsequently passing order-in-original as ab-inito, null and void.
(viii) That it is also imperative for the appellant to add that in the light of expressed provision of Section 2(s) and Section 177 of the Customs Act, 1969 and S.R.O. 118(I)/83 (Exhibit "J") confirms that the transportation of goods within the territorial limit of Pakistan do not constitute an offence, meaning thereby that transportation of goods from Karachi to Hyderabad through Super High Way supported by valid bilties and interruption of those at Truck Stand near Custom House by the respondent No. 1 cannot be termed as smuggling. It would also not be out of place to state that after clearance of the goods from Customs, either from Area of Sea Port or Dry Port, they are out of the ambit of Customs Department including the respondent No. 1 and any subsequent checking during transportation of those goods within the territory of Pakistan is beyond their jurisdiction as none of the provision of the Customs Act, 1969 authorizes any designated official of Customs to interrupt the local transportation of goods on sham pleas of smuggling. Reference is placed on the order of the Tribunal in Customs Appeal No.K-719/02, H-720/02, H-686/03, Q-776/04, 2005 PTD (Trib.) 135 and PLD 1991 Supreme Court 630.
(ix) That the respondents have also look into the 2nd aspect for confirmation of smuggling i.e. whether the goods so transported are retrieved from the hidden/false cavities made for time being or artificially made as defined in clause (b) of Notification No. 499(I)/2009 dated 13.06.2009, (Exhibit "K") meaning thereby the space behind a truck for loading goods would not fall within the definition of false cavity. Resultant, goods transported within the territory of Pakistan with the exclusion of area given in Notification No. 118(I)/83 dated 12.02.1983, cannot be presumed even through a figment of imagination as smuggled. The appellant purchased/transported the goods at the back of the carrier openly. Resultant, the goods loaded on the carrier cannot be intercepted, detained, seized as has been done by the respondent No. 1. The said act amounts to exercise of powers based on forced construction of law, rendering the same nullity to law. Reliance is placed on the order of Customs Appellate Tribunal in Customs Appeal H-185/2009 Noor Muhammad S/o Muhammad Gul, Imtiaz Ali S/O Pir Buksh v. Deputy Collector of Customs, (Adjudication) Hyderabad and Lahore High Court reported judgment 2010 PTD 2015 Collector of Customs v Rehmat Afridi.
(x) That the 3rd aspect to be looked into, for determination of the goods purchased/transported by the appellant or any other person is that whether those are freely available in the local market without any curb or restriction, if available then such goods does not fall within the degree of smuggled as defined in Section 2(s) of the Customs Act, 1969 and are presumed to have been tax and duty paid. The said opinion stood validated from the reported judgment of Apex Court 1995 SCMR 387 Sikandar A. Karim v. The State. The Double Bench of the Hon'ble Supreme Court comprised of Justice Saeed-uz-Zaman Siddiqui and Justice Mukhtiar Ahmed Junejo held in unambiguous term that "If the item alleged to be smuggled by the prosecution were freely available in the open market and the import of such goods were not banned in the country, presumption could arrive that the goods in question were lawfully brought in the country unless contrary was shown". As per dictum laid down by the Hon'ble Supreme Court the Appellate Tribunal in Customs Appeal No.339/2000 Mr. Muhammad Hanif v. The State and 301/2003 Nasser Ahmed v. Collector of Customs, Sales Tax and Excise, Quetta that held that "to produce legal import documents is nothing but to put undue pressure on the business community inspite of the fact that it has been observed number of time by the Supreme Court of Pakistan that the goods which are freely available in the market are presumed to be have been legally imported and duty paid. Even otherwise no reasonable ground has been given in the order-in-original that even for the sake of arguments, it is taken that the receipt produced by the appellant and issued by Saifullah Khan have no legal status then also it cannot be concluded that the said transaction was illegal, making way to call upon appellant to produce import documents.
(xi) That irrespective of the referred in above proposition of law, if it is considered for a while that the stance taken by the respondents is correct, even then the onus to prove the allegation of smuggling rest on their shoulders under Articles 117 and 121 of Qanun-e-Shahadat (10 of 1984) as per laid down law by the Superior Courts of Pakistan namely S.M. Anwar Sethi v. South British Insurance Company Ltd. PLD 1975 Kar. 458; Barkat Ali v. The State PLD 1973 Kar. 659; Cross on evidence 1967, 3rd Edn., London Butterworth; A Practical Approach to Evidence by Peter Murphy 1988 3rd Edn. London, Black Stone Press Ltd; The Modern Law of evidence by Adrian Kean 1985, 1st Den. Oxford, Professional Books Ltd; Mst Safia Begum v. Mst. Malkani and another PLD 1965 Lah. 576; Akber Ali v. Ehsan Ellahi PLD 1980 Lah. 145; Government of Pakistan v. Moulvi Ahmed Saeed 1983 CLC 414; Muhammad Sarwar v.. Fazal Rehman 1982 CLC 1286 Sardar Ghulam Nabi Khan v. Azad Government of State of Jammu and Kashmir 1984 CLC 325; Eastern Rice Syndicates v. CBR PLD 1959 SC (Pak) 364; The Collector Central Excise and Land Customs v. Imdad Ali 1969 SCMR 708 and Messrs Latif Brothers v. Deputy Collector of Customs, Lahore 1992 SCMR 1083.
(xii) That the said proposition of law was explained with clarity by their Lordship of High Court of Sindh in reported judgment PLD 1996 Karachi 68 Kamran Industries v. Collector of Customs (Exports) and Order of the Custom Tribunal in Customs Appeal No. K-391/04 Mr. Muhammad Mir v Collector of Customs (Adjudication), Karachi. While holding that:
"For every offence for which the accused is charged under the Customs Act he shall have to disprove the allegation of the Customs Authorities is entirely without any obligation upon the Customs Department to adduce evidence, it would amount to affording unfettered, naked and arbitrary discretion to the authorities who may at their sweet will make out false cases against importers without the need of proving the sanctity of their actions. Such cannot be the intention of Parliament while the Courts are under an obligation to place such construction on statutes which would be beneficial to the widest extent and which would make the legislation operate fairly, justly and equitably and not unreasonably (see Mst. Zainab v. Kamal Khan (PLD 1990 SC 1051). This Court is also of the view that a construction is to be placed upon statutes which would minimize the discretion vested upon the executive authorities. As absolute power corrupts an interpretation fettering the discretion of the executive authority would be more in line with the principles of equity and justice. The issue regarding the applicability of section 187 is to be looked from another angle i.e. in case we were to hold that due to Section 187 the entire burden to dispute the entire case rest upon the accused alone. The executive authorities would be let loose and given a wide, naked and arbitrary discretion to operate without any guidelines which would then leave section 187 susceptible to a Constitutional challenge upon its vires on this score alone. By the interpretation as proposed above any redundancy or illegality would also be avoided.
(xiii) That despite of the fact that the respondents failed to discharge the onus of proof in regards to leveled allegation, the appellant despite not warranted under law voluntarily supplied the copies of the corresponding documents of the goods transported from Karachi to Hyderabad for resolving the non-issue created by the respondent No. 1 and which stood verified from the seller as evident from the reply to the notices served on them under Section 26 of the Customs Act, 1969. Confirmation in regards to 45 TV's and 3 Refrigerators were completely discarded and ignored without any basis and lawful excuse beside in absence of availability of power of detaining/seizing of the goods.
(xiv) That with the submission of the corresponding documents against each bilty the appellant discharged burden of proof and there was no cause or reason for the respondent No. 1 to detain, seize the goods purchased/transported by the appellant for the purpose of adjudication and nor for the respondent No. 2 for ordering of release of 62 TV's and confiscation of the rest, rendering his act in derogation to the judgment of High Court of Lahore in C.A. No. 68/2002 Collector of Customs, Lahore v. S.M. Saleem. The Division Bench of the Lahore High Court, Lahore dismissed the appeal and maintain the order of the Tribunal while holding in Paras 6 and 7 that:
"6 it is not denied before this Court that the goods subject matter of this appeal were importable. It is further not denied that the respondent had produced receipts before the Adjudicating Officer but he did not give any enable reason whatsoever as to why this piece of documentary evidence was not relied upon. The operative part of the judgment of the Deputy Collector Customs (Adjudicating) is to the effect that "since no documentary evidence indicating the proper import thereof has been furnished. It is hereby concluded that watches and watches part seized in this case have been brought into country without payment of duty and taxes."
The Section requires reasonable belief on the part of the person seizing the goods that an act to defraud the govern-ment of duty has been committed. If a person purchases goods as in an ordinary market then in the absence of any suspicious circumstances of some definite fact leading to that inference the custom officer is not entitled to a reasonable belief that the Government has been defrauded of the duty payable on the goods. The ordinary method of the import of goods from outside into Pakistan is that they come through the customs barrier and the duty payable is infact paid. The presumption therefore, with respect to any goods which may be sold in the open market in the absence of an indication to the contrary would be that duty has been paid on them.
(xv) That irrespective of the referred in above factual aspect and discharge of burden of proof by the appellant despite not laid upon him, the appellant felt appropriate to rely upon judgment of the Hon'ble Supreme Court of Pakistan reported 2007 SCMR 10 Collector of Customs, Sales Tax and Central Excise v. Prof. Muhammad Khan and 6 other. Wherein their lordship of the Supreme Court examined the aspect that whether Directorate General-FBR can demand import documents of any goods or item within the city or during their transport within the territory of Pakistan or not and held that:
"law certainly provided protection to a public servant for doing lawful act in discharge of his duty but no such immunity was to be claimed by a person for committing illegal act in his official capacity as a public servant in the absence of proof that the goods in possession of a person were brought into Pakistan in violation of any law, customs authorities and such other public functionaries had no authority to detain such goods merely on suspicion---petitioner had showed documents of registration in his name to customs official who, having detained the car, insisted the production of import documents for release of car---- Detention of car was an act of highhandedness which was committed through misuse of official authority and it might constitute misconduct in terms of Civil Servants (Efficiency and Discipline) Rules, 1973 read with Removal from Service (Special Powers) Ordinance, 2000---- Exercise of official authority in a manner in which a person was made victim of misuse of process of law was violative of constitutional guarantees of rights of citizens and a person responsible for violation of such rights of citizens and a person responsible for violation of such rights was to face legal consequences--- Act of customs officials might also constitute misconduct, therefore, concerned authorities were under legal obligation to initiate appropriate proceedings against officials involved in the matter."
(xvi) The appellant carves his right to add any fresh grounds at the time of hearing beside placing any valid incriminating evidence/ documents
The respondent in order dated 26.12.2013 failed to distinguish the act and commission of the appellant in relation to the provision of the act and rules and regulation framed there under as evident from the following:--
(a) That the impugned order-in-original was not dispatched/served on appellant as evident from the fact that the order should had been dispatched to the appellant on his address immediately upon passing date i.e. 26.12.2013. To the contrary, the same was not dispatched the appellant obtained the copy of the order from Mr. Haji Saeed Ahmed.
(b) That it is appropriate for the appellant to state further that on plain reading of impugned order-in-original issued by the respondent shows that it is not a speaking orders in which the role of appellant has been distinguished. Such orders have been deemed to be without jurisdiction in which the competent authorities have not discussed questions of fact and questions of law addressed by the taxpayer. This position has been discussed at length in the case of National Bottlers decided by the Hon'ble Lahore High Court reported as 1994 CLC 2181 wherein it has been ruled that orders passed by the authorities were not only laconic and sketchy but there was no application of mind. It was further observed that it is now a well settled law that authority exercising statutory powers of adjudication appeal and revision affecting valuable rights of the parties act in quasi judicial if not judicial capacity and it must pass a speaking order duly supported by reasoning showing due application to facts and law applicable while disposing off the case before it. Orders lacking this criteria have been declared to be without lawful authority and of no legal effect and hence beyond jurisdiction and corem non judice. The operational portion of the subject order-in-original contains inherent legal infirmities, deficiencies and substantive illegalities, which are in direct contradiction with the provision of the Customs Act, 1969, rules and regulation framed there-under and judgments of the Superior Judicial fora. The said position is also fortified by the judgments of Superior Courts reported as 2005 YLR 1019, 2007 PTD 2500, 2004 PTD 1973, 2005 YLR 1719, 2003 PTD 777, 2003 PTD (Trib) 2369, 2002 MLD 357, 1983 CLC 2882, 2005 PTD 2519, 2005 PTD 1189, 2003 PTD 2369. As regards non-speaking orders the Hon'ble Supreme Court of Pakistan has time and again disapproved the passing of such perfunctory orders in the cases invoking valuable rights of the parties. It is settled law that the judicial order must be a speaking order manifesting by itself that the Court has applied its judicial mind to the issues and the points of controversy invoked in the case. Furthermore, when the reasons would not be forthcoming, obviously the Appellate Court would be deprived of the views of the subordinate Court. In any way the impugned orders which are not speaking orders and devoid of reasons are not sustainable in law instead mala fide and based on intellectual dishonesty and as such are in contravention of law declared by the Hon'ble Supreme Court of Pakistan in various cases reported as PLD 1995 SC (Pak) 272, PLD 1970 SC 158, PLD 1970 SC 173 and 1984 SCMR 1014.
(c) That upon receipt of the contravention report, it was mandated upon the respondent No. 2 to look into the actual facts of the case and the applicable provision of the Act, Rules and Regulation independently and fairly. Instead he completely relied upon the version of the officials of respondent No. 1 and mechanically signed the show cause notice on the basis of the draft of the show cause notice forwarded by them along with the contravention report, rendering it nullity to the law laid down by the Superior Courts of Pakistan. Reliance is placed on the reported judgment 2004 PTD 369 Messrs Zeb Traders v. Federation of Pakistan. Wherein their lordship of the High Court held in unambiguous terms that:--
"The proceeding before Adjudicating Officer, under the Customs Act, 1969 are in the nature of quasi judicial proceedings and issuance of notice under section 180 of the Customs Act, is very important documents. The decision to issue show cause notice is to be taken by the Collector, Adjudication, by application of independent mind and not merely signing the draft show cause notice submitted by the investigation agency separate from the Adjudication Department and each category of officers are required to perform their respective functions/duties under the law. The practice to submit draft show cause notice by the Director General of Intelligence and Investigation to the Collector Adjudication is depreciated."
(d) That for intercepting goods transported with in the territory of Pakistan, by the official of respondent No. 1 is tantamount to abuse of power as no interception can be made unless a provision exists in the Act or any notification is in field directing the transporter to obtain documents of import or purchase prior to booking of the goods meant for transportation within the territory of Pakistan and the driver of the trailer/carrier should contains those documents during the journey. No such section is available in the Act and nor any notification is in field. Resultant interception of the transported goods at Multan by the officer of DG (I&I)-FBR, Multan Range is patently illegal rather confirmed without any ambiguity abuse of power and high handedness.
(e) That irrespective of the referred in above illegality it is appropriate for the appellant to state that it was mandated upon the Directorate General-FBR to act within the frame work of the definition of the word "smuggle" given in subsection 2(s) of the Customs Act, 1969. For ease verbatim of the same is reproduced here-in-under:
"smuggle" means to bring into or take out of Pakistan in breech of any prohibition or restriction for the time being in force, or evading payment of customs duties or taxes leviable thereon, Gold bullion, silver bullion, platinum, palladium, radium, precious stones, antiques, currency, narcotics and narcotic and pyschotropic substances; or
Manufactures of gold or silver or platinum or palladium or radium or precious stones, and any other goods notified by the Federal Government in the official Gazette, which, in each case, exceed [one hundred and] [fifty thousand rupees] in value
or
Any goods by any route other than a route declared under section 9 or 10 or from any place other than a customs station and includes an attempt, abetment or connivance of so bringing in or taking out of such goods; and all cognate words and expressions shall be construed accordingly.]
That customs ports etc. as expressed in clause (iii) of Section 2(s) are notified through various notifications in terms of Section 9 of Customs Act, 1969. Whereas, the border area of Pakistan Territory, whereas restriction on the possession of goods in certain areas (borders) as expressed in Section 177 ibid is also notified vide Notification No. SRO 118(I)/83 dated 12.02.1983, ear marking the area of 5 miles adjacent to the Frontier of Pakistan with India and Iran to be the area to which Section 177 of the Customs Act, 1969 shall apply.
(f) That the goods transported by the appellant were from Karachi to Hyderabad and those were not brought into Pakistan in breach of any prohibition or restriction for the time being inforce or while evading payment of customs duties leviable thereon as expressed in clause (a) of Section 2(s). Nor were brought into Pakistan by any other route expressed in section 9 or 10 of the Customs Act, 1969 or from any other place than a customs station as per clause (a)(iii) of Section 2(s) instead were transported through proper agreement and those cannot be considered as smuggled by any stretch of imagination. Hence interruption of carrier loaded with the goods, their detention and seizure subsequently for the purpose of adjudication is nullity to the definition of the word "Smuggle" rendering the entire act of the Directorate General -FBR and respondent right from interruption till issuance of show cause notice as ab-initio, null and void.
(g) That it is also imperative for the appellant to add that in the light of expressed provision of Section 2(s) and Section 177 of the Customs Act, 1969 and S.R.O. 118(I)/83 confirms that the transportation of goods within the territorial limit of Pakistan do not constitute an offence, meaning thereby that transportation of goods from Karachi to Hyderabad through Super High Way and interruption of those at Truck Stand near Customs House by the official of respondent No. 1 cannot be termed as smuggling. It would also not be out of place to state that after clearance of the goods from Customs, either from Area of Sea Port or Dry Port, they are out of the ambit of Customs Department including the Directorate of Intelligence and Investigations and any subsequent checking during transportation of those goods within the territory of Pakistan is beyond their jurisdiction as none of the provision of the Customs Act, 1969 authorizes any designated official of Customs to interrupt the local transportation of goods on sham pleas of smuggling. Reference is placed on the order of the Tribunal in Customs Appeals Nos. K-719/02, H-720/02, H-686/03, Q-776/04, 2005 PTD (Trib.) 135 and PLD 1991 Supreme Court 630.
(h) That the respondents Nos. 1 and 2 have also to look into the 2nd aspect for confirmation of smuggling i.e. whether the goods so transported are retrieved from the hidden/false cavities made for time being or artificially or the vehicle was exclusively used for the smuggled goods as defined in clause (b) of preamble Notification No. 499(I)/2009 dated 13.06.2009, meaning thereby open space at the hind of a truck for loading goods would not fall within the definition of false cavity and neither transported by him within the territory of Pakistan with the exclusion of area given in Notification No. 118(I)/83 dated 12.02.1983, cannot be presumed even through a figment of imagination as smuggled. The appellant intended to transport the goods at the hind of the carrier openly. Resultant, the carrier can be intercepted, detained, seized as has been done by the official of respondent No. 1 and neither the vehicle can be ordered to be confiscated and release of it on redemption fine and penalty by respondent No. 2. The said act amounts to exercise of powers based on forced construction of law, rendering the same nullity to law. Reliance is placed on the order of Customs Appellate Tribunal in Customs Appeal H-185/2009 Noor Muhammad son of Muhammad Gul, Imtiaz Ali son of Pir Buksh v. Deputy Collector of Customs, (Adjudication) Hyderabad and Lahore High Court reported judgment 2010 PTD 2015 Collector of Customs v. Rehmat Afridi.
(i) That irrespective of the referred in above proposition of law, if it is considered for a while that the stance taken by the official of respondent No. 1 is correct that the goods transported by the appellant are smuggled and his vehicle is used exclusively for the transport of the smuggled goods, the ultimate burden to prove the said fact rest on the shoulders of the officials of respondent No. 1 under Articles 117 and 121 of Qanun-e-Shahadat (10 of 1984) as per laid down law by the Superior Courts of Pakistan namely S.M. Anwar Sethi v South British Insurance Company Ltd PLD 1975 Kar. 458; Barkat Ali v. the State PLD 1973 Kar. 659; Cross on evidence 1967, 3rd Edn., London Butterworth; A Practical Approach to Evidence by Peter Murphy 1988 3rd Edn. London, Black Stone Press Ltd; The Modern Law of evidence by Adrian Kean 1985, 1st Den. Oxford, Professional Books Ltd; Mst Safia Begum v. Mst Malkani and anothers PLD 1965 Lah. 576; Akber Ali v. Ehsan Ellahi PLD 1980 Lah. 145; Government of Pakistan v. Moulvi Ahmed Saeed 1983 CLC 414; Muhammad Sarwar v. Fazal Rehman 1982 CLC 1286 Sardar Ghulam Nabi Khan v. Azad Government of State of Jammu and Kashmir 1984 CLC 325; Eastern Rice Syndicates v. CBR PLD 1959 SC (Pak) 364; the Collector Central Excise and Land Customs v Imdad Ali 1969 SCMR 708 and Messrs Latif Brothers v. Deputy Collector of Customs, Lahore 1992 SCMR 1083.
(j) That the said proposition of law was explained with clarity by their Lordship of High Court of Sindh in reported judgment PLD 1996 Karachi 68 Kamran Industries v. Colllctor of Customs (Exports) and Order of the Custom Tribunal in Customs Appeal No. K-391/04 Mr. Muhammad Mir v. Collector of Customs (Adjudication), Karachi. While holding that:
"For every offence for which the accused is charged under the Customs Act he shall have to disprove the allegation of the Customs Authorities is entirely without any obligation upon the Customs Department to adduce evidence, it would amount to affording unfettered, naked and arbitrary discretion to the authorities who may at their sweet will make out false cases against importers without the need of proving the sanctity of their actions. Such cannot be the intention of Parliament while the Courts are under an obligation to place such construction on statues which would be beneficial to the widest extent and which would make the legislation operate fairly, justly and equitably and not unreasonably (see Mst. Zainab v. Kamal Khan (PLD 1990 SC 1051). This Court is also of the view that a construction is to be placed upon statutes which would minimize the discretion vested upon the executive authorities. As absolute power corrupts an interpretation fettering the discretion of the executive authority would be more in line with the principles of equity and justice. The issue regarding the applicability of section 187 is to be looked from another angle i.e. in case we were to hold that due to Section 187 the entire burden to dispute the entire case rest upon the accused alone. The executive authorities would be let loose and given a wide, naked and arbitrary discretion to operate without any guidelines which would then leave section 187 susceptible to a Constitutional challenge upon its vires on this score alone. By the interpretation as proposed above any redundancy or illegality would also be avoided.
(k) The appellant carves his right to add any fresh grounds at the time of hearing beside placing any valid incriminating evidence/documents
(i) That 107 sets of foreign origin LED/LCD TV's and three (03) Refrigerators were intercepted and subsequently seized on 04.09.2013 by the staff of Anti -smuggling organization, NMB Wharf, Karachi during transportation, at Super Highway near Toll Plaza, Karachi, the aforementioned LED/LCD TV's were smuggled/non duty paid and brought at intercity Bus Terminal Yousuf Goth, Karachi from there the same were loaded on Mazda Mini Truck bearing registration No. JY0080 for transportation to onward destination.
(ii) That the above mentioned smuggled and non duty paid LED/LCD TV's were firstly taken to Saddar market and 03 refrigerators were loaded on the back of the vehicle to camouflage the smuggle goods and receipt of entire goods was made to substantiate the legal importation/possession of the smuggled goods to disguise the Law Enforcement Agencies.
(iii) That as per facts and circumstances of the case a receipt in the name of S.S. electronics, Hyderabad was being produced by the respondent No. 2 (occupant/driver/owner of the vehicle) on behalf of the respondent No. 1, issued by whole sale point A/5, Hashoo Centre, Abdullah Haroon Road, Saddar, Karachi having no NTN No.
(iv) That during the adjudication proceeding the respondent No. 1 had submitted 05 more sale receipt viz (1) Messrs Surmawala, A-4, Hashoo Centre, A.Haroon Road, Saddar, Karachi (ii) Abdullah Nawaz Electronic, Shop No. A-3 and L-36, Hashoo Centre, Saddar, Karachi (iii) Messrs Wholesale point Hashoo Centre, Saddar, Karachi. (iv) Messrs Crown Electronic, Hashoo Centre, Saddar, Karachi and (v) Messrs Fahad Electronics, Hashoo Centre, Saddar, Karachi which is contrary to the respondent previous act as at the time of interception only 1 receipt was issued by M/s Wholesale point was produced, where under the whole goods were sold out by the said shop. This dissimilar action of the respondents shows an after thought and clear cut involvement of possession/transportation of smuggled/non duty paid goods in terms of subsection (s) of Section 2 of the Customs Act, 1969.
(v) The sale receipts were further investigated and notice under section 26 of the Customs Act, 1969 were issued to the above mentioned seller through courier service (TCS) where under the valid legal documents pertaining to the import of seized LED/LCD/TV's and Refrigerators were sought.
(vi) The replies from the shop keeper were deposited by hand in the office of Assistant Collector, Headquarter-I through the respondents and the same were not furnished in terms of Section 215 of the Customs Act, 1969 no import documents pertaining to seized goods were provided by the purported seller of the smuggled goods. The operative parts of the replies of the above mentioned seller are reproduced as under:
M/s. Surmawala:
(i) It is submitted that we are dealing the business of LED/LCD TV's as retailer, not as an importer.
(ii) We sale purchase LED/LCD TV's locally manufactured or assembled in open market.
(iii) We also confirm that we had sold forty (40) pieces Samsung 32E-4003 Samsung LED TV's are 3 pieces Refrigerators Heir to Messrs S.S. Electronics Hyderabad vide bills Nos. 085 and 102 dated 03.Sep., 2013 which are locally manufactured/assembled in Lahore.
(iv) The information listed at "A" to "K" called from us by the Model Customs Collectorate of Preventive, Custom House, Karachi is not warranted as the goods sold to our customers are locally manufactured assembled by the companies in Lahore.
(v) As our business turn-over does not come under the threshold required for Sales Tax Registration under Sale Tax Act, 1990 therefore we do not file Sales Tax monthly Return.
M/s. Abdullah Nawaz Electronics:
(vi) It is submitted that we are dealing the business of LED/LCD TV's as retailer, not as an importer.
(vii) We sale purchase LED/LCD TV's locally manufactured or assembled in open market.
(viii) We also confirm that we had sold twentyfive (25) pieces Samsung 32E-4000 Samsung LED TV's to Messrs S.S. Electronics Hyderabad vide bill No. 0463 dated 03.Sep., 2013 which are locally manufactured/assembled in Lahore.
(ix) The information listed at "A" to "K" called from us by the Model Customs Collectorate of Preventive, Custom House, Karachi is not warranted as the goods sold to our customers are locally manufactured assembled by the companies in Lahore.
(x) As our business turn-over does not come under the threshold required for Sales Tax Registration under Sale Tax Act, 1990 therefore we do not file Sales Tax monthly Return.
M/s. Whole Sale Point:
(xi) It is submitted that we are dealing the business of LED/LCD TV's as retailer, not as an importer.
(xii) We sale purchase LED/LCD TV's locally manufactured or assembled in open market.
(xiii) We also confirm that we had sold ten (10) pieces Samsung 32E-420 Samsung LED TV's & 05 Pieces Sony 32 EX 330 to M/s. S.S. Electronics Hyderabad vide bill No.1949 dated 04.Sep., 2013 which are locally manufactured/assembled in Lahore.
(xiv) The information listed at "A" to "K" called from us by the Model Customs Collectorate of Preventive, Custom House, Karachi is not warranted as the goods sold to our customers are locally manufactured assembled by the companies in Lahore.
(xv) As our business turn-over does not come under the threshold required for Sales Tax Registration under Sales Tax Act, 1990 therefore we do not file Sales Tax monthly Return.
M/s. Crown Electronics:
(xvi) It is submitted that we are dealing the business of LED/LCD TV's as retailer, not as an importer.
(xvii) We sale purchase LED/LCD TV's locally manufactured or assembled in open market.
(xviii) We also confirm that we had sold twenty (20) pieces Samsung 23 F -4003 Samsung LED TV's & 5 Pieces Sony 32 EX 330 to M/s. S.S. Electronics Hyderabad vide bill No. 197 dated 02.Sep., 2013 which are locally manufactured/assembled in Lahore.
(xix) The information listed at "A" to "K" called from us by the Model Customs Collectorate of Preventive, Custom House, Karachi is not warranted as the goods sold to our customers are locally manufactured assembled by the companies in Lahore.
(xx) As our business turn-over does not come under the threshold required for Sales Tax Registration under Sales Tax Act, 1990 therefore we do not file Sales Tax monthly Return.
M/s. Fahad Electronics:
(xxi) It is submitted that we are dealing the business of LED/LCD TV's as retailer, not as an importer.
(xxii) We sale purchase LED/LCD TV's locally manufactured or assembled in open market.
(xxiii) We also confirm that we had sold five (5) pieces Samsung 40F-5000 Samsung LED TV's and two (02) 43F Samsung LED TV's to M/s. S.S. Electronics Hyderabad vide bill No. 164 04.Sep., 2013 which are locally manufactured/assembled in Lahore.
(xxiv) The information listed at "A" to "K" called from us by the Model Customs Collectorate of Preventive, Custom House, Karachi is not warranted as the goods sold to our customers are locally manufactured assembled by the companies in Lahore.
(xxv) As our business turn-over does not come under the threshold required for Sales Tax Registration under Sales Tax Act, 1990 therefore we do not file Sales Tax monthly Return.
(i) That the contents of para are denied being incorrect, baseless and mis-leading facts of the case are that the contents of this para are irrelevant to the case as the case was originated by the respondent No. 1 on 04.09.2013, how the order was passed by the respondent No. 2 on 22.04.2011 and by respondent No. 3 on 30.12.2012 whereas, in the instant case there is no respondent No.3. However, it is quite true that the above named appellant is a habitual offender and always involved in criminal activities reportedly he has been sent to the prison vide FIR No.P-02/2014 dated 06.01.2014 when he tried to smuggled Foreign Origin Counter feed currency viz UAE Dirham 86900.00 and 31000/- Saudi Riyal to Dubai.
(ii) The contents of this para are denied as the same are based on assumption and surmising. The respondent No. 1 seized the true smuggled/non duty paid goods which were being transported to Hyderabad. The appellant failed to substantiate its legal possession/importation/transportation. Before issuance of Show Cause Notice by the respondent No. 2 or legal aspect were checked and found according to law. The precedent quoted by the appellant is irrelevant to the case.
(iii) That he contents of sub-para are denied being incorrect, baseless and mis-leading. Fact of the case are that the seized goods brought into the country through unauthorized routes other then the routes mentioned in Sections 9 and 10 of the Customs Act, 1969. The appellant and his accomplices failed to prove legal import and payment of duty and taxes of the seized goods in terms of Section 156(2) ibid. The said goods are liable to confiscation for violation of Sections 2(s), 16, 156(2) and 178 of the Customs Act, 1969 punishable under clauses 89, 90 and Section 166(1) ibid. Sub-para (d) of para 3 of S.R.O. 886(I)/ 2002 says that the cases of the following categories shall not be adjudicated by the adjudicating officer of the Collectorate of Customs (Adjudication) namely, (d) cases involving technical violation of import or export restrictions without involvement of any evasion of duty and taxes. But in the instant case the appellant did not provide single evidence regarding payment of duty and taxes of the impugned goods. The appellant caused loss of Government Revenue amounting to Rs.19,13,645.00. No violation of law has been made in Show Cause Notice and Order-in-Original in terms coram non judice because the Adjudicating Officer is empowered to adjudicate the case in terms of Section 179 of the Customs Act, 1969 and the precedent incorporated by the appellant are irrelevant to the instant case.
(iv) The contents of sub-para are denied being incorrect and misleading. Fact of the case are that the before making seizure the notice in terms of Section 171 of the Customs Act, 1969 were served upon the appellant which is available on record.
(v) The contents of sub-para are denied being incorrect and misleading. Fact of the case are that the respondent No. 1 is duly empowered under section 164 of the Customs Act, 1969 to stop and search the conveyance and also duly empowered to seek the smuggled goods in terms of Section 168 ibid. The respondent No. 1 did not misused the power conferred upon him. The respondent No. 1 is also authorized to perform the Anti-smuggling activities vide S.R.O. 581(I)/2013 dated 18.06.2013.
(vi) That the contents of sub-para are denied being incorrect, concocted, based on surmising and conjectures. The powers exercise by respondent No.1 were according to law. To know the essence of word "smuggling" it is appropriate to understand the concerned section which is incorporated as under:
Section 2(s) :-"smuggle" means to bring into or take out of Pakistan in breach of any prohibition or restriction for the time being in force, or evading payment of customs duties or taxes leviable thereon.
(a) Gold bullion, silver bullion, platinum, palladium, radium, precious stones, antiques, currency, narcotics and narcotic and pyschotropic substances; or
(b) Manufactures of gold or silver or platinum or palladium or radium or precious stones, and any other goods notified by the Federal Government in the official Gazette, which, in each case, exceed [one hundred and] [fifty thousand rupees] in value or
(c) Any goods by any route other than a route declared under section 9 or 10 or from any place other than a customs station and includes an attempt, abetment or connivance of so bringing in or taking out of such goods; and all cognate words and expressions shall be construed accordingly.]
As per above definition it is submitted that the appellant did not provide any evidence that the goods were imported legally and duty and taxes have been paid leviable thereon, secondly, as per (ii) of the above definition the seized goods have been notified by the FBR vide Notification S.R.O. 566(I)/2005 dated 06.06.2005 for the purpose of Section 2(s), thirdly the appellant did not provide any evidence regarding legal import through the routes declared under sections 9 and 10 of the Customs Act, 1969. In the light of aforementioned facts the seized goods can be construed as smuggled and non duty paid and brought into the country through un-authorized routes.
(vii) That the sub-para are denied being un-correct, baseless and mis-leading. Facts of the case are that the appellant failed to provide the legal imported documents of the impugned goods. It has already been submitted the only one sale receipt issued by the Messrs Whole Sale Point in the name of Messrs S.S. Electronics, Hyderabad was provided by the appellant (owner of the vehicle) at the time of interception where under the entire goods were sold out by that shop. Further it is submitted that the appellant did not claim the ownership before respondent No. 1 directly at the time of adjudication proceeding the appellant furnished 5 more sale receipt of various shops in support of his legal possession, contrary to his previous act. The notices under section 26 of the Customs Act, 1969 was issued to the concerned shops for acquiring the legal import documents of the seized goods, to ascertain the legality or illegality of the same, which were not provided by the concerned shop keeper as mentioned vide para 6 here-in-above. Thereafter the appellant took the plea that the goods purchased by him were locally manufactured by Messrs Orient Electronics (Pvt.) Ltd. at Lahore. Which were approached by the respondent No. 1 to confirm whether the same were made by them or otherwise. Messrs Orient Electronics (Pvt.) Ltd., Lahore vide letter dated 08.11.2013 that the seized goods were not manufactured/assembled by them (copy of letter is annexed). In the light of aforementioned facts and circumstances, it is crystal clear that the impugned goods were smuggled which were rightly seized under section 168 of the Customs Act, 1969 for violation of Sections 2(s), 16, 156(2), 178 and 157(2) of the Customs Act, 1969 punishable under clauses 89 and 90 of Section 156(1) ibid the contents of sub-para are repeated and the reply of the same has already been submitted here-in-above, hence needs no comments.
(viii) The contents of sub-para are denied being fabricated, concocted and based on classification. Fact of the case are that no import documents i.e. GD was provided by the appellant to determine that the goods were legally imported and the leviable duty and taxes have been paid. It has already been mentioned in the seizure report that the impugned goods were brought from Quetta to inter-city bus terminal, Yousuf Goth, Karachi thereafter were taken to Saddar Market from their refrigerators were loaded and bogus receipt of whole goods was manipulated to disguise the Law Enforcement Agency. It is the modus operandi which is being used for movement of smuggled goods. Question arises here that the goods cannot be smuggled without cavities; it was smuggled exclusively through inter city buses and was being transported to Hyderabad without legal import documents in terms of Section 2(s).
(ix) That the contents of sub-para are denied. The appellant neither provided any proof regarding legally importation of such goods nor provided any documents for payment of duty and taxes leviable thereon. The contrary had been shown at the part of the appellant as firstly he provided only one receipt of M/s. Whole Sale Point but at belated stage i.e. during adjudication proceeding he furnished further 5 sales receipt of various shop.
(x) That the contents of sub-para are denied and incorrect, baseless and misleading. Fact of the case are that the case was originated by respondent No. 1 and the goods were seized under Section 168 of the Customs Act, 1969 instead of Pakistan Penal Code. The remedies penalties and the burden of proof are also available under the said Act. Section 156(2) which is reproduced;
"(2) Where [any goods specified in clause (s) of section 2 or in a notification issued thereunder] are seized under this Act in the reasonable belief that an act to defraud the Government of any duty payable thereon or to evade any prohibition or restriction for the time being enforce by or under this Act has been committed in respect of such goods, or that there is intend to commit such act, the burden of proving that no such act has been committed and there was no such intent shall be on the person from whose the possession of the goods were seized." The Articles 117 and 121 of Qanun-e-Shahadat, 1984 is not applicable to the instant case.
(xi) That the precedent reproduced by the appellant has no relevancy to the case as the ratio decidendi and the principal of law are totally different. Hence need no comments.
(xii) That the contents of sub-para are denied being incorrect, baseless and mis-leading. Factual position of the case is that the burden of proof lies upon the appellant in terms of Section 156(2) of the Customs Act, 1969 which has been reproduced hereinabove. The appellant failed to discharge his burden as he did not provide the valid import documents.
(xiii) That the contents of sub-para are denied being incorrect baseless and misleading. Facts of the case are that the smuggled goods were not transported under the goods forwarding company and no bilty was made in this regard. The same was transported on Mazda Truck bearing registration No. JY-0080. The burden of proof lies still on the appellant and he did not discharge the same in terms of section 156(2) of the Customs Act, 1969.
(xiv) That the contents of sub-para are in replication and reply of the same has already been submitted hereinabove. Hence, needs no comments. That further arguments will be advanced before the Hon'ble Court at the time of hearing.
(i) The above named appellant did not comply with the law and committed the offence under Section 157(2) of the Customs Act, 1969 which is reproduced here as under:--
"(2) Every conveyance of what ever kind used in the removal of any good liable to confiscation under this Act shall also be liable to confiscation."
(ii) That the contents of this para are denied being incorrect as the order-in-original dated 26.12.2013 was communicated to the appellant through his consultant which can be confirmed from the concerned file from the Adjudication Officer.
(iii) That the contents of para are denied being incorrect, baseless and misleading. Facts of the case are that the order-in-original is quite clear regarding confiscation and redemption of the seized vehicle. The adjudicating officer has adequate jurisdiction in terms of section 179 of the Customs Act, 1969. Before issuance of said order dated 26.12.2013 all question of facts and question of law were discussed in detail.
(iv) That the contents of para are denied being incorrect and fabricated as it has already been submitted above that the respondent No. 1 has jurisdiction to curb the smuggling activities and seize the smuggled goods under the provisions of Customs Act, 1969. It is humbly submitted that the respondent No. 1 may stop the operation and not to exercise power conferred upon vide section 3 of the Customs Act, 1969 when smuggled goods are moving in the country.
(v) That the contents of para have no relevancy to the case hence need no comments.
(vi) That the contents of para are denied being fabricated, concocted and based on classification. Fact of the case are that it has already been mentioned in the seizure report that the smuggled goods were transported using the modus operandi to load the refrigerator on the vehicle and to issue the sale receipt of entire goods. Further the goods were camouflage with Tarpal at the time of importation. No import documents i.e. GD was provided by the appellant to determine that the goods were legally imported and leviable duty and taxes have been paid. It has already been mentioned in the seizure report that the goods were brought from Quetta to intercity Bus Terminal Yousuf Goth, Karachi thereafter were taken to Saddar Market from there refrigerators were loaded and bogus receipts of the whole goods were manipulated to disguise the Law Enforcement Agencies. It is modus oprendi which is being used for movement of smuggled goods.
(vii) That the contents of para are irrelevant to the case as the ratio decidendi are not same, hence needs no comments.
(i) Whether the respondent No.1 has the powers to intercept and detain the goods transported within the city or territory of Pakistan on suspicion of smuggled goods under Section 164 of the Customs Act, 1969 to be read with S.R.O.371(I)/2002 dated 15.06.2002 in the absence of any notification directing the transporter/driver of the goods to acquire and posses good declaration/bill/purchase receipt of the transported goods ?
(ii) Whether the respondent No. 2 was empowered to adjudicate the instant case in the presence of Notification No. 886(I)/2012 dated 18.07.2012 and to venture outside the scope of show cause notice?
(iii) Whether goods transported within the territory of Pakistan falls within the definition of smuggled goods in terms of Section 2(s) of the Customs Act, 1969 read with Notification Nos. S.R.O. 118(I)/83 dated 12.02.1983 and S.R.O. 499(I)/2009 dated 13.06.2009?
(iv) Whether the good intercepted and detained by the respondent No. 1 during the course of transportation within the territory of Pakistan are freely available in the local market without any restriction, hence ought to be duty paid as held by Superior Judicial Fora in umpteenth reported judgments?
(v) Whether the appellant discharged burden of proof laid upon him under Section 187 of the Customs Act, 1969?
(vi) Whether the respondent No. 1 can ask to pay the leviable duty and taxes on the/purchased goods in the absence of availability of any evidence of smuggling in material particular on which exchequer already received the leviable duty and taxes at the time of sale, in negation to the maxim of "double Taxation" and derogation of the provision of Customs Act, 1969, Sales Tax 1990 and Income Tax Ordinance 2001 and the law laid down by the Superior Judicial fora in umpteenth reported judgments?
(vii) Whether the respondent No. 2 issued the show cause notice after going through the facts of the case and applicable to provision of the Act, Rules and Regulations independently and fairly as held in reported judgment 2004 PTD 369 Messrs Zeb Traders, v. Federation of Pakistan?
Notwithstanding, the Notification No. 581(I)/2013 dated 18.06.2013 also no where delegate powers to the official of respondent No. 1 under Section 2(s) and Section 177 of the Customs Act, 1969, containing for the elaboration of the word "smuggle" and "restriction on possession of goods in certain areas", and these also does not includes the goods purchased locally and transported within the territory of Pakistan. Likewise, the Customs Act, 1969 contains no Section or any Notification is in field empowering the officials of respondent No. 1 to either intercept or detain any goods transported by any person himself or through public carrier within the territory of Pakistan with the exclusion of area expressed in Section 177 of the Customs Act, 1969 read with Notification No. 188(I)/83 dated 12.02.83 nor in regards to demand of import or purchase documents either from the driver of the carrier or from the owner of the transported goods through the public carrier. The officials of respondent No. 1 stretched their powers beyond the provision of the Customs Act, 1969 and Notification S.R.O. 581(I)/2013 dated 18.06.2013, which is not permitted under law. Rendering their act of intercepting the vehicle and detaining the loaded goods and demand of import/purchase documents of the transported goods from the driver or the shipper of the goods without power/jurisdiction, hence coram non judice as held by Superior Judicial Fora in reported judgments Major Syed Walayat Shah v. Muzaffar Khan and 2 others (PLD 1971 SC 184), Omer and Company v. Controller of Customs, (Valuation): (1992 ALD 449(1) Karachi AAA Steel Mills Ltd. v. Collector of Sales Tax and Central Excise Collectorate of Sales Tax (2004 PTD 624), PLD 1976 Supreme Court 514 Ali Muhammad v. Hussain Buksh and others and PLD 2001 Supreme Court 514 Land Acquisition Collector, Noshehra and others v. Sarfraz Khan and others, STA 444/03, STA 465/07, 2006 SCMR 129 Director, Directorate General of Intelligence and Investigations and others v. Messrs Al-Faiz Industries (Pvt.) Ltd. and others 2010 PTD (Trib) 1636 and 2010 PTD 465,2010 PTD (Trib.) 2158, 2011 PTD (Trib.) 1010, 2011 PTD (Trib) 1680, 2011 PTD (Trib.) 2086, The issue No. (i) is answered in negative.
"156(2)(i) if any goods imported by sea or air be unloaded or attempted to be unloaded at any place other than a customs ports or custom-airport declared under Section 9 for unloading of such goods; or (ii) if any goods be imported by land or inland water through any route other than a route declared under clause (c) of Section 9 for import of such goods; or (v) if any imported goods be brought into any bay, gulf, creek or river for the purpose of being landed at a customs port."
From the expression of above clauses, it is evident that the emphasis is on goods imported with the exception of their unloading other than declared port/airport under section 9, nothing is available on record that the transported goods were unloaded and cleared from the port/airport in contradiction to section 9 ibid. The respondent No. 1 has not indicated the place of unloading and subsequent transport, likewise the show cause is also silent in regards to the land route, bay, gulf, creek or river from where these were smuggled leading strong credence to the fact that no dispute in regards to the status of the goods, instead that these are not available in the local market for sale, to prove the said stance the respondent No. 1 has not placed a single piece of evidence leading strong credence that these goods are available in the market for purchase of general public. Resultant, the question of importability and determination of origin is out of context, determining the status of the transported/seized goods by the respondent No. 2 on the basis of origin is totally uncalled for. The said act of respondent No. 2 also ousted the subject case from his jurisdiction as it squarely falls within the ambit of import restriction under the Import Policy Order, 2013 and the question of origin falls within the ambit of technical violation of import and export restriction without the involvement of any evasion of duty and taxes, such type of cases has to be adjudicated by the Executive Collectorate in terms of para 3 of Notification No. 886(I)/2012 dated 18.07.2012. The said act of the respondent No. 2 is also outside the charter of show cause notice as nothing has been spelled out in regards to origin of the goods as determined by the respondent No. 2 in the show cause notice travelling beyond the scope of show cause notice is not permitted as held in reported judgments 1987 SCMR 1840 and 2004 PTD 1449, wherein it has been held by the Hon'ble Supreme/High Courts that " .... Order of adjudication being ultimately based on a ground which was not mentioned in the show cause notice was palpably illegal on the face of it." Rendering the order without power/jurisdiction as suffering from legal infirmity and fail the test of judicial scrutiny. The issue No (ii) is answered in negative.
Section 177--Restriction on the possession of goods in certain areas:- (i) This section shall apply to such areas adjacent to the frontier of Pakistan as may, from time to time, be notified by the Board in the official Gazette.
(2) In any area to which this section for the time being applies, no person shall have in his possession or control any such goods or class of goods in excess of such quantity or value as may from time to time be notified by the (Federal Government) or, with the previous approval of the (Federal Government) by the Provincial Government, in the official Gazette, except under a permit granted by the Government which issued the notification in respect of the particular goods or class of goods or by an officer authorized by such Government.
Notification of the Frontier Border area under Section 177
Notification No. SRO 118(I)/83 dated 12th February, 1983---In exercise of the power conferred by subsection (1) of section 177 of the Customs Act, 1969 (VI of 1969) and in supersession of its notification No. S.R.O 309(I)/70 dated 22.12.1970 the Central Board of Revenue is pleased to notify the area 5 mile adjacent to the Frontier with India and Iran to be the area to which the said section shall apply.
That after examining the Section 2(s), it is observed that the definition of 2(s) can be applied only if both of two forms are fulfilled. Each of this form have two "limbs" and the form applies if either of its limbs is applicable. These position are narrated here-in-below:
(a) Form (A): The impugned goods should be brought into or taken out of Pakistan either (i) in breach of any prohibition or restriction for the time being in force, or (ii) by evading payment of customs duty and other taxes leviable thereon; and
(b) Form (B) : The impugned goods should be (i) either those specifically listed in the definition, i.e. gold bullion, platinum, radium, etc or be notified by the Federal Government in the official Gazette in case those are not freely available in the local market for purchase by the general public, or (ii) be brought into or taken out of Pakistan by a route other than one declared under section 9 or 10 or from a place other than a customs station.
I am of the view that unless both forms (A) & (B) applies the case does not fall within the definition of "smuggle" and there can be therefore neither any smuggling of the goods nor can they be held to be "smuggled goods". As far as first limb is concern none of the goods specifically mentioned in the definition are relevant present case, therefore for Form (B) to apply, it must be shown that either goods transported have been notified by the Federal Government for the purpose of Section 2(s) and those are not freely available in the local market for purchase by the general public ( the first limb), or (the second limb) the goods in question were brought into Pakistan via route other than one declared in Section 9 or 10 of the Customs Act, 1969 or from a place other than a Customs-Station each of the two limbs of course applied to its own footing i.e., the applicability of one is not dependent on the existence, continuance or occurrence of the other . Obviously, if there is no notification in relation to the goods transported, then the first limb did not apply and it was only the second limb of form "B" that could apply. The importance of this point can be appreciated by looking at it in reverse. If there is no notification in the field (no application of the first limb), and goods are brought into Pakistan by the route declared under Sections 9 and 10 and through a customs-station i.e., the second limb also does not apply) then form "B" would not apply in such a situation, even though there may be an evasion of customs duty and other taxes or breech of any restriction or prohibition (i.e., form (A) applies). The matter would not come within the ambit of 2(s) in other words, there would be no smuggling of goods, which could not therefore be regarded as "smuggled goods". Another aspect has to be look into in the light of Section 177 of the Customs Act, 1969 and Notification No. 118(I)/83 dated 12.02.1983, which is irrelevant and not applicable in the instant case by virtue of the fact that the goods intercepted and detained were not transported by the appellant within 5 miles of India and Iran Borders, instead from Tool Plaza Karachi Super Highway, while the goods were transportation from Karachi to Hyderabad. Resultant, the transporting of the goods by the appellants does not fall within the meaning of "smuggling" and not the goods as "smuggled" through any stretch of imagination.
In addition to the above discussed two forms, the Federal Government carved yet another form vide Notification No. 499(I)/2009 dated 13.06.2009 extending the definition of smuggling and smuggled goods, i.e. "if those were transported through lawfully registered conveyance and containers carrying " goods in false cavities or been used exclusively or wholly for transportation of offending goods under clause (s) of section 2 of the Customs Act, 1969 (IV of 1969)". The Mazda Truck through which the appellant were transporting goods instead at the hind of truck and covering it with tarpal is for safety purpose. i.e. from dust and rain etc., and covering with tarpal does not falls within the definition of false cavities. This is ample to prove that neither the appellant was involved in any type of smuggling nor the goods transported by him are "smuggled goods". Rendering the intercepting of the vehicle and detention and seizure of the goods nullity to law as held by the Tribunal in H-185/2009 Noor Muhammad son of Muhammad Gul, Imtiaz Ali S/O Pir Buksh v. Deputy Collector of Customs, (Adjudication) Hyderabad and Lahore High Court reported judgment 2010 PTD 2015 Collector of Customs v. Rehmat Afridi and Customs Appeal No. K-339/2012 Qaderi Hajveri Goods forwarding Agency v. the directorate General of Intelligence and Investigations-FBR. On the basis of foregoing the Tribunal answered issue No. (iii) in negative.
That as regard issue No. (iv), one has to look into the vital fact that as to whether the goods transported by the appellant were freely available in the open market without any restriction, in case those are available then such goods does not falls within the degree of smuggled as defined in Section 2(s) of the/Customs Act, 1969 notification No. 118(I)/83 dated 12.02.1983, S.R.O. 566(I)/2005 dated 06.06.2005 and S.R.O. 499(I)/2009 dated 13.06.2009 and are to be presumed to have been duty paid as held by Supreme Court of Pakistan in reported judgment 1995 SCMR 387 Sikandar A. Karim v. The State. The Double Bench of the Hon'ble Supreme Court comprised of Justice Saeed-uz-Zaman Siddiqui and Justice Mukhtiar Ahmed Junejo held in unambiguous term that "If the item alleged to be smuggled by the prosecution were freely available in the open market and the import of such goods were not banned in the country, presumption could arrive that the goods in question were lawfully brought in the country unless contrary was shown". As per dictum laid down by the Hon'ble Supreme Court the Appellate Tribunal in Customs Appeal No.339/2000 Mr. Muhammad Hanif v. The State and 301/2003 Nasser Ahemd v. Collector of Customs, Sales Tax and Excise, Quetta held that "to produce legal import documents is nothing but to put undue pressure on the business community inspite of the fact that it has been observed number of times by the Supreme Court of Pakistan that the goods which are freely available in the market are presumed to be have been legally imported and duty paid. Even otherwise no reasonable ground has been given in the order-in-original that even for the sake of arguments, it is taken that the receipt produced by the appellant and issued by Saifullah Khan have no legal status then also it cannot be concluded that the said transaction was illegal, making way to call upon appellant to produce import documents. The issue No. (iv) is answered in affirmative.
That as regard issue No. (v), that upon submission of purchase bills against the transported good by the appellant No. 1, the respondent No. 1 sought there verification through notice under section 26 of the Customs Act, 1969. Each seller confirmed the genuineness of the bills through a proper reply and this has been admitted by the respondent in their comments with the exception that the reply has not been received as per the expression of Section 215 of the Customs Act, 1969 as those were not dispatched through registered post or through courier instead hand delivered in the office of Assistant Collector of Customs, Head Quarter and reached in his hand thereafter. The delivery of by hand falls within the ambit of any manner as expressed in clause (b) of Section 215. Hence their said plea is without any substance. The respondent No. 1 is also of the view that the same are fake to substantiate his stance nothing has been placed on record with the exception of the submission that since the goods are not manufactured or purchased by M/s. Orient Electronics (Pvt.) Ltd., Lahore, already stood controverted from the fact that the appellant No. 1 neither at adjudication stage nor at appellate contended that he purchased the goods from M/s. Orient Electronic (Pvt.) Ltd, Lahore, instead categorically stated that he purchased from the local market and from the dealers to whom notices under section 26 of the Customs Act, 1969 were issued by the respondent No. 1. None of the seller was put to question in regards to the goods and the bills in accordance with clause (d) of Section 26 by the respondent No. 1, confirming that the transported goods were lawfully purchased through valid bills. Hence, the appellant discharged the burden of proof laid upon him under Section 187 of the Customs Act, 1969 and the respondents failed to prove the charge of "smuggling " or transportation of "smuggled goods". To the contrary, the respondent No.1 despite mandated under Articles 117 and 121 of Qanun-e-Shahadat (10 of 1984) and umpteenth reported judgment referred by the appellant at para 3(x) of the order, failed to discharge burden of proof as the same stood shifted on his shoulders, it is on the person leveling the allegation to proof the charges . The Tribunal feels appropriate to reproduce herein below the verbatim of reported judgment PLD 1996 Karachi 68 and 2012 PTD 428, wherein their lordship of the Hon'ble High Court of Sindh held that:--
23- the next objection raised by the learned Counsel of the respondent is that under section 187 of the Customs Act, 1969 the burden of proof was on the petitioner rather than upon the customs authorities to categorically disproof the allegation of mis-declaration and under declaration leveled by the Customs authorities. In this respect Mr. S.Tariq Ali has contended that ruling relied upon by the petitioner counsel became inapplicable as the law has itself clearly cast the burden upon the petitioner. In order to appreciate this objection it is pertinent to scrutinized the provision of Section 187, which read as follows:-
187:- Burden of proof as to lawful authority, etc:- When any person is alleged to have committed an offence under this Act and any question arises whether he did any act or was in possession of anything with lawful authority or under a permit, license or other documents prescribed by or under any law for the time being enforce the burden of proving that he has such authority, permit, license or other documents shall lie upon him.
It appears to us that section 187 covers 02 situations which we states as follows:-
(a) When a person is charged with an offence under the Customs Act, 1969 the burden of proof is cast upon him to show that he had the lawful authority to commit that act;
(b) When a person is found in possession of any goods the burden of proof is cast upon him to show that he was holding such goods under some lawful authority;
The situation (b) is not in issue in present case, however, we feel that it provides for an eventuality where a person is found to be in possession of certain goods which falls under a prohibited category or which, in an unlawful manner find place in the possession or custody of the accused. In such case the burden is upon the accused to show that he falls under some exemption or exception to hold such goods. This type of eventuality as envisaged and stated in situation (b) above is essentially a statement of the general principle of law of evidence contains in Article 121 of the Qanun-e-Shahadat that who ever claim to all under preferential or exempt or excepted category must show that he fulfills that condition to fall within that category. This obviously, should not be confused with the factum of possession for which no presumption or burden of proof has been spelt out, in view whereof the possession itself has to be proof independently by the prosecution beyond all reasonable doubts".
It has been further held as under:-
"we feel that it is due to operation of the principle of incidence of burden of proof viz a viz "legal" and "evidential" burdens as discussed above the process of shifting of burdens becomes possible. We have already sighted the opinion of Adrian-Keane and we hold that in order to determine as to which party based the legal or evidential burden would depend on the terms of statute, case-law on the subject as also common sense and equity. In this case we are of the view that in situation in issue i.e. (a) as discussed in para 23 above section 187 cast upon the petitioner-accused only the obligation to make out a prima facie case as it is only the evidential burden which is born upon it. Once the petitioner were to satisfy this evidential burden the legal burden to bring home the ultimate cases shifted upon the customs authorities."
24- it is situation (a) as stated above in para 23 which is directly in issue in this case i.e. whether the burden of proof solely lies on the petitioner to disproof allegation of mis-declaration - mis-description levelled by the customs authorities and whether the customs authorities are under no obligation to lead evidence and discharge any onus of proof. This part of section 187 of the Customs Act, perhaps appeared to be contrary to the general principle of law of evidence contains in Article 117 of Qanun-e-Shahadat that who ever alleges existence of a particular fact must prove the same. There is little doubt that a special law or a particular statute can provide for a distinct regime of rule of evidence then contained in general law. Infact the law goes on as far as providing that the laws of evidence can be altered even by mutual consent and contrast. See S.M. Anwar Sethi v South British Company Ltd, PLD (1975 Karachi 458). However, on a closure scrutiny of the provision of Section 187 and the case law settled by our court. On the subject it appears that in such a situation it is only the evidential and tactical burden of proof which is cast upon the accused while the legal burden to bring home the allegation remains with a prosecution. Before we dilate upon the concept of 02 type of burden of proof and explain the terms " tacticle", "evidential" "legal" burden of proof we shall first discuss the case decided by High Court of Sindh in Barkat Ali v. The State PLD 1973 Karachi 659. In this case the controversy resolved around section 177-A of the erstwhile sea Customs Act, 1878 which catered for a similar situation as has reason in the present case i.e. the same provided the burden of proof upon the accused to disproof the case of the prosecution that his intention was not to defraud the exchequer or evade any prohibition or restriction under the Act. Writing for quote Tufail Ali, Rehman C.J. was of the opinion that the said presumption of burden of proof could not be drawn until the expression of the accused was first taken into consideration. According to the learned judge the normal "principle" was applicable i.e. the accused was entitled to benefit of doubt where he offered a reasonable explanation which was either acceptable or raise the doubt. In such cases the burden then shifted upon the prosecution to establish the case.
The Hon'ble Court also further held in para 25:
"For every offence for which the accused is charged under the Customs Act he shall have to disprove the allegation of the Customs Authorities is entirely without any obligation upon the Customs Department to adduce evidence, it would amount to affording unfettered, naked and arbitrary discretion to the authorities who may at their sweet will make out false cases against importers without the need of proving the sanctity of their actions. Such cannot be the intention of Parliament while the Courts are under an obligation to place such construction on statues which would be beneficial to the widest extent and which would make the legislation operate fairly, justly and equitably and not unreasonably (see Mst. Zainab v. Kamal Khan (PLD 1990 SC 1051). This Court is also of the view that a construction is to be placed upon statutes which would minimize the discretion vested upon the executive authorities. As absolute power corrupts an interpretation fettering the discretion of the executive authority would be more in line with the principles of equity and justice. The issue regarding the applicability of section 187 is to be looked from another angle i.e. in case we were to hold that due to Section 187 the entire burden to dispute the entire case rest upon the accused alone. The executive authorities would be let loose and given a wide, naked and arbitrary discretion to operate without any guidelines which would then leave section 187 susceptible to a Constitutional challenge upon its vires on this score alone. By the interpretation as proposed above any redundancy or illegality would also be avoided.
That with the submission of valid purchase bill and sought verification by the respondent No. 1 from the seller after serving notice under section 26 of the Customs Act, 1969, the burden laid upon the appellant stood discharged and there was no cause or reason for respondent No. 2 to only release 62 TV's instead of the whole lot. Rendering his act unjust, arbitrary and in derogation to the judgment of High Court of Lahore in C.A. No. 68/2002 Collector of Customs, Lahore v. S.M. Saleem. Wherein appeal was dismissed and order of the Tribunal was maintained while observing in Paras 6 and 7 that:--
"6 It is not denied before this Court that the goods subject matter of this appeal were importable. It is further not denied that the respondent had produced receipts before the Adjudicating Officer but he did not give any enable reason whatsoever as to why this piece of documentary evidence was not relied upon. The operative part of the judgment of the Deputy Collector Customs (Adjudicating) is to the effect that "since no documentary evidence indicating the proper import thereof has been furnished. It is hereby concluded that watches and watches part seized in this case have been brought into country without payment of duty and taxes."
The Section requires reasonable belief on the part of the person seizing the goods that an act to defraud the government of duty has been committed. If a person purchases goods as in an ordinary market then in the absence of any suspicious circumstances of some definite fact leading to that inference the custom officer is not entitled to a reasonable belief that the Government has been defrauded of the duty payable on the goods. The ordinary method of the import of goods from outside into Pakistan is that they come through the customs barrier and the duty payable is infact paid. The presumption therefore, with respect to any goods which may be sold in the open market in the absence of an indication to the contrary would be that duty has been paid on them.
In alike situation the Hon'ble Supreme Court of Pakistan reported 2007 SCMR 10 Collector of Customs, Sales Tax and Central Excise v. Prof. Muhammad Khan and 6 others. Their lordship examined the aspect that whether Directorate General-FBR can demand import documents of any goods or item within the city or during their transport within the territory of Pakistan or not and held that "law certainly provided protection to a public servant for doing lawful act in discharge of his duty but no such immunity was to be claimed by a person for committing illegal act in his official capacity as a public servant in the absence of proof that the goods in possession of a person were brought into Pakistan in violation of any law, customs authorities and such other public functionaries had no authority to detain such goods merely on suspicion---petitioner had showed documents of registration in his name to customs official who, having detained the car, insisted the production of import documents for release of car---- Detention of car was an act of highhandedness which was committed through misuse of official authority and it might constitute misconduct in terms of Civil Servants (Efficiency and Discipline) Rules, 1973 read with Removal from Service (Special Powers) Ordinance, 2000---- Exercise of official authority in a manner in which a person was made victim of misuse of process of law was violative of constitutional guarantees of rights of citizens and a person responsible for violation of such rights of citizens and a person responsible for violation of such rights was to face legal consequences--- Act of customs officials might also constitute misconduct, therefore, concerned authorities were under legal obligation to initiate appropriate proceedings against officials involved in the matter." That on the basis of Section 187 and Articles 117 and 121 of Qanun-e-Shahadat and the judgments referred in para supras I, answer the issue No. (v) in affirmative.
That as regards the issue No. (vi), I note with concern that how the respondent No. 1 determined the value of seized goods under the provision of Section 25 of the Customs Act, 1969 and how they can ask for the duty and taxes, reference is placed to the contravention report and the charter of show cause notice, when in case of smuggled goods no option is available for the respondent to release the goods in the presence of Notification No. 499(I)/2009 dated 13.06.2009. Confirming that the goods of instant case are not smuggled instead are lawfully locally purchased goods, sold after payment of leviable duty and taxes on the value of supply, hence these should had been allowed released unconditionally. Demanding duty and taxes for the second time i.e. from buyer in addition to seller is in derogation of the proposition of law and amounts to double taxation, which is prohibited under the provisions of Customs Act, 1969, Sales Tax Act, 1990 and Income Tax Ordinance, 2001 and the law laid down by the Superior Judicial fora in reported judgments 1992 PTD 593, 2003 PTD (Trib.) 928, 2010 PTD 1515, 2009 PTD (Trib.) 2025, 2011 PTD (Trib.) 1010 and 2014 PTD 752. The issue No. (vi) is answered in negative.
That as regards to the issue No. (vii), upon receipt of contravention report, the respondent No. 2 was duty bound to himself determined the fact of the case and the applicable provision of the Act, independently without any influence and fairly. To the contrary, he entirely relied upon the version of the official of respondent No. 1 and mechanically signed the show cause notice prepared by his subordinate on the basis of the said contravention report. Rendering the show cause notice nullity to the law and as such without any substance. The said opinion has been adopted time and again by the Superior Judicial Fora that the adjudicating authority himself has to apply his mind in issuing the show cause notice. Reference is place to one judgment being the most précis reported at 2004 PTD 369 Messrs Zeb Traders v. FOP, wherein it has been held in unambiguous terms that "The proceeding before Adjudicating Officer, under the Customs Act, 1969 are in the nature of quasi judicial proceedings and issuance of notice under section 180 of the Customs Act, is very important documents. The decision to issue show cause notice is to be taken by the Collector, Adjudication, by application of independent mind and not merely signing the draft show cause notice submitted by the investigation agency separate from the Adjudication Department and each category of officers are required to perform their respective functions/duties under the law. The practice to submit draft show cause notice by the Director General of Intelligence and Investigation to the Collector Adjudication is depreciated." The issue No. (vii) answered in negative.
2016 P T D (Trib.) 843
[Customs Appellate Tribunal]
Before Adnan Ahmed, Member (Judicial-II)
MUHAMMAD ILYAS
Versus
DIRECTOR GENERAL OF PCA, KARACHI and 2 others
Cus. Appeal No. K-1606 of 2014, decided on 25th February, 2015.
(a) Customs Act (IV of 1969)---
----S. 215---Service of order---Appeal---Importer's plea that appeal was filed within thirty days from date of service of order and was within time---Held, that no objection had been inscribed by department regarding limitation---Department in circumstances, had no reason to form opinion regarding limitation---Appeal was filed within time and as such had to be decided on merit instead of technicalities.
Case-law referred.
(b) Income Tax Ordinance (XLIX of 2001)---
----Ss. 228, 230A & 207---Directorate General Inspection, establishment of---According to S. 228 of Income Tax Ordinance, 2001, Director General of PCA (Customs) had not been appointed/designated as Officer of Inland Revenue by legislature for overseeing collection of withholding tax by authorized agents---For such purposes, Directorate General of Withholding Taxes had been established under S. 230A of Income Tax Ordinance, 2001---Customs department was not empowered at all under S. 207 of Income Tax Ordinance, 2001 to exercise powers to conduct audit under S. 177 of Income Tax Ordinance, 2001 for collection of Income Tax at import stage---Such action of customs department would render entire act of audit and subsequent proceedings by Customs department without powers/jurisdiction and as such coram non-judice.
Case-law referred.
(c) Sales Tax Act (VII of 1990)---
----Ss. 36 & 30---Income Tax Ordinance (XLIX of 2001), Ss. 148, 228, 207 & 106(2)---Collection of sales tax and income tax by Customs authorities---Customs department had invoked S. 36 of Sales Tax Act, 1990 and S. 148 of Income Tax Ordinance, 2001 while issuing show-cause notice to the importer---Importer's plea was that Customs department had not been appointed as Officer of Inland Revenue under S. 30 of Sales Tax Act, 1990 and S. 228 of Income Tax Ordinance, 2001 and had no powers to proceed in matter of Sales Tax and Income Tax for recovery of short collected/paid taxes---Validity---According to S. 30 of Sales Tax Act, 1990 and S. 207 of Income Tax Ordinance, 2001, legislature had appointed Federal Board of Revenue as Officer of Inland Revenue for exercising powers under respective sections of Act/ Ordinance, delegated through notifications---Customs department was never appointed as Officer of Inland Revenue and therefore it could not lay hands on any matter falling under S. 36 of Sales Tax Act, 1990 and S. 162(1) of Income Tax Ordinance, 2001.
(d) Customs Act (IV of 1969)---
----Ss. 25 & 202---Sales Tax Act (VII of 1990), Ss. 6,36 & 48---Income Tax Ordinance (XLIX of 2001), Ss. 140, 148 & 162(1)---Collection of taxes on imported goods by Customs authorities---Section 6 of Sales Tax Act, 1990 and S.148 of Income Tax Ordinance, 2001 had empowered Customs department to collect taxes on imported goods like customs duty on value determined under S. 25 of Customs Act, 1969---Said provisions of laws least empowered the Customs department to initiate adjudication/recovery proceeding for short collected/paid Sales Tax and Income Tax either due to collusion or connivance or inadvertent, error or misconstruction---In order to initiate proceedings for recovery, a show-cause notice had to be issued under S. 36 of Sales Tax Act, 1990 and S. 162(1) of Income Tax Ordinance, 2001---Authority to issue such show-cause notice had to be the Officer of Inland Revenue and Commissioner of Income Tax---Customs department had power only to collect Sales Tax and Income tax at import stage and not post importation---Plea that Customs department was empowered to recover short paid amount at import stage under S.202 of Customs Act, 1969 was based on mistaken belief---Customs department could recover amount of Sales Tax and Income Tax on behalf of Inland Revenue upon receipt of notice from Office of Sales Tax and Commissioner of Income Tax under S. 48 of Sales Tax, 1990 and S.140 of Income Tax Ordinance for recovery of adjudged amount of taxes after due process of law.
Case-law referred.
(e) Customs Act (IV of 1969)---
----Ss. 25, 25A, 32 & 202---S.R.O. No. 495(I)/2007, dated 9-6-2007---Directorate General of Valuation had been delegated powers under S.R.O. No. 495(I)/2007, dated 9-6-2007 read with Para 44 of CGO 12/2002 dated 15-6-2002 to adjudicate cases falling under Ss. 25, 25A & 32 of Customs Act, 1969 and to initiate action for recovery of Government dues thereafter under S. 202 of Customs Act, 1969 read with Customs Rules, 2001---Customs department had encroached specific notified territory of Directorate General of Valuation by laying hands on matter relating to Ss. 25 & 25A of Customs Act, 1969 and issuing order for recovery under S. 202 of Customs Act, 1969---Order passed by Customs department was without power/ jurisdiction and lawful authority.
Case-law referred.
(f) Customs Act (IV of 1969)---
----S.193A---Order in appeal---Appeal was filed on 23-11-2012, order under S. 193A(3) of Customs Act, 1969 should have been passed within 120 days from date of filing of appeal i.e. on or before 23-03-2013 or within a further extended period of 60 days during initial period of 120 days with reasons to be recorded for extension in writing after serving a notice to person concerned---No extension having been granted by department prior to expiry of initial period of 120 days, order was passed after 778 days from date of filing of an appeal was barred by time by 658 days---Appeal was liable to be dismissed.
Case-law referred.
(g) Customs Act (IV of 1969)---
----Ss. 32, 2(a), 25A & 80---S.R.O. 371(I)/2002, dated 15-6-2002---Customs Rules, 2001, R 438---Allegation of mis-declaration of valuation ruling---Importer had been charged for mis-declaration under S. 32 of Customs Act, 1969 on basis of allegation of non-application of valuation ruling---"Appropriate authority" as defined in S.2(a) of Customs Act, 1969 had been mandated to pass assessment order under S.80 of Customs Act, 1969 and R. 438 of Sub-Chapter (III) of Chapter XXI of Customs Rules, 2001 while exercising powers delegated upon it through S.R.O. No. 371(I)/2002, dated 15-6-2002 on valuation ruling---Application of valuation ruling did not attract S.32 of Customs Act, 1969 as such application was not a document which was a declaration by importer and no column was available in prescribed GD to be filed by an importer online for obtaining clearance of goods, rendering charge of mis-declaration under S. 32 as of no substance and legal effect---Valuation ruling issued under S. 25A of Customs Act, 1969 was for the purpose of assessment and not for charging importer for misdeclaration of value---Charge of mis-declaration of value had to be leveled on basis of direct evidence.
Case-law referred.
(h) Customs Act (IV of 1969)--
----Ss. 80 & 83---Customs Rules 2001, Rr. 438 & 442---If valuation ruling had not been applied at time of assessment under S. 80 of Customs Act, 1969 and R. 438 of Sub-Chapter (III) of Chapter XXI of Customs Rules, 2001, said provisions could not be applied subsequently after clearance of goods under S. 83 of Customs Act, 1969 and R. 442 of Sub-Chapter (III) of Chapter XXI of Customs Rules, 2001 by competent authority enunciated in S. 83 of Customs Act, 1969.
Case-law referred.
(i) General Clauses Act (X of 1897)---
----S.24A---"Speaking order", essentials of---Direction of Federal Board of Revenue and mandated requirement of General Clauses Act, 1897 had to be adhered to by department while passing an order---Department had intentionally and purposely not rebutted a single ground of appeal filed before it and passed a very sketchy, slipshod, vague, cursory and non-speaking order, confirming that it had not been passed on objective consideration rather on personal whims and wishes and inapt interpretation of law---Such type of order was termed as illegal, void, arbitrary and a result of misuse of authority---Department had no authority to pass such illegal, void and arbitrary order---If any Authority, Court or Tribunal gave a finding of fact which was not based on material available on record, findings so given was illegal, arbitrary and became perverse which was violative of principles of appreciation of evidence on record and as such not sustainable in law---Appeal was allowed, accordingly.
(j) Administration of justice---
----Speaking order---Every Judicial/Quasi-Judicial order be based on a reasoning containing justification for finding given in order, in absence of the same, order so issued was in derogation of principles of dispensation of justice.
Nadeem Ahmed Mirza (Consultant), Obayd Mirza and Mirza Muhammad Abeer Nadeem for Appellant.
Faiz Mudassir for Respondent No.1.
Kosar Hussain for Respondent No.2.
Date of hearing: 17th December, 2014.
2016 P T D (Trib.) 876
[Customs Appellate Tribunal]
Before Adnan Ahmed, Member (Judicial-II)
M.N. TRADING COMPANY, LAHORE
Versus
DIRECTOR GENERAL OF VALUATION, CUSTOM HOUSE, KARACHI and 2 others
Cust. Appeal No. K-1605 of 2014, decided on 25th February, 2015.
(a) Customs Act (IV of 1969)---
----Ss. 19A & 33---Exemption and refund claim---Appellant/Importer submitted pay order as security deposit---Due to non-determination of finalization of value of goods within prescribed period by Department, appellant's declared value stood final---Appellant's request for return of pay order was termed as an application of refund filed under S. 33 of Customs Act, 1969, by Department and asked appellant to prove non-passing of incidence of duty/taxes as per expression of S. 19A and S. 33(1) of Customs Act, 1969---Validity---Held, that according to S. 33 of Customs Act, 1969, refund application had to be filed for duty/taxes paid by inadvertence, error or misconstruction---In order to claim refund, it is upon the appellant to prove that amount of duty/taxes levied had not been passed to the end consumer---If an adjustment of Sales Tax under S. 7 of Sales Tax Act, 1990 had been obtained, appellant would not be entitled for refund---Conditions laid down in S.33, Customs Act, 1969 were not applicable and refund filed was not governed by S. 33 of the Act with exception of S. 33(3)---Request/ application of appellant to return pay order did not in any manner fall within the ambit of a refund application under S. 33 of Customs Act, 1969.
Case Law referred.
(b) Customs Act (IV of 1969)---
----Ss. 19A & 81---Provisional assessment---Refund claim---Scope---Section 81 of Customs Act, 1969 had no nexus with S. 19A of the Customs Act, 1969---Under S.81, importer had asked for return of his pay order/back guarantee deposited as security---Importer was not supposed to file refund claim for paid amount of duty/taxes at the time of provisional determination of value by Department and if Department had encashed such security for meeting revenue target in absence of determination of value within stipulated period mentioned in S. 81(2) of the Customs Act, 1969, Department was duty bound to refund that amount without calling for an application for refund.
Case Law Referred.
(c) Customs Act (IV of 1969)---
----Ss. 80 & 81---Customs Rules, 2001, R.438---Provisional assessment---Finality, attaining of---Scope---Amount deposited as security could not be termed as paid duty/taxes while determining the value provisionally under S. 81 of Customs Act, 1969---Such an act will make S. 81 rendundant and the assessment made at time of clearance of goods under S. 81 would be deemed to be an assessment under S. 80 and R. 438 of Customs Rules, 2001---Such an interpretation denied the return of pay order to importer on pretext of S. 19A, which is against the intention of Legislature and expression of S. 81.
(d) Customs Act (IV of 1969)---
----S. 81---Final assessment---Encashment of bank guarantee by Department---Appellant deposited pay order with Department as Security subject to its encashment or return upon determination of final value within the stipulated period given in S. 81(2) of Customs Act, 1969---Encashment of such security by the Department was an usurpation of an "Amanah" which was not permitted under Customs Act, 1969---Such an act was in direct conflict with the Constitution, Islamic Moral standards and Tenets of Islam---Public servant held the amount of security deposit as an "Amanah"---Legislature had set a time limit of six months as provided in S. 81(2) of Customs Act, 1969, to ensure timely determination of value and if determination is not made within time, amount deposited as "Amanah" become refundable/returnable without any let, hitch and hindrance---Lapse on part of government servant cannot be attributed to a tax payer/importer under S.81 of Customs Act, 1969.
Case Law Referred.
(e) Customs Act (IV of 1969)---
----Ss. 193 & 193-A(3)---Order-in-appeal, passing of---Delay of 680 days---Appellant filed appeal before Department on 04-07-2012---According to S. 193A(2) of Customs Act, 1969, an order had to be passed by Department within 120 days from the date of filing of an appeal i.e. on or before 01-11-2012 (in the present case) or within further extended period of 60 days with reasons to be recorded for extension in writing---Department passed order after 800 days from the date of filing of an appeal---Effect---Held, no extension was accorded by Department prior to expiry of initial period of 120 days as per contents of order---Order passed by Department, in the present case, was barred by time, without jurisdiction and could not be enforced under law---Appeal was allowed accordingly.
Case Law Referred.
Nadeem Ahmed Mirza (Consultant), Obayd Mirza (Advocate) and Mirza Muhammad Abeer Nadeem for Appellants.
Ashfaq Ahmed and Stephen Alison - Principal Appraisers for Respondent No.1.
Amir Hussain for Respondent No.2.
Dates of hearing: 17th and 23rd December, 2014.
2016 P T D (Trib.) 925
[Customs Appellate Tribunal]
Before Mohammad Yahya Member (Technical-I)
Messrs ABDUL AZIZ AND BROTHERS, KARACHI
Versus
DIRECTORATE GENERAL I&I and 2 others
Customs Appeal No.K-03 of 2015, decided on 26th June, 2015.
(a) Customs Act (IV of 1969)---
----Ss.25 & 156(1)---Sales Tax Act (VII of 1990), Ss.6 & 11---Income Tax Ordinance (XLIX of 2001), Ss.148 & 162(1)---Federal Excise Act (VII of 2005), S.3---Adjudication proceedings for short/paid sales, income tax and federal excise duty---Scope---Section 6 of Sales Tax Act, 1990, S.148 of Income Tax Ordinance, 2001 and S.3 of Federal Excise Act, 2005 had made it clear that customs Department was empowered to collect taxes and federal excise duty on import of goods like duty of customs on value determined under S. 25 of Customs Act, 1969---Said provisions did not empower Customs Department to initiate adjudication/recovery proceedings for short collected/paid sales tax, income tax and federal excise tax either due to collusion or connivance or inadvertence, error or misconstruction and for proceedings for such type of recovery; a show cause notice had to be issued under S.11 of Sales Tax Act, 1990 and S.162(1) of Income Tax Ordinance, 2001---Authorities which were to issue show cause notices under S.11 of Sales Tax Act, 1990 and S.162(1) of Income Tax Ordinance, 2001 were officers of Inland Revenue and not Customs officers---Customs Department while adjudicating the present case had invoked S.156(1) of Customs Act, 1969 which was patently unlawful for imposing penalty in terms of Income Tax and Sales Tax, and such matters were exclusive to penal provisions contained in Sales Tax Act, 1990 and Income Tax Ordinance, 2001 for which Customs Department was not empowered.
Case Law Referred.
(b) Customs Act (IV of 1969)---
----Ss.32(1) & 32(2)---Sales Tax Act (VII of 1990), S.11---Income Tax Ordinance (XLIX of 2001), S.3---False statement---Assumption of jurisdiction by Customs Authorities in for sales tax and withholding tax matters---Scope---In presence of specific provisions of Sales Tax Act, 1990 and Income Tax Ordinance, 2001, assumption of jurisdiction by customs department under Ss.32(1) and 32(2) of the Customs Act, 1969 for sales tax and withholding tax was void ab-initio and unlawful.
(c) Customs Act (IV of 1969)---
----Ss.32(1), 32(2), 25A, 79 & 80---Sales Tax Act (VII of 1990), Ss.3, 6, 33, 34 & 36---Income Tax Ordinance (XLIX of 2001), S.148(1)---Directorate General of Intelligence and Investigation, powers of---Directorate General of Intelligence and Investigation did not have any legal authority to proceed against anybody in case of violation of Ss.32(1), 32(2), 25A, 79 & 80 of Customs Act, 1969 read with Ss.3, 6, 33, 34 & 36 of Sales Tax Act, 1990 and S.148(1) of Income Tax Ordinance, 2001.
Case-law referred.
Nadeem Mirza for Appellant.
Siddique Zia, A.O., Abdul Rashid, I.O. and Anwar Farooque, I.O. for Respondents.
Date of hearing: 20th May, 2015.
2016 P T D (Trib.) 969
[Customs Appellate Tribunal]
Before Muhammad Nadeem Qureshi, Member (Judicial-I) and Muhammad Yahya, Member (Technical-I), Messrs ASIF TEXTILE TRADING
Versus
DIRECTORATE GENERAL OF INTELLIGENCE AND INVESTIGATION and 2 others
Customs Appeal No.K-982 of 2012, decided on 4th December, 2015.
(a) Customs Act (IV of 1969)---
----Ss. 9, 80, 83, 2(a), 193 & 195---S.R.O. No.371(I)/2001, dated 15-06-2001---SRO No.586(I)/2007, dated 9-6-2007---Import of goods---Goods declaration---Collector of appraisement, powers of---Appeal, right of---Scope---Contention of importer was that consignment which had already been cleared by officials of Collector of Appraisement after completion of all codal formalities from Port/terminal as defined in S.9 of Customs Act, 1969 were lawful and legal and stood ousted from the act of "smuggling" and fell within the domain of prescribed duties of officials of Collector of Appraisement---Validity---Upon passing of assessment order under S.80 of Customs Act, 1969 and R.438 of Customs Rules, 2001 and thereafter passing of clearance order under S.83 of Customs Act, 1969 and R.442 of Customs Rules, 2001 by authority defined in S.2(a) of Customs Act, 1969 and SRO No.371(I)/2001 dated 15-6-2001, it could not be disturbed by any authority including officials of department for preparing contravention report and connected proceedings therewith---Only recourse left for officials of department was to challenge the said orders before Collector of Customs (Appeals) under S.193 of Customs Act, 1969 which empowered the Directorate General of Investigations in terms of SRO No.586(I)/2007 dated 9-6-2007 to file appeals---When the right of appeal had been accorded by legislature under provision of S.193 of Customs Act, 1969, provision of S.195 of Customs Act, 1969 was un-operational and could not be exercised even by authority defined therein.
Messrs Paramount International (Pvt.) Ltd., Karachi v. Secretary Revenue Division 2014 PTD 1256 rel.
(b) Customs Act (IV of 1969)---
----Ss.9, 80, 83, 2(a), 193 & 195---Sales Tax Act (VII of 1990), S.30A---Income Tax Ordinance (XLIX of 2001), Ss.230, 207 & 230A---SRO No.776(I)/2011 dated 19-8-2011---Import of goods---Directorate General of Intelligence and Investigations, powers of---Upon perusal of S.30A of Sales Tax Act, 1990 and S.230 of Income Tax Ordinance, 2001 it was clear that Directorate General of Investigations had not even been appointed/designated as Officer of Inland Revenue by legislature, instead Directorate General of Intelligence and Investigations had been delegated powers under SRO No.776(I)/2011 dated 19-8-2011 for exercising under different Sections of Sales Tax Act, 1990 and under S.207 of Income Tax Ordinance, 2001 and for overseeing collection of withholding tax at import stage---Directorate General of Withholding Taxes had been established under S.230A of Income Tax Ordinance, 2001 meaning thereby that Directorate General of Intelligence and Investigations was not at all appointed/designated as Officer of Inland Revenue, thus, rendering the entire act of preparation of contravention report in the matter relating to Sales Tax and Income Tax without powers/jurisdiction and as such corum non judice.
Waseem Ahmed and others v. FOP and another 2014 PTD 1733 and Muhammad Measum and others v. FOP and others 2015 PTD 702 rel.
(c) Customs Act (IV of 1969)---
----Ss.80, 83, 193 & 195---Income Tax Ordinance (XLIX of 2001), Ss. 148, 148(5) & 162(I)---Import of goods---Advance tax, collection of---Recovery in case of default, powers of---Double jeopardy---Scope---Person could not be tried on the same offence by two forums, and he could be tried only where clear cut provisions of law were available---According to S.148 of Income Tax Ordinance, 2001 power of recovery in case of default vested with Income Tax Department and Commissioner of Income Tax as prescribed officer could go for recovery---Power to collect advance Income Tax under S.148(5) of Income Tax Ordinance, 2001 could not have the effect of converting Income Tax into Customs duty---Merely by providing the manner of collection advance tax under any tax enactment the nature of said tax could not be changed, hence, short recovery of any tax collectable under Ss.148(5) & 148(6) of Income Tax Ordinance, 2001 to a person in form of short collected, short levied or not so collected, either on account of mis-declaration of importer or on account of error, inadvertence or under mistake vested with Commissioner of Income Tax under S.162(I) of Income Tax Ordinance, 2001---Collector of Customs did not have the authority to go for recovery of said tax and it was the Commissioner of Income Tax who could start proceedings of recovery against the person in case of default on short collected, short levied or not so collected, either on account of mis-declaration of importer or on account of error, inadvertance or under mistake, hence, adjudication by Customs Officials to the point of recovery of Income Tax against the import was illegal, unjustifiable and not tenable in the eye of law.
Messrs Global Marketing Services and another v. Model Customs Collectorate and another 2010 PTD (Trib.) 2086; M. I. Traders v. Additional Collector of Customs 2014 PTD (Trib.) 299; Al-Hajj Industrial Corporation (Pvt.) Ltd., Peshawar v. Collector of Customs (Appraisement) 2004 PTD 801; Agro Industry (Pvt.) Ltd. v. Collector of Customs and 8 others 2014 PTD 1963; 2005 PTD 23; Xen Shahpur Division v. Collector of Sales Tax (Appeal), Collectorate of Customs, Federal Excise and Sales Tax, Faisalabad 2008 PTD 1937 and Collector of Sales Tax and Federal Excise v. Messrs Qasim International Container Terminal Pakistan Ltd., 2007 PTD 250 rel.
(d) Customs Act (IV of 1969)---
----Ss. 80, 83, 180 & 193---Customs Rules, 2001, Rr.438 & 442---S.R.O. No.371(I)/2002 dated 15-6-2002---Constitution of Pakistan, Art.13---Double jeopardy---Appeal, right of---Limitation---Import of goods---Checking of goods declaration by customs---Consignments had undergone procedure of assessment/clearance under provisions of Ss.80 & 83 of Customs Act, 1969 and Rr.438 & 442 of Customs Rules, 2001 by authority defined in S.2(a) of Customs Act, 1969 in exercise of powers conferred upon by Federal Board of Revenue through SRO No.371(I)/2001 dated 15-6-2001---Such orders were appealable and could be assailed either by importer or department under S.193 of Customs Act, 1969 within 30 days of said orders---No appeal was in fact filed and resultantly, said orders attained finality through limitation and could not be disturbed by any authority, however, department, in the present case, opted to issue show-cause notice under S.180 of Customs Act, 1969---Validity---Department was not empowered to issue said show-cause notice because such an act tantamounted to piling upon yet another order on existing assessment orders passed by competent authority under S.80 of Customs Act, 1969---Once an order was passed, which had attained finality, the same could not be subject to another show-cause notice, considering that no appeal or revision was filed against the first order---By virtue of non-filing appeals by department against assessment orders within stipulated period, the said transaction stood past and closed and had attained finality and could not be disturbed through subsequent order-in-original because it was not permitted under the law and also such exercise was also an act of double jeopardy barred under Art.13 of the Constitution---Impugned show-cause notice was set aside---Appeal was allowed, accordingly.
Messrs World Trade Corporation v. Central Board of Revenue 1989 MLD 4310 and Messrs Smith Kline French v. Pakistan 2004 PTD 3020 rel.
(e) Administration of justice---
----Being custodian of law, courts were required to maintain the norms of justice and equity, and litigants were to be respected not on account of court's power to legalize injustice on technical grounds but to remove injustice.
Nadeem Ahmed Mirza, Mirza Muhammad Abeer and Obayd Mirza for Appellants.
Farhat Jafferi, S.I., for Respondent No.1.
Muhammad Azam, A.O. for Respondent No.2.
Date of hearing: 29th September, 2015.
2016 P T D (Trib.) 1008
[Customs Appellate Tribunal]
Before Muhammad Nadeem Qureshi, Member (Judicial-I) and Mohammad Yahya, Member (Technical-I)
Messrs PHILIP MORRIS (PAKISTAN) LTD., KARACHI
Versus
The ADDITIONAL COLLECTOR OF CUSTOMS and others
New Customs Appeals Nos.K-556, K-554 and K-555 of 2014 and Old Customs Appeals Nos.K-376, K-377 and K-388 of 2012, decided on 9th December, 2015.
(a) Customs Act (IV of 1969)---
----Ss.200 & 202---Income Tax Ordinance (XLIX of 2001), Ss. 148, 162, 207 & 228---Sales Tax Act (VII of 1990), Ss.6, 30 & 36---Federal Excise Act (VII of 2005), Ss.3, 14, 14A & 29---Federal Excise Rules, 2005, R. 60---Import of goods---Recovery of short paid amount---Scope---Contention of importer was that Addl. Collector of Customs had not been appointed as Officer of Inland Revenue under S.29 of Federal Excise Act, 1990, S. 30 of Sales Tax Act, 1990, and S.228 of Income Tax Ordinance, 2001, therefore, he had no powers to proceed in the matter of Federal Excise, Sales Tax and Income Tax to issue show-cause notice for recovery of short paid duty and taxes---Department contended that Addl. Collector of Customs was empowered to collect Federal Excise Duty, Sales Tax and Income Tax at import stage under S.3 of Federal Excise Act, 2005, S.6 of Sales Tax Act, 1990 and S.148 of Income Tax Ordinance, 2001 and could also recover Federal Excise Duty and other taxes under S.202 of Customs Act, 1969---Validity---Legislature, for S.29 of Federal Excise Act, 1990, S.30 of Sales Tax Act, 1990 and S.207 of Income Tax Ordinance, 2001, had appointed different organs of the department as Officers of Inland Revenue for exercising powers under the said sections, however, in said sections neither Collectorate of Customs (PaCCS) nor Addl. Collector of Customs/Deputy Director of Post Clearance Audit figured anywhere and as such they were not appointed as Officer of Inland Revenue under said sections, hence, they could not lay hands on any matter falling under the ambit of Ss.14, 14A of Federal Excise Act, 2005, S.36 of Sales Tax Act, 1990 and S.162(1) of Income Tax Ordinance, 2001---Reliance of Department on the notification of Ministry of Law and Justice was untenable as the same had no mandate to interpret the provisions of the law or to amend the provisions and it could only give an opinion and it was for the judicial forums to interpret the provision of a statute---Assuming power on the strength of letter of Ministry of Law and Justice was palpably illegal besides fatal for the case---None of the said officials had powers to recover arrears at their own---Unless the importer was in receipt of notice from Officer of Inland Revenue and Commissioner of Income Tax under R.60 of Federal Excise Rules, 2005, Ss.48 & 140 of Federal Excise Act, 2005, adjudicating proceedings under S.14 of Federal Excise Act, 2005, S.11 of Sales Tax Act, 1990 and S.148 of Income Tax Ordinance, 2001 were not legal, justifiable and tenable in the eyes of law---Impugned show-cause notice and order-in-original was set aside---Appeal was allowed, accordingly.
Messrs AGP (Pvt.) Ltd. v. Additional Collector of Customs, Karachi 2011 PTD (Trib.) 110; Messrs Global Marketing Services and another v. Model Customs Collectorate and another 2010 PTD (Trib.) 2086; M.I. Traders v. Additional Collector of Customs 2014 PTD (Trib.) 299; Al-Haaj Industrial Corporation (Pvt.) Ltd., Peshawar v. Collector of Customs (Appraisement) 2004 PTD 801; Shujabad Agro Industry (Pvt.) Ltd. v. Collector of Customs and 8 others 2014 PTD 1963; 1994 CLC 1612; 1990 PTD 29; 2005 PTD 23; Collector of Sales Tax and Federal Excise v. Messrs Qasim International Container Terminal Pakistan Ltd., 2007 PTD 250; Xen Shahpur Division v. Collector of Sales Tax (Appeal), Collectorate of Customs, Federal Excise and Sales Tax, Faisalabad 2008 PTD 1973 and DGI&I and others v. Al-Faiz Industries (Pvt.) Ltd. and others 2006 PTD 129 rel.
(b) Customs Act (IV of 1969)---
----S. 179(3) & (4)---Order-in-original, passing of---Limitation---Delay of 179 days---Effect---Show-cause notice was issued on 21-12-2011 by department and an order under S.179(3) of Customs Act, 1969 should have been passed within 120 days i.e. on or before 19-4-2012---Time sought through adjournment by importer had to be added in the said period, resultantly, time for passing order by department was extended by 30 days and he had to pass order on or before 19-5-2012---No order was passed by said date and time was extended by 60 days by the Department itself under S.179(4) of Customs Act, 1969 without serving notice to importer---Held, that in terms of S.179(4) of Customs Act, 1969, Federal Board of Revenue was empowered, after meeting the mandated requirements to extend period and by no one else including the Department---Extension given by the Department on or before 19-5-2012 was without lawful authority/jurisdiction rendering the order-in-original dated 10-10-2012 barred by time by 179 days, hence, without power/jurisdiction and not enforceable.
Messrs Super Asia Muhammad Din Sons (Pvt.) Ltd. v. Collector of Sales Tax, Gujranwala 2008 PTD 60; Messrs Hanif Strawboard Factory v. Additional Collector (Adjudication) Customs, Sales Tax and Central Excise Gujranwala 2008 PTD 578; Messrs Tanveer Weaving Mills v. Deputy Collector Sales Tax and 4 others 2009 PTD 762; Messrs Syed Bhai Lighting Limited, Lahore v. Collector of Sales Tax and Federal Excise, Lahore and 2 others 2009 PTD (Trib.) 1263; Leo Enterprises v. President of Pakistan and others 2009 PTD 1978; Innovative Impex, v. Collector of Customs, Sales Tax and Federal Excise (Appeal) 2010 PTD (Trib.) 1010; Fazal Ellahi v. Additional Collector of Customs, MCC of PaCCS 2011 PTD (Trib.) 79; Unique Wire Industries v. Additional Collector of Customs, MCC of PaCCS 2011 PTD (Trib) 987; Kaka Traders v. Additional Collector of Post Clearance Audit 2011 PTD (Trib.)1146 and Pak Electron Ltd. v. Collector of Customs, Lahore and others 2012 PTD 275 rel.
(c) Customs Act (IV of 1969)---
----Ss. 26A & 32(3A)---Import of goods---Goods declaration---Audit, conduct of---Limitation---Scope---According to S.26A of Customs Act, 1969, Department was empowered to conduct audit of imported consignment/goods declaration within three years from the date of clearance as expressed in S.32(3)(A) of Customs Act, 1969---In the present case, date of clearance of goods as referred in show-cause notice was 26-7-2000 and audit of the aforesaid goods was conducted in year 2011 on the strength of which show-cause notice were issued i.e. after ten years of date of clearance---Such show-cause notice was issued in derogation of S.32(3A) of Customs Act, 1969 rendering the audit, preparation of audit observation of contravention report, show-cause notice and order-in-original in negation of S.32(3A) of Customs Act, 1969---All such actions were time barred and not enforceable under law---Impugned order was set aside in circumstances.
(d) Customs Act (IV of 1969)---
----Ss. 80, 83 & 195---Customs Rules, 2001, Rr. 438 & 442---Powers of Federal Board of Revenue---Order, re-opening of---Scope---According to S. 195 of Customs Act, 1969, order could be re-opened by Collector which suffered from irregularity and impropriety---Terms "illegal" and "improper" had nexus with abuse of power by subordinate officers and otherwise the ethical moorings of a civil society, in relation to relevant law---Revisional powers conferred vide S. 195 of Customs Act, 1969 did not authorize even Collector of Customs to examine issue not falling within scope of terms "legality" and "propriety", hence, powers under S.195 of Customs Act, 1969 were limited, compared to an appeal before a competent authority---Setting side of assessment/clearance orders passed under Ss. 80 & 83 of Customs Act, 1969 and Rr. 438 & 442 of Chapter XXI of Customs Rules, 2001 were type of orders which could be revised by Revisional Authority under S. 195 of Customs Act, 1969, for the simple reason that such orders were subject to satisfaction of Collector of Customs which must be arrived at fairly and not arbitrarily.
East Jamunia Co. (Pvt.) Ltd. Calcutta v. Collector of Customs, Calcutta 1978 ECR 790; Council of Civil Service Union v. Minister for the Civil Service (1985) AC 374 and 410; Union of India v. Popular Dechem 1987 [ELT 63] Bom.; 1982 ELT 43 (Del) and Malik Vetro Designi and 25 others v. Collector of Customs, Appeals and 3 others 2011 PTD (Trib.) 2480 rel.
(e) Customs Act (IV of 1969)---
----Ss. 32 & 32(3A)---Import of goods---Goods declaration---False statement and fiscal fraud---Scope--Order or decision passed or taken by subordinate officer could only be corrected in revisional power and not under S. 32 of Customs Act, 1969---For adjudication of a case through issuance of show-cause notice, proof of mis-declaration had to be prima facie present in the first instance if allegation of mis-declaration was to be leveled against importer in terms of S. 32 of Customs Act, 1969 through issuance of show-cause notice by officer of original jurisdiction---When consignments were released on the basis of commercial documents and physical examination by Examining and Assessing Officers then charges subsequently levelled against importer under S. 32 & S. 32(3A) of Customs Act, 1969 were unsubstantiated, once the goods had left customs/port area.
(f) Interpretation of statutes---
----Being custodian of law, it was duty of court to follow legal obligations as well as those made by Legislature---Observations of higher courts and intention of legislature and interpretation which led to manifest absurdity should, if possible be avoided---Courts were under statutory obligation to supply omission with a view to prevent defeating of the object, as well as rules and could fill gaps in a piece of legislation, where the plain instructions would lead to absurd results---Interpretation which was more in consonance with avowed policy that was decipherable from its title and Preamble, the same was to be preferred.
Ijaz Ahmed for Appellant.
Haroon Khan Akhter and Faiz Mudassir for Respondents.
Date of hearing: 26th February, 2015.
2016 P T D 1222
[Customs Appellate Tribunal]
Before Muhammad Nadeem Qureshi Member, (Judicial-I) and Mohammed Yahya, Member (Technical-I)
YINGQUAN PANG through Advocate Legal Consultant
Versus
COLLECTOR OF CUSTOMS and 2 others
Customs Appeal No.K-1301 of 2015, decided on 11th December, 2015.
(a) Customs Act (IV of 1969)---
----Ss. 3, 32(1)(a), 32(1)(c) & 179---Foreign Exchange Regulation Act (VII of 1947), S. 22---SRO No. 886(I)/2012 dated 18-07-2012---Import of goods---Powers of Federal Board of Revenue---Establishment of Collectorate of Customs Adjudication---Scope---Board in exercise of powers conferred upon it under S.3 of Customs Act, 1969, established a separate forum namely Collectorate of Customs Adjudication through SRO No. 886(I)/2012 dated 18-07-2012 for adjudication of cases of mis-declaration and causing revenue loss under S.179 of Customs Act, 1969---Show-cause notice showed that allegation had been levelled against importer for mis-declaring the export value and declaration value which attracted provisions of Ss.32(1)(a) and 32(1)(c) of Customs Act, 1969 and S.22 of Foreign Exchange Regulation Act, 1947---Allegations and provisions invoked ousted the case from jurisdiction of Executive Collectorate and fell under jurisdiction of Collectorate of Customs, Adjudication---Inspite of clarity of allegations, show-cause notice and order had been issued by Collector of Customs, Exports who was a Collector on Executive side---Said Collector was not Collector of Customs Adjudication and was not empowered either to issue show-cause notice or pass order-in-original---Collector of executive side issued show-cause notice and passed order-in-original by transgressing exclusive and notified jurisdiction of Collector of Customs Adjudication---Such action of collector of executive side, render show-cause notice and order-in-original as without power/adjudication, void ab initio and as such of no legal effect.
PTCL 2004 CL 2005; PLD 1961 SC 237; PLD 1964 SC 410; PLD 1964 SC 536; PLD 1965 SC 90; 1983 SCMR 1208; PLD 1987 SC 304; 1994 SCMR 2232; 2003 SCMR 1505; 2006 SCMR 129; 2006 SCMR 1023; 2013 PTD (Trib.) 353 and 2015 PTD (Trib.) 1422 rel.
(b) Customs Act (IV of 1969)---
----Ss. 32(1), 32(1)(a) & 32(3)---Import of goods---False statement---Mis-declaration and mis-statement---Scope---Invoking of Ss.32(1) and 32(1)(a) of Customs Act, 1969 by Collector of Customs, Exports was also out of context as spirit and essence of S.32(1) of Customs Act, 1969 was that mis-declaration and mis-statement so made should be conscious and that should inflict injury to exchequer as expressed in Ss.32(2) and 32(3) of Customs Act, 1969 which were to be read in conjunction with S.32(1) of Customs Act, 1969---Mis-declaration/mis-statement so made should be instrumental in monetary gain on the expense of revenue of exchequer---Consignment in question was not subject to payment of any export or regulatory duty nor qualified for payment of duty drawback or refund of Sales Tax, resultantly, no revenue of exchequer was evaded by importer---When there existed no revenue loss, mis-declaration/mis-statement so made was without any significance and no consequences flew out of the same.
Messrs Al-Hamd Edible Oil Ltd. And others v. Collector of Customs and others 2003 PTD 552; Messrs Kamran Industry v. Collector of Customs, (Exports) and 4 others PLD 1996 Kar. 68 and Collector of Customs, Exports and another v. R.A. Hosiery Works 2007 PTD 2215 rel.
(c) Customs Act (IV of 1969)---
----S. 178---Punishment of persons accompanying a person possessing goods liable to confiscation---Scope---Responsibility of Department to follow and observe the dictums of law while taking any initiative against importer or exporter and liable to combat the same with proper and appropriate force of statutory obligations---In the present case, where two persons from the company allegedly held responsible for the act and omissions conducted during procedure of export and clearance thereof, there was no evidence available on record to distinguish between acts of two individual members to prove exactly what part was taken by each of them in the alleged offence---To deal with such circumstances, S. 178 of Customs Act, 1969 laid down as to what act would be deemed to be done by conspirators if any were held responsible---Mandatory and essential ingredient that for attributing joint liability on person accompanying the role and goods of the owner liable to be confiscated under Customs Act, 1969 for creating such liability there should be evidence whether the other persons had the knowledge of the fact that goods were contraband, smuggled and liable to be confiscated---Prime duty of prosecution and seizing agency to prove by some cogent evidence that persons had the knowledge of such goods confiscated and in absence of such evidence, mere finding of mixed goods found in subject case by no means sufficient to make out the case against person who had no knowledge about such activity.
(d) Customs Act (IV of 1969)---
----S. 156(1)---Import of goods---Punishment for offences---Pitch of penalties---Scope---Prior to imposing penalty, adjudicating authority had to take into consideration the profile of importer and his line of business and relevant clause of S.156(1) of Customs Act, 1969---Indeed clauses of S.156(1) of Customs Act, 1969 defined pitch of penalties and other actions, but none of said clauses were mandatory in nature and it was left for discretion of adjudicating authority and court to impose penalty defined therein to the extent felt appropriate---Adjudicating authority was also empowered to let free person/company with a warning---In the present case, department had imposed huge penalty and also ignored the fact that Special Judge, Customs had also imposed a penalty upon the importer for pleading guilty for return of his passports, which was a vital instrument, desired for travelling---Department also lost sight of the fact that importer was not a habitual offender---Penalty so imposed should be for deterrence and not for crucifying the offender---Penalty which pinched the offender as harsh penalty served no purpose instead it frustrated the offender and he became desperate and hardened criminal---In judging the penalty, certain other factors such as circumstances in which it was committed, age and character of offender and injury to individual and society were required to be considered---Pitch of penalty had to correspond with the gravity of offence and according to the spirit of S.156(1) of Customs Act, 1969.
Sardar Muhammad Ishaque for Appellant.
Ch. Muhammad Younis, AO, for Respondent.
Date of hearing: 20th October, 2015.
2016 P T D (Trib.) 1266
[Customs Appellate Tribunal]
Before Muhammad Nadeem Qureshi (Member Judicial-I) and Muhammad Yahya (Member Technical-I)
Messrs PATANWALA AND SONS, KARACHI and 3 others
Versus
COLLECTOR MCC OF APPRAISEMENT-WEST CUSTOMS HOUSE KARACHI
Customs Appeals Nos.K-599, K-600, K-606 and K-601 to K-606 of 2015, decided on 15th December, 2015.
(a) Customs Act (IV of 1969)---
----Ss. 32 & 80---Import of goods---S.R.O. No.371(I)/2002 dated 15-6-2002---Checking of goods declaration---False statement and mis-declaration---Scope---Charge of mis-declaration had been levelled on the importer on basis of specifications given in MTC, which according to department were not as shown therein instead and they could not determine the same through naked eye and a test was desired---Under regime of "One Customs", no duty and taxes were paid in advance, in fact under S.R.O. No. 371(I)/2002 dated 15-06-2002---Under S. 80 of Customs Act, 1969, it was duty of customs officers to determine the exact description, specification, quantity, weight and PCT Heading as the same fell within the ambit of "assessment"---Department was also empowered under S. 80 of Customs Act, 1969 to either accept or reject the claim of exemption and complete the assessment as ascertained by it under respective PCT heading, mentioning or claiming ascertained PCT, under which importer's goods did not fall or could not be construed an act of mis-declaration on the part of importer---During the process of assessment, it was the duty of Assessing Officer not only to examine the goods but also to tally the description, its weight and value of goods thereof and to consider any extra information available on the Bill of Entry in order to arrive at a correct assessment of duty and taxes---To constitute a criminal act an element of mens rea and intentional knowledge was necessary and the offending act must be one in which material particulars had been wrongly given or provided to Customs Authorities---In the present case, in goods declaration all the entries relating to description, quantity and nature of goods were found true and no charge had been framed against importer on such count---Alleging a charge of mis-declaration in such circumstances, particularly on the basis of wrong classification heading did not constitute an offence within the framework of S. 32 of Customs Act, 1969 as there was no material falsity in the statement made by importer---Appeals were allowed, accordingly.
2003 PTD (Trib.) 293; Umme Kulsoom Trading Co. v. Collector of Custms Appeals and others Customs Appeal No.K-333 of 2006; State Cement Corporation v. GOP 2002 MLD 1980 and Messrs Sadaat Khan FOP and others 2014 PTD 1615 rel.
(b) Customs Act (IV of 1969)---
----Ss. 80, 81(2), 81(4) & 81(5)---Checking of goods declaration---Provisional assessment of liability---Goods declaration attaining finality---Scope---Final assessment order under Ss. 80 & 81(5) of Customs Act, 1969 should have been passed by officer expressed therein within six months or further extended period of 90 days by Collector of Customs after serving a notice to importer---In the present case, no extension was given under S. 81(2) of Customs Act, 1969 and no such order had been passed, consequent to which declaration of importer stood final in terms of S. 81(4) of Customs Act, 1969.
Messrs Abdul Aziz Ayoob v. Assistant Collector of Customs and 3 others PLD 1990 Kar. 378; Messrs Golden Plastic (Pvt.) Ltd. Collector of Customs and others PLD 2002 Kar. 54; Khalid Mahmood v. Collector of Customs 1993 SCMR 1881; Hassan Trading Company v. CBR 2004 PTD 1979 and Collector of Customs Appraisement v. Automobile Corporation of Pakistan 2005 PTD 2116 rel.
(c) Customs Act (IV of 1969)---
----S. 179(3)---Adjudication, power of---Show-cause notice, issuance of---Delay of 311 days---Scope---Show-cause notice was issued on 11-08-2013 by Department and an order under S. 179(3) of Customs Act, 1969 should had been passed within 120 days i.e. on or before 21-02-2014, from the date of show-cause notice or within a further extended period of 60 days prior to lapse of initial period of 120 days after serving a notice to person concerned---Department's plea was that Federal Board of Revenue had extended the period after expiry of 311 days of initial period of 120 days and 251 days from expiry of entire period of 180 days---Held, that Board was not competent to extend the time period after expiry of period given under S. 179(3) of Customs Act, 1969, rendering the extension without any lawful authority, hence, the same was void and ab initio.
Khalid Mahmood v. Collector of Customs 1993 SCMR 1881; Vithoba Syamna v. Union of India AIR 1957 Bom. 321 and Eastern Rice Syndicate v. Collector of Customs PLD 1959 SC 364 rel.
(d) Customs Act (IV of 1969)---
----Ss. 79, 80, 32, 207, 208 & 209---Import of goods---Goods declaration---Liability of principal and agent---Declaration and assessment---Scope---Provisions of Ss. 79 and 80 of Customs Act, 1969 revealed that importer or his agent had to file goods declaration for release of goods on which Assessing Officer had to make an assessment and any claim made by an importer was subject to scrutiny by assessing officer who had been vested with unfettered powers to complete an assessment---Claim was subject to approval by a competent officer and where a competent authority granted or rejected the claim, no charge of fraud or otherwise could be linked to the Agent or to the principal, whose duty was to submit relevant documents for processing for release of consignment or application---Held, that Department which issued show-cause notice grossly misunderstood the scheme of operative mechanism of Ss. 32 & 80 of Customs Act, 1969---Liability of Clearing Agent during the course of clearance of consignment had to be evaluated under Ss.207, 208 and 209 of Customs Act, 1969 which indicated that an Agent represented his principal until and unless any direct evidence was attributed against him or when department was not able to prove any criminal intent on his part, he could not be penalized under general provisions of Customs Act, 1969 unless he violated the governing condition of his licence---Clearing Agent, in normal course of business, filed a bill based upon the documents and information provided by importer and he could not be presumed to be privy to any illegal arrangement, which importer might have intended in his mind---For such purpose some evidence of his direct involvement will have to be brought on record.
2002 YLR 2651 rel.
Nadeem Ahmed Mirza, Consultant, Mirza Muhammad Abeeullah Nadeem, Consultant and Mr. Obayd Mirza, for Appellants.
Ammar Aamir Mir, Assistant Collector for Respondents.
Date of hearing: 5th December, 2015.
2016 P T D (Trib.) 1294
[Customs Appellate Tribunal]
Before Chaudhry Muhammad Tariq, Chairman/Member Judicial
Messrs DUA TRADERS and 3 others
Versus
COLECTOR OF CUSTOMS (APPEALS), KARACHI and another
Customs Appeals No.K-963 to K-966 of 2010, decided on 24th November, 2014.
Customs Act (IV of 1969)---
----Ss. 25(5)(6), 32(3-A), 36, 156 & 194-A---Determination of customs value of imported goods---Short levy of duty and taxes---Transaction of identical goods---Imposition of penalty---Directorate General of Post Clearance Audit, reported that importers, imported consignments and got cleared from customs vide Goods Declaration at a very low value, as compared to the value of similar/identical goods imported by other importers from same source and that importers had caused substantial loss to the Government revenue and national Exchequer, which was a violation of the provisions of S.32(3-A) of the Customs Act, 1969, punishable under provisions of S.156(1) of the Customs Act, 1969---Adjudicating Authority vide order-in-original found that importers had tried to mis-declare the actual value of the goods; and ordered payment of short-levied amount of taxes under S.32(3-A) of Customs Act, 1969---Appellate Authority having dismissed appeal of importers against order of Adjudicating Authority---Consignment was out of charge, when department issued show-cause notice and invoked the provisions of S.32(3-A) of Customs Act, 1969---Departmental Representative could not produce evidence to establish the charges levelled against importers in the show-cause notice---Law did not authorize any Authority to initiate proceedings against any person on the basis of presumption---Section 32(1)(2) of Customs Act, 1969, would not attract, where no allegation had been made that any forged document had been filed, or the goods were released illegally after joining hands with the customs authorities---Where case was neither of a forgery nor of fraud, same would fall within the ambit of S.32(3) of Customs Act, 1969---Provisions of said section were mandatory in nature---In the present case, the show-cause notice was issued after lapse of about 4 years---Such delay in issuance of show-cause notice was exceptional, inordinate and unexplained---Impugned orders were set aside and show-cause notice was vacated, in circumstances.
Sardar Faisal Zafar for Appellant.
Khalid Pervez, A.O., for Respondents.
Date of hearing: 29th October, 2014.
2016 P T D (Trib.) 1305
[Customs Appellate Tribunal]
Before Muhammad Nadeem Qureshi Member (Judicial-I) and Muhammad Yahya Member (Technical-I)
Messrs A.F.U. INTERNATIONAL, KARACHI
Versus
DIRECTOR GENERAL and another
Customs Appeal No.K-445 of 2014, decided on 16th December, 2015.
(a) Customs Act (IV of 1969)---
----S. 25-A---Income Tax Ordinance (XLV of 2001), S.148(9)---Sales Tax Act (VII of 1990), S.46(g)---Import of goods---Customs value, determination of---Directorate General of Valuation, powers of---In terms of S.46(g) of Sales Tax Act, 1990, Director, Directorate of General Valuation was not empowered to fix the value of imported goods through valuation ruling in exercise of power vested under S.25A(1) of Customs Act, 1969 as it was for the Federal Board of Revenue to issue a notification---Similarly, for determination of value of goods for levy/collection of Income Tax at import stage, the Director, Directorate General of Valuation was not empowered as evident form the expression of S.148(9) of Income Tax Ordinance, 2001, rendering the determination of value for levy of Sales Tax and Income Tax under S.25A(1) of Customs Act, 1969 without power/jurisdiction---Determination of value for levy/collection of Sales Tax and Income Tax at import stage by Director, Directorate General of Valuation was coram non judice, null and void and of no legal effect---Mandatory condition for exercise of jurisdiction if the same was not fulfilled, then entire proceeding which followed became illegal and suffered from want of jurisdiction.
Mansab Ali's case PLD 1971 SC 124; Chittaranjan Cotton Mills Ltd. v. Staff Union PLD 1971 SC 197; Kwami Asante, Treahon v. Chief Kwame Tawia PLD 1973 SC 236 and Shahid Impex v. Director General of Valuation 2014 PTD (Trib.) 675 rel.
(b) Customs Act (IV of 1969)---
----Ss. 25, 25(10) & 25(15)---Value of imported and exported goods, determination of---Scope---Provisions of S.25 of Customs Act, 1969 were to be followed in sequential manner baring certain exceptional cases where massive group under-invoices was rampant, however, resort to subsequent method was not permissible without exhausting the sequence indicated in S.25 of Customs Act, 1969 as it would annihilate and terminate the spirit and essence of transaction value which in the first instance had to be established as colourable and tainted---Mere insertion of word "may" or "may not" in place of "are required to" in S.25(15) of Customs Act, 1969 through Finance Ordinance, 2007 did not give a free hand to Customs Administration to manoeuvre the provisions of S.25 of Customs Act, 1969 and thereby making them in-effective and redundant---Discretion had to be exercised judicially based on reason, rationale and fairplay and it was specifically provided by Legislature in S.25(10) of Customs Act, 1969 that subsections (1), (5), (6), (7), (8) & (9) of said section define how the customs value of imported goods were to be determined by the customs---Methods of customs valuation were normally required to be applied in a sequential order except reversal of the order at importer's request, if so agreed by Collector of Customs.
Rehan Omer v. Collector of Customs Karachi 2006 PTD 909; Messrs Toyo International Motorcycle v. Federation of Pakistan and 3 others 2008 PTD 1494; Najam Impex Lhr v Assistant Collector of Customs, Karachi and others 2008 PTD 1250; Sadia Traders v. FOP PTCL 2014 CL537; Faco Trading Company v. Members Custom, Federal board of Revenue and others 2013 PTD 825; Goodwill Traders, Karachi v. FOP 2014 PTD 176 rel.
(c) Customs Act (IV of 1969)---
----Ss. 25, 25(7) & 25(9)---Customs Rules, 2001, Rr.107, 108 & 112---Valuation Procedures---Value of imported and exported goods, valuation of---Scope---Method of valuation provided in S.25 of Customs Act, 1969 and Customs Rules, 2001 were required to be applied in a sequential order and without visible exercise reflected on record, no resort could be made to secondary method of valuation---In the present case, Director, Directorate General of Valuation had directly determined the value of compound chocolate under Ss.25(7) & 25(9) of Customs Act, 1969 which was unlawful on the face of it as value could either be determined under S.25(7) or 25(9) of Customs Act, 1969, and not under both the subsections and that also after exhausting the exercise conducted under the preceding subsection of S.25 of Customs Act, 1969---Such an inquiry was not in accordance with law, and was without jurisdiction, being patently in derogation of provisions of Ss.25 & 25A of Customs Act, 1969 and Chapter IX of Customs Rules, 2001.
(d) Customs Act (IV of 1969)---
----Ss. 25D & 81---Import of goods---Valuation of goods---Provisional determination---Review of value---Scope---When an initial order for valuation was challenged through an appeal or review application, the said order so assailed, reopened for decision by Reviewing/Appellate Authority, therefore upon challenging the Valuation Ruling through Review Application under the provisions of S.25D of Customs Act, 1969, it stood re-opened with the norms of justice and fair play---Department was mandated to immediately pass stay order on filed Review Application or at least issue direction to the Clearance Collectorate to complete assessment of forthcoming consignment of import under S.81 of Customs Act, 1969 as determined value through Ruling stood sub-judice before him and thus un-operational to the extent of imported goods.
CBR v. Chanda Motors 1993 SCMR 39; Ghulam Nabi v. FOP 2013 PTD 581; Central Board of Revenue and others v. Chanda Motors 1993 SCMR 39; Garikapati Veeraya v. N. Subbiah Choudhry and others PLD 1957; Commissioner of Wealth Tax v. Vimlaban Vadilal Mehta (1984) 145 ITR 11 and F.A. Khan v. The Government of Pakistan PLD 1964 SC 520 and Chatturam and others v. Commissioner of Incmoe Tax Bihar (1947) 15 ITR 302 rel.
Nadeem Ahmed Mirza, Consultant along with Obayd Mirza for Appellants.
Riaz Hyder, P.A. for Respondent No.1.
Abdul Rasheed Khan, Appraiser for Respondent No.2.
Date of hearing: 9th February, 2015.
2016 P T D (Trib.) 1456
[Customs Appellate Tribunal]
Before Ch. Muhammad Tariq, Chairman Adnan Ahmed, Member Judicial-II and Khalid Mahmood, Member Technical
Messrs 7 STAR ENTERPRISES and others
Versus
ADDITIONAL COLLECTOR OF CUSTOMS and others
Customs Appeals Nos.K-1056 to 1061, decided on 12th August, 2014.
Customs Act (IV of 1969)---
----Ss. 79, 121, 127, 129, 179(3), 194-A & 207---Pilferage and misappropriation of imported goods---Imposition of penalty---Appellants were licensed customs house agents falling under the provisions of S.207 of the Customs Act, 1969 and were mainly engaged in the clearance of goods relating to Afghan Clients, who imported their cargo through customs port at 'Port Qasim'---Appellants filed goods declaration (GDS) on the basis of documents supplied by the importers---After completion of customs formalities by the concerned Collectorate of Customs, imported cargo was lifted by National Logistic Corporation (NLC), whose operations were governed and controlled by the Army officials---After loading the goods, the containers were checked by Customs Authorities, who sealed the containers and goods were transported to their destination---Allegation was that dutiable goods were pilfred enroute under the garb of transit cargo---Responsibility of the appellants, was restricted to the extent of "Port Qasim" and not for later stage---In show cause notice NLC (National Logistic Corporation) who lifted the cargo had been exclusively held responsible for said act of pilferage---No role in the alleged pilferage, had been assigned in the charging part of the show-cause notice, except associating the appellants with importer, the NLC and the border agent on the basis of a generalized statement---Show-cause notice finally brought out contravention of different sections of the Customs Act, 1969, which were not attracted against the appellant---Despite that Adjudicating Authority imposed a penalty of Rs.250,000 on the appellants---Sole responsibility of carrier companies and others involved in the safe transportation/transit of the goods across the country, which also included to get receipt from the competent authorities as to the safe and sound arrival of the goods at the destination along with cross-border certificate---Stereo-type notices cyclostyled by the Port Qasim Authority were served upon the appellants---No specific allegation was levelled against appellants in the show-cause notices, except that the appellants were Clearing Agents---Under the relevant law, Clearing Agent's job would end with the filing of Goods Declaration, their processing and loading on the containers; and it was the sole responsibility of carrier to safely transit the goods across the country through designated destination---No evidence was available on record that appellants actively participated in the misappropriation/pilfering or smuggling of imported goods---Departmental Representative, representing various Directorates, could not point out that the goods from the containers were pilfered, smuggled or misappropriated by the appellants (Clearing Agents) or was done with their connivance---Appeals to the extent of appellants, were accepted and impugned orders, were set aside, in circumstances.
PLD 2008 SC 951 ref.
Nazeer Abbasi, M.H. Awan, Rana Zahid, Zia ul Hassan, Asim Muni Bajwa, Rfvigree, M. Ishaque, Saleem Abbasi, Nadeem Mirza, Sardar Faisal Zafar, Ch. M. Rafique, Darvesh K. Mandan, Aqeel Ahmed, S. Baqar Ali Naqvi, Raja Babar Hamid, Ms. Faima Khalid, Salahuddin Khan, Sardar Zafar Hussain, Shaikh Farukh Saleem, Sonil Ali, Ch. Mehmood Anwar and Haseeb Jhandolla for Appellants.
Shahid Ali Abbasi, D.C., Imtiaz Ahmed A.O., Kausar H.A.O., Khalil M. Dogar, Shakeel Ahmed, Ms. Maha, Rana Gulzar Ahmed SIO, Zafar Iqbal and M. Hanif for Respondents.
Dates of hearing: 4th, 5th, 6th, 7th, 11th and 12th August, 2014.
2016 P T D (Trib.) 1570
[Customs Appellate Tribunal]
Before Tahir Zia Member (Judicial-II)
Messrs G.A. POLYMER (PVT.) LTD.
Versus
COLLECTOR, COLLECTORATE OF CUSTOMS (APPEALS) and 2 others
Customs Appeal No.K-1305 of 2015, decided on 5th March, 2016.
Customs Act (IV of 1969)---
----S. 179---Pecuniary jurisdiction of Assistant Collector Customs---In the present case, customs duty and taxes involved were Rs.5,40,084, whereas under S.179 of Customs Act, 1969 the Assistant Collector Customs, who passed the order-in-original, had power to adjudicate a case wherein involvement of duty and taxes was less than Rs.5,00,000---Assistant Collector Customs, in circumstances, had no jurisdiction; and not competent to issue show-cause notice and pass order in the matter---Power vested in any Authority, could only be exercised by that very Authority; in default whereof, the entire action would be without jurisdiction and void ab initio; and of no legal effect---Things required by law to be done in certain manner as prescribed by law, was to be done accordingly---Where the mandatory condition of exercise of jurisdiction by a court, Tribunal or authority, was not fulfilled, then the entire proceedings would become illegal; and all subsequent orders would be without jurisdiction---Requirements, of law were absolute and violation of the same would invalidate the whole procedure---Imposition of redemption fine and penalty on the importer was very harsh; same were ordered to be remitted; and orders passed by the Customs Authorities, were modified to that extent only, in circumstances.
Government of Sindh v. Nizakat Ali 2011 SCMR 592; M. Hussain Shah v. Abdul Qayyum 2011 SCMR 743; WAWA Garments Industries (Pvt.) Ltd. Karachi's case 2011 PTD (Trib.) 2557; Azhar Hussain Gillani v. Chief Election Commissioner 2011 CLC 1109; Aluminum Processing Industrial International (Pvt.) Ltd. v. Pakistan 2011 PTD 2128; Victor Electronic Appliances Industries (Pvt.) Ltd. v. Habib Bank Ltd. 2011 SCMR 806; Munir Hussain Bhatti Advocate v. Federation of Pakistan PLD 2011 SC 407; Muhammad Hussain Shah v. Abdul Qayyum 2011 SCMR 743; Kamran Industries v. Collector of Customs Export PLD 1996 Kar. 68; PLD 1995 Kar. 587 and Messrs Khyber Tractors (Pvt.) Ltd. v. Government of Pakistan PLD 2005 SC 482 ref.
M.H. Awan for Appellant.
Siddique Zia for Respondents.
Date of hearing: 3rd December, 2015.
2016 P T D (Trib.) 1580
[Customs Appellate Tribunal]
Before Adnan Ahmed Member Judicial-II
Messrs CARE IMPEX LAHORE
Versus
DEPUTY COLLECTOR OF CUSTOMS and another
Custom Appeal No.K-1607 of 2014, decided on 6th March, 2015.
(a) Customs Act (IV of 1969)---
----S. 193A---Appeal, filing of---Limitation---Appellant filed appeal against the order of department---Department's contention was that appeal was barred by time---Validity---Perusal of memo. of appeal showed that an objection regarding limitation had been inscribed by the Department---Held, that appeal had to be filed after clearance of goods and not upon passing of the assessment order and delay was only of four days---Department neither raised objection at the time of filing of appeal nor during course of hearing---Appeal before the Tribunal was, therefore, within time and the same had to be decided on merit instead of technicalities.
(b) Customs Act (IV of 1969)---
----Ss. 193 & 193-A(3)---Order-in-appeal, passing of---Delay of 242 days---Appeal was filed on 6-5-2013---According to S. 193A(3) of Customs Act, 1969, an order had to be passed within 120 days from the date of filing of an appeal or within a further extended period of 60 days with reasons to be recorded for extension in writing---No extension was granted as per contents of order and Department passed an order after 362 days---Department's contention was that the appeal filed was barred by time---Held the order passed by Department was barred by time, without jurisdiction and could not be enforced under law---Appeal was allowed, accordingly.
Messrs Super Asia Muhammad Din Sons (Pvt.) Ltd., v. Collector of Sales Tax, Gujranwala 2008 PTD 60; Messrs Hanif Strawboard Factory v. Additional Collector (Adjudication) Customs, Sales Tax and Central, Excise Gujranwala 2008 PTD 578; Messrs Tanveer Weaving Mills v. Deputy Collector Sales Tax and 4 others 2009 PTD 762; Messrs Syed Bhai Lighting Limited, Lahore v. Collector of Sales Tax and Federal Excise, Lahore and 2 others 2009 PTD (Trib.) 1263; Leo Enterprises v. President of Pakistan and others 2009 PTD 1978; Innovative Impex, v. Collector of Customs, Sales Tax and Federal Excise (Appeal) 2010 PTD (Trib.) 1010; Fazal Ellahi v. Additional Collector of Customs, MCC of PaCCS 2011 PTD (Trib.) 79; Unique Wire Industries v. Additional Collector of Customs, MCC of PaCCS 2011 PTD (Trib.) 987; Kaka Traders v. Additional Collector of Post Clearance Audit 2011 PTD (Trib.)1146 and Pak Electron Ltd. v. Collector of Customs, Lahore and others 2012 PTD (Trib.) 1650 ref.
2009 PTD 1978 and 2009 PTD (Trib.) 1263 rel.
(c) Customs Act (IV of 1969)---
----Ss. 25 & 80---Customs Rules, 2001, Rr. 110 & 107(a)---Declared value of imported goods---Assessment---Section 80 of the Customs Act, 1969 and R.438 sub-chapter III of chapter XXI of the Customs Rules, 2001 envisaged that value can be determined by passing an assessment order in case the value declared was found to be tainted or false through tangible evidential invoice of identical goods of same period and country of origin---Nothing was available on record which depicted that declared value by importer was not fair within the meaning of S. 25(1) of the Customs Act, 1969 therefore, the assessment of goods had be to made on the basis of import value of imported goods available in the data maintained by Collectorate under R.110 of the period given in R.107(a) of Customs Rules, 2001---No assessment could be made in the absence of availability of evidential invoice which is supplied to the importer ---- Assessment note of Department was confusing as the same on the one hand stated that data of US $1.2/kg was not available, on the other hand the assessment was made on the basis of data of identical goods of US $0.75/kg---Department failed to mention the relevant goods declaration and assessment made by the Department was invalid being in complete derogation of S. 25 of Customs Act, 1969 and Valuation Rule embodied in Chapter IX of Customs Rules, 2001.
2012 PTD (Trib.) 1650 and Messrs Collector of Customs, Port Muhammad Bin Qasim v. Messrs Zymotic Diagnostic Intl., Faisalabad 2008 SCMR 438 rel.
(d) Customs Act (IV of 1969)---
----S. 25---Customs Rules, 2001 Ch. IX (Rr.107-125)---General Clauses Act (X of 1897), S.24-A---Speaking order---Appellate authority passed the order without rebutting the grounds of appeal in a slip-shod manner by stating that "the assessment officer was within his authority to reject the declared transaction value and to determine the customs value on the basis of the value of identical goods imported at or about the same time"---Validity---Appellate authority failed to examine the conditions for rejecting the declared value and assessing the goods on the basis of identical and similar goods, mentioned in S. 25 of the Customs Act, 1969 and Valuation Rule in Chapter IX of Customs Rules, 2001---Order of Appellate Authority was illegal, void, arbitrary, without the application of mind and a result of misuse of authority vested in public functionary.
(e) General Clauses Act (X of 1897)---
----S. 24-A---Orders of Court/Authority/Tribunal--- Essential ingredients---If any authority, Court or Tribunal gave a finding of fact which was not based on material available on record, the same becomes perverse and such finding of fact was violative of the established principles of appreciation of evidence on record which was not sustainable in law---Every judicial or quasi-judicial finding be based on reasons which contained the justification for the finding in the order itself.
2007 PTD 2500; 2004 PTD 1973; 2005 YLR 1719; 2003 PTD 777; 2003 PTD (Trib) 2369; 2002 MLD 357; 1983 CLC 2882; 2005 PTD 2519; 2005 PTD 1189; 2003 PTD 2369; PLD 1995 SC (Pak) 272; PLD 1970 SC 158; PLD 1970 SC 173; 1984 SCMR 1014 and 2012 PTD (Trib.) 619 rel.
Obayd Mirza and Mirza Muhammad Abeer Nadeem for Appellants.
S.M. Sohail for Respondent No.1.
Date of hearing: 6th January, 2015.
2016 P T D (Trib.) 1605
[Customs Appellate Tribunal]
Before Amjad Ali Bohio, Member Judicial-III
COLLECTOR OF CUSTOMS, through Deputy Collector of Customs
Versus
Messrs AL-MALIK TRADERS and 2 others
Customs Appeal No.K-1388 of 2015, decided on 11th December, 2015.
Customs Act (IV of 1969)---
----Ss. 179, 179(1), 79 & 80---Powers of adjudication---Import of goods---Mis-declaration---Pecuniary jurisdiction of Customs Officials---Scope---Contention of importer was that Deputy Collector of Customs who had issued show-cause notice had no jurisdiction as provided under S.179 of Customs Act, 1969 and order-in-original passed by him was coram non judice---Validity---Power vested in any authority can only be exercised by the authority, in default thereof, the entire action would be without jurisdiction void ab initio and of no legal effect---Question regarding jurisdiction was foundation stone for a judicial or a quasi-judicial functionary to exercise its power/authority and no sooner the question of jurisdiction was determined in negative, the whole edifice built on such defective proceedings was bound to crumble down---Show-cause notice was issued for amount of customs duty and other taxes by Deputy Collector Adjudication who had no jurisdiction to issue such show-cause notice as Deputy Collector could not issue a show-cause notice and adjudicate upon for an amount exceeding eight hundred thousand rupees and consequently passing of impugned order-in-original was null and void---Authority who issued show-cause notice and passed order-in-original was not competent, having no jurisdiction to adjudicate upon the act of importer of concealing and filing un-true declaration in order to get the goods released---Pecuniary jurisdiction of Customs Officials had been described in S.179(1) of Customs Act, 1969 and exercise of jurisdiction by an authority was mandatory requirement and its non-fulfilment would entail entire proceedings to be coram non judice and such defect would not be technical but render entire exercise of authority to be ab initio void and illegal---Impugned order-in-original was set aside in circumstances.
All Pakistan Newspapers Society and others v. Federation of Pakistan and others PLD 2004 SC 600; Ali Muhammad through Legal Heirs and others v. Chief Settlement Commissioner and others 2001 SCMR 1822; Commissioner of Inland Revenue Zone-III, Faisalabad v. Messrs Kamal Fabrics, Faisalabad 2012 PTD (Trib.) 619; Khyber Tractors (Pvt.) Ltd. Through Manager v. Pakistan through Ministry of Finance, Revenue and Economic Affairs, Islamabad PLD 2005 SC 842; Collector of Customs, Model Customs Collectorate of PaCCS, Karachi v. Messrs Kapron Overseas Supplies Co. (Pvt.) Ltd., Karachi 2010 PTD 465; Ilam Khan v. Government of Pakistan and 3 others 1983 CLC 786; Noor Dad and 10 others v. The State 1983 PCr.LJ 623; Engro Chemical Pakistan Ltd. v. Additional Collector of Customs and others 2003 PTD 777; Collector of Sales Tax & CE, Lahore v. Zamindara Paper and Board Mills and others 2007 PTD 1804; Abida Rashid v. Secretary PLD 1995 Kar. 587; Abdul Razzaq v. Muhammad Sharif PLD 1997 Lah. 1; 2007 PTD 1804 and 2010 PTD 465 rel.
Ghulam Mustafa, A.O., for Appellant.
Nadeem Ahmed Mirza for Respondent No.1.
Date of hearing: 11th December, 2015.
2016 P T D (Trib.) 1613
[Customs Appellate Tribunal]
Before Adnan Ahmed, Member Judicial-II
M. NADEEM TRADING COMPANY and another
Versus
COLLECTOR OF CUSTOMS (EXPORTS)
Customs Appeals Nos.K-1586 and K-1587 of 2014, decided on 27th February, 2015.
(a) Customs Act (IV of 1969)---
----S. 180 ---Show-cause notice---Essentials and scope---Show-cause notice was a basic document which should be prepared with utmost care as foundation of entire proceedings stand on show-cause notice---If show-cause notice was defective, sketchy and vague, subsequent proceedings ought to crumble down---Show-cause notice had to be issued well supported by tangible evidence as the same was a fundamental document which comprehensively described the case made a out against tax payer by making reference to evidence collected in support of same and with narration of facts along with supportive evidence which determined an offence attracted to a particular case---Show-cause notice was not a casual correspondence or a tool or a license to commence a rowing inquiry into the affair based on assumption and speculation but was a fundamental document that carried definitive legal and factual position of department against tax payer, legal enforceability and jurisdictional validity of a show-cause notice vested from its context ---Show-cause notice, in the present case, was very sketchy and vague as evident from fact that inspite of levelling allegation of mis-declaration under S. 32 of Customs Act, 1969, nothing had been said as to how an importer mis-declared transmitted declaration therewith---Such type of show-cause notice was palpably illegal and without any lawful authority and jurisdiction.
Case-law referred.
(b) Customs Act (IV of 1969)---
----S.131---Customs Rules, 2001, R.444---Clearance for exportation---Procedure---Owner of any goods to be exported had to make a Goods Declaration for export under S. 131(a)(1) of Customs Act, 1969 and transmit it online in terms of R. 444 of Customs Rules, 2001---Principles.
(c) Customs Act (IV of 1969)---
----S.25(15)---Foreign Exchange Regulation Act (VII of 1947), S. 12---Valuation of exported goods---Determination---Scope---Matter of valuation was between seller and buyer to agree to prices----Scheduled Bank, State Bank of Pakistan or customs department had no authority to dispute the declared value---Determination of export value fell within the ambit of State Bank of Pakistan under S. 12, Foreign Exchange Regulation Act, 1947---If it was found that export value was not in accordance with specification of goods, department could only issue order to Terminal to retain consignment as enunciated in S. 12(5) of Foreign Exchange Regulation Act, 1947---Department was also empowered to determine value of exported goods under S. 25(15) of Customs Act, 1969 which laid down the concept of "open market" value of goods at prescribed time---Term "open market" had laid down parameters as to what was a sale in "open market" between buyer and seller independent of each other---In view of such specific provisions regarding method and mechanism for determination of value of export consignment, value in the present case, had been determined in arbitrary/unilateral manner which was alien to provision of S. 25(15) of Customs Act, 1969.
Case law referred.
(d) Customs Act (IV of 1969)---
----Ss. 26, 29, 130, 131 & 205---Customs Rules, 2001, Rr. 444, 450(2) & 450(3)---Information to be furnished---Re-assesment---Scope---According to S. 26 of Customs Act, 1969, Department could ask for supply of documents or information corresponding to any import or export for determination of its veracity/correctness---No documents or information were sought by Department under S. 26 of Customs Act, 1969, instead demand was made for submission of another Form "E" for US$ 117,526.00---Scheduled Bank was not authorized to issue a supplementary Form "E" to already attested Form "E" through which shipment was affected---Issuing of supplementary Form "E" was not permitted under Foreign Exchange Regulation Act, 1947 ---Demand made by Department was unrealistic and of no lawful authority---Department tried to amend goods declaration which was not permitted under S.29 of Customs Act, 1969 and R. 444 of Customs Rules, 2001---No amendment under S. 205 of Customs Act, 1969 was allowed in column of declared value, quantity or description after removal of goods from customs area---Exporter was barred to obtain amendment post-filing of Goods Declaration and after shipment of goods---Term "assessed for duty" laid restriction on department not to amend the contents of Goods Declaration after shipment under S. 130 of Customs Act, 1969 on strength of valid assessment order by appropriate authority under S. 131 and R. 450 of Customs Rules, 2001---Such acts and omissions of department were without lawful authority being in derogation of S. 131(c) of Customs Act, 1969---Intention of Legislature was not as interpreted by the Department---Once goods were cleared for shipment, no reassessment was permitted under S. 131 of Customs Act, 1969---Reassessment was permitted prior to passing of order of clearance under S. 131 and R.450(2) of Customs Rules, 2001 upon filing of review by exporter under R.450(3) of Customs Rules, 2001 against assessment orders of Appraiser/Principal Appraiser and Assistant/ Deputy/ Collector as the case may be.
(e) Customs Act (IV of 1969)---
----S. 131(c)---Customs Rules 2001, R. 450(2)---Clearance for exportation---If it was considered that Department was empowered to reassess Goods Declaration after shipment in terms of R.450(2) of Customs Rules, 2001, it would render S. 131(c) of Customs Act, 1969 redundant---Section 131(c) of Customs Act, 1969 had to prevail over R.450(2) of Customs Rules, 2001.
Case-law referred.
(f) Customs Act (IV of 1969)---
---Ss. 26 & 215---Information to be furnished---Scope---Contention of importer was that department had referred S. 26 of Customs Act, 1969 in show-cause notice but no copy of notice had been placed on record confirming that neither inquiry was initiated, nor a notice was served within meaning of S. 215 of Customs Act, 1969---Held, that Department was shooting in dark and making fishing and rowing inquiry through the show-cause notice which was not permitted by law---Appeal was allowed in circumstance.
Case-law referred.
(g) Interpretation of statutes---
----Conflict of Rules with parent Act---Act to prevail.
Nadeem Ahmed Mirza, Obayd Mirza and Mirza Muhammad Abeer Nadeem for Appellants.
Tariq Mehmood, Appraiser for Respondent.
Date of hearing: 17th December, 2014.
2016 P T D (Trib) 1644
[Customs Appellate Tribunal]
Before Ch. Muhammad Tariq, Chairman/Member Judicial
HUFFAZ SEAMLESS PIPE INDUSTRIES LTD.
Versus
COLLECTOR OF CUSTOMS, and 2 others
Customs Appeal No.H-257 of 2015, decided on 6th May, 2015.
Customs Rules, 2001---
----R. 350(4)---Customs Act (IV of 1969), S.194-A---Warehousing period---Interpretation and scope of R. 350(4) of Customs Rules, 2001---Importer imported a consignment of hot rolled bars which were to be used for manufacturing of pipes within a period of three years---Department contended that importer was obliged to manufacture and export finished goods within the stipulated period of three years in terms of R.350(4) of Customs Rules, 2001---Held, that once whole raw material was consumed and new product was formed, question of non-consumption ended---According to R.350(4) of Customs Rules, 2001, importer was not bound to export his imported consignment within three years from the date of import---Rule 350(4) of Customs Rules, 2001, provided that material should be consumed within the period of three years of its import and said rule was silent regarding the time period in which consumed material would be exported.
Nasir Ahmad Malik for Appellant.
Nawabzadi Aliya Khanji-Deputy Collector and Abdul Latif Shar Inspector for Respondents.
Date of hearing: 5th May, 2015.
2016 P T D (Trib.) 1706
[Customs Appellate Tribunal]
Before Adnan Ahmed, Member Judicial-II
Messrs ALIZ INTERNATIONAL
Versus
COLLECTOR OF CUSTOMS, MMC OF PMBQ, CUSTOMS HOUSE, KARACHI and 2 others
Cus. Appeal No.K-1678 of 2014, decided on 25th February, 2015.
(a) Words and phrases---
----"Dis-mental"---Meaning---Dismental means to take to pieces, to destroy the integrity or functioning, to come to an end.
(b) Words and phrases---
----"Scrap"---Meaning---Scrap means waste; anything discarded as worn out, out to date, useless, cease to use, do away with and abandon.
(c) Customs Act (IV of 1969)---
----S. 80---Customs Rules, 2001, R.438---S.R.O. 886(I)/2012, dated on 18.07.2012---Assessment of duty---Jurisdiction of Customs Authority---Department calculated the loss of revenue by terming the imported scrap as fresh goods---Imported goods were subject to passing of assessment order under S. 80 of Customs Act, 1969 and R. 438 of Customs Rules, 2001, hence, no loss of revenue existed---Validity---When there was no revenue loss, the case stood ousted from the jurisdiction of Department and fell within the powers of Principal Appraiser of Executive Collectorate in terms of S.R.O. No. 886(I)/2012 dated 18-7-2012---Department usurped the jurisdiction of Executive Collectorate and also powers of Principal Appraiser which was not permitted under any circumstances---Superior Authority could not exercise the power of its sub-ordinates for adjudication purpose---Exercise of jurisdiction by Department was mandatory requirement and its non-fulfillment would entail entire proceedings to be coram non-judice.
The State v. Zia-ur-Rehman and others PLD 1973 SC 49 and 2009 PTD 1083 rel.
(d) Customs Act (IV of 1969)---
----S. 180---Show-cause notice, not disclosing grounds and reasons for proposed action---Show-cause notice contained the amount of Sales Tax and Income Tax and did not contain the relevant provisions of Sales Tax Act, 1990 and Income Tax Ordinance, 2001---Effect---Held, that no charge can be leveled or upheld without invoking relevant provisions of law---Order of adjudication being ultimately based on ground which was not mentioned in the show-cause notice was palpably illegal on the face of it.
Collector Central Excise and Land Customs and others v. Rahmdin 1997 SCMR 1840 rel.
Asst. Collector v. Khyber Elec. Lamps 2003 PTD 1275; D G Khan Cement v. Collector of Customs 2005 PTD 480; Caltex v. Collector 2003 PTD 1593; Union Playing Card Company v. Collector of Customs 2002 MLD 130; Atlas Tyres v. Addl. Collector 2002 MLD 180; State Cement v. Collector PTCL 2001 CL 558; Kashmir Sugar v. Collector 1992 SCMR 1898 and Rose Color v. Chairman, CBR 2013 PTD 813 ref.
(e) Customs Act (IV of 1969)---
----S. 27A---Customs Rules, 2001 R.593---Interpretation of S.27A of Customs Act 1969 and Rule 593 of Customs Rules, 2001---Mutilation/scraping of imported goods---Appellant's request of mutilation/scraping was declined by Department on the basis of R. 593 of Customs Rules, 2001---Rule 593 of Customs Rules, 2001 permitted that the importer or his clearing agent has to submit a request to the Assistant Collector or Deputy Collector for mutilation/scraping before filing of goods declaration and if that was not done, the same shall not be entertained---Validity---Provision of Section 27A of the Customs Act, 1969 was to be read and interpreted as expressed/phrased, which permitted mutilation or scraping of the imported goods on the request of importer without any conditionality---Rule 593 of Customs Rules, 2001 was in conflict with the expression of S. 27-A of Customs Act, 1969---Provision of S. 27A of Customs Act, 1969 and R. 593 of Customs Rules, 2001 had to be adhered in letter and spirit and for the benefit of tax payer and both the provisions were directory in nature and could not be construed as mandatory.
Messrs Nishat Mills Ltd. v. Superintendent of Central Excise Circle-II PLD 1989 SC 222; Superior Textile Mills Ltd. v. FOP 2000 PTD 399; Messrs Arjun Salt Chemical v. UC Gharo 1982 SCMR 522 and Atta Muhammad Qureshi v. The Settlement Commissioner, Lahore Division Lahore and 2 others PLD 1971 SC 61 rel.
Lt. General (Retd) Shah Rafi Alam v. Lahore Race Club 2004 CLD 373; Khalid Qureshi v. UBL 2001 SCMR 103; East West Steamship v. Queen Land Insurance PLD 1963 SC 663 and Sahibzada Sharfuddin v. Town Committee 1984 CLC 1517 ref.
(f) Interpretation of statutes---
----Rules under statute---Purpose---Rules were subordinate to the statute and were made for promotion of the Act and to be used as "stepping stones" and not to be operated as "stumbling blocks"---Where rules were in conflict with parent Act, the former must yield to the latter and the rules to the extent of inconsistency would be void.
Assistant Director v. B.R. Herman Mohata Ltd. PLD 1992 SC 485; Central Insurance v. CBR 1993 SCMR 1232; Collector of Customs, Peshawar v. Collector of Customs (Appeals) Peshawar 2011 PTD (Trib.) 2114; Messrs Wawa Garments Industries (Pvt.) Ltd. v. The Additional Collector of Customs, Export, Karachi 2011 PTD (Trib.) 2557; 2002 PTD 976; 2002 SCMR 312 and 2009 PTD 1507 ref.
Obaydullah Mirza and Mirza Muhammad Abeer Nadeem for Appellants.
Imdad Ali Appraisers for Respondent No.1.
Dates of hearing: 14th, 22nd and 26th January, 2015.
2016 P T D (Trib.) 1767
[Customs Appellate Tribunal]
Before Adnan Ahmed, Member (Judicial-II)
Messrs EMAAN IMPEX (PVT.) LTD., KARACHI
Versus
The ASSISTANT COLLECTOR OF CUSTOMS and another
Cus. Appeal No.K-1175 of 2014, decided on 25th February, 2015.
(a) Customs Act (IV of 1969)---
----S. 180---Show-cause notice---Scope---Prior to passing of order-in original, it was mandatory condition to issue show-cause notice under S. 180 of Customs Act, 1969 by adjudicating authority----Non-issuance of show-cause notice could not be simply ignored as procedural irregularity---Issuance of show-cause notice was pre-requisite as show-cause notice contained brief facts, offence committed, evidence on presumption of which allegation were based and law that had been violated and penal clauses that were attracted---Main objective of show-cause notice was to enable the person to whom notice was given, to know as to what were the charges leveled against him---Show-cause notice was not a casual correspondence or a tool or a license to commence a rowing inquiry into an affair based on assumption and speculation, but it was a fundamental document that carried definitive legal and factual position of department against tax payer---Legal enforceability and jurisdictional validity of show-cause notice emanated from its context.
Case law referred.
(b) Customs Act (IV of 1969)---
----S. 193A(3)---Order in appeal, passing of---Delay of 847 days---Appeal was filed on 11-10-2012----Order under S. 193A(3) of Customs Act, 1969 was to be passed within 120 days from the date of filing of appeal i.e. on or before 08-09-2012 or within further extended period of 60 days during initial period of 120 days with reason to be recorded for extension in writing after serving a notice to person concerned----No extension had been granted by department prior to the expiry of initial period of 120 days and it was evident from the order which was silent in that regard---Department passed an order after 967 days from the date of filing of appeal which was barred by 847 days---Order passed by department was without power/jurisdiction and could not be enforced under law.
Case law referred.
(c) General Clauses Act (X of 1897)---
----S. 24A---Speaking order, essentials of---Directions of Federal Board of Revenue were to be adhered to in terms of S. 223 of Customs Act, 1969 keeping in view principles of natural justice, fair play and ratio decidendi---Perusal of order in question showed that department had not passed the same with application of mind and as per essence and spirit of law---Department intentionally and purposely had not rebutted a single ground of appeal filed before it by the party and had passed a sketchy, vague, cursory and non-speaking order, confirming that it had been passed not on objective consideration rather on personal whims and wishes---Such order was termed as illegal, void and arbitrary and as result of misuse of authority vested with department---No authority was available with department to pass such illegal, void, arbitrary order---If any Authority, Court or Tribunal gave a finding of fact which was not based on material available on record, findings so given were illegal and arbitrary and became perverse and a perverse finding of fact was violative of established principles of appreciation of evidence or record and as such not sustainable in law---Every judicial/quasi-judicial order was to be based on a reasoning containing justification for finding given in order because in absence of same, order so issued was in derogation of established principles of dispensation of justice---Order-in-appeal, in the present shape was too vague and defective as it contained no valid reasoning for rejecting the appeal---Order was in derogation of direction of Federal Board of Revenue and mandatory requirement of S. 24A of General Clauses Act, 1897---Order in question was not only illegal and void but also failed the test of judicial scrutiny and as such not sustainable in eyes of law---Appeal was allowed, accordingly.
Case law referred.
Obaydullah Mirza and Mirza Muhammad Abeer Nadeem for Appellant.
Aijaz Ahmed, Appraisers for Respondent No.1.
Date of hearing: 16th December, 2014.
2016 P T D (Trib.) 1847
[Customs Appellate Tribunal]
Before Adnan Ahmed (Member Judicial-II)
Messrs MALIK RUBBER SHEET FACTORY
Versus
DEPUTY COLLECTOR and another
Cus. Appeal No.K-664 of 2011, decided on 14th February, 2015.
(a) Customs Act (IV of 1969)---
----S. 179---S.R.O. 371(I)/2002 dated 15-6-2002---Department assumed jurisdiction on basis of involved amount of duty and taxed enunciated under S. 179 of Customs Act, 1969 and S.R.O. No. 371(I)/2002 dated 15-6-2002---Amount of duty, taxed and revenue loss to exchequer was non-existent by virtue of the fact that duty and taxes shown in GD on declared value came to Rs. 15,509.00 and case of said amount fell within the jurisdiction of Assistant Collector of Customs not with the authority issuing show-cause notice under S. 179 of Customs Act, 1969 prior to amendment through Finance Act, 2006---Present case was not of evasion of duty instead was that of importability, duty and taxes on goods to be paid by importer upon finalization of assessment order under S. 80 of Customs Act, 1969---Authority to adjudicate such case was Principal Appraiser vide S.R.O. 371(I)/2002 dated 15-6-2002---Department, inspite of clarity in expression of S. 179 of Customs Act, 1969, and Serial No. 30 of S.R.O. No. 371(I)/2002 and directions of Federal Board of Revenue to the adjudicating authorities issued show-cause notice while usurping powers of its subordinate in derogation of S. 179 of Customs Act, 1969 and S.R.O. No. 371(I)/2002 and direction of the Board---Department had gone beyond the allotted sphere of defined jurisdiction.
Case law referred.
(b) Administration of justice---
----Neither superior nor subordinate quasi- judicial authorities were empowered to eclipse powers of their subordinate/superior, in course of adjudication proceedings---If mandatory condition for exercise of jurisdiction by specified authorities was not fulfilled as per expressed provision of relevant law, entire proceedings which followed became illegal and suffered from want of jurisdiction/powers---Any order passed in continuation of such proceedings in adjudication or appeal equally suffered from illegality and were without jurisdiction---Appellate Authority intentionally ignored provisions of relevant law while passing order-in-appeal---Show-cause notice being without power/jurisdiction, entire proceedings right from show-cause notice to order-in-appeal were also without lawful authority and jurisdiction.
Case law referred.
(c) Customs Act (IV of 1969)---
----S. 193A---Order in appeal---Appeal was filed on 30-12-2010---Order under S. 193A(3) of Customs Act, 1969 should have been passed within 120 days from date of filing of appeal i.e. on or before 29-04-2011---Extension granted by department on 11-06-2011 was not valid as the same was extended when time for extending period stood lapsed---Department was not empowered to extend period unless a notice to importer was served.
Case law referred.
(d) Customs Act (IV of 1969)---
----S. 181---Import Policy Order, 2009-2010---Option to pay fine in lieu of confiscated goods---Importer imported printing ink from India which was not in positive list of goods importable in terms of Appendix- G to Import Policy Order, 2009-2010---Contention of importer was that such an act did not make printing ink as banned and Department should have released the same upon imposition of penalty instead of outright confiscation which least served any purpose as that did not add any revenue to exchequer---Collection of leviable duty and taxes were blocked by department and goods so seized were put to auction for which general public submitted bids and goods were delivered to highest bidder---Amount so received by department was far lesser than amount of leviable duty and taxes---Validity---When importer was not entitled for clearance of said goods for home consumption then how the general public was entitled to buy that through auction---When there was restriction on the import, it was restricted for auction as well for general public---Confiscation would serve no purpose and payment of duty would certainly add to Government Revenue which would be in the interest of State as disposal of such confiscated items at a very low price was absurd---Failure to exercise discretionary powers as provided under Customs Act, 1969 was without legal justification which amounted to denial of a fair trial---Department, in general terms was obliged to give option to owner of gooods to pay fine in lieu of confiscation by exercising powers as provided under S. 181 of Customs Act, 1969---Appeal was allowed, accordingly.
Case law referred.
(c) Notification---
----Notification could be given retrospective effect if the same went to comfort the tax payer.
Nadeem Ahmed Mirza (Consultant) for Appellant.
Khalid Pervaiz (Appraiser) for Respondents.
Date of hearing: 12th February, 2015.
2016 P T D (Trib.) 2125
[Customs Appellate Tribunal]
Before Adnan Ahmed, Member (Judicial-II)
Messrs AL-FAJAR ASSOCIATES, KARACHI
Versus
DIRECTORATE GENERAL OF INTELLIGENCE AND INVESTIGATIONS-FBR, KARACHI
Cus. Appeal No.K-3140 of 2013, decided on 8th December, 2014.
(a) Customs Act (IV of 1969)---
----Ss. 179, 32, 14, 14A & 156(1)---Income Tax Ordinance (XLIX of 2001), S. 162(1)---Contention of department was that word 'taxes' had been inserted in S. 179 of Customs Act, 1969 through Finance Act, 2014, which was quite enough for exercising jurisdiction corresponding to taxes---Held, such understanding was based on misconception as the word "taxes" was inserted by legislature for calculation of involved amount of duty and taxes on basis of which adjudicating authority as defined in S. 179 of Customs Act, 1969 determined his powers---Inspite of insertion of word "taxes", adjudicating authority had to issue show-cause notice within respective applicable provision of Customs Act, 1969 and not under charging provision of S. 162(I) of Income Tax Ordinance, 2001---Charging section for short paid amount of income tax was S. 162(I) of Income Tax Ordinance, 2001 under which Commissioner of Income Tax was the only authority to proceed in matter---No mis-declaration was apparent on part of importer, therefore, invoking of Ss. 32, 14, 14A & 156(1) of Customs Act, 1969 was manifestly wrong as these provisions could not be invoked in the matter of income tax attracting S. 162(1) of Income Tax Ordinance, 2001---Department acted without power/jurisdiction as the same was usurpation of powers of authority expressed in S. 162(1) of Income Tax Ordinance, 2001---Department was not empowered to proceed in the matter of income tax---Order accordingly.
Case law referred.
(b) Jurisdiction---
----If mandatory condition for exercise of jurisdiction was not fulfilled, entire proceeding which followed became illegal and suffered from want of jurisdiction---No deviation from notified jurisdiction could be made---If an action had been taken or order had been passed without having competency under respective provision of law same had to be declared illegal and without jurisdiction.
Case law referred.
(c) Customs Act (IV of 1969)---
----S. 179(3)---Order in appeal---Delay of 14 days---Show-cause notice was issued on 6-5-2013---Order should have been passed within 120 days i.e. on or before 3-9-2013 as against 27-9-2013---Validity---Order under S. 179(3) of Customs Act, 1969 had to be passed within 120 days from date of issuance of show-cause notice or within further extended period of 60 days by department upon availability of "exceptional circumstances" and recording of said exceptional circumstances prior to expiry of initial period of 120 days after serving notice to person concerned---Held, that extension obtained by department for passing order after expiry of stipulated initial period of 120 days was without any valid reason as no "exceptional circumstances" were either available to it and no notice was served on importer despite mandated---Rendering the extension was non-existent as same was accorded by Collector without any lawful authority and after expiry of initial period of 120 days on which order passed by department was completely silent---Once matter became barred by time, subsequent enhancement in period of limitation should not have effected reopening of past and closed transaction.
Case-law referred.
(d) Customs Act (IV of 1969)---
----Ss. 32,32(2), 80, & 83---Customs Rules, 2001, R. 438 & 442---Allegation of mis-declaration on filing of goods declaration---Department charged appellant for mis-declaration under S. 32 of Customs Act, 1969 merely on basis of filing of good declaration---No charge had been leveled under S. 32(2) of Customs Act, 1969 against appropriate officials who passed assessment/clearance order under Ss.80 & 83 of Customs Act, 1969 and Rr. 438 & 442 of Customs Rules, 2001---Held, that inspite of standing on same pedestal, importer had been meted out with partial treatment by department which was not permitted under Art. 25 of the Constitution---Treatment given to importer was violative of Arts. 4 & 25 of the Constitution---Appeal was allowed in circumstances.
Case law referred.
Obayd Mirza and Nadeem Ahmed Mirza for Appellants.
Muhammad Aqil Alam for Respondent.
Date of hearing: 9th September, 2014.
2016 P T D (Trib.) 2157
[Customs Appellate Tribunal]
Before Muhammad Nadeem Qureshi, Member Judicial-I and Mohammad Yahya, Member Technical-I
Messrs LEATHER COTEX
Versus
COLLECTOR OF CUSTOMS (ADJUDICATION-II) and another
Customs Appeal No.K-1630 of 2014, decided on 14th March, 2015.
(a) Customs Act (IV of 1969)---
----S. 195---Re-opening of past and closed matter by customs authorities---Scope---Assessment---Order of assessment by department had attained finality---In order to reopen such past and closed transaction, only recourse available was that Collector of Customs to initiate action under S. 195 of Customs Act, 1969.
Glaxo Smith Kline Pakistan Ltd. v. Federation of Pakistan and other 2004 PTD 3020 ref.
(b) Customs Act (IV of 1969)---
----S. 195---Mis-declaration---Assessment order had attained finality---Once an order was passed which had attained finality, same could not be subject to show-cause notice again, when no appeal or revision was filed against the first order.
(c) Customs Act (IV of 1969)---
----Ss. 80 & 32---Assessment of duty---Essentials---Perusal of S. 80 of Customs Act, 1969 indicated that during process of assessment it was duty of the Department to not only examine goods and to consider any extra information available on Goods Declaration in order to arrive at a correct assessment of duty and taxes---Assumption that quoting a wrong PCT Heading amounted to mis-declaration would not be a correct approach in view of S. 32 of Customs Act, 1969, where emphasis was on the word "material particulars" which meant something "going to the root cause of basic declaration".
(d) Customs Act (IV of 1969)---
----Ss. 32, 32(3)(A) & 131---Mis-declaration---Incorrect quoting of PCT Heading by Department---Untrue statement---Goods declarations were filed by importer with correct description of goods---Department found no false statement or any collusion and no evidence was brought on record through show-cause notice---Validity---Alleging a charge of mis-declaration on basis of a wrong classification heading did not constitute an offence within framework of S. 32 of Customs Act, 1969, when there was no material falsity in statement made by the Importer---Incorrect quoting of PCT Heading did not tantamount to mis-declaration within ambit of Ss. 32 & 32(3)(A) of Customs Act, 1969---Positive assertion of facts was pre-requisite for bringing charges of mis-declaration against Importer---If wisdom of Department for invoking S. 32 of Customs Act, 1969 in case of incorrect citing of PCT Heading was acceded to, no responsibility devolved upon Department to levy and assess duty according to law, and S. 131 of Customs Act, 1969 would become redundant.
Messrs Falcon Enterprises v. Collector of Customs vide Appeal No. K-723 of 2007; Customs Appeal Nos. K-432 and State Cement v. Government of Pakistan 2002 MLD 180 ref.
(e) Customs Act (IV of 1969)---
----S. 26---Power to require information to be furnished---Object of S. 26 of Customs Act, 1969 was to empower department to ask for information or require production of documents to inspect same in order to determine legality or illegality of importation or exportation of goods which had been imported or exported.
(f) Customs Act (IV of 1969)---
----Ss. 32, 32(1), 32(2) & 32(3)(A)---Untrue statement, requirements of---Untrue statement, criminal in nature---Careful observations of S. 32(1)(2) & S. 32(3)(A) of Customs Act, 1969 were required in the light of obligations made or attributed against importer---Section 32 did not merely contained punitive provisions but it dealt with recovery of duties and charges payable to exchequer either on account of fraudulent act of persons liable to pay or through errors of department---Section 32(1)(2) and (3)(A) required that untrue statement must be made in connection with any material of customs and would be false in any material particular---Section 32 of Customs Act, 1969 was penal/criminal in nature---Basic requirements of S. 32 would have to be determined and then execute the same accordingly---Penal/criminal provisions were divided into provisions prescribing "actus reus" i.e. act in question and "mens rea" i.e. requisite mental element and it was not essential for a penal provision to contain both such ingredients as provisions which committed mens rea were called strict liability offences---Penal proceedings were criminal in nature and required a higher standard of proof and could only be tainted with legality if independent and cogent evidence was led in accordance with law---Section 32(3)(A) of Customs Act, 1969 was only to be invoked as a result of an audit or examination of an importer's accounts and not against exporter.
2014 PTD (Trib.) 52; 2014 PTD (Trib.) 76; 2014 PTD (Trib.) 52; 2014 PTD (Trib.) 76; 1996 (82) ELT 441 (SC); 1997 (94) ELT 9 (SC) Para 15; 1984 (18) ELT 3 (Tribunal); 1997 (92) ELT 451 (SC); 1993 (68) ELT 82 (Tribunal) and 1988(35) ELT 434 (Tribunal) and 2001 SCMR 838 ref.
(g) Administration of justice---
----Where initial order or notice was void, all subsequent proceedings, orders or superstructure built on it were also void.
(h) Administration of justice---
----Law required credible grounds for impregnating a stance forwarded with purpose to implement certain sections of law on basis of equal treatment emanating from natural course of justice---Principle for recovery of short levied duties was that all were equal before law, whether citizen or State.
(i) Limitation---
----Limitation, starting of---Period of limitation would not commence from date of discovery of short levy---No law existed to the effect that period of limitation should commence from date of discovery of short levy---If department was negligent and was not able to detect short levy of customs duty within period of limitation provided in law then only course open for department was to initiate appropriate disciplinary proceedings against departmental officers.
(j) Customs Act (IV of 1969)---
----S. 190---Show-cause notice---Essentials---Allegation of mis-declaration---Show-cause notice must disclose material facts on basis of which charges of mis-declaration, connivance, suppression or fraud were intended to be raised.
(k) Interpretation of statutes---
----Taxing statute---Charging provisions imposed charge of tax and machinery provisions provided machinery for clarification of charge levied and collection of tax in respect of charge so imposed---Machinery provisions did not impose charge or extend or restrain charge elsewhere clearly imposed---Courts were expected to construe machinery sections in such a manner that charge for taxes not defeated---Specific provisions to impose charge against importer were not mentioned nor invoked.
(l) Customs Act (IV of 1969)---
----S.32(3A)---Delay/limitation time---Section 32(3)(A) of Customs Act, 1969 was invoked only to cover delay/limitation of time---Such intent on part of department did not have any support or warrant of law---Appeal was allowed in circumstances.
(m) Administration of justice---
----To maintain administration of justice and not to prejudice anyone, courts were required to do justice between parties in accordance with law---Litigant who approached court for relief was bound to substantiate procedure adopted by him.
(n) Administration of justice---
----If a particular thing was required to be done in a particular manner, it must be done in that manner.
(o) Interpretation of statutes---
----Fiscal statute---What had not been expressly written by legislature, same could not be implied.
2012 PTD 337; 2002 PTD 877; 1993 SCMR 274 and 1993 PTD 69 ref.
M.H. Awan for Appellant.
Dr. Jam Imran and Nadeem AO for Respondents.
Date of hearing: 10th February, 2015.
2016 P T D (Trib.) 2190
[Customs Appellate Tribunal]
Before Adnan Ahmed, Member (Judicial-II)
MUHAMMAD JAWED and 3 others
Versus
The DIRECTOR, DIRECTORATE GENERAL OF INTELLIGENCE AND INVESTIGATION, FBR, KARACHI and another
Customs Appeals Nos. K-1639 to K-1642 of 2014, decided on 20th January, 2015.
(a) Affidavit---
----Non-submission of counter-affidavit whether by will or default, forfeit right of respondent to deny assertion made in the affidavit---Where no counter-affidavit had been filed by respondent, appeal on facts and grounds of case would confirm that deposition made by appellant in memo of appeal and affidavit were to be deemed to be true and correct.
[Case-law referred].
(b) Customs Act (IV of 1969)---
----Ss. 162 & 163---Search warrant and arrest without warrant, powers of---Search under S.163 of Customs Act, 1969 had to be made by Officer concerned strictly in accordance with spirit of its expression after exhausting recourse of obtaining a search warrant in terms of S.162 of Customs Act, 1969 from Judicial Magistrate on basis of application made by Department stating therein grounds of belief that goods liable to be confiscated should be useful as evidence in proceeding under the law---Judicial Magistrate after going through request, if felt appropriate, issue search warrant, which had to be executed in same way and had the same effect as of search warrant issued under Cr.P.C.
[Case-law referred].
(c) Customs Act (IV of 1969)---
----S. 163---Issue of search warrant, dispensation of---Scope---Requirement of issue of search warrant by Magistrate could be dispensed with under S. 163 of Customs Act, 1969 which empowered Department to make search without warrant if department was satisfied that there was danger of removal of goods if search warrant was obtained---Department had to record such reason in statement so prepared in writing containing ground of belief with regard to danger which it apprehend---Search was conducted under S. 163 of Customs Act, 1969 by an officer of below the rank of Assistant Collector Customs and without recourse to mandated requirement of S.162 of Customs Act, 1969---Search was, therefore, without lawful authority and jurisdiction and no superstructure could be built upon such search.
[Case-law referred].
(d) Customs Act (IV of 1969)---
----S.91---Official of department was not empowered under any provision of Customs Act, 1969 to approach any private warehouse---Such official could visit for inspection bounded warehouse/stored goods by public on payment of warehouse charges---Neither Departmental official could ask anything with regard to goods stored, either from owner of warehouse or from person whose goods were stored in the warehouse---No provision with such regard was available in Customs Act, 1969 or by notification---In absence of availability of enabling provision official of customs were barred by law to ask about Goods Declaration or purchase bills/receipts of warehoused goods.
[Case-law referred].
(e) Customs Act (IV of 1969)---
----Ss. 168(1) & 171---Seizure of things liable to confiscation---Contention of owner of warehouse was that inspite of searching warehouse and preparation of seizure report department had not served seizure notice as mandated under S. 168(1) of Customs Act, 1969 and notice under S. 171 of Customs Act, 1969---In spite of mentioning name of importer in seizure report, no notice either under S.168(1) or S.171 of Customs Act, 1969 had been served which was prerequisite prior to preparation of seizure report---Validity---Seizure notices under Ss.168(1) & 171 of Customs Act, 1969 were intentionally not served on owner because seizure so conducted was unlawful as no enabling provision exist in Customs Act, 1969 to do so in addition to demanding of Goods Declaration or purchase receipt/bills from owner of warehouse---Such case was framed malafidely which stood vitiated for non-serving of mandatory notices in terms of Ss. 168(1) & 171 of Customs Act, 1969.
[Case-law referred].
(f) Burden of proof---
----One who alleges has to prove the same.
[Case-law referred].
(g) Customs Act (IV of 1969)---
----S. 179---Adjudication, power of---Requirements---Powers of adjudication had been defined in S. 179 of Customs Act, 1969---Powers so delegated had to be assumed on basis of amount of duty and taxes involved excluding conveyance---Officials of department had clubbed consignments of four importers into one in seizure report and contravention report and forwarded the same to department for issuance of show-cause notice---Department instead of segregating amount of duty and taxes of each importer, issued a single show-cause notice to all importers---Department interpreted S. 179 of Customs Act, 1969 in accordance with whims and wishes which found no place in legal parlance and assumed the powers which were vested in its subordinate authority---Validity---Functionary of the department was not allowed to assume powers of an appropriate adjudicating authority whether subordinate or superior---Assuming of jurisdiction was a mandated requirement of law and its non-fulfillment would entail entire proceeding to be coram non-judice.
[Case-law referred].
(h) Customs Act (IV of 1969)---
----S.168---Detention, seizure and confiscation---Scope---Delay in transporting the goods after clearance---Effect---No limitation was provided in any provision of Customs Act, 1969 to transport or sell goods within such period from date of clearance, importer was to transport or sell goods in accordance with his wishes and convenience---In absence of enabling provision, objection of department about delayed transport of goods was of no legal effect and could not be made basis for detention/seizure/confiscation of goods when those were lawfully imported and cleared and transported to owner for selling as per an agreement executed between importer and owner.
(i) Customs Act (IV of 1969)---
----S. 179(3)---Order-in-original, passing of---Delay of 48 days---Show-cause notice was issued by department on 27-03-2014---According to S.179(3) of Customs Act, 1969 an order should be passed by Authority within 120 days from the date of show-cause notice i.e. on or before 25-07-2014---Department passed the impugned order on 11-09-2014---Such order was barred by time, without power/jurisdiction and not enforceable under law---Appeal was allowed, in circumstances.
[Case-law referred].
(j) Jurisdiction---
----Assuming of jurisdiction was a mandated requirement of law and its non-fulfillment would entail the entire proceeding to be coram non judice.
Nadeem Ahmed Mirza (Consultant)/Obayd Mirza and Mirza Muhammad Abeer Nadeem for Appellants.
Ghulam Muhammad Sher, I.O. (for Respondents).
Dates of hearing: 15th 22nd December, 2014 and 5th January, 2015.
2016 P T D (Trib.) 2230
[Customs Appellate Tribunal]
Before Mohammed Yahya, Member (Technical-I)
Messrs MACCA TRADERS
Versus
SUPERINTENDENT SPECIAL ANTI SMUGGLING SQUAD and another
Customs Appeal No.K-673 of 2015, decided on 13th July, 2015.
Customs Act (IV of 1969)---
----Ss.162, 163, 164 & 179---Arrest, search warrant and adjudication, powers of---Contention of importer was that mode and manner of search and issuing show-cause notice by Department was without jurisdiction as provided under S.179 of Customs Act, 1969---Held, that impugned goods were lying at delivery godown of transport company and there was a possibility that consignee could have taken delivery and vanished away---Resorting to procedure of search prescribed under S.162 of Customs Act, 1969 may have provided ample time to consignee to remove goods from godown of transport company, thus in such a situation possible way out was to resort to procedure as prescribed under S.163 of Customs Act, 1969---Department in present case did not opt for either of said two option, hence, search of premises, which was neither done under S.162 nor S.164 of Customs Act, 1969 were unlawful and illegal---Accordingly all subsequent actions i.e. seizure outright confiscation also became void ab initio and unlawful---Appeal was accepted in circumstances.
Case-law referred.
Nadeem Mirza for Appellant.
Ms. Nawabzadi Aliya, D.C. and Aqil Jaffari Inspector present for Respondents.
Date of hearing: 18th June, 2015.
2016 P T D (Trib.) 2463
[Customs Appellate Tribunal]
Before Tahir Zia, Member (Judicial-II)
Messrs ZUBAIR WALI AHMED ZIA LTD. and another
Versus
The PRINCIPAL APPRAISER and others
Customs Appeals Nos. K-1310 and K-1311 of 2015, decided on 13th April, 2016.
(a) Customs Act (IV of 1969)---
----Ss. 1(2), 2(s), 25, 25-A, 30, 32, 73, 79, 121, 129, 156, 168, 181, 207, 208, 209 & First Schedule---Customs Rules, 2001, Rr. 110, 473(6) & Ch. XXI, Sub. Ch.VII---Sales Tax Act (VII of 1990), Ss. 6, 11, 30, 33, 34 & 48---Income Tax Ordinance (XLIX of 2001), Ss. 48, 140, 148, 162, 207 & 228 to 230-A---Revised Koyoto Convention (1999)---S.R.O. No.151(I)/2004 dated 10.03.2004---S.R.O. No.886(I)/2012 dated 18.07.2012---Transit trade---Goods declaration---Classification of goods--- Procedure--- Insurance guarantee---Necessity---Clearing agent---Liability---Scope---Importer, in the present case, was a citizen of Afghanistan and was duly registered as an importer with the Ministry of Commerce and Industry of Afghanistan under the Trade license for importing goods for home consumption in Afghanistan at Karachi for transit to the place of business in Afghanistan under Afghan Pakistan Transit Trade Agreement, 2010 (APTTA)---Any discrepancy found in the import documents submitted for transit of the goods or in the goods thus imported had to be reported by the Director General of Transit Trade (DGTT) to the Ministry of Commerce and Trade of Afghanistan (MOCA) through the Ministry of Commerce, Pakistan and subsequently a complaint under para 2 of Art. 3 of S. II of APTTA had to be filed before the Afghanistan Pakistan Transit Trade Co-ordination Authority under Art. 34 of Section S. X of APTTA, as under the provisions of Customs Act, 1969, the officials of Customs were not empowered to proceed---Customs Act, 1969, being neither applicable in Afghanistan nor on the citizens of Afghanistan, was not applicable to the appellant, and the department had no locus standi to serve impugned show cause notice to him--- Word 'mis-declaration' was alien to Revised Kyoto Convention, 1999, Afghan Pakistan Transit Trade Agreement, 2010 and Sub-Chapter VII of Chapter XXI of Customs Rules, 2001---Importer of Afghanistan, transmitting goods declaration under WeBOC regime, narrated the tentative facts of the goods stuffed in container that could be varied in description, quantity, quality and weight, which was curable through an amendment, and if the same was not possible, the importer could have been asked to submit additional insurance guarantee for the amount of leviable duty and taxes on the value determined under S. 25 or 25-A of Customs Act, 1969 for home consumption under S. 79(1) of the Act---Use of the word 'mis-declaration' in the impugned show cause notice and Order-in-Original was out of context besides the same being based on mis-conception, as the provisions of Customs Act, 1969 were not applicable to said goods---Goods, in the present case, having been allowed "gate-out", could not have been allowed to "gate in", nor could the same have been stopped under any apprehension, as the customs Officials, after clearance of the goods and removal of the consignment from the customs area, had become functus officio to reopen the case again, which had become past and closed transaction---Impugned show cause notice had been issued after expiry of the initial period of two months, without any extension by the Collector prior to expiry of the initial period after serving a notice to the appellants and recording of exceptional circumstances and reasons in writing---Impugned show cause notice being barred by 22 days, was without power or jurisdiction and lawful authority---Sections 33 & 34 of the Act could not have been invoked in the impugned show cause notice in isolation, unless the charging section was invoked and by the authority competent to do that---Incorporation of the irrelevant sections rendered the impugned show cause notice and Order-in-Original void ab initio and of no legal effect---Additional Collector of Customs, under said sections, was not empowered to exercise powers under the charging S. 11 of Sales Tax Act, 1990 and S. 162(1) of Income Tax Ordinance, 2001---Department had no power to recover the arrears of the taxes on their own, unless they were in receipt of notice from the Officer of Inland Revenue and Commission of Income Tax under Ss. 48 & 140 of Income Tax Ordinance, 2001---Impugned adjudication proceedings under S. 11 of Sales Tax Act, 1990 and S. 148 of Income Tax Ordinance, 2001 were, therefore, not legal and justifiable---Initiation of legal proceedings in case of discrepancy against the importer of Afghanistan through his clearing agent rested with Principal Appraiser of the DGTT, who was to take cognizance of the discrepancy found in the documents and the goods during the course of examination, and in case of need, he was competent to issue show cause notice himself to the clearing agent of the importer of Afghanistan for seeking justification for the found discrepancy or pass an observation for preparation of complaint for submission with the Ministry of Commerce of Pakistan for its onward submission with the Ministry of Commerce of Industry of Afghanistan for placing it before Afghanistan Pakistan Co-ordination Authority in terms of para 2 of Art. 3 of Afghanistan Pakistan Transit Trade Agreement, 2010---Principal Appraiser, in the present case, took cognizance of the issue, instead of proceeding himself inspite of being competent, had opted to frame contravention report instead of complaint and transmitted the same to the respondent/Additional Collector of Customs, who issued impugned show cause notice and subsequently passed order in the capacity of Principal Appraiser, to which he was not empowered being an Additional Collector---Additional Collector was not even empowered to adjudicate the cases where there was technical violation of import and export having no revenue loss---Superior Officer was not empowered to exercise quasi judicial powers of his subordinate in the matter of adjudication---Impugned show case notice, not having been issued by the authority defined in R. 473(6), proviso of Chapter VII of Customs Rules, 2001, was without jurisdiction and void ab initio---Goods Declaration of Transit Trade did not fall within the ambit of the phrase 'any other approved purpose'; hence, the same was outside of the ambit of S. 79(1) of Customs Act, 1969---Department had presumed the classification of the said goods as being auto parts on the basis of presumption without disclosing the appropriate H.S. Code or evidence under which the impugned goods could have been classified as auto parts---Opinion and findings of the department with regard to the impugned goods were without any substance due to the fact that auto parts and accessories fell within the ambit of headings 87.01 to 87.08, and none of the sub-heading subsequent to 87.08 expressed nuts and bolts as motor parts---Nuts and bolts imported by the appellant, therefore, did not fall within the ambit of auto part---None of the Customs Authorities operating at Karachi for clearance of the imported goods and Enforcement and even Directorate General of Intelligence and Investigation of the Federal Board of Revenue were empowered either to hold or detain or examine the goods meant for transshipment under the S. 121 of Customs Act, 1969, which was synonymous to S. 129 of the Act---Goods, in the present case, were meant for transit to Afghanistan were subject to submission of insurance guarantee to the extent of the amount of duty and taxes leviable thereon under 1st Schedule to the Customs Act, 1969 returnable after cancellation upon receipt of confirmation to the effect that the goods had been crossed the border---Confiscation and detention of the goods were, therefore, declared without lawful authority---Charges against the appellant/clearing agent were wholly misconceived, as his action did not fall within the operative mechanism of S. 32 of the Act---Liability of the appellant/Clearing Agent during the course of clearance of the consignment had to be evaluated under the provisions of Ss. 207, 208 & 209 of Customs Act, 1969, which indicated that an agent represented his principal and until and unless any direct evidence was attributed against him or when the department was not able to prove any criminal intent on his part, he could not have been penalized under the general provisions of Customs Act, 1969, unless, he violated the governing condition of his license---Clearing agent could not be presumed to be privy to any illegal arrangement, which the importer might have coined or had intended in his mind, and for that purpose some evidence of his direct involvement would have to be brought on record, particularly, when the clearing agent was not shown to have been directly or indirectly a beneficiary of evasion of taxes/duties---Customs Appellate Tribunal, vacating the impugned show cause notice and setting aside the orders-in-original passed thereon, being illegal, void ab initio, directed the department to allow transit of the goods shown and found in the Goods Declaration upon securing insurance guarantee---Principles.
Case-law referred.
(b) Words and phrases---
----'Discrepancy'----Definition and scope.
Case-law referred.
(c) Administration of justice---
----Things should be done as or required to be done and not at all.
Case-law referred.
Nadeem Ahmed Mirza, Mirza Muhammad Abeer (Consultants) and Obaydullah Mirza for Appellants.
Jam Muhammad Akram, Appraiser for Respondents.
2016 P T D (Trib.) 2891
[Customs Appellate Tribunal]
Before Ghulam Murtaza Bhatti, Member Judicial and Khalid Mahmood Member Technical
APEX INTERNATIONAL and another
Versus
DIRECTORATE OF INTELLIGENCE AND INVESTIGATION FBR and another
Appeal No.159/LB of 2014, decided on 16th December, 2014.
Customs Act (IV of 1969)---
----Ss. 3, 32(1)(2), 156(1), 10-A & 14---S.R.O. No.1125(I)/2011 dated 31-12-2011---S.R.O. No.898(I)/2013 dated 4-10-2007---Claiming concession as 'manufacturer' in respect of imported polyester fabric---Refusal of claim and imposition of penalty---Validity---Appellant/ importer, claimed concession as 'manufacturer' in respect of imported polyester fabric under SRO No.1125(I)/2011 dated 31-12-2011---Directorate of Intelligence and Investigation and Federal Board of Revenue confirmed that appellant did not have any manufacturing facility and that imported polyester fabric was not used as industrial input---Since, appellant was considered a commercial importer, and did not qualify for the concessionary rate of sales tax available to manufacturer, it was perceived that appellant had committed offence within the meaning of S.32(1)(2) of Customs Act, 1969 punishable under Ss.156(1), 10-A & 14 of the Act, read with relevant sections of Sales Tax Act, 1990 and Income Tax Ordinance, 2001---Department had alleged that the appellant intentionally and deliberately in league with clearing agent, through mis-declaration, had evaded amount of taxes to the tune of Rs.2,71,11, 524---Said amount was found recoverable under S.32(2) of Customs Act, 1969 read with S.36(1) of Sales Tax Act, 1990 and S.148 of Income Tax Ordinance, 2001---Penalty was also warranted under Ss.156(1), 10-A & 14 of Customs Act, 1969---Cognizance was taken by the authorities (DG (I&I) & FBR) for the matter of sales tax and income tax for which it had neither been delegated any powers by the Federal Board of Revenue in the notification, nor assigned any role under the Sales Tax Act, 1990 or Income Tax Ordinance, 2001---Customs authorities, including officers of the Directorate General (I&I) (Federal Board of Revenue) could not assume jurisdiction in sales tax or income tax matters, except the situations expressly provided in the relevant statutes---Contradiction existed in the statutory provisions invoked in the show-cause notice, and applied in the judgment---Order-in-original passed by adjudicating authority, could not travel beyond the show-cause notice---Authorities had made out case of recovery of allegedly evaded amount of sales tax at import stage, which action lacked legal veracity---Customs authorities, had no powers to recover the short paid sales tax, excise duty or withholding tax under the instrument of Customs Act, 1969, though they had powers to collect those levies at the import stage in the manner the customs duties were collected---Default surcharge, was not applicable to the appellant, who demonstrated a consistent behaviour of terms of discharging his liability under prescribed provisions of law---In view of said infirmities that the order-in-original suffered from, coupled with jurisdiction issues, it was held that impugned order-in-original in respect of the demand of default and penalty raised thereunder, was void and unsustainable---Default surcharge and penalty imposed, were omitted, and impugned order-in-original was modified to that extent; while appellant, would pay up the entire principal amount of the tax in the prescribed manner.
2004 PTD 2994; 2005 PTD 23; Jamil Brothers v. MCC Multan 2013 PTD (Trib.) 2082; Pioneer Industries v. Collector of Customs Multan 2013 PTD (Trib.) 1375; M.I. Traders v. Additional Collector 2014 PTD (Trib.) 299; Shujabad Agro v. Collector 2014 PTD 1963; PLD 1995 SC 963; PTCL 1995 CL 415; Collector of Sales Tax v. Associated Industries 2010 PTD (Trib.) 601 and Muhammad Hashim Paracha v. Collector of Customs (Appraisement) Customs, Excise and Sales Tax Appellate Tribunal Bench-III 2003 PTD (Trib.) 1902 ref.
Raza Ahmad Cheema for Appellant.
Ehsan Ullah Cheema for Respondent.
2016 P T D (Trib.) 169
[Customs Federal Excise Tribunal]
Before Ghulam Murtaza Bhatti, Member Judicial and Khawaja Umar Mehdi, Member (Technical)
Messrs AZHAR BROTHERS
Versus
ASSISTANT COLLECTOR (IMPORTS) and 3 others
Customs Appeal No.9/LB of 2015, decided on 27th July, 2015.
Customs Act (IV of 1969)---
----Ss. 16, 32(1) & 156(1)---Constitution of Pakistan, Art.25---Import Policy Order (2007-2008), Appendix C, S. No.10---SRO 1020(I)/2007 dated 8-10-2007---Pakistan Customs Tariff, HS Code 87.4---FBR Clarification Letter No.12(21)/2005-Imp.I dated 12-3-2012---Discrimination---Scope---Import of used Trucks Mounted Crane by Construction Company---Importer claimed assessment under H.S. Code 8705.1000, Crane Lorries which covered "special purpose motor vehicles, other than those principally designed for the transport of persons or goods"---Customs Staff on the contrary found that as per physical condition of the vehicles in question, the same were not special purpose motor vehicles, principally designed as crane lorries and hence could not be classified under the said heading, instead, said vehicles were found classifiable under H.S. Code 87.04 of Pakistan Customs Tariff, import of which was restricted vide S. No.10 of the Appendix "C" of the Import Policy Order, 2007-2008---Consequently show-cause notice(s) were issued to the importer as to why the vehicles imported may not be confiscated for the offence under Ss.16 & 32(1) of the Customs Act, 1969 read with its clauses 9 and 14 of subsection (1) of S.156 and Para. 16(A)(ii) and serial No.10 of Appendix "C" of the Import Policy Order, 2007-2008---High Court had directed the department to adjudicate the present matter after taking into account the Department's (FBR) letter dated 12-3-2012 regarding import of trucks mounted cranes/crane lorries by Construction Companies---Department had not made any exception to said direction of High Court and also the letters issued by Federal Board of Revenue in clarification letter dated 12-3-2012---Department only held that vehicles were not trucks mounted cranes/crane lorries---Stance of department was not substantiated by any cogent proof---Vehicles imported by other construction companies were cleared by other customs stations and had the same description of vehicle as vehicles in the present case---Such vehicles were declared as "truck mounted cranes/crane lorries"---Department had objected to import of trucks by importer, in the present case, which itself was violative of Art.25 of the Constitution which prohibited discrimination without any cogent reason---Appeal of importer was allowed, accordingly.
Mian Abdul Ghaffar for Appellant.
Mst. Amna Parveen for Respondents.
Date of hearing: 2nd July, 2015.
2016 P T D (Trib.) 2777
[Customs, Excise and Sales Tax Appellate Tribunal]
Before Adnan Ahmed (Member Judicial-II)
Messrs GENERAL FOOD CORPORATION, KARACHI and another
Versus
DIRECTORATE GENERAL OF INTELLIGENCE and Investigation-FBR, Karachi and 2 others
Cus. Appeals Nos.K-151 and K-152 of 2014, decided on 9th December, 2014.
(a) Customs Act (IV of 1969)---
----Ss. 32(1), 32(2), 32A, 79, 80 & 83---Customs Rules, 2001, R. 442---Contention of importer was that consignment was cleared by Department lawfully therefore powers of department were ousted to charge the importer for smuggling as the same would not fall within domain of Collectorate of Intelligence (Collectorate) and Investigations---Collectorate had invoked Ss. 32(1), 32(2), 32A & 80 of Customs Act, 1969 on contravention report---Collectorate's plea was that it was fully empowered to act for contravention of Ss. 32 & 32A of Customs Act, 1969 at import stage---Validity---Powers invoked under Ss. 32 & 32A of Customs Act, 1969 had not been delegated to the Collecorate---Section 79 was a machinery provision and defined procedure for filing of goods declaration by importers---Section 80 of Customs Act, 1969 empowered Department to complete assessment order for imported goods for levy of duty and taxes---Collecorate had no power under said sections to lay hands on goods declaration for preparation of contravention report which had been lawfully released by Department under S. 80 of Customs Act, 1969 after passing of valid and legal assessment order---Import stage meant at the time of clearance of goods not the ones which had been released/cleared under S. 83 of Customs Act, 1969 and R. 442 of Sub-Chapter III of Chapter XXI of Customs Rules, 2001---Importer's case least corresponded to import stage instead of post clearance---Collectorate of Intelligence had no powers to lay hand on importer and it transgressed powers as defined in Ss. 32, 32A & 80 of Customs Act, 1969 rendering the contravention report without power and jurisdiction.
Case-law referred.
(b) Customs Act (IV of 1969)---
----Ss. 2(a), 80, 83 & 193---Customs Rules, 2001, Rr. 438 & 442---S.R.O. No.371(I)/2002 dated 15-6-2002---S.R.O. No.486(I)/2007 dated 15-6-2007---Show cause notice---Scope---While passing of assessment order under S. 80 of Customs Act, 1969 and R. 438 of Customs Rules, 2001 and thereafter passing of clearance order under S. 83 and R. 442 of Customs Rules, 2001 by the Authority defined in S. 2(a) of Customs Act, 1969 and SRO No. 371(I)/2002, dated 15-6-2002 it could not be disturbed by an Authority to prepare contravention reports - Only course for department was to challenge such order before Collector of Customs (Appeals) under S. 193 of Customs Act, 1969 which empowered the department in terms of S.R.O. No. 486(I)/2007 dated 15-6-2007 to file an appeal and in that they could incorporate all of their apprehensions, misreading of facts and contravention of provision of Act/Rules---Collector of Customs, upon receipt of appeal and after going through facts and grounds, if think fit that contention of department was correct and duty and taxes had been either not levied or short paid on basis of goods assessed earlier for clearance was empowered to issue show-cause notice under S.32 of Customs Act, 1969 as expressed in S. 193A(2) of Customs Act, 1969.
(c) Customs Act (IV of 1969)---
----Ss. 193 & 195---Right of appeal---When right of appeal had been accorded by legislature in S. 193 of Customs Act, 1969 then provision of S. 195 was inoperative and could not be exercised by any authority.
Case-law referred.
(d) Customs Act (IV of 1969)---
----Ss.18 & 202---Sales Tax Act (VII of 1990), S. 30A---Income Tax Ordinance (XLIX of 2001), S.230--S.R.O.776(I)/2011, dated 19-8-2011--According to S. 30A of Sales Tax Act, 1990 and S. 230 of Income Tax Ordinance, 2001, department had not been appointed/designated as officer of Inland Revenue by Legislature instead Directorate General of Intelligence and Investigation had been delegated powers under S.R.O. No. 776(I)/2011 dated 19-8-2011 for exercising powers referred in Sales Tax Act, 1990 and Income Tax Ordinance, 2001---Directorate General of Withholding had been established under S. 230A of Income Tax Ordinance, 2001 as officer of Inland Revenue---Rendering of contravention report by Customs department in matter relating to sales tax and income tax was without powers and jurisdiction.
Case-law referred.
(e) Customs Act (IV of 1969)---
----Ss. 18 & 202---Sales Tax Act (VII of 1990), Ss. 3, 6, 7A & 30---Income Tax Ordinance (XLIX of 2001), Ss. 148, 162(1) & 207---Customs department had invoked Ss. 3, 6 & 7A of Sales Tax Act, 1990 and S. 148 of Income Tax Ordinance, 2001 in show-cause notice---Contention of importer was that department had not been appointed as officer of Inland Revenue under S. 30 of Sales Tax Act, 1990 and S. 207 of Income Tax Ordinance, 2001, therefore, department had no powers to proceed in matter of Sales Tax and Income Tax under the provision invoked in show-cause notice for short paid taxes---Department's plea was that it was empowered to collect sales tax and income tax at import stage under S. 6 of Sales Tax Act, 1990 and S. 148 of Income Tax Ordinance, 2001 and could also recover taxes under S. 202 of Customs Act, 1969---Validity---Legislature had appointed different officers of FBR as Officer of Inland Revenue under S.30 of Sales Tax Act, 1990 and Ss. 228 to 230A of Income Tax Ordinance, 2001---According to S. 6 of Sales Tax Act, 1990 and S. 148 of Income Tax Ordinance, 2001, Customs department was empowered to collect taxes on imported goods like custom duty on value determined under S. 25 of Customs Act, 1969---Said section least empowered department to initiate adjudication/recovery proceeding for short collected/paid Sales Tax and Income Tax either due to collusion or connivance or inadvertence, error or misconstruction---Customs department had an authority to collect Sales Tax and Income Tax at import stage in capacity of collecting agent and could recover escaped/short payment paid customs duty and regulatory duty levied on imported goods under Ss. 18 & 202 of Customs Act, 1969 after due process of law but had no powers to adjudicate cases of short recovery of sales tax under S. 11 of Sales Tax Act, 1990 and under Section 162(1) of Income Tax Ordinance, 2001.
Case-law referred.
(f) Customs Act (IV of 1969)---
----Ss. 80, 83 & 193---Customs Rules, 2001, Rr. 438 & 442---S.R.O. 371(I)/2002, dated 15-6-2002---Consignment had undergone procedure of assessment/clearance order under Ss. 80 & 83 of Customs Act, 1969 and Rr. 438 & 442 of Customs Rules, 2001 by authority defined in S. 2(a) of Customs Act, 1969 in exercise of powers conferred upon Board through SRO No. 371(I)/2002 dated 15-6-2002---Such order was an appealable order and could be assailed either by importer or department under S. 193 of Customs Act, 1969 within 30 days---Department had not filed appeal, thus, order had attained finality and could not be disturbed by any authority---By virtue of non-filing appeal by department within stipulated period, transaction stood past and closed and attained finality and could not be disturbed through any subsequent reassessment orders or order-in-original as it was not permitted under law.
Case-law referred.
(g) Customs Act (IV of 1969)---
----S. 179(3)---Order-in-original, passing of---Limitation---Show-cause notice was issued to importer on 25-06-2013 and an order under S. 179(3) of Customs Act, 1969 had to be passed by department within 120 days i.e. on or before 23-10-2013 from date of issuance of show-cause notice or within a further extended period of 60 days by Department prior to lapse of initial period of 120 days after serving notice to person concerned and thereafter recording reasons for extension based on exceptional circumstances in writing---Order had been passed on 11-12-2013---Held, that order so passed was barred by 50 days, therefore, without powers/jurisdiction and could not be enforced.
Case-law referred.
(h) Interpretation of statutes---
----Intention of legislature---Determination---Intention of legislature had to be ascertained by reference to word used and grammatical and ordinary sense of word to be adhered to---Where language of statute was clear and unambiguous, it must be interpreted in its ordinary sense---State of law which was passed at time of statute was a matter material to be considered to arrive at intention of legislature.
Case-law referred.
(i) Words and phrases----
----"But"---Meaning---Without; on the other hand; in contrast; nevertheless; unless; if not and other than.
(j) Words and phrases---
---"Excluding"---Meaning---To shut out; to push out; to eject; to prevent from entering; to omit; to prevent from taking part; to except; to leave out and to exempt.
(k) General Clauses Act (X of 1897)---
----S. 24A---Speaking order---Essentials---Orders which did not contain rebuttal on grounds advanced and not containing substantial reasons also did not show that such orders were passed on objective consideration should be treated as illegal, void, arbitrary and a result of misused of authority vested in public functionary---No room was available for such illegal, void and arbitrary orders in any system of law---If any authority, Court or Tribunal gave a finding of fact which was not based on material available on record was illegal and arbitrary without discussing it became perverse and such finding of fact which was violative of established principles of appreciation of evidence on record was not sustainable in law---Every judicial or quasi-judicial finding should be based on reasons containing justification for finding in order itself---Adjudication order was being violation of basic principle of good governance and mandatory requirements of S. 24A of General Clauses Act, 1897 was not only illegal and void but also not sustainable in law.
Case law referred.
Obayd Mirza and Nadeem Ahmed Mirza for Appellants.
Saud Hassan Khan, I/O for Respondent No.1.
Kousar Hussain for Respondents Nos. 2 and 3.
2016 P T D 12
[Federal Tax Ombudsman]
Before Abdur Rauf Chaudhry, Federal Tax Ombudsman
MAQSOOD AFZAL
Versus
SECRETARY, REVENUE DIVISION, ISLAMABAD
Complaint No.237/FSD/IT(149)/1471 of 2014, decided on 7th April, 2015.
Income Tax Ordinance (XLIX of 2001)---
----Ss. 177(10), 121(1)(d), 137 & 214-C---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), Ss.2(3) & 10(4)---Selection of case for audit---Maladministration---Complainant contended that he started business with effect from 18-12-2012; that return was due from tax year 2013, and not for tax year 2012; that his case could not be selected for audit under S.214-C of Income Tax Ordinance, 2001; that department issued illegal demand under S.137 of Income Tax Ordinance, 2001, and assessment order of another party was attached with the said demand notice and that rectification application was not responded, which tantamounted to maladministration under S.2(3) of Establishment of Office of Federal Tax Ombudsman Ordinance, 2000---Validity---Filing of return on e-portal of the FBR, was not established from the record being maintained by the department---Department failed to provide proof regarding service of order on the complainant passed in his name---Contention of the complainant that the assessment order of another taxpayer was appended with the demand notice issued in his name, had been found correct and the same was verified from the documents provided by him---Since the department failed to establish the filing of return by the complainant, question of its selection under S.214-C of the Income Tax Ordinance, 2001, would not arise---Order passed under Ss.177(10)/121(1)(d) of the Income Tax Ordinance, 2001, was not tenable in law, as mistake in passing/service of order upon the complainant was not rectified---Act of the department in dispatching the demand notice with incorrect assessment order in a hasty manner, had shown inefficiency and incompetence, which tantamounted to maladministration under S.2(3) of Establishment of Office of Federal Tax Ombudsman Ordinance, 2000---Federal Board of Revenue, was recommended to direct the Chief Commissioner to revisit the order passed under Ss.177(10)/121(1)(d) of Income Tax Ordinance, 2001, and finalize the same by ascertaining true facts after providing opportunity of being heard to the complainant, as per law within four weeks, report compliance within 7 days thereafter.
Mian Munawar Ghafoor, Advisor Dealing Officer.
Riaz Ahmad Raja, Authorized Representative.
Malik Rafique Ahmad, IRO Departmental Representative.
2016 P T D 201
[Federal Tax Ombudsman]
Before Abdur Rauf Chaudhary, Federal Tax Ombudsman
ABDUL HABIB RAJWANI
Versus
SECRETARY, REVENUE DIVISION, ISLAMABAD
Complaint No.221/KHI/ST(102)/725 of 2015, decided on 30th October, 2015.
Establishment of the Office of Federal Tax Ombudsman Ordinance (XXXV of 2000)---
----Ss.2(3) & 10---Complaint against non-issuance of sales tax refund---Jurisdiction of the Federal Tax Ombudsman---Scope---Contention of complainant/taxpayer was that Department was illegally retaining refund amount due to the taxpayer---Validity---Balance invoices received through the Expeditious Refund System in the present case were not appearing in the system and the Department had stated that this was due to data not being properly loaded in the Expeditious Refund System and suggested to process the case at deferred stage by using option of Return Discrepancy in the STARR system by adding invoices manually---Federal Tax Ombudsman observed that it was evident that in the present case the staff at the concerned Regional Tax Office were ignorant about option of Return Discrepancy---Inordinate delay in settling refund claim was tantamount to maladministration in terms of S. 2(3)(ii) of the Establishment of the Office of Federal Tax Ombudsman Ordinance, 2000---Federal Tax Ombudsman recommended that the Department direct the Chief Commissioner Inland Revenue to process balance refund claim of complainant by adding remaining invoices manually by using option of Return Discrepancy in STARR system---Complaint was disposed of accordingly.
Imtiaz Ahmed Barakzai, Advisor Dealing Officer.
Nadeem Iqbal, Authorized Representative.
Naveed Ali Narejo, DCIR and Rabnawaz Motina, ACIR Departmental Representatives.
2016 P T D 247
[Federal Tax Ombudsman]
Before Abdur Rauf Chaudhry, Federal Tax Ombudsman
WAHEED SHAHZAD BUTT
Versus
Dr. MUHAMMAD AKRAM KHAN, C.I.R., R.T.O., GUJRANWALA and others
Own Motion No.1 of 2014, decided on 19th October, 2015.
Establishment of the Office of Federal Tax Ombudsman Ordinance (XXXV of 2000)---
----Ss. 9(1) & 2(3)(vii)---Income Tax Ordinance (XLIX of 2001), S.227---Maladministration---Avoidance of disciplinary action against an officer or official whose order of assessment or valuation was held by a competent appellate authority to be vindictive, capricious, biased or patently illegal---Jurisdiction, functions and powers of the Federal Tax Ombudsman---Scope---Own Motion complaint pertaining to gross professional incompetence, inefficiency and mala fide of three Department functionaries---Contention of department was, inter alia, that the Federal Tax Ombudsman lacked jurisdiction in the matter as there was no aggrieved person as there was no complainant in the present case and that actions were taken in good faith and therefore Department enjoyed immunity under S. 227 of the Income Tax Ordinance, 2001---Validity---Objections to the Federal Tax Ombudsman's jurisdiction were misconceived as although the complainant was not personally aggrieved, he had pointed out some grave issues which had direct bearing on professional competence and integrity of Department officials charged with assessment of income of taxpayers and thus had a direct nexus with revenue mobilization by the Department for the State exchequer---Cognizance of such maladministration was required to be taken under Ss. 9(1) & 2(3)(viii) of Establishment of the Office of Federal Tax Ombudsman Ordinance, 2000---Federal Tax Ombudsman observed that issue, in the present case, was not concerned with quantum of income assessed but was concerned with professional competence and integrity of those charged with assessment and supervisory duties and any disability noted in such critical areas would tantamount to maladministration which fell within Federal Tax Ombudsman's jurisdiction---Section 2(3)(vii) of the Establishment of the Office of Federal Tax Ombudsman Ordinance, 2000 provided disciplinary action against an officer whose order of assessment was held by a competent appellate authority to be vindictive, capricious, biased or patently illegal---Federal Tax Ombudsman further observed that not every assessment overturned in appeal entailed action against assessing officer for incompetence and inefficiency and such action was called for only in cases where there was patent illegality and mala fide; which were typically assessments that had gone before more than one appellate tier and clear findings had been recorded against assessing officer(s) in the two appellate fora---Federal Tax Ombudsman, inter alia, recommended the Department to ensure that concerned officers attended and successfully completed a course of compulsory training in Income Tax Law and Accounts and retention in service and payment of additional allowance to such officers be made contingent to appropriate certification of professional competence by the training institution, and appropriate observations are recorded in PERs of such officers and supervisory officers and senior officers in field formations exercise regular supervisory oversight of work done by the subordinate assessing officers and take prompt cognizance of all arbitrary actions---Complaint was disposed of, accordingly.
1993 SCMR 633 ref.
Muhammad Munir Qureshi, Advisor Dealing Officer.
Waheed Shahzad Butt, Authorized Representative.
Liaquat Ali Ch., Umer Mehmood Kasuri, Muhammad Nadeem, IRAO, Asim Sana Naik, Staff Officer to CCIR and M. Faheem Sajjad Dhariwal, ACIR Departmental Representative.
OWN MOTION
ABDUR RAUF CHAUDHRY, FEDERAL TAX OMBUDSMAN.---This is an Own Motion Complaint taken up for investigation under section 9(1) read with Section 2(3)(vii) of the Establishment of Federal Tax Ombudsman Ordinance, 2000 (FTO Ordinance) to take cognizance of the matter brought to our notice by a taxpayer citizen of Pakistan, admittedly not personally aggrieved, pertaining to gross professional incompetence, inefficiency and mala fide of three FBR functionaries cited in the titled complaint.
The relevant facts in this case are that Inland Revenue Audit (IRAO) (Muhammad Nadeem) finalized an amended income tax assessment for Tax Year 2010 in the case of a private limited company under sections 122(1)/122(5) of the Income Tax Ordinance, 2001 (the Ordinance) in which, inter alia, he made additions under Sections 111(1)(a) and 111(1)(b) of the Ordinance, amounting to Rs.1,974,051/- and Rs.81,684,612/- respectively, aggregating to Rs.83,658,663/- and included the same in the total amended income determined by him which resulted in an additional tax demand, over and above the one declared by the taxpayer, at Rs.20,401,293/-. The aggrieved taxpayer contested the treatment so accorded before the Commissioner IR (Appeals) [CIR(A)] who deleted both additions made under section 111 of the Ordinance. The Deptt then contested part of the addition deleted by the first appellate authority under section 111(1)(a) of the Ordinance (Rs.307,238/- out of total addition of Rs.1,974,051/- deleted by the CIR(A)), before the Appellate Tribunal Inland Revenue (ATIR). The ATIR vide order No.154/LB/2014, dated 16.04.2014 (110 TAX 41 = 2015 PTD 906) upheld in toto the treatment as accorded by the CIR(A) under section 111(1)(a) of the Ordinance and also under section 111(1)(b) of the Ordinance. The Deptt then filed a Reference under section 133(1) of the Ordinance before the Lahore High Court. This reference was rejected by the Hon'ble Court vide Judgment dated 16.12.2014 in PTR No. 214/2014.
Mr. Waheed Shahzad Butt, Advocate, the Complainant, contends that as a consequence of the above cited High Court Judgment, the factual as well as legal determination by the CIR(A) regarding additions made under section 111(1)(a)(b) of the Ordinance have attained finality and the Deptt having made no further attempt to contest the same has accepted the adjudication as made by the first appellate authority. That being so, it is contended that the Deptt was bound to take strict notice of the observations as recorded by the CIR(Appeals) as well as by the ATIR and take action against the three FBR officials for their gross professional incompetence, negligence, inefficiency and, in the case of the IRAO, also his alleged mala fide in deliberately applying provisions of law and principles of accountancy in a whimsical manner, with ulterior motive. In the case of the Commissioner and the Chief Commissioner incompetence was allegedly evident from the fact that they had failed to exercise effective supervisory oversight of the work done by the sub-ordinate IRS official [IRAO], and had given him a free hand to act arbitrarily when taking up an assessment for amendment. In the case of the IRAO the mala fide allegedly emerged from the fact that he deliberately and maliciously burdened the affected taxpayer with a substantial tax liability with a view to cause financial harm and business loss to the taxpayer.
When confronted in terms of the provisions of section 10(4) of the FTO Ordinance, the Deptt filed a reply to deny the allegations leveled. The respondents contended that the FTO does not have jurisdiction to take up the matter for investigation on the ground that: (a) there was no aggrieved person here; (b) they (i.e. the respondents) enjoyed immunity under section 227 of the Ordinance for actions taken in good faith during the course of discharge of their official duties; (c) the matter involved determination / assessment of income and attracted the provisions of section 9(2)(b) of the FTO Ordinance.
The Complainant, Mr. Butt, averred that adverse observations of the CIR (A) and ATIR in their appellate orders are cognizable under Section 2(3)(vii) of the FTO Ordinance 2000. He also referred to a Judgment of the Hon'ble Supreme Court of Pakistan reported as 1993 SCMR 633 in which the adverse observations recorded by the High Court against the inapt and inept actions of the public functionaries charged with judicial / quasi judicial functions were endorsed and their suitability as judicial / quasi judicial authorities put to question. He pleaded that in the present case as well it was evident that the cited FBR functionaries, by their actions in the case of the affected taxpayer, had shown that they were not competent enough to carry out work involving assessment of income.
Both sides heard and available record examined.
The objections raised by the respondents have been examined and their challenge to the FTO's jurisdiction is found to be misconceived. Although the Complainant is not personally aggrieved, he has pointed out some grave issues which had a direct bearing on the professional competence, performance, efficiency and integrity of FBR officials charged with assessment of income of taxpayers and thus had a direct nexus with revenue mobilization by FBR for the State exchequer. Therefore, cognizance of such maladministration is required to be taken under Section 9(1) of the FTO Ordinance read with Federal Ombudsmen Institutional Reforms Act, 2013. Section 2(3)(vii) of the FTO Ordinance also requires to take cognizance against FBR's officials whose conduct has been found by any appellate authority to be capricious, vindictive, biased or patently illegal.
Section 9(2)(b) of the FTO Ordinance is not involved in the instant case as assessment per se is not the issue here. The issue involved is not concerned with the quantum of income assessed. But it is concerned about the professional competence and integrity of those charged with assessment and supervisory duties. Any disability noted in these critical areas would tantamount to maladministration which falls well within the FTO's jurisdiction.
With regard to immunity claimed to be available to FBR functionaries, here too the respondents are misconceived. When the assessing officer throws caution to the winds and acts arbitrarily, capriciously and whimsically when framing an order of assessment and when the supervisory officers close their eyes to the assessing officer's many acts of omission and commission during assessment, such officials cannot justifiably say that their actions are in good faith.
During the investigation it transpired that the FBR had issued instructions vide Circular No. 16 of 1994 dated 26.07.1994 (1994 PTCL 907] to take cognizance and initiate Disciplinary Proceedings when at least five assessments made by an assessing officer were rejected in appeal. It was pointed out that in the present case only one assessment was involved. However, Section 2(3)(vii) of FTO Ordinance provides disciplinary action against an officer whose order of assessment is held by a competent appellate authority to be vindictive, capricious, biased or patently illegal. The following observations recorded by CIR (Appeals) in appellate order dated 28.10.2013 and the ATIR in ITA No.154/LB/2014, dated 16.04.2014 [110 TAX 41 = 2015 PTD 906], in particular serve to display the objectionable conduct and professional incompetence of the assessing officer:--
"Taxpayer is not to be put under fear that he has to remember scenario of each and every entry at the end of a year. Such like attitude of Tax department to show the muscle neither serves the public exchequer nor the economy of the country.
"Strange enough that without considering the clearly worded order issued by the Hon'ble High Court a huge amount of Rs.81,684,612/- has been taxed as deemed income solely by misapplying the provisions of the Ordinance which is patently illegal."
"IRAO miserably failed to identify the nature of investment by misconstruing the law and has proceeded to add the said amount into taxable income under section 111(1)(b)", it is a transgression which cannot be approved. This bent of mind at the part of IRAO reflects poor appreciation of law and facts."
..."IRAO does not know the basic accounting principles" "it appears that IRAO has his own accounting principles and interpretation of fiscal laws like the Ordinance. Additions under section 111 made by the IRAO are not only vindictive, capricious, biased but also patently illegal and nullity in the eyes of law."
It is necessary to clarify here that not every assessment overturned in appeal entails action against the assessing officer for incompetence and inefficiency. Rather, such action is called for only in cases of patent illegality and mala fide. Typically, these are assessments that have gone before more than one appellate tier and clear findings have been recorded against the assessing officer in the two appellate fora.
Findings:
Recommendations:
(i) the IRAO attends and successfully completes a course of compulsory training in Income Tax Law and Accounts at DOT(IR). His retention in service and payment of Additional Allowance to be made contingent to appropriate certification of professional competence by the training institution;
(ii) appropriate observations are recorded in the PERs of the IRAO and his supervisory officers, i.e. the CIR and the CCIR;
(iii) senior officers in field formations exercise regular supervisory oversight of work done by the subordinate assessing officers and take prompt cognizance of all whimsical and arbitrary actions; and
2016 P T D 457
[Federal Tax Ombudsman]
Before Abdur Rauf Chaudhry, Federal Tax Ombudsman
IJAZ HUSSAIN BUTT
Versus
The SECRETARY, REVENUE DIVISION, ISLAMABAD
Complaint No.54/ISD/F.E(01)/675 of 2015, decided on 16th December, 2015.
Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000)---
----Ss. 2(3) & 10---Federal Excise Act (VIII of 2005) Ss. 3 & Sched., 45A---Federal Excise Duty on allotment of plots by Housing Society, on basis of expenditure incurred---Complainant was a Cooperative Housing Society and raised complaint against order-in-original of RTO whereby it was found liable for payment of Federal Excise Duty in terms of the relevant provision of Federal Excise Act, 2005 which stood repealed in June, 2011---Contention of Department was inter alia that the relevant period for which proceedings were initiated was when the said provision was still in force---Validity---Case against complainant was initiated much after relevant provision of the Federal Excise Act, 2005 was repealed on 03.06.2011 and it was evident that impugned order-in-original was issued without framing of Rules under the Federal Excise Act, 2005---Perusal of impugned order-in-original revealed that that Federal Excise Duty had been ordered to be paid on basis of development expenditure incurred by the complainant during the relevant time---Impugned order-in-original also violated Appellate Tribunal's decision where it was held that crucial date for levy of Federal Excise Duty was date of taking over possession of plots---Mere ordering payment of Federal Excise Duty on basis of development expenditure instead of allotment or possession of plots as well as residential and commercial units violated Department's own directions---Impugned order-in-original was also discriminatory as the present matter was the only case wherein Federal Excise Duty had been ordered to be paid on basis of expenditure incurred instead of application of the criteria of allotment, or possession of plots, residential or commercial units, which had been done in other cases---Federal Tax Ombudsman observed that order for payment of Federal Excise Duty on basis of development expenditure instead of allotment or possession was tantamount to maladministration in terms of S.2(3) of the Establishment of the Office of Federal Tax Ombudsman Ordinance, 2000---Federal Tax Ombudsman directed the Department to direct concerned Commissioner to review impugned order-in-original in terms S.45A of the Federal Excise Act, 2005 and pass orders afresh if needed on basis of Departments' own instructions applied to other cases---Complaint was disposed, accordingly.
Abrar Ahmad Khan, Advisor Dealing Officer.
Syed Sibt-e-Hassan, Syed Muzammal Hussain Jafri and Mohd. Naeem Khan Authorized Representatives.
Zaheer Qureshi, Secretary FBR and Babar Chohan, DCIR, Departmental Representative.
2016 P T D 481
[Federal Tax Ombudsman]
Before Abdul Rauf Chaudhry, Federal Tax Ombudsman
Messrs GULL JEWELLERS, NEW SARAFA BAZAR, SARGODHA
Versus
SECRETARY, REVENUE DIVISION, ISLAMABAD
Complaint No.47/LHR/ST(07)/126 of 2015, decided on 17th March, 2015.
Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000)---
----S. 10---Sales Tax Rules, 2006, R. 6(4) & proviso---Sales Tax Special Procedures Rules, 2007, R.4(b)---S.R.O. No. 680(I)/2014 dated 02.07.2014----Compulsory registration of taxpayer---Remedy---Complaint against compulsory sales tax registration of taxpayer---Complainant was asked by Federal Tax Ombudsman as to whether he had agitated against compulsory registration before concerned Commissioner to which he replied in negative---Validity---Remedy to the compliant could only be provided administratively by the Chief Commissioner or concerned Commissioner under proviso to R.6(4) of the Sales Tax Rules, 2006---Both Department and complainant agreed that the authorized representative of the complainant would move an application for de-registration of the complainant before the Chief Commissioner, intimating the reasons for wrong compulsory registration and the Departmental Representative would then intimate to the concerned Commissioner to reconsider application of the complainant on merit, as per law---Complaint was disposed of, accordingly.
Umar Farooq, Advisor for the Dealing Officer.
M. Nasir Nawaz for the Authorized Representative.
Shakil Ahmad Shakil, DCIR, for the Departmental Representatives.
FINDING
ABDUR RAUF CHAUDHRY, FEDERAL TAX OMBUDSMAN.---The complaint was filed in terms of Section 10(1) of the Federal Tax Ombudsman Ordinance, 2000 (the Ordinance). Allegedly, the Complainant, Messrs Gull Jewellers, was compulsorily registered by CRO on 07-11-2014 on the recommendations of Local Registration Office (LRO) RIO, Sargodha vide letter No.LRO/REGIST/ 417 dated 15-10-2014. A corrigendum of this order was also issued on 12-11-2014 mentioning the correct provisions of laws and rules. As per the Complainant, he was running his business on a petty scale, and thus did not fall in any of the categories specified in S.R.O. 608(I)/2014 dated 02-7-2014. Through this complaint, he requested for deregistration.
(i) That the Complainant had flourishing business and had a good name in the Gold Market. He was carrying out business in an air conditioned shop at Sarafa Bazar, Sargodha. Hence, it fell in category (b) of sub-rule (4) of Sales Tax Special Procedure Rules, 2007 amended vide S.R.O. 608(I)/2014 dated 2-7-2014;
(ii) Decision on compulsory registration was communicated to the Complainant on 01-10-2014;
(iii) Corrigendum in the original order of compulsory registration was issued on 12-11-2014, rectifying the mistake of mentioning incorrect provisions of law.
The AR intimated that clause 4(b) of the said SRO was made the basis of issuance of registration notices to all the retail shops in Sargodha. However, application of this clause on the Complainant was not correct, as it pertained only to those retailers, who were operating their businesses in centrally air conditioned Malls, Plazas and Shopping Centers. Hence, the air conditioned shop of the Complainant located in a non-centrally air conditioned building, was not liable to be registered on this account. This was the only reason for applying for deregistration. The AR also averred that the report of Mr. Saleem Raza Malik, IRAO, Incharge Registration Cell, RTO, Sargodha was sent by the LRO to the CRO without verification. Further stated that no notice intimating the reasons for compulsory registration was ever received by the complainant.
The DR controverted the interpretation of the AR about the air conditioning of the business premises, by stating that there was no word used in the SRO as centrally air conditioned. He also furnished a copy of the notice so issued to the complainant vide RTO's letter No.RTO/SG/2014-15/IRRC-2/2825 dated 01-10-2014, sent through TCS receipt No.03745727 dated 01-10-2014. As this was not returned undelivered, so it was presumed that it had reached its destination. When no reply of the complainant was received, the LRO recommended compulsory registration to the CRO on 15-10-2014. The AR was asked as to whether he had agitated this compulsory registration issue before the concerned Commissioner or the Chief Commissioner, to which he replied in the negative. The AR averred that it was improper to initiate action on a single default of not responding to the notice. The AR was told that remedy to his complaint could only be provided administratively by the Chief Commissioner or the concerned Commissioner of RTO Sargodha, under Proviso to sub-rule (4) of Rule 6 of the Sales Tax Rules, 2006, which is reproduced below:--
"Provided that if it is subsequently established that a person was not liable to be registered but was wrongly registered under this rule due to inadvertence, error or misconstruction, Commissioner shall send recommendation to REGSYS to cancel his registration. In case of such cancellation of registration, such person shall not be liable to pay any tax, default surcharge or penalty under the Act or rules made thereunder, subject to the conditions, limitations and restrictions prescribed under section 3B of the Act."
2016 P T D 609
[Federal Tax Ombudsman]
Before Abdur Rauf Chaudhry, Federal Tax Ombudsman
Messrs AL-HAMRA TRADING COMPANY
Versus
SECRETARY, REVENUE DIVISION, ISLAMABAD
Review Petition No.05 of 2011 and Complaint No.315/KHI/CUS(135)/ 1195/2010, decided on 1st October, 2015.
Customs Act (IV of 1969)---
----Ss. 216, 217, 193, 160, 169, 79 & 156---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), Ss.2(3), 10, 14(4) & 22----Import of goods---Mis-declaration in description and price of imported goods---Seizure/confiscation of imported goods---Redemption of seized goods against payment of fine---Compensation claimed by importer for demurrage and container rent incurred to complainant during confiscation of imported goods---Maladministration---Scope---Complainant's/importer's goods were confiscated on the ground that the description and price of goods had not been described correctly by the importer---Complainant did not avail option of redemption of goods to avoid accumulation of port demurrage and rent of container and instead filed appeal against order-in-original---Said appeal was decided in favour of complainant, and subsequently complainant, through present complaint, sought inter alia, compensation for payment of extra demurrage and container rent from the Department---Validity---Instead of availing option to redeem the goods on payment of duties, taxes and fine; as allowed by the Adjudicating Officer, the importer/complainant filed appeal against said order-in-original and it was therefore evident that delay in clearance of goods was on part of importer himself; firstly by indulging in mis-declaration and manipulation of import documents which resulted in detailed examination of said goods and adjudication by Department---Importer/complainant also failed to avail opportunity of redemption provided to him by Adjudicating Officer---On receipt of order-in-appeal, the Deputy Collector was under an obligation to propose filing of appeal to the Customs Appellate Tribunal in terms of S. 194A of the Customs Act, 1969 read with the option given in the said order---While discharging such obligation by recommending use of departmental option to contest the appellate decision, the Deputy Collector also proposed release of goods in terms of a public notice, which allowed release of said goods without recovering of penalty and fine----Subsequently Deputy Collector issued instructions to release said goods in compliance with order-in-appeal, and such proposal was made in discharge of his obligations under law and such procedure could not be treated as mala fide---Section 216 of the Customs Act, 1969 provided that no one was entitled to claim compensation for loss or injury except on proof of neglect or on a willful act and S. 217 laid down the common law rule that where government or its servant(s) did or intended to do anything in good faith in pursuance of provisions of any law under which they were authorized to act, they shall not be liable criminally or civilly---Federal Tax Ombudsman observed that nothing in the actions of Deputy Collector smacked of mala fide, vendetta, hostility, or violation of importers' rights and his acts were bona fide and lawful; which were duly protected under Ss. 216 & 217 of the Customs Act, 1969; and thus no case for maladministration was made out and furthermore, that importer/complainant was entitled to no compensation---Complaint was disposed of, in circumstances.
Yasin Tahir, Senior Advisor, Dealing Officer.
Imran Iqbal and Imran Rauf, CEO, Authorized Representatives.
Zaheer Abbas, Assistant Collector Departmental Representative.
2016 P T D 709
[Federal Tax Ombudsman]
Before Abdur Rauf Chaudhry, Federal Tax Ombudsman
ABDUL HAMID KHAN DARBARI
Versus
SECRETARY, REVENUE DIVISION, ISLAMABAD
Complaint No.448/LHR/IT(318)/1473 of 2015, decided on 12th February, 2016.
Income Tax Ordinance (XLIX of 2001)---
----S. 234---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), Ss.2(3) & 10---Complaint against problems faced by taxpayers in electronic input of particulars through the "IRIS" pertaining to payment of motor vehicle tax under S.234 of the Income Tax Ordinance, 2001---Maladministration---Scope---Federal Tax Ombudsman observed that the IRIS e-system of the Department was the cause of many problems faced by taxpayers with regard to filing of returns as well as related documentation and Tax Facilitation Wing of the Department had evidently not been able to explain the said system properly to the taxpayers and public-at-large and that it was high time that a concerted campaign be launched to remove bugs from the said system and educate the public on all aspects of its utilization---Departmental maladminsitration was therefore, evident---Federal Tax Ombudsman recommended that the "IRIS" system be debugged and Tax Facilitation Wing of the Federal Board of Revenue launch a campaign to educate taxpayers on all aspects of the "IRIS" system---Complaint was disposed of, accordingly.
Muhammad Munir Qureshi, Advisor Dealing Officer.
Nemo Authorized Representative.
Mrs. Bushra Fatima, DCIR Departmental Representative.
2016 P T D 821
[Federal Tax Ombudsman]
Before Abdur Rauf Chaudhry, Federal Tax Ombudsman
Malik FAISAL AZEEM
Versus
SECRETARY, REVENUE DIVISION, ISLAMABAD
Complaint No.06/MLN/ST(03)/1086 of 2015, decided on 11th February, 2016.
Sales Tax Act (VII of 1990)---
----Ss.66 & 10--- Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S.2(3) & 10---Complaint against non-issuance for sales tax refund cleared by pre-refund audit---Contention of complainant, inter alia, was that Department had, not issued sales tax refund, which was cleared by pre-refund audit committee---Federal Tax Ombudsman observed that it was evident that Department had failed to settle refund claim of complainant within stipulated time provided under S.66 of the Sales Tax Act, 1990 and such failure of Department tantamount to maladministration under S. 2(3)(i)(a) of the Establishment of Office of Federal Tax Ombudsman Ordinance, 2000---Federal Tax Ombudsman recommended that the Department direct the concerned Chief Commissioner to settle refund claim of the complainant as per law within a period of thirty days---Complaint was disposed of, accordingly.
Muhammad Daud Khan, Advisor for Dealing Officer.
Riaz Ahmad Raja, ITP Authorized Representative.
Nadeem Ahmad, DCIR Departmental Representative,
2016 P T D 830
[Federal Tax Ombudsman]
Before Abdur Rauf Chaudhry, Federal Tax Ombudsman
NAZAR HUSSAIN
Versus
SECRETARY, REVENUE DIVISION, ISLAMABAD
Complaint No.04/MLN/ST(02)/1084 of 2015, decided on 12th February, 2016
Sales Tax Act (VII of 1990)---
----Ss. 25, 33(9) 45-A & 72B---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), Ss. 2(3) & 10---Audit---Non-furnishing of record---Penalty---Opportunity of hearing for the taxpayer---Complainant was selected for audit under S. 72B of the Sales Tax Act, 1990 and per contention of Department after issuing of three notices to complainant, he failed to provide sales tax record for audit and thus violated previsions of S. 25 of the Sales Tax Act, 1990 and therefore, penalty under S. 33(9) of the Sales Tax Act, 1990 was imposed and thereafter assessment was made---Contention of complainant was that notice was issued on 18.03.2015 and assessment was completed on 26.03.2015 and that per Department's own Circular, at least 15 days were required for compliance of the same---Federal Tax Ombudsman observed that passing of assessment order without providing sufficient time to complainant, being against Department's own instructions, tantamount to maladministration under S. 2(3)(i)(a) of the Establishment of the Office of Federal Tax Ombudsman Ordinance, 2000---Federal Tax Ombudsman recommended that Department direct concerned Commissioner to revisit the impugned assessment order under S. 45-A of the Sales Tax Act, 1990 and pass fresh order after affording opportunity of hearing to the complainant and considering complainant's viewpoint---Complaint was disposed of, accordingly.
Muhammad Daud Khan, Advisor for Dealing Officer.
Riaz Ahmad Raja, ITP for Authorized Representative.
M. Qaswar Hussain, DCIR for Departmental Representative.
2016 P T D 1066
[Federal Tax Ombudsman]
Before Abdur Rauf Chaudhry, Federal Tax Ombudsman
SHAHID MUSHTAQ
Versus
SECRETARY, REVENUE DIVISION, ISLAMABAD
Complaint No.353/LHR/IT(256)/1080/2015, decided on 17th February, 2016.
Income Tax Ordinance (XLIX of 2001)---
----Ss. 181 & 147---Finance Act (VII of 2015), S. 5(38)---S.R.O. No. 1076(I)/2015 dated 02.11.2015---S.R.O. 791(I)/2015 dated 10.08.2015---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), Ss. 2(3) & 10(1)---Maladministration---Registration of taxpayers---Filing of tax returns---Taxpayers identifier---Computerized National Identity Card (CNIC)---National Tax Number (NTN)---Scope---Contention of the complainant was that consequent to amendments in the Income Tax Ordinance, 2001 vide Finance Act, 2015; tax returns by individuals could be filed on basis of the CNIC without obtaining an NTN number by entering the same into the registration process and that NTNs are being forcibly allotted through the registration process, contrary to the provisions of the law---Validity---Amendments brought about by the Finance Act, 2015 required the 13 digit CNIC to replace the 7 digit NTN by virtue of which the CNIC became the taxpayers' identifier instead of the NTN; however, the requirement of registration of taxpayers had not been done away with by the Legislature and consequently all individuals salaried or otherwise, were obliged to get registered with the Department in terms of S. 181 of the Income Tax Ordinance, 2001---Taxpayers' registration process introduced by Department after said amendments went beyond mandate of law and subsequently S.R.O. No. 1076(I)/2015 dated 02.11.2015 was issued which introduced changes and helped harmonize operational procedures and requirements with the relevant changes in law---Complainant's concern was that the registration could be obtained on basis of incorrect information as there was no automatic check in the operating software and such checking would necessitate linkages with databases of all relevant sources of Federal, Provincial and Local Governments and other entities and such proposition was of vital importance which the Department could undertake as a policy objective---Federal Tax Ombudsman recommended the Department to remove deficiencies in its operating system and ensure smooth payment of tax and filing of returns in accordance with the amended provisions of law---Complaint was disposed of, accordingly.
Afzal Nau Bahar Kayani for Dealing Officer.
Waheed Shehzad Butt for Authorized Representative.
Raana Ahmed, Member IT FBR, Vishno Raja Qavi, Chief Tax Policy and Dr. Naveed Khalid, Secretary IT Policy for Departmental Representatives.
2016 P T D 1212
[Federal Tax Ombudsman]
Before Abdur Rauf Chaudhry, Federal Tax Ombudsman
MUHAMMAD ZAFAR IQBAL
Versus
SECRETARY REVENUE DIVISION, ISLAMABAD
Complaint No.33/MLN/IT/(1)/1343 of 2015, decided on 17th March, 2016.
Income Tax Ordinance (XLIX of 2001)---
----Ss. 171, 173 & 177----Establishment of the Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), Ss. 2(3) & 10---Appeal to the Commissioner (Appeals)---Finality of Appellate Order ----Maladministration---Scope---Assessment order passed against complainant was annulled on first appeal before Commissioner Inland Revenue (Appeals), and the Department did not file second appeal against said Appellate Order, therefore the same attained finality---Department subsequently repeated the same assessment order against complainant---Validity----Annulled order was legally void and ceased to exist---Department, if it fails to file second appeal in the Appellate Tribunal, then the effect of the first appeal was required to be allowed within two months as prescribed by law---Repetition of assessment after annulment of earlier order by the Commissioner Inland Revenue (Appeals); therefore, was arbitrary, and unlawful; which tantamount to maladministration in terms of S. 2(3) of the Establishment of the Office of Federal Tax Ombudsman Ordinance, 2000---Federal Tax Ombudsman recommended the Department to direct the concerned Commissioner to revisit the unlawful order within a period of 21 days---Complaint was disposed of, accordingly.
Muhammad Daud Khan, Advisor for dealing Officers.
Sardar Irshad Shaheen, Advisor Dealing Officer.
Riaz Ahmad Raja, ITP for Authorized Representative.
Allah Wasay, IRO for Departmental Representative.
2016 P T D 1443
[Federal Tax Ombudsman]
Before Abdur Rauf Chaudhry, Federal Tax Ombudsman
DIRECTOR GENERAL, INTELLIGENCE AND INVESTIGATION INLAND REVENUE, ISLAMABAD
Versus
MASTER TILIES AND CERAMIC INDUSTRIES LTD. G.T. ROAD GUJRANWALA and 3 others
Review Applications Nos. 3 and 5 of 2016 in Complaint No.53/ISD/ IT(39)/648/2015, decided on 15th April, 2016.
(a) Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000)---
----Ss.14(8), 13 & 9----Review of findings of Federal Tax Ombudsman---Scope----Department, by way of review of impugned order, sought expunction of remarks made by the Federal Tax Ombudsman in the impugned order, on the ground that the said remarks were contradictory, as the Federal Tax Ombudsman had observed that Departmental maladministration was not evident, yet the impugned remarks conflicted with the said finding and a direction to the Chairman FBR in the impugned order to conduct an enquiry into the matter was also not tenable---Validity----In the impugned order, which was under review, the Federal Tax Ombudsman by way of abundant caution had left door open to be able to take cognizance of any Departmental wrongdoing that may come to light at any later stage and should the Department be found later to be lacking in internal check and balance, it ought to be possible to address said deficiency---Such corrective action was clearly contingent upon conclusive identification of persons responsible for alleged leakage of confidential information, which was the matter under consideration in the complaint, and for which there was no oversight mechanism---Fact that complainant might be trying to exploit said remarks of the Federal Tax Ombudsman in the complainant's review petition, was not sufficient justification to warrant their expunction---Present review petition did not establish any readily discernable defect in impugned order that might warrant remedial action in review----Review was rejected, in circumstances.
2012 SCMR 123; 2007 CLC 124; 2009 YLR 1508; 2011 YLR 2452; 2012 YLR 1580; 2013 MLD 1759; 2006 CLD 79; Eli Lily 2009 PTD 1392; 2013 PLC 934 (SC (AJK)); 1996 MLD 2002 (SC (AJ&K)); 1969 SCMR 427 and 2014 SCMR 1858 ref.
(b) Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000)---
----S. 14(8)----Scope of review of findings of Federal Tax Ombudsman under S. 14 of the Establishment of the Office of Federal Tax Ombudsman Ordinance, 2000----Concreted effort to re-argue the entire case and introduction of new issues which were not raised in the original complaint, in a review under S. 14(8) of the Establishment of Office of Federal Tax Ombudsman Ordinance, 2000 was not permissible in law.
PLD 1997 SC 865 (867); 2014 SCMR 1858; 2011 CLC 939 and 2016 CLC 10 rel.
Muhammad Munir Qureshi Advisor Dealing Officer.
Hassan Kamran Bashir for Authorized Representative.
Shahid ul Hassan Chatha, Director I & I - IR/DR Amir Abbas Khan, Addl. Director, I & I, IR/DR for Departmental Representative.
2016 P T D 1691
[Federal Tax Ombudsman]
Before Abdur Rauf Chaudhry, Federal Tax Ombudsman
MUHAMMAD SALEEM
Versus
The SECRETARY, REVENUE DIVISION, ISLAMABAD
Complaint No. 11/KHI/IT(03)/21 of 2016, decided on 21st March, 2016.
Income Tax Ordinance (XLIX of 2001)---
----Ss. 122A & 121---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), Ss. 2(3) & 10---Amendment of assessment---Revision by the Commissioner---Maladministration---Scope of revision under S. 122A of the Income Tax Ordinance, 2001---Assessment of complainant/taxpayer was amended under provisions of S. 122 of the Income Tax Ordinance, 2001 whereafter the complainant approached the concerned Commissioner Inland Revenue vide an application pointing out various illegalities in the amendment of assessment order---Said application of complainant was rejected on the ground that S. 122A of Income Tax Ordinance, 2001 vested only suo motu powers to the Commissioner Inland Revenue and no action could be taken on an application filed by the complainant---Validity---Suo motu action required some information for initiation of action to examine the record and some information in any form was essential---In the present case, the concerned Commissioner Inland Revenue received information highlighting irregularities and serious legal flaws in the impugned order through an application filed by the complainant but he failed to act on the same---Application filed by complainant was enough to set in motion proceedings under S. 122A of the Income Tax Ordinance, 2001---Rejection of said application arbitrarily was against spirit of law which required the concerned Commissioner Inland Revenue to correct the illegality committed by his subordinates to avoid prolonged litigation---Failure to revisit the amendment of assessment order in terms of S. 122A of the Income Tax Ordinance, 2001 was tantamount to maladministration under S. 2(3) of the Establishment of the Office of Federal Tax Ombudsman Ordinance, 2000---Federal Tax Ombudsman recommended the Department to direct to the concerned Commissioner to revisit the amendment of assessment order in terms of S. 122A of the Income Tax Ordinance, 2001 and decide the matter afresh after affording proper opportunity of hearing to the complainant and sensitize the concerned Commissioner Inland Revenue for lack of understanding of the legal provisions---Complaint was disposed of, accordingly.
Haji Rehm Dil v. The Province of Balochistan and others 1999 SCMR 1060 and Mst. Mubarak Salman and others v. The State PLD 2006 Kar. 678 ref.
Muhammad Mubeen-us-Salam and others v. Federation of Pakistan through Secretaray Ministry of Defence and others PLD 2006 SC 602 distinguished.
Manzoor Hussain Kureshi, Dealing Officer.
Kamran Rizvi and Muhammad Saleem Authorized Representatives.
Rizwan Memon, DCIR Departmental Representative.
2016 P T D 1797
[Federal Tax Ombudsman]
Before Abdur Rauf Chaudhry, Federal Tax Ombudsman
Messrs CHICAGO METAL WORKS
Versus
SECRETARY, REVENUE DIVISION ISLAMABAD
Complaint No.139/FSD/IT(109)602 of 2015, decided on 22nd December, 2015.
Income Tax Ordinance (XLIX of 2001)---
----S.214(4)---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S. 2(3)---Maladministration---Non-issuance of tax refund---Giving effect to Appellate Order---Scope---Contention of complainant was that Department did not allow effect to decisions of Appellate Courts which it was bound under the law to do so and consequently it had not issued the entire amount of refund due and illegally withheld part thereof, particularly pertaining to Workers' Welfare Fund, thus violating S.124(4) of Income Tax Ordinance, 2001 which tantamount to maladministration---Department's plea was that appeal against order of CIR (Appeals) was dismissed and appeals on same issue had been filed in other cases and many such appeals were presently pending before the Supreme Court---Validity---Department did not file further appeal at the higher Appellate fora, therefore, it did not authorize Department to disallow appellate effect under S.214(4) of Income Tax Ordinance, 2001 or to withhold the due refund---Federal Tax Ombudsman recommended that inordinate delay to issue refund was established on part of Department which tantamount to maladministration under S.2(3) of Federal Tax Ombudsman Ordinance, 2000, thus, Department must pass an order giving effect to appellate order and issue the due amount of refund, as per law within 21 days and report compliance within 7 days thereafter---Complaint was disposed of, accordingly.
Muhammad Daud Khan, Advisor Dealing Officer.
Riaz Ahmad Raja, ITP Authorized Representative.
Bilal Ahmad, DCIR Departmental Representative.
2016 P T D 2037
[Federal Tax Ombudsman]
Before Abdur Rauf Chaudhry, Federal Tax Ombudsman
Rao IMRAN NASIR Proprietor
Versus
The SECRETARY, REVENUE DIVISION, ISLAMABAD
Complaint No.171/FSD/IT(133)717 of 2015, decided on 22nd March, 2016.
Income Tax Ordinance (XLIX of 2001)---
----Ss 175 & 239D---Federal Ombudsmen Institutional Reform Act (XIV of 2013) S. 11---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), Ss. 2(3), 5 & 10---Power to enter and search premises under S.175 of the Income Tax Ordinance, 2001---Jurisdiction of Federal Tax Ombudsman---Maladministration---Temporary injunction, grant of---Scope---Contention of complainant, inter alia was that the raid conducted by Department was without jurisdiction and did not comply with provisions of S.175 of the Income Tax Ordinance, 2001, and the same was tantamount to maladministration---Validity---Only show-cause notice had been issued to the complainant and no order had been passed by the Department's officers and complainant had submitted explanation with material facts before concerned officers to enable them to arrive at some conclusion---Raid, if properly carried out under provisions of S.175 of the Income Tax Ordinance, 2001 could not be termed unlawful and tax under S.236D of the Income Tax Ordinance, 2001 was to be paid once and at a fixed rate for the relevant period whether business of the raided premises belonged to one person or two different persons---Show cause notice in the present case had detailed figures of apparent tax evasion for the relevant period---Substance had to take precedence over technicalities and complainant had to refute allegations properly to support his case and could not challenge the issuance of the show-cause notice---Complainant's plea for grant of temporary injunction under S. 11 of Federal Ombudsmen Institutional Reform Act, 2013 was not valid as a temporary injunction under said provision was against operation of an impugned order or decision and not against proceedings, as in the present case---Federal Tax Ombudsman, however, observed that Department was required to consider the matter sympathetically and settle proceedings in a transparent way after affording fair opportunity of hearing to complainant---No case of maladministration was made out and the proceedings were accordingly closed---Complaint was dismissed, accordingly.
Muhammad Daud Khan, Advisor, Dealing Officer.
Riaz Ahmad Raja, ITP, Authorized Representative.
Ghulam Nabi Sheikh, IRO, Departmental Representative.
2016 P T D 2054
[Federal Tax Ombudsman]
Before Abdur Rauf Chaudhry, Federal Tax Ombudsman
Messrs BURHAN PRODUCTS (PVT.) LTD., LAHORE
Versus
The SECRETARY, REVENUE DIVISION, ISLAMABAD
Complaint No.291/LHR/IT(211)881 of 2015, decided on 18th March, 2016.
Income Tax Ordinance (XLIX of 2001)---
----Ss.229, 230 & 120---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), Ss. 9, 2(3) & 10---Complaint against non-issuance of income tax refund---Jurisdiction of the Federal Tax Ombudsman in relation to cases of tax refund ---Scope--- Contention of complainant was income tax refund due to him for various tax years was not being issued due to inaction on part of Department to process said refund claims---Contention of Department was that complainant had not provided proof of tax deductions and that the Federal Tax Ombudsman did not have jurisdiction to take up tax refund claims for investigation---Validity---Held, no doubt supporting documentation for refund claims was expected to be submitted with the return but where the said return was electronically filed and deemed an assessment made under S.120 of the Income Tax Ordinance, 2001 that resulted in determination of refund payable to taxpayer, then the Department must issue and serve upon the taxpayer a notice to submit the required supporting documentation if the same was not available readily on the assessment record---Adverse inference against the taxpayer could not be drawn without giving such taxpayer the opportunity to explain his position---Federal Tax Ombudsman's objective was not to decide the refund claim, and rather the Federal Tax Ombudsman endeavored to see whether a refund at all arose in the case and if it did, then whether or not the Department had failed to process and dispose of the said claim within the prescribed time in accordance with law---Actual determination of amount of refund due to the taxpayer was the prerogative of the Department---In the present case, complainant's deemed assessments had been made for various years to which the claims for refund pertained, and resulted in a determination of refund because of excess deduction of tax at source, and the Department was bound to take cognizance of the same particularly after filing of refund applications by the complainant and the Department had to take practical steps to evaluate the refund claim---Protracted Departmental inaction was evident in the present case, and maladministration in terms of S.2(3) of the Establishment of Office of Federal Tax Ombudsman Ordinance, 2000 thus stood established and a taxpayer could not be stopped from filing a complaint against the same before the Federal Tax Ombudsman---Federal Tax Ombudsman recommended the Department to direct the concerned Commissioner to examine the tax deduction payment evidence available with the complainant in accordance with the legal procedure and to issue refund/compensation due strictly in accordance with law within a period of 21 days---Complaint was disposed of, accordingly.
Colenco Power v. FBR C.No.654/LHR/IT/(550)1153/2010 and TR-48 of 2011 Chicago Metal Works distinguished.
Muhammad Munir Qureshi, Advisor Dealing Officer.
Ahmad Nawaz for authorized Representative.
Khurram Fakhar, ACIR, Departmental Representative.
2016 P T D 2072
[Federal Tax Ombudsman]
Before Abdur Rauf Chaudhry, Federal Tax Ombudsman
Messrs SHAHSONS PAKISTAN (PVT.) LTD., MULTAN
Versus
The SECRETARY, REVENUE DIVISION, ISLAMABAD
Complaint No.64/MLN/IT(42)530 of 2016, decided on 10th June, 2016.
Income Tax Ordinance (XLIX of 2001)---
----Ss. 170 & 171---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), Ss.2(3)(ii) & 10(4)---Non-issuance of income tax refund---Complainant, claimed additional payment under S.171 of Income Tax Act, 2001 for delay of payment of tax refund---Representative of the complainant, delivered a copy of letter, claiming that the matter had been fully verified and there was no justification to withhold the refund any further---Departmental representative submitted that verification from Bank was still needed, but he failed to point out any justifiable deficiency---Department's failure to settle the refund claim within time as prescribed under S.170 of the Income Tax Ordinance, 2001, was tantamount to maladministration under S.2(3)(ii) of Establishment of Office of Federal Tax Ombudsman Ordinance, 2000---Federal Board of Revenue was recommended to direct the Commissioner to complete the verification process, and issue the due amount of refund within 30 days; and report compliance within 7 days thereafter.
Muhammad Daud Khan, Advisor, Dealing Officer.
Riaz Ahmad Raja, ITP, Authorized Representative.
Abid Gulshan, DCIR, Departmental Representative.
2016 P T D 2089
[Federal Tax Ombudsman]
Before Abdur Rauf Chaudhry, Federal Tax Ombudsman
Messrs CHICAGO METAL WORKS (PVT.) LTD., MULTAN
Versus
The SECRETARY, REVENUE DIVISION, ISLAMABAD
Complaint No.66/MLN/IT(44)554 of 2016, decided on 23rd June, 2016.
Income Tax Ordinance (XLIX of 2001)---
----Ss.170 & 171---Refund---Maladministration---Refund claim was due on account of tax withholdings/payments, but was not settled---Authority stated that verification process had been started and refund voucher would be issued on its completion---Department, had to complete the verification process within time as prescribed under S.170(4) of Income Tax Ordinance, 2001---Verification process, was not an open ended exercise, and could not be allowed to continue indefinitely---Delay in settling refund claim within prescribed time would tantamount to maladministration under S.2(3)(ii) of the Establishment of Office of Federal Tax Ombudsman Ordinance, 2000---Ombudsman directed that Federal Board of Revenue should direct the Commissioner to ensure that refund claim be settled within 3 weeks along with compensation due under S.171 of Income Tax Ordinance, 2001 for delayed payment of refund; and to give compliance report within next 7 days thereafter.
Muhammad Daud Khan, Advisor Dealing Officer.
Riaz Ahmad Raja, ITP Authorized Representative.
Abid Hussain Gulshan, DCIR Departmental Representative.
2016 P T D 2104
[Federal Tax Ombudsman]
Before Abdur Rauf Chaudhry, Federal Tax Ombudsman
MUHAMMAD TARIQ
Versus
The SECRETARY, REVENUE DIVISION, ISLAMABAD
Complaint No.33/MLN/IT/(22)/252 of 2016, decided on 23rd June, 2016.
Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000)---
----Ss. 2(3)(ii) & 10---Income Tax Ordinance (XLIX of 2001), Ss. 120, 122(5)(9) & 122-C---Refund claim---Complainant, who had been regularly filing returns of income had filed return of income for the relevant year annually within due date---Department initiated proceedings under S.122-C of Income Tax Ordinance, 2001 and completed provisional assessment without proper service of notice on the ground that return was manually filed---Refund was claimed by the taxpayer through an application---Taxpayer/complainant, visited the department time and again and finally sent reminder, but refund was not processed---Ombudsman observed that if the department had the intention to verify the correctness of income and tax computation, or make some inquiry with regard to the processing of refund; it should have been completed within 30 days---Refund could not be withheld on the basis of anticipated liabilities, or prospective proceedings---Department could not withhold refund, unless some substantiated flaw was proved in the claim about its genuineness and accuracy---department's neglect, inattention and ineptitude in the discharge of duties for processing of refund, was tantamount to "maladministration" in terms of S.2(3)(ii) of Establishment of Office of Federal Tax Ombudsman Ordinance, 2000---Ombudsman recommended that, Federal Board of Revenue should direct the Commissioner to dispose of refund/compensation claim by providing opportunity of hearing to the complainant, in a transparent manner within 21 days; report of compliance within 7 days thereafter.
2009 SCMR 973 ref.
Haji Ahmad, Advisor, Dealing Officer and Muhammad Daud Khan, Advisor.
Riaz Ahmad Raja, ITP, Authorized Representative.
Nadeem Ahmad, DCIR, Departmental Representative.
F1NDINGS/RECOMMENDATIONS
ABDUR RAUF CHAUDHRY, FEDERAL TAX OMBUDSMAN.--This complaint was filed under section 10(1) of the FTO Ordinance, 2000 (FTO Ordinance) against non-payment of refund of Rs.1.057 million with compensation for tax year 2011.
The Complainant derives income from medical practice and agriculture and has been regularly filing returns of income since 23.07.2003. Return for tax year 2011 was manually filed within the due date on 28.11.2011. Later, the Deptt. received information about the purchase of a plot at Buch Executive Villas for a consideration of Rs.3.940 million during the period relevant to tax year 2011. Based on the said information, the Deptt initiated proceedings under Section 122C of the Income Tax Ordinance, 2001 (the Ordinance) and completed provisional assessment on 17.06.2013 without proper service of notices and also considering that the return was manually filed on 28.11.2011. According to the complainant, unlawful tax demand of Rs.0.985 million was created and a sum of Rs.1.057 million was recovered through attachment of bank accounts by invoking the provisions of Section 140 of the Ordinance. The recovery exceeded the amount of tax created in the case. The provisional assessment was contested before the Commissioner IR on the ground that it amounted to double assessment as deemed assessment was already in the field since the filing of return on 28.11.2011.
Further, plot was purchased in installments and only a sum of Rs.1.659 million was paid to the seller during the year, but the entire purchase price of Rs.3.940 million was treated as unexplained and assessed to tax. The Commissioner looked into the matter and observed that in the presence of deemed assessment order treated to have been issued under Section 120(1)(b) of the Ordinance, there was no need to proceed under Section 122C of the Ordinance. The action taken under Section 122C of the Ordinance was, therefore, declared void ab initio vide order No.MN/RT0/2015-16/1033 dated 10.08.2015. Consequently, the provisional assessment stood vacated and tax recovered through attachment of bank accounts became refundable. The refund was claimed by e-filing of return of income and refund application dated 14-09-2015 There-after, the Complainant visited the Deptt time and again and finally sent reminder dated 04-02-2016, but refund, was not processed.
The complaint was sent to the Secretary, Revenue Division, Islamabad in terms of Section 10(4) of the FTO Ordinance. In response, the FBR, vide letter C.No.4(252)TO-I/2016 dated 04.04.2016 forwarded comments of the Commissioner bearing No.CIR:MN/RT0/2015-16/8775 dated 30-03-2016. The Deptt contended that the complainant failed to respond to the notices, so the provisional assessment was made ex-parte. The demand notice and assessment order were served upon Mr. Pervaiz Ahmad, the Dispenser of the Complainant, but return, wealth statement and wealth reconciliation statement were not filed within 45 days of the service as per proviso to sub Section (2) of section 122C of the Ordinance. Hence the provisional assessment attained finality. Further claimed that the Deptt had rightly recovered tax through attachment of bank accounts.
The Deptt, however, admitted that the return was manually filed on 28-11-2011 in Multan instead of the relevant jurisdiction in Muzaffargarh without any refund claimed therein. However, the refund was claimed in the return filed on 14-09-2015.
According to the Deptt, merely filing of return cannot be taken deemed order for issuance of refund. The Commissioner IR has to make conscious application of mind and decide the claim after checking its veracity/calculation. The perception of the Complainant that the Deptt was bound to accept the claim on basis of calculation as per assessment order deemed to have been issued by the Commissioner on the date the return was filed, is not acceptable. This perception is contrary to the law and the prescribed procedure. Further submitted that the compensation would be due after three months on which date the refund becomes due as held by the Lahore High Court, Multan Bench in Reference No. 48/2011 in the case of Commissioner Inland Revenue v. Chicago Metal Works. In view of this position no compensation was due in the case.
The DR defended the treatment meted out by the Deptt. According to him, no maladministration was involved in the case. He, however, informed that proceedings for amendment of assessment under Section 122(5) read with Section 122(9) have also been initiated in the case. The refund due, if any, would be processed in the due course of time.
On the contrary, the AR contended that tax was recovered from the banks by the Deptt, therefore, no further verification of the same was required and as the competent authority has vacated the provisional assessment, there is no justification to withhold refund lawful claimed in return e-filed on 14-09-2015.
Both parties heard and, record perused. The contention of the AR appears to be convincing. The treatment meted out on four counts is palpably wrong as the provisional assessment was made without proper service of notices, without affording opportunity of hearing to the Complainant and ignoring the return filed on 28.11.2011. That is why the provisional assessment has been declared void ab-initio by the Commissioner himself vide his office order No.CIR/MN/RTO/2015- 2016/1033, dated 10.08.2015. So the tax recovered through banks became refundable.
In case the Deptt had the intention to verify the correctness of income and tax computation or make some inquiry with regard to the processing of refund, it should have been completed within 30 days so that refund could be issued in three months to avoid compensation as per procedure prescribed in circular No.5/2003 dated 30-06-2003.
As regards the proceedings initiated for amendment of assessment under Section 122(5) read with Section 122(9) of Ordinance, the deemed assessment has not been amended and no further tax has been raised as yet. It is trite law as settled by the superior judiciary that refund cannot be withheld on the basis of anticipated liability or prospective proceedings. Moreover, the Supreme Court in a case cited as "2009 SCMR 973" held that the Deptt cannot withhold refund unless some substantiated flaw is proved in the claim about its genuineness and accuracy.
Findings:
8.(sic) The Deptt's neglect, inattention, inefficiency and ineptitude in the discharge of duties for processing of refund is tantamount to maladministration in terms of section 2(3)(ii) of FTO Ordinance, 2000.
Recommendations:
(i) direct the Commissioner to dispose of refund/compensation claim by providing opportunity of hearing to the Complainant in a transparent manner, within 21 days; and
2016 P T D 2522
[Federal Tax Ombudsman]
Before Abdur Rauf Chaudhry, Federal Tax Ombudsman
Messrs PRIME LUBRICANTS (PVT.) LTD.
Versus
The SECRETARY, REVENUE DIVISION, ISLAMABAD
Complaint No. FTO-MLN/000004/2016, decided on 18th August, 2016.
Income Tax Ordinance (XLIX of 2001)---
----Ss. 117 & 114---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), Ss. 10 & 2(3)---Return of income---Notice of discontinued business---Deletion of National Tax Number (NTN)---Maladministration--- Scope--- Complaint against inordinate delay in deletion of complaint's name from the list of NTN holders and against issuance of notices to complainant for furnishing return of income---Contention of complainant was that despite various applications to the Department intimating closure of business and request for issuance of NOC for deletion of its name from list of NTN holders, no response was forthcoming from the Department and instead notices under S. 114 of the Income Tax Ordinance, 2001 were issued to the complainant for furnishing return of income---Validity---Under S. 117 of the Income Tax Ordinance, 2001 any person discontinuing business was required to give notice to the Commissioner Inland Revenue to the such effect within a period of fifteen days and the complainant, in the present matter, neither disclosed the exact date of closure of business nor furnished any such notice---Department, under such circumstances, had no option except to serve notices to complainant to furnish fresh return of income under S. 117 of the Income Tax Ordinance, 2001---Federal Tax Ombudsman observed however, that the Department had not disposed of the complainant's application, which was the Department's responsibility, in order to enable the complainant to seek further legal remedy and such inattention to the applications of the complainant tantamount to maladministration under S. 2(3) of the Establishment of Office of Federal Tax Ombudsman Ordinance, 2000---Federal Tax Ombudsman recommended the Department to direct the concerned Commissioner to dispose of the complainant's application for deletion its name from list of NTN holders within a period of 21 days after providing opportunity of hearing to the complainant---Complaint was disposed of accordingly.
Haji Ahmad, Advisor and Muhammad Daud Khan, Advisor for Dealing Officers.
Riaz Ahmad Raja, ITP Authorized Representative.
2016 P T D 2577
[Federal Tax Ombudsman]
Before Abdur Rauf Chaudhry, Federal Tax Ombudsman
Messrs SERVO MOTOR OIL (PVT.) LTD.
Versus
SECRETARY REVENUE DIVISION, ISLAMABAD
Complaint No.FTO-ONL/0000006/16, decided on 26th July, 2016.
Federal Excise Act (VIII of 2005)---
----Ss. 46 & 42B--- Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), Ss. 9 & 10---Jurisdiction, functions and powers of the Federal Tax Ombudsman---Bar on jurisdiction of Federal Tax Ombudsman under S. 9 of the Establishment of the Office of Federal Tax Ombudsman Ordinance, 2000---Scope---Complaint against order of Commissioner Inland Revenue for audit of complainant under S. 46 of the Federal Excise Act, 2005---Contention of complainant, inter alia, was that its audit could not be ordered and selection for audit could not be initiated by the Commissioner without balloting carried out by the Department under S.42B of the Federal Excise Act, 2005---Validity---Federal Tax Ombudsman observed that the issue of legality of audit ordered by the Commissioner Inland Revenue without selection of audit by the Department through computer ballot involved interpretation of law, and therefore, bar on jurisdiction of Federal Tax Ombudsman under S. 9 of the Establishment of the Office of Federal Tax Ombudsman Ordinance, 2000 was applicable---Complaint was rejected in circumstances.
President's Order issued vide No. 71/FTO/2015 dated 1-6-2016 and 2012 PTD 1815 rel.
Muhammad Daud Khan, Advisor for Dealing Officer.
Nemo for the Complainant.
2016 P T D 2599
[Federal Tax Ombudsman]
Before Abdur Rauf Chaudhry, Federal Tax Ombudsman
Messrs MAJEED AND SONS STEEL (PVT.) LTD.
Versus
SECRETARY REVENUE DIVISION, ISLAMABAD
Complaint No. FTO-KHI/0000572/2016, decided on 12th August, 2016.
Customs Act (IV of 1969)---
----S. 81---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), Ss. 2(3) & 10---Import of goods---Provisional determination of liability---"Maladministration"---Scope---complaint against failure of Department to respond to complainant's application for release/refund of customs duty and taxes in terms of S. 81(3) of the Customs Act, 1969---Validity---Goods in question were allowed provisional release subject to test reports from laboratory to ascertain the specifications of the goods, however, said reports were still awaited---Complainant vide two letters, requested the Department to pursue the pending test reports for a period exceeding a year and eight months, after which present complaint was filed---Federal Tax Ombudsman observed that it was evident that the Department did not pursue the matter of laboratory reports in the normal course, causing inordinate delay in finalization of provisional assessment which tantamount to "maladministration"---Federal Tax Ombudsman recommended the authorities to direct the Customs Department to pursue the matter with the laboratory and decide the case within a period of ten days, and furthermore, to evolve a mechanism for monitoring of pending test reports in all other cases of provisional assessment to avoid inordinate delays in finalization of cases---Complaint was disposed of, accordingly.
Shahid Ahmad, Advisor for Dealing Officer.
Imran Iqbal Authorized Representative.
2016 P T D 2619
[Federal Tax Ombudsman]
Before Abdur Rauf Chaudhry, Federal Tax Ombudsman
ABID BASHIR (CO-OWNER) MESSRS SHEIKH BROTHERS CHEMICALS
Versus
SECRETARY REVENUE DIVISION, ISLAMABAD
Complaint No. FTO-FSD/0000571/2016, decided on 5th September, 2016.
Sales Tax Act (VII of 1990)---
----Ss. 38, 37 & 40---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), Ss. 2(3) & 10---Power of authorized officers to have access to premises, stocks, accounts and record---Power to summon persons to give evidence and produce documents in inquiries under the Sales Tax Act, 1990---Searches under warrant--- Maladministration--- Scope--- Complaint against raid of Departmental officials at the complaint's premises under S. 38 of the Sales Tax Act, 1990---Contention of complainant was inter alia that the complainant's business unit had been closed in the year 2013 and that the said raid was conducted without authorization and was hence illegal---Validity---Evidence on record showed that apparently the complainant's business unit was operational after the year 2013, which was contrary to its contention, and Departmental officers visited the complainant's premises on 9.6.2016 after valid authorization from the competent authority and thus no case of maladministration was made out against the Department and plea of complainant to declare actions of Department illegal was premature particularly when so far the Department had not taken any coercive action against the complainant---Federal Tax Ombudsman observed, however, that if the Department subsequently decided to lodge on FIR against complainant, the fate of the same would be decided on the basis of the guidelines about applicability of provisions of S. 38 of Sales Tax Act, 1990---Complaint was disposed of, accordingly.
2005 SCMR 1166 = 2005 PTD 1933; 2003 PTD 2037; 2004 PTD 295; 2009 PTD 690; 2009 PTD 1083; PLD 1991 SC 630; PTCL 2003 CL 338(sic.); 2003 PTD 1034; 2004 PTD 1731; 164/LHR/ST(07)/ 281/2010; Messrs Firdous Textile Mills (Pvt.) Ltd. v. Federation of Pakistan Writ Petition No. 6363 of 2015 and 1993 SCMR 785 ref.
PTCL 2009 CL 671 rel.
Haji Ahmad, Advisor and Abrar Ahmad Khan, Advisor for Dealing Officers.
Mian Zafar Iqbal and Muhammad Anwar Bhatti for Authorized Representative.
2016 P T D 2681
[Federal Tax Ombudsman]
Before Abdur Rauf Chaudhry, Federal Tax Ombudsman
Messrs BISMILLAH CNG FILLING STATION, KOT ADDU ROAD, LAYYAH
Versus
SECRETARY REVENUE DIVISION, ISLAMABAD
Complaint No. FTO-ONL/0000008/2016, decided on 26th July, 2016.
Income Tax Ordinance (XLIX of 2001)---
----Ss. 120, 171 & 235---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), Ss. 2(3) & 10---Non-payment of refund amount---Complaint had been filed under S.10(1) of Establishment of Office of Federal Tax Ombudsman Ordinance, 2000 against non-payment of refund of tax withheld under S.235 of Income Tax Ordinance, 2001---Complainant provided evidence in support of refund application, but neither any deficiency/discrepancy was brought to the notice of the complainant, nor verification completed in accordance with procedure---Resultantly the claim of the complainant remained unsettled---Departmental representative submitted that verification was under process and the refund due would be issued as soon as the same was complete---Representative, could not justify as to why the deficiencies, if any were not communicated to the complainant, immediately after the filing of returns/refund application by the complainant---Ombudsman observed that tax verification process should be completed expeditiously, so that refund was issued within prescribed time to avoid payment of compensation---Department had not followed the procedure laid down by Federal Board of Revenue---Department could not withhold refund, unless some substantial flaw was proved in the claim of the complainant about its genuineness or accuracy---No substantial flaw having been identified by the department, withholding of refund due, as per law, without cogent reason was unjust---Delay also created complainant's right to claim compensation under S.171 of the Income Tax Ordinance, 2001---Department's neglect, inattention/inefficiency and inordinate delay in processing of refund, was tantamount to 'maladministration' in terms of S.2(3)(ii) of Establishment of Office of Federal Tax Ombudsman Ordinance, 2000---Federal Board of Revenue was recommended by Ombudsman to direct the Commissioner to ensure completion of verification process at the earliest and dispose of refund/ compensation within 30 days; and report compliance within 7 days thereafter.
Commissioner IR v. Chicago Metal Works Tax Reference No.48 of 2011; 2015 PTD 6191; Complaint No. 350/2007 vide Order No.55/2007-LAW(FTO) dated 31-7-2008 and 2009 SCMR 973 ref.
Haji Ahmad, Advisor and Muhammad Daud Khan, Advisor for Dealing Officers.
Riaz Ahmad Raja, ITP, Authorized Representative.
2016 P T D (Trib.) 7
[Inland Revenue Appellate Tribunal]
Before Muhammad Riaz, Accountant Member and Jawaid Masood Tahir Bhatti, Chairperson
AKSA SOLUTIONS DEVELOPMENT SERVICES (PVT.) LTD.
Versus
COMMISSIONER INLAND REVENUE, REGIONAL TAX OFFICE, ISLAMABAD
I.T.A. No.751/IB of 2013, decided on 5th August, 2014.
Income Tax Ordinance (XLIX of 2001)---
----Ss.21(c) & 122(1)---Deductions not allowed---Stationery Office Supplies, repair and maintenance, selling expenses and other expenses---Additions---Taxpayer contended that S.21(c) of the Income Tax Ordinance, 2001 had wrongly been applied on such expenses which did not come under said section and the addition was liable to be deleted---Revenue contended that addition had rightly been made as all such heads come under the ambit of services on which the taxpayer was required to deduct the tax and First Appellate Authority had rightly maintained the addition---Validity---Addition under S.21(c) of the Income Tax Ordinance, 2001 had wrongly been made which was ordered to be deleted as the addition made did not come under the ambit of S.21(c) of the Income Tax Ordinance, 2001---Such addition was also not maintainable as the same was not specifically confronted to the taxpayer and had been made without referring any definite information.
2013 PTD 884; I.T.A. No.1468/LB of 2009 and 2010 PTD 704 rel.
Qadeer Ahmad, ITP for Appellant.
Shafqat Mahmood, D.R. for Respondent.
Date of hearing: 5th August, 2014.
2016 P T D (Trib.) 15
[Inland Revenue Appellate Tribunal]
Before Ch. Anwaar ul Haq, Judicial Member and Muhammad Raza Baqir, Accountant Member
Messrs PAKISTAN CYCLE INDUSTRIAL CO-OPERATIVE SOCIETY LTD., LAHORE
Versus
C.I.R., L.T.U., LAHORE
I.T.A. No.270/LB of 2013, decided on 6th May, 2014.
Income Tax Ordinance (XLIX of 2001)---
----Ss. 80(2)(b)(v), 113, 122(5-A), 131 & 221---Amendment of assessment---Imposition of minimum tax---Appellant, being Co-operative Society, was deriving income from manufacturing of bi-cycles and motorcycles---Assessment of the appellant, was amended, wherein minimum tax under S.113 of Income Tax Ordinance, 2001 was imposed on the appellant; for the reasons that during the relevant year loss was determined---Appellant filed application for rectification under S.221 of the Ordinance, on the ground that appellant being a Co-operative Society, minimum tax under S.113 of the Income Tax Ordinance, was not leviable in his case---Said application having been rejected by Assessing Officer, rejection order was assailed by appellant before Appellate Authority, which rejected appeal, observing that S.113 of the Income Tax Ordinance, 2001 was applicable in the case of appellant---Validity---Under provisions of S.80(2)(b)(v) of Income Tax Ordinance, 2001, "Co-operative Society" was specifically included in the definition of 'company'---Appellant, in circumstances, was liable to pay minimum tax as contained in S.113 of the Income Tax Ordinance, 2001---Order passed by Appellate Authority was maintained, and appeal filed by the appellant/Co-operative Society, was rejected, in circumstances.
CIT v. Messrs Idara-e-Kissan Lahore I.T.As. Nos.1319 to 1321/LB of 2009; CIR v. Messrs Lahore Cantt. Cooperative Housing Society and 7 others 2009 PTD 799 and CIR (Legal Division), Multan v. Messrs Multan Educational Trust, Multan 2014 PTD 420 ref.
M.M. Akram for Appellant.
Asif Rasheed, D.R. for Respondent.
Date of hearing: 6th May, 2014.
2016 P T D (Trib.) 45
[Inland Revenue Appellate Tribunal]
Before Jawaid Masood Tahir Bhatti, Chairperson and Muhammad Riaz Accountant Member
Dr. JAMEEL AHMAD
Versus
C.I.R., REGIONAL TAX OFFICE, SARGODHA
I.T.As. Nos.539/IB and 510/IB of 2014, decided on 3rd June, 2014.
Income Tax Ordinance (XLIX of 2001)---
----Ss. 111, 114, 120, 122, 131 & 177---Filing of return of income---Assessment---Amendment of assessment---Taxpayer, who was a Doctor, derived professional income, property income and agriculture income---Taxpayer filed return of income for the year under review---Later on same was revised by increasing the property income and professional income along with agriculture income---Amended order was further amended by Taxation Officer under S.122(1) & (5) and addition was also made under S.111(1)(b) of Income Tax Ordinance, 2001---Appellate Authority, allowed partial relief to the tax-payer on some issues, but upheld the treatment of the Taxation Officer regarding some of issues and remanded case to Taxation Officer---Both taxpayer and the department filed appeals before the Tribunal against order of the Appellate Authority---Taxpayer deposited amount against the declared property income and tendered tax return along with record, but Taxation Officer did not check the tax return filed by the taxpayer---Taxation Officer accepted the professional income, in which it was also necessary to ascertain the accounts of the declared income, but that amount was accepted by Taxation Officer without any hesitation---Property income and agriculture income were not accepted on the ground that said income was not supported by any evidence---Such treatment reflected the arbitrary action of the Taxation Officer---Appellate Authority also failed to ascertain, dig out said fact of the case---Counsel for taxpayer contended that the order which was liable to be cancelled/vacated, could not be remanded by Appellate Authority---No justification existed for amending the assessment without considering the revised return filed by the taxpayer and remanding the matter by Appellate Authority---Taxpayer had proved his case on the basis of facts with documentary evidence, that he tendered himself with clean hands---Appeal was allowed by the Tribunal, holding that assessment in the case was made by ignoring amended assessment in the shape of revised return, which had been filed by the taxpayer; and was in the knowledge of Taxation Officer---Impugned order of Appellate Authority was vacated, and order passed by Taxation Officer was cancelled and declared to be without any lawful authority, in circumstances.
1971 SCMR 681; Yousaf Ali's case PLD 1958 SC 104; 2010 PTD (Trib.) 2602; 2013 PTD (Trib.) 1749; 2011 PTD 2389 and 2009 PTD (Trib.) 749 ref.
Mohammad Naeem Aziz for Appellant (in I.T.A. No.539/IB of 2014)
Tahir Khan, D.R. for Respondent (in I.T.A. No.539/IB of 2014).
Tahir Khan, D.R. for Appellant (in I.T.A. No.510/IB of 2014).
Mohammad Naeem Aziz for Respondent (in I.T.A. No.510/IB of 2014).
Date of hearing: 3rd June, 2014.
2016 P T D (Trib.) 57
[Inland Revenue Appellate Tribunal]
Before Jawaid Masood Tahir Bhatti, Chairman and Fiza Muzaffar accountant Member
Messrs HONDA POINT (PVT.) LTD., LAHORE
Versus
C.I.R., AUDIT, R.T.O.-1, LAHORE and others
S.T.A. No.729/LB of 2014, decided on 8th December, 2014.
(a) Interpretation of statutes---
----Taxing statutes---One can only look for intendment or language used in law and there was no room for intendment or presumption on interpretation of law---Person sought to be taxed could only be taxed when he came within letter of law.
(b) Sales Tax Act (VII of 1990)---
----Preamble & S.3---Nature, purpose and scope of Sales tax---Sales tax, in its present shape for all practical purposes was similar to value added tax and was generally called also consumer's tax---Such tax was ultimately charged from buyer and even if there was any transaction in between among manufacturer, distributor, wholesaler and consumer, said tax would pass on to ultimate consumer---Sales tax was an indirect tax with its ultimate impact on consumers, therefore, liabilities under Sales Tax Act, 1990 could not be worked out in a fanciful manner based on mere surmises, estimates and conjectures and by adopting self-devised formate having no legal support---Where taxpayer was not the buyer of cars and he was operating as an agent to whom commission was paid for rendering of intermediary services and goods were sold directly to consumers after receiving price of car through agent, sales tax liability on sale/purchase of cars should be zero on part of such tax payer.
(c) Sales Tax Act (VII of 1990) ---
----S. 3 & Chapter-II---Scope of tax for retailer---Retailer operates under Chapter II of Sales Tax Act, 1990 and not only paid tax under Chapter II of Sales Tax Act, 1990 but was also liable to pay tax at standard rates when sales/supplies were made to a person who deducted income at source under the Income Tax Ordinance, 2001---Such supplies would be subjected to tax at a standard rate under S. 3 of Sales Tax Act, 1990 and supplier would be entitled to deduction of input tax on purchase of goods so supplied at standard rates.
(d) Sales tax---
----"Retailer" and "final consumer of goods"---Meaning---Words and phrases occurring in a provision of law were not to be taken in an isolated or detached manner, disassociated from the context ----Such words and phrases were to be read together and construed in light of overall context of provision---Expression 'retailer' and "final consumer of goods" was to be interpreted in light of words associated to it and not in pure isolation.
1973 PTD 453 rel.
(e) Public Functionary---
----Duties of---Under the Constitution all state functionaries were expected to work within permissible norms of law and justice---Any undue and harsh action by state functionaries against a taxpayer spoke volume of mala fide on their part as a flagrant violation of law and procedure.
(f) Sales Tax Act (VII of 1990)---
----S. 71---Special procedure---Overriding effect---"Anything", occurring in S.71, Sales Tax Act, 1990---Connotation---"Anything" used in S. 71 of Sales Tax Act, 1990 broadly expanded scope of S. 71 for purposes of overriding effect of all provisions contained in Sales Tax Act, 1990---Such connotation may have a diversity of meanings and may be employed to indicate "all" or "every" as well as "some" or "one", therefore, it clearly followed that meaning of said word used in statute were dependent upon context and subject matter of statute.
(g) Interpretation of statutes---
----Statute was required to be read as a whole and not in a piecemeal manner---Interpretation of law was sole prerogative of courts.
(h) Constitution of Pakistan---
----Art. 25---Equality of citizens---Where an order passed by any forum, authority or court was patently illegal or against express provisions of law, if allowed to stay intact, would tantamount to and cause prejudice and serious breach of legal rights of citizens---To enjoy protection of law and to be treated in accordance with law was inalienable right of every citizen.
(i) Sales Tax Act (VII of 1990)---
----S. 25---Drawing of samples---Interpretation of S.25 of the Sales Tax Act, 1990---If S. 25 of Sales Tax Act, 1990 had prescribed a specific method for doing a thing in a specific manner and provided certain rights to taxpayers, such provision of law was to be followed in letter and spirit---Achieving or attaining objective of performing or doing a thing in manner other than provided by law would not be permitted.
1993 SCMR 633 rel.
(j) Discretion---
----Exercise of---Discretion will become an act of discrimination when the same was improper or capricious exercise or abuse of discretionary authority and person against whom that discretion was exercised faced certain appreciable disadvantages which he would not have faced otherwise.
2001 SCMR 256 rel.
(k) Sales tax---
----Tax fraud - Burden of proof---In order to attract provisions relating to tax fraud, initial burden lay on the department to show that taxpayer knowingly, dishonestly, or fraudulently and without any lawful excuse had done any act or caused any act to be done or had omitted to take any action or had caused omission to take any action in contravention of duties or obligations imposed under the law or rules or instructions issued there-under with intention of understating tax liability or underpaying tax.
2004 PTD 868 and 2007 PTD 468 rel.
(l) Sales tax---
----Public functionaries, role of---If department was permitted to conduct void proceedings without adhering to any lawful jurisdiction, it would compromise neutrality of taxation system---Such action would also create a statutory anamoly whereby department had to exercise jurisdiction within four corners of law---When an illegal action would flow from a public functionary, it would certainly be tainted with mala fide---Authorities could not be allowed to exercise discretion at their whims, sweet will or in an arbitrary manner but rather were bound to act fairly, evenly and justly.
Caltex v. Collector 2006 SCMR 1519; 2001 SCMR 838; Abid Hussain v. PIAC 2005 PLC (CS) 1117; Abu Bakar Siddique v. Collector of Customs 2006 SCMR 705; Walayat Ali v. PIAC 1995 SCMR 650 and Sharp v. Wakefield 1891 AC 173 rel.
(m) Administration of justice---
----Courts, duty of---Court was to weigh conflicting evidence and to draw its own inferences and conclusions in order to administer substantial justice.
(n) Administration of justice---
----When it was said that something was to be done within discretion of authorities, it meant that something was to be done according to rules of reason and justice not according to private opinion but according to law and not humor and it was to be, not arbitrary, vague and fanciful but legal and regular---Powers must be exercised within limit to which an honest man competent to discharge of his office ought to confine himself.
Union of India v. Kuldeep Singh 2004 (2) SCC 590; State of U.P. v. Mohammad Nooh AIR 1958 SC 86;Pratap Singh v. State of Punjab AIR 1964 SC 72; Fashih Chaudhary v. D.G. Doordarshan (1989) 1 SCC 189 and Sharp v. Wakefield 1891 AC 173 rel.
(o) Evidence---
----Proof---Party making an allegation must bring material evidence to prove the same---Any action which was based upon no evidence or flimsy, fanciful grounds was not permitted by any law.
2006 SCMR 1713; PLD 1958 SC 104; PLD 1973 SC 326; PLD 2002 SC 630; 2003 SCMR 50; 2004 SCMR 28 and 2004 SCMR 1798 rel.
(p) Administration of justice---
----When law specified a particular manner and procedure, it was obligatory for functionary of State to adhere to the same and comply with it in all respects and any negligence, failure or omission to do so would invalidate proceedings on account of which whole superstructure which was raised on such defective foundation would automatically crumble down.
(q) General Clauses Act (X of 1897)---
----S. 24A---Sales Tax Act (VII of 1990), Preamble---Speaking order---Authorities, duties of---Authority exercising statutory powers of adjudication/assessment or appeal affecting valuable rights of parties should act as quasi-judicial authority and while exercising such powers must pass a speaking order duly supported by reasoning showing due application of mind and facts as well as law applicable---Any order lacking such criteria was not only illegal and without lawful authority but also of no legal effect.
(r) Administration of justice---
----In order to maintain sanctity of both quasi-judicial and administrative proceedings, it was necessary to maintain oversight on performance of adjudicating authorities whose orders would not be entirely dependent upon opinions and comments of assessing officers.
(s) General Clauses Act (X of 1897)---
----S. 24A---Speaking order---Scope---Non-speaking and sketchy order could not be said to meet requirements of judicial order, which must contain contentions raised before authority by rival parties and its reasoning based on evidential substance for passing a reasoned order in accordance with relevant provisions of law.
Waheed Shahzad Butt for Appellant.
Javed Iqbal Sheikh, D.R. for Respondent.
Date of hearing 8th December, 2014.
2016 P T D (Trib.) 80
[Inland Revenue Appellate Tribunal]
Before Khalid Mahmood, Member Technical-I
Messrs KHYBER TEA AND FOOD COMPANY and another
Versus
COLLECTOR OF CUSTOMS and another
Customs Appeal No.K-845 of 2013, decided on 6th August, 2015.
(a) Sales Tax Act (VII of 1990) ---
----S. 2(16)---Sales Tax Special Procedures Rules, 2007---Federal Excise Act (VII of 2005), S.2(16)---Term 'manufacture', meaning of---Contention of importer was that he possessed necessary manufacturing facility to be entitled to exemption from payment of 3% value addition sales tax imposed under Sales Tax Special Procedures Rules, 2007---Department's plea was that importer ought to maintain process like that of other manufacturers to qualify the definition or status of a "manufacture"---Validity---According of S. 2(16) of Sales Tax Act, 1990, even mixing of different qualities of tea or blending the same would form part of word 'manufacture'---Identical definition of word 'manufacture' had been provided in S.2(16) of Federal Excise Act, 2005---Held, that assertion of department was far from what law stipulated and reliance of adjudicating officer upon department's report was misconceived and un-sustainable in law---Appeal was allowed accordingly.
(b) Sales Tax Act (VII of 1990) ---
----S. 36---Order-in-original raising demand was issued on 28-5-2013---Officer empowered to recover dues was an officer of Inland Revenue as substituted for officer of Sales Tax by Finance Act, 2010---Powers to recover dues had been withdrawn from officer of Sales Tax with the enforcement of Finance Act, 2010---Entire S. 36 of Sales Tax Act, 1990 was omitted from law by Finance Act, 2012 and all goods declaration which were subject of order-in-original pertained to years 2011 and 2012---Held, that proceedings instituted by an officer of Sales Tax Act, 1990 to initiate recovery of short levied sales tax were ab initio, unauthorized and unlawful subsequent to amendment made vide Finance Act, 2010---As S. 36 of Sales Tax Act, 1990 did not exist in the statute book, following its omission from the Act by Finance Act, 2012, initiation of proceedings for recovery under said provision of law in 2013 was without jurisdiction and void.
(c) Income Tax Ordinance (XLIX of 2001)---
----Ss. 148 & 50(5)---Imports---Recovery of short levied income tax by officer of Inland Revenue---Validity---Powers and scope of Customs Officers---Powers available to Customs Officers in terms of Sections 148 & 50(5) of Income Tax Ordinance, 2001 were limited to collection of tax only---Recovery of short payment of income tax, if any, could only be demanded and effected by officer of Inland Revenue of competent jurisdiction---Customs Officer could not assume upon himself the power which Income Tax Ordinance, 2001 had not conferred upon him---Proceedings of recovery of short levied income tax were void ab initio and unlawful.
2010 PTD (Trib.) 2086 rel.
2010 PTD (Trib.) 472; 2006 PTD 534, 2006 PTD 2177; 2009 PTD 642 and 2011 PTD (Trib.) 110 ref.
2003 PTD (Trib.) 1857; 2005 PTD 1069; 2010 PTD (Trib.) 2086; 2009 PTD (Trib.) 500; 2003 PTD 1797; 2002 MLD 180; 2003 PTD 1354; 2003 PTD (Trib.) 1361; 2003 PTD 1797; 2006 PTD 340; PTCL 2003 CL 841 (sic); 2007 SCMR 95; 2007 PTD 1495; 2008 PTD 60; 2009 PTD 762; 2009 PTD 204; 2010 PTD 324 (Trib.); 2011 PTD (Trib.) 110; 2011 PTD (Trib.) 79; 2003 PTD 2821; 2006 PTD 2237; 2008 PTD 1968; 2001 SCMR 838; 2003 PTD 2090; 2009 PTD (Trib.) 1926; 2012 PTD (Trib.) 1650; 2005 PTD (Trib.) 135; PLD 1959 SC 2721; PLD 1970 SC 158 and PLD 1970 SC 173 ref.
Ajeet Kumar for Appellant.
Shahnawaz Khoso, A.O. for Respondents.
Date of hearing: 6th July, 2015.
2016 P T D (Trib.) 189
[Inland Revenue Appellate Tribunal]
Before Jawaid Masood Tahir Bhatti, Chairman and Fiza Muzaffar, Accountant Member
Messrs ARROWS ADVERTIZING (PVT.) LTD., LAHORE
Versus
C.I.R., ZONE-II, R.T.O.1, LAHORE
I.T.As. Nos. 2133/LB to 2137/LB of 2014, decided on 11th November, 2014.
(a) Income tax---
----Amendment in period of limitation---Retrospective application of such amendment---Even procedural law could not take away vested and existing right by applying the same retrospectively---Limitation as stood at the time of filing of return would apply.
(b) Income Tax Ordinance (XLIX of 2001)---
----Ss. 122 & 122(5)(A)---Amendment of assessment---Scope---Upon filing of return and its maturity into a deemed assessment, taxpayer acquired a right and the same became a past and closed transaction---Any subsequent change in law could not effect such a finalized matter---Department was left with no authority to reopen an already finalized assessment---Issuance of notice and passing impugned order pursuant thereto after expiry of prescribed limitation of five years was against the law---Impugned amendment in the assessment made under S.122(5)(A) of Income Tax Ordinance, 2001 was not maintainable in the eye of law being made beyond the time limitation prescribed in law.
Nagina Silk Mills Lyallpur v. The Income Tax Officer Lyallpur 1963 PTD 633 = PLD 1963 SC 322; 1981 CLC 372 and 1985 CLC 679 rel.
(c) Income Tax Ordinance (XLIX of 2001)---
----S. 122---Amendment of assessment---'Definite information'---Connotation---Every information could not be treated as the basis for re-opening of assessment but information should of the nature which would qualify as "definite information"---Term "definite information" could not be given a universal meaning but it would have to be construed in each case where a taxpayer disclosed all material facts without any concealment---Any estimate, gossips, personal whims or surmises could not be termed as "definite information"---Any information which created doubt or provided reason to suspect that income had been concealed did not form a part of the term 'definite information'.
1993 SCMR 1232 and 2010 PTD (Trib.) 122 rel.
Tahir Mehmood, Ch. Najum-uz-Zaman Subhani and Miss Sumaira Khurshed for Appellant.
Dr. Razi ur Rehman, D.R. for Respondent.
Date of hearing: 11th November, 2014.
2016 P T D (Trib.) 253
[Inland Revenue Appellate Tribunal]
Before Jawaid Masood Tahir Bhatti, Chairperson and Muhammad Riaz, Accountant Member
Messrs MUHAMMAD ASHRAF through Nasar Mahmood Gondal, Sargodha
Versus
COMMISSIONER INLAND REVENUE R.T.O., SARGODHA
M.A. (R) Nos.87/IB to 90/IB of 2014, decided on 15th October, 2014.
Income Tax Ordinance (XLIX of 2001)---
----Ss. 114, 116, 122-C, 131 & 172---Application for rectification of order passed by Appellate Tribunal on the grounds that; multiple notices under Ss.114 & 116 of the Income Tax Ordinance, 2001 had been issued to him by the Taxation Officer on the date when jurisdiction of the case had not been assigned in Taxation Officer; that important point went unnoticed by the Bench while passing the original order, though representative of the taxpayer had pointed out the same, but same escaped the attention of the Bench; that taxpayer was non-resident, but department had neither appointed any agent under S.172 of the Income Tax Ordinance, 2001, nor any service of notice was made on the taxpayer or his agent and that issuance of notices on the taxpayer, had made the whole proceedings as illegal and ab initio void---Bench was fully convinced to call the original order, and order made by both Taxation Officer and Appellate Authority, were cancelled in circumstances.
2012 SCMR 1235; 2006 PTD 2654; PLD 1958 SC 104; 2014 PTD 1484; 1993 SCMR 1134; 1996 SCMR 230; 2007 PTD (Trib.) 1740 and 2013 PTD (Trib.) 2174 ref.
Ch. Naeem Aziz for Appellant.
Miss Nazia Zaib, D.R. for Respondent.
Date of hearing: 15th October, 2014.
2016 P T D (Trib.) 268
[Inland Revenue Appellate Tribunal]
Before Muhammad Jahandar, Judicial Member and Qurban Ali, Accountant Member
C.I.R., (ZONE-I), R.T.O., RAWALPINDI
Versus
Ch. MUHAMMAD ABUZAR
I.T.A. No.717/IB of 2011, decided on 23rd February, 2012.
Income Tax Ordinance (XLIX of 2001)---
----Ss. 114, 120 & 172(3)---Return of income---Non-resident---Assessment without appointing representative/agent of non-resident assessee---Effect---Assessee, who was a non-resident, filed return of income declaring 'NIL' income---Notice for furnishing return of total income was issued to the assessee---Brother of assessee, who simply looked after property of the assessee, filed reply of notice, which was found unsatisfactory---Assessing Officer treating brother of assessee as representative of assesee finalized assessment assessing total income of assessee---Appeal filed by assessee against assessment order, having been accepted, case was remanded to decide the same on merits---Validity---Assessee, being a non-resident, process of his assessment could only be initiated after appointing someone as his representative---Under S.172(3) of Income Tax Ordinance, 2001, such representative could be; if he was employed by, or on behalf of non-resident person; if he had any business connection with the non-resident, and from or through whom non-resident was in receipt of any income, whether directly or indirectly; if he was the trustee of the non-resident; or he was declared by the order of Commissioner in writing to be the representative of non-resident person---Brother of the assessee, who had none of the said qualities, could not be treated as representative of assessee---Finding of Appellate Commissioner that an ex parte assessment order had been made by showing brother of assessee as his representative, was not exceptionable---Appeal was dismissed.
Zia Ullah Khan, D.R. for Appellant.
Atif Waheed for Respondent.
Date of hearing: 31st January, 2012.
2016 P T D (Trib.) 283
[Inland Revenue Appellate Tribunal]
Before Jawaid Masood Tahir Bhatti, Judicial Member
Messrs HOTEL AL-FAROOQ, COMMITTEE CHOWK, RAWALPINDI
Versus
OFFICER INLAND REVENUE (AUDIT-I), R.T.O., RAWALPINDI
I.T.A. No.834/IB of 2010, decided on 8th February, 2011.
Income Tax Ordinance (XLIX of 2001)---
----S. 122---Amendment of assessment---Disallowances---Remanding of case---Taxation Officer had made the disallowances without confronting the assessee and giving specific reasons for making the same---Assessee had furnished complete books of accounts, and no defect had been pointed out in the notice, as well as in the impugned order resulting the disallowances---Appellate authority, remanded the matter without any justification, as once the Appellate Authority had come to conclusion that the disallowances had not been made in a proper and judicious manner, Authority should have deleted the disallowances instead of remanding the matter to the Taxation Officer---Disallowances made by Taxation Officer, were deleted accordingly and appeal filed by assessee was allowed, in circumstances.
2007 PTD (Trib.) 95 ref.
Attif Waheed for Appellant.
Zia Ullah Khan, D.R. for Respondent.
Date of hearing: 27th October, 2010.
2016 P T D (Trib.) 286
[Inland Revenue Appellate Tribunal]
Before Jawaid Masood Tahir Bhatti, Chairman and Fiza Muzaffar, Accountant Member
Messrs IMRAN PIPE MILLS (PVT.) LTD., LAHORE
Versus
COMMISSIONER INLAND REVENUE, ZONE-IV, RTO-I, LAHORE
I.T.A. No.1563/LB of 2014, decided on 10th December, 2014.
(a) Income Tax Ordinance (XLIX of 2001)---
----Ss. 39, 111, 120 & 122---Amendment of assessment---Making addition in the income of taxpayer---Inland Revenue Officer made the addition (confirmed by Appellate Authority) in the income of the taxpayer, without confronting the taxpayer on proposed addition as required under S.122(9) of the Income Tax Ordinance, 2001 and without bringing any evidence on the record---Taxpayer submitted before the Inland Revenue Officer and the Appellate Authority a certificate from the bank that the credit amount pertained to the refund of LC margin, but authorities had failed to determine the true spirit and made the addition in the amount of the taxpayer without bringing any evidence on record to substantiate their action---Validity---Addition made in the income of the taxpayer, by the authorities, was illegal, unjustified and without providing the opportunity of being heard to the taxpayer---Addition in question was deleted, in circumstances.
(b) Income Tax Ordinance (XLIX of 2001)---
----Ss. 39, 111, 120 & 122---Amendment in assessment---Making addition in the income of taxpayer on "bank to bank transfer"---Inland Revenue Officer made the addition (confirmed by Appellate Authority), without confronting the taxpayer on the proposed addition as required under S.122(9) of Income Tax Ordinance, 2001 and without bringing any evidence on record---Taxpayer submitted the copy of Bank Statement depicting the "bank to bank transfer" before the Inland Revenue Officer and the Appellate Authority, but they failed to determine the true spirit of the fact and made alleged addition in the income of taxpayer without bringing any counter evidence, on the record---Addition made being illegal, unjustified, unsupported and without providing the opportunity of being heard to the taxpayer was deleted, in circumstances.
(c) Income Tax Ordinance (XLIX of 2001)---
----Ss. 39, 111, 120 & 122---Amendment of assessment---Making addition in the income of taxpayer on ground of "advance from customer"---Inland Revenue Officer made addition in the income of the taxpayer (confirmed by Appellate Authority) without confronting the taxpayer on the proposed addition as required under S.122(9) of Income Tax Ordinance, 2001 and without bringing any evidence on the record---Taxpayer had received advance money from an enterprise having NTN for the supply of specialized Pipe which had been refunded to the customer as Taxpayer had failed to deliver the required size of pipe---Taxpayer had submitted the copy of the Ledger Account along with the proof of refund of deposit before the authorities, but they failed to determine the true spirit of the fact and made alleged addition in the income of the taxpayer without bringing any counter evidence on the record---Addition made in the income of taxpayer, being unjustified, unsupported and without providing the opportunity of being heard to the taxpayer, was deleted, in circumstances.
(d) Income Tax Ordinance (XLIX of 2001)---
----Ss. 39, 111, 120 & 122---Amendment of assessment---Making addition in the income of the taxpayer on the ground of "advance from Directors"---Inland Revenue Officer made the addition in the income of the taxpayer (confirmed by Appellate Authority) on the ground of "advance from Directors"---Alleged addition was made without confronting the taxpayer on the proposed addition as required under S.122(9) of the Income Tax Ordinance, 2001, and without bringing any evidence on the record---Taxpayer had refunded the advance from Directors, but Inland Revenue Officer made the addition in the income of the taxpayer without bringing any supportive material on the record---Addition being illegal, unjustified, unsupported and without providing the opportunity of hearing to the taxpayer on that score, was deleted, in circumstances.
(e) Income Tax Ordinance (XLIX of 2001)---
----Ss. 111, 120 & 122---Amendment of assessment---Making addition in the income of the taxpayer on ground of "suppression of import purchase" and "non-declaration of Goods Declarations"---Inland Revenue Officer made addition in the income of the taxpayer by giving the reason that "Goods Declaration" had not been declared---Inland Revenue Officer made additions, without considering the evidence and the copies of Goods Declaration placed on record---Inland Revenue Officer had ignored the supporting documents and taxed the taxpayer on the self-interpretations---Addition made by Inland Revenue Officer, being void, illegal, unjustified and unsupported, was deleted, in circumstances.
(f) Income Tax Ordinance (XLIX of 2001)---
----Ss. 111, 120, 122 & 165---Amendment of assessment---Making addition in the income of taxpayer on ground of "suppression of local purchase"---Contention of taxpayer was that he had submitted before the Officer of Inland Revenue, the monthly statement under S.165 of the Income Tax Ordinance, 2001, copy of the purchase register and the reconciliation statements of the purchase register, but Inland Revenue Officer had ignored all those documents at the time of framing of impugned order---Taxpayer further contended that since the officer was in haste to achieve the revenue target, he taxed the taxpayer without pointing out the "party-wise purchases" which had allegedly been concealed---Addition made by Inland Revenue Officer being void, illegal, unjustified and unsupported, was deleted, in circumstances.
(g) Income Tax Ordinance (XLIX of 2001)---
----Ss. 111, 120, 122 & 174(2)---Amendment of assessment---Disallowing the expenditures---Making addition in income of taxpayer---Inland Revenue Officer, made additions in the income of the taxpayer, duly confirmed by Appellate Authority by disallowing the expenditures under S.174(2) of Income Tax Ordinance, 2001 without confronting the taxpayer and without bringing on record any evidence and without properly following the procedure laid down in Part VIII of Chapter X of Income Tax Ordinance, 2001, disallowed/curtailed the expenses under S.174(2) of Income Tax Ordinance, 2001---Spirit of charges with regard to audit proceedings brought about through new Income Tax Ordinance, 2001 was altogether overlooked by the department---Addition made in the income of the taxpayer being void, illegal, unjustified and unsupported, was deleted---Impugned order of the Appellate Authority was vacated, and order passed by Inland Revenue Officer was cancelled.
2008 PTD (Trib.) 927 ref.
Zeeshan Riaz, ACA, Tahir Mehmood and Miss Sumaira Khurshid for Appellant.
Dr. Javed Iqbal Sheikh, D.R. for Respondent.
Date of hearing: 10th December, 2014.
2016 P T D (Trib.) 342
[Inland Revenue Appellate Tribunal]
Before Ch. Anwaar ul Haq, Judicial Member and Abdul Nasir Butt, Accountant Member
Messrs EHSAN CHAPPAL STORE (PVT.) LTD., LAHORE
Versus
C.I.R., R.T.O.-II, LAHORE
S.T.A. No.401/LB of 2014, decided on 9th July, 2014.
(a) Sales Tax Act (VII of 1990)---
----S.3(2)---S.R.O. No.1125(I)/2011, dated 31-12-2011 condition (i)---Registered person---Payment of five percent Sales Tax under S.R.O. No.1125(I)/2011 dated 31-12-2011 condition (i)---Scope---Contention of Department was that persons mentioned in Condition No. (i) in S.R.O. No. 1125(I)/2011 dated 31-12-2011 and registered as manufacturer, importer, exporter and wholesaler doing business in textile (including jute), carpets, leather, sports and surgical goods sectors and also engaged in business of such goods as retailer were liable to pay five percent sales tax under Condition No. (viii) of the said S.R.O.---Held, that contention was totally misconceived as bare reading of Preamble of S.R.O. No. 1125(I)/2011 dated 31-12-2011 revealed that Federal Government notified "goods specified" in column (2) of Table under PCT Heading Numbers mentioned in Column (3) of said Table including "goods or class of goods" mentioned in S.R.O. No. 1125(I)/ 2011 dated 31-12-2011 to be goods on which sales tax should subject to said conditions be charged at zero-rate or as the case may be at 5 percent wherever applicable to the extent and in the manner as specified in the aforesaid conditions---Under Condition No. (viii) of S.R.O. No. 1125(I)/2011, "registered persons" who were solely or otherwise engaged in retail business of "these goods" or products were
liable to pay sales tax at 5 percent ad. val. on their retail sales---Connotation "these goods" used in said condition referred to "goods mentioned in Preamble of S.R.O. No.1125(I)/2011 dated 31-12-2011 i.e. "goods specified" in Table including goods mentioned in conditions of said S.R.O.
(b) Sales Tax Act (VII of 1990)---
----Ss.3(2), 3(2)(b) & 3(6)---S.R.O. No.1125(I)/2011 dated 31-12-2011---Scope of tax---Taxable supplies---Supplies of importer were covered by goods mentioned in S.R.O. No.1125(I)/2011 dated 31-12-2011 issued by Federal Government in exercise of powers conferred upon it under Ss.3(2) & 3(6) of Sales Tax Act, 1990---Section 3(2)(b) of Sales Tax Act, 1990 empowered Federal Government that subject to such conditions and restrictions as it may impose to declare that in respect of any "taxable supplies" made by "registered person" or class of registered person, tax should be charged, collected and paid in such manner and at such "higher" or "lower" rate or rates as may be specified in the notification S.R.O. No.1125(I)/2011, dated 31-12-2011.
(c) Sales Tax Act (VII of 1990)---
----S. 4---Zero-rating---S.R.O. No. 1125(I)/2011 dated 31-12-2011---Scope---Under Condition No. (ii) of S.R.O. No.1125(I)/2011, dated 31-12-2011 benefit of zero rate had been allowed to registered manufacturers of five zero rated sectors mentioned in Condition (i) of S.R.O. No. 1125(I)/2011---On the other hand, in the said condition (iii) supplies made to manufacturers other than manufacturers mentioned in condition (i) were made liable to tax at 5 percent of supplies---Similarly, under condition (viii) of S.R.O. No. 1125(I)/2011 registered persons who were solely or otherwise engaged in retail business of "these goods" or products had been obliged to pay higher sales tax at 5 percent ad. val. on their retail sales, however, they were entitled to input tax adjustment and were not required to pay any other sales tax leviable on their retail transactions.
(d) Sales Tax Act (VII of 1990)---
----Ss. 3(1) & 7---Scope of Tax---Concessional rate of tax, benefit of -- Scope---Under normal tax regime, in terms of Section 3(1) of Sales Tax Act, 1990, tax was chargeable at 16 percent of value of supplies and in that eventuality subject to certain conditions credit of input tax was allowable in terms of S. 7 of Sales Tax Act, 1990---If a person claimed benefit of any concessional rate of tax notified by Federal Government under Sales Tax Act, 1990 then it had to comply with its all directions and conditions stipulated thereto.
Iftikhar Ahmad, A.R. for Appellant.
Mrs. Misbah Nawaz, D.R. along with Muhammad Ahsan Tahir, ACIT for Respondent.
Date of hearing: 3rd July, 2014.
2016 P T D (Trib.) 445
[Inland Revenue Appellate Tribunal]
Before Nazir Ahmad, Muhammad Waseem Ch. Judicial Members and Muhammad Akram Tahir, Accountant Member
Messrs SARHAD RESTAURANT, LAHORE
Versus
C.I.R. (APPEALS-III), LAHORE
S.T.A. No.815/LB of 2012, decided on 3rd June, 2014.
Per Nazir Ahmad, Judicial Member; Muhammad Waseem Choudhry, Judicial Member, agreeing
(a) Sales Tax Act (VII of 1990)---
----Ss.2(34) & 11---Assessment of tax---Scope---According to Ss.2(34) & 11 of Sales Tax Act, 1990 tax period consisted of one month and every taxpayer/registered person was required to file a return for a tax period on 15th of next month of tax period and in case Department found that any registered person had failed to file return or short levied tax or he had been refunded erroneously, then in such eventuality, Department could assess correct amount of tax whereas in case of previous periods, department was empowered to conduct audit on basis of record once in a year.
(b) Sales Tax Act (VII of 1990)---
----Ss.11 & 2(34)---Assessment of tax---Scope---If tax was not paid within one month due to non-filing of return or if return filed, short levied of tax could be subject to assessment and not for a year i.e. 12 tax periods---Law did not empower tax authorities to pass an order for 12 tax periods in garb of monitoring instead of one month---Department, if of the view that registered person had paid short tax consisting of more than one tax period then law empowered Department to conduct audit for previous tax periods and levy correct tax evaded by registered person.
(c) Sales Tax Act (VII of 1990)---
----S.40(B)---Monitoring---Scope---Department was to watch and observe return filed for a specific period and if declaration of registered person was not in accordance with data collected by monitoring team then only return for said period could be said to be understated by registered person and Department could have initiated proceedings in accordance with law---Law did not empower revenue/Department to initiate proceedings on basis of monitoring conducted during tax period to reopen and proceed for previous tax period for reason that firstly information was only available for tax period in which monitoring was conducted and secondly monitoring was not relevant to past and closed tax periods and thus data collected could not be a tool for proceedings of previous tax periods---Department having no exact and definite figures of supplies for pervious periods, therefore no basis of information of one tax period to which data related to previous tax periods could not be proceeded---Department was to look to return for tax periods in which monitoring was conducted and if declared supplies of tax payer were not in accordance with supplies made then department was at liberty to initiate proceedings for tax period only.
Per Muhammad Akram Tahir, Accountant Member, dissenting
(d) Sales Tax Act (VII of 1990)---
----S.11(2)---Assessment of tax for more than one tax periods---Scope---Normally a spot inquiry was conducted in order to measure volume of business activities and assessment was to be framed on basis of findings/results of such inquiry---According to section 11(2) of Sales Tax Act, 1990 law had not imposed any restriction therefore department was empowered to pass an order for more than one tax period.
Per Muhammad Waseem Chaudhry, Judicial Member, agreeing with Nazir Ahmad, Judicial Member
(e) Sales Tax Act (VII of 1990)---
----S.2(43)---"Tax period"---Definition and Scope---Tax period was exclusive in nature and it meant a period of one month or such period as Federal Government may be notification in official Gazette specify---Each Tax period was an independent period and had to be treated as separate unit---Monitoring conducted for a particular tax period for estimation of supplies was relevant only for said tax period and it could not be made basis for earlier or subsequent tax period as there were a number of factors on basis of which quantum of supplies during a tax period depended---If department had definite information about suppression of supplies in any preceding or succeeding period, it could take action under relevant provisions of Sales Tax Act, 1990 but supplies declared in other tax periods could not be charged on the basis of estimation alone and on the basis of facts not relating to those periods.
(f) Sales Tax Act (VII of 1990)---
----Ss. 2(34) & 11---Constitution of Pakistan, Art. 4(2)---Right of individuals to be dealt in accordance with law---Article 4(2) of the Constitution stated that no action detrimental to life, liberty, body, reputation, or property of any person shall be taken except in accordance with law---Every action of government functionary had to be in accordance with law---Assessee could be subject to tax under a provision of law which was unambiguous and clear---Functionary had to state provision of law on basis of which his action was based upon because otherwise action would be arbitrary and would have no legal foundation to stand upon.
(g) Sales Tax Act (VII of 1990)---
----S.11---Taxable supplies---Supplies declared in a particular tax period by registered person were sacrosanct unless proved to be a wrong declaration by a positive evidence showing or indicating suppression of supplies, inflated claim of input adjustment etc.---Definite information had to come in hands of adjudicating authority whether as a result of audit or otherwise---For obtaining information relevant to tax period, audit of that tax period would be necessary if it was not otherwise available with department.
(h) Sales Tax Act (VII of 1990)---
----S.11---Taxable supplies---No room for any intendment existed and there was no presumption as to tax---In absence of any deeming provision, Revenue was required to establish that a transaction fell within parameters of taxable supplies or in furtherance of any taxable activity failing which sales tax imposed on basis of some assumption or presumption not warranted in law should always be struck down---To apply inference drawn from one tax period to other tax periods, was merely an assumption that sales would have been suppressed in other tax periods which were not under monitoring.
Messrs Al-Hilal Motors and others v. CST&CE, Karachi 2004 PTD 868 rel.
Jamil Akhter Baig, FCA for Appellant.
Ms. Fauzia Fakhar, D.R. for Respondent.
Date of hearing: 11th February, 2014.
2016 P T D (Trib.) 485
[Inland Revenue Appellate Tribunal]
Before Jawaid Masood Tahir Bhatti, Chairperson and Fiza Muzaffar, Accountant Member
Messrs MUNIR FOUNDRY
Versus
C.I.R. (APPEALS-II), LAHORE and others
S.T.A. No.1405/LB of 2014, decided on 9th December, 2014.
(a) Sales tax---
----Notice, service of---Service of notice was a sin qua non for assumption of jurisdiction---If service of notice was not in accordance with law, all subsequent proceedings and assessment made on basis of such notice were also not sustainable under law.
(b) Administration of justice---
----No order affecting rights of a person should be passed without providing him with an opportunity of being heard and no authority or Court could adjudicate upon a right of party who was not before it or to whom no notice was given---Ex parte order was no order in eye of law.
Nazir Ahmad Panhwar v. Government of Sindh through Chief Secretary, Sindh and others 2005 SCMR 1814 and Hazara (Hill Tract) Improvement Trust through Chairman and others v. Mst. Qaisra Elahi and others 2005 SCMR 678 rel.
(c) Notice----
----Mere absence of provision in a statute as to notice could not override principles of natural justice that an order affecting rights of a party could not be passed without an opportunity of hearing and where giving of a notice was a necessary condition for proper exercise of jurisdiction then failure to comply with said requirement rendered order void and entire proceedings which followed became illegal.
Mst. Maryam Yonus v. Director of Education, Cantonment, G.H.O., Rawalpindi and 2 others PLD 1990 SC 666 rel.
(d) Sales Tax Act (VII of 1990)---
----S. 11---Assessment order of tax---Where impugned adjudication order was passed on back of importer without giving any opportunity of hearing which was flagrant disregard of law and principles of natural justice and fundamental rights---Person against whom any action warranted under law was not properly heard to confront charges leveled against him and he was not properly undergone due process of adjudication as consciously enacted by legislation in various laws particularly in fiscal statutes then any order passed subsequent to it was an illegal and void order.
The Collector of Sahiwal and 2 others v. Mohammad Akhtar 1971 SCMR 681 rel.
(e) Sale tax---
----Natural justice, principles of---Opportunity of being heard---Necessity---Right of being personally heard was an inseparable right of a tax payer and could not be denied to him under any circumstances and violation of principles of natural justice could be equated with violation of provisions of statutory provisions.
(f) Sales Tax Act (VII of 1990)---
----S. 11(5)---Assessment of tax---Opportunity of hearing---Scope---Adjudication order was passed on ex parte basis without providing the taxpayer with any opportunity of being heard which was not only against norms of natural justice but also contrary to S.11(5) of Sales Tax Act, 1990 as the principle of "Audi alteram partem that "nobody should be condemned unheard" had not been observed---Provisions of S.11(5) of Sales Tax Act, 1990 had clearly provided opportunity of hearing before passing an adverse order against tax payer.
(g) Sales Tax Act (VII of 1990)---
----S. 11---Constitution of Pakistan, Art. 10A---Assessment of Tax---Fair trial, right of---Scope---Whole proceedings, in the present case, had been carried out by tax functionaries without due process of law and act of revenue department for creating huge liability of sales tax had been done without providing the tax-payer with any opportunity of hearing and without confronting material evidences collected by department---Department had violated fundamental right of tax-payer because right of due process of law like notice, opportunity of hearing and confronting of evidences collected by department was a fundamental right of every tax payer as guaranteed under Art.10-A of the Constitution---Any determination of rights or order passed in respect of a person falling short of due process and fairness of facts was illegal and unconstitutional.
2005 SCMR 1814; 2005 SCMR 678; PLD 1990 SC 666; 2005 SCMR 678; 2012 SCMR 1235 and 2012 CLC 1236 ref.
Babar Hussain Shah and another v. Mujeeb Ahmed Khan and another 2012 SCMR 1235 and Shabir Ahmed v. Kiran Khursheed and others 2012 CLC 1236 rel.
(h) Administration of justice---
----Authority dealing with a matter must possess jurisdiction to deal with the same, and if such authority did not have power then initiation of entire proceedings would be liable to be quashed for being coram non judice and non-est.
Ali Muhammad v. Chief Settlement Commissioner and others 2001 SCMR 1822 rel.
(i) Jurisdiction---
----If a mandatory condition for exercise of jurisdiction before Court, Tribunal or Authority was not fulfilled, entire proceedings which follow become illegal and suffer from want of jurisdiction---Any order passed in continuation of such proceedings in appeal or revision equally suffered from illegality and was without jurisdiction.
Izhar Alam Farooqi Advocate v. Sheikh Abdul Sattar Lasi and others 2008 SCMR 240 and Faqir Abdul Majeed Khan v. Distt Returning Officer and others 2006 SCMR 1713 rel.
(j) Sales Tax Act (VII of 1990)---
----Ss. 38 & 40---Search under warrant---Authorized officers---"Free access", meaning of---"Free access" to any property of citizen did not mean search and seizure for purposes of collecting evidence against such party and such object could only be achieved on observing codal formalities under S.40 of Sales Tax Act, 1990 which ensured respect for rights of subject---Search and seizure by tax functionaries was the hardest hit on person, property and self respect of a citizen which could not be assessed to have been granted as a matter of course---Mere allegation of tax evasion, here and there could not be allowed to be extended to justify a storming business premises and factories---Visit by tax functionary to person or property of a citizen could have colour and countenance of royal wrath against a defiant adversary---Every evidence collected through an illegal means, howsoever incriminating, partake the colour of a confession extracted through torture---Section 38 of Sales Tax Act, 1990 without any iota of doubt was meant only to authorize an officer to have free access to premises, accounts, or record of a registered person and its purpose was nothing but just to give a legal cover---Only on such visit, without previous planning or without having intention of taking into custody any particular material or documents, that if the officer found some books of accounts, stock record documents, or other information which may be required for any inquiry or investigation in any tax fraud committed by a tax payer or his agent or any other person 'that he might take the same into custody---Such were mere enabling provisions and had nothing to do with regular search or seizure which could only be done in accordance with S.40 of Sales Tax Act, 1990.
2003 PTD 2037; 2009 PTD 1083; and 2005 SCMR 1166 = 2005 PTD 1933 ref.
Messrs Ihsan Yousaf Textile Mills Ltd. v. The Federation of Pakistan 2003 PTD 2037 rel.
(k) Sales Tax Act (VII of 1990)---
----S. 38---Constitution of Pakistan, Art. 14---Authorized officers to have access to premises---Right to dignity---Scope---General provisions of S.38 of Sales Tax Act, 1990 could not be made to circumvent or override Constitutional guarantees of an individual, particularly those ensured to a person under Art.14(1) of the Constitution---Where general and a specific provision on a particular subject was available then resort to general provision could not be made to do or sustain the act---Tax functionaries could not be allowed to act and achieve which was only possible in conditions stated in S.40 of Sales Tax Act, 1990---Only provision which authorized a departmental officer to conduct a search and seizure was available in S.40 of Sales Tax Act, 1990.
2014 PTD (Trib.) 1293 ref.
(l) Sales Tax Act (VII of 1990)---
----Ss. 38 & 40---Authorized officers to have access---Search under warrant under S. 38 of Sales Tax Act, 1990---Scope---Provisions of S.38 of Sales Tax Act, 1990 were not by itself search and seizure provisions and such provision, therefore, must give way to specific provisions of S. 40 of Sales Tax Act, 1990---If stand point of Department viz. S. 38 of Sales Tax Act, 1990 was accepted then no one could give picture of a situation in which S. 40 of Sales Tax Act, 1990 would be invokeable---If interpretation of provision as being made by Department was accepted as correct then either S. 38 of Sales Tax Act, 1990 was superfluous or provision of S. 40 of Sales Tax Act, 1990 was reduced to be mere duplication---By passing course available under S.40 of Sales Tax Act, 1990 direct invocation of powers under S. 38 of Sales Tax Act, 1990 in garb of free access to business premises of tax payer was not warranted under law and was illegal and unlawful.
(m) Sales Tax Act (VII of 1990)---
----S. 38---Authorized officers to have access of premises---Scope---Purpose of S.38 of Sales Tax Act, 1990 was just to see that proper records under Sales Tax Act, 1990, rules and regulations were maintained---Reasonable cause for a visit could arise in a situation where registered person had filed documents in normal course which indicated that a particular record was not being maintained or that it was not being maintained in required manner---Basis for visit need not be shared with person whose premises were to be visited but must be on Department's files for production in proceedings that may be instituted by said person---Visit must be confined to inspecting record and documents that were in plain sight or those that were voluntarily made available for inspection by person present at premises on request---Record and documents taken into custody must be against a receipt signed by officer---Department had no power under S.38 of Sales Tax Act, 1990 to compel registered person for production of any record or document that was not in plain sight or that had not been voluntarily made available---Any record or document taken into custody under compulsion could not be used for any purpose whatsoever by Department against person from whose custody the record or document had been taken by an officer into his possession---Permitting Department to benefit from such action would also be equally illegal and void.
(n) Sales tax---
----Scope---Sales Tax was on sale and supply of goods which necessarily entailed delivery of goods or receipt of money consideration and where no corroborating evidence for any clandestine removal of goods or for receipts of money consideration had been provided without which whole exercise for creating huge liability of sales tax remained in thin air and thus of no legal effect.
(o) Sales tax---
----Scope---Person must be taxed only if he fell within letter of law otherwise he was free even though his case fell within spirit of law---Fiscal statutes should be strictly construed as for as liability to tax was concerned---In fiscal statutes, only letter of law was to be looked into and there was no room for any intendment, equity and presumption.
Messrs Avari Hotel Ltd. v. The Collector of Sales Tax and 3 others 2000 PTD 3765 rel.
(p) Qanun-e-Shahadat (10 of 1984)---
----Arts. 117 & 118---Burden of proof---Scope---Party making an allegation must bring material evidences to prove the same and any action which was based upon no evidence was not permitted by any law----Adjudication based on mere presumption of facts was not sustainable under Art.117 read with Art.118 of Qanun-e-Shahadat, 1984.
(q) Sales Tax Act (VII of 1990)---
----S. 11---Show-cause notice---Ingredients and scope---Show cause notice was a foundational document which was to describe case comprehensively made out against tax payer by invoking relevant provisions of law and by making references on corroborating and solid evidences collected in support of same---Show cause notice it was a narration of facts along with supporting material evidences determining offences attracted in a particular situation in meaningful and tangible manner---Show cause notice was not a casual correspondence or a tool or license to commence a roving inquiry into affairs of taxpayer based on assumptions and speculations but it was a document of fundamental value carrying a definitive legal and factual position of department against taxpayer---Non-completion of pre-requisites of show cause notice and supply of grounds or reasons in clear and explicit words rendered such notice illegal and invalid---Tax functionaries being an author of a show-cause notice must cite only those sections and legal provisions of relevant law which were materially relevant to subject and objectively fixed therein with proper application of judicial mind not at all in mechanical and hypothetical way---Person against whom proceedings were held could not be punished for a charge different from the one, for which notice had been given expressly or impliedly due to incompetency and inefficiency of its author to put a substance in its contents which was altogether irrelevant and immaterial to subject would definitely render whole exercise as illegal and void ab initio and would never end in true justice.
PLD 2013 Lah. 634 = 2013 PTD 1536 and 2012 PTD (Trib.) 1697 ref.
Messrs Caretax v. The Collector of Sales Tax and Federal Excise, and others PLD 2013 Lah. 364 = 2013 PTD 1536 and Messrs Shahzad Ghee Mills Ltd., Gadoon Amaz v. The Collector of Customs, Sales Tax and Federal Excise (Appeals), Peshawar and another 2012 PTD (Trib.) 1697 rel.
(r) Sales Tax Act (VII of 1990)---
----S. 11(2)---Assessment order---Scope---Any order passed under S.11(2) of Sales Tax Act, 1990 could be equated with an assessment order determining amount of tax actually payable by a registered person and in no way could be purported to be a judgment for adjudging any recovery of tax or charge, non-levied or made or had been short levied in its legal semantics and jurisprudence.
(s) Administration of justice---
----If a statute enacted that certain action should be taken in a certain manner and in no other manner, then such requirement was absolute and negation to attend or non-compliance would invalidate whole proceedings.
Messrs Inam Packages, Lahore v. Appellate Tribunal Customs, Central Excise and Sales Tax, Customs House, Lahore and 2 others 2007 PTD 2265 rel.
(t) Sales Tax Act (VII of 1990)---
----S.33---Penalty---Penalty proceedings being criminal one, it was mandatory for department that specific amount of penalty and default surcharge imposed against taxpayer must be properly confronted in show-cause notice.
AIR 1962 Madras 366 rel.
(u) Sales Tax Act (VII of 1990)---
----S. 33---Offences and penalties---Penalty, imposition of---Show-cause notice---Scope---No penalty under S. 33 of Sales Tax Act, 1990 could be imposed and adjudged against a taxpayer through an adjudication order until and unless each and every subsection was specifically mentioned and confronted in show-cause notice and if any penalty imposed without confronting relevant provisions as contained in subsections of S. 33 of Sales Tax Act, 1990 it would definitely fell beyond the scope, stance and contents of show-cause notice which would render the same illegal, unlawful and void ab initio---Where any adverse finding was given in adjudication order on allegations or violation or provisions of law which were not incorporated and confronted in show-cause notice then entire proceedings would be rendered illegal and void for reason of breach of principles of natural justice which was also breach of law.
The Collector Central Excise and Land Customs v. Rahim Din 1987 SCMR 1840 rel.
(v) General Clauses Act (X of 1897)---
----S.24A---Sales Tax Act (VII of 1990), Ss.11 & 33---Speaking order---Essentials---Every officer, authority or a tax functionary making an order was required to give solid reasons---Any judicial findings without discussing necessary facts, case law, legal issues involved therein and material available on record was not a judicial order and consequently was not sustainable in eyes of law---Onerous duty was on adjudicating and appellate authorities to discuss all issues and dispose off what had been argued---Orders which were not speaking orders and devoid of reasons were not sustainable in law.
Messrs Adamjee Jute Mills Ltd. v. The Province of East Pakistan and others PLD 1959 SC (Pak.) 2721; Gowanea Mohan Sikdar v. The Controller Import and Export and 2 others PLD 1970 SC 158; Mollah Ejahar v. Government of East Pakistan and others PLD 1970 SC 173 and Muhammad Ibrahim Khan v. The Secretary, Ministry of Labor and others 1984 SCMR 1014 rel.
Khubaib Ahmad, Tahir Mehmood and Miss Sumaira Khurshid for Appellant.
Javed iqbal Sheikh, D.R. for Respondents.
Date of hearing: 9th December, 2014.
2016 P T D (Trib.) 711
[Inland Revenue Appellate Tribunal]
Before Mrs. Seema Imran, Judicial Member and Faheemul Haq Khan, Accountant Member
C.I.R., ZONE-IV, LTU, KARACHI
Versus
HAMDAM PAPER PRODUCTS (PVT.) LTD.
S.T.A. No.144/KB of 2012, decided on 30th June, 2015.
Sales Tax Act (VII of 1990)---
----Ss.8B(2), 8B(3) & 66---Refund to be claimed within one year---Adjustable input tax---Scope---Taxpayer had claimed an excess in input tax and Department had disallowed claim for period under consideration for purpose of input adjustment or refund subject to its allowance in terms of Ss.8B(2) & 8B(3) of Sales Tax Act, 1990---Section 8B of Sales Tax Act, 1990 did not create any further charges and it not only ensured minimum value addition but also restricted claimed input with its corollaries like adjustment or refund either temporarily during the year/period or permanently---Provisions of S.8B of Sales Tax Act, 1990 authorized Department to restrict excessive input and placed taxpayer under obligation to claim it subsequently subject to fulfillment of legal requirements---In the present case then was no evidence of any effort on part of taxpayer in terms of S.66 of Sales Tax Act, 1990---Appeal of Department was dismissed.
Abdul Wahid, D.R. for Appellant.
Ajeet Sundar for Respondent.
Date of hearing: 29th June, 2015.
2016 P T D (Trib.) 722
[Inland Revenue Appellate Tribunal]
Before Jawaid Masood Tahir Bhatti, Muhammad Jawed Zakaria, Judicial Members and Shaista Abbas, Accountant Member, Messrs SHELL (PAKISTAN) LTD., KARACHI
Versus
C.I.R. ZONE IV, LTU, KARACHI
S.T.A. No.14/KB of 2011, decided on 13th March, 2012.
(a) Sales Tax Act (VII of 1990)---
----S.45A---Federal Board of Revenue to call for records, power of---Scope---Section 45A of Sales Tax Act, 1990 empowered Commissioner Inland Revenue to call for any order of any Inland Revenue Officer suffering from impropriety or illegality and it was the duty of Department to regulate all exports and facility of zero rating had to be allowed under Sales Tax Act, 1990---Right and responsibility of Inland Revenue department was governing the Sales Tax Act, 1990 to examine, accept or reject such claim as per law.
Case-law referred.
(b) Customs Act (IV of 1969)---
----Ss.2(s) & 131---Clearance for exportation---Goods declaration, filing of---Scope---Smuggling---Procedure of filing of goods declaration for all kinds of imports and exports was the foundation pillar of Customs Act, 1969---Importance of said procedure was so vital that same had been made part of substantive law that is S.131 of Customs Act, 1969 and such was not any routine procedure which was made under rules/subordinate legislation---Legislature had intended that in case any import or export was made without filing of goods declaration, the same would constitute "smuggling" in terms of S.2(s) of Customs Act, 1969---If such procedure of filing of goods declaration was allowed to be done away with as merely being a procedure, it would tantamount to encourage further violation of law and even smuggling.
(c) Income Tax Ordinance (XLIX of 2001)---
----S.130---Appellate Tribunal Inland Revenue---Powers---Scope---Tribunal was last and final fact finding authority---Appellate Tribunal was bound to decide cases on basis of law laid down by Supreme Court and High Courts or by Tribunal---Every effort must be made by Tribunal to decide legal issues by taking help from decisions of Supreme Court and if there was no direct authority of Supreme Court on the point then of the High Court.
(d) Constitution of Pakistan---
----Arts. 189, 201 & 203---Decisions of superior courts binding on other courts---Scope---Effect of Arts. 189 & 201 of the Constitution was to accord constitutional recognition to doctrine of precedent; decisions of Supreme Court and High Courts to the extent that they decided a question of law or were based upon or enunciate a principle of law were also laws---Courts' interpretation of the Constitution or a law became integral part of the Constitution or as the case may be of the law so interpreted---Principle of law enunciated by courts became law of land under Arts. 189 & 201 of the Constitution---As per Art. 203 of the Constitution High Court in exercise of supervisory jurisdiction was competent to take all measures for preventing flagrant mal-administration of justice in sub-ordinate court/tribunal.
(e) Constitution of Pakistan---
----Arts. 4, 5, 8, 175(2) & 199---"Law"---Connotation---Expression "law" as such had occurred in Art. 199 of the Constitution and had been used also in various other provisions of the Constitution such as Arts. 4, 5 & 8 of the Constitution and in Art. 175(2) of the Constitution both expressions 'Constitution' and 'law' had been used to distinguish sub-constitutional 'law' from the Constitution---In Art. 8 of Constitution which was first Article, Part-II, in Chapter 1 and provided for Fundamental Rights, expression 'law' had been used in contra-distinction with "any custom or usage having force of law" it was established that Constitution was law and recognized expressly and by necessary implication.
Case-law referred.
(f) Constitution of Pakistan---
----Arts.189, 190 & 201---"Law"---Meaning---When the Constitution speaks of law, it is speaking of law as interpreted or declared by Judges in exercise of judicial power of State---When a question before Court was to interpret a provision of Constitution or any enactment or statutory instrument and court decided the same, it becomes a question of law within meaning of Arts. 189 & 201 of the Constitution---Since interpretation of the Constitution or any enactment become "law", it was incumbent on all executive and judicial authorities to act in aid of Supreme Court as they were required to do by Art. 190 of the Constitution by treating interpretation as "law"---Where Supreme Court or High Court had interpreted a provision of Constitution or any enactment or statutory instrument then such interpretation was as much binding upon judicial and executive authorities as the Constitution, enactment or statutory instrument as the case may be.
Case-law referred.
(g) Precedent---
----Generalizations made by Judges which were based on their worldly experience or understanding of human nature were neither law nor enunciation of a principle of law, however, there could be possible grounds under specific law/facts and circumstances for overruling precedents.
(h) Precedent---
----Ratio decidendum of a decision was judicial reason on which such decision was founded and it was what such a case decided generally, or rule of law for which it was an authority and the same was also of universal application and it was binding on executive and subordinate courts alike---Principle decided would be applied whenever a new case come up for decision---Where judgment acted against the whole world i.e. in rem, findings in that case may be conclusive even against third parties---Paramount importance that law declared by courts would be certain, clear and consistent---All principles evolved by man for regulation of social order, doctrine of binding precedent was circumscribed in its governance by perceptible limitations arising by reference to need for re-adjustment in a changing society, a re-adjustment of legal norms demanded by a changed social context.
(i) Precedent---
----Binding nature of decision was of two types; One was in relation to facts and the other was in relation to principles of law --- Principle of law declared would be treated as precedent and binding on all --- Finding of facts would bind only parties to decision itself and it was the ultimate decision that bind.
(j) Administration of justice ---
----Every court had its plenary powers to deliberate upon every issue agitated before it as well as any other issue arising on material placed before it in manner known to law after giving a prior notice and affording opportunity of being heard---Such power of discharging statutory functions whether discretionary or obligatory should be in the interest of justice and confined within legal permissibility; in doing so, Judge should disengage himself of any irrelevant and extraneous materials which come to his knowledge from any source other than the one presented before him in accordance with law and which were likely to influence his mind one way or the other.
(k) Income Tax Ordinance (XLIX of 2001)---
----S. 130(1)---Appellate Tribunal---Difference of Opinion---Adjudication by Appellate Tribunal---Referee Bench---Scope---Tribunal of fact had no right or jurisdiction to come to a conclusion entirely contrary to the one reached by another Bench of the same Tribunal on same facts---If a Bench of a Tribunal on identical facts was allowed to come to a conclusion directly opposed to conclusion reached by another Bench of the Tribunal on an earlier occasion; the same would be destructive of institutional integrity itself and if the Tribunal wanted to take an opinion different from one taken by an earlier Bench, then it should place matter before the Chairman of the Tribunal so that he could have the case referred to a Full Larger Bench of the Tribunal consisting of three or more members.
Case law referred.
Mohammad Naseem for Applicant.
Shakeel Ahmad Kasana, DCIR/DR for Respondent.
Date of hearing: 13th March, 2012.
2016 P T D (Trib.) 792
[Inland Revenue Appellate Tribunal]
Before Ch. Anwaar ul Haq, Nazir Ahmad, Ch. Shahid Iqbal Dhillon, Judicial Members, Sohail Afzal and Fiza Muzaffar, Accountant Members
Messrs ATTA CABLES (PVT.) LTD., LAHORE
Versus
The COMMISSIONER INLAND REVENUE LTU, LAHORE
S.T.A. No.1194-A/LB of 2012 and MA (AG) No.41/LB of 2013, decided on 9th July, 2013.
Per Anwaar Ul haq Judicial Member, Sohail Afzal Accountant Member, dissenting.
(a) Sales Tax Act (VII of 1990)---
----Ss.11(3) & 45---General Clauses Act (X of 1897), S.24---Assessment of tax---Powers of adjudication---S.R.O. No. 555(I)/96, dated 1-6-1996---Continuation of orders---Scope---S.R.O. No.555(I)/96 dated 01-6-1996 was clearly a procedural notification giving powers to officers of Sales Tax Collectorate to adjudicate upon matters in respect of cases involving assessment of sales tax, charging of additional tax, imposition of penalty and recovery of amount erroneously refunded subject to limitation and conditions as specified therein---Said notification did not create any right or liability---S.R.O. No.555(I)/96 dated 01-6-1996 was replaced by permanent legislation that was S.11(3) of Sales Tax Act, 1990 which was omitted and S.45 was substituted---Subsequently, S.45 of Sales Tax Act, 1990 was omitted by Finance (Amendment) Ordinance, 2009---Such amendments continued in force through subsequent Finance (Amendment) Ordinance, 2010 and finally through Finance Act, 2010, and such amendments were saved which still continued in the statute---Notifications issued under said provisions had not been saved in Sales Tax Act, 1990 or through any notification---If notification would be considered as a by-law that had continued notwithstanding the repeal of S. 11(3) of Sales Tax Act, 1990 then it would be in conflict with S. 24 of General Clauses Act, 1897.
(b) Sales Tax Act (VII of 1990)---
----Ss. 30(3), 11(2) & 36(1)---Appointment of Officer---Scope---After creation of Inland Revenue Services Department, S. 30(3) of Sales Tax Act, 1990 was substituted through Finance Act, 2010 which only empowered Commissioner Inland Revenue to direct their subordinate officers to perform functions in respect of such persons or class of persons or such areas as Commissioners may direct---By virtue of power given in S. 30(3) of Sales Tax Act, 1990, Commissioners Inland Revenue issued jurisdictional orders for their subordinate officers and directed them to perform their functions in respect of such persons or class of persons or such areas as they were directed---According to such jurisdictional orders, powers had been given to Officers of Inland Revenue under Ss. 11 & 36 of Sales Tax Act, 1990 to adjudicate cases involving assessment of sales tax, charging of additional tax, imposition of penalty and recovery of amount erroneously refunded subject to limitation and conditions as specified therein---By following jurisdictional order issued by Commissioner Inland Revenue, Department had rightly issued show cause notice under Ss. 11(2) & 36(1) of Sales Tax Act, 1990 and passed Order-in-original.
(c) Sales Tax Act (VII of 1990)---
----Ss. 11(3) & 30(3)----S.R.O. No.555(I)/96 dated 01-6-1996---Assessment of tax---Appointment of Officer---S.R.O. No.555(I)/96 dated 01-6-1996---Scope---Department vide S.R.O. No. 594(I)/2012 dated 01-06-2012 while exercising powers under S. 11 of Sales Tax Act, 1990 rescinded S.R.O. No. 555(I)/1996 dated 01-6-1996---Held, that at the time of issuance of S.R.O. No. 594(I)/2012 dated 01-06-2012, provisions of S. 11(3) of Sales Tax Act, 1990 were not available on statute book whereunder S.R.O. No. 555(I)/1996 dated 01-06-1996 was issued---S.R.O. No. 555(I)/1996 dated 1-6-1996 had already lost its legal efficacy since date of enforcement of Finance Ordinance, 2000 whereunder S. 11(3) of Sales Tax Act, 1990 was omitted---Department had no answer to query as to whether at the time of rescinding notification, any other SRO was issued or amendment was brought on statute book for assumption of jurisdiction to any authority regarding performing function of adjudication except powers as given under S. 30(3) of Sales Tax Act, 1990.
Per Nazir Ahmad, Judicial Member; Fiza Muzaffar Accountant Member and Ch. Shahid Iqbal Dhillon agreeing [Majority view]
(d) Income Tax Ordinance (XLIX of 2001)---
----S. 130(1)---Appellate Tribunal---Difference of opinion---Referee Bench---Adjudication---Scope---According S. 130(10) of Income Tax Ordinance, 2001, in case of difference of opinion between members of Bench on a point, they would state the point on which they differ, meaning thereby that they would formulate questions and then send the same to Chairperson for hearing on that point by Referee Bench which may comprise of single member or more to decide the said points or questions but decision of majority should be final---Referee Bench consisting of one or more members of Tribunal should be bound to the reply or adjudicate questions referred to the Bench by said Bench had no mandate to go beyond formulated questions.
(e) Sales Tax Act (VII of 1990)---
----Ss. 11(3) & 45---S.R.O. No. 555(I)/96 dated 01-06-1996---S.R.O. No. 594(I)/2012 dated 01-06-2012---Assessment of Tax---Power of Adjudication---Scope---Pecuniary jurisdiction of officers of sales tax, additional tax, penalty and recovery of amount erroneously refunded was primarily notified by Board vide S.R.O. No 555(I)/1996 dated 01-06-1996 in exercise of powers conferred by S. 11(3) of Sales Tax Act, 1990---Later on by virtue of S. 45 of Finance Act, 2000 titled as 'Power of adjudication' was added to Sales Tax Act, 1990 and at the same time provisions of S. 11(3) of Sales Tax Act, 1990 empowering the Board to notify adjudication powers of sales tax officers were omitted---Powers of adjudication for officers of sales tax became a subject of supreme legislation as enacted under new provisions of S. 45 of Sales Tax Act, 1990 and Board remained no more empowered through subordinate legislation by way of any notification to specify pecuniary jurisdiction of officers of sales tax for adjudication---After enactment of S. 45 of Sales Tax Act, 1990 which was a supreme legislation, provisions of S.R.O. No. 555(I)/1996 dated 01-06-1996 which by all means was a subordinate legislation became redundant and ineffective till its rescission vide S.R.O. No. 594(I)/2012 dated 01-06-2012.
(f) Sales Tax Act (VII of 1990) ---
----Ss. 45 & 11(3)----S.R.O. No.555(I)/1996 dated 01-06-1996---Power of Adjudication ---Scope---After omission of S. 45 of Sales Tax Act, 1990 through Finance Act, 2010, revival of S.R.O. No.555(I)/1996 dated 1-6-1996 was not possible as provisions of S. 11(3) of Sales Tax Act, 1990 were omitted from Statute book and by its deletion, Board remained no more empowered to notify adjudication jurisdiction of officers of Sales Tax, hence, S.R.O. No 555(I)/1996 dated 1-6-1996 became redundant and superfluous loosing its legal existence and sanctity.
(g) Sales Tax Act (VII of 1990) ---
----Ss. 36 & 11(3)---S.R.O. No. 555(I)/96 dated 01-06-1996---Recovery of tax not levied or short-levied---Scope---According to Section 36 of Sales Tax Act, 1990 Board was not empowered to specify power of adjudication of officers of sales tax in cases of recovery of amount of erroneously refunded likewise in cases of assessment of Sales Tax for which Board was empowered under S. 11(3) of Sales Tax Act, 1990---Provisions of S.R.O. No. 555(I)/1996 dated 01-06-1996 were not applicable in cases of recovery of tax not levied or short levied as provisions for recovery cases in these two situations were primarily found missing from very outset from Preamble of such notification---In case of recovery of amount erroneously refunded, Board was not empowered under S. 36 of Sales Tax Act 1990 to issue any notification specifying powers of adjudication of officers of sales tax because it was S. 11(3) of Sales Tax Act, 1990 whereunder Board was legally empowered to specify powers of adjudication necessarily in cases of assessment of sales tax, additional tax and penalty under law.
Raza Ahmed Cheema for Appellant.
Shaban Bhatti, D.R. for Respondent.
Date of hearing: 9th July, 2013.
2016 P T D (Trib.) 1238
[Inland Revenue Appellate Tribunal]
Before Ambreen ASLAM, Judicial Member and Faheemul Haq Khan, Accountant Member
GHANI BUILDERS AND DEVELOPERS (Pvt.) Ltd., Karachi
Versus
COMMISSIONER INLAND REVENUE, ZONE-I, RTO-II, KARACHI
I.T.A. No.809/KB of 2015, decided on 20th January, 2016.
Income Tax Ordinance (XLIX of 2001)---
----Ss. 32, 34, 75, 111, 120, 122, 129 & 131---Income Tax Rules, 2002, R.168---Amendment of assessment---Return of income filed by taxpayer company for tax year 2009, was considered as deemed assessment order under S.120(1) of Income Tax Ordinance, 2001---During audit proceedings, it was revealed that a deed of partnership was signed between the taxpayer company and other company---Through said agreement, taxpayer company agreed to sell land owned to it to joint project for consideration of money for business purposes---Taxpayer in its return of income for tax year 2009 and accounts, did not include receipts from sale of said land---Assessing Officer, being not satisfied with replies of the company to show-cause notice, amended assessment order, holding that taxpayer being a limited company had violated the law while adopting accounting method on cash basis; that said violation had resoluted in loss of public revenue in tax year 2009, while escaping the assessment of the income chargeable to tax---Accounts of the taxpayer prepared on cash basis, were rejected; and deemed assessment order, was amended---Commissioner, on appeal, had confirmed the order of the Assessing Officer---Validity---Taxpayer received the amount towards the cost of the land---Joint venture of the taxpayer and other company, was not completed---Taxpayer having received partial cost of land from the joint venture, partial sale stood established---Taxpayer, who held land as asset, would be treated as having made disposal of the same at the time he parted with ownership of the same---Sum received on account of cost of land would be subject to tax on "receipt basis" to the extent of receipt; in circumstances.
2011 PTD (Trib.) 1918; 2007 PTD (Trib.) 769; (98 Tax 262 (HC Ind); Messrs National Commodity Exchange Ltd., Karachi v. T.O. Audit, AD-I, RTO, Karachi ITA No.375/KB of 200 and CIT v. Bufco Tanneries Ltd. 2004 PTD (Trib.) 2300 ref.
Muhammad Mehtab Ahmed and Javed Alvi for Appellants.
Mukhtar Ahmed, D.R., R.T.O. and Mrs. Maryam Habib, D.R., R.T.O. for Respondents.
Date of hearing: 17th November, 2015.
2016 P T D (Trib.) 1290
[Inland Revenue Appellate Tribunal]
Before Javed Iqbal, Chairman and Muhammad Riaz, Accountant Member
Messrs PUNJAB MACHINERY STORE, RAWALPINDI
Versus
THE COMMISSIONER INLAND REVENUE, RTO, RAWALPINDI
I.T.A. No.105/IB of 2014, decided on 23rd April, 2015.
Income Tax Ordinance (XLIX of 2001)---
----Ss.111, 113A, 122 & 177---Federal Board of Revenue Circular No.4(36)ITP/2002, dated 5-10-2009---Federal Board of Revenue Circular No.1(162)/C-TPA/(TY 2011)/2012-2013/44856r dated 8-4-2013---Final Tax Regime---Selection of case for audit---Commissioner Inland Revenue, jurisdiction of---Assessee filed its return under final tax regime and was aggrieved of its case selected by Commissioner Inland Revenue for audit---Validity---In case of return filed and tax paid on the basis of turnover under S.113-A of Income Tax Ordinance, 2001, i.e., under final tax regime, no proceedings could be initiated under S.122(1)/(5) of Income Tax Ordinance, 2001 without there being any definite information attracting the provisions of S.111 of Income Tax Ordinance, 2001 or regarding concealment of turnover---No such information was available with assessing officer, in such cases even selection of case for audit without there being any definite information attracting the provisions of S.111 of Income Tax Ordinance, 2001 or regarding concealment of turnover---No such information was available with assessing officer, in such cases even selection of case for audit without there being any information regarding incorrect declaration of turnover was legally not justified---Federal Board of Revenue vide Circular No.4(36) ITP/2002, dated 5-10-2009 and Circular No.1(162)/C-TPA/(TY 2011)/2012-2013/44856R, dated 8-4-2013 had also issued directions for non-selection and non-carrying of audit proceedings in the case falling under final tax regime---Selection of case of assessee for audit as well as proceedings initiated and order passed under section 122(1)/(5) of Income Tax Ordinance, 2001 were illegal and void ab initio---Appellate Tribunal Inland Revenue set aside orders passed by Deputy Commissioner Inland Revenue and Commissioner Inland Revenue (A)---Appeal was allowed accordingly.
Atif Waheed for Appellant
Mrs. Nazia Zaib, D.R. for Respondent.
Date of hearing: 23rd April, 2015.
2016 P T D (Trib.) 1299
[Inland Revenue Appellate Tribunal]
Before Javid Iqbal, Chairperson and Muhammad Riaz, Accountant Member
Messrs SARWISH TRADERS and others
Versus
C.I.R., R.T.O., Abbottabad and others
S.T.As. Nos. 381/IB to 382/IB of 2015, decided on 30th September, 2015.
Sales Tax Act (VII of 1990)---
----Ss.3, 6, 7, 11(2), 26, 33(1), (2), (5), (6), (11), (B), (C), (13), (19), (21) & 37-A---Convention on the Privileges and Immunities of the United Nations, S.7---Sales Tax Rules, 2006, R.57(5)---Sales Tax, recovery of---Show cause notice---Zero rating---Supply to diplomatic missions---Principle of substantive compliance---Applicability---Show cause notices were issued to appellants for making supplies Diplomatic Mission which withheld 1/5th of the sales tax whereas, appellants were charged for failing to pay 4/5th of the sales tax---Validity---United Nations including its subsidiary organs were exempted under S. 7 of Convention on the Privileges and Immunities of the United Nations from all direct taxes and customs duties in respect of articles imported or exported for its official use---Such tax exemption privileges were obtained for United Nations vendors, the vendor authorized the mission to deduct from vendor's invoices any amount representing such taxes or duties charged by the vendor the Mission---Payment of such corrected invoiced amounts would constitute full payment by the Mission---Amount demanded was allowed to be recovered from appellants invariably, they had to knock at the door of the Mission which would in turn, approach to Economic Affairs Division of Federal Government for exemption---Mission by virtue of R.57(5) of Sales Tax Rules, 2006 could approach Economic Affairs Division---For post-facto regularized supplies in terms of Sales Tax Rules, 2006, ipso facto qualified the appellant supplies were exempted or zero rated---If once the supplies were found exempted from tax leviable under the Statute, then any procedural lapse for availing exempt were condonable by virtue of principle of substantive compliance---Supplies made to the Mission being privileged organization, were zero rated within the meaning of relevant provision of law---Appellate Tribunal Inland Revenue annulled the order of assessment as the same was illegal and without lawful jurisdiction---Appeal was allowed in circumstances.
Government of Pakistan v. Muhammad Ashraf and others PLD 1993 SC 176 and Northern Bottling Co. v. The Federation of Pakistan 2004 PTD 2267 ref.
Messrs Nishat Textile Mills v. Superintendent of Central Excise and others PLD 1989 SC 222 and 2003 PTD 1881 rel.
Isaac Ali Qazi, ASC for Appellant.
Sar Zameen Khan, D.R. for Respondent.
Date of hearing: 10th September, 2015.
2016 P T D (Trib.) 1356
[Inland Revenue Appellate Tribunal]
Before Mrs. Seema Imran, Judicial Member and Dr. Manzoor Ahmed, Accountant
Member
Messrs MERCK (PVT.) LTD, KARACHI and others
Versus
COMMISSIONER INLAND REVENUE, ZONE-I, LTU, KARACHI and others
I.T.As Nos. 648/KB and 691/KB of 2012, decided on 8th December, 2015.
(a) Income Tax Ordinance (XLIX of 2001)---
----S. 34(3)---Income from business---Accrual basis accounting---Disallowance of unrealized exchange loss---Taxpayer had agitated confirmation of authorities below regarding disallowing of unrealized exchange loss of being notional in nature, and not allowable under S.34(3) of Income Tax Ordinance, 2001---Held, that section 34(3) of Income Tax Ordinance, 2001, envisaged certain parameters to be observed by the taxpayers who were maintaining their accounts on accrual basis---Taxpayer, had himself admitted that there was a certain amount of unrealized exchange loss---Assessing Officer, though confronted the taxpayer at disallowance of exchange loss but following the submission of break up by the taxpayer certain amount was unrealized exchange loss which did not conform to the provisions of S.34(3) of the Income Tax Ordinance, 2001, which allowed to record the liability for the persons, maintaining the accounts on the accrual basis, when all the events that determine the liability, had occurred---Exchange loss recorded, in the present case, pertained to unrealized exchange loss---No legal infirmity was in the order of authorities below which were maintained.
(b) Income Tax Ordinance (XLIX of 2001)---
----Ss. 67, 237---Taxpayer, had agitated against allocation of expenses of Rs.289,411 against insurance commission---Validity---Insurance commission, was part and parcel of the main business activities, as same related to "Business assets"---Allowable expenses, were to be apportioned that income also---Resultant addition to Normal Tax Regime income, had been worked out by the Assessing Officer according to R.13(3)(b) and S.67 of Income Tax Ordinance, 2001 by Appellate Authority---Since the income of insurance commission, was part and parcel of business activity, the treatment meted out under S.67 of the Income Tax Ordinance, 2001 was correctly worked out and confirmed by Appellate Authority below---Same could not be interfered with---Impugned addition, was maintained, in circumstances.
(c) Income Tax Ordinance (XLIX of 2001)---
----Ss. 21(c), 153(1)(b) & 122(1)(5)---Deletion of the disallowance of encapsulation charges---Appellant/department had agitated the deletion of disallowance of encapsulation charges by Appellate Authority below---Assessing Officer confronted taxpayer during audit proceedings that it had claimed deduction on account of Encapsulation charge paid to another Pharmaceutical Company; and it was noted that those payments were in nature of services rendered by said company for taxpayer; and that taxpayer was under legal obligation of deducting tax at source under the provisions of S.153(i)(b) of Income Tax Ordinance, 2001---Non-deduction of tax at source, had resulted in disallowing of said claim as provided under S.21(c) of the Income Tax Ordinance, 2001---All pertinent enquires regarding the business relations between the taxpayer and other Pharmaceutical company, could be carried out to ascertain, whether the business relationship between the two fell in the ambit of "supplies" or "service rendered", including the presence of written agreement between the two---Case was remanded for adjudication as per law.
(d) Income Tax Ordinance (XLIX of 2001)---
----S. 111(1)(c)---Unexplained income or assets---Annulling the addition---Contention was that Assessing Officer was explained that manufacturing charges, paid to another Pharmaceutical company, included previous year's balance---Assessing Officer, termed same as mere statement; and stated that no copy of general ledger of the said company was produced---Appellate Authority, though had annulled the addition, but had also issued certain directions for re-confirmation---Appellate Tribunal remanded the matter to Appellate Authority for fresh adjudication.
(e) Income Tax Ordinance (XLIX of 2001)---
----S. 108---Transaction between associates---Annulment of---Disallowance of royalty claim---Department had agitated the annulment of disallowance of royalty---Appellate Authority below for previous year i.e. tax year 2009, had set aside the issue; and for the year under consideration, Appellate Authority also referred to the observation in the immediately proceeding year; and also issued certain directions---Order of Appellate Authority for the tax year 2009 was setting aside of that addition with direction that Assessing Officer should examine the contention of the taxpayer regarding comparability of the facts of two cases, with relevant details and decide accordingly---Issue was set aside for fresh adjudication.
Amin Malik, FCA for Appellant (in I.T.A. No.648/KB of 2012)
Mukhtar Ali sher, D.R. for Respondent (in I.T.A. No.648/KB of 2012)
Mukhtar Ali sher, D.R. for Appellant (in I.T.A. No.691/KB of 2012)
Amin Malik, FCA for Respondent (in I.T.A. No.691/KB of 2012)
Date of hearing: 8th December, 2015.
2016 P T D (Trib.) 1377
[Inland Revenue Appellate Tribunal]
Before Nazir Ahmad, Muhammad Waseem Ch., Judicial Members and Muhammad Pervaiz Alam, Accountant Member
Messrs MASOOD AND CO., PESHAWAR
Versus
C.I.R., R.T.O., PESHAWAR
S.T.A. No.92/PB of 2013, decided on 1st October, 2015.
Per Nazir Ahmed Judicial Member; Muhammad Parvez Alam, Accountant Member dissenting on merits and agreeing with point of limitation
(a) Sales Tax Act (VII of 1990)---
----Ss. 36(1) & 36(2)---Recovery of tax not levied or short levied---Show cause notice---Limitation---Scope---Sections 36(1) & 36(2) of Sales Tax Act, 1990 established that show-cause notice issued beyond very time of limitation was in flagrant disregard of law in inasmuch as recovery of sales tax not levied beyond three years was not only barred by time limitation but was also ex-facie violation of S. 36(2) of Sales Tax Act, 1990.
Messrs Xen Shahpur Division v. Collector Sales Tax (Appeals) Collectorate of Customs, Federal Excise and Sales Tax, Faisalabad and 2 others 2008 PTD 1973 rel.
(b) Sales Tax Act (VII of 1990)---
---S.3---Sales Tax on value/price fixed by Board of Revenue---Double Taxation---Sugar mills manufacturing white crystalline sugar made its supply to wholesalers and charged sales tax at 16% on such value as fixed and notified by Federal Board of Revenue for period under reference---Rationale behind fixation of value in case of white crystalline sugar and payment of sales tax thereon was that such fixed price at the time of making its supply by sugar mills was to provide a complete ouster appallingly on all its subsequent stages of supply mainly (including) wholesale and retail sale---Sales tax was no doubt a value added tax but this was not the case, in case notified by Board for purposes of sales tax irrespective of value at which its supply was actually made or any addition in its price occurred subsequently in due course of business---Sales tax once paid on basis of fixed value of locally produced white crystalline sugar by Sugar Mills provided a complete exoneration to all persons doing its business as a wholesaler and retailer from payment of any further additional amount on this account and if any effort was made to recover sales tax at any stage of its subsequent supply other than on basis fixed value would defeat the purpose behind fixation of value of locally produced white crystalline sugar and if its demand was created on basis of 'fixed value' again from its wholesaler and retailers despite payment of sale tax on such value by its manufacturing mills would definitely end up with double taxation not permissible in any civilized tax system---Taxpayer was a person making retail sale of sugar and no sales tax should be charged by such person because sales tax had already been paid at primary manufacturing stage on value fixed by Board and if department was bent upon to charge to levy sales tax again on same goods, it would amount to double taxation.
Messrs Seven-up Bottling Company (Pvt.) Ltd. v. Lahore Development Authority (L.D.A.) Lahore through Managing Director 2003 CLC 513 and Messrs Innovative Impex, Karachi v. Collector of Customs, Sales Tax and Federal Excise (Appeals), Karachi 2010 PTD (Trib.) 1010 rel.
Per Muhammad Parvez Alam Accountant Member dissenting with Nazir Ahmad, Judicial Member [Minority View]
(c) Sales Tax Act (VII of 1990)---
----Ss. 7 & 8---Levy and collection of tax on specified goods---Double taxation---Scope---Mandatory to prove as to whether sales tax so charged at purchase stage/level was deposited/paid by supplier company of taxpayer or otherwise---Case could not be said to be the one of double taxation as payment of tax on purchases if any, was adjustable against output tax on supplies in terms of Ss. 7 & 8 of Sales Tax Act, 1990---Taxpayer was under legal obligation to prove genuineness of tax on purchases on basis of substantial documents in support of input tax which was paid on purchase stage that is sales tax invoice, sales tax returns of supplier etc. [Minority view]
Per Muhammad Waseem Choudhry, Judicial Member [Majority view]
(d) Sales Tax Act (VII of 1990)---
----S. 23---Sales Tax Rules, 2006, R. 6---Tax invoices---Compulsory registration---Scope---Sales Tax invoice could only be issued under S. 23 of Sales Tax Act, 1990 by specified persons only---Person not registered under Sales Tax Act, 1990 could not issue a sales tax invoice under S. 23 of Sales Tax Act, 1990---If a person was not registered but was required or liable to be registered then under R.6(1) of Sales Tax Rules, 2006, concerned authority could issue and compulsorily register such person under Sales Tax Act, 1990 after following procedure prescribed thereunder.
(e) Sales Tax Act (VII of 1990)---
----S. 23---Tax invoices to be issued to registered person only---Scope---Sales tax invoice to be issued under S. 23 of Sales Tax Act, 1990 was envisaged to be issued only by a registered person having a Sales Tax Registration Number which was evident from the fact that S. 23 of Sales Tax Act, 1990 required registration numbers of supplier as well as recipients on sales tax invoice issued by him otherwise it would not be an invoice in accordance with S. 23 of Sales Tax Act, 1990---Person who was liable to be registered but not actually registered could not issue sales tax invoice and withhold tax thereon.
(f) Sales Tax Act (VII of 1990)---
----Ss. 2(25), 3(1)(a), 14 & 23---Sales Tax Rules, 2006, R.6---Tax invoices---Registration---Compulsory registration---Scope---Combined reading of Ss.2(25) & 23 of Sales Tax Act, 1990 and R.6 of Sales Tax Rules, 2006 showed that where a person was required to be registered under Sales Tax Act, 1990 as envisaged under S. 14 of Sales Tax Act, 1990; he was under obligation to apply for registration and in case of failure, Department should issue a notice to such person and after allowing him an opportunity of being heard it would pass an order whether or not such person was liable to be registered compulsorily or not---Where a person was liable to be registered, Department was required to register compulsorily and then charge sales tax from such person under S. 3(1)(a) of Sales Tax Act, 1990.
Baber Nazir for Appellant.
Naseer Ahmed DR and Zulfiqar Ahmad, IRAO for Respondent.
Date of hearing: 1st October, 2014.
2016 P T D (Trib.) 1462
[Inland Revenue Appellate Tribunal]
Before Mrs. Seema Imran, Judicial Member and Dr. Manzoor Ahmed, Accountant Member
Messrs ENI PAKISTAN LTD., KARACHI
Versus
COMMISSIONER INLAND REVENUE, ZONE-III, LTU, KARACHI
I.T.A. No.1088/KB of 2013, decided on 16th December, 2015.
Income Tax Ordinance (XLIX of 2001)---
----S. 205---S.R.O. 547(I)/2012 dated 27-5-2012---Imposition of default charges or additional tax for delayed payment---Claim for waiver of default surcharge---Taxpayer, who was obliged to pay certain amount of tax on 29-3-2011, paid the same on 30-4-2012, with delay of 400 days---Assessing Officer being dissatisfied with the reply of show-cause notice issued to taxpayer, by passing impugned order, imposed default charges on taxpayer for delayed payment of principal amount of tax---Said order of Assessing Officer upheld by Appellate Authority---Taxpayer claimed exemption, seeking protection of S.R.O. 547(I)/2012 dated 27-5-2012---Validity---Case of taxpayer, did not fall under the ambit of S.R.O. 547(I)/2012 issued on 27-5-2012, as amount of tax, was already paid on 30-4-2012, prior to issuance of the SRO---Spirit of the SRO in question was to recover the disputed tax demand voluntarily; and to give incentive to the taxpayers in shape of waiver of default surcharge; that too in the case, wherein tax demand was outstanding on 30-4-2012---If the position would have been otherwise, all those taxpayers, who had paid their principal amount of tax due to recovery proceedings any time before 1-5-2012 would claim the protection of said SRO; and would deny to pay default surcharge---Such would be an unending process; and the taxpayer could claim that any payments made in past regarding principal amount, although after due date, were eligible for exemption from default surcharge, which could not be the intention of the Legislature and against the spirit of S.R.O. 547(I)/2012 dated 27-5-2012---Order accordingly.
Qadeer Ahmed, FCA for Appellant.
Nisar Barki, DR for Respondent.
Date of hearing: 11th December, 2015.
2016 P T D (Trib.) 1519
[Inland Revenue Appellate Tribunal]
Before Muhammad Waseem Chaudhry, Judicial Member and Muhammad Majid Qureshi, Accountant Member
Messrs SAUDI PAK INDUSTRIAL AND AGRICULTURAL INVESTMENT COMPANY LTD.
Versus
COMMISSIONER INLAND REVENUE, ZONE-I, LTU, ISLAMABAD
I.T.As. Nos. 239/IB to 241/IB of 2014, 419/IB, 420/IB of 2011 and 153/IB of 2012, decided on 7th December, 2015.
(a) Income Tax Ordinance (XLIX of 2001)---
----S. 2(15)---"Debt"---Defined and explained---Debt, could be defined as a sum of money due from one person to another---Where a taxpayer (Investment company) was entitled to receive a sum of money from another, at law or in equity, it was accepted that a debt existed---There was a debt for the purposes of S.2(15) of Income Tax Ordinance, 2001, where a taxpayer had merely an equitable entitlement to the debt---Debt would exist when a certain sum of money was owing from one person to another---'Debt', denoted not only to obligation of the debtor to pay, but also the right of the creditor to receive and enforce payment---Word 'debt' comprised an ascertained sum of money, provided it was ascertainable by reference to relevant data, and the liability to pay was unconditional---Debt had to be paid any how and in all circumstances.
Case law referred.
(b) Words and phrases---
----'Bad debt'---Defined and explained.
Case law referred.
(c) Income Tax Ordinance (XLIX of 2001)---
----S. 29---Bad debt---Existence, onus, conditions for writing off---Bad debt, presupposed existence of debt and such debt, must be for the purpose of business---Assessee was to establish that the debt had become irrecoverable during the year in which the income had to be ascertained---Assessee was to determine as to when he should write off the bad debt---Bad debt ought to have been written off within a fair and reasonable time---Department had no arbitrary discretion to say that the bad debt should be written off in a particular year---Debts, which were bad debts and were written off as such during the year of income, and had been brought to account as assessable income of any year; or were in respect of money lent in the ordinary course of the business of the lending of money by a taxpayer who carried on that business, would be allowed deductions---Four conditions, must be satisfied in order to qualify for a bad debt reduction; first, a debt must exist; second, the debt must be bad; third, the debt must be written off as a bad debt during the year of income in which the deduction was claimed; fourth; the debt must have been brought to account as assessable income in any year, or in the case of a money lender, the debt must be in respect of money lent in the ordinary course of business of lending of money---Debt, could be considered to have become bad; in case the debtor had died leaving no, or insufficient, assets out of which the debt could be satisfied; the debtor could not be traced and the creditor had been unable to ascertain the existence of, or whereabouts of any assets against which action could be taken; where the debt had become statute barred and the debtor was relying on his defence for non-payment; if the debtor was a company, it was in liquidation or receivership and there were insufficient funds to pay the whole debt, or the part claimed as a bad debt; where on an objective view of all the facts, or on the probabilities existing at the time, the debt, or a part of debt, was alleged to have become bad, there was little or no likelihood of the debt, or the part of the debt, being recovered---Taxpayers, in the present case, could not be allowed to claim any relief on the subject of admissibility of bad debt, as they had failed to submit any document to controvert the claim of authorities below---Additions made by the First Appellate Authority were confirmed, and appeal filed by the taxpayers was dismissed, in that respect, in circumstances.
Case law referred.
(d) Income Tax Ordinance (XLIX of 2001)---
----Ss. 20 & 67---Income Tax Rules, 2002, R.13(6)---Apportionment of common expenses to income under Final Tax Regime (FTR)---In terms of S.20 of Income Tax Ordinance, 2001, in computing the income of a person chargeable to tax under the head "income from business" for a tax year, a deduction would be allowed for any expenditure incurred by the person in the year wholly and exclusively for the purpose of business---Conditions and basic principles, which should concur in order that a particular item of expenditure, was deductible under S.20 of the Income Tax Ordinance, 2001, were that the expenditure should be in nature of expenses described in S.21 of Income Tax Ordinance, 2001; that it should have been incurred in the accounting year; that it should be in respect of business which was carried on by the taxpayer, and profit of which would be computed and assessed, and should be incurred after the business was set up; that it should not be in the nature of personal expenses of the taxpayer; that it should have been laid out wholly and exclusively for the purpose of such business; and that it should not be in the nature of capital expenditure---Under S.67 of the Income Tax Ordinance, 2001, where an expenditure related to; (i) the derivation of more than one head of income; or (ii) derivation of income comprising of taxable income, and any class of income to which final or presumptive tax regime was applicable; or (iii) derivation of income chargeable to tax under a head of income, and to some other persons, would be apportioned on any reasonable basis taking account of the relative nature and size of activities to which the amount of expenditures related---Section 67 of Income Tax Ordinance, 2001, provided for allocating expenditure where income was derived from more than one head of income, or part of income related to Presumptive Tax Regime (PTR), or expenses had been incurred for a purpose other than that of deriving income---Rule 13 of Income Tax Rules, 2002 provided the formula for apportionment of expenses based on attribution principle---Sub-Rule (6) of said R.13, enumerated 15 classes of different incomes which included almost all types of incomes, including exempt, final or presumptive and normal; it also covered salary and income from business, speculative income or dividend income etc.---Contention was that first Appellate Authority had erred in confirming the order of Additional Commissioner by apportioning the expenses between exempt/PTR and taxable income without taking into account the 'nature and size' of the activity carried on by the appellant/taxpayer; and the allocation had been without following the principles elucidated in S.67 of the Income Tax Ordinance, 2001---Validity---In the absence of specific objections on the calculation with reference to wrong application of facts and figure and/or erroneous application, statutory principles, laid down in Ordinance and Rules of Income Tax, Tribunal agreed with the finding of lower authority; and refused to interfere in the order passed by authorities below.
Case law referred.
(e) Income Tax Rules, 2002---
----R. 5---SRO No.586(I)/91, dated 30-6-1991---Addition on account of non-deduction of withholding tax from salary and prerequisites---Appellant/taxpayer had produced a schedule of 13 employees, who were paid non-taxable allowance on account of POL, maintenance of vehicle and reimbursement of medical expenses---Contention was that these allowances were either reimbursement of expenses to those officials, or directly connected with the business of the taxpayer; and were in accordance with the Banking industry practices and that those expenses were not part of take home salary, but were sort of privilege to the employees, and vary with the usage and occurrence of certain event---said amounts were not offered for tax, because those were relating to maintenance of car and medical allowance and other reimbursement which were not taxable in the hands of employee---Provision of vehicle, was in accordance with R.5 of Income Tax Rules, 2002---Tax department, had not acted in accordance with law; and arbitrarily added the amount on the pretext of withholding regime---POL, were not subject to withholding tax under SRO 586(I)/91 dated 30-6-1991, as all the oil marketing companies, were exempt from withholding provisions---Other expenses, related to re-imbursement of expenses---Revenue could not produce a single piece of evidence which could show that such re-imbursement was paid as part of monthly salary; and was part of take home salary---No withholding tax being chargeable on account of re-imbursement of expenses, taxpayer's appeal, succeeded on that point.
(f) Income Tax Ordinance (XLIX of 2001)---
----Ss. 21(c), 122(5-A) & 153---S.R.O. No. 1194(I)/2006 dated 15-11-2006---Convention for Avoidance of Double Taxation between Government of Pakistan and Government of Saudi Arabia, Arts.14 & 15---Additions of expenses incurred by assessee on Saudia Office Employees'---Question before the Tribunal was about admissibility of 'Additions of Expenses' incurred on 'Saudia Office' employees---Appellant/Taxpayer, contended that the only ground for addition of expenses incurred in "Saudia Office", by Appellate Authority was that the stance taken by the taxpayer, was different from the one taken before the Assessing Officer---In the amended assessment order the taxpayer had informed about the nature of expenses in threadbare way which was ignored---Order of Commissioner (Appeal) was not sustainable, because Commissioner had rejected the matter merely on technicalities---Assessment order showed that an amount of Rs.1,165,654 was added back on that account---Contention of the department was that where no foreign income was earned, no foreign expenses could be allowed---Taxpayer, made those payments to outsourced staff whose services were secured from other service providers---Any payment in that respect, was not admissible for services rendered liable to deduction of tax at source in terms of S.153 of the Income Tax Ordinance, 2001; and because of non-withholding and non-submission of withholding on that account filed in tax return under S.165, the same was disallowed in terms of S.21(c) of Income Tax Ordinance, 2001---Two employees were deputed in Saudia Office and was wholly and exclusively incurred for the purpose of business---Any expenditure incurred outside Pakistan in respect of employee, salary would be dealt with the laws of other Country where the salary had been paid or expenses incurred---If any salary was paid in Saudi Arabia, it should be dealt in accordance with the tax treaty between the two countries---Articles 14 & 15 of the Convention between Government of Pakistan and Government of Saudi Arabia for avoidance of double taxation and the prevention of tax evasion with respect to taxes on income, was a binding document on the tax department; and would overtake the provisions of Income Tax Ordinance, 2001---Tax treaty provided that salaries or remuneration paid in Saudi Arabia would be taxed according to their laws; and they would not be exposed to the provisions of S.153 of the Income Tax Ordinance, 2001---Assessing Authority as well as Appellate Authority, patently ignored those binding provisions---Appeal was allowed on that count and department was directed to delete the additions made in the computation of income.
Case-law referred.
(g) Income Tax Ordinance (XLIX of 2001)---
----Ss. 20, 21 & 29---Add back on account of amount written off in respect of non-recoverable amount---"Bad and doubtful debt" amount in question represented the advance given for the purchase of 32.718 million shares of a Bank---Out of that amount the tax-payer company only received 32.703 million shares in the current year, while the receipt of remaining shares was doubtful---Taxpayer deemed appropriate to mention the provision of Rs.256,792 being "bad and doubtful debt"---Neither the amount's complete nature of the transactions with background was submitted, nor any documentary evidence, was produced which reflected that, amount in question would not be refunded---Said additions, could not be allowed because, those were not meant for wholly and exclusively for the purposes of business of the taxpayer; loss would not constitute the "business loss"---Orders passed by lower forums could not be interfered with, in circumstances.
Case-law referred.
(h) Income Tax Ordinance (XLIX of 2001)---
----Ss. 22, 23, 28 & 32---Unearned Finance Lease---Additions in income in respect of unearned Finance Lease---Broad features of the Finance Lease---Addition of unearned Lease Finance to the computation of taxable income of the taxpayer, an investment company---Taxpayer, had entered into lease agreement with the lessees, though no such lease agreements, were ever produced by the taxpayer---Treatment meted out in tax return adopted by the taxpayer seemed to be of operating lease because of claim of tax depreciation; and adding income from lease as operating income--- No precise findings could be given on the treatment due to non-production of complete audited financial statements, computation of taxable income and lease documents ---Broad features of the Finance Lease, were; that such a lease was non-cancellable; and there was a fixed obligation on the lessee for payment of lease money---If lease was terminated permanently by the lessee, the lessor was entitled to recover his investment with expected interest---Such lease was always for a fixed period, which period was decided by taking into consideration the economic life of the asset---Initial lease, was settled in such a way so as to fully recover the investment of the lessor together with interest thereon---Lessor was always interested in the recoupment of his investment with interest in the shape of rentals over the period of lease, and not the asset of its user---Lessee was responsible to bear all costs of insurance, repairs and maintenance and other related costs and expenses for the leased equipment---Though the equipment was chosen by the lessee, but the payment to the supplier was made by the lessor---Held, that lessee who would choose the assets, take delivery, enjoy the use of the asset, would bear its wear and tear, it was the lessee who would become the real owner of the assets; that it was the lessee who would pay taxes etc., in relation to such asset; that the risks and rewards incidental to the ownership would vest with the lessee; that the features of bailment were absent in such a lease; that the lessor simply would hold the title of asset as his security till his investment and interest thereon was recouped; that lessor was only symbolic owner during the period of lease, and on the expiry of lease period, even such symbolic ownership also would come to an end---Operating lease was fully covered in provisions of the statute---In case of a finance lease, it was the lessee who was the owner of the property for all practical purposes, and was entitled to depreciation under Ss.22 & 23 of the Income Tax Ordinance, 2001 and not the lessor---Tribunal observed that neither party having produced lease agreements, it was not possible to decide with reference to underlying facts and figures---Since it was the claim of the department that the taxpayer got unjustly enriched by claiming initial and normal depreciation allowance, and yet had not offered all the incomes accrued therefrom; and since both the authorized representatives of the appellant and departmental representative, could not provide the details of nature of leases and its related computation, matter was remanded to Assessing Authority to decide the controversy, accordingly.
Case-law referred.
Rashid Ibrahim, FCA and Hafiz Muhammad Idrees for Appellants.
Sheikh Anwar ul Haq for Respondent.
Date of hearing: 12th June, 2015.
2016 P T D (Trib.) 1662
[Inland Revenue Appellate Tribunal]
Before Ch. Shahid Iqbal Dhillon, Judicial Member and Muhammad Raza Baqir, Accountant Member
Messrs PROTEK DEVICES, LAHORE
Versus
C.I.R., ZONE-VI, R.T.O., LAHORE
S.T.A. No.472/LB of 2016, decided on 16th May, 2016.
Sales Tax Act (VII of 1990)---
----Ss. 2(37), 11(5), 36(1) & 46---Tax fraud---Inadmissible adjustment of input tax---Officer concerned came to know that registered person claimed inadmissible adjustment of input tax for the tax period March 2009 to May 2009 on account of invoices issued by blacklisted unit, in contravention of law---Show-cause notice for said contravention was issued to the registered person on May 2015 (after six years)---Under provisions of S.11(5) of the Sales Tax Act, 1990, such show-cause notice was to be issued within five years, but same was issued after lapse of prescribed period---Sales Tax demand raised by the department for tax period 2009, was barred by time which was not sustainable---Show-cause notice, in the present case, was issued after lapse of prescribed period of five years time limit, order-in-original passed on the basis of said show-cause notice, was barred by time, and not sustainable---Orders passed by authorities below being not sustainable, appeal filed by registered person, was accepted, in circumstances.
1992 SCMR 1898; 2010 PTD 251; 2004 PTD 1893; 2002 PTD 2440; 2000 PTD 399 and 2016 PTD 467 ref.
Suhail Mutee Babri, ITP for Appellant.
Kashif Azhar, D.R. for Respondent.
Date of hearing: 16th May, 2016.
2016 P T D (Trib.) 1758
[Inland Revenue Appellate Tribunal]
Before Ch. Anwaar ul Haq, Judicial Member
C.I.R., R.T.O., SIALKOT
Versus
MUHAMMAD KHALID SETHI, Prop: New Hafiz Cloth House, Sialkot Cantt.
I.T.A. No.593/LB of 2012, decided on 12th May, 2016.
Income Tax Ordinance (XLIX of 2001)---
----Ss. 113-A, 114 & 122(1)(5)(9)---Amendment of assessment---Taxpayer/an individual, who derived income by running a cloth shop, filed return of income under S.113-A of Income Tax Ordinance, 2001, instead of filing regular return of income under S.114 of the Income Tax Ordinance, 2001---Assessing Authority, amended assessment under S.122(1)(5) of the Income Tax Ordinance, 2001---Appellate Authority, on appeal annulled impugned order passed by Assessing Authority---Validity---Taxpayer by furnishing statement and opting to pay turnover tax under S.113-A of the Income Tax Ordinance, 2001, had duly fulfilled its legal obligation for the relevant year and it was no more required to file return under S.114 of the Income Tax Ordinance, 2001 as its income was subject to final taxation under S.113-A of the Income Tax Ordinance, 2001---No justification existed for the department to make amendment of assessment in the presence of statement filed under S.11-A---Since the very assumption of jurisdiction by the Assessing Authority was nullity in the eye of law, subsequent superstructure built thereupon, was bound to be fall down---Notices issued and subsequent proceedings initiated and orders passed, were liable to be declared null and void, and Appellate Tribunal ordered so, in circumstances.
Ms. Bushra Fatima, D.R. for Appellant.
Ch. Qamar-uz-Zaman for Respondent.
Date of hearing: 12th May, 2016.
2016 P T D (Trib.) 1805
[Inland Revenue Appellate Tribunal]
Before Muhammad Jawed Zakaria, Judicial Member and Farzana Jabeen, Accountant Member
C.I.R., ZONE-III, LTU, KARACHI
Versus
Messrs EFU LIFE ASSURANCE, KARACHI
M.A. (Rect.) Nos.35/KB in I.T.As. Nos.334/KB of 2011 and 36/KB of 2013 in I.T.A. No. 335/KB of 2011, decided on 2nd December, 2013.
Income Tax Ordinance (XLIX of 2001)---
----Ss. 221 & 131---Rectification of order---Application for---Non-appearance of applicant on date of hearing---Applicant/department, filed applications for seeking rectification in the earlier order, passed by the Division Bench of the Tribunal, whereby the appeals of the applicant/department, were dismissed being devoid of any merits---On date of hearing, applicant (department) was called thrice to contest case, but applicant failed to appear---Appellate Tribunal, addressed letter to Chief Commissioner, LTU and also to Chief Commissioner, RTO regarding non-appearance and various issues relating to Departmental Representatives---None appeared on behalf of the Department, nor submitted any adjournment application, despite proper service of notice of hearing---Tribunal dismissed miscellaneous applications for non-appearance/non-prosecution, in circumstances.
None for Applicant.
Arshad Siraj for Respondent.
Date of hearing: 2nd December, 2013.
2016 P T D (Trib.) 1820
[Inland Revenue Appellate Tribunal]
Before Ch. Anwaar ul Haq, Judicial Member
C.I.R., ZONE-III, RTO, FAISALABAD
Versus
Messrs DRAZ RICE MILLS, KOT KHAIRA, JHANG
I.T.A. No.1501/LB of 2013, decided on 19th May, 2016.
Income Tax Ordinance (XLIX of 2001)---
----Ss. 53, 113, 221 & Second Sched., Part III, Cl.13---S.R.O. 57(I)/2012 dated 24-1-2012---Payment of minimum tax---Reduction in rate---Rectification of deemed assessment---Return of income by taxpayer, for tax year 2011, declaring sales/turnover---Department as per provisions contained in S.113 of the Income Tax Ordinance, 2001, found that taxpayer was required to pay minimum tax at rate of 1% upon total turnover declared, whereas it had paid tax on income declared---Assessing Officer rectified the deemed assessment under S.221 of Income Tax Ordinance, 2001 by levying minimum tax under S.113 of the Income Tax Ordinance, 2001---Appellate authority being convinced with representation of taxpayer, observed that S.R.O. 57(I)/2012 dated 24-1-2012, was retrospectively applicable in the case; and directed to levy minimum tax at the reduced rate of 0.2% turnover for the year 2011---Validity---S.R.O. 57(I)/2012 dated 24-1-2012, Cl. (13) was inserted in Part III of the Second Schedule to Income Tax Ordinance, 2001, vide which rate of minimum tax in the case of rice dealers, were reduced to eighty percent of their total turnover---Said reduction allowed by the legislature, was not applicable to the present taxpayer as it had already filed its return of income on 9-1-2012 for tax year 2011 i.e. for the period ended on 30-6-2011---Said reduction in minimum tax, was not applicable retrospectively for the reason that amendment related to charge of rate of tax which was prospective and being not of the nature of beneficial legislation, it was not retrospective---Taxpayer, in circumstances, was not entitled to reduction of minimum tax as introduced through S.R.O. 57(I)/2012 dated 24-1-2012, which was applicable for the tax year 2012 in terms of subsection (2) of S.53 of the Income Tax Ordinance, 2001---Impugned order of the Appellate Authority, was vacated, and that of Assessing Officer restored, in circumstances.
2016 PTD 427 ref.
Abdul Malik, D.R. for Appellant.
Imran Rasool for Respondent.
Date of hearing: 19th May, 2016.
2016 P T D (Trib.) 1829
[Inland Revenue Appellate Tribunal]
Before Jawaid Masood Tahir Bhatti, Chairman and Sikandar Aslam, Accountant Member
Messrs MULTAN ELECTRIC POWER COMPANY, MEPCO COMPLEX, KHANEWAL ROAD, MULTAN
Versus
COMMISSIONER (IR), ZONE-II, R.T.O., MULTAN
S.T.A. No.247/LB of 2013, decided on 19th December, 2014.
Sales Tax Act (VII of 1990)---
----Ss. 2(19)(35)(46), 3(1)(a), 13 & 46---S.R.O. 911(I)/2007, dated 10-9-2007---Scope of sales tax---Treating government subsidy as taxable income---Appellant, a public limited company, was engaged in business of distribution and supply of electricity after purchasing from National Transmission and Distribution Company---Adjudicating Authority passed order-in-original on the basis of difference in the value of net sales declared by the appellant in its return of total income, as against the declared sales in sales tax return---Difference, which primarily constituted the amount of subsidy received by the appellant from the government as tariff differential, was subjected to tax, treating the same as part of value of taxable supplies for the purpose of S.3(1)(a) of the Sales Tax Act, 1990---Amount of Rs.925,295,652 was also included in the value of taxable supplies considering it as unexplained difference---Appellate authority below had upheld the order passed by adjudicating authority, appellant---Appellant, had alleged that adjudicating authority was not justified in assuming the chargeability of sales tax on account of subsidy received from government as consideration on account of taxable supply---Two issues were involved in the case, first one revolved around the fundamentally legal controversy" as to whether the amount of subsidy received by the appellant from the Government as tariff differential in normal course of its business activity, was taxable or not"---Second issue was based on factual mistake regarding unexplained difference purportedly on account of zero rated supplies---Held, S.3 of Sales Tax Act, 1990, dealing with scope of tax, would be attracted, if three fundamental conditions would exist simultaneously i.e., firstly, the person was "registered" under Sales Tax Act, 1990; secondly, that the person carried on a "taxable activity"; and lastly, that he made "taxable supplies"---In the present case, appellant was a "registered" person for the purpose of Sales Tax Act, 1990---Only precondition involved in second condition "taxable activity" and it was that it had to be in the form of an "economic activity" and it immaterial, whether the purpose of that economic activity was to earn profit out of it or not---As per clause (a) of S.3 of Sales Tax Act, 1990, all activities in the form of business, trade or manufacturing, fell within ambit of the term 'taxable activity'---Accordingly, all activities associated with the appellant, in normal course of business fell within the ambit of taxable activity---Regarding third condition "taxable supplies", the value of which was subjected to tax at applicable rate, no definition had been provided in the statute for the term 'taxable supplies'---Once the condition of "taxable activity" had been satisfied, all supplies made by the appellant would automatically be treated as taxable unless specifically exempted from the charge of sales tax---In the course or furtherance of a taxable activity, all supplies, that were not exempted under S.13 of Sales Tax Act, 1990 were taxable supplies---Amount of subsidy, was actually made part of the bills issued to the consumers---Amount of subsidy was clearly reflected in the bills issued by the appellant to its consumers as reduced from the tariff fixed by NEPRA---Taxing statutes always expressly exclude things from the chargeability under special circumstances in the shape of exemptions---Specification of exemption of law was necessary where the amount was chargeable to tax under the law---Law could not be stretched, while interpreting it to exclude a thing from its charge, and was not specifically excluded---Appellant, had failed to establish that the provisions of the charging section of Sales Tax Act, 1990, were not attracted to the amount of subsidy, despite being part and parcel of economic activity of appellant and integral component of the tariff fixed by NEPRA for the sale of electricity---Findings of appellate authority, in that respect, could not be interfered with---Appeal on that score was dismissed, in circumstances---Unexplained difference in value of supply, required reconciliation of sales amount as per return and accounts---Case was remanded on that issue for re-examination in the light of information/necessary documents according to the facts and the circumstances of the case.
PLD 1990 SC 68 ref.
Rana Usman, FCA for Appellant.
Syed Bahadur Ali, D.R. and Agha M. Akmal, Legal Advisor for Respondent.
Date of hearing: 18th December, 2014.
2016 P T D (Trib.) 1877
[Inland Revenue Appellate Tribunal]
Before Muhammad Jawed Zakaria, Judicial Member
C.I.R., ZONE-IV, R.T.O.-II
Versus
Messrs PEARL PACKAGES (PVT.) LTD., KARACHI
S.T.A. No.89/KB of 2013, decided on 22nd December, 2015.
(a) Sales Tax Act (VII of 1990)---
----Ss. 7, 8(1)(d), 8-A, 11(2), 25, 46 & 73---Determination of tax liability---Failure to pay tax due, or making short payment and claiming input tax---Registered person/respondent, after verifying the status and genuineness of the supplier, made payments of input tax, and fulfilled all the legal responsibilities on its part---Registered person after adopting of methods of making payments, as prescribed by the law, had discharged its onus---No responsibility lay on the registered person to haunt its supplier depositing their liabilities in the Government Exchequer---Mere allegation that the alleged suppliers were blacklisted, suspended, and false, was not enough and corroborating evidence for denying the lawful right of input tax of the buyer---Duty of the tax functionaries was to check, as to whether the supplier had made payment of tax due to them, especially when he was filing the monthly Sales Tax returns; and summaries of sales and purchase with the department---Registered person, in circumstances, could not be evolved as a joint liable; and induction of contravention did not qualify---Registered person, did all the possible precautions and endeavours, as well as used all the official resource to verify status and genuineness of the suppliers---Registered person, discharged all his legal and the ethical responsibilities to bring the truth at the door in a good faith---All requisite conditions, as were laid down in Ss.7 & 73 of Sales Tax Act, 1990, for claiming input tax were fulfilled in bona fide manner---Representative of the department had failed to produce any order regarding the blacklisting of the suppliers---Impugned show-cause notice, did not disclose that the registered person was in the knowledge, or had reasonable grounds to suspect that some or all the tax payable in respect of supply, would go unpaid---Department had failed to prove the allegation levelled against the registered person that it claimed inadmissible input tax adjustment on the basis of invoices issued by its suppliers, which were blacklisted---Subsequent blacklisting of supplier could not be made tool to deprive the registered person of a valuable right accrued in his favour---Departmental appeal was dismissed, in circumstances.
Karachi Textile Deying and Printing Works, Karachi v. Commissioner of Income Tax (Central) Karachi 1984 PTD 150; 2006 PTD 2654; 2007 PTD (Trib.) 2583; Messrs D.G. Khan Cement Company Ltd. v. The Federation of Pakistan and others Writ Petition No.3515 of 2012; Government of Pakistan v. Messrs Village Development Organization 2005 SCMR 492 and Messrs Brother Engineering (Pvt.) Ltd.'s case 2004 PTD 2928 ref.
(b) Income tax---
----Presumption against the bona fide or the honesty of assessee/ taxpayer---Taxpayer, could not be presumed to be dishonest---No presumption, was against the bona fide or the honesty of the assessee---Normally, the Income Tax Authorities, would not be justified in refusing to an assessee a reasonable opportunity of representing his view before deciding any matter against him---No presumption of bad faith against any assessee was permissible in law, unless there be sufficient material on record to establish and ascertained the bad faith in relation to that particular taxpayer---Pure guess or bare suspicion, was not sustainable, while framing assessment against assessee; there must be something more than bare suspicion.
Pannala Binjraj and others v. Union of India and others AIR 1957 SC 397; Hirabai D. Desai and Sons v. CIT (1936) 4 ITR 95 (Bom.); A.S. Sivan Pillal v. CIT (1958) 34 ITR 328; Dharajlal Girdharilal v. CIT (1954) 26 ITR 736 and Dhakeswari Cotton Mills Ltd. v. CIT (1954) 26 ITR 755 ref.
Abdul Hafeez Nizamani, D.R. for Appellant.
Miss Memona for Respondent.
Date of hearing: 2nd December, 2015.
2016 P T D (Trib.) 1908
[Inland Revenue Appellate Tribunal]
Before Muhammad Jawed Zakaria, Judicial Member
COMMISSIONER INLAND REVENUE, ZONE-II, RTO
Versus
Messrs TALHA TEXTILE
I.T.As. Nos.246/KB and 245/KB of 2014, decided on 5th May, 2016.
Income Tax Ordinance (XLIX of 2001)---
----Ss. 114, 133, 120 & 122(1)(5-A)(9)---Amendment of assessment---Charging of turnover minimum tax---Taxpayer filed return of total income for the years 2011 & 2012, and case of the taxpayer was selected for audit, and deemed assessment was amended by Assessing Authority---Discrepancy on scrutiny, having been found in the return of income amended assessment was rendered erroneous---Assessing Authority further amended assessment by charging turnover minimum tax under S.133 of the Income Tax Ordinance, 2011, and issued demand notices to the taxpayer accordingly---Appellate Authority on filing appeal, vide impugned order deleted said minimum tax charged---Validity---Appellate Authority, had rightly deleted the minimum tax charged on turnover for tax years 2011 & 2012---Section 113 of the Income Tax Ordinance, 2001, was applicable to individual, having turnover of fifty million or above in tax year 2009, or in any subsequent year---Taxpayer being an individual had declared turnover of Rs.41,972,028 for the tax year 2011 & 2012, its turnover to Rs.47,789,484 did not exceed the threshold of Rs. fifty million---Benchmark of turnover/sales, had to be considered independently for each year, that was so, because turnover itself was a year-on-year phenomenon and levy for one year could not be imposed by reference to benchmark of turnover for any preceding year---Taxpayer, was liable to turnover in any year, where it exceeded Rs.50 million---Department had failed to establish its claim/contention and could not refute or repudiate the arguments of the representative of the taxpayer---Impugned order passed by Appellate Authority below was found legal, lawful and in accordance with law---Tribunal declined interference.
Muhammad Aslam, D.R. for Appellant.
Muhammad Ali, FCA for Respondent.
Date of hearing: 5th May, 2016.
2016 P T D (Trib.) 1957
[Inland Revenue Appellate Tribunal]
Before Abdul Qayyoom Sheikh, Judicial Member and Abdul Nasir Butt, Accountant Member
Messrs R.M. GULISTAN ENGINEERS AND CONSTRUCTORS (PVT.) LTD.
Versus
The COMMISSIONER INLAND REVENUE (APPEALS-IV), KARACHI
S.T.A. No.15/KB of 2013, decided on 29th April, 2015.
Sales Tax Act (VII of 1990)---
----Ss. 11, 32 & 36---S.R.O. No.575(I)/2006 dated 5-6-2006---Evasion of duty and taxes in respect of sales tax---Recovery of short paid amount of sales tax---Issuance of show-cause notices---Registered persons, were alleged for short payment of duty and taxes on import of Seamless Steel Pipes/Tubes and the goods declaration/record showed wrong application of S. R. O. 575(1)/2006 dated 5-6-2006, at the time of clearance of goods---Two show-cause notices were issued by the Officer of Inland Revenue to the registered persons for recovery of alleged dues---Impugned order-in-original was issued by Officer of Inland Revenue, who finalized the assessment under S.36(1) of the Sales Tax Act, 1990 on the basis of issues confronted vide said show-cause notices-7-Commissioner (Appeals), upheld the order-in-original--Validity---No collusion or deliberate act of mis-declaration of any 'material particulars viz, origin, description, weight, quantity etc., had been alleged against, or shown to have committed by registered persons---Said show-cause notices were patently deficient in respect of incorporation of correct and appropriate legal provisions relating to S.36 of the Sales Tax Act, 1990---Failure on the part of Authority for non-mentioning the grounds available for issuance of show-cause notices undei. S.36(1)(2) of Sales Tax Act, 1990, would render said show-cause notices invalid and illegal---Adjudication and appellate proceedings based upon such defective and default show-cause notices, were void ab initio---Said show-cause -notices were issued beyond statutory period of three years, therefore were barred by time--- Registered person had adequately discharged their duty by pointing out that incorrect claim of PCT Heading did not tantamount to an act of "mis-declaration"---Order-in-original and subsequent proceedings in the shape of impugned order, were held to be without jurisdiction and were accordingly annulled, in circumstances.
[Case law referred]
Muhammad Arif Moton and Muhammad Adnan Moton as A.Rs. for Applications.
Dr. Latif (R.T.O.-III), Karachi as DR for Respondent.
Date of hearing: 29th April, 2015.
2016 P T D (Trib.) 2002
[Inland Revenue Appellate Tribunal]
Before Ch. Anwaar ul Haq, Judicial Member
Messrs H.A.H. PACKAGES, FAISALABAD
Versus
COMMISSIONER INLAND REVENUE, ZONE-II, R.T.O., FAISALABAD
S.T.A. No.774/LB of 2013, decided on 2nd May, 2016.
Sales Tax Act (VII of 1990)---
----Ss. 11, 36, 45 & 46---Ex parte sales tax order passed by Collector---Ex parte sales tax order, passed by concerned ACIR, was assailed by registered person---No body having appeared on adjourned date of hearing, on behalf of the registered person, Appellate Authority proceeded ex parte, and decided the appeal on the point of laches instead on merits of the case---Contention of registered person was that impugned order was passed on date, which was not the date fixed for hearing---Registered person, further contended that order passed on the point of laches was not confronted to appellant/registered person by the Appellate Authority---Validity---Appellate Authority, was under obligation to confront the appellant with the fact that the appeal was time barred---Case was remitted to the Appellate Authority, with the direction to confront the registered person with the issue as to whether, the first appeal filed by the registered person was within time or not, after obtaining such explanation the matter be decided in accordance with law.
Abuzar Hussain for Appellant.
Ms. Bushra Fatima, D.R. for Respondent.
Date of hearing: 2nd May, 2016.
2016 P T D (Trib.) 2039
[Inland Revenue Appellate Tribunal]
Before Ch. Anwaar ul Haq, Judicial Member
COMMISSIONER INLAND REVENUE, ZONE-VIII, R.T.O.-II, LAHORE
Versus
Messrs HAPPY MANUFACTURING COMPANY, LAHORE
S.T.A. No.308/LB of 2012, decided on 22nd April, 2016.
Sales Tax Act (VII of 1990)---
----Ss.8(1)(d), 11(2), 36(1), 46 & 73---Sales Tax Rules, 2006, R.12(5)---Recovery of tax not levied or short-levied or erroneously refunded---Registered person had claimed/objected illegal input tax on invoices issued by blacklisted unit, which was not admissible in case of registered person under the law---Registered person, was called upon to show cause, as to why input tax in question along with default surcharge and penalties, could be recovered under Ss.11(2) & 36(1) of Sales Tax Act, 1990---Since registered person had failed to appear before Assessing Authority, an ex parte order was passed whereby said amount was ordered to be recovered along with default surcharge and penalty---Registered person had failed to provide requisite documentary evidence before the Authorities below, such as, proof of payment in terms of S.73 of Sales Tax Act, 1990, physical transfer of goods, genuineness of purchase invoices etc.---Orders passed by both Authorities below, were set aside, and matter was remanded to concerned Assessing Authority for fresh proceedings, in circumstances.
Re: CIR v. Messrs Tariq Poly Pack (Pvt.) Ltd. S.T.R. No.98/2014 dated 12.03.2015 rel.
Ms. Bushra Fatima, D.R. for Appellant.
Adnan Goraya and M. Ahmed Kamal for Respondent.
Date of hearing: 22nd April, 2016.
2016 P T D (Trib.) 2052
[Inland Revenue Appellate Tribunal]
Before Ch. Anwaar ul Haq, Judicial Member
COMMISSIONER INLAND REVENUE, ZONE-I, L.T.U., LAHORE
Versus
Messrs BECTON DICKINSON PAKISTAN (PVT.) LTD.
S.T.A. No.428/LB of 2012, decided on 5th April, 2016.
Sales Tax Act (VII of 1990)---
----Ss. 7, 10, 46 & 74---Adjustment of sales tax liability against income tax refund---Delay in filing appeal---Condonation of delay---Department had filed application seeking condonation of delay in filing appeal---Submission of department was that appeal could not be filed within prescribed period as employees of the department went on strike---Said application for condonation of delay, was not supported by an affidavit of concerned Commissioner---Contents of the application, without supporting document, could not be entertained---Even if the employees of the department went on strike, appeal was not filed on next date of calling off the strike, but was filed on second day thereof, which was barred by time---Application for condonation of delay, was incompetent, in circumstances---Even on merits, impugned appellate order did not suffer from any infirmity to warrant interference by the Appellate Tribunal---Registered person had filed request for adjustment of sales tax liability against income tax refund well within time of filing sales tax return and the delay for adjustment was caused by the department---Order of adjustment of sales tax by Appellate Authority below, was maintained, in circumstances.
Waqas Rashid, D.R. for Appellant.
Nemo for Respondent.
Date of hearing: 5th April, 2016.
2016 P T D (Trib.) 2069
[Inland Revenue Appellate Tribunal]
Before Ch. Anwaar ul Haq, Judicial Member
Messrs MUGHAL STEEL METALLURGY CORPORATION LTD., LAHORE
Versus
COMMISSIONER INLAND REVENUE, ZONE-IV, R.T.O., FAISALABAD
I.T.As. Nos.1760/LB and 1761/LB of 2012, decided on 20th May, 2016.
Income Tax Ordinance (XLIX of 2001)---
----Ss. 21(c), 122(1)(5), 151 & 158---Amendment of assessment---Additions---Assessing Authority made additions under S.21(1) of Income Tax Ordinance, 2001, for tax years 2009 and 2010, for the reason that taxpayer had failed to deduct tax while making payments towards re-rolling charges on purchases made, though they had exemption certificate---Appellate Authority upheld impugned additions---Validity---As issue of deduction of tax on re-rolling charges, was involved, case fell under cl.(b) of S.158 of Income Tax Ordinance, 2001, which dealt with the deduction of tax other than profit on debts and stipulated that tax was to be deducted at the time the amount was "actually paid"; whereas under cl.(a) of said section, tax could be deducted on actual basis---Matter was remanded by Appellate Tribunal to the Assessing Authority to verify the time of payment against said charges by the taxpayer to the recipient company in terms of S.158(b) of Income Tax Ordinance, 2001; and then proceed with the matter in accordance with law.
Shahbaz Butt for Appellant.
Naveed Akhtar, D.R. for Respondent.
Date of hearing: 20th May, 2016.
2016 P T D (Trib.) 2083
[Inland Revenue Appellate Tribunal]
Before Ch. Anwaar ul Haq, Judicial Member
ABDUL RASHID AMIR
Versus
COMMISSIONER INLAND REVENUE, FAISALABAD
I.T.A. No.911/LB of 2013, M.A. (Add. G) No.44/LB of 2016, I.T.A. No. 912/LB of 2013 and M.A. (Add. G) No.46/LB of 2016, decided on 16th May, 2016.
Income Tax Ordinance (XLIX of 2001)---
----Ss.111(1)(b), 120, 122(1)(5)(9) & 131---Amendment of assessment---Bank Account maintained by the taxpayer, showed that the bank transactions/credit entries, did not match with declared results; and discrepancies were also observed---Reply to show-cause notice issued to the taxpayer, was rejected being not tenable in the eye of law---Assessments already completed in terms of S.120 of Income Tax Ordinance, 2001, were amended under S.122(1)(5) of Income Tax Ordinance, 2001 for relevant years---Appellate Authority maintained orders passed by Adjudicating Officer---Contention of the taxpayer was that assessment made was beyond the scope of show-cause notice, for the reason that in show-cause notice taxpayer was confronted for adding of Rs.3,09,51,201; whereas in the assessment order he had made addition of Rs.10,97,000 which was never confronted to the taxpayer---Validity---Taxpayer through show-cause notice was confronted regarding straight addition of Rs.3,09,51,201 under S.111(1)(b) of Income Tax Ordinance, 2001, as unexplained income, but at the time of passing of assessment order, the Assessing Officer, took lenient view, and treated the said amount as sales; and applied GP @ 5% thereon and allowed expenses on estimate basis, resulting an addition of Rs.10,97,000 only---Said treatment adopted, though not confronted to the taxpayer, but same was beneficial to the taxpayer and it could not be said that addition of Rs.10,97,000 was beyond the scope of show-cause notice whereby excess amount was proposed---Assessing Officer, while passing the order, took the fair view, and instead of adding the huge amount of Rs. 3,09,51,201 only unexplained income under S.111(1)(b) of Income Tax Ordinance, 2001 added Rs.10,97,000---Orders of both the authorities below for the assessment year 2007 were upheld, and appeal was rejected.
CIR v. Maj. Gen. (R) Dr. C.M. Anwar and 2 others 2015 PTD 424; The Collector Central Excise and Land Customs and others v. Rahim Din 1987 SCMR 1840; Caretex v. The Collector Sales Tax and Federal Excise and others PLD 2013 Lah. 634 = 2013 PTD 1536 and 2009 PTD (Trib) 1919 distinguished.
Qadeer Ahmed, ITP for Appellant.
Ms. Bushra Fatima, D.R. for Respondent.
Date of hearing: 16th May, 2016.
2016 P T D (Trib.) 2098
[Inland Revenue Appellate Tribunal]
Before Ch. Anwaar ul Haq, Judicial Member
Messrs AHMAD TRADERS, GUJRANWALA
Versus
COMMISSIONER INLAND REVENUE, R.T.O., GUJRANWALA
S.T.A. No.1176/LB of 2012, decided on 13th May, 2016.
Sales Tax Act (VII of 1990)---
----S. 46---Appellate Tribunal Rules, 2010, R.27---Delay in filing appeal---Condonation of delay---Registered person filed appeal against order-in-appeal passed by Appellate Authority---None appeared on behalf of registered person on the date of hearing of appeal---Application for adjournment was received on behalf of registered person through courier post---Counsel of registered person, repeatedly sent adjournment applications by post in a causal manner---Rule 27 of the Appellate Tribunal Rules, 2010, provided that the Tribunal, could, if sufficient cause was shown, adjourn the hearing of appeal or application on request made by the party or authorized representative and no request for adjournment sent through post or fax could be entertained---Since no one on behalf of the registered person appeared at the time of hearing, application seeking adjournment was refused and appeal was dismissed, being barred by time, in circumstances.
Nemo for Appellant.
Ms. Bushra Fatima, D.R. for Respondent.
Date of hearing: 13th May, 2016.
2016 P T D (Trib.) 2099
[Inland Revenue Appellate Tribunal]
Before Muhammad Jawed Zakaria, Judicial Member
Messrs AMRELI STEELS LTD., KARACHI
Versus
The COMMISSIONER INLAND REVENUE, ZONE-I, L.T.U., KARACHI
I.T.As. Nos.673/KB and 674/KB of 2014, decided on 17th May, 2016.
(a) Income Tax Ordinance (XLIX of 2001)---
----Ss. 122(5-A) & 205---Default surcharge, levy of---Amendment of assessment---On examination of return of income and audited accounts, department observed that the taxpayer had not paid workers' welfare fund along with return of income, which was payable at 2% of accounting profit---Return of income had shown that taxpayer had made adjustment of workers' welfare fund for arrival of taxable income and claimed workers' welfare fund, but that liability neither paid along with return of income nor offered for adjustment against refund due to the taxpayer---Subsequently, the deemed assessment/ income was amended under S.122(1) of the Income Tax Ordinance, 2001; and workers' welfare fund had been charged and demand had been adjusted against excess income tax refund---Being not satisfied with the reply of the taxpayer to show-cause notice, Assessing Officer passed order under S.205 of the Income Tax Ordinance, 2001 whereby default surcharge was levied for relevant to two years; and issued demand notice to the taxpayer for both the years---Validity---Default surcharge, could not be levied on the basis of presumption and assumption, where the determined refund was available; and the taxpayer had not denied any payment of the fund; and the Taxation Officer adjusted the same against available determined refund---Taxpayer's legitimate money was lying in Revenue Department's treasury---Despite giving compensation/ markup, the department had imposed extra burden under the garb of default surcharge---Assessing Officer had not appreciated the fact that certain unadjusted refunds were due from the department at the time of alleged default, if it was true, the default surcharge was not leviable---Appellate Authority had failed to apply its judicious mind and passed impugned order without considering the facts---Impugned order passed by Appellate Authority, was vacated by Appellate Tribunal, and default surcharge was deleted---Appeals, were allowed.
(b) Interpretation of statutes---
----Revenue/fiscal laws---Scope---Revenue/fiscal laws were not in the nature of penal laws, and the deterrent provisions, were neither charging nor revenue generating provision---Taxation laws, were substantially remedial in their character, and were intended to prevent deception, suppress public wrong and promote good reputation of taxing department in taxpayer's eyes; These ought to be construed in such a way as to accomplish all those objects.
Najeeb Moochhala, F.C.A. for Appellant.
Javed Iqbal Tarad, D.R. for Respondent.
Date of hearing: 17th May, 2016.
2016 P T D (Trib.) 2108
[Inland Revenue Appellate Tribunal]
Before Ch. Anwaar ul Haq, Judicial Member
Messrs CRYSTAL TEXTILE PROCESSING MILLS (PVT.) LTD., GUJRANWALA
Versus
COMMISSIONER INLAND REVENUE, R.T.O., GUJRANWALA
I.T.A. No.1735/LB of 2013, decided on 11th May, 2016.
Income Tax Ordinance (XLIX of 2001)---
----Ss. 21(c), 40(1)(3), 122(5-A) & 131---Amendment of assessment---Declaring lease, rentals under the head 'income from other sources'---Additions---Return filed by the taxpayer for the tax year 2010, was deemed to be treated as assessment---Subsequently, it was found by the department that deemed assessment was erroneous insofar as prejudicial in the interest of Revenue; in as much as the taxpayer had declared lease rentals under the head "income from other sources", and expenses deemed by the taxpayer, were not allowable against such income under S.40 of the Income Tax Ordinance, 2001---Assessment was amended, whereby an aggregate addition under S.40(1) under head "operating expenses"; addition under S.40(3) of Income Tax Ordinance, 2001 under the head "depreciation" and addition under S.21(c) under the head "auditor remuneration", were made by Assessing Officer---Appellate Authority had upheld all said additions---Validity---No infirmity existed in the impugned orders, which would warrant interference---Taxpayer had leased out all its assets, and he only derived lease rentals---Operating expenses claimed against said income were not allowable; as those had no direct nexus while earning such income---Under S.40(1) of the Income Tax Ordinance, 2001, the taxpayer was only entitled to claim those expenses, which had directly been attributed to such income---Appellate Authority, had rightly upheld additions made under S.40(1)(3) of Income Tax Ordinance, 2001, as taxpayer had failed to point out any nexus of the assets issued in earning income declared during relevant year---Matter of addition made under S.21(c) of Income Tax Ordinance, 2001, was remanded to the Assessing Officer for verification as the audit remuneration paid to the Chartered Accountant Firm, was subject to deduction of tax or not.
Nemo for Appellant.
Ms. Bushra Fatima, D.R. for Respondent.
Date of hearing: 11th May, 2016.
2016 P T D (Trib.) 2122
[Inland Revenue Appellate Tribunal]
Before Ch. Anwaar ul Haq, Judicial Member
COMMISSIONER INLAND REVENUE, R.T.O., GUJRANWALA
Versus
Messrs KARWAN-E-SIDDIQUE-E-AKBAR (PVT.) LIMITED
I.T.As. Nos.2075/LB and 2076/LB of 2013, decided on 12th May, 2016.
Income Tax Ordinance (XLIX of 2001)---
----Ss. 113, 114, 120, 122(5-A), 131, Second Schedule, Part IV, clause (72-A)---Payment of minimum tax on gross receipts---Amendment of assessment---Returns filed by taxpayer (Hajj operators) for tax years 2010 & 2011, declaring net income, were deemed to be treated as assessment---Subsequently Additional Commissioner/ Assessing Officer found that deemed assessment was erroneous, for the reason that taxpayer worked out liability by applying normal rate of tax; whereas taxpayer was required to pay minimum tax under S.113 of the Income Tax Ordinance, 2001 on total turnover (gross receipts), declared for said years---Assessment was amended under S.122(5-A) of Income Tax Ordinance, 2001; whereby gross receipts from Hajj Services declared by the taxpayer, were subjected to minimum tax under S.113 of the Income Tax Ordinance, 2001---On filing appeal by the taxpayer Appellate Authority observed that receipts of the taxpayer could not be termed as turnover, and deleted the additions in both years 2010 and 2011---Validity---Taxpayer had wrongly calculated tax on normal rates on net incomes declared, which were arrived at by excluding the operating expenses from gross receipts from Hajj Services---Provisions of S.113(3) of the Income Tax Ordinance, 2001 provided that taxpayer was liable to pay minimum tax on its gross receipts declared during the years (2010 - 2011) under consideration---Hajj Group Operators, were excluded from the purview of S.113 of the Income Tax Ordinance, 2001 through insertion of new cl.(72-A) of the Part -IV of Second Schedule, w.e.f. July 2013, whereas no such exclusion was available to the taxpayer in tax years 2010 and 2011---Assessing Authority in circumstances, had rightly charged minimum tax under S.113 of the Income Tax Ordinance, 2001 on gross receipts declared by the taxpayer in tax years 2010 and 2011---Impugned order passed by Appellate Authority, was vacated and that of the Assessing Officer, passed under S.122(5-A) of the Income Tax Ordinance, 2001, was restored, having been passed in accordance with law.
Ms. Bushra Fatima D.R. for Appellant.
Nemo for Respondent.
Date of hearing: 12th May, 2016.
2016 P T D (Trib.) 2154
[Inland Revenue Appellate Tribunal]
Before Ch. Anwaar ul Haq, Judicial Member
Messrs SURAJ FERTILIZER INDUSTRIES (PVT.) LTD., LAHORE
Versus
COMMISSIONER INLAND REVENUE, ZONE-VIII, R.T.O.-II, LAHORE
S.T.A. No.119/LB of 2012, decided on 29th February, 2016.
Sales Tax Act (VII of 1990)---
----Ss. 3, 7, 11(2), 13, 36(1) & 46---S.R.O. No. 535(I)/2008 dated 11-6-2008---Assessment of tax---Determination of tax liability---Recovery of tax not levied or short levied---Case as made out by the department was that registered person/company made in-house production of sulphuric acid, which was manufactured by a chemical reaction of sulphur and rock phosphate---Since the end product i.e. GSSP fertilizer was exempt from tax, department taxed the in-house production of sulphuric acid being supply/taxable activities---Assertion of the registered person was that Assessing Authority was not justified to levy sales tax by not appreciating the fact that the company had been paying sales tax on the purchase of sulphur from the market and input tax on sulphur used in the manufacturing of sulphuric acid for the production of GSSP (Fertilizer) was not being claimed as refundable and that since the sulphuric acid manufactured in-house with sulphur was being used for the production of sulphuric acid, it could not be construed as an intermediary product warranting payment of sales tax side by side with input tax which was not claimed---Validity---In the present case, no sale of goods was made, which would attract the provisions of Sales Tax Act, 1990, as production of sulphuric acid, remained the continuous process to produce the end product i.e. GSSP Fertilizer, which was exempt from levy of Sales Tax in terms of SRO No.535(I)/2008 dated 11-6-2008---No taxable activity was involved in the present case which attracted the provisions of Sales Tax Act, 1990 to levy Sales Tax upon the registered person---Impugned order passed by Appellate Authority, was vacated and that of the Assessing Authority was cancelled.
2012 PTD (Trib.) 1316 ref.
Hassan Kamran Bashir for Appellant.
M. Ali, D.R. for Respondent.
Date of hearing: 29th February, 2016.
2016 P T D (Trib.) 2173
[Inland Revenue Appellate Tribunal]
Before Nazir Ahmad, Judicial Member and Fiza Muzaffar, Accountant Member
Messrs ALLIED STAINLESS INDUSTRIES, GUJRANWALA
Versus
The COMMISSIONER INLAND REVENUE, R.T.O., GUJRANWALA
S.T.A. No.933/LB of 2014, decided on 19th February, 2015.
Sales Tax Act (VII of 1990)---
----Ss. 2(37), 3, 11, 33, 34 & 46---Federal Excise Act (VII of 2005), S.3-A---Failure to pay sales tax on supplies and commission of tax fraud---Recovery of sales tax with default surcharge and imposition of penalty---Appellant made huge sales during relevant period, but allegedly failed to pay sales tax as well as Special Excise Duty in violation of provisions of Ss.3 & 11 of Sales Tax Act, 1990, and S.3-A of Federal Excise Act, 2005---Show-cause notice was issued, calling appellant as to why said amount of Sales Tax and Special Excise Duty could not be recovered from him under S.11 of Sales Tax Act, 1990 and S.3-A of Federal Excise Act, 2005 along with default surcharge and penalties---Adjudicating Authority, vide order-in-original, adjudged liability of sales tax and Special Excise Duty against appellant and Authority also imposed 100% penalty on amount of tax on appellant under S.33(13) of Sales Tax Act, 1990 along with default surcharge---Order-in-original passed by Adjudicating Authority, was upheld by Appellate Authority---Validity---"Recovery of Sales Tax not levied" could not be made/adjudged under S.11(2) of Sales Tax Act, 1990, which always provided for "Assessment of Tax"---Cases of assessment made out of sales tax returns of a registered person, should all the more be adjudicated under S.11(2) of the Sales Tax Act, 1990 and the cases of "Tax fraud" as defined under S.2(37) of the Act, involving evasion of Sales Tax in a collusive and mala fide way, were very much precluded from the ambit and scope of S.11(2) of Sales Tax Act, 1990 and was always to be proceeded with the bar under Specific provisions of S.11(3) or as the case may be, under S.36(1) of Sales Tax Act, 1990---No mention of provisions of S.11(3) or S.36(1) of Sales Tax Act, 1990, had been found in the show cause notice which rendered the same illegal, unlawful and without jurisdiction---Department had also failed to establish any nexus between receipts appeared in the Bank accounts of different persons with that of sales shown in manual as well as computerized books of accounts of the appellant---In absence of any corroborating material evidence co-relating receipt of money with that of clandestine removal of taxable goods, no tax could be levied, merely on some assumption, presumption, whims and conjectures---Special Excise Duty under S.3-A of Federal Excise Act, 2005, could only be imposed by initiating proceedings under enabling provisions of Federal Excise Act, 2005---Since no separate order for Special Excise Duty existed on record and the order-in-original bore a single number on its face for both the levies (jointly) and not distinctly, there was no absurdity caused in filing of single appeal by the appellant on the same cause against same order before Appellate Authority by the appellant---Impugned show-cause notice was vacated, and orders of both authorities below, were declared to be illegal, void ab initio and nullity in the eyes of law---Impugned order, was set aside, in circumstances.
Messrs Al-Hilal Motors Stores and others' case 2004 PTD 868; Messrs Avari Hotel Ltd.'s case 2000 PTD 3765; Messrs R.J. Cotton Waste Factory, Faisalabad 2012 PTD (Trib.) 337; Messrs D.G. Khan Cement Company Ltd. v. Federation of Pakistan and others PLD 2013 Lah. 693; Messrs Taj International (Pvt.) Ltd. and others v. The Federal Board Revenue and others 2014 PTD 1807 and 2013 PTD 1780 ref.
Abuzar Hussain for Appellant.
Ms. Shabana Aziz, D.R. for Respondent.
Date of hearing: 19th January, 2015.
2016 P T D (Trib.) 2248
[Inland Revenue Appellate Tribunal]
Before Nazir Ahmad, Judicial Member and Muhammad Akram Tahir, Accountant Member
Messrs MAGNA TEXTILE (PVT.) LTD., FAISALABAD
Versus
The COMMISSIONER INLAND REVENUE, RTO, FAISALABAD
S.T.A. No.273/LB of 2014, decided on 16th October, 2014.
Sales Tax Act (VII of 1990)---
----Ss. 3, 7, 8, 10, 11, 33, 34, 36 & 46---Receipt of inadmissible refund amount---Recovery of---Adjudicating Officer vide impugned order, had held that appellant/registered person, had received sales tax refund amount against invoices of suspended/blacklisted units, which was not admissible and was recoverable under S.11(3) of Sales Tax Act, 1990, along with default surcharges under S.34 of Sales Tax Act, 1990 with penalty equal to the principal amount---Said order of Adjudicating Authority, was upheld by the appellate authority---Validity---At the time of purchase transaction, none of suppliers of the appellant, was blacklisted or suspended, and their subsequent inclusion in that very list, could not be made operative retrospectively---Liability to pay sales tax, was on the supplier under S.3(3)(a) of Sales Tax Act, 1990, and could be extended to the buyer only by way of notification under S.3-A of Sales Tax Act, 1990---If due tax had not been deposited by the supplier, input tax of the buyer adjusted on the strength of their invoices, could not be disallowed under S.8(1)(ca) of Sales Tax Act, 1990, as it would axe an innocent person for wrongs of the other---In the present case, neither any charge of 'tax fraud' to evade sales tax with the connivance of suppliers by way of false invoices was levelled in the impugned show-cause notice, nor department could bring on record any evidence for which it could be inferred that alleged invoices were fake and false, nor could prove mens rea of tax fraud, particularly, where payments in respect of all transactions, had been made through bank, without which input tax could not be disallowed---Initial burden lay on department to establish that taxpayer had prior knowledge and reasonable grounds on the basis of past track record of supplier to suspect that sales tax paid to him would remain unpaid, and then to proceed against taxpayer---Whole proceedings in the case being infested with inherent legal infirmities and improprieties, were liable to be set aside---Orders passed by both authorities, being devoid of legal substance, appeal filed by appellant/registered person, was accepted, in circumstances.
Government of Pakistan v. Messrs Village Development Organization 2005 SCMR 492; 2012 PTD (Trib.) 453 and Messrs D.G. Khan Cement Company Ltd. v. The Federation of Pakistan and others PLD 2013 Lah. 693 ref.
Abuzar Hussain for Appellant.
Fauzia Adil, D.R. for Respondent.
Date of hearing: 11th September, 2014.
2016 P T D (Trib.) 2348
[Inland Revenue Appellate Tribunal]
Before Ch. Shahid Iqbal Dhillon, Judicial Member and Muhammad Raza Baqir, Accountant Member
Messrs GOLDEN SANITARY CERAMICS, GUJRANWALA
Versus
COMMISSIONER INLAND REVENUE, R.T.O., GUJRANWALA
S.T.A. No.636/LB of 2016, decided on 16th June, 2016.
Sales Tax Act (VII of 1990)---
----Ss.2(37), 3, 11, 14, 33, 34, 36 & 46---Sales Tax Rules, 2006, R.6---Notification No.SRO 555(I)/2006, dated 5-6-2006---Failure to pay sales tax---Issuance of show-cause notice beyond time of limitation---Effect---Sales tax liability was adjudged under Ss.11(2) & 36(1) of the Sales Tax Act, 1990, against appellant/ registered person without providing him any opportunity of hearing in conjunction with default surcharge and penalty under S.33(5)(7), was imposed on registered person vide order-in-original which order was upheld in appeal---Validity---Impugned show-cause notice was issued to the registered person, beyond prescribed time of limitation in flagrant disregard of law---Recovery of sales tax, not levied beyond three years, was not only barred by time limitation, but was also ex facie violation of S.36(2) of the Sales Tax Act, 1990---Sole basis of the action against the registered person by both the authorities below was the sales declared by registered person in income tax return for the year under consideration, which was not sustainable---Registered person, had been charged to sales tax, without his registration under S.14 of Sales Tax Act, 1990 by Inland Revenue Officer, which was illegal in the light of S.3 of the said Act and Rules applicable thereto---Impugned show-cause notice as well as consequent orders of both the authorities below were declared to be illegal, void, ab initio and were vacated, in circumstances.
Messrs Peacock Restaurant (South) Kalar Kahar, Chakwal v. Commissioner, Inland Revenue (Appeals-III) Large Taxpayer Unit, Islamabad 2011 PTD 2861; Messrs Al-Hilal Motors Stores and other v. The Collector, Sales Tax and Central Excise (East) Karachi and others 2004 PTD 868; Messrs Siddique Enterprises, Faisalabad v. C.I.R. (Appeals), R.T.O., Faisalabad and others 2013 PTD (Trib.) 2130; Messrs Xen Shahpur Division v. Collector Sales Tax (Appeals) Collectorate of Customs, Federal Excise and Sales Tax, Faisalabad and 2 others 2008 PTD 1973 and 2013 PTD (Trib.) 2130 ref.
Abuzar Hussain for Appellant.
Mrs. Amina Ameen, D.R. for Respondent.
Date of hearing: 16th June, 2016.
2016 P T D (Trib.) 2362
[Inland Revenue Appellate Tribunal]
Before Nazir Ahmad, Judicial Member and Masood Akhter Shaheedi, Accountant Member
Messrs GARDEN TOWN, PHASE-II, GUJRANWALA
Versus
COMMISSIONER INLAND REVENUE, R.T.O., GUJRANWALA
F.E.A. No.04/LB of 2014, decided on 18th January, 2016.
Federal Excise Act (VII of 2005)---
----Ss. 4, 8, 14 & 19(1)---Liability to pay Federal Excise Duty---Limitation---Failure to file monthly returns---Registered person, engaged in the business of property development and construction of residential/commercial units, was under legal obligation to file monthly returns---Proceedings were initiated against the registered person, on failure to file returns---Show-cause notices were issued, which culminated in passing of order-in-original, wherein registered person was directed to pay Federal Excise Duty with penalty for non-payment and for non-filing of monthly returns---Order-in-original was upheld in appeal---Show-cause notice issued to the registered person, was barred by time---Federal Excise Duty, could not be levied on registered person, without establishing factum of provision and rendering of services of land development into residential or commercial entities---Show-cause notice dated 26-12-2013, having been issued belatedly, recovery for the period prior to 25-12-2010, was barred by limitation and was without any lawful authority and of no legal effect---Contention of registered person, was that Federal Excise Duty was chargeable at the time when the development was completed, and residential or commercial plots were delivered for sale and its physical possession was given to the owners against certain money consideration---Department contended that Federal Excise Duty, would become chargeable at the time of having connection of gas and electricity to the property through demand notice---Validity---When any electricity and gas connections were acquired or land was procured, unless and until it was fully developed in the form of residential or commercial plot after due approval of its site plan and feasibility from Municipal Administration or Development Authority, or any other authorized Local Body---Federal Excise Duty could not be charge---Department had failed to establish that any physical possession of developed residential or commercial plots had been given to any body; or even any consideration in money, whether partly or fully, was received---Impugned show-cause notice being time-barred, without jurisdiction and unlawful, was vacated; both orders passed by authorities below being devoid of any merits, were set aside, in circumstances.
2006 PTD 537 and Federation of Pakistan through Secretary, Finance, Islamabad and others v. Messrs Ibrahim Textile Mills Ltd. and others 1992 SCMR 1898 ref.
Abuzar Hussain for Appellant.
Asghar Niazi, D.R. for Respondent.
Date of hearing: 17th November, 2015.
2016 P T D (Trib.) 2376
[Inland Revenue Appellate Tribunal]
Before Javed Iqbal, Chairperson and Muhammad Riaz, Accountant Member
SWANCI KARYANA STORE, MIANWALI and others
Versus
COMMISSIONER INLAND REVENUE, R.T.O., SARGODHA and others
I.T.As. Nos. 494(IB) to 497(IB), 597(IB) to 600(IB) of 2013, decided on 21st April, 2015.
Income Tax Ordinance (XLIX of 2001)---
----Ss. 111(1)(b), 114(6), 120, 122 & 131---Amendment of assessment---Making addition in income of taxpayer chargeable to tax---Taxpayer filed returns, declaring net income for tax years 2006 to 2009---Assessing Officer obtained information from third parties, and on the basis of that, an inference was drawn that the income of the taxpayer was under-assessed---Assessing Officer treated said information as definite and started proceedings for amendment of assessment under S.122(1) of the Income Tax Ordinance, 2001---Taxpayer filed revised returns wherein the same income was declared for all four years---Sales were revised upwards in the computation charts---Assessing Officer rejected the revised returns, holding that same were not properly revised in the light of S.114(6) of Income Tax Ordinance, 2001---Assessing Officer treated the aggregate of bank deposits of each year as business turnover---Assessing Officer chose the entries of peak deposits, and confronted the taxpayer about his intention of treating it as concealed income---Taxpayer's explanation was turned down; and peak deposits, were added under S.111(1)(b) of Income Tax Ordinance, 2001---Department was not in possession of any "definite information"; and information available with the department, did not fulfil the parameters of being "definite"---Assessing Officer was totally unjustified to make addition under S.111(1)(b) of Income Tax Ordinance, 2001 on account of peak deposits in bank account---Assessing Officer, was not legally justified to estimate the business income---Appellate authority below, was also not fully justified to make estimate of business income of the taxpayer---Neither the deposits in banks account nor G.P. rate (low or high) could be treated as "definite information"---Assessing Officer, as well as Appellate Authority below entered into unnecessary controversies; and their treatment to the taxpayer was based on mere estimate gossip and surmises, which could not be upheld in any case---In the present case, income tax return was filed for the year 2006 on 30-9-2006, and the period of five years limitation in terms of S.122(2) of the Income Tax Ordinance, 2001, relating to tax year 2006, stood expired on 30-9-2011---Notice dated 2-5-2012 and amendment of assessment order dated 30-6-2012 being after the expiry of limitation of 5 years, both order of the authorities below for the tax years 2007 to 2009, were vacated; and impugned assessment was nullified, in circumstances.
CIR v. Major General Retd. Dr. C.M. Anwar and others PTCL 2014 CL 608; CIR v. Messrs D.S. Textile PTR No.277/2014 PTR No.284 of 2014; Commissioner of Income Tax v. Messrs Eli Lilly Pakistan Private Limited 2009 PTD 1392; Nagina Silk Mill Layallpur v. The Income Tax Officer and others PLD 1963 SC 322; 1993 PTD 1108 (SC Pak); 1993 SCMR 1108 = 1993 PTD 1108; 2009 PTD (Trib.) 1919, 1997 PTD (Trib.) 1994; 2007 PTD (Trib) 2601 and 2013 PTD 884 ref.
Ch. Naeem-ul-Haq for Appellants (in I.T.As. Nos. 494(IB) to 497(IB) of 2013).
Ms. Nazia Zeb Ali for Respondents (in I.T.As. Nos. 494(IB) to 497(IB) of 2013).
Ms. Nazia Zeb Ali for Appellants (in I.T.As. Nos. 597(IB) to 600(IB) of 2013).
Ch. Naeem-ul-Haq for Respondents (in I.T.As. Nos. 597(IB) to 600(IB) of 2013).
Date of hearing: 21st April, 2015.
2016 P T D (Trib.) 2398
[Inland Revenue Appellate Tribunal]
Before Ikram Ullah Ghauri, Judicial Member and Jehanzeb Mahmood, Accountant Member
ISLAMABAD ELECTRIC SUPPLY COMPANY LIMITED
Versus
COMMISSIONER INLAND REVENUE, (ZONE-III) LTU, ISLAMABAD
I.T.As. Nos.555/IB and 556/IB of 2013, decided on 16th February, 2016.
Income Tax Ordinance (XLIX of 2001)---
----Ss. 113, 120 & 122(5-A)(9), Second Sched., Part-1, Cls. 102(A) & 132---Liability to minimum tax---Subsidy received as tariff "gross receipt"--- Nature--- "Turnover"--- Connotation--- Taxpayer company, engaged in the business of Electric Power transmission and distribution, filed income return for tax years 2010, 2011, declaring loss which constituted a deemed assessment under S.120(1) of the Income Tax Ordinance, 2001---Subsequently it was observed that said assessment was erroneous, as well as prejudicial to the interest of revenue---Show-cause notice for amendment of assessment was issued to the taxpayer company---Commissioner, found that company was liable to minimum tax---Question for determination was as to whether the subsidy received by the company as tariff differentiation, was characterized as "gross receipt", within the meaning of the phrase "turnover"---Held, expression 'turnover' used in subsection (3) of S.113 of the Income Tax Ordinance, 2001, would mean gross receipts, gross sales, derived from sale of goods---Subsidy received by the company, was an essential component of the gross receipt from the company's sale of electricity to the consumers, which constituted integral part of the turnover, which was chargeable to minimum tax in terms of S.113 of the Income Tax Ordinance, 2001---If company had not declared loss, the provisions of S.113 of Income Tax Ordinance, 2001 relating to chargeability of minimum tax would not have been applicable---Clause 102-A of Part-1 of the Second Schedule to Income Tax Ordinance, 2001 in juxtaposition with S.113 of the Income Tax Ordinance, 2001, suggested that while a subsidy granted to a company; or legal person by the Federal Government for purposes of implementation of a Social Policy measures or any order of the Federal Government, in that behalf was undoubtedly exempt from tax; but if the loss was declared the tax exemption would not be available; and in turn the provision of S.113 of the Income Tax Ordinance, 2001 would become applicable---Section 113 contained a set of conditions for its applicability; and one of those conditions given in cl.(c) of subsection (1) of S.113, was the situation where exemption from tax was claimed---Company, whose gross receipts of subsidy which was otherwise exempt from tax under Cl.102A of the Part-1 of Second Schedule to Income Tax Ordinance, 2001 would attract application of minimum tax because of company's declaration of loss---Had the company not declared loss, the subsidy received by it would have been eligible for tax exemption in terms of Cl.102A of the Part-1 of Second Schedule to the Income Tax Ordinance, 2001---Company was not qualified for exemption from minimum tax, because the criterion for exemption under the said clause was the applicability of Cl.132 of Part-1 of the Second Schedule to the Income Tax Ordinance, 2001---Said Cl.132 provided exemption to power generation companies; and did not apply to power distribution companies---Subsidy received by the company, was chargeable to minimum tax---Orders passed by the forums below, having been found to be in accordance with law on the subject matter of the case, same were sustained.
S.T.A. No.874/LB/2013 para-72; S.T.A. No.96/PB/2013 and T.A. No.170/PB/2011 para-23 ref.
Farrukh Jamil, FCA for Appellant.
Zia Ullah Khan, DR for Respondent.
Date of hearing: 6th October, 2015.
2016 P T D (Trib.) 2413
[Inland Revenue Appellate Tribunal]
Before Javid Iqbal, Chairman and M. Majid Qureshi, Accountant Member
Messrs PESHAWAR ELECTRIC SUPPLY COMPANY, WAPDA HOUSE, PESHAWAR
Versus
The COMMISSIONER INLAND REVENUE, R.T.O., PESHAWAR
S.T.A. No. 79/PB of 2014, decided on 26th May, 2015.
Sales Tax Act (VII of 1990)---
----Ss. 2(20), 3, 7, 11 & 46---Sales Tax Special Procedure Rules, 2007, R.58-H---SRO No.678(I)/2007, dated 6-7-2007---SRO No.480(I)/2007, dated 9-6-2007---Short payment of sales tax---Adjustment of input tax---Assessing Officer, observed that company/registered person had paid short sales tax for the period under reference---Assessing Officer raised demand of tax along with penalty and default charges---Validity---Department contended that the company charged and collected sales tax from Steel Melters under R.58-H of Sales Tax Special Procedure Rules, 2007, but failed to deposit the same into the Government Treasury which was clear violation of law; as that levy was the final discharge of Sales Tax liability of the Steel Melters---Ordinarily sales tax was levied at the rate of 17% of the value of taxable supplies made by a registered person in the course of any taxable activity carried on by him under S.3(1) of the Sales Tax Act, 1990---Such amount was termed as "output tax"---Section 7 of Sales Tax Act, 1990, had provided that the tax liability of a registered person, would be determined after deducting the input tax paid by the registered person from output tax collected by such person on the taxable supplies made by him---Claim of said output tax was statutory right of a registered person under S.7 of Sales Tax Act, 1990---Such was a value added tax, which was levied at every stage, the value addition took place at the same supply---Such was, no more a one point levy; and the ultimate burden was passed on to the consumer---Company was entitled to claim adjustment of input tax to the extent of sales tax collected from all consumers, including the Steel Melters and Re-roller; however, it was not entitled to claim any input tax adjustment in respect of sales tax collected from said class of taxpayer under R.58-H of Sales Tax Special Procedure Rules, 2007---Assertion of company that it had collected only the fixed sales tax from Steel melters, was not understandable, because company was obliged to collect both the taxes---While fact could be ascertained by obtaining data from the company, and the steel melters and re-rollers---Tribunal observed that it was appropriate to provide another opportunity to the real parties---Orders of the both authorities below, were vacated, and case was remanded to Assessing Officer.
The State v. Asif Adil 1997 SCMR 209; Sajawl Khan v. Wali Muhammad and others 2002 SCMR 134; PLD 1959 SC 296; D.G. Khan Cement Company Ltd. v. Federation of Pakistan 2004 PTD 1179 (S.C.)/2004 SCMR 456; Messrs Shahmurad Sugar Mills v. The Collector of Customs, Sales Tax and Federal Excise, Hyderabad, 2009 PTD (Trib.) 500; Nestle Milk Pak Ltd. v. Addl. Coll. (Adj.), Multan 2002 PTD (Trib.) 300; Messrs Cherat Cement v. Collector of Customs, Sales Tax and Central Excise (Adjudication) Rawalpindi 2006 PTD (Trib.) 195; Messrs Lone China (Pvt.) Ltd. v. Additional Secretary, Ministry of Finance, C.B.R., Karachi PTCL 1995 CL 415; Mehran Associates Limited v. CIT, Karachi 1993 SCMR 74 = 1993 PTD 69; 2003 PTD 760/2004 STR 369; Hinopak Motors Limited v. Federation of Pakistan, Rijaz (Pvt.) Ltd. v. Wealth Tax Officer, Lahore 1996 PTD 489l; 2003 PTD (Trib.) 2525 Appeal No. 1600/LB/2001; Messrs Sarwar & Co. (Pvt.) Ltd. Lahore v. The Collector of Sales Tax, Multan and others 2001 PTD 1982; Messrs Pakistan Beverage Limited, Karachi v. Large Taxpayer Unit (L.T.U.) thorough Chief Commissioner Inland Revenue, Karachi 2006 CLD 162 and PTCL 2001 CL 235 ref.
Hussain Ahmed Sherazi for Appellant.
Shuaib Sultan and Naseer Ahmed, D.Rs. for Respondent.
Date of hearing: 16th April, 2015.
2016 P T D (Trib.) 2545
[Inland Revenue Appellate Tribunal]
Before Muhammad Asif, Accountant Member and Nazir Ahmad, Judicial Member
CIR, ZONE-III, LTU, LAHORE
Versus
Messrs PAKISTAN FRUIT JUICE, LAHORE
M.A. No. 28/LB/2014, decided on 17th August, 2015.
Income Tax Ordinance (XLIX of 2001)---
----Ss. 221 & 132 & 131---Appeal before Appellate Tribunal---Rectification of mistake---Scope---Department moved application for rectification of an error in the order of the Appellate Tribunal on the ground that the Appellate Tribunal had relied on a judgment of a High Court (reported as 2004 PTD 2267) and ignored a judgment of the Supreme Court (reported as 2001 PTD 2094) which supported contention of the Department---Validity---Contention of the Department regarding judgment of the Supreme Court was not tenable as the said judgment did not address the issue in question and the judgment of High Court relied on in the impugned order had not been suspended by the Supreme Court therefore, the Appellate Tribunal had rightly placed reliance on said judgment---No mistake apparent on the record in the impugned order was present--- Application was rejected, in circumstances.
2004 PTD 2267; 2001 PTD 2094 and 2008 PTD 1267 ref.
Qaisar Mehmood, DR for Applicant.
Waseem Ahmad Malik for Respondent.
2016 P T D (Trib.) 2560
[Inland Revenue Appellate Tribunal]
Before Javid Iqbal, Judicial Member and Muhammad Majid Qureshi, Accountant Member
Messrs SHIRAZ ARENA
Versus
DEPUTY COMMISSIONER INLAND REVENUE (AUDIT-I) RTO, PESHAWAR and another
STA No. 86/PB/2013 and M.A. No. 11(PB) of 2013, decided on 5th June, 2014.
Sales Tax Act (VII of 1990)---
----Ss. 11(2), 25, 33, 34, 45-A, 46 & 72---Khyber Pakhtunkhwa Sale Tax Ordinance (III of 2000), Preamble---FBR Circular No. 105(2)5-IR-III/2011 dated 25-8-2011---Short paid Sales Tax---Recovery of---Exemption---Appeal to Appellate Tribunal---Appellant, a Wedding Hall, was providing food as well as services---Food items were supplied by various persons which were served by the appellant---Notice under S.11(2) of Sales Tax Act, 1990 was issued to appellant for recovery of short paid sales tax from appellant during relevant tax period---Appellant submitted reply to show-cause notice and denied allegation of short payment of sales tax--- Appellant being a Wedding Hall, its activities during relevant period, were exempt from sales tax under the Khyber Pakhtunkhwa Province Sales Tax Ordinance, 2000 as amended by Khyber Pakhtunkhwa Act, 2005---Federal Board of Revenue, vide its Circular No.105(2)5-IR-111/211 dated 25-8-2011, had clarified that after said amendment in the Provincial Act, Wedding Halls activities were exempt from sales tax---Due to said exemption proceedings against appellant were void ab initio for being coram non judice---When services provided by marriage halls were exempt from sales tax, that would mean that all services which a marriage hall provided in the normal course of business, were exempt from sales tax---Deputy Commissioner, Sales Tax, had no authority under S.25 of the Sales Tax Act, 1990 to carry out audit of exempted activities---Appeal succeeded and impugned order was set aside, in circumstances.
Isaac Ali Qazi for Appellant.
Nemo for Respondents.
2016 P T D (Trib.) 2610
[Inland Revenue Appellate Tribunal]
Before Muhammad Jawed Zakaria, Judicial Member
COMMISSIONER INLAND REVENUE, ZONE-I, RTO, KARACHI
Versus
Messrs ABS ENTERPRISES, KARACHI
I.T.A. No. 491/KB of 2014, decided on 12th May, 2016.
(a) Income Tax Ordinance (XLIX of 2001)---
----Ss. 182(1)(1A), 153(7), 165, 165-A, 115 & 131---Failure to furnish statement---Imposition of penalty---Reduction in amount of penalty---Deputy Commissioner after issuing a show-cause notice to the taxpayer, imposed a penalty of Rs.50,000 under S.182(1)(1A) of Income Tax Ordinance, 2001, on account of non-filing of statement under S.165 of Income Tax Ordinance, 2001--- Commissioner Inland Revenue/ Appellate Authority vide impugned order had reduced the penalty amount to Rs.10,000---Validity---Penalty under subsection (1A) of S.182(1) of the Income Tax Ordinance, 2001, was imposed where a person would fail to furnish a statement as required under Ss.115, 165 or 165-A of the Income Tax Ordinance, 2001, within the due date---Deputy Commissioner had failed to appreciate that taxpayer was not required to file statement under S.165(5) of Income Tax Ordinance, 2001---Deputy Commissioner had also failed to appreciate that taxpayer was not "prescribed person" as defined under S.153(7) of Income Tax Ordinance, 2001, as such he was not required to file statement under S.165 of the Income Tax Ordinance, 2001---No revenue loss had occurred to the National Exchequer, as the penalty was imposed without appreciation of intent to S.182 of the Income Tax Ordinance, 2001---Officer of Inland Officer, was not justified to impose penalty of Rs.50,000 under S.182(1)(1A) of Income Tax Ordinance, 2001---Appellate Authority, had rightly reduced the penalty amount to Rs.10,000---Impugned order passed by Appellate Authority, being legal, lawful and in accordance with law, no interference was required, in circumstances.
(b) Income Tax Ordinance (XLIX of 2001)---
----S. 182---Failure to furnish a return or statement---Imposition of penalty---Department had wrong impression that the penalty had to be universally imposed without any exception whatsoever, if there was a default---Major prerequisite for imposition of penalty, had always been a default committed; onus to prove lay on the department---All Officers of Inland Revenue, were to be judicious in imposition of penalty---Authorities, in penalty proceedings must act fairly and honestly---Section 182 of the Income Tax Ordinance, 2001, by no means was charging provision and the intention of legislature was not to generate tax or revenue income; and the purpose and intention of the penal provision, was not the source of resources mobilition---Provision was only for ensuring collection of taxes and compliance thereof---Department, could not be allowed to use provisions of S.182 of the Income Tax Ordinance, 2001, as substitute of normal assessment or new source of revenue/tax originating provisions---Order accordingly.
Muhammad Aslam Jamro, DR for Appellant.
Agha Faqir Muhammad for Respondent.
2016 P T D (Trib.) 2643
[Inland Revenue Appellate Tribunal]
Before Jehanzeb Mahmood, Accountant Member and Ikram Ullah Ghauri, Judicial Member
Messrs A&J ENGINEERING (PVT.) LTD. through CEO
Versus
COMMISSIONER INLAND REVENUE, ZONE-I, RTO, RAWALPINDI
I.T.A. No. 786/IB/2015, decided on 18th January, 2016.
Income Tax Ordinance (XLIX of 2001)---
----Ss. 21(c), 39(3), 122(5) & 131---Amendment of assessment---Return of income filed by taxpayer for relevant year was selected for audit on the basis of certain parameter---Show-cause notice was issued to the taxpayer---Reply of the taxpayer having not been found to be satisfactory, Assessing Officer proceeded to assess income of the taxpayer making addition---Appeal filed by the taxpayer, having been dismissed by Appellate Authority below; taxpayer had filed appeal before Appellate Tribunal---Case of the taxpayer was that the expense incurred by him on account of his initial subscription for acquisition of shares in a private limited company of which he was member, was added by the authorities to his income in terms of S.39(3) of Income Tax Ordinance, 2001---Tax payer alleged that it did not make monetary transaction of the value of his shares through Banking channel into the company's account---Central argument of taxpayer was that the reporting of initial subscription in the memorandum of association; and article of association, was a prerequisite for incorporation of a new company under the Companies Ordinance, 1984, but no company could open an account with a Bank, unless it was already incorporated as a company by the Securities and Exchange Commission of Pakistan---Argument of the taxpayer carried weight; at the time of acquisition of shares in the company, taxpayer company, had no bank account, as it had not yet come into existence by way of its incorporation---Allocation of shareholding in a company, or recognition of the value of shares, was an internal matter among its members---Members of the limited company, themselves would decide, as to how much shares would be owned by each member of the company; and how the contribution to the paid-up capital by member would be recognized---Show-cause notice which was predicated on violation of S.39(3) of the Income Tax Ordinance, 2001, was prima facie misconceived---Forum below seemed to have charged the taxpayer for failure to do something which was legally impossible---Order passed by the authorities below were held to be bad in law, hence vacated, in circumstances.
Zahid Shafique for Appellant.
Masood Akhter, DR for Respondent.
2016 P T D (Trib.) 2659
[Inland Revenue Appellate Tribunal]
Before Muhammad Pervez Alam, Accountant Member and Javid Iqbal, Judicial Member
Messrs THE DECENT LODGES, U/TOWN, PESHAWAR
Versus
COMMISSIONER OF INLAND REVENUE, RTO, PESHAWAR
S.T.A. No. 5 (PB) of 2014, decided on 9th December, 2014.
Sales Tax Act (VII of 1990)---
----Ss. 3, 6, 11(5), 26(1), 33, 34 & 46---General Sales Tax Order 3 of 2004 dated 12-6-2004, Paragraph (b)---Failure to file monthly sales tax return---Imposition of penalty along with default surcharge---Appellant/registered person failed to file monthly sales tax returns for 41 months, thus violating provisions of Ss.3, 6 & 26(1) punishable under Ss.33 & 34 of Sales Tax Act, 1990---Appellant having failed to make any reply to show-cause notice issued to him, Adjudicating Authority, imposed penalty along with default surcharge, and also determined liability of minimum tax---Appeal filed against order of Adjudicating Authority was dismissed by Appellate Authority---Validity---Appellant, being registered person was required to file return under S.26(1) of Sales Tax Act, 1990, but it failed to do so despite service of show-cause notice---Attitude of non-appearance of appellant to defend his case, seemed to be violation of penal provisions of Sales Tax Act, 1990---Both, Adjudicating Authority and Appellate Authority below, were justified to impose the penalty on appellant---Condition for exemption under the SROs quoted by appellant was that outstanding principal amount of Sales Tax or Federal Excise Duty was paid by or before the specified dates in the SROs, but, in the present case, appellant had failed to do so---Order of imposition of penalty, was confirmed, in circumstances---Adjudicating Officer imposed minimum tax under S.11(5) of the Sales Tax Act, 1990, read with Sales Tax General Order, 2004---Minimum tax had been imposed after amendment in S.11(5) of the Sales Tax Act, 1990, which revealed nothing about the imposition of minimum tax---Adjudicating Officer was directed to impose sales tax under the new provisions of S.11(5) of the Sales Tax Act, 1990, strictly keeping in view the amendments---Adjudicating Authority had not followed the condition and guideline as given in the General Sales Tax Order, 2004 in its true spirit while levying minimum tax--- Case was remanded to Adjudicating Authority, with the direction to strictly follow in its true spirit the Sales Tax General Order, 2004, read with relevant provisions of S.11(5) of the Sales Tax Act, 1990, as before and after the amendment.
Danish Ali for Appellant.
Nasir Ahmed, DR and Zulfiqar Ahmed, IRAO for Respondent.
2016 P T D (Trib.) 2675
[Inland Revenue Appellate Tribunal]
Before Masood Akhtar Shaheedi, Accountant Member and Qamar-ul-Haq Bhatti, Judicial Member, Messrs ALIF PLASTIC INDUSTRY, LAHORE
Versus
CIR, RTO, LAHORE
S.T.A. No. 1691/LB/15, decided on 10th February, 2016.
Sales Tax Act (VII of 1990)---
----Ss. 2(41), 3(1A), 11(2), 14, 33(3) & 34---Sales Tax Rules, 2006, R.4---SRO No.648(I)/2013 dated 9-7-2013---Failure to charge further tax on supplies made to unregistered persons---Person, who was not under a legal obligation under Sales Tax Act, 1990 to obtain Sales Tax Registration Number, could not be burdened with further tax under S.3(1A) of the Act for not obtaining the Registered Number---Conclusion drawn in the case by both authorities below being based on wrong application of law, was erroneous and factually incorrect---Purchasers from the registered person who did not make any taxable supplies under S.2(41) of Sales Tax Act, 1990, were not bound to obtain Sales Tax Registration Number, as a consequence; they were under no obligation to pay "Further Tax"; and S.3(1A) of Sales Tax Act, 1990, had no application to their case---If the goods were supplied to other than registered person, it would in no case injure the Government Treasury because, the tax was charged on the market price i.e. price to be paid by ultimate consumer---Orders passed by authorities below, which were against the principles of natural justice; were not sustainable in the eyes of law---Law should not be used to penalize the assessee, unless it could be drawn that default on the part of the registered persons had resulted in any loss of revenue---Orders of the authorities below, illegally passed, having no sanctity, in the eyes of law, were vacated, in circumstances.
PLD 1973(sic.) 837 and 2016 PTD (Trib.) 57 ref.
Waheed Shehzad Butt for Applicant.
Adnan Ahmad Khan, D.R. for Respondent.
2016 P T D (Trib.) 2695
[Inland Revenue Appellate Tribunal]
Before Javed Iqbal, Chairman, Muhammad Waseem Ch., Nazir Ahmed, Judicial Members Masood Akhtar Shaheedi and Muhammad Asif, Accountant Members
Messrs SECURITY GENERAL INSURANCE COMPANY LTD., LAHORE
Versus
The CIR, ZONE-III, LTU, LAHORE
I.T.As. Nos. 1274/LB/2015 to 1278/LB/2015, decided on 28th September, 2015.
Per Javed Iqbal, Chairman, Muhammad Waseem Ch., Nazir Ahmed, Judicial Members and Masood Akhtar Shaheedi, Accountant Member agreeing, Muhammad Asif, Accountant Member, dissenting.
Income Tax Ordinance (XLIX of 2001)---
----Ss. 5, 67, 99, 120 & 122(5-A), First Sched., Part-I, Division III & Fourth Sched., R. 5--- Insurance company---Amendment of assessment---Benefit of reduced rate of taxation on 'dividend income', claim for---Taxpayer, for relevant tax years filed return of total income claiming benefit of reduced rate of taxation of 10% on 'dividend income' under S.5 of Income Tax Ordinance, 2001, read with Division III of Part I of First Schedule to the Income Tax Ordinance, 2001---Such returns were deemed to be assessment orders issued under S.120 of the Income Tax Ordinance, 2001---Department, later on, invoked the provisions of S.122(5-A) of the Ordinance, asserting the position that since taxpayer company was an 'Insurance Company', taxation of its income was to be carried out under S.99, read with Fourth Schedule to Income Tax Ordinance, 2001; and provisions of S.5 of the Ordinance, 2001, providing for reduced rate of taxation for dividend income did not apply in the case, as entire income, including 'dividend income', was required to be treated as 'income from business' chargeable to tax at full rate of corporate law in that regard---Validity---Up till 30-6-2007, in Division III of Part I of First schedule to Income Tax Ordinance, 2001, a separate and specific rate of tax for 'dividend income' of 'Insurance Companies' was clearly prescribed---Providing for a reduced rate of taxation, explicitly in Division III of Part I of First Schedule for Insurance Companies at the time of promulgation of the Income Tax Ordinance, 2001, aimed at aligning the Legislation in line with principles settled by the Supreme Court in the case reported as PLD 1997 SC 700 = 1997 PTD 1693---Controversy, was limited to determine the effect of amendment introduced in said Division III of Part I of the First Schedule of Income Tax Ordinance, 2001, vide Finance Act, 2007, whereby the reduced rate, inter alia for insurance companies was done away with; and a uniform rate of 10% was prescribed for dividend income of all recipients---No amendment in S.5 or S.99 of the Income Tax Ordinance, 2001, was made by the Legislature while introducing a uniform rate of tax for various recipients of dividend income---Such position manifestly controverted the departmental stance that with effect from 1-7-2007, S. 5 of Income Tax Ordinance, 2001 became inapplicable as for as 'Insurance Companies' were concerned---Had the intention of the Legislature been to tax dividend income of insurance companies at corporate rate of tax, a corresponding amendment, must have been made in either S.5 or S.99 of the Income Tax Ordinance, 2001; and Fourth Schedule providing for application of uniform rate of taxation for all streams of income---Such was not the case---Dividend income in case of 'insurance companies' would remain chargeable to tax at reduced rate specified in Division III of Part I of the First Schedule to the Income Tax Ordinance, 2001.
Case-law referred.
Asim Zulfiqar, FAC for Appellant.
Muhammad Asim Haleem, D.R. (LTU) and Ch. Muhammad Tariq D.R. (CIR) along with Ali Adnan Khan, DR (LTU) for Respondent.
2016 P T D (Trib.) 2744
[Inland Revenue Appellate Tribunal]
Before Ch. Shahid Iqbal Dhillon, Judicial Member and Muhammad Akram Tahir, Accountant Member
Messrs S & S ENGINEERING COMPANY, MULTAN
Versus
C.I.R., R.T.O. MULTAN
S.T.A. No.973/LB of 2013, decided on 11th February, 2015.
Sales Tax Act (VII of 1990)---
----Ss.2(37), 8-A, 21(3), 23, 46 & 73---Sales Tax Rules, 2006, R.12(2)---STO No.555(I)/2006, dated 2-6-2012, as rescinded by STGO No.35/2012, dated 30-6-2012---Evasion of tax and tax fraud---Suspension of registration and initiating proceedings for blacklisting---Appellant, allegedly having been found involved in the tax evasion and tax fraud---Commissioner, suspended registration of appellant and proceedings for blacklisting were initiated by issuing a show-cause notice---Reply furnished by appellant, having been considered unsatisfactory, appellant was blacklisted---Validity---Section 21 of the Sales Tax Act, 1990, had laid down a procedure for the de-registration, suspension and blacklisting and the Federal Board of Revenue had duly prescribed the procedure through STO No.555(I)/2006, dated 2-6-2012---Said STO was subsequently rescinded, and the Board had issued another STGO No.36/2012, dated 30-6-2012, regarding the procedure for suspension/blacklisting---Said procedure had not been notified in the official gazette as provided in S.21(2) of the Sales Tax Act, 1990---Until or unless, the notification regarding procedure for suspension/blacklisting, was notified in the official gazette, same was not in accordance with law, and had no legal effect---Allegation of tax fraud levelled against the appellant, was based on surmises and conjectures---Trading company on the basis of which, the appellant had been declared blacklisted, in its statement, had admitted that the company were duly shown in its Sales Tax returns, which would mean that said company admitted the declared sales---If any case of tax fraud was to be made, that should have been made against that company and not against the appellant---Appellant had made purchases from the suppliers, which at the material time, were active and their subsequent inclusion in the list of suspended/blacklisted units, could not be applied retrospectively---Impugned order was annulled, and appeal preferred by the appellant was accepted, in circumstances.
PLD 2011 SC 374; 2004 PTD 868 and 2005 SCMR 492 ref.
Riaz Ahmad Raja, I.T.P. for Applicant.
Mrs. Ayesha Imran Butt, D.R. for Respondent.
2016 P T D (Trib.) 2757
[Inland Revenue Appellate Tribunal]
Before Jawaid Masood Tahir Bhatti, Chairperson and Sabiha Mujahid, Accountant Member
Messrs NICON (PVT.) LTD., LAHORE
Versus
C.I.R. R.T.O.-II, LAHORE
I.T.As. Nos.1159/LB and 1160/LB of 2012, decided on 27th August, 2013.
Income Tax Ordinance (XXXI of 1979)---
----Ss. 66A, 59(1) & Second Sched: Part-1, Cl.86B---Powers of Inspecting Additional Commissioner to revise Deputy Commissioner's order---Association of person---Company---Additional Commissioner of Income Tax considered that the assessment framed under S.59(1) of the Income Tax Ordinance, 1979 on account of claiming exemption by the assessee was erroneous and prejudicial to the interest of revenue; and took action in the case of assessee, as an "Association of Persons"---Taxpayer had contended that Inspecting Additional Commissioner of Income Tax had passed order under S.66-A of the Income Tax Ordinance, 1979 in the case of "Association of Persons" and not in the case of appellant "company"; and since the base of order of the Taxation Officer was non-existent in the case of the appellant company, same was liable to be cancelled instead of setting aside the same---Validity---Order under S.66A of the Income Tax Ordinance, 1979 supported the contention of the appellant company that no order under S.66A of the Income Tax Ordinance, 1979 was passed in its case---Taxation Officer had misdirected himself in starting and finalization of proceedings under S.63 of the Income Tax Ordinance, 1979 in the case of taxpayer company---Very basis of the order under S.63 of the Income Tax Ordinance, 1979 was non-existent and liable to be cancelled and Appellate Tribunal ordered accordingly---Other grounds of appeal were not found necessary to be adjudicated by the Appellate Tribunal.
2008 PTD (Trib.) 1641; PLD 1975 Lah. 1317 and 2012 PTD (Trib.) 1032 ref.
Ch. M. Saleem Jahangir and Mian Mansoor Ahmad for Appellants.
Muhammad Jamil Bhatti, D.R. for Respondent.
2016 P T D (Trib.) 2861
[Inland Revenue Appellate Tribunal]
Before Muhammad Jawed Zakaria, Judicial Member
Miss HAJRA BIBI, KARACHI
Versus
OIR, UNIT-06, ZONE-IV, RTO-III, KARACHI
I.T.As. Nos.745/KB and 664/KB of 2014, decided on 2nd June, 2016.
Income Tax Ordinance (XLIX of 2001)---
----Ss. 129, 131, 177 & 182---Failure to furnish return or statement---Imposition of penalty---Commissioner Inland Revenue/Appellate Authority, on the same cause delivered contradictory findings vide two orders, both passed on the same date---Even notices issued to the taxpayer, were the same---Said notices as alleged by the taxpayer had not been issued to him---Taxpayer applied for certified copies but no certified copy of notices issued, were received by the taxpayer, though he paid the fee for the same---Authorities below, seemed to have not applied their judicious mind, rather they proceeded to pass the orders in arbitrary and whimsical manners; which were not maintainable in the eyes of law---No order, particularly, a penal action, could be taken in vacuum, without any proof and such orders were nullity in the eyes of law---Nobody should suffer due to any act, omission or mistake of the department the authorities---Order whereby penalty of Rs.25000 was imposed on taxpayer, was vacated while the other order was upheld.
Nadeem Iqbal for Appellant (in I.T.A. No.745/KB of 2014).
Abdul Rehman Khilji, D.R. for Respondent (in I.T.A. No.745/KB of 2014).
Abdul Rehman Khilji, D.R. for Appellant (in I.T.A. No.664/KB of 2012).
Nadeem Iqbal for Respondent (in I.T.A. No.664/KB of 2014).
2016 P T D (Trib.) 2905
[Inland Revenue Appellate Tribunal]
Before Ch. Shahid Iqbal Dhillon, Judicial Member and Muhammad Akram Tahir, Accountant Member
MUHAMMAD SHAFIQUE SHAHID
Versus
COMMISSIONER INLAND REVENUE, RTO, FAISALABAD
I.T.A. No.15/LB of 2014, decided on 10th December, 2014.
Income Tax Ordinance (XLIX of 2001)---
----Ss. 114, 121(1)(d) & 131---Filing return of income---Best judgment assessment---Taxpayer filed return of income declaring net income at Rs.11,22,813 and his case was selected for audit---Taxation Officer made assessment under S.121(1)(d) of Income Tax Ordinance, 2001, enhancing sales at Rs.3,25,00,000; and net income of the taxpayer was assessed at Rs.33,75,000---Appellate Authority on appeal reduced the sale to Rs.3,10,00,000---Contention of taxpayer who was registered with the Sales Tax Department was that relief allowed by Appellate Authority in reducing the assessed sales from Rs.3,25,00,000 to Rs.3,10,00,000 as against declared sales of Rs.2,78,04,488 was insufficient---Plea of representative of the department was that only those sales could be accepted which were supported by the books of accounts, could not be agreed to---Audit by the Sales Tax Department, had some sanctity as it being a Government Department, its decision should be respected by other Government Institutions---Sales Tax assessment, should also be given proper respect while making income tax assessments---Application of law through mutual trust and respect would bring happy and positive change in society---Declared sales of the taxpayer for the year under consideration, was accepted, in circumstances.
(2005) 91 Tax 177 (Trib.); 2007 PTD 1325; 2005 PTD (Trib.) 745; 2011 PTD (Trib.) 936 and (2007) 96 Tax 57 (Trib.) ref.
Muhammad Imran Rashid for Appellant.
Ms. Ayesha Ranjha, D.R. for Respondent.
2016 P T D (Trib.) 2924
[Inland Revenue Appellate Tribunal]
Before Muhammad Jawed Zakaria, Judicial Member and Ms. Farzana Jabeen, Accountant Member
C.I.R., ZONE-II, R.T.O., SUKKUR
Versus
SILVER TRADING AND CO.
I.T.A. No.496/KB of 2012, decided on 18th September, 2014.
(a) Income Tax Ordinance (XLIX of 2001)---
---S. 131----Appeal to Appellate Tribunal---Mandatory requirements---While filing appeal, it was mandatory for tax payer to send briefs consisting of grounds of appeal, assessment order, appellate order and a copy of appeal memo and it may be ensured by the higher authorities that Departmental Representatives appearing must be well prepared and with all relevant records so that they may protect interest of revenue and assist in dispensation of justice.
(b) Income Tax Ordinance (XLIX of 2001)---
----S. 131---Appeal to Appellate Tribunal---Scope of powers of Appellate Tribunal---Appellate Tribunal Inland Revenue, like any judicial body, had a number of procedural requirements to be complied with before an appeal could be heard---Departmental Representatives neglect to comply with requirements, decency, decorum of court craft and court culture and also by-passing interest of revenue with result that their matters get adjourned and they waste their own time and that of department and of Bench also.
(c) Income Tax Ordinance (XLIX of 2001)---
----S. 131---Appeal to Appellate Tribunal---Bench and Bar---Duties---Appellate Tribunal Inland Revenue was final fact finding authority---Department, Members of Bar and Bench were trustees and onus was on them to preserve its dignity, sanctity and purity---Role of Departmental Representatives was no less than that of Bar and Bench---Duty of Departmental Representative was very noble and sacred one and they were entrusted with a duty to be performed in court---Departmental Representatives were only agents or trustees of department in one sense but also an Officer of the court; they had three fold duties; one towards department/FBR/Government another towards the court and third towards the opposing counsel.
(d) Bench and Bar---
----Counsel of taxpayers and department may file adjournment applications in advance wherever possible and a copy of same must be forwarded to concerned representative of other party and also before court at time of hearing---Appearance before Tribunal even for seeking an adjournment was representation and only persons authorized to appear as such could seek an adjournment on behalf of taxpayer---Trainee, clerks or staff employed by professionals were not competent to appear in this behalf in absence of necessary authorization.
(e) Legal Practitioner---
----Whether someone was a Departmental Representative, lawyer or a judge, he was an eternal student of law---Every day was a new experience, every new thought, new fact or situation, new argument revealed, a new angle needing attention of studious representatives, holding degree of law was not just enough---Degree in law would merely serve purpose of enrolment as a lawyer but real journey of profession begin from active practice in court.
Nemo for Appellant.
Udha Ram Rajput for Respondent.
2016 P T D (Trib.) 2936
[Inland Revenue Appellate Tribunal]
Before Shahid Iqbal Dhillon, Judicial Member and Muhammad Raza Baqir, Accountant Member
Messrs DUA INTERNATIONAL TRADING SYSTEMS
Versus
COMMISSIONER INLAND REVENUE
I.T.A. No.2426/LB of 2013, decided on 16th April, 2014.
Income Tax Ordinance (XLIX of 2001)---
----Ss. 177, 121, 122 & 131---Selection of person for audit---Criteria---Interpretation of S.177 of the Ordinance---Amended assessment---Section 177, Income Tax Ordinance, 2001 had made it clear that the laying down of criteria for selection of any person for audit of his income tax affairs in terms of subsection (1) of S.177 of Income Tax Ordinance, 2001, was an essential pre-requisite for the Commissioner to select a person for audit---Once the Commissioner had selected a case for audit in accordance with the criteria laid down by the Central Board of Revenue, then additionally, the Commissioner could also select a person for an audit of the person's income tax affairs; having regard to the factors enumerated in clauses (a), (b) & (c) of sub-section (4) of S.177 of Income Tax Ordinance, 2001---Subsection (4) of S.177 of Income Tax Ordinance, 2001, would come into play, when the Commissioner in the course of proceedings with the audit of a person, would discover that in addition to the selection of person, the Commissioner required to select another person for audit of income tax affairs---Such was exactly what was envisaged in subsection (4) of S.177 of Income Tax Ordinance, 2001, wherein it was clearly mentioned that in addition to the selection referred to in subsection (2) thereof, the Commissioner could also select a person for audit of his income tax affairs---Subsection (4) of S.177, was secondary in character in relation to subsections (1) and (2)---If subsection (4) was not capable of being isolated from subsections (1) and (2), clause (d) of subsection (4) could not be detached from its preceding clauses of subsections---Clause (d) of subsection (4) of S.177 of Income Tax Ordinance, 2001, could not be applied in isolation of the preceding clauses (a), (b) & (c) of subsection (4)---Different clauses of S.177, were interrelated and the sequence, or order in which those had been mentioned by the legislature in its wisdom, must be observed by the Authorities in letter and spirit as an obligation---Impugned selection for audit of taxpayer's case for audit under S.177(4)(d) of the Income Tax Ordinance, 2001, was illegal and without lawful authority---Same was set at naught, which rendered the consequent amended assessment to be illegal, hence same was cancelled and taxpayer's appeal had succeeded on legal score---Impugned amended assessment, which was under S.121(1)(d) of Income Tax Ordinance, 2001, was not warranted prior to insertion of subsection (10) in S.177 of the Income Tax Ordinance, 2001 through the Finance Act, 2010, which would be applicable from the tax year 2011---Impugned ex parte assessment, was liable to be cancelled on that score too.
2013 PTD 391 ref.
Syed Ali Imran Rizvi for Appellant.
Sajjad Taslim, D.R. for Respondent.
2016 P T D 596
[Islamabad High Court]
Before Athar Minallah, J
PAKISTAN TOBACCO COMPANY LTD.
Versus
FEDERATION OF PAKISTAN and others
W.P. No.4001 of 2012, decided on 28th December, 2015.
(a) Interpretation of statutes---
----Fiscal statute---Principle---While interpreting fiscal statutes, court looks at what is clearly said; there is no room for any intendment; there is no equity about a tax; there is no presumption as to tax and nothing has to be read in or implied and one can only look fairly at the language used.
Cape Brandy Syndicate v. Inland Revenue Commissioner (1921) 1 KB 64; Federation of Pakistan through Secretary Ministry of Finance and others v. Haji Muhammad Sadiq and others PLD 2007 SC 133; Aslam Industries Ltd., Khanpur v. Pakistan Edible Corporation of Pakistan and others 1993 SCMR 683; Collector of Customs (Appraisement), Karachi and others v. Messrs Abdul Majeed Khan and others 1977 SCMR 371 and Messrs Hirjina & Co. (Pakistan) Ltd., Karachi v. Commissioner of Sales Tax Central Karachi 1971 SCMR 128 rel.
(b) Legislation---
----Delegation of power---Scope---Legislative power cannot be delegated as the same would tantamount to violation of letter of Constitution.
(c) Interpretation of statutes---
----Fiscal statute---Charging section---Effect---Unlike principle of strict construction in the case of charging section, machinery provisions are construed liberally so as to effectuate charging provisions.
Pearl Continental Hotel and another v. Government of N.-W.F.P. and others 2010 PTD 2018 rel.
(d) Income Tax Ordinance (XLIX of 2001)---
----Ss. 122 & 210(1)---Constitution of Pakistan, Art. 199---Constitutional petition---Maintainability---Aggrieved person---Scope---Notice, issuance of---Delegation of power---Alternate remedy, availing of---Petitioner companies were aggrieved of notices issued by an official who was not authorized under the law, without delegation of power---Validity---Separate order was not required in respect of delegation of power, for the purposes of S. 122(6) of Income Tax Ordinance, 2001---Was sufficient, if Commissioner had delegated his powers and functions to an officer not lower in rank than an Additional Commissioner for the purposes of S. 122 of Income Tax Ordinance, 2001---Delegation of powers vested in Commissioner under S. 122 of Income Tax Ordinance, 2001, would essentially include and cover powers under all of its subsections i.e. from (1) to (9) of S. 122 of Income Tax Ordinance, 2001---Adequate remedy was provided under law therefore, petition under Art. 199 of the Constitution was not competent---Once petitioner made resort to alternate remedy available under law, then Constitutional petition was liable to be dismissed---Notices in question were issued by officers vested with power and jurisdiction under Income Tax Ordinance, 2001, therefore, did not suffer from any legal infirmity or jurisdictional error---Notices were not adverse orders so as to bring petitioners within the fold of 'aggrieved persons'---High Court declined to interfere in the notices issued by authorities---Petition was dismissed in circumstances.
2013 SCMR 1158; PLD 2002 SC 460; Province of Sindh and others v. Ghulam Fareed and others 2014 SCMR 1189; Captain Muhammad Azhar v. (1) Commissioner of Karachi and (2) Province of West Pakistan PLD 1966 SC 253; Izhar Alam Farooqi Advocate v. Sheikh Abdul Sattar Lasi and others 2008 SCMR 240; Commissioner of Income Tax, Companies-II and another v. Hamdard Dawakhana (Waqf) Karachi PLD 1992 SC 847; Khalid Mehmood v. Collector of Customs, Customs House, Lahore 1999 SCMR 1881; Mian Jamal Shah v. The Member Collection Commissioner, Government of Pakistan, Lahore and others PLD 1966 SC 1; Mst. Bibi Alam Taj and others v. Mst. Inayat Begum PLD 1963 Pesh. 199; Lahore Development Authority through D.G. and others v. Ms. Imrana Tiwana and others 2015 SCMR 1739; Mrs. Sh. Abdul Rahim, Allah Ditta v. Federation of Pakistan and others PLD 1988 SC 670 and Sobho Gyanchandani v. Crown PLD 1952 FC 29 ref.
Commissioner of Income Tax, Companies-II and another v. Hamdard Dawakhana (Waqf) Karachi PLD 1992 SC 847 rel.
Sardar Ahmed Jamal Sukhera, Ali Sibtain Fazli, Hafiz Muhammad Idrees and Muzammal Hussain for Petitioners.
Hafiz Munawar Iqbal, Saeed Ahmed Zaidi, Babar Bilal, Shazia Bilal, Sheikh Anwar-ul-Haq and Dr. Mrs. Farhat Zafar for Respondents.
Fazal-ur-Rehman Khan Niazi, Deputy Attorney General.
Dates of hearing: 26th June and 3rd December, 2015.
2016 P T D 824
[Islamabad High Court]
Before Athar Minallah, J
PAKISTAN OILFIELDS LTD., through General Manager
Versus
FEDERATION OF PAKISTAN through Secretary Revenue, Division and 3 others
Writ Petition No.2333 of 2012, decided on 28th December, 2015.
Customs Act (IV of 1969)---
----Ss. 83-A, 196 & 202-A---S.R.O. 400(1)/97, dated 31-05-1997--- S.R.0.761(1)/2012, dated 21-06-2012---Consolidated fee, recovery of---Petitioner company was aggrieved of show cause notice issued by authorities seeking recovery of 3% consolidated fee on annual deferred basis pursuant to clause 3 of S.R.O. 400(1)/97, dated 31-05-1997--- Plea raised by petitioner was that it was entitled to the benefit of amnesty scheme under S.R.O. 761(1)/2012, dated 21-06-2012- Validity-Notification which conferred a benefit could operate retrospectively while it was otherwise when a notification had impaired an existing/vested right or imposed liability or obligations---Petitioner had paid principal amount adjudged pursuant to the show cause notice and was entitled to the benefit of remissions as described under the notification---Refusal on the part of authorities to extend the benefit of notification was arbitrary and illegal---Benefit of notification was only to the extent of principal amount paid by the petitioner before cut-off date, i.e., 30-6-2012---Constitutional petition was allowed accordingly.
Messrs Army Welfare Sugar Mills Ltd. and others v. Federation of Pakistan and others 1992 SCMR 1652; Anoud Power Generation Limited v. Federation of Pakistan and others PLD 2001 SC 340; Collector of Sales Tax and Central Excise, Lahore v. Messrs Fauji Sugar Mills, Sheikhupura 2007 PTD 2598; CIT Central Zone, Lahore v. National Security Insurance Co. Ltd. Lahore 2001 PTD 814; Messrs Kamalia Sugar Mills Ltd., Kamalia v. Superintendent, Intelligence and Investigation (Customs and Central Excise), Regional Office Lahore and another 2002 PTD 632 and Messrs UDL Industries Ltd., Karachi v. Collector of Customs (Appraisement), Karachi and 4 others 2005 PTD 940 rel.
Barrister Umar Majeed Malik for Petitioner.
Mujeeb-ur-Rehman Warraich, Saeed Ahmed Zaidi and Malik Zahoor Awan for Respondents.
Date of hearing: 27th November, 2015.
2016 P T D 955
[Islamabad]
Before Aamer Farooq, J
Messrs HAQ BAHU SUGAR MILLS (PVT.) LTD.
Versus
FEDERATION OF PAKISTAN and others
W.P. No.3678 of 2015, heard on 11th January, 2016.
Income Tax Ordinance (XLIX of 2001)---
----S. 209(1)---Sales Tax Act (VII of 1990), Ss. 30 & 31---Federal Excise Act (VII of 2005), S. 29---Transfer of case----Authorities transferred case of assessee from Regional Tax Office to Large Tax Unit (LTU) in respective area but it was again transferred to Regional Tax Office---Plea raised by assessee was that re-transfer order was passed without issuing any notice and granting any opportunity of hearing---Validity---Generally, office orders did not require opportunity of hearing to be granted to persons concerned---After transfer of jurisdiction by authorities case of assessee was being proceeded by LTU, as was clear from various letters appended with petition---Propriety demanded that before passing order in question, opportunity of hearing should have been granted to assessee as its case was the only one being re-transferred to Regional Tax Office---Even in administrative matters which adversely affect rights of a person, principles of natural justice were to be complied with---Authorities under S. 209 of Income Tax Ordinance, 2001, Ss. 30 & 31 of Sales Tax Act, 1990, and S. 29 of Federal Excise Act, 2005, did not have absolute jurisdiction to transfer or re-transfer cases---High Court set aside the order passed by authorities---Constitutional petition was allowed in circumstances.
Qazi Abdul Jalil v. N.W.F.P. Forest Development Corporation and others 2010 SCMR 1933; Liaqat Ali Chugtai v. F.O.P and others PLD 2013 Lah. 413; Messrs Dewan Salman Fiber and others v. Govt. of NWFP and others PLD 2004 SC 441 and Mrs.Anisa Rehman v. P.I.A.C. and others 1994 SCMR 2232 ref.
Government of Pakistan v. Farheen Rashid 2011 SCMR 1; Muhammad Din and others v. Jamal Din and others 2007 SCMR 1091; Chairman, Regional Transport Authority v. Pakistan Mutual Insurance Company Limited PLD 1991 SC 14 and Complaint No.149/Islamabad/IT(128)/790/2010 rel.
Munawar us Salam for Petitioner.
Saeed Ahmed Zaidi for Respondents.
Date of hearing: 11th January, 2016.
2016 P T D 1061
[Islamabad High Court]
Before Noor-ul-Haq N. Qureshi and Athar Minallah, JJ
PAK GULF CONSTRUCTION (PVT.) LTD.
Versus
COMMISSIONER INLAND REVENUE
Income Tax References Nos.73 to 76 of 2014, decided on 15th February, 2016.
(a) Interpretation of statutes---
----Intention of legislature---Principle---In order to discover intention of legislature, provision has to be read as a whole.
(b) Income Tax Ordinance (XLIX of 2001)---
----Ss. 127, 131 & 133---Reference---Interim injunction, grant of---Principle---Assessee was aggrieved of order passed by Appellate Tribunal Inland Revenue rejecting application for interlocutory relief when no stay was granted in appeal pending before Commissioner Inland Revenue (Appeals)---Validity---Ingredients to be determined to decide an application seeking injunctive order were that a prima facie case was made out; that irreparable loss would be suffered to the taxpayer; and the balance of convenience or inconvenience---Appeal before Commissioner Inland Revenue (Appeals) was a statutory right provided under S.127 of Income Tax Ordinance, 2001---Refusal to grant an injunctive order, while the appeal was pending, had the effect of upholding the 'recovery' of tax---Appellate Tribunal Inland Revenue did not properly appreciate first proviso to S.131 of Income Tax Ordinance, 2001, in its true perspective---Consolidated order passed by Appellate Tribunal Inland Revenue could not be held as a legal order therefore, the same was set aside---High Court remanded the matter to Appellate Tribunal Inland Revenue for decision afresh---Reference was disposed of accordingly.
Saad M. Hasmi for Applicant.
M. Irshad Chaudhry for Respondent.
2016 P T D 1142
[Islamabad High Court]
Before Noor-ul-Haq N. Qureshi, J
Messrs KINGCRETE BUILDERS through General Manager
Versus
CENTRAL BOARD OF REVENUE, through Chairman CBR, Islamabad and 3 others
W.P. No.888 of 2013, heard on 19th January, 2016.
Customs Act (IV of 1969)---
----Ss. 30 & 30-A---Notification S.R.O. No. 1090(I)/2006, dated 01-11-2006---Conditional exemption---Scope---Petitioner imported 13 concrete transit mixers and his grievance was that authorities had declined benefit of Notification S.R.O. No. 1090(I)/2006, dated 01-11-2006 to him---Validity---Parties had given joint undertaking to pay amount of taxes within 3 days, in case, Federal Board of Revenue would deny exemption in excess of 5% customs duty---Petitioner, in the said undertaking, had also undertaken to accept decision of adjudicating authority by paying fine/penalty which later on came in the shape that there was no retrospective effect of Notification S.R.O. No. 1090(I)/2006, dated 01-11-2006---Petitioner was accommodated in view of such undertaking and when decision was made on the issue, petitioner was required to pay the differential amount---High Court declined to interfere in the decision made by Federal Board of Revenue---Constitutional petition was dismissed in circumstances.
PLD 1999 Kar. 238; 1993 SCMR 1905; PLD 1993 SC 147; PLD 1997 SC 334; 1999 SCMR 16; 1999 SCMR 412; 2005 SCMR 37 and 2010 SCMR 115 ref.
Syed Riaz Hussain for Petitioner.
Raja Muhammad Iqbal for Respondents.
Date of hearing: 19th January, 2016.
2016 P T D 1158
[Islamabad High Court]
Before Athar Minallah, J
Messrs SIEMENS AKTIENGESELLSCHAFT ("SIEMENS AG") 2 through Authorized Person
Versus
PAKISTAN through Secretary Revenue Division and 3 others
W.P. No.1620 of 2013, decided on 10th December, 2015.
(a) Income Tax Ordinance (XLIX of 2001)---
----S. 122(5) & (9)---Constitution of Pakistan, Art. 199---Constitutional petition---Show cause notice---Scope---Petitioner company was aggrieved of initiation of proceedings under S. 122(5) read with 122(9) of Income Tax Ordinance, 2001---Validity---Jurisdiction of officer who issued notices in question was not disputed, therefore, it did not involve question of want of jurisdiction---High Court declined to doubt competence or bona fides of officer who issued notices in question---Entertaining constitutional petition in such circumstances and deciding merits would amount to bypassing and circumventing statutory forums as the same was undermining legislative intent as the powers and jurisdictions were vested in various forums under the Income Tax Ordinance, 2001---Provision of S. 122(9) of Income Tax Ordinance, 2001, provided that assessment would not be amended or further amended unless the taxpayer was provided with an opportunity of being heard---Mere issuance of notice in no manner caused any prejudice so as to give rise to a grievance---Notice in question could not be treated as an adverse order therefore, Constitutional petition was not maintainable---High Court observed that the petitioner would be at liberty to file its reply and submission before the authority which had issued the notice in question---High Court directed the Authority to afford proper opportunity of hearing and proceed in the matter in accordance with law---Constitutional petition was dismissed in circumstances.
Edulji Dinshaw Limited v. Income-Tax Officer 1990 PTD 155; Roche Pakistan Ltd. v. Deputy Commissioner of Income-Tax and others 2001 PTD 3090; Sitara Chemical Industries Ltd and another v. Deputy Commissioner of Income-Tax 2003 PTD 1285; I.C.I. Pakistan Ltd., through Chief Financial Officer, Karachi v. Federation of Pakistan through Secretary Ministry of Finance and 3 others 2006 PTD 778; Messrs Julian Hoshang Dinshaw Trust and others v. Income-Tax Officer, Circle XVIII South Zone, Karachi and others 1992 SCMR 250; Messrs Usmania Glass Sheet Factory Limited Chittagong v. Sales Tax Officer, Chittagong PLD 1971 SC 205; Nagina Silk Mill, Lyallpur v. Income Tax Officer and others PLD 1963 SC 322; Federation of Pakistan through Secretary, Finance, Islamabad and 4 others v. Messrs Ibrahim Textile Mills Ltd and others 1992 SCMR 1898; Messrs Central Insurance Co. and others Co. v. Central Board of Revenue, Islamabad and others 1993 5CMR 1232; Telecard Ltd. through Authorized representative v. Pakistan Telecommunication Authority through Chairman 2014 CLD 415 and Messrs Attock Gen Ltd. v. Additional Commissioner (Audit), Large Taxpayer Unit Islamabad and 3 others W.P. No.4066 of 2012 ref.
(b) Constitution of Pakistan---
----Art. 199---Constitutional petition---Disputed question of fact---Scope---Such question cannot be resolved while exercising powers and jurisdiction under Art. 199 of the Constitution.
Abdul Rab and others v. Wali Muhammad and others PLD 1980 SC 139; Ghulam Muhammad and another v. Mst. Noor Bibi and 5 others 1980 SCMR 933; Khawaja Muhammad Akhtar v. President, Cantonment Board, Sialkot Cantt Election Authority (Tribunal) and another 1981 SCMR 291; Benedict F.D Souza v. Karachi Building Control Authority and 3 others 1989 SCMR 918; Federation of Pakistan and 2 others v. Major (Retd.) Muhammad Sabir Khan PLD 1991 SC 476 and Muhammad Younis Khan and 12 others v. Government of N.W.F.P. through Secretary, Forest and Agriculture, Peshawar and others 1993 SCMR 618 rel.
Dr. Muhammad Farogh Naseem for Petitioner.
Muhammad Bilal, Babar Bilal and Shazia Bilal for Respondents.
Date of hearing: 12th November, 2015.
2016 P T D 1436
[Islamabad High Court]
Before Aamer Farooq, J
LINKDOTNET TELECOM LIMITED
Versus
CHIEF COMMISSIONER INLAND REVENUE, ISLAMABAD and 2 others
W.P. No. 2518 of 2015, decided on 15th October, 2015.
Income Tax Ordinance (XLIX of 2001)---
----Ss. 152(5) & 2(54)---S.R.O. 248(I)/2001 dated 26.04.2001---Convention for Avoidance of Double Taxation Between the Islamic Republic of Pakistan and the Government of the United Arab Emirates, Arts. 12(3) & 11---Deduction of tax at Source---Double taxation---Payments to non-residents---"Royalty", definition and scope---Petitioner's application to Commissioner Large Taxpayers Unit for permission to make payment to its UAE business partner without deduction of tax at source under S. 152(5) of the Income Tax Ordinance, 2001 on the ground that said partner was a non-resident entity in Pakistan, was rejected---Contention of Department was that said payment was for use of equipment and amounted to royalty within meaning of Art. 12 of Convention for Avoidance of Double Taxation Between the Islamic Republic of Pakistan and the Government of the United Arab Emirates---Validity---By virtue of Convention for Avoidance of Double Taxation Between the Islamic Republic of Pakistan and the Government of the United Arab Emirates, a business concern in a contracting State was to be taxed only in its own country if it did not have any arrangement in the other contracting State---Royalty was an exception to the general scope under said Convention and under said Convention royalties arising in a contracting State may be taxed in the other state and royalties may also be taxed in the contracting State in which they arose and if recipient was beneficiary owner of the royalties, then tax so charged should not exceed a certain percentage of the gross amount of such royalties---"Royalty" as defined in the said Convention showed that the term "royalty", inter alia, included payment of any kind for use of or the right to use industrial, commercial or scientific equipment and definition of "royalty" per S. 2(54) of the Income Tax Ordinance, 2001 was payment for use of, or right of use in industrial, commercial and scientific equipment---Term that had been used in agreement between the parties was rendering of service and service had been defined as well but service that was rendered in the present case depended upon use of equipment and petitioner had the right to use said equipment of its contracting party for which payments were made to it---Scope and definition of word "royalty" was of a wide ambit and included right to use any type of commercial or scientific equipment which may be tangible or intangible---Department, in impugned order, had not interpreted the concept of "royalty" in an unreasonable or irrational manner which could be interfered with---Constitutional petition was dismissed, in circumstances.
1992 PTD 954 ref.
Saraswathi Udyog v. State of Haryana (1987) 1 Punj LR, 305; Kheyerbari Tea Co. Ltd. v. State of Assam AIR 1964 SC 925; Doma Sao Kishan Lal v. State of Bihar AIR 1952 PAT 357; Dy. Commr, Sales Tax v. GS Pai Co., AIR 1980 SC 611; Buttu Lal Makhanlal Jain v. Commr. of Sales Tax, Madhya Pradesh (1962) MPLJ 915; Birla Cement Works v. State of Rajasthen (1974) 4 SCC 277; India Cement Ltd. v. State of TN AIR 1990 SC 85; International Development Corporation Ltd. v. State of M.P. AIR 1990 MP 112 and State of W.B. v. Karosome Industries Limited 2004 266 ITR 721 rel.
Naveed A. Andrabi and Ayyaz Shaukat for Petitioner.
Hafiz Munawar Iqbal for Respondent Nos. 1 and 2.
Barrister Munawar Iqbal Duggal for Respondent No.3.
Nasir Khan, Commissioner Enforcement and Ghulam Abbas Kazmi, Commissioner Legal.
2016 P T D 1484
[Islamabad High Court]
Before Athar Minallah, Noor-ul-Haq N. Qureshi and Aamer Farooq, JJ
PAKISTAN TELECOMMUNICATION COMPANY LTD.
Versus
FEDERATION OF PAKISTAN
I.C.A. No.529 of 2014, with others connected appeals decided on 25th February, 2016.
(a) Income Tax Ordinance (XLIX of 2001)---
----Ss.120 & 177---Self-assessment scheme---Audit---Scope---In any self-assessment scheme, audit is the most effective and efficient tool to verify accuracy of declarations made in returns, treated as assessment order---Audit is the only process for the purposes of determining that correct income has been declared and levied tax has been paid.
(b) Interpretation of statutes---
----Redundancy---Scope---Every word and expression has to be given meaning and redundancy has to be avoided.
(c) Interpretation of statutes---
----Procedural provision---Scope---Principles of strict interpretation do not extend to the machinery of procedural provisions---Such provisions are to be interpreted liberally so as to effectuate charging sections.
Pearl Continent Hotel and another v. Government of N.W.F.P and others 2010 PTD 2018 and Commissioner of Income Tax v. Messrs Eli Lilly Pakistan (Pvt.) Ltd. 2009 PTD 1392 rel.
(d) Income Tax Ordinance (XLIX of 2001)---
----Ss. 120, 177 & 214-C---Constitution of Pakistan, Arts. 10A, 18 & 25---Self-assessment scheme---Audit---Commissioner, powers of---Due process of law, right of free trade and discrimination---Assessees assailed show cause notices issued to them for conducting of their audit against the returns filed under Self-Assessment Scheme---Single Judge of High Court dismissed the petition filed by assessees---Validity---Powers of Commissioner under S. 177 of Income Tax Ordinance, 2001, were not subservient to the powers of Federal Board of Revenue, under S. 214-C of Income Tax Ordinance, 2001---Powers under both the provisions were exclusive and independent of each other---Scope of power of Commissioner under S. 177 of Income Tax Ordinance, 2001, were circumscribed by the checks and limitations which had been imposed by legislature---Power to select a person under S. 177 of Income Tax Ordinance, 2001, exclusively vested in Commissioner and the same had to be exercised within the scope determined therein---Power of Commissioner to call for record and conduct audit under S.177 of Income Tax Ordinance, 2001, did not require any pre-selection process by the Board---Division Bench of High Court, in intra court appeal, declined to declare provisions of S. 177 of Income Tax Ordinance, 2001, to be in violation of Art. 10-A, 25 or 18 of the Constitution---Notices in questions either did not disclose reasons based on criterion determined by Commissioner or no reason had been mentioned---High Court directed the Commissioner to afford an opportunity of hearing to each assessee and thereafter pass speaking order and judgment passed by Single Judge of High Court was set aside---Intra Court Appeal were allowed accordingly. Chenone Stores Limited through Executive Director (Finance Accounts) v. Federal Board of Revenue through Chairman and 2 others 2012 PTD 1815 and Northern Bottling Company Limited v. Federation of Pakistan 2013 PTD 1552 dissented from.
Chenone Stores Limited through Executive Director (Finance Accounts) v. Federal Board of Revenue through Chairman and 2 others 2012 PTD 1815 and Northern Bottling Company Limited v. Federation of Pakistan 2013 PTD 1552 dissented from.
Case-law referred.
(e) Sales Tax Act (VII of 1990)---
----Ss. 25 & 72-B---Audit---Summoning of record of documents---Powers of Commissioner and Federal Board of Revenue---Scope---Provisions of S. 25 & S. 72-B of Sales Tax Act, 1990, are independent of each other---Commissioner is exclusively empowered to exercise powers within the scope and limits as prescribed under S. 25(1) of Sales Tax Act, 1990.
(f) Federal Excise Act (VII of 2005)---
----S.46---Audit---Powers of Commissioner and Federal Board of Revenue---Giving of advance notice---Purpose, object and scope---Board as well as Commissioner are empowered to conduct audit of the record and documents of any person registered under Federal Excise Act, 2005, once a year after giving advance notice in writing---Requirement of giving advance notice in writing includes giving reasons for selection of a person for audit---Such power, if exercised by Commissioner, is not dependent on a pre-selection to be made by the Board under S. 42-B of Federal Excise Act, 2005---Notice in writing required to be given in advance under S. 46 of Federal Excise Act, 2005, has to give reasons.
Makhdoom Ali Khan, ASC, Ali Sibtain Fazli, ASC Hafiz Muhammad Idrees, ASC and Ch. Naeem Ul Haq, Sardar Ahmed Jamal Sukhera, Malik Nasir Abbas Awan, Saad Hashmi and Salman Afridi for Appellants.
Hafiz Munawar Iqbal, Dr. Farhat Zafar, Sheikh Anwar Ul Haq, Saeed Ahmed Zaidi, Ayyaz Shaukat and Syed Anwar Ahmed Shah for Respondents.
Date of hearing: 25th November, 2015.
2016 P T D 1590
[Islamabad High Court]
Before Athar Minallah, J
PAKISTAN OIL FIELDS LTD. through Authorised Attorney and General Manager
Versus
FEDERATION OF PAKISTAN through Secretary Revenue and 2 others
Writ Petition No.3414 of 2011, decided on 24th February, 2016.
(a) Income Tax Ordinance (XLIX of 2001)--
----S. 130---Appellate Tribunal---Proceedings---Scope---Appellate Tribunal is the first independent forum outside the department to decide rights and liabilities of taxpayer as well as safeguarding the interests of exchequer---Proceedings before Appellate Tribunal are judicial proceedings---Appellate Tribunal has the power to stay recovery of tax under relevant statute or increase burden of liability.
(b) Constitution of Pakistan---
----Arts. 189 & 188---Judgment of Supreme Court---Binding nature---Review, pendency of---Even if a review is pending against judgment of the Supreme Court the same is binding unless it has been reviewed and a different conclusion is reached by Supreme Court---Judgment of Supreme Court has due effect and deference if it decides a question of law or is passed on the basis of law and/or enunciates a principle of law.
Khan Gul Khan and others v. Daraz Khan 2010 SCMR 539; Muhammad Tariq Badr and another v. National Bank of Pakistan and others 2013 SCMR 314; Sindh High Court Bar Association through its Secretary and others v. FOP through M/O Law and Justice, Islamabad and others PLD 2009 SC 879; Commissioner Income Tax v. Habib Bank Ltd. ANZ and Grindlays Bank 2015 PTD 619, Pakistan Telecommunication Employees Trust (PTET) through M.D. Islamabad and others v. Mohammad Arif and others 2015 SCMR 1472 and Nazir Ahmed and others v. The State and others PLD 2014 SC 241 rel.
(c) Income Tax Ordinance (XLIX of 2001)---
----Ss. 2(2), 3(c) & 130---Sales Tax Act (VII of 1990), S.46---Federal Excise Act (VII of 2005), S.2(3)---De facto doctrine, applicability---Appointment of Chairman Appellate Tribunal---Consultation with Chief Justice---Scope---Petitioners assailed appointment of Chairman and members of Appellate Tribunal on the ground that Chief Justice of Pakistan was not consulted on such appointment---Validity---Meaningful consultation with Chief Justice of Pakistan before making such appointment was to safeguard independence of judiciary; it could be through such meaningful consultation that it was determined whether a person falling in S.3(c) of Income Tax Ordinance, 2001 was to be appointed as Judicial Member---Three categories of persons were prescribed who could be appointed as judicial members and with regard to nature of such appointment, preference could be given to such category as would be in the best interest of independence of Appellate Tribunal as a forum exercising judicial functions---Such object could be achieved through meaningful consultations with Chief Justice of Pakistan---High Court declared appointments of Chairman and Members of Appellate Tribunal made without consultation of Chief Justice of Pakistan, as illegal, void and without lawful authority---Chairman and Members so appointed were directed to be treated as de facto holders of their respective offices---Acts done and orders or judgments passed, including any and all proceedings shall remain protected under de facto doctrine---Constitutional petition was allowed accordingly.
Sh. Riaz-ul-Haq and others v. Federation of Pakistan and others PLD 2013 SC 501 rel.
Government of Balochistan v. Azizullah Memon PLD 1993 SC 341; Government of Sindh v. Sharaf Faridi PLD 1994 SC 105; Imran v. Presiding Officer Punjab Special Court No.VI, Multan PLD 1996 Lah. 542; Mehram Ali v. Federation of Pakistan PLD 1998 SC 1445; Liaquat Hussain v. Federation of Pakistan PLD 1999 SC 504; Ziaullah v. Najeebullah PLD 2003 SC 656; Raj Mohd Khan v. Mohd Farooq Khan 1998 SCMR 669; Ranyal Textiles v. Sindh Labour Court PLD 2010 Kar. 27; Shahid Orakzai v. Pakistan PLD 2011 SC 365; Ch. Nisar Ali Khan v. Federation of Pakistan PLD 2013 SC 568; Magor and St. Mellons Rural District Council v. Newport Corporation (1951) 2 All ER 839; State v. Zia ur Rehman PLD 1973 SC 49; Executive District Officer (Revenue), District Khushab at Jauharabad v. Ijaz Hussain 2012 PLC (C.S.) 917; Air Marshal (Retd.) Muhammad Asghar Khan v. General (Retd.) Mirza Aslam Baig, Former Chief of Army Staff PLD 2013 SC 1; Shahid Nabi Malik v. Chief Election Commissioner PLD 1997 SC 32; Shell Co. of Australia Limited v. Federal Commissioner of Taxation (1930) All ER 367; Imran Raza Zaidi v. Government of Punjab 1996 SCMR 645; Tariq Transport Company v. The Sargodha Bhera Bus Service PLD 1958 SC 437 and Lahore Development Authority through D.G. and others v. Ms. Imrana Tiwana and others 2015 SCMR 1739 ref.
Makhdoom Ali Khan, Shahid Hamid, Senior Advocates Supreme Court, Muhammad Raheel Kamran Sheikh, Sardar Ahmed Jamal Sukhera, Ali Sabtain Fazli, Ayyaz Shaukat, Advocates Supreme Court and Malik Sardar Khan Awan, AHC and Saad M. Hashmi, AHC for Petitioners.
Afnan Karim Kundi, Additional Attorney General, Malik Zahoor Awan, Standing Counsel, Saeed Ahmed Zaidi,, Sh. Anwar-ul-Haq and Mst. Dr. Farhat Zafar, Advocates Supreme Court for Respondents.
Date of hearing 25th November, 2015
2016 P T D 1675
[Islamabad High Court]
Before Athar Minallah, J
OIL AND GAS DEVELOPMENT COMPANY LTD. through Manager (Pricing)
Versus
FEDERAL BOARD OF REVENUE through Chairman and 2 others
W.P. No.805 of 2015, decided on 29th April, 2016.
(a) Sales Tax Act (VII of 1990)---
----S. 11----Constitution of Pakistan, Art. 199---Assessment of tax and recovery of tax not levied or short levied or erroneously refunded---Show cause notice---Scope---Constitutional petition---Maintainability---Show caused notice was issued on allegations of failure to impose or collect sales tax---Mere show cause notice was not an adverse order; however, exception to said general rule was that if the show cause notice was without jurisdiction constitutional petition was maintainable---Objection as to maintainability of constitutional petition was repelled in circumstances.
Commissioner of Income Tax v. Eli Lilly Pakistan (Pvt.) Ltd., 2009 SCMR 1279; Gatron (Industries) Ltd. v. Government of Pakistan and others 1999 SCMR 1072 and Murree Brewery Co. Ltd. v. Pakistan through Secretary to GOP, Works and Division and 2 others PLD 1972 S.C. 279 rel.
(b) Sales Tax Act (VII of 1990)---
----S. 11----Assessment of tax and recovery of tax not levied or short levied or erroneously refunded---Show cause notice issued on allegations of failure to impose or collect sales tax---Scope and applicability of S.11, Sales Tax Act, 1990---'Redundancy', principle of---Applicability---Whether---S. 11(1) of the Act was attracted when a person, who was required to file a tax return, had failed to file the same for a tax period by the due date, or paid an amount, which because of some miscalculation, was less than the amount of tax actually paid, and the provision related to a situation which did not involve dispute regarding the actual amount payable as tax by the registered person---Section 11(2) of the Act envisaged a situation where a person had not paid the tax due on supplies made by him or had made short payments or claimed input tax credit or refund which was not admissible under the Act for reasons other than those specified in S. 11(1) of the Act; therefore, said provision did not involve the short levy or non-levy of tax, and the tax due was not disputed---Sections 11(3) & 11(4) of the Act, on the other hand, were attracted when the allegation related to a tax or charge not having been 'levied or made' or having been 'short levied' or erroneously refunded---Crucial expression which distinguished Ss. 11(3) & 11(4) from Ss. 11(1) and 11(2) of the Act were 'tax not levied' or 'short levied'---Imposition, assessment and collection of tax fell within the ambit of the expression 'levy'---Section 11 of the Act, therefore, envisaged distinct eventualities, and acceptance of the argument that there was no difference in the four subsections of S. 11 of the Act would tantamount to declaring the same as redundant---Redundancy could not be attributed to the Legislature---Allegations leveled in impugned show cause notices, being related to failure to impose or collect sales tax, fell within the ambit of Ss. 11(3) & 11(4) of Sales Tax Act, 1990---Impugned show cause notices although had been issued under S. 11(2) of the Act, but that would not render the same illegal, as mentioning of wrong title would not affect the validity of the notices.
Messrs Master Foram (Pvt.) Ltd. and 07 others v. GOP through Secretary, M/O Finance and 2 others PLD 2005 SC 373; Shahid Nabi Malik and another v. Chief Election Commissioner Islamabad and 07 others PLD 1997 SC 32; Messrs Karachi Steam Navigation Company and others v. Messrs Abdul Rahman Abdul Gani PLD 1962 SC 90; Dr. Raja Aamer Zaman v. Omar Ayub Khan and others 2015 SCMR 1303; District Bar Association, Rawalpindi and others v. FOP and others PLD 2015 SC 401 and Collector of Sales Tax and Central Excise (Enforcement) and another v. Messrs Mega Tech (Pvt.) Ltd. 2005 SCMR 1166 rel.
(c) Sales Tax Act (VII of 1990)---
----Ss.11, 30, 31, 32 & 2 (18)----Constitution of Pakistan, Art. 199---Constitutional petition---Assessment of tax and recovery of tax not levied or short levied or erroneously refunded---Show cause notice, validity of---Appointment of authorities---Powers/delegation of powers, validity of---Officer of Inland Revenue'---Definition and scope---Question before the High Court was whether the Inland Revenue Officer was empowered to issue impugned show cause notices under S.11 of Sales Tax Act, 1990, and whether the Commissioner Inland Revenue was vested with the power and jurisdiction to delegate the power conferred under the Act to subordinate officer/Inland Revenue Officer---Each officer necessarily had to have a specific designation in order to exercise the powers and functions under the Act---Expression 'Officer Inland Revenue' was, therefore, a general expression or phrase for all the officers having specific designation and empowered to exercise powers under the various provisions of the Act.
Section 2(18) of Sales Tax Act, 1990 defined the expression 'Officer of Inland Revenue' as an officer appointed under Section 30 of the Act. Said definition, being exhaustive and unambiguous, showed that the expression, in itself, did not relate to a specific officer, but the same referred to all the officers appointed under section 30 of the Act. Section 30 of the Act empowered the Federal Board of Revenue to appoint in relation to an areas, person or class of persons as an Officer of Inland Revenue having a specific designation. Appointment was, therefore, made on the basis of a specific designation of an officer. Section 30(1)(a) to (ia) of the Act although enumerated various designations for officers of the Inland Revenue, however, section 30(1)(j) of the Act provided that the Board might appoint an officer of the Inland Revenue with any other designation. Each officer necessarily had to have a specific designation in order to exercise the powers and functions under the Act. Expression 'Officer Inland Revenue' was, therefore, a general expression or phrase for all the officers having specific designation and empowered to exercise powers under the various provisions of the Act.
Impugned show cause notices had been issued by an officer having the designation of 'Inland Revenue Officer' as mentioned in section 30(1)(g) of Sales Tax Act, 1990. Provisions of section 11 of the Act had expressly provided that show cause notice under the relevant provision would be issued by an Officer of Inland Revenue. Section 31 of the Act provided that an officer of Inland Revenue appointed under section 30 of the Act would exercise such powers and discharge such duties as were conferred or imposed upon him or her under the Act, which meant/declared that such an officer would also be competent to exercise all powers and discharge all duties conferred or imposed upon any officer subordinate to him. Section 31, proviso, of the Act, which contained a non-obstante clause in relation of the Act and or the rules made thereunder, empowered the Board to impose limitations or conditions on the exercise of such powers and discharge of such duties by general or special order. Section 32 of the Act conferred upon the Board or the Chief Commissioner the power of delegation; the Commissioner, however, could exercise such powers subject to approval of the Board.
Board was vested with the exclusive power to confer jurisdiction or vest power in any officer of the Inland Revenue for purpose of the various provisions of Sales Tax Act, 1990. Power of delegation had also been circumscribed in section 32 of the Act. In case, an officer of Inland Revenue had been specified under a provision, then only such officer could exercise powers thereunder; otherwise, the Board, through a general or special order, could delegate the power to an officer appointed under section 30 of the Act, subject to such conditions or limitations as the Board might deem necessary. Board empowered one of the officer of Inland Revenue, specified in section 30 of the Act, to exercise power and jurisdiction under section 11 of the Act.
Commissioner had delegated the power and jurisdiction to the Inland Revenue Officer, which had been expressly conferred upon him by the Board. Commissioner appeared to have delegated the powers on the assumption that he could assign functions to any officer subordinate to him pursuant to the powers vested in him under section 30(3) of Sales Tax Act, 1990. Section 30(3) of the Act merely empowered the Commissioner Inland Revenue to direct any officer, with the designation specified in said provision, to perform functions in respect of any person or class or person or such areas.
Eight Edition of Black's Law Dictionary rel.
Distinction exited between the terms 'functions', 'power' and 'jurisdiction'. 'Function' could only be performed by persons who had already been conferred with power and jurisdiction. 'Power' or 'jurisdiction' conferred on an officer of Inland Revenue preceded the performance of 'functions'. Conferment of 'power' or 'jurisdiction' was pre-condition for the performance of functions. Section 30 (3) of the Act did not empower the Commissioner to confer 'power' or 'jurisdiction'. Commissioner, however, in terms of S. 30 (3) of the Act, could assign person or areas in respect of the officers specified therein for the purpose of the performance of function with regard to the scope of the power and jurisdiction already conferred on such officers. Notification, relied upon by the Commissioner, had not conferred the power of adjudication under S. 11 of the Act.
Board had expressly conferred power of adjudication under the Act on the Commissioner; therefore, the Commissioner had no authority or jurisdiction to further delegate the power and jurisdiction. Order issued by the Commissioner, whereby, he had delegated his powers, was, therefore, without lawful authority and jurisdiction. Inland Revenue Officer was, therefore, not vested with the power nor had he the jurisdiction to issue impugned show cause notices under S. 11 of the Act. High Court declared impugned show cause notices as having been issued by the person not vested with power or jurisdiction, with the observation that the Commissioner or such officer vested with the powers and jurisdiction to adjudicate under S. 11 of the Act might issue fresh show cause notice. Constitutional petition was allowed in circumstances.
Muhammad Ashraf Tiwana and others v. Pakistan and others 2013 SCMR 1159 and 'De Smith's Judicial Review' Seventh Edition rel.
(d) Delegation of powers---
----Delegation/sub-delegation of powers---Permissibility---Delegatee cannot further delegate its power unless expressly authorized under the law---In order to enable a person to delegate powers or functions, there must be an authority, express or implied, to delegate---Power, when conferred on a particular person, can only be exercised by the person alone, and its exercise could not be transferred to another person.
Muhammad Ashraf Tiwana and others v. Pakistan and others 2013 SCMR 1159; 'De Smith's Judicial Review' Seventh Edition and Sahni Silk Mills (Pvt.) Ltd., and another v. Employee's State Insurance Corporation (1994) 5 SC Cases 346 rel.
(e) Administration of justice---
----Void order---Effect---If the basic order is void, then any superstructure built thereupon is also illegal and liable to fall.
(f) Interpretation of statutes---
----'Redundancy', principle of----Applicability---Redundancy cannot be attributed to the Legislature.
(g) Interpretation of statutes---
----Harmonious construction, principle of----Every word used in a statute must be given its true meaning and the provisions must be construed together in a harmonious manner---One provision cannot be applied in isolation from other provision.
(h) Words and phrases---
----'Levy'---Definition and scope.
Black's Law Dictionary 8th Edition rel.
(i) Words and phrases---
----'Power', 'function' and 'jurisdiction'---Definition and scope.
Eight Edition of Black's Law Dictionary rel.
Nasim Sikandar, Jawad Hassan Barrister Omer Azad Malik, Abdul Shakoor Paracha and Haseeb Shakoor Paracha for Petitioners.
Babar Bilal, Saeed Ahmed Zaidi, Hafiz Munawar Iqbal and Malik Waris Khokhar for Respondents.
Date of hearing: 18th April, 2015.
2016 P T D 1702
[Islamabad High Court]
Before Athar Minallah, J
DOWELL SCHLUMBERGER (WASTERN) S.A.
Versus
FEDERATION OF PAKISTAN and others
W.P. No.3830 of 2014, decided on 10th March, 2016.
(a) Interpretation of statutes---
----Absurdity cannot be attributed to legislature.
(b) Interpretation of statutes---
----Mandatory/directory provision of law---Determination---Where consequence of failure to comply with a provision is not mentioned, such provision is directory and where consequence is expressly mentioned, said provision is mandatory.
Malik Umar Aslam v. Mrs. Sumaira Malik and others 2014 SCMR 45; Maulana Nur-ul-Haq v. Ibrahim Khalil 2000 SCMR 1305; Ghulam Hassan v. Jamshaid Ali and others 2001 SCMR 1001, Human Rights Cases Nos. 4668 of 2006, 1111 of 2007 and 15283-G of 2010 and PLD 2010 SC 759 rel.
(c) Income Tax Ordinance (XLIX of 2001)---
----S. 131(5)---Stay of recovery---Duration---Petitioner was a taxpayer and his grievance was that despite pendency of appeal before Appellate Tribunal Inland Revenue, authorities were bent upon to recover disputed amount---Validity---Time specified in S. 131(5) of Income Tax Ordinance, 2001 was directory and therefore, if appeal was not decided within said period, stay would continue till disposal or decision of appeal unless expressly recalled by Appellate Tribunal Inland Revenue---Any other interpretation to provision of S. 131(5) of Income Tax Ordinance, 2001 would defeat the legislative intent of protecting a taxpayer against undue hardship---High Court declared that stay granted by Appellate Tribunal Inland Revenue would continue to remain effective till disposal/decision of appeal unless expressly recalled after affording an opportunity of hearing---High Court observed that Appellate Tribunal Inland Revenue was expected to decide the appeal expeditiously---Constitutional petition was allowed accordingly.
Makhdoom Ali Khan and Saad M. Hashmi for Petitioners.
Babar Bilal for Respondents.
2016 P T D 1754
[Islamabad High Court]
Before Shaukat Aziz Siddiqui and Mohsin Akhtar Kayani, JJ
Messrs PAKTEL LTD., ISLAMABAD
Versus
COLLECTOR OF CENTRAL EXCISE AND SALES TAX, RAWALPINDI
Tax Appeal No.36 of 2005, decided on 22nd March, 2016.
Central Excise Act (I of 1944)---
----Ss. 3, 36-C & First Schedule---Central excise duty, recovery of---"Telephone"---Definition---Scope---Mobile telephone---Appellant was a company engaged in business of cellular phones and was aggrieved of show cause notice raising demand for recovery of central excise duty---Validity---Mobile phones were covered in the definition of telephone therefore, expression 'telephone' given in the First Schedule of Central Excise Act, 1944, included cellular phones and all kinds of fixed line phones, V-phones and satellite phones---Such were the different kinds of telephones and covered under the definition of 'telephone'---Appellant company was receiving excess charges at the tariff rates which fell under central excise duty as there was no exemption on such charges which were part of telephone/telecommunication services---Excess charges were part of telephone charges liable to duty under the law---High Court declined to interfere in the judgment passed by Appellate Tribunal as no question of law was raised and all forums had rightly decided questions relevant to law---Appeal was dismissed in circumstances.
Chambers Dictionary Edition 1993 ref.
Sardar Ahmed Jamal Sukhera for Appellant.
Babar Bilal and Ms. Shazia Bilal for Respondents.
2016 P T D 1799
[Islamabad High Court]
Before Aamer Farooq, J
Messrs HUAWEI TECHNOLOGIES PAKISTAN (PVT.) LTD.
Versus
COMMISSIONER INLAND REVENUE and others
W.P. No.4187 of 2015, decided on 3rd March, 2016.
(a) Income Tax Ordinance (XLIX of 2001)---
----Ss. 120, 122 (5) (A) & 140---Coercive measures---Attaching of Bank accounts---Show cause notice was issued to assessee for amendment in assessment order, which notice was assailed before High Court in constitutional petition---During the pendency of petition before High Court, authorities attached Bank accounts of assessee to recover outstanding amount---Validity---No coercive measures were to be adopted for recovery of disputed tax liability till the decision of appeal by independent forum---Authorities before invoking provision of S.140 of Income Tax Ordinance, 2001, were required to issue notice intimating taxpayer regarding invocation of S.140 of Income Tax Ordinance, 2001, and requiring him to make payment of tax liability within a reasonable time---High Court declared order attaching accounts of assessee effecting recovery, without lawful authority and of no legal effect---Constitutional petition was allowed in circumstances.
Z.N. Exports (Pvt.) Ltd. v. Collector of Sales Tax 2003 PTD 1746; Sun-Rise Bottling ' Company (Pvt.) Ltd. v. Federation of Pakistan 2006 PTD 535; Karachi Shipyard and Engineering Works Ltd. v. Additional Collector, Customs, Excise and Sales Tax (Adjudication-III), Government of Pakistan, Karachi 2006 PTD 2207; Messrs Daewoo Pakistan Motorway Service Ltd., Lahore v. Commissioner Inland Revenue Zone-II, Lahore 2012 PTD (Trib.) 1976 and Pakistan Steel Mills Corporation v. Muhammad Azam Katper and others 2002 SCMR 1023 ref.
Sultan Mehmood Khan v. Deputy Commissioner Inland Revenue and 3 others 2015 PTD 458 rel.
(b) Administration of justice---
----Thing not done in prescribed manner vitiates the proceedings.
Commissioner (Legal) Inland Revenue v. EFU General Insurance Ltd. 2011 PTD 2042 rel.
Waseem Sajjad, Idrees Ashraf and Hafiz Muhammad Idrees for Petitioner.
Hafiz Munawar Iqbal and Babar Bilal for Respondents.
Date of decision: 3rd March, 2016.
2016 P T D 1886
[Islamabad High Court]
Before Shaukat Aziz Siddiqui and Athar Minallah, JJ
COLLECTOR OF CUSTOMS
Versus
Messrs ASKARI CEMENT LTD.
Customs Appeal No.20 of 2003, decided on 9th March, 2016.
Customs Act (IV of 1969)---
----Ss. 196 & 223---Classification of goods---Federal Board of Revenue, jurisdiction of---Question was with regard to classification of goods by Federal Board of Revenue for the purposes of PCT Heading---Validity---Provision of S. 223 of Customs Act, 1969 placed a clog on the power of the Board to interfere with discretion of appropriate officer of Customs in matters which involved exercise of quasi-judicial functions; in other matters, officers of Customs and other persons in execution of Customs Act, 1969 were bound to observe and follow orders and instructions of the Board---Adjudicating officer as well as appellate forums created under Customs Act, 1969 were competent and vested with power and jurisdiction to resolve any controversy whether factual or legal relating to a dispute in the context of a PCT Heading independently---Ruling given by the Board related to classification could be considered but was not treated as final or binding on adjudicating authority or the hierarchy of appellate forums provided under Customs Act, 1969---Appeal was disposed of accordingly.
Federation of Pakistan through Secretary, Revision Division, F.B.R. and others v. Messrs Millennium Pharmaceutical Company, Karachi and others 2011 PTD 690; Collector of Central Excise and Sales Tax, Multan v. Messrs Holiday Inn, Multan and others 2010 SCMR 241; Muree Brewery Company Ltd. v. Collector of Customs (Appraisement), Customs House Karachi 2010 SCMR 164; Federation of Pakistan through Secretary, Ministry of Finance and others v. Haji Muhammad Sadiq and others PLD 2007 SC 133; Excise and Taxation Officer, Karachi and another v. Burmah Shell Storage and Distribution Company of Pakistan Limited and 5 others 1993 SCMR 338 and Messrs Central Insurance Co. and others v. The Central Board of Revenue, Islamabad and others 1993 SCMR 1232 ref.
Dr. Farhat Zafar and Sheikh Anwar-ul-Haq for Appellant.
Mian Tauqeer Aslam for Respondent.
Date of hearing: 21st December, 2015.
2016 P T D 2146
[Islamabad High Court]
Before Noor-ul-Haq N. Qureshi and Athar Minallah, JJ
Messrs AL-HAJ ENTERPRISES (PVT.) LIMITED through Authorized Officer
Versus
COLLECTOR OF CUSTOMS, MODEL CUSTOMS COLLECTORATE, ISLAMABAD and 3 others
Customs Reference Application No.31 of 2015, decided on 20th April, 2016.
(a) Interpretation of statutes---
----Mandatory/directory provision of law---Determination---Where consequence of failure to comply with a provision is not mentioned, such provision is directory and where consequence is expressly mentioned, that provision is mandatory.
Malik Umar Aslam v. Mrs. Sumaira Malik and others 2014 SCMR 45; Maulana Nur-ul-Haq v. Ibrahim Khalil 2000 SCMR 1305; Ghulam Hassan v. Jamshaid Ali and others 2001 SCMR 1001; Human Rights Cases Nos.4668 of 2006, 1111 of 2007 and 15283-G of 2010 [PLD 2010 SC 759] rel.
(b) Customs Act (IV of 1969)---
----Ss. 12, 13, 32, 110, 193 & 194-B(1)---Customs Rules, 2001, Rr. 558, 559, 560, 561, 564, 566 & 569---Reference---Duty and tax remission for export---Supply of goods to International Security Assistance Force (ISAF)---Taxpayer was engaged in business of transporting fuel supplies to military forces stationed in Afghanistan---Fuel supplies were exported from Pakistan to Afghanistan and duty and taxes relating thereto were not paid---Authorities issued show cause notice to taxpayer alleging that various petroleum products were short received at destination and same was in excess of 1% of invoiced quantity---Validity---Liability of taxpayer was adjudged by the Authority as the taxpayer had exercised its right of appeal before Tribunal against liability adjudged by Collector (Adjudication)---Liability remained in existence till it was annulled or set aside by Tribunal by accepting appeal---Liability created under order in original remained in existence and right of appeal to the Tribunal was not extinguished even if appeal was not decided within specified time---Failure to decide appeal could not be treated as having the effect of annulling or setting aside of rider in original---Any interpretation contrary to the same would tantamount to reading into the provision, something not provided therein---No consequences were provided for deciding appeal beyond time prescribed therefore, provision was directory in nature rather than being mandatory---High Court decided all questions in negative---Reference was dismissed in circumstances.
Asad Raza for Applicant.
Ms. Farah Yasmin Dawood for Respondents
Date of hearing: 2nd February, 2016.
2016 P T D 2332
[Islamabad High Court]
Before Athar Minallah, J
ZAVER PETROLEUM CORPORATION LIMITED through Director, Islamabad
Versus
FEDERAL BOARD OF REVENUE through Chairman FBR, Islamabad and another
Writ Petitions Nos.768 and 805 of 2015, decided on 29th April, 2016.
(a) Constitution of Pakistan---
----Art. 199---Constitutional petition---Maintainability---Show cause notice---Mere notice or a show cause notice was not an adverse order; therefore, constitutional petition would not be competent; exception to said general rule was a grievance relating to the notice or show cause notice suffering from want of jurisdiction---Exercise of constitutional jurisdiction would be justified when a show cause notice was palpably without jurisdiction and/or issued on the basis of mala fide.
Commissioner of Income Tax v. Eli Lilly Pakistan (Pvt.) Ltd. 2009 SCMR 1279; Gatron (Industries) Ltd. v. Government of Pakistan and others 1999 SCMR 1072 and Murree Brewery Co. Ltd. v. Pakistan through Secretary to GOP, Works and Division and 2 others PLD 1972 SC 279 rel.
(b) Sales Tax Act (VII of 1990)----
----Ss. 11 & 36----Assessment of tax or recovery of tax not levied or short levied or erroneously refunded---Delegation of powers conferred on Commissioner to subordinate officer---Scope---Competence of officer issuing the show cause notice---Show cause notice---Show cause notice showing wrong provision of law---Effect---'Levy'---Meaning and scope---Interpretation and legislative history of S.11, Sales Tax Act, 1990---Questions before High Court was as to whether show cause notice had been issued under S. 11(2), (3) or (4) of Sales Tax Act, 1990, and whether the tax had been imposed, assessed or collected by the registered person fell within the impugned show cause notice---Allegations mentioned in show cause notice related to failure to impose or collect sales tax, which did not attract S. 11(1) or (2) of the Act---Effect---Sales Tax Act, 1990 had been promulgated to consolidate and amend the law relating to the levy of tax on the sale, importation, exportation, production, manufacture or consumption of goods---Two distinct provisions, Ss. 11 & 36 of Sales Tax Act, 1990, related to adjudication of cases at the promulgation of the Act---Section 36 of the Act, however, had been omitted later and the provisions thereof had been inserted in S. 11 of the Act as S. 11 (3) and (4)---Section 11 (1) of the Act was attracted when a person, who was required to file a tax return, failed to file the return for a tax period by the due date, or paid an amount which because of some miscalculation, was less than the amount of tax actually paid---Section 11 (1) of the Act did not contemplate a situation which did not involve a dispute regarding the actual amount payable as tax by the registered person---Section 11(2) of the Act, likewise, envisaged a situation where a person had not paid the tax due on supplies made by him or had made short payment or claimed input tax credit or a refund which was not admissible under the Act for reasons other than those specified in S. 11(1) of the Act---Section 11(2) of the Act also envisaged the eventualities which did not involve the short levy of tax , that was the tax due was not disputed---Section 11(3) and (4) of the Act, on the other hand, attracted when the allegations related to a tax or charge not having been 'levied or made', or having been 'short levied' or erroneously refunded---Section 11 of the Act, therefore, envisaged distinct eventualities, and any other interpretation would tantamount to declaring the provisions as redundant---Legislature had used separate expressions which distinguished each subsection of S. 11 of the Act from the other---Crucial expressions which distinguished S. 11(3) and (4) of the from S.11(1) and (2) were 'tax not levied' or 'short levied'---Imposition, assessment and collection of a tax, therefore, fell within the ambit of the expression 'levy'---Allegations made in the impugned show cause notice, therefore, fell within the ambit of tax having not been levied or short levied under S.11(3) or (4) of the Act---Titles of the impugned show cause notice although showed that the same had been issued under S. 11(2) of the Act, but the same would not render the notice illegal, as mentioning a wrong title would not affect the validity of the notice.
Messrs Master Foram (Pvt.) Ltd. and 7 others v. GOP through Secretary, M/O Finance and 2 others PLD 2005 SC 373; Shahid Nabi Malik and another v. Chief Election Commissioner Islamabad and 7 others PLD 1997 SC 32; Messrs Karachi Steam Navigation Company and others v. Messrs Abdul Rahman-Abdul Gani PLD 1962 SC 90; Dr. Raja Aamer Zaman v. Omar Ayub Khan and others 2015 SCMR 1303; District Bar Association, Rawalpindi and others v. FOP and others PLD 2015 SC 401; Collector of Sales Tax and Central Excise (Enforcement) and another v. Messrs Mega Tech (Pvt.) Ltd. 2005 SCMR 1166 and Black's Law Dictionary 8th Edition rel.
(c) Sales Tax Act (VII of 1990)----
----Ss. 2 (18), 11, 30, 30A to 30-E, 31 & 32----Constitution of Pakistan, Art. 199---Constitutional petition---Assessment of tax or recovery of tax not levied or short levied or erroneously refunded---Show cause notice---Competent authority---Determination---'Officer Inland Revenue'---Scope---Powers/delegation of powers---Parameters/permissibility---Appointment of officers of Sales Tax and their powers---Scope---'Function'/'power'/'jurisdiction'---Meaning and scope---Questions before the High Court were that as to "who was competent/vested with power and jurisdiction to issue show cause notice under S. 11 of the Act and whether the Commissioner was vested with the power and jurisdiction to delegate the powers conferred upon him by Sales Tax, 1990 to a subordinate officer, and that what was the status of the Notification whereby powers had been delegated by the Commissioner to an officer having the designation of "Inland Revenue Officer"---Held, S.30 of Sales Tax Act, 1990 empowered the Board of Revenue to appoint in relation to an area, person or class of persons an Officer of Inland Revenue having a specific designation---Section 2 (18) of the Sales Tax Act, 1990 defined the expression 'officer of Inland Revenue' as an officer appointed under S. 30 of the Act; said definition was exhaustive and unambiguously showed that the expression in itself was not a specific officer but referred to all the officers appointed under S. 30 of the Act---Appointment was, therefore, made on the basis of a specific designation of an officer---Section 30 (1) (a) to (ja) of the Act explicitly enumerated the various designations of officers of the Inland Revenue, and S. 30 (j) of the Act provided that the Board of Revenue might appoint an officer of the Inland Revenue with any other designation---Each officer necessarily had to have a specific designation in order to exercise the powers and functions under the Act---Expression 'Officer Inland Revenue' was, therefore, a general expression or phrase for all the officers having a specific designation and empowered to exercise powers under various provisions of the Act---Show cause notice, in the present case, had been issued by officer having the designation of Inland Revenue Officer as mentioned in S. 30(1)(g) of the Act---Section 30(1), (2), (3) and (4) of the Act expressly provided that the show case notice would be issued by an "Officer of Inland Revenue"---Section 31 of the Act declared that an "Officer of Inland Revenue" appointed under S. 30 of the Act would exercise such powers and discharge such duties as were conferred or imposed upon him or her under the Act and further that such an officer would also be competent to exercise all powers and discharge all duties conferred or imposed upon any officer subordinate to him---Section 31, proviso of the Act empowered the Board to impose limitations or conditions on the exercise of such powers and discharge of such duties by general or special order; said proviso contained a non-obstante clause in relations to the Act or the rules made thereunder---Section 32 of the Act conferred upon the Board of Revenue or the Chief Commissioner the power of delegation, however, the Commissioner could exercise powers subject to approval of the Board---Sections 30 A to 30 E of the Act related to such entities or offices not covered under S. 30 of the Act as officers of Inland Revenue---Section 30A to 30-E of the Act were in respect of the respective Directorates and were distinct from the officers of Inland Revenue appointed under S. 30 read with S. 31 of the Act---Each officer appointed under S. 30 of the Act by the Board fell within the generic expression of 'officers of Inland Revenue'; however, every officer of Inland Revenue appointed under S. 30 of the Act ought to have a designation as explicitly mentioned in S. 30 (1) (a) to (ja) of the Act----Board was vested with the exclusive power to confer jurisdiction or vest power in any officer of the Inland Revenue for the purposes of the various provisions of the Act---Powers of delegation were also circumscribed under S. 32 of the Act---If the officer of the Inland Revenue had been specified under a provision of the Act, then only such officer could exercise power thereunder; otherwise, the Federal Board of Revenue through a general or special order delegated the power to an officer appointed under S. 30 of the Act---Board had empowered one of the officers of Inland Revenue specified under S. 30 of the Act to exercise powers and jurisdiction under S. 11 (1), (2), (3) and (4) of the Act---Commissioner had delegated the power to the Inland Revenue Officers, which had been conferred upon him by the Board---Commissioner, in the present case, had issued the order on the assumption that he could assign function to any officer subordinate to him, pursuant to the powers vested in him under S. 30 (3) of Act---Section 30 (3) of the Act envisaged that the Commissioner Inland Revenue was empowered to direct any officer, with the designation specified in that provision, to perform functions in respect of any person or class of persons or such areas---Section 30 (3) of the Act merely empowered the Commissioner to assign to the specified officers or class of persons or areas in respect of performance of their functions as might be directed by the latter---Definitions of the expressions 'power', 'function' and 'jurisdiction' were distinct and separate---Functions can only be performed by persons who were already conferred with power or jurisdiction---Power or jurisdiction conferred on an officer of Inland Revenue preceded the performance of functions---Conferment of power or jurisdiction was a pre-condition for the performance of functions---Section 30 (3) of the Act had not empowered the Commissioner to confer power or jurisdiction---Commissioner, however, pursuant to S. 30 (3) of the Act could assign persons or areas in respect of the officers specified therein for the purpose of performance of functions with regard to the scope of the power and jurisdiction already conferred on such officer---Such officer, in order to perform their respective function, had to be vested with power or jurisdiction---Board had expressly conferred the power of adjudication under the Act on the Commissioner; therefore, the latter had no authority or jurisdiction to further delegate the power and jurisdiction of adjudication conferred by the Board---Inland Revenue Officer was, therefore, not vested with the power nor had jurisdiction to issue a show cause notice under S. 11 of the Act, as the Commissioner alone was vested with the power and jurisdiction under S.11 of the Act pursuant to the Board's order---High Court allowing the constitutional petition, declared the impugned show cause notices as having been issued by the persons not vested with power or jurisdiction---High Court further provided that the Commissioner or such officer vested with the powers and jurisdiction to adjudicate under S.11 of the Act could issue fresh show cause notice---Constitutional petitions were allowed accordingly.
Eight Edition of Black's Law Dictionary; Muhammad Ashraf Tiwana and others v. Pakistan and others 2013 SCMR 1159; De Smith's Judicial Review' Seventh Edition and Sahni Silk Mills (P) Ltd. and another v. Employee's State Insurance Corporation 1994 5 SCC 346 rel.
(d) Administration of justice----
----Delegated powers/authority----Scope---Delegatee cannot further delegate its powers unless expressly authorized under the law---In order to enable a person to delegate the powers or functions, there must be an authority, expressed or implied to delegatee---Statutory delegatee could not sub-delegate his or her powers.
Muhammad Ashraf Tiwana and others v. Pakistan and others 2013 SCMR 1159 and Sahni Silk Mills (P) Ltd. and another v. Employee's State Insurance Corporation 1994 5 SCC 346 rel.
(e) Administration of justice----
----Void order----Effect---In case the basic order is void, then any superstructure built thereon was also illegal and liable to fail.
(f) Interpretation of statutes----
----Redundancy, principle of----Scope---Redundancy cannot be attributed to the Legislature; every word used in a statute must be given its true meaning and the provisions construed together in a harmonious manner---Applying one provision of law in isolation from the other provision was not legal or proper, as surplusages or redundancy cannot be attributed.
(g) Words and phrases----
----'Power'/'function'/jurisdiction---Meaning and scope.
Eight Edition of Black's Law Dictionary rel.
(h) Words and phrases----
----'Levy'---Meaning and scope.
Black's Law Dictionary 8th Edition rel.
(i) Words and phrases----
----'Discretionary power'---Meaning and scope.
De Smith's Judicial Review Seventh Edition and Sahni Silk Mills (P) Ltd. and another v. Employee's State Insurance Corporation 1994 5 SCC 346 rel.
Nasim Sikandar, Jawad Hassan, Barrister Omer Azad Malik, Abdul Shakoor Paracha and Haseeb Shakoor Paracha for Petitioner.
Babar Bilal, Saeed Ahmed Zaidi, Hafiz Munawar Iqbal and Malik Waris Khokhar for Respondents.
Date of hearing: 18th April, 2016.
2016 P T D 2406
[Islamabad High Court]
Before Miangul Hassan Aurangzeb, J
MARI PETROLEUM COMPANY LTD.
Versus
APPELLATE TRIBUNAL INLAND REVENUE and others
Writ Petition No.1812 of 2016, decided on 13th May, 2016.
Income Tax Ordinance (XLIX of 2001)---
----S. 122(5-A) & (9)---Coercive measures, restraining of---Authorities issued show cause notice and rejected objections taken by taxpayer---Notice of demand raised by authorities was assailed by taxpayer before appellate authority---Grievance of taxpayer was that neither any interim relief was granted nor appeal was decided within a period of thirty days---Validity---Appeal filed by taxpayer was not taken up for hearing and Appellate Tribunal was not functioning---Appeals were being adjudicated only under directions passed by High Court in exercise of Constitutional jurisdiction---Plea raised by taxpayer was that if interim reprieve was not granted, taxpayer would be subjected to coercive measures by authorities---Validity---High Court directed authorities to decide appeal of taxpayer expeditiously, preferably within a period of sixty days and granted temporary relief to taxpayer, as stopgap measures---High Court further directed that until decision on taxpayer's appeals, no coercive measures will be taken against it---Constitutional petition was allowed accordingly.
Messrs Pearl Continental Hotel, Lahore v. Customs, Excise and Sales Tax Appellate Tribunal, Lahore and another 2005 PTD 1368, Karachi Shipyard and Engineering Works Limited, Karachi v. Additional Collector, Customs, Excise and Sales Tax (Adjudication-III), Government of Pakistan, Karachi and 2 others 2006 PTD 2207 and Sun-Rise Bottling Company (Pvt.) Limited v. Federation of Pakistan and 4 others 2006 PTD 535 ref.
Jawad Hassan, Barrister Umar Malik and Umair Saleem for Petitioner.
2016 P T D 2419
[Islamabad High Court]
Before Noor ul Haq N. Qureshi and Athar Minallah, JJ
COMMISSIONER OF INCOME TAX COMPANIES ZONE, ISLAMABAD/WEALTH TAX
Versus
Messrs SHIFA INTERNATIONAL HOSPITAL, ISLAMABAD
I.T.R. No.24 of 2008, heard on 31st May, 2016.
Income Tax Ordinance (XXXI of 1979)---
----Third Sched.---Rules for the Computation of Depreciation Allowance, R.2---Hospital building---Depreciation allowance---Income Tax Appellate Tribunal treated hospital owned by assessee as "plant" thereby entitling it to depreciation when assessee had not pleaded to treat it as such---Validity---Three categories specified under R.2 of Rules for the Computation of Depreciation Allowance given in Third Schedule to Income Tax Ordinance, 1979, had been specified under the title 'Building'---Rate of depreciation in case of a building not otherwise specified was 5% while rate of 10% was attracted in case of a factory, workshop or residential quarters for labour---Building of hospital did not fall within the category of a factory, workshop or residential quarters of labour in order to attract rate of 10%---Assessing officer had correctly applied rate of 5% while Commissioner Inland Revenue (Appeals) and Income Tax Appellate Tribunal misinterpreted R.2 of Rules for the Computation of Depreciation Allowance given in Third Schedule to Income Tax Ordinance, 1979---Reference was answered in negative.
Babar Bilal for Applicant.
Mian Tauqeer Aslam for Respondent.
Date of hearing: 31st May, 2016.
2016 P T D 2515
[Islamabad High Court]
Before Noor-ul-Haq N. Qureshi and Athar Minallah, JJ
MUJAHID SOAP AND CHEMICAL INDUSTRIES (PVT.) LTD.
Versus
MEMBER (JUDICIAL), CUSTOMS APPELLATE TRIBUNAL and others
Customs Reference No.4 of 2015, decided on 29th March, 2016.
Customs Act (IV of 1969)---
----Ss. 179 & 196---Customs Rules, 2001, Rr. 302, 302-A, 303, 305 & 307-A---Duty and Tax Remission for Exports (DTRE)---Time barred claim---Scope---Importer was granted DTRE approval on 25-6-2008 and at the relevant time, input goods were to be consumed within 24 months which had expired on 24-6-2010---Federal Board of Revenue extended time for utilization/consumption and extended period had also lapsed on 24-12-2011 and no further extension was granted by the Board---Plea raised by importer was that transfer of balance/leftover input goods to the new DTRE approval granted by Regulatory Customs Collector on 05-3-2012 could be treated as an extension in time relating to consumption of input goods---Validity---Such approval granted by regulatory authority could not be treated as extension in time relating to consumption of input goods---No power and jurisdiction was vested in regulatory authority to extend time specified under Customs Rules, 2001---Authorities sought information from importer and the latter had voluntarily provided the same---Contravention report was not a document prescribed in Customs Act, 1969 and it was a mere information forwarded to adjudicating officer relating to some alleged violation of Customs Act, 1969 or the rules or regulations made thereunder---Officer empowered under S. 179 of Customs Act, 1969 was to consider the same and to form an opinion as to whether to proceed under S. 179 of Customs Act, 1969---Adjudicating officer could exercise powers under S. 179 of Customs Act, 1969 on the basis of information received from any source---As long as the officer issuing show cause notice and exercising powers under S. 179 of Customs Act, 1969 was empowered to act and have jurisdiction thereunder, the source of information would become irrelevant and could not affect legality of proceedings---High Court declined to interfere in the order passed by Appellate Tribunal---Reference was disposed of accordingly.
Malik Umar Aslam v. Mrs. Sumaira Malik and others 2014 SCMR 45; Maulana Nur-ul-Haq v. Ibrahim Khalil 2000 SCMR 1305; Ghulam Hassan v. Jamshaid Ali and others 2001 SCMR 1001 and Human Rights Cases Nos. 4668 of 2006, 1111 of 2007 and 15283-G of 2010 PLD 2010 SC 759 ref.
Sikandar Naeem Qazi for Appellant.
M.D. Shahzad for Respondents.
2016 P T D 2579
[Islamabad High Court]
Before Noor-ul-Haq N. Qureshi and Athar Minallah, JJ
COMMISSIONER INLAND REVENUE (LEGAL), L.T.U., ISLAMABAD
Versus
Messrs BAHAWALPUR ENGINEERING (PVT.) LTD., ISLAMABAD
ITR No. 144 of 2010, heard on 22nd March, 2016.
Income Tax Ordinance (XLIX of 2001)---
----Ss. 118-C, 133, 122 & 221---Reference---Rectification application---Limitation---Delay in enforcing the right---Effect---Taxpayer for the first time agitated matter by approaching Taxation Officer on 13-11-2006 by filing application under S. 221 of Income Tax Ordinance, 2001, whereas, last assessment order was passed on 31-05-1997---Validity---Delay defeats equity and equity leans in favour of a vigilant litigant---Law of Limitation is not considered a mere formality and is required to be observed as being of mandatory nature---Such principles rest on the foundation that lapse of time creates rights in favour of other party and therefore, burdening the party which fails to act within the stipulated time to demonstrate sufficient and satisfactory cause/reason for delay regarding each day---Any person may have an enforceable right but if he/she fails to enforce such right within the time stipulated by law then the right becomes unenforceable---Neither appellate authority nor Income Tax Appellate Tribunal was justified in allowing rectification application beyond the limitation period prescribed under S. 221(4) of Income Tax Ordinance, 2001---Taxation Officer vide order dated 15-11-2006 had rightly dismissed the application filed under S. 221 of Income Tax Ordinance, 2001, seeking rectification of respective assessment orders for the relevant assessment years---Reference was allowed in circumstances.
Messrs Pfizers Laboratories Limited v. Federation of Pakistan and others PLD 1998 SC 64 and Shahtaj Sugar Mills Ltd. through Chief Executive v. Additional Secretary Government of Pakistan, Ministry of Finance, Karachi and others 2009 SCMR 1421 ref.
State Bank of Pakistan through Governor v. Imtiaz Ali Kharl 2012 SCMR 280; Ghulam Sarwar v. Amir Hussain 2004 SCMR 944; Lahore Development Authority v. Mst. Sharifan Bibi PLD 2010 SC 705 and Shahid Pervaiz alias Shahid Hameed v. Muhammad Ahmad Ameen 2006 SCMR 631 rel.
Abdul Shakoor Parach and Ms. Wajeeha Pervaiz for Applicant.
Mian Tauqeer Aslam for Respondent.
2016 P T D 2601
[Islamabad High Court]
Before Athar Minallah, J
K.K. OIL AND GHEE MILLS (PVT.) LTD.
Versus
FEDERAL BOARD OF REVENUE and others
W. P. No. 2318 of 2015, decided on 18th March, 2016.
(a) Administration of justice---
----What cannot be done directly can also not be achieved indirectly.
(b) Income Tax Ordinance (XLIX of 2001)---
----Ss. 65-D & 175---Show cause notice---Exemption certificate---After the benefit under S. 65-D of Income Tax Ordinance, 2001 was granted to the assessee, the authorities initiated investigation to confirm claim of assessee and its entitlement to the tax credit---Validity---Respondent authority was not vested with power or jurisdiction under S. 65-D of Income Tax Ordinance, 2001 nor in the circumstances powers under S. 175 of Income Tax Ordinance, 2001 could have been invoked---Notice in question was palpably without jurisdiction and an adverse order, as actions completed therein were an infringement of right to privacy, dignity and liberty of assessee---Constitutional Petition before High Court was maintainable and notice was declared to be issued without jurisdiction and lawful authority---Petition was allowed in circumstances.
"Income Tax Officer v. Seth Brothers [1969] 74 ITR 836; Lan Eseda Steels Ltd. v. Assistant Commissioner CIT [1994] 209 ITR 901; Harmel v. Union of India [1993] 204 ITR 334; Janake Raj Sharma v. Director of Inspection [1995] 111 PLR 140; PR, Metrani v. CIT [2007] 1 SCC 789; Dr. G. Balakrishnan Nair v. CIT [1999] 237 ITR 70; Sibal (H.L.) v. CIT [1975] 101 ITR 112; Dr. D.G. Srivastava v. Director of Income Tax [2007] 212 UR CTR All 527; 2000 PTD 2958; Mujahid Oil Refinery (Pvt.) Ltd. v. Director I&I Inland Revenue and others 2015 PTD 2572; Messrs Chenone Stores Ltd. through Executive Director (Finance Accounts) v. Federal Board of Revenue through Chairman and 2 others 2012 PTD 1815; Northern Bottling Company (Pvt.) Ltd. Industrial Estate Peshawar v. Federation of Pakistan 2013 PTD 1552; Commissioner of Income Tax v. Eli Lilly Pakistan (Pvt.) Ltd. 2009 SCMR 1279; Gatron (Industries) Ltd. v. Government of Pakistan and others 1999 SCMR 1072 and Murree Brewery Co. Ltd. v. Pakistan through Secretary to GOP, Works and Division and 2 others PLD 1972 SC 279 ref.
Mansoor Usman Awan for Petitioner.
Hafiz Ahsan Ahmed Khokhar and Muhammad Rahim Khan, Inspector I.R. for Respondents.
2016 P T D 2685
[Islamabad High Court]
Before Noor ul Haq N. Qureshi and Athar Minallah, JJ
Messrs ISLAMABAD ELECTRIC SUPPLY COMPANY LIMITED
Versus
DEPUTY COMMISSIONER INLAND REVENUE, AUDIT-II, LTU, ISLAMABAD and others
S.T.R. No. 265 of 2011, decided on 9th June, 2016.
(a) Sales Tax Act (VII of 1990)---
----Ss. 2(48), 3, 4, 13 & 34---Customs Act (IV of 1969), Ss. 12, 13 & 131---Constitution of Pakistan, Art. 1(2)---Azad Jammu and Kashmir Interim Constitution Act (VIII of 1974), Ss. 21 & 31---Sales tax reference---Exemption from sales tax---Zero rating---'Zero rated supply'---Definition and scope---'Import'/'export'/'exported goods'---Scope---Federation of Pakistan and Azad Jammu and Kashmir---Status and relationship---Electric Supply Company contended that Azad Jammu and Kashmir being not a part of Pakistan, the supply of electricity fell within the expression 'goods exported' for the purpose of S. 4 of Sales Tax Act, 1990, and as such the same were to be charged at the rate of zero percent and that the Electric Supply Company had been exempted from payment of sales tax on the supply to Azad Jammu and Kashmir under the agreement with Government of Pakistan for such supply---Questions before the High Court were as to whether the supply of electricity to Azad Jammu and Kashmir fell within the scope of 'export' and was thus to be treated as 'goods exported', and that whether the agreement in question could be treated as an instrument or made basis for the purposes of non-payment of Sales Tax under Sales Tax Act, 1990---Held, supply of electricity had not been declared as exempt in the manner prescribed under S. 13 of Sales Tax Act, 1990---Supply of electricity by the Electric Supply Company to the territories of Azad Jammu and Kashmir were taxable supplies, attracting the charge and levy of sales tax under S. 3 of Sales Tax Act, 1990, and the same had not been exempted in the manner prescribed under the Act---Neither the sales tax on supplies of electricity made by the Company to Azad Jammu and Kashmir were exempt nor could the same be charged at the rate of zero percent as zero rated supplies---Principles.
Section 3 of Sales Tax Act, 1990 was the charging section and described the scope of the sales tax and the charge, levy and payment thereof. In case section 3 of the Act was attracted to the supplies made by a registered person then the payment of sales tax at the specified rates became mandatory unless it was either exempt under section 13 of the Act or fell within the ambit of section 4 of the Act in order to claim the charge at the rate of zero percent. Section 13 of the Act contemplated three modes whereby a registered person might claim exemption from payment of the charge and levy of the tax: goods either had to be specified in the Sixth Schedule of the Act or the Federal Government by a notification in the official gazette or the Board through a special order in each case had exempted payment of the whole or any part of the tax chargeable under the Act.
Section 2(48) of the Act defined zero rated supply as meaning a taxable supply which was charged to tax at the rate of zero percent under section 4 of the Act. Section 4 of the Act started with a non obstante clause and provided that the goods enumerated in section 4(a) to (b) of the Act specified therein would be charged tax at the rate of zero percent; such goods though were liable to be charged tax under section 3 of the Act, but since they fulfill the criteria mentioned in one of the clauses/categories specified in said provision the charge was at the rate of zero percent which meant that no tax was required to be paid.
Azad Jammu and Kashmir was not a territory specified under Art. 1(2) of the Constitution. Territory of Azad Jammu and Kashmir was governed under Azad Jammu and Kashmir Interim Constitution Act, 1974. Azad Jammu and Kashmir, therefore, had a special status and might be treated as a foreign territory but the same did not fall within the definition of sovereign state or a distinct country, recognized as such by the comity of nations.
Expressions 'export' and 'import' were complementary to each other. Goods sent out of Pakistan had to be imported in another country. Conditions and the procedure as prescribed and provided for under section 131 of Customs Act, 1969 were also to be complied with for the purposes of 'export'; likewise, restrictions and conditions imposed under Import and Export Control Act, 1950 would also apply. Warehouses established, operated and managed in Azad Jammu and Kashmir were licensed under sections 12 and 13 of Customs Act, 1969 by the Collector of Customs, Rawalpindi/Islamabad. Goods entering the territory of Azad Jammu and Kashmir were neither treated as goods imported or exported from Pakistan. Mere taking goods out of Pakistan was, therefore, not enough to treat the same as 'export'; goods taken out of the country and imported into another country after fulfilling the prescribed conditions and procedure were treated as goods having been exported. Azad Jammu and Kashmir was not a country from where goods were imported from Pakistan, for which reason the procedure prescribed for exporting goods from Pakistan was neither attracted in the case of goods sent to Azad Jammu and Kashmir, nor were the same dealt with as imports upon entry into said territory. Goods taken out of the territories specified in Art. 1(2) of the Constitution and sent to Azad Jammu and Kashmir could not be treated as 'goods exported' from Pakistan to another country.
Case-law referred.
In case goods chargeable to duty under section 3 of the Sales Tax Act, 1990, the payment at the specified rates was mandatory unless such taxable supplies were exempt under section 13 of the Act, or the tax was charged at the rate of zero percent under section 4 of the Act. Tribunal, therefore, erred by holding that the pursuant to the agreement, the Electric Supply Company was not liable to pay sales tax. Neither the sales tax on supplies of electricity made by the Company to Azad Jammu and Kashmir were exempt nor could the same be charged at the rate of zero percent as zero rated supplies. Sales Tax Reference was disposed of accordingly.
(b) Words and phrases
----'Export'/'Domestic export'---Meaning and scope.
Case-law referred.
(c) Administration of justice---
----What cannot be done directly cannot be done indirectly, and likewise, a thing ought to be done in the manner as prescribed under the statute.
(d) Interpretation of statutes---
----Taxing statutes----Construction, rules of---In a taxing statute, as in any other statute, there is no reason to depart from the general rule that words used in a statute must first be given their ordinary and natural meaning---Resort can be made to discovering other appropriate meanings, only when an ordinary meaning does not make sense.
Case-law referred.
Tariq Rasheed for Applicant.
Hafiz Munawar Iqbal for Respondents.
2016 P T D 2727
[Islamabad High Court]
Before Noor-ul-Haq N. Qureshi and Athar Minallah, JJ
COMMISSIONER INLAND REVENUE (ZONE-III), L.T.U., ISLAMABAD
Versus
Messrs OIL AND GAS DEVELOPMENT CO. LTD.
I.T.R No.263 of 2015, decided on 29th March, 2016.
(a) Income Tax Ordinance (XLIX of 2001)---
----Ss. 120 & 122 (2) [as amended by Finance Act (I of 2009)]---Reference---Show cause notice---Past and closed transaction---Retrospective effect of amendment---Assessee was aggrieved of show cause notice issued under S. 122 (2) of Income Tax Ordinance, 2001, as amended through Finance Act, 2009---Validity---At the time when show cause notice was issued, assessment order dated 30-12-2006, treated to have been passed by Commissioner under S. 120 of Income Tax Ordinance, 2001, had attained finality i.e. the order had become a past and closed transaction---Such order could not have been re-opened by applying limitation period provided under amended S.122(2) of Income Tax Ordinance, 2001, by giving it retrospective effect---Vested right was created in favour of assessee company when limitation had expired under substituted provision and the same could not have been taken away by giving amended provision retrospective effect---High Court declined to interfere in the order passed by Income Tax Appellate Tribunal---Reference was dismissed in circumstances.
2005 PTD 14 and 2009 PTD 712 distinguished.
Commissioner Inland Revenue v. Maj Gen. (R) Dr. C. M. Anwar and 2 others 2015 PTD 424; Nagina Silk Mill, Lyallpur v. The Income-Tax Officer, A-Ward Lyallpur and others PLD 1963 SC 322; Messrs Shoaib Bilal Corporation, U.B.L. Super Market Circular Road, Faisalabad through Ejaz Hashmat Khan Member v. The Commissioner of Income Tax, Faisalabad Zone, Faisalabad and another 1993 PTD 332; Commissioner of Income Tax v. Messrs Eli Lilly Pakistan (Pvt.) Ltd. 2009 PTD 1392; Civil Petition No.1306 of 2014; Commissioner of Income Tax v. Eastern Federal Insurance Company PLD 1982 SC 247 and Commissioner Inland Revenue v. Messrs Ghausia Builders (Pvt.) Ltd., 2015 PTD 772 ref.
(b) Administration of justice---
----What cannot be done directly can also not be done indirectly.
Hafiz Munawar Iqbal for Applicant.
Nasim Sikandar, ASC for Respondent.
2016 P T D 2839
[Islamabad High Court]
Before Aamer Farooq, J
Messrs INFOTECH (PRIVATE) LTD.
Versus
FEDERATION OF PAKISTAN and 4 others
Writ Petition No.3223 of 2015, decided on 22nd July, 2016.
(a) Income Tax Ordinance (XLIX of 2001)---
----Ss. 4, 113 & 153 [as amended by Income Tax (Second Amendment) Ordinance (X of 2015)]---Constitution of Pakistan, Arts.25, 260 & Schedule IV, item 47---Section 4, Income Tax Ordinance, 2001---Vires----Minimum tax---Reasonable classification, principle of---Applicability---Petitioners were taxpayers who were aggrieved of recovery of minimum tax by authorities---Validity---Minimum tax fell within the scope and ambit of income tax as provided in S. 4 of Income Tax Ordinance, 2001-- - Minimum tax was specie of income tax and Parliament had competence to levy the same under item 47 of Schedule IV of the Constitution---Legislature in its wisdom could classify and concept of reasonable classification was available as an exception to discrimination under Art. 25 of the Constitution---By virtue of Income Tax (Second Amendment) Ordinance, 2015, reasonable classification was made and case of petitioners did not fall within Art. 25 of the Constitution---Concept of minimum tax was neither in violation of Income Tax Ordinance, 2001, nor fell outside item 47 of Schedule IV to the Constitution---Deductions to be made from payment made for rendering services at the rate of 8% were regarded as minimum tax---If petitioners could feel that the same was expropriatory and confiscatory in any manner could approach authorities for redress of their grievance by way of representation---Provisions in questions were not ultra vires the Constitution or any other provision---High Court declined to interfere in the matter---Constitutional petition was dismissed in circumstances.
Messrs Elahi Cotton Mills Ltd. and others v. Federation of Pakistan through Secretary M/o Finance, Islamabad and 6 others PLD 1997 SC 582 rel.
Messrs Quetta Textile Mills Limited through Chief Executive v. Province of Sindh through Secretary Excise and Taxation, Karachi and another PLD 2005 Kar. 55; Syed Imran Ali Shah v. Government of Pakistan through Secretary Human Resources (HR) Division, Islamabad and 2 others 2013 PLC 143; Capt. (Retd.) Nayyar Islam v. Judge, Accountability Court No. III and, others 2012 SCMR 669; 2004 PTD 2479; 1988 CLC 5; PLD 2010 SC 983; 1989 PTD 961; AIR 1966 SC 1292; Lahore Development Authority through D.G. and others v. Ms. Imrana Tiwana and others 2015 SCMR 1739 and Commissioner of Income Tax Legal Division and others v. Khursheed Ahmed and others PLD 2016 SC 545 ref.
(b) Income Tax Ordinance (XLIX of 2001)---
----S.113(3)---"Turnover"---Scope---Definition of turnover is much wider than mere receipt of payment.
Syed Ali Zafar, Ms. Mehak Ali and M.S. Babar for Petitioner.
Dr. Farhat Zafar, Sheikh Anwar ul Haq and Saeed Ahmed Zaidi for Respondent.
Syed Hasnain Ibrahim Kazmi, Deputy Attorney-General.
2016 P T D 2853
[Islamabad High Court]
Before Noor ul Haq N. Qureshi and Athar Minallah, JJ
MUSTEHKAM CEMENT LTD.
Versus
COMMISSIONER INLAND REVENUE, LTU, ISLAMABAD
S.T.R. No.184 of 2011, decided on 29th March, 2016.
(a) Sales Tax Act (VII of 1990)---
----S.3---"Sales tax"---Concept---Sales tax is levied and charged under Sales Tax Act, 1990, and is in the nature of indirect tax---In case of indirect tax, intermediary collects tax from another person while the latter actually bears burden of tax---After collecting tax it is statutory duty of intermediary to account for and deposit the same in exchequer---Scheme of Sales Tax Act, 1990, is based on self-assessment and therefore, it imposes statutory obligation on registered person collecting tax from other person to declare and account for the tax in monthly returns as provided under the provisions of Sales Tax Act, 1990.
(b) Sales Tax Act (VII of 1990)---
----S.11---Default surcharge---Word "shall" as used in S.11, Sales Tax Act, 1990---Effect---Non-obstante clause in the context of S. 11 of Sales Tax Act, 1990, and use of expression "shall" makes imposition of default surcharge mandatory.
(c) Words and phrases---
----Levy---Connotation---Imposition, assessment as well as collection of a tax falls within the ambit of expression 'levy'.
Balcks's Law Dictionary 8th Edition rel.
(d) Sales Tax Act (VII of 1990)---
----Ss.3, 11 & 36---Sales Tax (Refund of Excess Input Tax to the Manufacturers) Rules, 2005, R.8---Reference---Default surcharge---Input tax adjustment---Taxpayer sought adjustment advice for tax period July, 2006, and Adjudication Officer observed that the adjustment had been made against invoices issued by another registered person---Authorities issued show cause notice and imposed recovery of default surcharge under S. 34 of Sales Tax Act, 1990, and further penalty was imposed---Plea raised by taxpayer was that Adjudicating Officer could not have ignored Sales Tax (Refund of Excess Input Tax to the Manufacturers) Rules, 2005---Validity---Procedure for claiming benefit envisaged under Sales Tax (Refund of Excess Input Tax to the Manufacturers) Rules, 2005, was distinct and separate and could be confused with recovery proceedings initiated in case of alleged non-levy or short levy of tax---Adjudication proceedings had no nexus with Sales Tax (Refund of Excess Input Tax to the Manufacturers) Rules, 2005, nor Adjudicating Officer empowered to examine claims under Sales Tax (Refund of Excess Input Tax to the Manufacturers) Rules, 2005---Proceedings for recovery of tax under S. 36 of Sales Tax Act, 1990, were distinct and separate from proceedings relating to claims made by registered person for refund and under Sales Tax (Refund of Excess Input Tax to the Manufacturers) Rules, 2005---Reference was disposed of accordingly.
Muhammad Anwar and others v. Mst. Ilyas Begum and others PLD 2013 SC 255 ref.
Barrister Farrukh Jawad Panni for Applicant.
Dr. Farhat Zafar for Respondent.
2016 P T D 1
[Sindh High Court]
Before Nadeem Akhtar and Muhammad Iqbal Kalhoro, JJ
Messrs SMS COURIER (PVT.) LTD.
Versus
COLLECTOR (APPEALS) CUSTOMS and another
Special Sales Tax Reference Application No.105 of 2006, decided on 28th April, 2015.
Sales Tax Act (VII of 1990)---
----Ss. 25, 38 & 47---Access to record, documents, etc.---Reference to High Court ---Question before the High Court was "whether Superintendent Sales Tax was empowered to act as officer of Sales Tax under S. 25 of the Sales Tax Act, 1990 when he visited the taxpayer's office and obtained record therefrom"---Contention of taxpayer was, inter alia, that Superintendent Sales Tax was not competent to visit the office of the taxpayer and seize record therefrom, and only Commissioner was empowered to collect such record and only he could authorize an officer not below the rank of Assistant Commissioner to hold inquiry in terms of S. 38 of the Sales Tax Act, 1990---Held, that record, in the present case, belonged to period from July, 2002 to February, 2003, during which time, no proviso to S.25 of the Sales Tax Act, 1990 existed and in the said period the Superintendent Sales Tax, being officer concerned in terms of the then prevalent law, was competent to require the taxpayer to allow him to access the record pertaining to services provided during subject period---No illegality was therefore committed---Reference was answered, accordingly.
2004 PTD 1339 and 2005 PTD 1933 ref.
Mazahar Jafri for Appellant.
Shakeel Ahmed for Respondents.
Date of hearing: 11th December, 2014.
2016 P T D 35
[Sindh High Court]
Before Aqeel Ahmed Abbasi and Muhammad Junaid Ghaffar, JJ
MUHAMMAD WAHEED through attorney
Versus
CUSTOMS APPELLATE TRIBUNAL and another
Special Customs Reference Application No.218 of 2012, decided on 24th July, 2015.
(a) Customs Act (IV of 1969)---
----Ss. 32 & 223---Customs General Order 12 of 2002, para 101(B)---SRO No. 487(I)/2007, dated 9-6-2007---Misdeclaration of physical description of goods---Assessment of goods---Element of mens rea---Scope---Duties of Field Officer---SRO No. 487(I)/2007, dated 9-6-2007 read with Para 101 (B) of Customs General Order 12 of 2002 reflected that though a fine of 50% could be imposed in terms of SRO No. 487(I)/2007, dated 9-6-2007 on alleged mis-declaration of physical description of goods---Department which was responsible for assessment of goods, had to ensure itself before invoking provisions of S. 32 of Customs Act, 1969 that prima facie an element of mens rea was present i.e. "there should be an attempt of wilful and deliberate false declaration"---Directions contained in Customs General Order 12 of 2002 though not binding upon authorities performing quasi-judicial functions but such directions were mandatory in nature and were binding upon Field Officers of department in terms of S. 223 of Customs Act, 1969---Field Officers were required to follow such directions or guidelines before making any contravention report/case against an importer---Any act of field officers in violation of such directions would be illegal and of no consequence.
(b) Customs Act (IV of 1969)---
----S.196---Reference to High Court---Customs General Order 12 of 2002---Applicability---Scope---Department's plea was that after introduction of electronic assessment, Customs General Order 12 of 2002 was no more applicable---In absence of any clarification and/or amendment to such effect, Customs General Order 12 of 2002 would not be applicable in case of assessment of goods declaration under electronic processing of same---Reference application was allowed, accordingly.
Mohabbat Hussain Awan for Applicant.
Kashif Nazeer and Ilyas Ahsan Appraising Officer (Legal) for Respondents.
Dates of hearing: 24th March and 14th July, 2015.
2016 P T D 55
[Sindh High Court]
Before Aqeel Ahmed Abbasi and Muhammad Junaid Ghaffar, JJ
COLLECTOR OF CUSTOMS through Additional Collector of Customs
Versus
SHAHDEV VANKWANI
Special Customs Reference Applications Nos. 63 and 64 of 2013, decided on 15th May, 2015.
Customs Act (IV of 1969)---
----S. 196---Limitation Act (IX of 1908), S. 5---Reference to High Court---Condonation of delay---Seeking of legal advice by authorities---Reference filed by authorities was barred by 51 days---Plea raised by authorities was that after getting certified copy of order passed by Customs Appellate Tribunal, the same was sent to seek legal advice whereafter fresh copy of order was obtained and reference was filed beyond the period of ninety days---Validity---Reason for seeking condonation of delay, besides being frivolous, could not otherwise be accepted---On expiry of period of limitation provided for filing reference or appeal etc. created a vested right in favour of succeeding party and unless some reasonable explanation was given, explaining delay of each and every day, condonation under such circumstances could not be allowed---Authorities failed to explain reasonably the delay caused in filing of reference---Reference was dismissed in circumstances.
Kashif Nazeer for Applicant.
Nemo for Respondent.
Date of hearing: 15th May, 2015.
2016 P T D 97
[Sindh High Court]
Before Aqeel Ahmad Abbasi and Muhammad Junaid Ghaffar, JJ
COMMISSIONER OF INCOME TAX, LEGAL DIVISION, R.T.O.
Versus
Messrs MATRIX PRESS (PVT.) LTD.
I.T.R.A. No.723 of 2010, decided on 7th May, 2015.
Income Tax Ordinance (XLIX of 2001)---
----Ss.21(1)(m), 22(15) & 133---Depreciation, claim of---Disallowance of expenses---Concurrent findings of facts---Authorities were aggrieved of finding of Appellate Tribunal holding that claim of initial and normal depreciation were allowable in spite of facts that same related to repair and maintenance---Validity---Question relating to disallowance of expenses or claiming depreciation on fixed assets while transferring expenses on construction work incurred in previous years which was completed during tax year under consideration were questions of fact which had been dealt with in detail by forums below by recording concurrent findings on such facts---Such finding of facts could not be disturbed in Reference under S. 133 of Income Tax Ordinance, 2001, unless such concurrent finding was either perverse or contrary to record---Findings of facts did not give rise to a question of law which could be entertained by High Court under its reference jurisdiction---No merit was found in reference application, whereas questions proposed were questions of facts and no question of law had arisen from order passed by Appellate Tribunal---Reference was dismissed in circumstances.
Commissioner of Income Tax v. Electronic Industries Ltd. Karachi 1988 PTD 111 and E.M. Oil Mills and Industries Ltd. v. Commissioner of Income Tax, Audit Division II, Companies III, Karachi 2011 PTD 2708 rel.
Amjad Javaid Hashmi for Applicant.
Nemo for the Respondent.
Date of hearing: 7th May, 2015.
2016 P T D 100
[Sindh High Court]
Before Faisal Arab, C.J. and Zafar Ahmed Rajput, JJ
Messrs PAK ARAB PIPELINE COMPANY LTD. through Attorney
Versus
FEDERATION OF PAKISTAN through Secretary and 2 others
C.Ps. Nos.D-710 of 2015, D-380 of 2014 and D-1520 of 2013, decided on 8th October, 2015.
Income Tax Ordinance (XLIX of 2001)---
----Ss.153 & 122(9)----Constitution of Pakistan, Art. 199---Constitutional petition---Payments for goods, services and contracts---Term 'services', scope of---Assessment under 'Normal Tax Regime' or 'Final Tax Regime'---Determination---Notice to amend tax return---Petitioner had been filing tax returns after assessment under Normal Tax Regime, but for last three year, he filed same on basis of Final Tax Regime placing reliance on judgment of High Court on the subject---Authorities issued notices under S.122(9) of Income Tax Ordinance, 2001 requiring petitioner to amend tax returns under Normal Tax Return---Validity---Tax deductible for transactions covered under S. 153(1)(b) of Income Tax Ordinance, 2001 did not fall under Final Tax Regime as envisaged under S. 153(3) of the Ordinance---Out of three distinct situations covered under S. 153(1)(a), (b) & (c) of Income Tax Ordinance, 2001, benefit of Final Tax Regime was extended only in two situations---Third situation falling under S.153(1)(b) of Income Tax Ordinance, 2001 was not extended benefit of Final Tax Regime---Phrase but not including a contract for sale of goods or the rendering of or providing of services' in S. 153(1)(c) of Income Tax Ordinance, 2001, by process of elimination, excluded situations covered under Ss. 153(1)(a) and (b) of the Ordinance thereby implying that situation covered under S. 153(1)(c) of the Ordinance was distinct from rest of two situations---Section 153(1)(c) of Income Tax Ordinance, 2001 covered all contracts other than those for sale of goods or for providing services---Benefit of Final Tax Regime under S.153(3) of Income Tax Ordinance, 2001 was not extendable to transactions covered under S. 153(1)(b) of the Ordinance---Under amended provision of S. 153(1)(c) of Income Tax Ordinance, 2001, any transaction of providing or rendering services stood excluded from its ambit irrespective of nature of service that was to be rendered---Fact that 'services' could be divided into more than one categories was not relevant for two reasons: Firstly, term 'services' in phrase from the rendering of or providing of services' as contained in S. 153(1)(b) of Income Tax Ordinance, 2001 was not covered by S. 153(3) of the Ordinance; secondly, even if one explored meaning of term 'services' as defined under S. 153(7)(ii) of Income Tax Ordinance, 2001, question would arise as to whether definition of 'services' as provided therein was intended to either bring within its ambit services of accountants, architects, dentists, doctors, engineers, interior decorators and lawyers as well along with services of those who did not require any professional degree for rendering of their services or whether term 'includes' contained in S. 153(7)(ii) of the Ordinance was intended to give restricted meaning to term 'services' so as to exclude from its ambit services of those persons who did not require professional degree---By use of word 'includes' and not 'means' in definition S. 153(7) of Income Tax Ordinance, 2001, all resident persons whether or not they rendered services which required professional degree were intended to be brought within ambit of S. 153(1)(b) of the Ordinance---Sole purpose of defining term 'services' was that persons who rendered services such as accountants, architects, dentists, doctors, engineers, interior decorators and lawyers and other, who required professional degree for doing so might not seek exclusion from advance deductions out of their receipts that was required to be made in terms of S. 153(1) of Income Tax Ordinance, 2001---Intention of legislature in defining term 'services' was not to restrict but to enlarge its scope---Whether a person required professional degree or not for rendering his services, he was covered within ambit of S.153(1)(b) of Income Tax Ordinance, 2001, and tax was to be deducted in advance from payments made to him for rendering of or providing of services---Said categorization of services was relevant only for purpose of making advance deduction from payment which a person received under any of the three situations covered under S. 153(1)(a), (b) & (c) of Income Tax Ordinance, 2001---However, same was irrelevant for purpose of S. 153(3) of Income Tax Ordinance, 2001---As benefit of Final Tax Regime under S. 153(3), having clearly not been extended to transactions relating to rendering of or providing of services, tax returns in all such cases were to be filed and assessed under Normal Tax Regime---Advance tax, if any deducted under S.153(1) of Income Tax Ordinance, 2001 from receipts of such person, would be adjusted against his tax liability---Amendment in S. 153(1)(c) of Income Tax Ordinance, 2001 clarified that person could not successfully claim benefit of Final Tax Regime under S. 153(3) of the Ordinance if he rendered or provided any kind of service---Federal Board of Revenue was for said two reasons was justified in issuing notices to petitioner for disputed years in order to amend tax returns under Normal Tax Regime that had been originally furnished under Final Tax Regime---Constitutional petitions were dismissed in circumstances.
Engro Vopak Terminal Ltd. v. Pakistan 2012 PTD 130 distinguished.
Makhdoom Ali Khan for Petitioners.
Sarfraz Ali Metlo, Kafeel Ahmed Abbasi and Barkat Ali Metlo for Respondents.
Dr. Najeeb Ahmed, A.D. C.I.R and Dr. Farrukh Ansari, C.I.R.
2016 P T D 163
[Sindh High Court]
Before Abdul Rasool Memon, J
MUHAMMAD ASIM ARMAN
Versus
COLLECTORATE OF CUSTOMS (PREVENTIVE) and 3 others
R.A. No.197 of 2012, decided on 7th May, 2015.
(a) Customs Act (IV of 1969)---
----Ss.193 & 217---Civil Procedure Code (V of 1908), S.2 & O. VII, R.11---Specific Relief Act (I of 1877), Ss.42 & 52---Suit for declaration and permanent injunction---Maintainability---Protection of action taken under Customs Act, 1969---Suit barred under Customs Act, 1969---Order passed under O.VII, R.11, C.P.C.---Nature and effect---Remedy available under special law---Scope---Concurrent findings---Rules for interference---Plaintiff filed suit for declaration and permanent injunction challenging validity of demand letter under which tax duties were imposed by defendants on equipment imported by plaintiff and warrant of attachment issued for non-payment of said duties---Contention raised by plaintiff was that the equipment imported by him was not subject to payment of any tax duties and that show-cause notice issued to plaintiff was time barred in terms of S. 32(2) of Customs Act, 1969---Defendant took plea that show cause notice was within time as provided under S. 32(5) of Customs Act, 1969---Trial Court dismissed the suit being barred under S. 217 of Customs Act, 1969 and due to availability of adequate remedy of appeal under S. 193 of the Act---Appellate court upheld judgment and decree of Trial Court---Validity---Customs Act, 1969 was complete Code in respect of levy and collection of customs duties and other allied matter and rights of parties were fully protected by said law---When an action or order passed by Customs suffered from illegalities, aggrieved party could always seek remedy in hierarchy provided under the said Act---Assumption of jurisdiction to adjudicate dispute relating to customs' duties would come within domain of highest hierarchy or Tribunal established under Customs Act, 1969---Under S. 217 of Customs Act, 1969 provided bar in respect of suits filed by importers and the same were incompetent---Section 193 of Customs Act, 1969 provided that any person who felt aggrieved by decision or order passed under Ss. 33, 79, 80 & 179 of the Act could prefer appeal to Collector within thirty days from date of communication of order, and it also contained provision as to condonation of delay in filing of appeal after prescribed period of limitation---Order passed by Trial Court was in accordance with law and the same could be termed as an order passed under O. VII, R. 11, CPC---Order passed under O. VII, R. 11, CPC was itself a decree within meaning of S. 2, CPC and the same was appealable without any formal decree prepared by Trial Court---Findings of appellate court in respect of non-availability of decree were contrary to law---Where law had provided a remedy of appeal or revision to any Tribunal fully competent to give relief, any indulgence to contrary by High Court, was bound to produce sense of distrust in statutory Tribunals---Concurrent findings of courts below did not require any interference---No illegality or irregularity could be pointed out in finding of court below---Revision petition was dismissed in circumstance.
(b) Customs Act (IV of 1969)---
----Preamble---Object of Customs Act, 1969 is complete Code in respect of levy and collection of customs duties and other allied matters and rights of parties are fully protected by said law.
(c) Customs Act (IV of 1969)---
----Ss. 33, 32, 79, 80, 179, 193 & 217----Section 193 of Customs Act, 1969 provides that any person who feels aggrieved by decision or order passed under Ss. 33, 79, 80 & 179 of the Act can prefer appeal to Collector within thirty days from date of communication of order, and it also contains provision of condonation of delay in filing of appeal after prescribed period of limitation.
(d) Civil Procedure Code (V of 1908)----
----O. VII, R. 11, & S.2----Rejection of plaint---"Decree"---Scope---Order of court to the effect that suit was incompetent could be termed as an order passed under O. VII, R. 11, CPC, as such suit should have been buried before its inception---Order passed under O. VII, R. 11, C.P.C. was itself a "decree" within meaning of S. 2, CPC the same was appealable without any formal decree prepared by Trial Court---Finding of appellate court in respect of non-availability of decree were contrary to law.
(e) Civil Procedure Code (V of 1908)----
----S. 115---Revision---Maintainability---Remedy available under special law---Scope---Where law provides a remedy of appeal or revision to any Tribunal fully competent to give relief, any indulgence to the contrary by High Court, is bound to produce sense of distrust in statutory Tribunals.
1999 MLD 1728; PLD 1997 Kar. 541; 2004 PTD 1189; 1992 SCMR 1898; 2002 MLD 130; 1990 CLC 511; 2007 PTD 127; 2011 SCMR 1279; Muhammad Idris v. The Collector of Customs, Karachi and another PLD 1971 Kar. 911; Moon Corporation v. Central Board of Revenue 2004 PTD 2615 and Shahid Agency v. The Collector of Customs 1989 CLC 1938 rel.
Syed Jehangeer Akhtar for Applicant.
Dikhurram Shaheen for Respondents.
Date of hearing: 12th March, 2015.
2016 P T D 185
[Sindh High Court]
Before Aqeel Ahmed Abbasi and Muhammad Junaid Ghaffar, JJ
COMMISSIONER INLAND REVENUE, ZONE-II, RTO-II
Versus
Messrs G.M. FISHERS (PVT.) LTD., KARACHI
I.T.R.A. No.90 and C.M.A. No.431 of 2014, decided on 20th May, 2015.
Income Tax Ordinance (XLIX of 2001)---
----Ss. 124(2) & 133---Completion of proceedings---Time frame--- Authorities were aggrieved of direction issued by Appellate Tribunal to appellate authority for completing proceedings within sixty days---Plea raised by authorities was that Income Tax Appellate Tribunal could not reduce time frame as provided under S. 124(2) of Income Tax Ordinance, 2001---Validity---Reference to S. 124(2) of Income Tax Ordinance, 2001, by authorities was misconceived, as it provided a maximum time limit to taxation officer to pass an order after remand by Appellate Tribunal, High Court or Supreme Court and the same could not be treated as minimum time period to pass such order after remand---No error or illegality was found in the order passed by Appellate Tribunal, whereby matter had been remanded to concerned taxation officer with certain directions to decide case preferably within a period of sixty days---Reference was disposed of accordingly.
S. Irshadur Rehman for Applicant.
2016 P T D 244
[Sindh High Court]
Before Ahmed Ali M. Shaikh and Muhammad Iqbal Kalhoro, JJ
MUHAMMAD AKRAM QURESHI
Versus
DIRECTOR, FEDERAL INVESTIGATION AGENCY and 5 others
C.P. No.D-5068 of 2013, decided on 3rd June, 2015.
Customs Act (IV of 1969)---
----Ss.16 & 171---Constitution of Pakistan, Art.199---Constitutional petition---Maintainability---Recovery of foreign currency little over the prescribed limit, from a passenger at the Airport---Factual controversy---Alternate relief---Effect---Factual controversy would require evidence and same could not be decided under constitutional jurisdiction---Petitioner had alternate remedy before the Trial Court---If alternate remedy was available, constitutional jurisdiction could not be exercised---Constitutional petition was dismissed in circumstances.
Sohail Muzaffar for Petitioner.
Salman Talibuddin, Additional Attorney General and Inspector Ali Murad, CBC FIA for Respondents.
Date of hearing: 15th April, 2015.
2016 P T D 365
[Sindh High Court]
Before Aqeel Ahmed Abbasi and Muhammad Junaid Ghaffar, JJ
ZAHEER AHMED
Versus
DIRECTORATE GENERAL OF INTELLIGENCE and 4 others
Constitutional Petition No. D-3337 of 2013, decided on 11th June, 2014.
(a) Constitution of Pakistan---
----Art.203---Criminal Procedure Code (V of 1898), Ss.249-A, 265-K & 561-A---Superintendence of High Court over subordinate---Inherent jurisdiction of High Court---Scope---Quashing of proceedings---Principles---High Court is responsible for entire administration of justice and being charged with responsibility of supervising all Courts subordinate to it, High Court is competent to take all appropriate measures for preventing mal-administration of justice and abuse of process of law in appropriate cases---When case is of no evidence or registration of case is proved to be mala fide or case is of purely civil nature or when there is unexceptional delay in disposal of case causing deplorable mental, physical and financial torture to person proceeded against, High Court is competent to take cognizance of the matter and by exercising inherent powers under S. 561-A, Cr.P.C. to correct a wrong by ordering quashing of FIR and proceedings emanating therefrom---Powers vested in High Court under S. 561-A, Cr.P.C. are co-extensive with powers vested in Trial Court under Ss. 249-A & 265-K, Cr.P.C. and in appropriate cases can be invoked directly without resorting to decision by Trial Court under Ss. 249-A & 265-K, Cr.P.C. to avoid abuse of process of Court.
The State v. Asif Ali Zardari and another 1994 SCMR 798; Muhammad Khalid Mukhtar v. The State through Deputy Director, FIA (CBA), Lahore PLD 1997 SC 275; Miraj Khan v. Gul Ahmed 2000 SCMR 122; Maqbool Rehman v. The State and others 2002 SCMR 1076; Mian Munir Ahmad v. The State 1985 SCMR 257; Raees Ahmad Khan v. The State 1991 PCr.LJ 1381; Ch. Pervez Ellahi v. The Federation of Pakistan 1995 MLD 615 and Muhammad Hassan v. Manzoor Ahmad and another 1991 PCr.LJ 2177 rel.
(b) Sales Tax Act (VII of 1990)---
----Ss.14 & 33---Federal Excise Act (VII of 2005), Ss.13 & 19---Constitution of Pakistan, Art.199---Constitutional petition---Quashing of FIR---Action without jurisdiction---Petitioner was not a registered person whether under S. 13 of Federal Excise Act, 2005, or under S.14 of Sales Tax Act, 1990, nor petitioner had any history of being assessed to pay duty under Federal Excise Act, 2005---In the present case, before raid at the premises of petitioner, seizing goods and sealing premises, petitioner was neither issued with any show cause notice nor any opportunity was provided by authorities to petitioner to explain his position with regard to allegations as contained in FIR---Validity---FIR and proceedings emanating therefrom were without lawful authority---Authorities acted without jurisdiction and in violation of express provisions of law---High Court while exercising inherent jurisdiction vested in it and in order to avoid abuse of process of law quashed FIR and proceedings pending before Trial Court since 2012 without any useful progress---Petition was allowed in circumstances.
Shah Nawaz and 2 others v. Birjlal and others 2011 MLD 956; Sadaqat Ali Khan through L.Rs. and others v. Collector Land Acquisition and others PLD 2010 SC 878; Muhammad Amin v. Master Bashir Ahmed and others 2006 SCMR 969; Shah Muhammad v. Haq Nawaz and another PLD 1970 SC 470; Mohammad Ashraf v. Faiz Ali and 11 others PLD 1975 SC 556; Abdul Razzaq v. S.H.O. and others 2008 PCr.LJ 812; Abdul Rashid and another v. The State 1983 PCr.LJ 42; Senator Asif Ali Zardari and another v. The State PLD 2008 Kar. 381; Khursheed Ahmed v. The State 2011 YLR 2368; Muhammad Aslam Baig v. The State 1993 MLD 567 and Quaid Johar v. Murtaza Ali and another PLD 2008 Kar. 342 ref.
Tariq Mehmood for Petitioner.
S. Mohsin Imam, M. Azam Nafees I.R., A.O./I.O. and Asfaq Rafiq Janjua for Standing Counsel for Respondents.
Date of hearing: 11th June, 2014.
2016 P T D 427
[Sindh High Court]
Before Aqeel Ahmed Abbasi and Muhammad Junaid Ghaffar, JJ
CHINA HARBOUR ENGINEERING COMPANY LIMITED
Versus
FEDERATION OF PAKISTAN through Secretary, Chairman and others
C.P. No.D-2112 of 2015, decided on 23rd September, 2015.
Income Tax Ordinance (XLIX of 2001)---
----Ss. 152(4A) & 153---FBR Circular No.2 of 2012, dated 27-7-2012---Constitution of Pakistan, Art. 199---Constitutional petition---Exemption Certificate---Beneficial legislation---Retrospective effect---Principles---Assessee was aggrieved of order passed by Authorities whereby Exemption Certificate granted in its favour had been withdrawn---Validity---Only purpose and intent for carrying out amendment in Ss.152 & 153 of Income Tax Ordinance, 2001, through Finance Act, 2012, was to simplify and harmonize withholding tax regime pertaining to Permanent Establishments of Non-Resident Persons in Pakistan, as there was some overlapping and confusion with regard to withholding and deduction of tax on such establishments---Federal Board of Revenue clarified through circulars, that to remove such problem, mechanism of payments in respect of Permanent Establishments of Non-Residents through Finance Act, 2012 was omitted from S. 153 of Income Tax Ordinance, 2001 and were made part of S. 152 of Income Tax Ordinance, 2001---Insertion of subsection (4A) in S. 152 of Income Tax Ordinance, 2001, through Finance Act, 2015, was remedial and curative in nature as it had rectified an apparent mistake and omission, hence the same would be applicable retrospectively on the case of petitioner, as the petitioner's case was pending when such amendment was introduced in Income Tax Ordinance, 2001---Assessee was entitled for issuance of Exemption Certificate during the period prior to 2015 as well---High Court set aside the orders passed by authorities whereby Exemption Certificate dated 19-06-2014, already issued to assessee was withdrawn/recalled---Petition was allowed in circumstances.
Commissioner of Income Tax v. Shah Nawaz Ltd. and others 1993 SCMR 73; Dawood Cotton Mills v. Commissioner of Income Tax 2000 PTD 285 and Commissioner of Income Tax v. J.D. Sugar Mills Ltd. 2009 PTD 481 rel.
Mushtaq Hussain Qazi for Petitioner.
Dilawar Hussain, Standing Counsel for Respondent No.1.
Muhammad Sarfaraz Ali Metlo, Assisted by Dr. Najeeb Ahmed Memon Additional Commissioner, Shakeel Ahmed Kasana Additional Commissioner and Abdul Wahid Deputy Commissioner for Respondents Nos. 2 and 3.
Ms. Sara Malkani for Respondent No.6.
Dates of hearing: 13th, 20th May and 7th September, 2015.
2016 P T D 518
[Sindh High Court]
Before Zafar Ahmed Rajput, J
MUBISHAR PESH IMAN
Versus
FEDERATION OF PAKISTAN and 2 others
Suit No.174 of 2004, decided on 19th September, 2014.
(a) Customs Act (IV of 1969)---
----S. 217---Protection against any legal proceedings---Pre-conditions---Protection provided by S. 217 of Customs Act, 1969, is conditional upon their having acted in good faith---Mala fide act is not protected under S. 217 of Customs Act, 1969---Ouster of jurisdiction can be claimed when action in question is focused to be within four corners of statute under which it is taken.
Federation of Pakistan v. Saman Diplomatic Bonded Warehouse 2004 PTD 1189 rel.
(b) Customs Act (IV of 1969)---
----S. 156(I)(89)---Specific Relief Act (I of 1877), Ss. 10, 42 & 54---Suit for recovery of specific movable property, declaration, injunction and damages---Show cause notice, assailing of---Confiscation of goods---Plaintiff was aggrieved of ceasing of betel nuts owned by him and had also assailed show cause notice issued by Customs authorities intending to confiscate the nuts under S. 156 (I)(89) of Customs Act, 1969---Validity---Plaintiff had successfully proved his case that he had legally purchased 42260 kilograms of betel nuts, which were lawfully imported and Sales tax was also duly paid thereon but Customs authorities illegally and unlawfully seized the same---Plaintiff had also claimed an amount against authorities severally and / or jointly, by way of damages for causing serious mental torture and bad name to him from the date of filing of suit till satisfaction of decree---Suit was decreed accordingly.
(c) Damages---
----Special and general---Proof---Person claiming special damages has to prove each item of loss with reference to evidence brought on record---For general damages relating to mental torture, anguish, distress and defamation, those are to be assessed following the Rule of Thumb---Such exercise falls in discretionary jurisdiction of Court which has to decide same in facts and circumstances of each case.
Abdul Majid Khan v. Towseen Abudl Haleem and others 2012 CLD 6 and Malik Gul Muhammad Awan v. Federation of Pakistan through Secretary M/o Finance and others 2013 SCMR 507 rel.
Munir A. Malik and Basil Nabi Malik for Plaintiff.
Nemo for Defendants.
Date of hearing: 5th August, 2014.
2016 P T D 548
[Sindh High Court]
Before Sajjad Ali Shah and Syed Saeeduddin Nasir, JJ
TAUSEEF MIRZA
Versus
COLLECTOR OF CUSTOMS (APPRAISEMENT) and 2 others
C.P. No.D-3160 of 2012, decided on 2nd September, 2015.
(a) Customs Act (IV of 1969)--
----Ss.32 & 32-A---Constitution of Pakistan, Art. 199---Constitutional petition---Import of goods---Fiscal fraud---Misdeclaration of goods by importer---Department's plea was that payment by importer to department was made upon incorrect values declared by importer in Goods Declaration (GD) presented before Customs Authorities for payment of 1% warehousing surcharge---Contention of importer was that he was unaware of correctness of declared value and about correct/actual invoice value was not acceptable as he was dealing with clearance of imported goods namely "Ethyl Hexanole" and "Ortho-Xylene" for many years for several clients---Validity---Importer in connivance of clearing agent simply used forumula of 50% under-invoicing i.e. half of actual price was declared at the time of inbonding to defraud public exchequer revenue---Declaration of fake value on customs copy of GD and actual value on importers copy of GD established such fact that importer had deliberately committed offence of misdeclaration---Importer was liable for wilful act, negligence or default on account of which duty was short levied which department was entitled to recover from importer---Constitutional petition was dismissed.
(b) Customs Act (IV of 1969)--
----Ss. 18 & 209---Goods dutiable---Liability of principal and agent---Scope---Amendments made by Finance Act, 1992 and Finance Act, 1996, made clear that term "duty" used in proviso of S. 209 of Customs Act, 1969 in context of clearing agents was duty levied and payable under S. 18 of Customs Act, 1969 and as per amendment by Finance Act, 1992 and Finance Act, 1996 the same would be levied and collected as an additional customs duty as surcharge on warehoused goods @ 1% of value of such goods.
(c) Customs Act (IV of 1969)--
----S.209---Customs Rules 2001, R. 101(e)---Responsibilities of licensee---Scope---Rule 101(e) of Customs Rules, 2001,provided that importer could not evade payment of amount of duties and taxes along with 1% additional customs duty as warehousing surcharge to Department levied on actual value of imported goods---Department could recover such duty from importer inasmuch as importer was jointly and severally responsible along with Department for causing loss to National Exchequer by misdeclaration of imported goods chargeable at the time of in-bonding of goods in public/private bonded tanks terminals under Finance Act, 1991.
(d) Customs Act (IV of 1969)---
----S. 209---Liability of agent---Agent was responsible to fill various columns of bill-of-entry in a proper manner and neglect to do so would amount to wilful neglect which would make him liable for duty which was not levied or short levied.
Sohail Muzaffar for Petitioner.
Sarfaraz Ali Metlo and Zia-ul-Makhdoom, DAG, Ilyas Ahsan Khan, Appraisal Officer, Customs Department for Respondents.
Date of hearing: 29th April, 2015.
2016 P T D 577
[Sindh High Court]
Before Faisal Arab, C.J. and Muhammad Iqbal Kalhoro, J
SHAKEEL AHMED and 5 others
Versus
FEDERATION OF PAKISTAN through Secretary, Revenue Division and 2 others
Constitutional Petition No. D-3266 of 2014, (and all other connected petitions), decided on 20th October, 2015.
Sales Tax Act (VII of 1990)---
----Ss. 3 & 7---Recovery of Sales Tax at one stage---Petitioners were operators of Compressed Natural Gas stations and plea raised by them was that they were required to pay sales tax at the stage of purchasing natural gas not on the value of natural gas but on the value at which they were required to sell Compressed Natural Gas to consumers, as such the same enhanced sales tax from 17 % to 32%---Validity---Sales tax was charged only at the rate of 17% at one stage i.e. at the time Compressed Natural Gas station operators purchased natural gas from gas company which otherwise could be charged at two stages i.e. at the time of making purchases of natural gas and then at the time of selling of Compressed Natural Gas to its consumers after giving adjustment of input tax paid on purchase of natural gas---Such two stage procedure was reduced to one without having any adverse effect on Compressed Natural Gas station owners as they even under S. 3(8) of Sales Tax Act, 1990, as it so stood to pay sales tax on the value of Compressed Natural Gas at the rate of 17 % only and the same was exactly that was being done---Instead of recovering sales tax at two stages, it was being done at one stage, which procedure was akin to the procedure envisaged under S. 3(2)(a) of Sales Tax Act, 1990---Entire burden of sales tax recovered by gas company from Compressed Natural Gas station operators at the time of selling natural gas was passed on to Compressed Natural Gas consumers and not a fraction of it was borne by Compressed Natural Gas station operators---Even if the levy was unlawful, even then the burden had transferred to the end consumer---No illegality existed in charging sales tax in the manner provided under the provisions of S. 3(8) of Sales Tax Act, 1990---Constitutional petition was dismissed in circumstances.
2014 SCMR 220 and Cotton Ellahi's case PLD 1997 SC 582 ref.
Khalid Jawed Khan with M. Ahmar, Syed Irshadur Rehman, Fahim Zia Abrar, Raja Fateh Shaikh, Munawar Ali, Amjad Ali holding brief for Moulvi Iqbal Haider, Khurshid Javed, Hakim Ali Khan, Ms. Lubna Pervez, Malik Altaf Javed, Sanaullah Noor Ghori and Shafqat Zaman for Petitioners.
Sarfraz Ali Metlo with Barkat Ali, Amjad Javed Hashmi, Kafeel Ahmed Abbasi, Farmanullah Khan and Asim Iqbal for Respondents.
Mukesh Kumar A.A.-G.
Dr. Farrukh Ansari CIR, Dr. Najeeb Ahmed Memon CIR, Shajeel Ahmad DCIR and Zia Ahmed Khan Asstt. Manager Audit.
Date of hearing: 6th October, 2015.
2016 P T D 622
[Sindh High Court]
Before Muhammad Shafi Siddiqui, J
MUHAMMAD HUSSAIN and others
Versus
PAKISTAN THE SECRETARY REVENUE DIVISION and others
Suits Nos. 1764, 2214, 2299, 2300, 2339, 2439, 2357 and 2515 of 2014 and 142, 794, 937, 1034 and 1035 of 2015, decided on 8th September, 2015.
(a) Income Tax Ordinance (XLIX of 2001)---
----S. 227---Civil Procedure Code (V of 1908), S. 9---Jurisdiction of civil court, bar on---Scope---Vires of law---Such bar is only with regard to proceedings or orders made under Income Tax Ordinance, 2001 and does not preclude a challenge to vires of law or statute framed or amendment inserted therein by parliament---Civil courts are courts of ultimate jurisdiction and, therefore, such jurisdiction is being enjoyed by High Court, is sufficient to dispel any challenge of defendant with regard to maintainability of such suit.
HMC v. Fateh Jeans 1991 MLD 284; Abbasia Cooperative Bank v. Hakeem Hafiz Muhammad Ghaus PLD 1997 SC 3; Hamid Hussain v. GOWP PLD 1974 SC 356 and Sanofi Aventis v. Province of Sindh PLD 2009 Kar. 69 rel.
(b) Interpretation of statutes---
---Stretching of meaning---Principles---Interpretation should be such that if stretched to its maximum elasticity it should not cross limits of rationality.
(c) Words and phrases---
---'Deemed'---Connotation---Word 'deemed' encompasses all possible things that could have been received but not received by a person.
(d) Interpretation of statutes---
---Legislation---Constitutionality of---Scope---Law should be saved rather than be destroyed and court must lean in favour of upholding constitutionality of legislation---Rule of constitutional interpretation is that there is a presumption in favour of constitutionality of legislative enactments unless ex facie it is violative of constitution.
(e) Income Tax Ordinance (XLIX of 2001)---
---Ss. 2(29), 39(1), 236-M & 236-N [as inserted by Finance Act (IX of 2014] Second Schedule, Part I, clauses 57(I)(viii), 99 & 100---Specific Relief Act (I of 1877), Ss. 42 & 54---Suit for declaration and injunction---Bonus shares, Income tax on---Vires---Plaintiffs were assessees and assailed vires of Ss. 2(29), 39(1), 236-M & 236-N inserted in Income Tax Ordinance, 2001, whereby income tax had been levied on bonus shares---Validity---Any company after making profit paid income tax thereon, it then either distributed profit as dividend or if required, the company consumed profit as capital reserves by issuing bonus shares to its existing shareholders in proportionate of their respective shareholdings---Such decision taken by Board of Directors of company was an implied authority of shareholders---Decision of Board of Directors in utilization of profit as company capital needed no explanation that the amount of profit from the pool wherefrom dividend was to be given was bartered with bonus shares under implied authority of shareholders---Such decision could always be overturned by majority in general body meeting and could hardly be termed as tax avoidance---Such is only tax evasion whereby income was suppressed and disguised in transaction of bonus shares which was not prohibited but taxable in terms of amendment in question---Bonus shares in question were lawfully considered as taxable and after insertion of Ss. 236-M & 236-N in Income Tax Ordinance, 2001, Modarba, pension funds etc., which were not exempted but taxable---Exemption as provided by virtue of clauses 57(1)(viii), 99 and 100, Part I of Second Schedule to Income Tax Ordinance, 2001, was not available to the entities, as the provisions taxing issuance of bonus shares were to be prevailed over the exemption---Exemption was not a right to concession and could be lifted/withdrawn by legislature at any time expressly or impliedly---High Court declined to interfere in the amendments made through Finance Act, 2014---Suit was dismissed in circumstances.
Batala Engineering v. ITO (29 Taxation 190); ITRO and 2 others v. CBR 2003 PTD 1155; Abbas S. Shroff v. ITO (78 Taxation 119); AIR 1971 Calcutta 368; AIR 1971 AP 339; Abdul Rauf v. Abdul Hamid Khan PLD 1965 SC 671; Hashmatullah v. KMC PLD 1971 Kar. 514; Hamid Hussain v. GOWP PLD 1974 SC 356; HMC v. Fateh Jeans 1991 MLD 284; Shujabad v. Collector 2014 PTD 1963; PIDC v. Pakistan 1992 SCMR 891; Nishat Tak v. FOP PLD 1994 Lah. 347; Mandviwalla Muaser v. FOP 1996 CLC 1042; Ellahi Cotton Mills v. FOP PLD 1997 SC 582; H.A. Rahim v. Province of Sindh 2003 CLC 649; Sanofi Aventis v. Province of Sindh PLD 2009 Kar. 69; Jiyajeerao Cotton Mills Ltd. v. CIT (1958) 34 ITR 888; CIT v. Calcutta Discount Co. Ltd (1973) 91 ITR 8; Aruna Group of Estates v. State of Madras (1965) 55 ITR 642 (Madras); CIT v. Jai Narain Ram Chander (1981)128 ITR 179 (Calcutta); CIT v. Fisher's Executor (1926) AC 395; CIT v. Umer Saigal 1973 PTD 450; Shirin Ayub Khan v. CIT PLD 1976 Lah. 1028; Ebrahim Brothers Ltd. v. CIT 1992 SCMR 1935; Eisner v. Macomber 252 US 189 (1920); AIR 1961 SC 1038; PLD 1997 SC 582; 2010 PTD 1924; Abbasia Cooperative Bank v. Hakeem Hafiz Muhammad Ghaus PLD 1997 SC 3; 2006 PTD 2167; PLD 1992 Pesh. 76; 2001 YLR 2542; PLD 1997 Kar. 541; Standard Charted Bank v. Custodian and another AIR 2000 SC 1488; Swan Brewery Co. v. The King (1914) AC 231 and Navnit Lal C. Javeri v. K.K. Sen AIR 1965 SC 1375 ref.
(f) Interpretation of statutes---
---Fiscal law---Deeming provision---Scope---Effect of a deeming provision in a taxing statute is that it brings within the tax net a gain or benefit which ordinarily would not have been treated as cash income---Deeming provision brings within the chargeability income not actually accrued but which supposedly to have accrued notionally.
Dr. Muhammad Farogh Naseem, Pooja Kalpna, Nasir Latif Khan and Aamir Raza for Plaintiffs (in Suits Nos. 1764 and 2214 of 2014).
S. Owais Ali Shah for Plaintiffs (in Suits Nos.2299 and 2300 of 2014).
Behzad Haider for Plaintiffs (in Suits Nos. 2339, 2391, 2515, 2439 of 2014 and 828, 1034 and 1035 of 2015).
Aminuddin Ansari along with Khaliq Tanvari for Plaintiff (in Suit No.794 of 2014).
Salman Talibuddin, Addl. Attorney General for Defendant.
Amjad Javed Hashmi for Defendant No.2 (a) (in Suits Nos. 1764, 2214, 2299, 2339, 2515 of 2014, 142, 794, 937 of 2015).
Irshad-ur-Rehman for Defendant No.2(b) (in Suits Nos.2214, 794 and 1035 of 2015).
Khaleeque Ahmed for Defendant No.4 (in Suits Nos.2439, 2515 of 2014).
Zeeshan Abdullah for Defendant No.7 (in Suit No.794 of 2015).
Dates of hearing: 22nd, 25th, 28th May, 2nd, 6th, 7th, 10th, 13th and 15th July, 2015.
2016 P T D 648
[Sindh High Court]
Before Sajjad Ali Shah and Muhammad Junaid Ghaffar, JJ
DIGICOM TRADING (PVT.) LTD.
Versus
FEDERATION OF PAKISTAN through Secretary, Revenue Division/Chairman and another
C.P. No.D-3028 of 2014, decided on 29th September, 2015.
(a) Sales Tax Act (VII of 1990)---
----Ss. 8(1)(b) & 13(2)(a)---Tax Credit---Exemption---Scope---Section 8(1)(b) of Sales Tax Act, 1990 provided that a registered person should not be entitled to reclaim or deduct input tax paid on any other goods or services which Federal Government in official gazette may specify whereas S. 13(2)(a) of Sales Tax Act, 1990 provided that Federal Government may by notification in official gazette exempt any taxable supplies made or import or supply of any goods or class of goods, from whole or any part of tax chargeable under Sales Tax Act, 1990 subject to conditions and limitation specified therein.
(b) Sales Tax Act (VII of 1990)---
----Ss. 3, 3(1), 3(1)(a), 13(1) & 13(2)(a)---S.R.O. No. 460(I)/2013 dated 30-05-2013---Taxable supplies, exemption of---Chargeability of tax---Scope---Examination of provisions of S. 13(1) of Sales Tax Act, 1990 showed that it provided notwithstanding provisions of S. 3 of Sales Tax Act, 1990, for exemption from levy of Sales Tax on supply or import of goods specified in Sixth Schedule subject to such conditions as the case may be, whereas, S. 13(2)(a) of Sales Tax Act, 1990 provided that Federal Government may by notification in official gazette exempt any taxable supplies made or import or supply of any goods or class of goods from whole or any part of tax chargeable under Sales Tax Act, 1990, subject to conditions and limitations specified therein---S.R.O. No. 460(I)/2013 dated 30-05-2013 reflected that it had been specifically issued in terms of S. 13(2)(a) of Sales Tax Act, 1990 in addition to other relevant provisions of Sales Tax Act, 1990, therefore, through S.R.O. No. 460(I)/2013 dated 30-05-2013 Federal Government had fixed rate of Sales Tax as mentioned in Column 2 of table to S.R.O. No. 460(I)/2013 dated 30-05-2013 at different rates and such fixation of Sales Tax appeared to be final liability of Sales Tax at import and supply stage---Words used in S. 13(2)(a) of Sales Tax Act, 1990 were very specific and provided for exemption of any taxable import or supply of any goods from whole or any part of Sales Tax chargeable under Sales Tax Act, 1990---Section 13 of Sales Tax Act, 1990 had an overriding effect on chargeability of Sales Tax in terms of S. 3(1) and S. 3(1)(A) of Sales Tax Act, 1990---Once mechanism had been prescribed by Federal Government by issuance of Notification in terms of various provisions of Sales Tax Act, 1990 including S. 13(2)(a), question of payment of any additional tax in terms of S. 3(1)(A) of Sales Tax Act, 1990 for supply of goods to unregistered person did not arise---Section 3(1)(A) of Sales Tax Act, 1990 could only be invoked in respect of goods which were being charged sales tax under S. 3(1) of Sales Tax Act, 1990 at the rate specified therein at ad-valorem basis which was 17%---Once mode and manner and rate of Sales Tax had been altered, modified or fixed by Federal Government either through Ss. 3(2) & 3(6) of Sales Tax Act, 1990 read with S. 8(1)(b) of Sales Tax Act, 1990 as well as under S. 13 of Sales Tax Act, 1990, no further tax could be demanded once liability of Sales Tax was discharged on basis of special procedure as contemplated under S.R.O. No. 460(I)/2013 dated 30-05-2013.
Khalid Javed Khan for Petitioner.
Asim Mansoor Khan DAG for Respondent No.1.
Jawaid Farooqui for Respondent No.2.
Date of hearing: 7th September, 2015.
2016 P T D 702
[Sindh High Court]
Before Sajjad Ali Shah and Muhammad Junaid Ghaffar, JJ
DANISH JAHANGIR
Versus
The FEDERATION OF PAKISTAN through Secretary/Chairman and 2 others
C.P. No.D-6918 of 2015, decided on 10th November, 2015.
(a) Customs Act (IV of 1969) ---
----Ss. 25, 25A, 81 & 219---Customs Rules, 2001, R. 125---SRO No. 450(I)/2001 dated 18-06-2001---Determination of value of imported goods---Valuation Ruling---Provisional determination of liability---Scope---Where Valuation Ruling, though valid, but had lost its credibility and effectiveness for all legal and practical purposes then there was no justification in refusal of provisional release of consignments by the Department---Rule 125 of Customs Rules, 2001 issued by Department in terms of S. 219 of Customs Act, 1969 notified vide S.R.O. No. 450(I)/2001 dated 18-06-2001 also provided for provisional release of consignments if there was any valuation dispute---Determination of valuation under S. 25A of Customs Act, 1969 was dependent upon methods and mechanism provided for valuation under S. 25 of Customs Act, 1969, therefore, if assessments made under S. 25 of Customs Act, 1969 could be disputed and release could be allowed in terms of S. 81 of Customs Act, 1969 then there was no reason to withhold or deny such provisional release in case of assessments made under S. 25A of Customs Act, 1969.
Sadia Jabbar v. Federation of Pakistan 2012 SCMR 167 = PTD 898 and Rehan Umar v. Collector of Customs Karachi and 2 others 20016 PTD 909 rel.
(b) Customs Act (IV of 1969)---
----Ss. 25-D & 196---Valuation ruling, determination of---Review of the value determined---Scope---Valuation ruling issued by Director Valuation, if challenged, did not remain sacrosanct/final and was subject to review by DG Valuation under S. 25-D of Customs Act, 1969 against which an appeal lay to Customs Tribunal whereafter a Reference Application was provided for under S. 196 of Customs Act, 1969 before High Court and finally a leave to appeal before Supreme Court.
Wasim Radio v. Federation of Pakistan and others 2014 PTD 525 rel.
(c) Customs Act (IV of 1969) ---
----S. 81---Provisional determination of liability---Scope---Where Valuation Ruling was more than 90 days old and an importer had approached Director Valuation in terms of judgment of Supreme Court in Sadia Jabbar v. Federation of Pakistan (2012 SCMR 617); fresh consignments of such importers should be allowed provisional release in terms of S. 81 of Customs Act, 1969 by securing differential amount of duty and taxes in the shape of Pay Order/Bank Guarantee as the case may be.
(d) Customs Act (IV of 1969)---
----Ss. 25-D & 81---Import of goods---Review of the value determined---Scope---In cases where a proper revision application had been filed by an importer in terms of S. 25-D of Customs Act, 1969 before Director General Valuation and pending such review/revision a fresh consignment was imported then at the request of importer who had filed such revision/review, the consignment in question should be released in terms of S. 81 of Customs Act, 1969 after securing differential amount of duty and taxes in the shape of Pay Order/Bank Guarantee as the case may be.
Ghulam Nabi Shar for Petitioner.
Mrs. Masooda Siraj for Respondent No.2.
Kashif Nazeer for Respondent No.3.
Manzoor Ahmed Memon Director (Valuation).
Abdul Majid Yousfani, Collector of Customs, (East).
Muhammad Shehzad Deputy Director (Valuation).
Ali Waheed Deputy Collector of Customs.
Ilyas Ahsan Appraising Officer Legal.
2016 P T D 900
[Sindh High Court]
Before Aqeel Ahmed Abbasi and Muhammad Junaid Ghaffar, JJ
DIRECTOR GENERAL PAKISTAN COST GUARDS
Versus
IQBAL AFGHANI and another
Special Custom Reference Applications Nos.124 and 125 of 2010, decided on 24th November, 2015.
(a) Customs Act (IV of 1969)---
----S. 196---Limitation Act (IX of 1908), S. 14(1)---Reference application---Exclusion of time of proceeding in court without jurisdiction---Limitation---Scope---Department had filed Reference application on the basis of a photocopy of orders along with application for condonation under S. 14(1) of Limitation Act, 1908---Held, that on perusal of such application it transpired that department had failed to disclose as to when it came to their knowledge that matter after its referral to a third Member of the Tribunal had been finally decided by Referee Member---Perusal of the record further reflected that on 8-2-2011, department had obtained a certified copy of order of Referee Member dated 16-4-2008 and had placed the same on record through statement on 7-8-2011----Department also failed to disclose as to the exact delay in filing aforesaid Reference application of which condonation was being sought under S. 14(1) of Limitation Act, 1908---Reference was dismissed, being barred by time.
(b) Customs Act (IV of 1969)---
----S. 196---Limitation Act (IX of 1908), S. 14(1)---Reference to High Court---Limitation---Period of limitation as provided under S.196 of Customs Act, 1969 for filing a Reference application against the order of Customs Appellate Tribunal was 90 days, whereas the order of Referee Member of the Tribunal as reflected from the record was issued somewhere on 18-04-2008---Perusal of such order reflected that departmental representative was present before Referee Member of the Tribunal on the date of hearing, therefore, it could not be said or argued that department had no knowledge that matter was being heard by Referee Member---Held, that department had failed to show reasonable explanation for above inordinate delay in filing reference application within prescribed period of limitation as provided under law---Department did not engage in any due diligence in filing reference application within time, though it was in their knowledge at latest by 29-1-2010 that Referee Member had passed orders on 16-4-2008---Reference application had been filed beyond period of limitation of 90 days as provided under S. 196 of Customs Act, 1969, and no reasonable explanation had been offered for such delay, which could otherwise be considered as a ground to exercise any discretionary relief in favour of department for condoning period of limitation in filing of such Reference application---Reference was dismissed being time barred, accordingly.
(c) Customs Act (IV of 1969)----
----S. 196---Reference application---Right of appeal---Statutory period of limitation---Scope---Right of appeal, and for that purpose remedy of filing a reference under Customs Act, 1969 was a statutory right and any period of limitation as prescribed under such special enactment had to be construed strictly and any discretion in such regard had to be exercised with due care and only in appropriate cases, so that a right accrued in favour of other party may not be impinged or intruded on flimsy grounds of ignorance of legal procedure or fault on the part of some officer or counsel.
Ali Muhammad through Legal Heirs v. Chief Settlement Commissioner and others 2001 SCMR 1822 rel.
(d) Limitation---
----Statutory period of limitation---Delay---Government Departments could not claim to be treated in any manner differently from an ordinary litigant and in fact government enjoyed unusual facilities for preparation and conduct of cases and its resources were much larger than those possessed by ordinary litigants, and delay of each day had to be explained.
Commissioner of Income Tax v. Rais Pir Ahmed Khan 1981 SCMR 37; Federation of Pakistan v. Niaz Ahmed 1997 SCMR 959 and Central Board of Revenue v. Raja Industries (Pvt.) Ltd. 1998 SCMR 307 rel.
Nazar Hussain Dhoon for Applicant.
Mir Nawaz Khan Marwat and Khalid Nawaz Khan Marwat for Respondents.
Dates of hearing: 7th May and 21st September, 2015.
2016 P T D 961
[Sindh High Court]
Before Faisal Arab, C.J. and Muhammad Iqbal Kalhoro, J
CIVIL AVIATION AUTHORITY through Airport Manager
Versus
FEDERAL BOARD OF REVENUE through Chairman and others
C.P. No.D-693 and C.M.A. No.2180 of 2014, decided on 9th September, 2015.
Sales Tax Act (VII of 1990)---
-----Ss. 2(35), 3, 3(5), 3(41) & 13---Constitution of Pakistan, Art.199---Constitutional Petition---Applicability---Scope---Civil Aviation Authority Ordinance (XXX of 1982), Preamble----S.R.O. No. 509(I)/2013 dated 12-06-2013---Scope of Tax---Additional tax, collection of---Object and Scope---Contention of petitioner Civil Aviation Authority was that it was neither a "manufacturer" nor a "retailer" or "importer" or a "wholesaler" or "person required to be registered" under any other law for tax or duty or a "commercial exporter" to be made subject of S.R.O. No. 509(I)/2013 dated 12-06-2013---Civil Aviation Authority having come into being through Pakistan Civil Aviation Authority, Ordinance 1982, object for its creation were enumerated in the Ordinance which was to promote and regulate civil aviation activities to develop an infrastructure for safe, efficient, adequate, economical and properly coordinated civil air transport service in Pakistan---Petitioners' (Civil Aviation Authority's) duty was to carry on all affairs relating to management of airports, air traffic and navigational services to aircrafts, communication services at the airports etc. and not one of said functions, however showed that petitioner was engaged in making any "taxable supplies in furtherance of any taxable activity" to hold that it was liable for registration as required under law---Department plea that since petitioner was a body corporate, it was liable to pay additional tax was not valid S.R.O. No. 509(I)/2013 dated 12-6-2013 was applicable on persons having industrial or commercial electric and gas connections, and who had either not provided sales tax registration number to supplier or whose names were not on Active Taxpayer list and whose bills exceed fifteen thousand rupees----Petitioner had no commercial and industrial electric and gas connections as there were number of buildings used for residential purpose nor was it carrying on any taxable activity by making supply of such utilities to persons doing some business in its premises---Any such contention that many business concerns were operating in premises of airport under the control of petitioner and it was earning a lot of revenue by granting them access and permission to so operate in its premises, could not be considered a valid point to infer that Department was rightly charging tax from the Civil Aviation Authority under S.R.O. No. 509(I)/2013 dated 12-06-2013---Such revenue as earned by Civil Aviation Authority could be made subject and be declared liable to duty or levy of some tax chargeable under some different laws but not under S.R.O. No. 509(I)/2013, dated 12.06.2013 which had specific connotation in present context---Activities carried out by petitioner definitely did not fall within the definition of scope for which Sales Tax Act, 1990 had been promulgated and any such inference contrary to it would neglect and be against the very scope and object of the Sales Tax Act, 1990---Petitioner was not required to be registered under Sales Tax Act, 1990 and it was only engaged in services relating to promotion of civil aviation activities, hence, it was not liable to pay additional tax under S.R.O. No. 509(I)/2013 dated 12-06-2013---High Court observed that this would not mean that Department could not charge tax under S.R.O. No. 509(I)/2013, dated 12-6-2013 from individual entities, either registered or liable to be registered which were making taxable supplies in course of any taxable activity within the premises of petitioner in any capacity---Mode and mechanism for collecting tax under S.R.O. No 509(I)/2013 dated 12-06-2013 could however be worked out by parties mutually either by installing sub-meters in respect of electricity and gas connections on such premises independently or by devising some other procedure permissible under Sales Tax Act, 1990---Constitutional, petition was allowed, accordingly.
PLD 2001 SC 600 and 2009 PTD 43 rel.
Emad ul Hassan for Petitioner.
Asim Iqbal and Farmanullah for Respondents.
Ainuddin Khan, D.A.G. for Federal Government.
Date of hearing: 19th August, 2015.
2016 P T D 1056
[Sindh High Court]
Before Muhammad Junaid Ghaffar, J
Messrs YUNUS TEXTILE MILLS LTD.
Versus
PAKISTAN through Secretary (Revenue Division) and 4 others
Suits Nos.2181 to 2183, 2211, 2316, 2329 to 2331, 2367 to 2371, 2374, 2375, 2393, 2475 to 2477, 2494 to 2499, 2525, 2526, 2546, 2558, 2568, 2570 to 2572, 2574, 2575, 2596, 2597, 2601, 2602, 2605, 2614 to 2619, 2634, 2635, 2332 of 2015 and 141 of 2016, decided on 27th January, 2016.
Income Tax Ordinance (XLIX of 2001)---
----Ss. 4-B & Div. II-A, Pt.-I, First Schedule---Civil Procedure Code (V of 1908), O. XXIX, Rr.1 & 2---Suit for declaration and injunction---Interim Injunction, grant of---Super tax, vires of---Plaintiffs were assessees and they had assailed imposition of super tax levied pursuant to S.4-B of Income Tax Ordinance, 2001, being unconstitutional and invalid---Validity---Plaintiffs were unable to make out prima facie case as it was merely a challenge to the constitutionality of a law validly enacted by parliament---Plaintiffs might have a better reading of law but that would not make out a prima facie case for them to seek indulgence against a validly enacted law which remained in operation and was applicable---Unconstitutionality of the provision on the ground of mala fides and discrimination were mere assertions whereas, plaintiffs failed to substantiate the same prima facie with any material or cogent reasons---Balance of convenience also did not lie in favour of plaintiffs---Irreparable loss/injury would be caused to defendants instead of plaintiffs as even if ultimately it was held by High Court that such levy of super tax was unconstitutional, plaintiffs would be entitled for refund/adjustment---Passing of any injunctive order in the nature of restraint and allowing plaintiffs to file their income tax returns without depositing super tax, when the same was being demanded on the basis of a provision which for the time being was validly existing, the same would cause irreparable loss to exchequer---Application was dismissed in circumstances.
The Paracha Textile Mill Limited v. Federation of Pakistan (Suit No.430 of 2016) fol.
The Lahore Textile and General Mills Ltd. Lahore and others v. The Federation of Pakistan through Secretary Ministry of Finance, Islamabad and others 1997 SCMR 894; Messrs Quetta Textile Mills Limited through Chief Executive v. Province of Sindh through Secretary, Excise and Taxation, Sindh Secretariat, Kamal Attaturk Road, Karachi and another 2002 CLC 512; Messrs Inter-Ocean Cargo Services, Karachi v. Federation of Pakistan through Chairman, Central Board of Revenue, Islamabad and 2 others 1992 PTD 1411; Messrs Nasir Flour Mills (Pvt.) Ltd. Karachi v. The Federation of Pakistan through Chairman, Central Board of Revenue, Islamabad and 2 others 1994 PTD 1421; Messrs International Tea Traders, Karachi v. Chairman, Central Board of Revenue, Islamabad and another 1994 PTD 1422; Dr. Mubashir Hassan and others v. Federation of Pakistan and others PLD 2008 SC 80; Atco Lab (Pvt.) Limited v. Pfizer Limited and others 2002 CLC 120 Bolan Beverages (Pvt.) Limited v. Pepsicoinc and 4 others 2004 CLC 1530; Lotte Pakistan PTA Ltd. through Chief Financial Officer and Company Secretary v. Federation of Pakistan through Secretary Ministry of Finance, Islamabad and 4 others 2011 PTD 2229; Federation of Pakistan and others v. Mrs. Samra Shakeel and others 2001 PTD 3919 and Messrs Shahbaz Garments (Pvt.) Ltd and others v. Pakistan through Secretary Ministry of Finance, Revenue Division, Islamabad and others 2013 PTD 969 ref.
Dr. Farogh Naseem, Mushtaq Qazi, Haider Ali Khan, Ali Almani, Anwar Kashif Mumtaz, Usman Alam, Ammar Athar Saeed, Kashif Hanif, Faiz Durrani, Samia Faiz Durrani, Furrukh Ansari, Zulfiqar Ali Memon, Omair Akbar Soomro, Salman Shaikh, Muhammad Ishaq Khan, Muhammad Shahid, Shahzad Raheem, Mir M. Ali Talpur, Iqbal M. Khurram and Manzoorul Haq for Petitioners.
Salman Talibuddin Additional Attorney General of Pakistan, Abdul Qadir Leghari, Muhammad Sarfaraz Ali Metlo, S. Irshad ur Rehman, Muhammad Aqeel Qureshi, Ghulam Shoaib and Muhammad Taseer Khan for Respondents.
2016 P T D 1072
[Sindh High Court]
Before Aqeel Ahmed Abbasi and Muhammad Junaid Ghaffar, JJ
COMMISSIONER OF INCOME TAX
Versus
Messrs CAFÉ STUDENT KARACHI and others
I.T.Rs. Nos.316, 320 and 377 of 1997, decided on 18th May, 2015.
(a) Income Tax Ordinance (XXXI of 1979)---
---S. 134(5)---Reference to High Court---Enhancement of fee for filing appeal before Appellate Tribunal---Amendment introduced through Finance Act, 1994 in S. 134(5) of Income Tax Ordinance, 1979 and fee for filing an appeal before Appellate Tribunal was enhanced---Income Tax Appellate Tribunal referred question to the High Court to the effect that "whether amendment introduced in S. 134(5) of Income Tax Ordinance, 1979 was applicable only to the appeals pertaining to assessment year 1994-95 onwards"---Contention of department was that since the amendment introduced through Finance Act, 1994 with regard to filing of appeal was a procedural amendment therefore same would apply in the cases of previous years as well which were pending disposal before the Appellate Tribunal at the time of such amendment---Contention of taxpayer was that any amendment in law introduced through Finance Act, 1994 was to be applied prospectively unless retrospective effect was given by the legislature specifically---Validity---Right of appeal against an adverse order was a statutory right---Appellate proceedings would be continuation of the original proceedings---Amendment introduced in law through Finance Act, 1994 were applicable prospectively in the year in which it had been inserted unless such retrospective effect had been given by the legislature---Impugned order passed by the Appellate Tribunal did not suffer from any error or illegality---Question referred by the Appellate Tribunal was answered in affirmative against the department and in favour of taxpayer.
Messrs Kurdistan Trading Company v. Commissioner Income Tax 2014 PTD 9 ref.
Kurdistan Trading Company v. Commissioner Inland Revenue 2014 PTD 339; Commissioner Income Tax Karachi v. BRR Investment (Pvt.) Ltd., Karachi 2011 PTD 2148; Commissioner of Income Tax v. Shahnawaz and others 1993 SCMR 73 and Commissioner of Income Tax v. Humayun Elahi Shaikh 2011 PTD 145 rel.
(b) Appeal---
---Right of appeal against an adverse order was a statutory right---Appellate proceedings would be continuation of the original proceedings.
Nasrullah Awan for Applicant.
Aminuddin Ansari for Respondents.
Date of hearing: 18th May, 2015.
2016 P T D 1080
[Sindh High Court]
Before Irfan Saadat Khan and Zafar Ahmed Rajput, JJ
NAYADAUR MOTOR (PVT.) LTD.
Versus
FEDERATION OF PAKISTAN through Secretary Ministry of Finance and 3 others
C.P. No. D-574 of 1996, decided on 4th February, 2016.
(a) Constitution of Pakistan---
----Art. 199---Constitutional jurisdiction of High Court---Scope---Alternate remedy-----Scope---Where a statutory functionary acted in a mala fide or partial, unjust and oppressive manner, High Court in exercise of its Constitutional jurisdiction had power to grant relief to the aggrieved party---Where alternate remedy was available , non-exercise of jurisdiction under Art.199 of the Constitution was a rule to be applied by High Court for regulating its Constitutional jurisdiction, and exception to said rule existed if the show-cause notice or order was ultra vires, palpably without jurisdiction or with mala fide intent, and if availing of statutory remedy against it would be inefficacious because such action was to be nipped in the bud---In presence of such an exception, High Court lean its discretion towards the petitioner to provide him speedy and efficacious justice by issuing a writ of certiorari.
Messrs Ocean Pakistan Limited v. Federal Board of Revenue, Islamabad and others 2012 PTD 1374 and Filters Pakistan (Pvt.) Limited v. Federal Board of Revenue and others 2010 PTD 2036 rel.
Muhammad Riaz Dar v. The Secretary, Local Government and others 1986 SCMR 469 and Mir Nabi Bakhsh Khan Khoso v. Branch Manager, National Bank of Pakistan, Jhatpat (Dera Allah Yar) Branch and 3 others 2000 SCMR 1017 ref.
(b) Sales Tax Act (VII of 1990)---
----Ss. 7, 2(9) & 2(15)---Assessment of sales tax---Determination of tax liability---Adjustment of input tax against output tax---Tax period---Interpretation, object and scope of S. 7 of the Sales Tax Act, 1990---Petitioner/taxpayer impugned show-cause notice whereby petitioner's adjustment of input tax from output tax for the tax period was found to be incorrect by Department and petitioner was asked to pay an additional amount---Contention of Department was, inter alia, that petitioner had adjusted its input tax in respect of items which were not consumed during particular tax period and therefore petitioner was not entitled for said deduction---Validity---Section 7 of the Sales Tax Act, 1990 was a beneficial provision and a person for the purpose of determining his/her tax liability in respect of taxable supplies made during the tax period was entitled to deduct his input tax from the output tax that was due from such a person in respect of the tax period---Words "taxable supplies, tax period, input tax and output tax", if read in juxtaposition, made clear that a registered person was entitled to deduct his input tax in said tax period from output tax of the same tax period in respect of taxable supplies and such facility was provided to the registered person to adjust his input tax pertaining to a relevant tax period from his output tax for that particular period---Petitioner paid input tax on imports and locally purchased goods which petitioner had deducted from its output tax for that particular tax period---Word "consumed" as had been derived by the Department was not understandable and if such interpretation of Department was considered to be correct, then Legislature would have used the word "consumed" during a tax period in S.7 of the Sales Tax Act, 1990 whereas the Legislature have instead used the word "output tax" that was due from taxpayer in respect of that tax period, meaning thereby, that a tax period which comprised of one month had been given emphasis in S.7 of the Sales Tax Act, 1990 with regard to adjustment of input tax from output tax---Consumption of goods in respect of which input tax had been paid by a person had no relevancy whatsoever with S.7 of the Sales Tax Act, 1990 and the said section provided a mechanism to taxpayers to adjust input tax from output which was basic right of taxpayer---Once a registered person established that he had paid input tax on goods in that tax period he then becomes entitled for deduction of that very tax from its output tax collected by it from taxable supplies made by him in respect of that particular tax period and such denial of said adjustment was contrary to the spirit of S.7 of the Sales Tax Act, 1990---Impugned show-cause notice was set aside---Constitutional petition was allowed, accordingly.
Mirpurkhas Sugar Mills Ltd. v. Government of Sindh 1993 SCMR 920; Collector of Customs (Appraisement), Karachi and others v. Abdul Majeed Khan and others 1977 SCMR 371; Collector of Sales Tax, Custom House, Lahore v. Hoechst Ravi Chemicals Limited, Faisalabad Road, Sheikhupura 2003 PTD 1817; New Jubilee Insurance Company Ltd. v. Special Officer Central Zone A, Karachi and another 1990 PTD Kar. 1; Messrs Car Tunes v. Income Tax Officer, Circle-V, Hyderabad and another PLD 1989 Kar. 337; F.S. Tobacco Co. (Pvt.) Ltd. v. Superintendent, Central Excise and Sales Tax, Nowshero and 4 others 1995 PTD 874; Edulji Dinshaw Limited v. Income Tax Officer 1990 PTD 155; Kamran Industries v. Collector of Customs (Export) PLD 1996 Kar. 68; Gul Ahmed Textile Mills Ltd. v. Collector of Customs (Appraisement) Customs House, Karachi 1990 MLD 126 Julian Hoshang Dinshaw Trust v. Income Tax Officer, Circle XVIII 1992 PTD 1 and Quetta Textile Mills Ltd. v. Federation of Pakistan and 2 others 1999 CLC 755 rel.
Shiekhoo Sugar Mills Limited v. Government of Pakistan and others 2001 PTD 2097 = 2001 SCMR 1376; Karachi Shipyard and Engineering Works Limited v. Government of Pakistan and others 2010 PTD 1652; Collector of Sales Tax, Customs House, Lahore v. Hoechst Ravi Chemicals Limited Faisalabad Road, Sheikhupura 2003 PTD 1817; Collector of Sales Tax, Customs House, Lahore v. Messrs Breeze Industries, Lahore 2003 PTD 1819 and Sales Tax Reference Application No.142 of 2005 rel.
Mansoor-ul-Afrin for Petitioner.
Muhammad Aslam Butt D.G.A. for Respondent No.1.
Nemo for Respondents Nos.2 to 4.
Date of hearing: 19th January, 2016.
2016 P T D 1096
[Sindh]
Before Syed Sajjad Ali Shah and Muhammad Junaid Ghaffar, JJ
Messrs TRADE LINK CORPORATION and others
Versus
FEDERATION OF PAKISTAN and others
C.Ps. Nos. D-1629, D-1025, D-137, D-419, D-452, D-268, D-6016, D-5103 and D-222 of 2014, D-4591, D-5572 of 2013, D-4798 of 2015, decided on 3rd November, 2015.
(a) Customs Act (IV of 1969)---
----Ss. 25, 25-A & 206----Value of imported or exported goods---Power to determine the customs value---Correction of clerical errors etc.---Corrigendum issued to amend Valuation Ruling---Legality---Petitioner impugned corrigendum, whereby a Valuation Ruling had been amended---Contention raised by petitioners was that Director Valuation had become functious officio and could therefore neither amend or alter the Valuation Ruling by issuing the corrigendum---Validity---Section 206 of Customs Act, 1969, which was the only provision relating to correction of clerical errors, provided that clerical or arithmetical errors in any decision or order passed by Federal Government, the Board or any officer of Customs under Customs Act, 1969, or errors arising therein from accidental slip or omission, might, at any time, be corrected by Federal Government, the Board or such officers of Customs or his successor in office as the case might be---Corrigendum in question had not been issued for any correction or mistake or omission; but, as stated in the corrigendum itself, the same had been issued in response to certain representations, which had been received after issuance of Valuation Ruling from various trade bodies, that while determining customs values, value of certain middle level brands were determined at par with high and expensive brands, whereafter, as per recommendations of stake holders associated with the trade, a brand rationalization exercise was carried out, and the amendments were made accordingly in the Valuation Ruling by issuance of impugned corrigendum---Impugned corrigendum intended to include or exclude certain brands of Toiletries from purview of Valuation Ruling in question, which could not have been done by issuance of the corrigendum---Fresh and independent Valuation Ruling was to be issued for the brands for which the corrigendum had been issued---Valuation Ruling, which was issued by exercising powers under S.25-A of Customs Act, 1969, was in fact statutory ruling or ruling which was backed by the statute---Director Valuation was delegated with such authority, but exercise of such authority must have been in accordance with law---Section 25-A of Customs Act, 1969, read with the Valuation Rules, provided a complete mechanism as to how and in what manner, Valuation had to be determined before notifying the same as a Ruling---Exercise, which was required to be carried out in terms of Ss.25 & 25-A of Customs Act, 1969, had not been followed while issuance of impugned corrigendum, whereby, Valuation Ruling had been made applicable to certain products or brands---Substantial amendments had been made in the Valuation Ruling, which had created distortion in uniform assessment of goods, leaving unfettered discretion to be exercised by assessing officers, and the same, therefore was not sustainable---Director Valuation had no authority and jurisdiction in law to issue the corrigendum, except for purposes as provided under S.206 of Customs Act, 1969---Impugned corrigendum was, therefore, impermissible under the law---High Court, setting aside impugned corrigendum for having been issued without lawful authority, directed authorities to finalize assessments of petitioner's consignments in accordance with law without being influenced by impugned corrigendum---Constitutional petition was allowed in circumstances.
Assistant Commissioner, Mianwali and another v. Muhammad Amir and 4 others 1987 CLC 2095 and Customs Appeal No. K-15/2013 2003 PTD 1489 ref.
Collector of Customs Port Muhammad Bin Qasim v. Zymotic Diagnostic International 2007 PTD 2623; Sadia Jabbar and 3 others v. Federation of Pakistan and others 2012 SCMR 617 and Ayesha Impex v. Federation of Pakistan 2012 PTD 1 rel.
(b) Words and phrases---
----"Corrigendum"---Meaning.
Oxford & Merriam Webster Dictionaries ref.
Mrs. Ismat Mehdi and Ghulamaullah for Petitioners.
Ainuddin Khan DAG for Federation of Pakistan.
Kashif Nazeer, Ghulam Haider Shaikh, Iqbal M. Khurram and Mrs. Masooda Siraj for Respondents.
Date of hearing: 13th October, 2015.
2016 P T D 1136
[Sindh High Court]
Before Irfan Saadat Khan and Zafar Ahmed Rajput, JJ
COMMISSIONER OF INCOME TAX, SPECIAL ZONE, KARACHI
Versus
DEWAN KHALID TEXTILE MILLS LTD., Income Tax Reference No.259 of 2002, decided on 20th January, 2016.
Income Tax Ordinance (XXXI of 1979)---
----Ss. 23(1)(xviii), 24(a) & 136(1)---Finance Act (XII of 1991), S. 12---Business expenditure---Corporate assets tax---Authorities were aggrieved of order passed by Income Tax Appellate Tribunal directing for allowance for corporate assets tax as expenses allowable under S.23 of Income Tax Ordinance, 1979---Validity---Any expenditure incurred for the purposes of business which was neither capital nor personal was an allowable expenditure under S. 23(1)(xviii) of Income Tax Ordinance, 1979---Only bar which could be imposed was whether such expenditure was incurred in ordinary course of business or not and on the ground of commercial expediency and had a direct nexus and relation with the business or not---While making assessment of a company corporate assets tax had to be given the same treatment as that of wealth tax since it was a direct levy on the assets held by a company---Such was an allowable expenditure and the same was rightly allowed by appellate authority as well as Income Tax Appellate Tribunal---Provisions of S. 24(a) of Income Tax Ordinance, 1979, were not applicable as corporate assets tax was not a tax on the profits and the gains of a company rather it was a direct charge or levy upon the assets held by a company as specified in S. 12 of Finance Act, 1991---High Court answered the question in affirmative against the authorities and in favour of assessee---Reference was dismissed in circumstances.
I.C.C. Textile Ltd. and others v. Federation of Pakistan and others 2001 PTD 1557; Rowlatt J, in IR v. Anglo Brewing Co. Ltd. 12 Tax Case 803; CIT v. Malayalam Plantations Ltd. 53 ITR 140 (SC); Commissioner of Income Tax v. Rajaram Bandekar (1994) 208 ITR 503; International Power Global Developments Ltd. v. Commissioner Income Tax 2009 PTD 50; Commissioner of Income Tax, East Pakistan DACCA v. Engineers Ltd. DACCA (1967) 16 Tax 81; Commissioner of Income Tax, Entral Zone 'B' Karachi v. Zakia Siddiqui 1989 PTD 135; Commissioner of Income Tax, Central Zone 'A' Karachi v. S.M. Naseem Allahwala [(1991) 64 Tax 31] and Commissioner of Income Tax Central Zone 'C' Karachi v. M. Hussain Ahmed 1992 PTD 30 ref.
Nemo for Appellant.
Iqbal Salman Pasha for Respondent.
Date of hearing: 19th January, 2016.
2016 P T D 1153
[Sindh High Court]
Before Munib Akhtar and Zulfiqar Ahmad Khan, JJ
Messrs ALLY BROTHERS AND CO. (PAKISTAN) LTD. through Duly Authorized Representative
Versus
COLLECTOR OF CUSTOMS
Special Customs Reference Application No.69 of 2008, decided on 29th January, 2016.
Customs Act (IV of 1969)---
----Ss. 13 & 196---Customs Rules, 2001, Rr. 344 & 345---Reference---Warehouse license---Renewal---Applicant was holding private bonded warehouse license in year 1977 which functioned up to year 1990---Applicant did not renew the license after 1990 and his license was cancelled due to nonrenewal of the license---Validity---Establishment charges were always required to be paid in advance for initial and for any revived term of license---No perpetuity existed in licensing fees, it could only be charged in respect of services performed and not otherwise---Once the licensee had not renewed the license, no goods could be in-bonded and services were to be provided by customs authorities---If a person would choose not to revive or renew the license, establishment charges were not payable as no services of customs authorities were to be enjoyed by defunct licensee---No provisions existed in Customs Act, 1969 or Customs Rules, 2001, which empowered customs authorities to determine establishment charges at their own sweet will without seeking any approval from the legislature---Such was not forthcoming from the very intent of law, no demand for the payment of establishment charges could be validly made once a licensee had decided not to renew its license---High Court answered the question in favour of applicant and against the respondent---Reference was allowed in circumstances.
Mazhar Jafri for Applicant.
Muhammad Sarfraz Ali Metlo for Respondent.
Date of hearing: 23rd December, 2015.
2016 P T D 1175
[Sindh High Court]
Before Munib Akhtar and Zulfiqar Ahmad Khan, JJ
COLLECTOR OF CUSTOMS through Additional Collector of Customs
Versus
MUHAMMAD SHAFIQUE
Special Customs Reference Application No.1229 of 2015, decided on 29th January, 2016.
Customs Act (IV of 1969)---
----Ss. 32, 33 & 196---Reference---Refund of excess customs duty---Classification of goods---Determination---Importer sought refund of excess custom duty on the ground that motor vehicle imported by him had seating capacity of ten persons falling under PCT HS Classification 8702.9090 whereas, duty was charged by him under PCT HS Classification 8703.2490 declaring the vehicle as limousine motorcar---Validity---Motorcars were smaller objects as compared to motor vehicles, therefore, as soon as a motor became capable of transporting 10 or more persons, it had traveled from the nomenclature of 'car' into a 'vehicle' and at the same time it shifted from PCT HS Code 8703 to PCT HS Code 8702---Vehicle in question was meant to transport 10 or more persons (including driver) and qualified to fall under PCT HS Code 8702 as the explanatory notes provided that PCT HS Code 8702 covered all motor vehicles designed for transport of 10 or more persons without any use of the same as public transport vehicle or private and without making any conditionality to vehicle's interior configuration being luxury or otherwise---Vehicle in question correctly fell under PCT HS Classification 8702.9090---High Court directed the authorities to comply with refund process---Reference was dismissed in circumstances.
2011 PTD 2175 rel.
Mrs. Masooda Siraj for Applicant.
Muhammad Azfal Awan for Respondent.
Date of hearing: 3rd December, 2015.
2016 P T D 1204
[Sindh High Court]
Before Faisal Arab, C.J. and Muhammad Iqbal Kalhoro, JJ
MEEZAN ISLAMIC FUND and others
Versus
D.G. (WHT) FBR and others
Const. P. Nos. D-3195, 2340, 2341, 2710, 2755, 2882, 2941, 2942, 2943, 2944, 3140, 3146, 3196, 3197, 3198, 3199, 3200, 3201, 3202, 3203, 3324, 3328, 3329, 3399, 3438 to 3455, 3548 to 3612, 3629, 3687, 3693, 3695 to 3705, 3744, 3752, 3836, 3837, 4043, 4089, to 4095, 4142 to 4149, 4208 to 4215, 4230 to 4233, 4246 to 4249, 4307 to 4312, 4314 to 4320, 4387 to 4392, 4508, 4534 to 4537, 4632, 4633, 4782 to 4784, 4820 to 4822, 4870 to 4875, 4911 to 4918, 4925, 4950, to 4955, 5011 to 5014, 5033 to 5037, 5061 to 5065, 5180, 5269, 5270, 5326, 5327, 5339, 5347, 5348, 5349, 5399 to 5406, 6052, 6667, 6668, 6672, 6673, 6203 to 6205, 6223, 6224, 6233, 6313, 6314 to 6356, 6378, 6379, 6452, 6484, 6805, 6806, 6177, 5842, 7001, 7002, 6955 to 6963, 7134, and 7135 to 7140 of 2015, decided on 2nd December, 2015.
Income Tax Ordinance (XLIX of 2001)---
----Ss.150, 151, 233---Second Sched. Part IV, Cl. 47B---Federal Board of Revenue Circular No.I(43)DG(WHT)/2008-Vol.11-66 dated 12.05.2015---Deduction/collection of advance tax---Exemption or lower rate certificate---Mandatory nature of requirement of obtaining an exemption certificate under section 159(2) of the Income Tax Ordinance, 2001---Petitioners impugned Federal Board of Revenue Circular No.1(43)DG(WHT)/2008-Vol. 11-66 dated 12.05.2015 which required that a valid exemption certificate be first obtained prior to availing benefit of Clause 47B of Part IV of Second Schedule to the Income Tax Ordinance, 2001---Validity----Under section 150,151 and 233 of the Income Tax Ordinance, 2001 every person making certain specified kinds of payments was required to first deduct withholding tax however, to avail some concession / exemption from the same by the person receiving said payment, an exemption certificate was required to be obtained under section 159 of the Income Tax Ordinance, 2001 ----Clause 47B of Part IV of the Second Schedule to the Income Tax Ordinance, 2001 granted statutory exemption to certain categories of entities whose payments were covered under section 150,151 and 233 of the Income Tax Ordinance, 2001 and such payments were not liable to advance tax deduction---Clause 47B of Part IV of the Second Schedule to the Income Tax Ordinance, 2001 itself however was not sufficient to avoid such deduction of tax and section 159(2) of the Income Tax Ordinance, 2001 provided that a person who was required to make advance tax deduction from payments that were covered under Ss. 150, 151 and 233 of the Income Tax Ordinance, 2001 then it was obligatory upon such person to deduct withholding / advance tax unless the other party presented a valid exemption certificate issued under S. 159(1) of the Income Tax Ordinance, 2001---Only upon the presentation of such an exemption certificate, the withholder stood discharged from its obligation to make advance tax deduction and such exemption certificate first had been made mandatory specifically under S. 159(2) of the Income Tax Ordinance, 2001 before the concession of Clause 47B of Part IV of the Second Schedule to the Income Tax Ordinance, 2001 was availed High Court observed that in view of provisions of S. 159(2) of the Income Tax Ordinance,2001 it was not left to the withholder to decide not to make advance tax deductions even when a person to whom he had to make payment claimed that he was entitled to the exemption under Clause 47B of Part IV of the second schedule to the Income Tax Ordinance, 2001 and the withholder was not to form his own opinion that a person's case fell within such exemption unless a valid exemption certificate issued under S. 159(2) of the Income Tax Ordinance, 2001 was presented ---Impugned Circular by the FBR thus referred to said S.159(2) of the Income Tax Ordinance, 2001 which created a statutory obligation upon the withholder to deduct advance tax for the relevant payments unless requisite exemption certificate was presented---Constitutional petitions were dismissed, in circumstances.
Naveed Andrabi, Usman and Ammar Athar Saeed for Petitioners (in C.P. No.3195/2015).
Salahuddin Ahmed for Petitioners (in C.P. No. D-4392/2015).
Ms. Lubna Pervaiz for Petitioners (in C.Ps. Nos. D-5180 and 6233 of 2015).
Emad-ul-Hasan for Petitioners (in C.Ps. No. D-5061 to 5065, 5842 and 6484/2015).
Jamshuid Malik for Petitioners (in C.Ps. Nos. D-6313 and 6314/2015).
Farhan A. Jaffri for Petitioner.
M. Ageel Qureshi for Petitioners (in C.Ps. Nos. D4192, 4314, 4230,4568, 4208, 4782, 4314, 4315, 4782, 4508, 4230 of 2015).
Javed Asghar Rana for Petitioner (in C.P. No. 6177/2015).
Hyder Ali Khan and Sami-ur-Rehman for Petitioners (in C.Ps. Nos. D-6052, 4925, 5839, 4043 and 5488/2015).
Umar Shoaib Pirzada for Petitioner (in C.P. No. D-4089/2015).
Amjad Javed Hashmi for the Department.
Irshad-ur-Rahman for the Department.
M. Aslam Butt, D.A.G.
Syed Noman Zahid for Respondent No. 6 (in C.Ps. Nos. D-5283 to 5287/2015).
Abid Hussain for Respondent No. 5 (in C.P. No. D-4392/2015).
Obaidullah for Respondent No. 7 (in C.Ps. Nos. D-5901, 5902 and 5904/2015).
Naveed Ali for Respondents M/s. Bank Al- Habib and Noble Computers.
Ms. Naheed A. Shahid, Advocate.
Naveedul Haq, for HBL Assets Management Mr. Jailer Raza, Advocate.
Ghulam Murtaza for Douche Bank.
Mr. Ijaz Ahmed, Advocate.
Ms Sanam Imtiaz, Advocate.
Khursheed Ahmed and Shiraz Saleem ur Rehman, Ghulam Murtaza Malik for Respondents (in C.Ps. Nos. 4534, 4535, 4536/2015).
Fazl-e-Rabi for Petitioner (in C.Ps. Nos. D-6805, 6806, 6667, 6668/2015).
M. Imtiaz Agha, Advocate.
Shiraz Saleem ur Rahman for BSO, ABL.
Shah Nawaz Khan Jamaal, Managerial Executive (Legal) National Refinery Ltd. (in C.Ps. Nos. D-5399, 5401 and 5402/2015).
Date of hearing: 4th November, 2015.
2016 P T D 1214
[Sindh High Court]
Before Faisal Arab, C.J. and M. Iqbal Kalhoro, J
NORINPACO and others
Versus
FEDERATION OF PAKISTAN and others
C.Ps. Nos. 1852, D-1922, D-1931 and D-1932, D-2922, D-3540, D-3166 of 2010 D-2145, D-1744, D-3955, D-543 and 10 of 2011, D-1124, D-749, D-1703, D-2911, D-4335 and D-4456 of 2012, D-2544 of 2013, D-3807, D-2361, D-3124, D-3252, D-3874, D-4415, D-4386 and D-5761 of 2014, D-5879, D-1152, D-3794, D-3795, D-3796, D-3797, D-5671, D-1433, D-1619, D-3702, D-984, D-3619, D-1112, D-1354, D-1620, D-2243, D-1631, 2005 and D-973 of 2015, decided on 2nd December, 2015.
Income Tax Ordinance (XLIX of 2001)---
----Ss.120(1A), 122(5), 214C & 177---Assessment---Audit---Scope of power of Commissioner to conduct audit under S. 120(1A) of the Income Tax Ordinance, 2001 distinguished from selection by Board for audit under S. 214C of the Income Tax Ordinance, 2001---Question before the High Court was whether Commissioner's power to conduct audit of any person under S. 120(1A) of the Income Tax Ordinance, 2001 was solely dependent upon Board's decision to select persons for audit under S. 214C of the Income Tax Ordinance, 2001 or could the Commissioner under S. 120(1A) of the Income Tax Ordinance, 2001 make such a selection on his own discretion"---Held, that S. 120(1A) of the Income Tax Ordinance, 2001 vested in the Commissioner the power to select a person for audit if there existed reasonable grounds for doing so, irrespective of the fact that section 120(1A) of the Income Tax Ordinance, 2001 mentioned the words "conduct audit" and not to select a person for audit" and such power to conduct audit was granted to the Commissioner so that where he felt necessary, he could bring any assessment under scrutiny and it would be impossible to do the same if such power was considered to be solely dependent upon selection of persons by the Board under S. 214C of the Income Tax Ordinance, 2001 ----Second proviso to S. 177 of the Income Tax Ordinance, 2001 prohibited the Commissioner from conducting audit after expiry of six years whereas no such prohibition existed when persons were selected for audit under S. 214C of the Income Tax Ordinance, 2001---Limitation contained in second proviso of section 177 of the Income Tax Ordinance, 2001 was applicable to selection made by the Commissioner under S. 120(1A) of the Income Tax Ordinance, 2001 but no such limitation was applicable when random selection was made under S. 214C of the Income Tax Ordinance, 2001 and the same showed that there exited two distinct provisions of the Income Tax Ordinance, 2001 on basis of which persons could be selected for audit, one was circumscribed by period of limitation and the other was not Power of the Board to choose persons for audit under S. 214C of the Income Tax Ordinance, 2001 was a general power which was in addition to power of the Commissioner under S. 120(1A) of the Income Tax Ordinance, 2001 and if the Commissioner was unable to conduct audit under said Section, then there would not exist any provision in the Income Tax Ordinance, 2001 which would facilitate the taxing authority to examine a tax return in case circumstances suggested conducting a person-specific audit and same could never be the intention of the Legislature---No provision of the Income Tax Ordinance, 2001 suggested that power to select a person for audit only vested with the Board---High Court observed that after examination of Ss. 120(1A), 122(5), 177 & 214C of the Income Tax Ordinance, 2001 it was clear that law visualized two distinct situations for conducting audit; and first was provided under S. 120(1A) of the Income Tax Ordinance, 2001 which was based on exercise of discretion on part of Commissioner and the other was the power of the Board to select persons or class of persons under S. 214C of the Income Tax Ordinance, 2001---Under S. 120(1A) of the Income Tax Ordinance, 2001 any person could be called upon by the Commissioner in his discretion to submit accounts for audit if reasonable grounds existed for doing so---Constitutional petitions were dismissed, in circumstances.
Anwar KaSltif Munztaz, Muhammad Usman Alam and Ammar Athar Saeed, for Petitioner.
Lubna Pervez for Petitioner.
Abid H. Shahan for Petitioner.
Muhammad Naeem Noor for Petitioner.
S. Irshad-ur-Rehman for Petitioner.
Kafeel Ahmed Abbasi for F.B.R.
Siddique Mirza for Respondents.
Javed Farooqui for Respondents.
Sarfaraz Ali Metlo for Respondents.
Altaf Mun for Respondent.
Ainuddin Khan, DAG.
Date of hearing: 25th August, 2015.
2016 P T D 1334
[Sindh High Court]
Before Muhammad Junaid Ghaffar, J
ELLECOT SPINNING MILLS LTD.
Versus
FEDERATION OF PAKISTAN through Secretary, Ministry of Trade and Commerce, Islamabad and 6 others
Suit No.2016 of 2015, decided on 4th February, 2016.
(a) Anti-Dumping Duties Act (XIV of 2015)---
----Ss. 37, 23, 2 (d) & 2 (j) (v)----Customs Act (IV of 1969), S. 31-A---Civil Procedure Code (V of 1908), O. XXXIX, Rr.1 & 2---Application under O.XXIX, Rr. 1 & 2 for temporary injunction---Anti-Dumping duty, validity of---Effective rate of duty---Applicability---National Tariff Commission issued notice to the plaintiff whereby Anti-Dumping Duty had been preliminary determined under S. 37 of Anti-Dumping Duties Act, 2015 on prices of Polyester Staple Fiber---Plaintiff challenged said notice on ground that as the plaintiff had entered into a binding contract by establishing a Letter of Credit, the Anti-Dumping Duty could not be levied on the goods being imported under said Letter of Credit---High Court had already allowed release of consignment pending adjudication of the suit subject to furnishing post-dated cheques in the Court for disputed amount of the duty---Plaintiff, contended that no duty having been levied prior to impugned notice, the plaintiff had acquired vested right, and that no Anti-Dumping duty, therefore, was to be paid---Validity---Matter in question was not a case of any vested rights, which might have accrued to the plaintiff for the reason that the investigation with regard to imposition of the Anti-Dumping Duty had been initiated by the defendant authority in terms of S. 23 of Anti-Dumping Duties Act, 2015 when the plaintiff had not established the Letter of Credit---Pursuant to initiation of the investigation, notices had been issued to the respective suppliers and exporters/producers had responded to the request of the defendant for providing information and data for the purpose of the investigation---Plaintiff's plea as to accrual of any vested right was misconceived and factually incorrect, as the Anti-Dumping Duty had been levied on the exporters/producers, who had apparently participated in the investigation proceedings---Applicant/interveners were parties before the authorities in the final determination of levy of the impugned Anti-Dumping Duties---Impugned notice reflected that the investigation under S. 23 of Anti-Dumping Duties Act, 2015 had been initiated by the authorities on the application made by the applicant/interveners---Object of the Anti-Dumping Duties Act, 2015 was to protect the local industry against dumping prices of foreign origin goods--Applicant/interveners, if not necessary party, were proper party, and to implead them in present matter would be in the fairness of things---Presence of the interveners would facilitates in the proper adjudication of the dispute in question and no prejudice would be caused to the plaintiff---High Court directed Court Nazir to get encashment of the cheques and pay the amount to the authorities and directed the plaintiff to amend title of the plaint impleading the applicant/interveners---Application for temporary injunction was dismissed, whereas the other applications by the interveners were allowed, in circumstances.
Al-Samreiz Enterprises v. Federation of Pakistan 1986 SCMR 1917; Muhammad Anwar v. Federation of Pakistan and others 2013 PTD 1568 and Messrs Fazal Din and Sons (Pvt.) Ltd. v. Federal Board of Revenue, Islamabad and others 2009 SCMR 973 ref.
S.M. Ilyas and another v. Karachi Building Control Authority and another PLD 2001 Kar. 85 ref.
Islamic Republic of Pakistan v. Abdul Wali Khan PLD 1975 SC 463; Syed Ahmed Kirmani v. Punjab Province and others 1982 CLC 590 and Naseem Abdul Sattar v. Federation of Pakistan and others PLD 2013 Sindh 357 distinguished.
Muhammad Anas Makhdoom for Plaintiff.
Waqas for Defendants No.2.
Ameen Abbasi and Kafeel Ahmed Abbasi for Defendants Nos. 5
Salman Zaheer for Intervener.
Date of hearing: 4th February, 2016.
2016 P T D 1429
[Sindh High Court]
Before Faisal Arab, C.J. and Muhammad Iqbal Kalhoro, J
Messrs PFIZER PAKISTAN LTD. through Company Secretary and others
Versus
DEPUTY COMMISSIONER and others
Constitutional Petitions Nos.D-1931, D-1852, D-1922, D-1932, D-2922, D-3540, D-3611 of 2010, D-2145, D-1774, D-3955, D-543, D-10 of 2011, D-1124, D-749, D-1703, D-2911, D-4335, D-4456 of 2012, D-2544 of 2013, D-3807, D-7483, D-2361, D-3124, D-3252, D-3874, D-4415, D-4836, D-5761, D-5879, D-1152, D-3794 to D-3797, D-5671 of 2014, D-1433, D-1619, D-3702, D-984, D-3619, D-1112, D-1354, D-1620, D-2243, D-1631, D-2005, D-973 of 2015, decided on 2nd October, 2015.
Income Tax Ordinance (XLIX of 2001)---
----Ss. 120(1A), 122(5), 177 & 214-C---Conducting of audit---Commissioner Income Tax, jurisdiction of---Assessees were aggrieved of powers exercised by Commissioner Income Tax to conduct their audit under S. 120(1A) of Income Tax Ordinance, 2001, as it was solely dependent upon decision of Board of Revenue---Validity---Power to impose tax vested in the State and a taxpayer was accountable to the State for his incomes so that leviable tax could be collected---State had every right to ensure that tax was properly calculated and paid---Such obligation of a person to pay correct amount of tax meant that a vested right had accrued to the State to examine account books of a taxpayer---Audit of accounts was the most effective mode of determining correct liability of tax---Right to conduct audit was absolute and such a right could not be left mainly to chance i.e., computer balloting or as and when the Board decided---Power of Board to choose persons for audit was a general power which was in addition to the power of the Commissioner under S. 120(1A) of Income Tax Ordinance, 2001---Law visualized two distinct situations for conducting audit; the first was provided under S. 120(1A) of Income Tax Ordinance, 2001 which was based on exercise of discretion on the part of Commissioner; and the other was the power of the Board to select persons or class of persons under S. 214-C of Income Tax Ordinance, 2001---By invoking S. 120(1A) of Income Tax Ordinance, 2001, any person could be called upon by Commissioner Income Tax in his discretion to submit accounts for audit if reasonable grounds existed for doing so---High Court in exercise of jurisdiction under Art. 199 of the Constitution declined to interfere in the matter---Petition was dismissed in circumstances.
Anwar Kashif Mumtaz, Muhammad Usman Alam and Ammar Athar Saeed, Ms. Lubna Pervez, Abid H. Shaban, Muhammad Naeem Noor and S. Irshad-ur-Rehman for Petitioners.
Kafeel Ahmed Abbasi for F.B.R.
Siddique Mirza, Javed Farooqui, Sarfaraz Ali Metlo and Altaf Mun for Respondents.
Ainuddin Khan DAG.
Date of hearing: 25th August, 2015.
2016 P T D 1667
[Sindh High Court]
Before Munib Akhtar and Abdul Maalik Gaddi, JJ
MUMTAZ HUSSAIN KHAN
Versus
ADDITIONAL COMMISSIONER INLAND REVENUE and 4 others
C.P. No.D-678 of 2016, decided on 7th April, 2016.
(a) Interpretation of statutes---
----Fiscal statute---Scope---Interpretation that reduces or lessens burden on taxpayer is to be preferred.
(b) Income Tax Ordinance (XLIX of 2001)---
----Ss. 2(28A), 4-B & 236-M(7)---Super tax, levy of---Bonus shares---Petitioner was an assessee and aggrieved of imposition of super tax on his income from bonus shares---Full face value of bonus shares could not be included in 'Income' for purposes of 'super tax' by applying S.236-M(7)(ii) of Income Tax Ordinance, 2001 as tax levied on such value was a final tax and matter would fall within the scope of S.2(28A) of Income Tax Ordinance, 2001---'Imputable income' alone was to be included in 'income' for the purposes of 'super tax'---Petitioner's 'income' on such basis was well below threshold of Rs. 500 million and no 'super tax' was payable by petitioner---Petitioner was not liable to pay any 'super tax' in terms of S. 4-B of Income Tax Ordinance, 2001---High Court quashed all demands, notices and proceedings (including, but not limited to, by way of rectification) seeking to claim or enforce any such payment and restrained the authorities from initiating or continuing such proceedings---Constitutional petition was allowed accordingly.
Shirin Ayub Khan v. Commissioner of Income Tax, Lahore PLD 1976 Lah. 1028 ref.
Anwar Kashif Mumtaz and Ammar Athar Saeed for Petitioners.
Syed Irshad ur Rehman for Respondent.
Ashfaq Rafique Janjua, Standing Counsel.
Date of hearing: 1st April, 2016.
2016 P T D 1698
[Sindh High Court]
Before Sajjad Ali Shah C.J and Zulfiqar Ahmad Khan, J
MUHAMMAD IQBAL and 2 others
Versus
PAKISTAN TELECOMMUNICATION AUTHORITY and 2 others
C.P. No.D-4660 of 2015, decided on 9th February, 2016.
(a) Customs Act (IV of 1969)---
----S. 16---Type Approval Regulation, 2004, Regln. 12----SRO No.797(I)/2004, dated 09.07.2004---Telecommunications Policy, 2015, Art. 9.6---Type Approval Certificate---Type approval regime for telecommunication terminal equipment---Import/export of terminal equipment/cellular phones (Black Phones) into Pakistan---Type Approval Certificate and No objection certificate from Pakistan Telecommunication Authority---Requirement and purpose---Power to prohibit or restrict importation or exportation of goods---Scope---Petitioners claimed that S.R.O. No.797(I)/2004, dated 09.07.2004, whereby the Federal Board of Revenue had called upon the Customs Authorities to ensure that only Type Approval terminal equipment/cellular phones were imported into Pakistan, was not applicable to their case, and that implementation of Type Approval Regulation, 2004 fell within the ambit of Pakistan Telecommunication Authority and not that of Federal Board of Revenue/Customs Authorities---Question before the High Court was that whether Type Approval Certificate from Pakistan Telecommunication Authority (PTA) was required before import of cellular phone or afterward---Customs Authorities were not supposed to allow import of terminal equipment/cellular phones, which did not have proper International Mobile Equipment Identity (IMEI) without having Type Approval Certificate issued by Pakistan Telecommunication Authority in that regard in advance---Article 9.6 of Telecommunication Policy, 2015 required that all terminal equipment/cellular phones would be subjected to Type Approval based on international norms, and regulatory mechanism would be developed in order to identify persons using phones with duplication identification in order to have such phones blocked---Said policy required each terminal equipment/cellular phone to have a valid and unique IMEI and such equipment should have had a certificate issued by Groupe Speciale Mobile Association (GSMA) providing Type Allocation Code (TAC) identifier---Type Approval Certificate provided information about the origin, operating frequency, trade name and the type of cellular phone approved by PTA in advance before the same was allowed to be imported into the country---Purpose of said approval mechanism was to ensure that the terminal equipment/cellular phones, which were being imported, were distinguishable/compatible by the operators' telecommunication infra-structure, meet certain minimum health and safety requirement, operate within the frequency range, which could be regulated by PTA and the same were not encrypt-able---No objection certificate would also be issued to the intending importer in respect of Type Approved cellular phones, which included details as to GSMA, TAC number and IMEI---Instruments like 'Black Phones' were lethal stealth weapons and a nightmare for the regulators to track and encrypt under S.16 of Customs Act, 1969, the Customs Authorities were, therefore, fully empowered to restrict the import of prohibited type of terminal equipment and cellular phones---Supreme Court had also instructed the Customs Authorities to restrict import of phones without IMEI---Petitioners were, therefore, under obligation to obtain Type Approval and NOC from PTA in advance before importing terminal equipment/cellular phones in question into Pakistan---Customs Authorities were competent to enforce broader measures under S. 16, of Customs Act, 1969, which empowered them to prohibit or restrict the bringing into or taking out of Pakistan any goods of specified description by air, sea or land---Constitutional petition was dismissed in circumstances.
(b) Customs Act (IV of 1969)----
----S. 16----Power to prohibit or restrict importation or exportation of goods---Scope---Federal Board of Revenue, through Customs Authorities, enforces large number of laws, which includes intellectual property, wild life preservation, narcotics and antiquities laws, for the Customs Authorities are competent to enforce broader measures under S. 16 of Customs Act, 1969, which empowers them to prohibit or restrict the bringing into or taking out of Pakistan any goods of specified description by air, sea or land.
Muhammad Anwar Tariq for Petitioners.
Haq Nawaz Talpur along with M. Talib Dogar, D.G. Type Approval-PTA. for Respondent No.1.
Ali Akbar Sahito, Dy. Director Law-PTA.
Kashif Nazir for Respondent No.2.
Ms. Masooda Siraj for Respondent No.3.
Aslam Butt, DAG for Respondent No.4.
Date of hearing: 9th February, 2016.
2016 P T D 1723
[Sindh High Court]
Before Muhammad Junaid Ghaffar and Muhammad Karim Khan Agha, JJ
Messrs D.J. BUILDERS AND DEVELOPERS through Partner and another
Versus
FEDERATION OF PAKISTAN through Secretary, Ministry of Finance, Islamabad and 6 others
C.Ps. Nos.D-5188 and D-3360 of 2013, decided on 17th March, 2016.
(a) Income Tax Ordinance (XLIX of 2001)---
----Ss. 122, 124 & 129----Order of attachment of property---Notice/ opportunity of hearing---Requirement---Amendment of assessment---Assessment giving effect to an order---Decision in appeal---Appellant tax-payer, having taken different stance in the appeal contending that the undisclosed income was not his income but the same belonged to petitioner/company and its Directors---Commissioner (Appeals) confirmed the order and modified the same making the tax amount recoverable from the petitioner/Company and their Directors with direction that property of the petitioner be sold for recovery of the tax amount---Legality---Order of Commissioner (Appeals) was against law---Principles.
Appellant, in his replies to the notice issued under Section 122(5)(A) of Income Tax Ordinance, 2001, had never pleaded that the shares were in fact Benami in the name of another company and/or its Directors. Impugned order did not contain any findings regarding the petitioner. Entire allegations were against the petitioner and its Directors, and the appellant had not alleged that the petitioner had any concern whatsoever in respect of the transaction in question.
Petitioners had approached the Appellate Tribunal, Inland Revenue, with an appeal, which had not been entertained. Petitioners, therefore, being remediless, rightly approached the High Court through present petition under Article 199 of the Constitution. Present petition was maintainable, when the impugned order of the Commissioner was without any lawful authority and jurisdiction.
Under Section 129 of Income Tax Ordinance, 2001, mandatory notice had been provided before any modification order could have been passed by the Commissioner. Commissioner had directed sale of the property of petitioners against whom, there was no order for recovery or for passing of any amended assessment order in terms of Section 122(5)(A) of the Ordinance, which was against the spirit of law and the Constitution. No notice had ever been issued to the petitioner either by the Inland Revenue Department or by the Commissioner (Appeals), nor even a copy of adverse impugned order had been addressed or sent to the petitioners. In the circumstances, since power to remand the case to the Assessing Officer was no more vested with the Commissioner after the Finance Act, 2005, the Commissioner on his own could have confronted the petitioners by issuing a notice before passing the adverse order against them.
Commissioner, having come to a definite finding that new material had been placed before him, which the authorities below had failed to appreciate, was duty bound to issue a proper notice to the petitioners to defend themselves. No liability could have been created against a person who was not even party to the proceedings. Commissioner had travelled beyond the scope and mandate of the law by passing the impugned order, while creating liability against the petitioners and by further ordering sale of the property in question. Impugned order had seriously prejudiced the interest of the petitioners and could not sustain.
Commissioner had also directed the Assessing Officer for making the proper use of the information available in the body of impugned order in respect of the Benami account holders and the employees of the petitioners and its Directors and further to reopen the assessment order in accordance with law. Department had not given effect to said order/direction of the Commissioner under Section 124 of the Ordinance, for which no plausible justification or reason had been given. High Court directed that a copy of its judgment be sent to the Chairman FBR, Member (Inland Revenue) and Member (Legal), FBR for conducting an inquiry as to why after passing of the order by Commissioner, no further proceedings had been initiated and taking appropriate action against the responsible person.
Commissioner (Appeals) had directed sale of property of the petitioner for the reason that the appellant was a partner of 6 % share in the same. Appellant had already retired from the partnership before the impugned order of Commissioner (Appeals) and the order of attachment of the property had been passed. Sale of the property of petitioner, therefore, could not have been effected. Assessment order in question was in respect of the appellant only, and no proceedings had ever been initiated against the petitioners and/or its directors/partners, either individually or collectively; therefore, the property, which belonged to the petitioner, could not be attached for recovery of the alleged amount of tax evaded by the appellant. High Court set aside the impugned order to the extent of creating liability against the petitioner and the attachment order. Constitutional petition was allowed in circumstances.
Mian Muhammad Latif v. Province of West Pakistan PLD 1970 SC 180; Hamid Husain v. Government of Pakistan and others 1974 SCMR 356; Akhlaque Hussain Memon and others v. Water and Power Development Authority 2015 PLC (C.S.) 596; Mrs. Anisa Rehman v. P.I.A.C. and another 1994 SCMR 2232 and Siemens Pakistan Engineering Co. Ltd. v. Pakistan and others 1999 PTD 1358 ref.
Julian Hoshang Dinshaw Trust v. Income Tax Officer 1992 SCMR 250; Khalid Mehmood v. Collector of Customs 1999 SCMR 1881 and Chief Commissioner, Karachi and another v. Mrs. Dina Sohrab Katrak PLD 1959 SC (Pak) 45 rel.
(b) Constitution of Pakistan---
----Art. 10-A----Right to fair trial---Maxim 'audi alteram partem'---Applicability---Nobody should be condemned unheard---Authority is under duty to confront the person against whom any adverse order is being passed, with proper notice detailing the reasons for taking any adverse action---No adverse order can be passed against a person without issuing notice and/or confronting the said person before passing any order---Spirit of Art. 10-A of the Constitution was premised on said proposition of law.
Chief Commissioner, Karachi and another v. Mrs. Dina Sohrab Katrak PLD 1959 SC (Pak) 45 rel.
Haider Waheed and Muhammad Ahmed Masood for Petitioners.
Muhammad Sarfaraz Ali Metlo for Respondent (in C. P. No.D-3360 of 2013).
Amjad Javed Hashmi for Respondent (in C.P. No.D-5188 of 2013).
Dates of hearing: 13th and 14th January, 2016.
2016 P T D 1750
[Sindh High Court]
Before Sajjad Ali Shah C.J. and Anwar Hussain, J
LAGUARDIA LOGISTICS (PVT.) LTD. through General Manager Officer, Karachi
Versus
FEDERATION OF PAKISTAN through Customs Collectorate Preventive
C.P. No.D-2211 and C.M.A. No.13364 of 2012, 341213 of 2014, decided on 27th January, 2016.
(a) Customs Act (IV of 1969)---
----S. 129----Customs General Orders No. 12/2002---Customs General Order No. 6/2010---Transit of goods across Pakistan to a foreign country---Levy of duties, taxes, etc.---Legality---Petitioner, a carrier company, sent a shipment for supply of Low Sulpher Diesel to Afghanistan for International Security Assistance Force (I.S.A.F) and North Atlantic Treaty Organization (N.A.T.O), but the same was attacked and destroyed en route to Afghanistan---Customs Authorities, issued Demand-cum-Show Cause Notices to the petitioner for non-payment of customs duties, taxes, etc. for the short delivery of said goods---Petitioner contended that in terms of the Agreement between Pakistan and Afghanistan and S. 129 of Customs Act, 1969, no customs duties, taxes, etc. were payable in respect of the supply of goods to Afghanistan---Validity---Demand-cum-Show Cause Notices for the payment of customs duties and taxes etc. had been issued on the basis of Customs General Order No. 12/2002 and Customs General Order No. 6/2010 and S. 129 of Custom Act, 1969---Supply of goods in question had already been transited out of Pakistan---Department as per Goods Declaration Form, were legally correct to take steps for recovery of the duties, taxes, etc.---Agreement between Government of Pakistan and Afghanistan relied upon by the petitioner related to trade between the governments for their nationals; whereas, the supply/transit of goods in question were for the use of I.S.A.F and N.A.T.O; said agreements were, therefore, not applicable to the present case---Petitioner had assailed the impugned Orders-in-Original passed by the Customs Authorities by way of filing appeal before Collector of Customs, which the petitioner had withdrawn therefore, said orders, having attained finality, had been accepted as correct---Last Demand Notices for payment of amount in dispute had been issued after the impugned orders had attained finality---Impugned orders, therefore, could not be assailed under Constitutional jurisdiction indirectly by way of present petition---High Court maintained impugned order---Constitutional petition was dismissed in circumstances.
Federation of Pakistan v. Jamaluddin 1996 SCMR 727 distinguished.
Afghan/Pakistan Transit Trade Agreement, 2010 (APTTA) ref.
(b) Constitution of Pakistan---
----Art. 199----Constitutional jurisdiction of High Court---Scope---Relief, which is directly sought under a statutory remedy, cannot be sought indirectly in Constitutional jurisdiction.
M. Abdul Rehman for Petitioner.
Muhammad Khalil Dogar for Respondents along with Ilyas Ahsan, Appraising Officer, Customs.
Aslam Butt, D.A.G.
2016 P T D 1783
[Sindh High Court]
Before Muhammad Junaid Ghaffar, J
Syed WAQAR HAYDER ZAIDI through Authorized person
Versus
FEDERATION OF PAKISTAN through Secretary/Chairman and 6 others
Suit No.1139 of 2015, decided on 29th March, 2016.
(a) Income Tax Ordinance (XLIX of 2001)---
----S. 129 (4)---Decision in appeal---Order passed in appeal beyond the prescribed statutory period---Effect---Plaintiff contended that impugned order, having been passed beyond the statutory period in terms of S. 129(4) of Income Tax Ordinance, 2001, was invalid---Validity---Impugned order passed by the Commissioner (Appeals) was admittedly beyond the period of 120 days and even beyond the extended period of 60 days thereafter---Section 129(4) of Income Tax Ordinance, 2001 although specified a period for passing appellate order by the Commissioner (Appeals), however, no consequences had been provided for non-passing of such appellate order within the prescribed period of limitation---Provision, wherein, some time limit was provided for performing an act and no consequence for such failure was provided, had always been termed as "directory" and not mandatory, and if a provision was directory in nature then even if any act was done or order passed beyond the period of any such limitation, that order would not, ipso facto, be an order without lawful authority---Appeal filed by the plaintiff, therefore, could not be deemed to have been allowed as prayed---Suit was dismissed in circumstances.
Super Asia Muhammad Din Sons (Pvt.) Ltd. v. Collector of Sales Tax Gujranwala 2008 PTD 60; Niaz Muhammad Khan v. Mian Fazal Raqid PLD 1974 SC 134 and Messrs Gold Trade Impex v. Appellate Tribunal of Customs and Excise and Sales Tax 2012 PTD 377 rel.
(b) Interpretation of statutes---
----Time limit prescribed in provision---Effect---Provision, wherein, some time limit was provided for performing an act and no consequence for such failure was provided, had always been termed as "directory" and not mandatory, and if a provision was directory in nature then even if any act was done or order passed beyond the period of any such limitation, that order would not, ipso facto, be an order without lawful authority.
Super Asia Muhammad Din Sons (Pvt.) Ltd. v. Collector of Sales Tax Gujranwala 2008 PTD 60; Niaz Muhammad Khan v. Mian Fazal Raqid PLD 1974 SC 134 and Messrs Gold Trade Impex v. Appellate Tribunal of Customs and Excise and Sales Tax 2012 PTD 377 ref.
Mushtaq Hussain Qazi for Plaintiff.
Syed Irshad-ur-Rehman for Defendants Nos. 4 to 6.
Ghulam Hyder Shaikh for Defendant No.7.
Date of hearing: 14th March, 2016.
2016 P T D 1813
[Sindh High Court]
Before Munib Akhtar and Muhammad Karim Khan Agha, JJ
KHALID MANSOOR---Petitioner
Versus
FEDERAL BOARD OF REVENUE and 3 others---Respondents
C.P. No.D-1591 of 2015, decided on 4th March, 2016.
(a) Income Tax Ordinance (XLIX of 2001)----
----Ss. 37-A, 100-B, First Sched., Part I, Div. VII & Eighth Sched.---Capital gain on disposal of securities---'Holding period', absence of---Effect---Term 'security', as used in S. 37-A of Income Tax Ordinance, 2001, meant shares of a listed company (as defined under S. 2 (47) of the Ordinance)---Company in question was not a listed company on any Stock Exchange on the date on which the petitioner had acquired the shares of the company---For the charge in terms of S. 37-A of Income Tax Ordinance to be complete and for the tax levied in terms thereof to be payable, the instrument in question (shares of the company) must have been a 'security' for the entire 'holding period', which meant that the shares of the company ought to have been listed on a Stock Exchange on the date on which the petitioner has acquired the same and the date on which he had disposed of the same---In absence of 'holding period', there could be no levy of tax in terms of S. 37-A of the Ordinance---Petitioner was, therefore, not liable to the payment of any tax in terms of S. 37-A of the Ordinance on disposal of the shares---High Court, setting aside the deduction and collection of the amount of tax from the petitioner, directed the department to refund the same---Constitutional petition was allowed in circumstances.
(b) Income Tax Ordinance (XLIX of 2001)----
----S. 37-A----Capital gain on disposal of securities---Conditions---'Securities'---Definition and scope---'Holding period', absence of---Effect---Section 37-A(2) of Income Tax Ordinance, 2001 determines the 'holding period', which in turn determines the rate to be applied to the capital gain made on the disposal of a security'---Said 'holding period' is with reference to a 'security' and not otherwise---Term 'security' has been given a specific meaning for purposes of S. 37-A of Income Tax Ordinance, 2001; therefore, the term can only have, and be given, its defined meaning---Relevant instrument in question must be a 'security' both on the date on which the same are acquired and on the date the same are disposed of, and both of said conditions must be met and are applicable for there to be a 'holding period' within the meaning of S. 37-A(2) of Income Tax Ordinance, 2001.
(c) Income Tax Ordinance (XLIX of 2001)---
----S. 37-A(2)----Capital gain on disposal of securities---Literal interpretation, rule of---Applicability---'Holding period'---Determination---Section 37-A(2) of Income Tax Ordinance, 2001 has to be applied literally and the 'holding period' has to be determined accordingly---In case two interpretations are reasonably available while construing a charging provision, the one more favourable to the taxpayer is to be adopted.
(d) Income Tax Ordinance (XLIX of 2001)---
----Ss.37-A(1), 100-B, First Sched., Part I, Div. VII & Eighth Sched.---Capital gain on disposal of securities---Rate of tax on capital gain---Determination---Under S. 37-A(1) of Income Tax Ordinance, 2001, tax on any capital gain is to be levied at the rates specified in Division VII of Part I of the First Schedule of Income Tax Ordinance, 2001; however, reference to said rates is not necessary---Section 100-B of Income Tax Ordinance, 2001 provides a mechanism, whereby the tax levied and made payable in terms of S. 37-A of the Ordinance is to be computed and collected.
(e) Income Tax Ordinance (XLIX of 2001)---
----S. 37-A----Capital gain on disposal of securities---Principles---Section 37-A of Income Tax Ordinance, 2001 is a charging provision, as the same imposes tax on capital gain made on the disposal of securities---Charging provision is to be construed strictly and literally and in favour of the tax payer and against the Revenue.
Atir Ansari for Petitioner.
Amjad Javed Hashmi for Respondent No.1.
Haider Naqi for Respondent No.2.
Ashfaq Rafiq Janjua, Standing Counsel.
Date of hearing: 26th January, 2016.
2016 P T D 1824
[Sindh High Court]
Before Faisal Arab, C.J. and Muhammad Iqbal Kalhoro, J
ASTRO PLASTICS (PVT.) LTD. through Company Secretary and another
Versus
MINISTRY OF FINANCE, GOVERNMENT. OF PAKISTAN through Secretary and 3 others
C.Ps. Nos. D-946 of 2013, D-3045 of 2014 and D-128 of 2015, decided on 20th November, 2015.
Customs Act (IV of 1969)---
----S. 25---Pakistan Customs Tariff Code---Duty structure---Classification---Discrimination---Petitioner was manufacturer of BOPET film (polyester films) and its grievance was that duty for PET Resin for making PET film was higher to PET Resin imported for making bottles and polyester yarn, which was discriminatory---Validity---Yarn grade was not only being used for textile purpose that catered to the most fundamental need of people (clothing) but for export as well, whereas film grade resin was being applied for making sticker etc., which were put on plastic bottles used in many drinks (plastic industry) and consumed locally---Such was not merely chemical formula of subject raw material (Intrinsic Viscosity) that was considered solely for imposing a certain customs duty on its import but the purpose and object for which was physically utilized by two different manufacturers that mattered the most in introducing two different regimes of duty on the same item---Rationale behind such decision was not against the principle of reasonable classification or any of the fundamental rights of petitioners to justify invoking Constitutional jurisdiction of High Court under Art. 199 of the Constitution---End use of a particular item, the purpose for which it was being used and import and the scope/limit to which it was being used could be the rational factors to maintain two different regimes of duty on the import of given items---Petitioner was not entitled to receive back differential amount of duty---Constitutional petition was dismissed in circumstances.
Abdul Sattar Pirzada and Umair A. Kazi for Petitioners.
Abid S. Zuberi for Respondent No.3.
Kashif Nazeer for Respondent No.3 (in C.P. No.D-3045 of 2014 and in C.P. No.D-128 of 2015).
Salman Talibuddin, Additional Attorney General for Pakistan.
Date of hearing: 3rd November, 2015.
2016 P T D 1861
[Sindh High Court]
Before Muhammad Junaid Ghaffar and Muhammad Karim Khan Agha, JJ
ABDUL RAZZAQ
Versus
DIRECTORATE GENERAL OF INTELLIGENCE AND INVESTIGATION-FBR, REGIONAL OFFICE, KARACHI and 2 others
Special Customs Reference Application No.340 of 2013, decided on 26th January, 2016.
Customs Act (IV of 1969)---
----Ss. 2(s), 16, 187 & 196---Reference---Smuggling---Principle of shifting of onus---Applicability---Cloth of foreign origin was recovered from the warehouse of applicant and proceedings were initiated by customs authorities for smuggling the goods---Plea raised by applicant was that he had purchased the cloth from place "Q" in open market and it was for the authorities to prove smuggling---Validity---Evidential and tactical burden was initially placed on accused in a customs offence who was only to show some evidence to prima facie discharge his evidential burden and thereafter, the same was to shift on customs authorities---Initial evidentiary burden fell on applicant to show that at least prima facie he had purchased goods in question from open market of place "Q" from a third party and thus he could not be liable for smuggling and/or violating S. 16 of Customs Act, 1969---Applicant failed to produce a single document or other piece of evidence to show that he had purchased goods in question from a third party in open market and only his bare assertion was on record---Applicant having failed to discharge his initial evidentiary burden of proof, he was liable for the offence charged---High Court declined to interfere in the order passed by Customs Appellate Tribunal---Reference was dismissed in circumstances.
Pakistan and (2) The Assistant Colleetor, Central Excise and Land Customs, Kohat. v. Qazi Ziauddin PLD 1962 SC 440; Mian Shafiq Alam v. The Collector Customs 1988 MLD 2085; Sikandar A. Karim v. The State, 1995 SCMR 387; Muhammad Saeed and another v. Collector, Customs, Central Excise, Peshawar 2005 PTD 1813 and Kamran Industries v. Collector of Customs PTCL 1996 CL 15 ref.
Sardar Faisal Zafar for Applicant.
Khalid Mehmood Dhoom for Respondent No.1.
Ms. Dil Khurram Shaheen for Respondents No.3.
Date of hearing: 14th January, 2016.
2016 P T D 1872
[Sindh High Court]
Before Faisal Arab, C.J. and Muhammad Iqbal Kalhoro, J
Messer's ATTOCK CEMENT PAKISTAN LTD. through Senior Manager Finance
Versus
ADDITIONAL COMMISSIONER INLAND REVENUE
Constitutional Petition No.1289 of 2015, decided on 29th October, 2015.
(a) Income Tax Ordinance (XLIX of 2001)---
----S. 122(5A)---Constitution of Pakistan, Art. 199---Constitutional petition---Show cause notice---Amendment of assessment, retrospective effect---Scope---Assessee was aggrieved of show cause notice issued by Income Tax authorities whereby original assessment order was amended after five years---Validity---Relevant period under S. 122(2) and (4) of Income Tax Ordinance, 2001, for amending assessment order by Commissioner was end of financial year in which it was issued or deemed to have been issued the assessment order to taxpayer---Section 122(2) and (4) of the Ordinance did not speak of the period starting from the end of financial year about which assessment order was passed but it was about financial year in which either Commissioner had issued or deemed to have issued the order that was relevant and would be so applicable in the case of assessee also for counting the limitation---Assessee filed return for tax year 2009 on 25-01-2010 which for all intents and purposes was deemed to be an assessment order issued by Commissioner when that year ended on 30-06-2010, therefore, it was relevant date as a point of time wherefrom period of five years as provided in S. 122 of Income Tax Ordinance, 2001, was to start counting---If it was so counted the show cause notice in question was within the time limit as prescribed therein---Petition was dismissed in circumstances.
2011 PTD 1588 and Civil Petition No.1306 of 2014 ref.
(b) Interpretation of statutes---
----Retrospective effect---Scope---Procedural law applies retroactively unless contrary is provided in law itself---In the procedure, nobody has vested right and if some change is made in original law prescribing some procedure it has to be read as if it was always part of original law from its inception.
The State v. Maulvi Muhammad Jamil and others PLD 1965 SC 681; Adnan Afzal v. Capt. Sher Afzal PLD 1969 SC 187 and Liaquat Ali and others v. The State 1992 SCMR 372 rel.
Anwar Kashif Mumtaz and Amar Athar Saeed and Usman Alam for Petitioners.
Amjad Javed Hshmi for Respondent.
Aslam Butt, D.A.-G.
Date of hearing: 29th October, 2015.
2016 P T D 1894
[Sindh High Court]
Before Sajjad Ali Shah and Syed Saeeduddin Nasir, JJ
Messrs TASLEEM TRADERS
Versus
DEPUTY COLLECTOR GROUP-III PaCCS and others
C.P. No.D-293 of 2011, decided on 30th April, 2015.
Customs Act (IV of 1969)---
----Ss. 19A, 81(1), 81(2), 81(3) & 81(4)---Import of goods---Provisional determination of liability---Release of security money deposited by importer at the time of provisional release of goods---Scope---Contention of petitioner/importer was that security money be released under S.81(3) of Customs Act, 1969 on expiry of six months of provisional determination, and as no final determination was framed by department, therefore, provisional determination became final order under the mandate of S.81(4) of Customs Act, 1969---Department's plea was that even if the provisional assessment would attain finality in case final assessment was not made within prescribed period, but importer had to prove that he had not passed on burden to end-user in terms of S.19A of Customs Act, 1969 and till then he was not entitled to any relief---Held, that Customs Authorities had failed to finalize assessment of importer's goods within stipulated period of 180 days as provided under S.81(2) of Customs Act, 1969 and in such circumstances provisional assessment made by Customs Authorities on basis of declared value of goods in terms of S.81(1) of Customs Act, 1969 had attained finality---Ad hoc amount to meet differential in case of final assessment, thus, became refundable to importer in case he discharged burden placed under S.19A of Customs Act, 1969---Customs Authorities were directed to release pay orders of the petitioner deposited at the time of provisional release of grounds---Constitutional petition was allowed, accordingly.
Messrs Hassan Trading Company v. Central Board of Revenue, Government of Pakistan 2004 PTD 1979; The Collector of Customs (Appraisement), Karachi v. Messrs Auto Mobile Corporation of Pakistan, Karachi 2005 PTD 2116 and Messrs Dewan Farooque Motors Ltd., Karachi v. Customs, Excise and Sales Tax Appellate Tribunal Karachi 2006 PTD 1276 rel.
Muhammad Afzal Awan for Petitioner.
Ilyas Ahsan for Respondents.
Date of hearing: 30th April, 2015.
2016 P T D 1903
[Sindh High Court]
Before Aqeel Ahmed Abbasi, J
GUL WALI and 4 others
Versus
The STATE and others
Spl. Crl. Bail Applications Nos.52 to 55 and 61 to 67 of 2015, decided on 5th October, 2015.
Criminal Procedure Code (V of 1898)---
----S. 497(2)---Customs Act (IV of 1969), Ss.2(s), 121 & 129---Transit of goods across Pakistan to Afghanistan---Removal or theft of goods---Bail, grant of---Prosecution, could not find any clue with regard to removal or theft of goods---Accused persons, who were either drivers of the vehicles, or employees of clearing, forwarding and shipping agencies their specific role in the commission of alleged offence of smuggling, or evasion of customs duty and taxes, was not reflected in the FIR, or in the final challan submitted by the Customs Authorities---No adjudication proceedings regarding determination of the amount of customs and taxes, allegedly evaded by accused persons had been initiated---Accused were behind the bars for the last seven months; challan had been submitted by the prosecution; they were no more required for further investigation in the case---Co-accused, who according to the prosecution was the main accused had been granted bail---Accused, having made out a case for further inquiry, whereas no useful purpose would be served if accused were kept behind the bars, they were admitted to bail, in circumstances.
Ms. Dilkhurram Shaheen for Applicants (in Spl. Crl. Bail Applications Nos.52 and 53 of 2015).
Fiaz H. Shah for Applicants (in Spl. Crl. Bail Applications Nos. 54 and 55 of 2015).
S.Zafar Ali Shah for Applicants (in Spl. Crl. Bail Applications Nos. 61 and 62 of 2015).
S. Mukhtar Hussain for Applicants (in Spl. Crl. Bail Applications Nos. 64 and 65 of 2015).
Sameer Ghazanfar for Applicants (in Spl. Crl. Bail Applications Nos. 66 and 67 of 2015).
Aashique Ali Anwar Rana, Special Prosecutor for Customs along with I.Os. Adnan Ameen Malik and Najeebullah Jafri.
Muhammad Qasim, Standing Counsel.
Dates of hearing: 23rd September and 5th October, 2015.
2016 P T D 1913
[Sindh High Court]
Before Munib Akhtar and Zulfiqar Ahmad Khan, JJ
COLLECTOR OF CUSTOMS through Additional Collector of Customs
Versus
MUHAMMAD ZUBAIR GHEEWALA
Special Customs Reference Applications Nos.332 and 333 of 2012, decided on 7th March, 2016.
Customs Act (IV of 1969)---
----Ss.14, 14-A, 32(1), 79(1) & 196---Attempt to evade tax---Reference---Mis-declaration---Fraud---Dispute was with regard to declaration of goods made by importer and customs authorities alleged the same not to be a partial mis-declaration rather, a fraud---Validity---Penalties under taxing statutes were generally imposed with respect to attempts at evasion of taxes rather than the eventuality of evasion having taken place---Importer did all he could have possibly done in his ambit to willfully mislead customs authorities by mis-declaration, mis-description, undervaluation and concealment in order to avoid payment of legitimate duties---Importer was successful in having goods released and walking away quietly from the crime scene with the hope that his act would go undetected---High Court declined to give treatment prescribed under S. 79(1) of Customs Act, 1969, as the same was available to an honest and innocent importer and law had shown him door of S. 32(1) of Customs Act, 1969---Unless extenuating circumstances existed, decision of the officer merely on mercy and leniency grants without assigning any reason as if the discretion of imposing fine in lieu of confiscation was capricious, arbitrary, devoid of rules of reason or principles of natural justice or where condition precedent for such exercise was not fulfilled---Discretion exercised by the customs officer should not be interfered with---High Court decided questions in favour of customs authorities---Reference was allowed accordingly.
Pfizer Laboratories v. Federation of Pakistan and others PLD 1998 SC 64; Eastern Rice Syndicate v. Central Board of Revenue PLD 1959 SC Pak 364; Collector Customs v. Haji Ahmedullah and Co. PLD 2005 SC 461; Baba Khan v. Collector of Customs 2000 SCMR 678; Abu Bakar Siddique v. Collector Customs 2006 SCMR 705 and Rohtas Industries v. SD Agarwal AIR 1969 SC 707 ref.
Iqbal M. Khurram for Applicant.
Zia-ul-Hssan for Respondent.
Date of hearing: 1st December, 2015.
2016 P T D 2219
[Sindh High Court]
Before Sajjad Ali Shah, C.J. and Zulfiqar Ahmad Khan, J
MUHAMMAD ATHAR HAFEEZ KHAN
Versus
ISLAMIC REPUBLIC OF PAKISTAN through Secretary, Ministry of Finance and 3 others
C.P. No.D-5614 of 2014, decided on 13th June, 2016.
Customs Act (IV of 1969)---
----S.81---SRO 575(I)/2006, dated 5-6-2006---Customs duty---Exemption---Petitioner imported air conditioners and claimed exemption in import duty---Plea raised by petitioner was that air conditioners imported by him were covered under Solar Air Conditioning System as provided under the Notification SRO 575(I)/2006, dated 5-6-2006---Validity---Hybrid solar air conditioning system imported by petitioner did not pass the criteria posed at Sr.No.35(4) of the Solar Air Conditioning System as envisaged by Notification SRO 575 (I)/2006, dated 5-6-2006, which aimed dedicated (even if not fully dedicated) use of alternate energy for air conditioning systems wherein main reliance was not placed on the use of conventional electricity rather on alternate modes like solar---No intention existed to the effect that such air conditioning systems could not at all use electricity but not to the extent that electricity was so used by the present air conditioners where actual cooling was done by powering the compressors by electrical means and mere fractional power was provided by solar means and that too only when the sun was shining to its fullest---Petitioner failed to make any case that hybrid solar air conditioners imported by him could be given exemptions provided for in the Notification SRO 575 (I)/2006, dated 5-6-2006---Petition was dismissed in circumstances.
Mansoor-ul-Arfin for Petitioner.
Salahuddin Ahmed for Respondents.
Date of hearing: 17th May, 2016.
2016 P T D 2426
[Sindh High Court]
Before Muhammad Junaid Ghaffar and Muhammad Karim Khan Agha, JJ
COMMISSIONER (LEGAL DIVISION), KARACHI
Versus
ATLAS INVESTMENT BANK LIMITED, KARACHI and others
I.T.R.As. Nos. 227, 531 of 2006, 564 of 2009, decided on 23rd February, 2016.
(a) Words and phrases---
----Otherwise---Meaning.
Case-law referred.
(b) Income Tax Ordinance (XLIX of 2001)---
----Ss. 2(7) & 133---Banking Companies Ordinance (LVII of 1962), S.5(b) & (c)---Notification SRO No. 585(I)/86 dated 13-07-1987---Reference---"Banking Company" and "Investment Bank"---Distinguished---Income Tax Appellate Tribunal did not hold assessee company as Banking company for income tax purpose and made it liable to be taxed as public company---Validity---In order to qualify as a Banking company, it had to carry out business of Banking and must perform at least all of the four functions which were primary functions when operation of banking companies were taken as a whole as opposed to any ancillary function (i) accepting of deposits of money from public; (ii) accepting must be for purpose of lending and investment; (iii) such deposits must be repayable on demand or otherwise, for example, within a grace period; and (iv) such deposits must be withdrawable by public by cheque, draft, order or otherwise e.g. by cash---Investment Bank did not in essence perform all core functions so as to bring its activities within core definition of business of "banking"---Main function of an investment Bank was acquisition of shares and later, sale of such shares in order to make profits for large organizations as opposed to the public---Assessee was not a Banking company for purposes of Income Tax Ordinance (XXXI of 1979) and Income Tax Ordinance (XLIX of 2001) as it was unlikely that it carried out all four core functions of a Bank to bring it within ambit of carrying out business of banking as defined in S.5(b)(c) of Banking Companies Ordinance, 1962---Assessee was not registered as a Banking company as required by S.27 of Banking Companies Ordinance, 1962 to enable it to carry out business of banking and had been licensed and registered under Notification SRO No. 585(1)/86 dated 13-07-1987 to carry out objects which specifically had excluded business of banking---Assessee company was an investment finance company as opposed to a banking company and was to be taxed accordingly as per law---Reference was dismissed in circumstances.
Case-law referred.
(c) Words and phrases---
----"Bank"---Defined.
Case-law referred.
(d) Words and phrases---
----"Investment bank"---Defined.
Case-law referred.
Javed Farooqui for Appellant.
Dr. Ikram ul Haq for Respondent.
Date of hearing: 12th January, 2016.
2016 P T D 2532
[Sindh High Court]
Before Irfan Saadat Khan and Zafar Ahmed Rajput, JJ
HAMDARD LABORATORIES (WAQF)
Versus
FEDERATION OF PAKISTAN through Secretary, Ministry of Finance, Islamabad and 2 others
Constitutional Petition No. D-419 of 1986, decided on 12th February, 2016.
Sales Tax Act (III of 1951)---
----S. 3(4)---Central Excise Rules, 1944, Rr. 10, 210 & 226---Sindh Pure Food Ordinance (VII of 1960), S. 2(9)---Sindh Pure Food Rules, 1965, Item No. 50---Honey food having medicinal qualities---Department issued show cause notice to the petitioner for payment of sales tax for selling honey packed in tubes to medical stores---Petitioner denied said demand contending that honey being natural product/medicine was not subject to levy of any sales tax and excise duty---Validity---Use of any food item for medicinal purposes would not make the same a medicine---Honey although possessed medicinal qualities which had miraculous effect on human body, but the same could not be considered to be medicine---Any product or substance had to be seen and examined in its entirety rather than discussing proprieties of the same in small sphere---Honey had to be seen in broader spectrum and not in limited manner, since honey had medicinal effect on some diseases hence the same was to be considered as medicine---Under S. 2(9), Explanation of Sindh Pure Food Ordinance, 1960, an article would not cease to be a food by reason only that the same was also capable of being used as medicine---For proving something as medicine or drug, the product had to pass through various tests as provided under the drug laws and the same had to be registered under the same law---Under Sindh Pure Food Rules, 1965, honey had been categorized as item No. 50 as a sweeting agent, which meant that honey had been recognized as food item---Primary use of honey was food and not medicine---Petitioner himself had never considered honey as drug; as honey neither had found mention in his list of Unani medicine nor had the same been registered as drug before the drug authorities---Material relied upon by the petitioner had also regarded honey as food having antibacterial and other medicinal properties---Honey, being food, was, therefore, not exempt from levy of sales tax and central excise duty---Constitutional petition was dismissed in circumstances.
Sultan Ahmad Bari v. Collector of Central Excise and Land Customs Karachi and others 1983 CLC 1538 ref.
Monawwar Ghani for Petitioner.
Muhammad Aslam Butt, D.A.G. for Respondent No.1.
Shakeel Ahmed for Respondents Nos.2 and 3.
2016 P T D 2555
[Sindh High Court]
Before Salahuddin Panhwar, J
The DEPUTY DIRECTOR, DIRECTORATE OF INTELLIGENCE AND INVESTIGATION-IR
Versus
SAJID HUSSAIN
Spl. Cr. Misc. Application No. 283 of 2014, decided on 10th March, 2016.
(a) Sales Tax Act (VII of 1990)---
----S. 33 (3), (5), (8) (11c) (13) (16) (18)---Criminal Procedure Code (V of 1898), S. 497---Issuance of fake/bogus sale tax invoice---Bail, recalling of---Alleged offence was against the society as a whole---Discretion of bail in favour of accused should not be exercised in white collar crimes---Non falling of offence within prohibitory clause of S. 497(1), Cr.P.C. would become immaterial in such like cases---Accused had caused loss of hundreds of million of rupees to government exchequer---Accused was bound to show that he had no link with the offence even if material collected by the prosecution was tentatively taken as correct---Accused was involved in issuing fake/bogus sale tax invoices---One should not be entitled for an exception to an illegal act merely for reason that he had acted on instructions of others---Sufficient material was available to believe that accused was involved with the commission of offence with which he was charged---Accused was not entitled for grant of bail in circumstances---Impugned order passed by the Special Court was set aside and bail granting order was recalled---Accused was directed to surrender before the Trial Court which should conclude the trial within a period of three months.
1971 SCMR 637; 1976 PCr.LJ 324; 1990 PCr.LJ 340 and 2012 PCr.LJ 1722 ref.
Nasir Khan v. Waseel Gul and another 2011 SCMR 710; Imtiaz Ahmed v. State PLD 1997 SC 545; Nisar Ahmed v. State and others 2014 SCMR 27; Muhammad Ismail v. Muhammad Rafique PLD 1989 SC 585 and Muhammad Yousuf v. PC Abdul Lateef Shar 2012 SCMR 1945 rel.
(b) Criminal Procedure Code (V of 1898)---
----S. 497---'Further inquiry---Connotation.
Syed Mohsin Imam Rizvi for Applicant.
Arshad Lodhi for Respondent.
2016 P T D 2585
[Sindh High Court]
Before Munib Akhtar and Sadiq Hussain Bhatti, JJ
Messrs INSAF COTTON GINNING AND PRESSING FACTORY AND OIL MILLS, MIRPURKHAS ROAD, SANGHAR
Versus
FEDERATION OF PAKISTAN through Secretary Revenue Division and Ex-Officio Chairman and 2 others
Constitutional Petition No. D-8001 of 2015, decided on 15th June, 2016.
Sales Tax Act (VII of 1990)---
----Ss. 3, 7, 13 & Sixth Sched. entry 81--- Sales Tax Special Procedure Rules, 2007, Rr. 58X & 58Y(1), (3)---Notification S.R.O. 188(I)/2015, dated 5-3-2015---In-house use---Exemptions---Role of Federal Government---Petitioners were running cotton ginning units and they used cottonseeds in their in-house operations---Petitioners were aggrieved of Notification S.R.O. 188(I)/2015, dated 5-3-2015 and challenged vires of the notification---Plea raised by authorities was that petitioners had entered into agreement through their Association to act as withholding/collecting agent regarding sales tax---Validity---Federal Government could regulate the manner in which exemption granted was to be availed and it was only to the extent and for the purpose that conditions could be imposed by Federal Government---Power of Federal Government in terms of S. 13(1) of Sales Tax Act, 1990, was strictly limited and it could not trespass on the area that legislature had reserved for itself---When cotton ginning units made a supply of cottonseed as contemplated by Chapter XV of Sales Tax Special Procedure Rules, 2007, they were not acting as "withholding/collecting agents" rather they had primary legal liability to pay sales tax in respect of such supply which was equally applicable to in-house use of cottonseeds by composite units---Such use had to be a "supply" within the meaning of Sales Tax Act, 1990---Undertaking or agreement through the Association and reliance placed thereon by authorities was misconceived and the same could not lend any support to them---High Court declared Chapter XV of Sales Tax Special Procedure Rules, 2007, as inserted by notification S.R.O. 188(I)/2015, dated 5-3-2015 ultra vires Sales Tax Act, 1990, and without any legal consequence or effect wheatsoever---High Court further declared that sales tax collected or paid on the supply of cottonseed was unlawfully demanded/claimed, as being contrary to entry No.81 of Sixth Schedule to Sales Tax Act, 1990---High Court restrained authorities from making any claim or demand for payment of sales tax in terms of Chapter XV of Sales Tax Special Procedure Rules, 2007, or from enforcement of any of the provisions of the said Chapter and any proceedings pending or initiated in such regard or any order made were quashed and set aside---High Court declared that petitioners were entitled to refund of any sales tax paid in terms of Chapter XV of Sales Tax Special Procedure Rules, 2007---Petition was allowed accordingly.
M. Faheem Bhayo for Petitioner.
Jawaid Farooqi and Mohsin Imam along with Wali Muhammad Shaikh, Additional Commissioner, Inland Revenue, RTO, Hyderabad for Respondents.
2016 P T D 2625
[Sindh High Court]
Before Irfan Saadat Khan and Zafar Ahmed Rajput, JJ
SEEDAT CHAMBERS through Abdul Cadir Adam Seedat
Versus
WEALTH TAX OFFICER and 3 others
Constitutional Petition No. D-1779 of 1999, decided on 12th May, 2016.
Wealth Tax Act (XV of 1963)---
----Ss. 2(e)(ii), 2(3), 3, 10(5), 23 & 45A---Wealth Tax Rules, 1963, R. 8(3)---Limitation Act (IX of 1908), S. 14---Constitution of Pakistan, Fourth Sched. Entry 50---Presumption as to validity of law---Burden of Proof--- Association of persons--- Scope--- 'Assessee'---Meaning and scope---Double taxation--- Method of assessment, vires of---Remedy/Forum---Jurisdiction of Assistant Commissioner Wealth Tax---Mistakes made in assessment order---Effect---Exclusion of time of proceeding bona fide in Court without jurisdiction---Petitioner challenged the vires of the entire assessment proceedings, the demand notices issued subsequent thereto as well as constitutionality of S. 2(e)(ii) of Wealth Act, 1963 and R. 8(3) of Wealth Tax Rules, 1963---Petitioner's case revolved around some legal aspects as well as factual aspects---Wealth Tax was a Federal Tax and presumption was in favour of the validity of the Legislation and the burden of proof that the same was invalid was on the person who alleged that---Objection, that the department was not justified in assessing the "Association of Persons" (AoP), which amounted to double taxation since respective shares of the wealth had been assessed in the individual hands, was not available to the assessee, since for the tax purposes AoP was always considered to be a separate and distinct entity from the wealth of individual persons---Under S. 2 (3) of the Act, term 'assessee' meant to be a person by whom any tax or any other sum of money was payable under the Act---Under S. 3 of the Act, subject to the other provisions contained in the Act, there would be charged for every financial year commencing on and from the first day of July, a tax in respect of the net wealth or assets on the corresponding valuation date of every individual, Hindu undivided family, firm, association of persons or body of individuals, whether incorporated or not, at the rate or rates specified in the Schedule---Deputy Commissioner/Assessing Authority was empowered to evaluate the land/building on the basis of its letting value---Assessee's objection as to method of assessment was the subject matter of appeal---Section 23 of Wealth Tax Act, 1963 stipulated that if any person was aggrieved against the assessment, the remedy lay with the Appellate Additional Commissioner/Commissioner of Income Tax (Appeals)---Issues with regard to non-ticking of the notice, availability of the refund of previous years, certain rectification matters pending, non-service of the notice on the Principle Officer and other related issued could only be decided in an appeal and not in a constitutional petition, since those issues required factual determination as well as dealt with method of assessment---Assessee, therefore, should have availed the remedy of appeal rather than approaching the High Court under Art. 199 of the Constitution---Assessee, in terms of S. 10 (5) of the Act, after filing the return, was refrained from raising the objection with regard to assumption of jurisdiction that the jurisdiction of the case did not lie with the Assistant Commissioner Wealth Tax, who had passed the impugned orders---Under S. 45-A of the Act, certain mistakes made by the Assistant Commissioner Wealth Tax while passing the assessment order would not vitiate the assessment proceedings---Contention of assessee was that instead of filing an appeal against the impugned assessment orders, he had filed constitutional petition, hence, in case of remand, the issue of limitation would come in the way---Time limit for filing of appeal was 30 days from the date of receipt of the impugned orders; whereas, the petitioner, instead of filing appeal, had filed the constitutional petition within the limitation period---High Court directed the assessee to prefer an appeal against the assessment orders along with an application under S. 14 of Limitation Act, 1908 and directed the Appellate Authority to consider said application sympathetically if appeals were filed---Constitutional petition was disposed of accordingly.
Case-law referred.
Dr. Farogh Naseem for Petitioner.
Javed Farooqi for Respondents.
2016 P T D 2648
[Sindh High Court]
Before Ahmed Ali M. Shaikh and Mohammed Karim Khan Agha, JJ
ALI SHAN
Versus
DIRECTORATE OF INTELLIGENCE AND INVESTIGATION (IRS) KARACHI
Criminal Bail Application No. 28 of 2016, decided on 19th May, 2016.
Sales Tax Act (VII of 1990)---
----Ss. 2(37), 3, 6, 7, 8, 10, 22, 23, 26, 33(11), 33(13) & 73---Criminal Procedure Code (V of 1898), S. 497---Tax fraud---Bail, grant of---Principles---Allegation of fake invoices---Offence falling under crime against society---Scope---Special Court (Customs and Taxation) dismissed the bail application---Sufficient material was available on the record to connect the accused to the offense---Under Ss. 33(11) & 33(13) of Sales Tax Act, 1990, maximum punishment provided was 3 and 5 years respectively, thus, even if the accused was convicted and punished under both of those sections and the sentences were ordered to run consecutively, the maximum of the combined sentence would be 8 years, as such the offences fell within the non-prohibitory clause of S. 497, Cr.P.C.---In non-bailable offences where punishment provided for the offence, was less than ten years, grant of bail was a rule and refusal an exception, and bail would be declined in extraordinary and exceptional cases---Offence in the present case being bailable, accused was prima facie entitled to bail as of right, provided his case did not fall within one of the exceptions mentioned in Supreme Court judgment in Tariq Bashir v. The State PLD 1985 SC 34---Exceptions as laid down in Tariq Bashir's Case were not exhaustive as indicated by use of the words 'for example', and as such there might be other extraordinary and exceptional cases, which would justify refusal of bail for offence which was otherwise bailable---System of governance as per the Constitution in Pakistan, which envisaged a trichotomy of powers, the Court was not to make appropriate sentence for particular offence, which role lay within the domain of the Legislature and not that of Judiciary whose role was to interpret the law---High Court observed that in Pakistan, few people, proprietorship, partnerships or companies paid tax, and the emphasis was either on tax avoidance (legal) or mainly tax evasion (illegal) by simply not paying tax---Deciding the question whether a fiscal crime was a crime against the society, the law must also have been practical, workable and most importantly enforceable---Environment/circumstances of Pakistan had made uplifted tax fraud to a crime against society---Primary objective of Sales Tax Act, 1990, when read as a whole, was one of recovery rather than being of penal nature---Apparent loss to the Government revenue had already been paid up---Contention that the consignments had actually been exported and therefore, the exporter was entitled to refund of sales tax paid, while purchasing the goods from local market could not have been controverted in precise terms for the reason that the final challan had not yet been submitted---Entire case depended upon the documentary evidence, which was already in possession of the prosecution---Commencement of the trial was not yet in sight---Prime question as to whether invoices were fake or not was yet to be determined at the trial---Offence in present case was although of serious nature, but the same could not have been upgraded to an offence to a crime against society---All white collar crimes were not crimes against society and likewise all crimes against society were not white collar crimes---Each crime must have been judged on its own particular facts and circumstances and existing background to determine its effect on society and whether the same qualified as a crime against society---Practicality, workability and enforceability of making certain fiscal crimes as crimes against society must also be considered in the light of the current environment in its relation to tax payment in Pakistan---Assessment order had not yet become final---Accused had been behind the bars for 6 months---Maximum sentence for the offence was 5 years---Accused was first offender and had not indulged in similar acts in the past---Bail application was allowed accordingly.
Syed Amir Ahmed Hashmi v. The State PLD 2004 Kar. 617; Abdul Wahid Bandkukda and others v. The State 2008 YLR 767; Akhtar Zaman Khan v. The State 2010 YLR 804; Arshad Farooq Siddiqui v. The State 2006 YLR 39; The State v. Muhammad Ashfaq Ahmed and others 2006 PTD 286; Khawaja Shabaz Ahmed v. Deputy Director, Directorate General of Intelligence and Investigation, Range Office Gujranwala 2012 PCr.LJ 1378; Messrs G.M.H. Traders and Manufactures v. Deputy Director/Investigation Officer, Directorate of Intelligence/Investigation, Lahore 2009 PTD 1894; Ashraf Steel Mills v. Director Intelligence and others 2014 PTD 1506 and Zaigham Ashraf v. The State 2016 SCMR 18 ref.
Tariq Bashir and others v. The State PLD 1995 SC 34; Zaheer Hussain v. The State PLD 2006 Kar 397; Rizwan Latif v. The State Lhr dated 17th March, 2008 unreported; Chaudari Shabbir Hussain v. The State 2014 MLD 384; Arshad Ali Khan v. The State Kar. dated 25th May, 2015 unreported; Owais v. The State Kar. dated 7th. November, 2015 unreported; Imtiaz Ahmed v. The State PLD 1997 SC 545; Muhammad Siddique v. Imtiaz Begum 2002 SCMR 442; Shameel Ahmed v. State 2009 SCMR 174; Mian Arif Hussain v. State 2011 PCr.LJ 1944; Ameen Saquib v. State 2012 PCr.LJ 577; Mian Tariq Aziz v. State 2015 PCr.LJ 1066 and Syed Amir Hashmi v. The State PLD 2004 Kar. 617 rel.
Zia-ul-Haq Makhdoom for Applicant.
Syed Mohsin Imam for Respondent.
2016 P T D 2664
[Sindh High Court]
Before Muhammad Junaid Ghaffar, J
PAKISTAN PETROLEUM LIMITED through Authorized Officer
Versus
PAKISTAN through Secretary Finance and 4 others
Suit No. 1224 of 2016, decided on 12th August, 2016.
(a) Interpretation of statutes---
----Casus Omissus, principle of--- Applicability--- Courts while interpreting a provision of statute are not required to read into something which is not there---Principle of Casus Omissus is applicable when a matter which should have been but has not been provided for in a statute---Such matter cannot be supplied by Court, as to do so is legislation and not construction.
Hansraj Gupta v. Dehra Dun Mussoorie Electric Tramway Co. Ltd. AIR 1933 PC 63; Nadeem Ahmed Advocate v. Federation of Pakistan 2013 SCMR 1062 and Collector of Customs (Appraisement) v. Abdul Majeed Khan and others 1977 SCMR 371 rel.
(b) Income Tax Ordinance (XLIX of 2001)---
----S. 177---Selection of case for audit---Objections---Case of taxpayer was selected for audit but Commissioner did not pass any speaking order on the objections filed by taxpayer against the notice---Validity---Notice in question was a valid notice as contemplated under S. 177 of Income Tax Ordinance, 2001---Notice provided sufficient reasoning for selecting case of plaintiff for audit purposes---Law did not provide that upon taxpayer's objections to such notice, Commissioner was required to pass any justiciable speaking order in support of his reasoning nor any further judicial review of the same was mandated either within the hierarchy of Income Tax department or before a competent Court of law---Subsequent notices and proceedings pursuant to the first notice were also valid and justified---Taxpayer was at liberty to contest its case before departmental hierarchy in accordance with law--- Suit was dismissed in circumstances.
Pakistan Telecommunication Company Ltd. v. Federation of Pakistan 2016 PTD 1484; Messrs Pfizer Pakistan Ltd. v. Deputy Commissioner and others 2016 PTD 1429; Messrs K.G. Traders and another v. Deputy Collector of Customs and 4 others PLD 1997 Kar. 541; Messrs Kohinoor Sugar Mills v. Federation of Pakistan (LHC Writ Petition No. 4691 of 2010); Messrs Castrol Pakistan (Pvt.) Ltd. v. Additional Commissioner Inland Revenue and others (C.P.No. D-23/ 2015); Sanofi Aventis Pakistan Limited v. Commissioner Inland Revenue and others (C.P. No. D-2911/2012); Messrs Pakistan Petroleum Limited v. Additional Commissioner Inland Revenue and others (C.P. No. D-1821/2015); Messrs Amin Textile Mills (Pvt.) Ltd. v. Commissioner of Income Tax and 2 others 2000 SCMR 201; Marghub Siddiqui v. Hamid Ahmad Khan and 2 others 1974 SCMR 519; Managing Director SNGPL v. Neelab CNG Filling Station PLD 2014 Pesh. 218 and Mian Akbar Hussain v. Mst. Aisha Bai PLD 1991 SC 985 rel.
Hyder Ali Khan for Plaintiff.
Muhammad Sarfaraz Ali Metlo assisted by Dr. Muhammad Ali Khan, Commissioner Inland Revenue, Zone III, LTU, Karachi for Defendants.
2016 P T D 2679
[Sindh High Court]
Before Aqeel Ahmed Abbasi and Syed Saeeduddin Nasir, JJ
CHINA HARBOUR ENGINEERING COMPANY LTD. through Authorized Officer
Versus
FEDERATION OF PAKISTAN through Secretary, Ministry of Finance and Economic Affairs and 2 others
Constitutional Petition No. D-778 of 2015, decided on 18th March, 2015.
Income Tax Ordinance (XLIX of 2001)---
----Ss. 152, 153, 122A & 122B---Payments to non-residents---Exemption from withholding of tax provided in Ss. 152 & 153 of the Income Tax Ordinance, 2001---Petitioner/taxpayer impugned withdrawal of exemption from withholding of tax granted to it by the Department in terms of Ss. 152 & 153 of the Income Tax Ordinance, 2001---Validity---High Court disposed of the Constitutional petition with consent of parties, by directing the petitioner to seek remedy as may be available by filing of revision under S. 122A or S. 122B of the Income Tax Ordinance, 2001 before the Commissioner within ten days whereafter the Commissioner was directed to pass a speaking order after providing opportunity of hearing to the petitioner---High Court further held that the petitioner was at liberty to approach the concerned Commissioner for seeking exemption under S. 153(4) of the Income Tax Ordinance, 2001 upon which the Commissioner was to pass a speaking order after providing an opportunity of hearing to the petitioner---High Court also directed the Department not to draw any adverse inference against the petitioner till disposal of said revision to be filed by the petitioner or claim of exemption to be filed by the petitioner---Constitutional petition was disposed of, accordingly.
Malik Naeem Iqbal for Petitioner.
S. Irshad-ur-Rehman for Respondent.
Azizullah Buriro, DAG.
2016 P T D 2734
[Sindh High Court]
Before Munib Akhtar and Zulfiqar Ahmad Khan, JJ
DATA STEEL PIPE INDUSTRIES (PVT.) LTD.
Versus
LARGE TAXPAYER UNIT (L.T.U.) through Chief Commissioner Inland Revenue
Special Customs Reference Application No.283 of 2011, decided on 7th March, 2016.
Customs Act (IV of 1969)---
----Ss.19, 20 & 196---S.R.O. No.601(I)/83 dated 11-6-1983---S.R.O. No.434(I)/2001 dated 16-6-2001---Reference---Exemption from customs duty---Explanatory note---Federal Board of Revenue---Jurisdiction---Dispute was with regard to denial of concessions provided to importers in customs duty, on the basis of explanatory notes/interpretation made by Federal Board of Revenue regarding Exemption Notifications---Validity---Merely for the reasons that an importer was provided a relief or concession under one regime could not make him non-suited for another---Importer was eligible and could validly take benefit of special exemptions notwithstanding that it was also eligible for a concessionary treatment under different notifications---Federal Board of Revenue had no legal standing to add explanatory notes or to plainly interpret exemption notifications once those were issued and rights of parties had been created from the general reading of the notifications---Reference was allowed in circumstances.
Government of Pakistan v. Saif Textile Mills 2003 PTD 355; Central Insurance Co. v. Central Board of Revenue 1993 SCMR 1232 and Ravi Spinning Ltd. v. Collector of Customs 1999 PTD 1078 rel.
Khaild Jawed Khan for Applicant.
Amjad Jawaid Hashmi for Respondent.
2016 P T D 2748
[Sindh High Court]
Before Aqeel Ahmed Abbasi and Abdul Maalik Gaddi, JJ
ADDITIONAL COLLECTOR OF CUSTOMS
Versus
MUHAMMAD HUSSAIN
Special Customs Reference Applications Nos.135 and 136 of 2011, decided on 15th August, 2016.
Customs Act (IV of 1969)---
----Ss. 194-A(3) & 196---Baggage Rules, 2006, R. 17---Notification No.S.R.O.499(I)/2009, dated 13-6-2009---Reference---Commercial import---Fine and penalty, remission of---Violation of Baggage Rules, 2006---Appellate Tribunal remitted in full imposition of fine and penalty on commercial imports made by importer in violation of Baggage Rules, 2006---Validity---Consignment imported under Baggage Rules, 2006, in commercial quantity was liable to be released on payment of duty and taxes on payment of fine at rate of 20% in terms of Notification No.S.R.O. 499(I)/2009, dated 13-6-2009, whereas in absence of mens rea imposition of penalty was not justified---Importer was liable to make payment of duty and tax and redemption fine at the rate of 20% in terms of Notification No.S.R.O. 499(I)/2009, dated 13-6-2009, whereas remitting the entire fine and penalty by Appellate Tribunal was contrary to legal position emerged in such matters---Reference was disposed of accordingly.
Ghulam Haider Sheikh for Appellant.
2016 P T D 2760
[Sindh High Court]
Before Irfan Saadat Khan and Zafar Ahmed Rajput, JJ
RAY SHIPPING ENTERPRISE LTD.
Versus
ASSISTANT COLLECTOR OF CUSTOMS and others
C.P. No.D-979 of 1995, decided on 19th April, 2016.
Customs Act (IV of 1969)---
----Ss.19(3) & 82---Notification S.R.O. No.487(I)/94, dated 9-6-1994---Recovery of customs duty---Doctrine of "promissory estoppel"---Applicability---Notice for recovery of customs duty was given to petitioner company who imported ships but subsequently, the same was broken-up---Validity---Concession was subject to condition that if ship was subsequently to be broken by importer, concession/exemption would stand withdrawn and person importing ship would be liable to pay duties and taxes at the rate as applicable at the time at which ship in question was imported---Petitioner did not have any vested right created in its favour and principle of promissory estoppel was also not available to petitioner in view of S. 19(3) of Customs Act, 1969 which provided that "no benefit/vested right/exemption could be claimed by a person "on basis of doctrine of promissory estoppel"---Concession granted by government functionaries ceased to take effect as imported ship was subsequently broken-up---Provisions of Notification S.R.O. No.487(1)/94 was squarely applicable to petitioner who was liable to pay due duties and taxes---Constitutional petition was dismissed accordingly.
Messrs Gadoon Textile Mills and 814 others v. WAPDA and others 1997 SCMR 641; Collector of Central Excise and Land Customs and 3 others v. Azizuddin Industries Ltd., Chittagong PLD 1970 SC 439; Raja Industries (Pvt.) Ltd. through General Manager v. Central Board of Revenue, Government of Pakistan, Islamabad through Chairman and 4 others 1996 MLD 980; Messrs M. Afzal and Sons and 2 others v. Federal Government of Pakistan, Islamabad through Secretary, Finance and another PLD 1978 Lah. 468 distinguished.
Muhammad Afzal Siddiqui and Rana Ikramullah for Petitioner No.1.
Nemo for Petitioner No.2.
Kashif Nazeer for Respondents Nos. 1, 2, 6 and 7.
Captain Rashid Anwer, Chief Nautical Survey Officer along with Fazal Abbas Dealing Assistant for Respondent No.3.
Asim Mansoor Khan, Deputy Attorney General for Respondents Nos.4 and 5.
2016 P T D 2831
[Sindh High Court]
Before Aqeel Ahmed Abbasi and Abdul Malik Gaddi, JJ
MOTIWALA SECURITIES (PVT.) LTD. through Chief Executive/MD
Versus
COMMISSIONER INLAND REVENUE
I.T.R.A. No.209 of 2012, decided on 8th August, 2016.
Income Tax Ordinance (XLIX of 2001)---
----Ss.168, 170, 233-A(1)(c) & 133---Reference---Refund, issuance of---Applicant was a stock broker who claimed to be entitled for issuance of refund collected by Stock Exchange---Validity---Amount of tax collected and withheld relating to customer/client of applicant was the liability of such taxpayer and not the liability of applicant---Mere fact that amount of tax was collected or withheld by Stock Exchange on the entire transaction made by applicant would not in any manner change the scope of liability or chargeability of tax---Applicant was not required to make payment of such refund of tax to its customers under any agreement between the two---Income Tax Ordinance, 2001, was a special law and a separate piece of legislation which had catered to chargeability of income and collection of tax liability of a taxpayer---Any agreement or accounting procedure, if any, adopted by applicant company, could not circumvent legal course as provided under Income Tax Ordinance, 2001---High Court declined to interfere in the orders passed by authorities below as well as the order of Appellate Tribunal, which depicted correct legal position---Circular issued by Federal Board of Revenue in such regard did not suffer from any illegality, though it could have binding effect in quasi- judicial proceedings or upon High Court while deciding a legal question---High Court decided the question in negative---Reference was dismissed in circumstances.
Aminuddin Ansari for Applicant.
2016 P T D 2866
[Sindh High Court]
Before Irfan Saadat Khan and Zafar Ahmed Rajput, JJ
Messrs SHOGAN INTERNATIONAL (PVT.) LTD.
Versus
CENTRAL BOARD OF REVENUE through Chairman and 3 others
C.P. No.D-2368 of 1993, decided on 13th April, 2016.
Customs Act (IV of 1969)---
----S. 25(5)(b)---Method of assessment---Notes/recommendations---Guidelines---Petitioner was exporter of goods to foreign countries and its grievance was about calculation of export value assessed by authorities on the basis of notes and recommendations instead of under S. 25(5)(b) of Customs Act, 1969---Validity---Provisions of law and not notes or recommendations, if any should be adhered to---Such notes or recommendations could only be considered as guidelines, where no proper method of valuation/assessment was available before customs officials---When basis of valuation or assessment was provided, such provisions of law had to be complied with in letter and spirit---Authorities were swayed away U.O. Note and they ignored provisions of S. 25 of Customs Act, 1969 while making valuation/assessment which could not be done---Customs authorities had to make assessment/ valuation on the basis of provisions of S. 25 of Customs Act, 1969, which was missing---High Court directed customs authorities to make a fresh assessment/valuation of exported goods as per provisions of S.25 of Customs Act, 1969 as the same was prevalent at the time of assessment/valuation and the same should be based on cogent reasons after giving proper opportunity of hearing to petitioner---Constitutional petition was allowed in circumstances.
Phassco Harware Co. v. The Government of Pakistan and 3 others PLD 1989 Kar. 621; Messrs Abdul Aziz Ayoob v. Assistant Collector of Customs and 3 others PLD 1990 Kar. 378; Collector of Customs (Valuation) and another v. Karachi Bulk Storage and Terminal Ltd. 2007 SCMR 1357; Khalid Mehmood v. Collector of Customs, Customs House, Lahore 1999 SCMR 1881; Securities and Exchange Commission of Pakistan v. Mian Nisar Elahi and others 2009 SCMR 1392; Mst. Kaniz Fatima through Legal Heirs v. Muhammad Salim and 27 others 2001 SCMR 1493; Messrs Al Amna International through Proprietor and others v. Federation of Pakistan through Secretary Chairman, Federal Board of Revenue and others 2014 PTD 370; Messrs Associated Industries Ltd. v. Federation of Pakistan and 2 others 2014 PTCL CL. 455; Rehan Umar v. Collector of Customs Karachi and others 2006 PTD 909 and Muhammad Amin Muhammad Bashir Ltd. v. Government of Pakistan and others 2015 SCMR 630 ref.
Imad-ul-Hassan for Petitioners.
Ghulam Haider Shaikh and Asim Mansoor Khan, Deputy Attorney General for Pakistan (DAG) for Respondents.
2016 P T D 2881
[Sindh High Court]
Before Aqeel Ahmed Abbasi and Muhammad Junaid Ghaffar, JJ
The STATE/ANTI NARCOTICS FORCE
Versus
MUSHTAQ AHMED MALIK and another
C.P. No.D-4486 of 2013, decided on 19th February, 2015.
Customs Act (IV of 1969)---
----S.156(1)(8)---Prevention of Smuggling Act (XII of 1977), Ss. 31, 32, 40, 43 & 46---Smuggling---Freezing property, allegedly acquired through illegitimate earning of smuggling---Department alleged that a Bangalow was traced out in the name of wife of respondent who was involved in smuggling of narcotics---Petitioner department had asserted that since the wife of respondent had no source of income, said Bangalow was apparently purchased from illegal earning of her husband---Petitioner department approached Special Judge (Anti-Smuggling) by filing information under S.31 of the Prevention of Smuggling Act, 1977---Notice was issued to the respondent and his wife---Wife of respondent claimed that Bangalow in question was purchased by her through registered Sale Deed---Special Judge, vide impugned order, ordered withdrawal of the notice and ordered to de-freeze the property---Department, did not file any appeal against impugned order of de-freezing of Bangalow, and after a lapse of about three years, filed application for ratification of impugned order, which application was finally dismissed---Validity---Department had not been vigilant enough to pursue its case; as no appeal was filed against the impugned order, whereby Bangalow was ordered to be de-freezed---Department after lapse of about three years filed application for rectification or recalling of impugned order which appeared to be an attempt to give a past and closed transaction a new life; and after dismissal of rectification application, filed acquittal appeal, which was also dismissed by Special Appellate Court---Once Department had chosen, not to file any appeal against Appellate Order, the matter, had attained finality---Respondent had been dragged in unnecessary litigation for such a long period of time, without any plausible justification on the part of Department---Department had not been able to point out any error or illegality in impugned orders, which could require any interference by High Court in its constitutional jurisdiction, which was discretionary in nature---Even otherwise, Bangalow in question was purchased by respondent much prior to the information filed under S.31 of Prevention of Smuggling Act, 1977---Order, whereby Bangalow in question, was ordered to be de-freezed, was passed by courts below after recording evidence---Said well reasoned order, could not be interfered with in constitutional petition, where no misreading, illegality or error had been pointed out.
Asghar Ali and another v. The State 1999 SCMR 654 rel.
Shafiq Ahmed Special Prosecutor and Samiullah Baloch A.D. ANF for Petitioner.
Pervaiz Mustafa for Respondent.
2016 P T D 2902
[Sindh High Court]
Before Aqeel Ahmed Abbasi and Abdul Maalik Gaddi, JJ
COLLECTOR OF CUSTOMS
Versus
Messrs BASHIR SONS
Special Customs Reference Application No.1232 of 2015, decided on 19th August, 2016.
Customs Act (IV of 1969)---
----Ss.32(1)(2), 79(1), 80 & 196---Reference---Factual controversy---Concurrent findings of facts by two forums below---Mis-declaration---Physical description---Authorities were aggrieved of concurrent findings of facts made by Collector (Appeals) and Customs Appellate Tribunal with regard to PCT classification of consignment in question---Validity---Questions proposed by authorities were questions of fact and did not give rise to any legal question arising from order passed by Customs Appellate Tribunal---Concurrent findings of fact were recorded by both appellate forums relating to classification of HS Code, which otherwise referred to a factual controversy and only in exceptional cases could give rise to legal controversy---Factual disputes could not be ascertained by High Court while exercising Reference jurisdiction under S. 196 of Customs Act, 1969---Reference was dismissed in circumstances.
2016 P T D 2910
[Sindh High Court]
Before Muhammad Junaid Ghaffar, J
MUHAMMAD AMER SAEED and 7 others
Versus
MODEL CUSTOMS COLLECTORATE OF CUSTOMS (EAST) and 7 others
Suit No.1542 of 2016, decided on 4th July, 2016.
Customs Act (IV of 1969)---
----Ss. 25-A & 218---Customs General Order, 12 of 2002, dated 15-6-2002, para 2---Customs General Order (2014-2015), para 2---Import Policy Order, 2013, Appendix-G---Civil Procedure Code (V of 1908), O.XXXIX, Rr. 1 & 2---Suit for declaration and injunction---Interim injunction, grant of---Valuation Ruling---Retrospective effect---Grievance of importer was that authorities declined import of polished granite slabs from India on the plea of change in valuation ruling---Validity---Goods in question had been released and assessed by authorities under HS Code 6802.2300 and for such purposes initially Valuation Ruling was issued in year 2011---Subsequently another Ruling bearing No.667 of 2014 was issued which specifically notified the goods in question being imported from India under HS Code 6802.2300---Long standing departmental practice being followed could not be deviated in an abrupt manner especially in respect of goods which had already been imported and by virtue of any such change in departmental practice would remain no longer importable---Plaintiffs had been importing goods in question since long and same were assessed under a Valuing Ruling issued under S. 25-A, Customs Act, 1969, nor their importability was in dispute prior to issuance of Assessment Alert, as those were being assessed and released under HS Code 6802.2300, which was not mentioned in the negative list notified through Appendix-G of Import Policy Order, 2013---Even if new HS Code was to be determined, the same could only be applied prospectively and not retrospectively---High Court directed the authorities to immediately release consignments in question under previously applied HS Code 6802.23000, as no public notice was issued as required in terms of para 2 of Customs General Order(2014-2015 Edition), whereby procedure and methodology for Ruling issued by Classification Center were notified in Federal Board of Revenue---High Court restrained the authorities from proceeding further for adjudication of past consignments released under HS Code 6802.2300, pursuant to Assessment Alert dated 22-4-2016---Application was allowed in circumstances.
Sadia Jabber v. Federation of Pakistan PTCL 2014 CL 537 Sadia Jabber and 3 others v. Federation of Pakistan and others 2012 SCMR 617 = 2012 PTD 898; Collector of Customs v. Khas Trading 2015 PTD 22 and Messrs Radaka Corporation and others v. Collector of Customs and another 1989 SCMR 353 ref.
Khawaja Shamsul Islam for Plaintiffs.
Kashif Nazeer assisted by Zubair Shah, Deputy Collector (Appraisement) East for Defendants.
2016 P T D 2933
[Sindh High Court]
Before Irfan Saadat Khan and Zafar Ahmed Rajput, JJ
Messrs PAK SUZUKI MOTOR CO. LTD.
Versus
PAKISTAN through Secretary Finance, Government of Pakistan and 3 others
C.P. No.743 of 1998, decided on 13th April, 2016.
Customs Act (IV of 1969)---
----Ss.13, 16, 58, 59, 62, 97 & 156(1)---Compliance of order---Petitioner was importer and manufacturer who was alleged to have violated conditions of notification, resultantly authorities directed to deposit differential and penalty---Appellate authority stayed recovery of differential and penalty subject to furnishing Bank guarantee for demand raised by authorities---Order passed by Appellate authority was in favour of petitioner who, in compliance of the same, had also furnished Bank guarantee---Validity---Petitioner could not claim that it was "aggrieved person" and could not claim that order passed by Appellate authority was passed against it---High Court declined to interfere with order passed by Appellate authority---Constitutional petition was dismissed in circumstances.
Irtaz Hussain Zaidi for Petitioner.
Nemo for Respondent No.1.
Ms. Masooda Siraj for Respondents Nos. 2 to 4.
2016 P T D 152
[Lahore High Court]
Before Shahid Karim, J
Messrs DAEWOO PAKISTAN EXPRESS BUS SERVICE LIMITED through Deputy Senior Manager
Versus
FEDERATION OF PAKISTAN through Secretary Law Division and 5 others
W.P. No.11888 of 2010, heard on 22nd June, 2015.
(a) Sales Tax Act (VII of 1990)---
----S. 7A---Value Added Tax (VAT)---Connotation---VAT is a tax levied on value added in each stage of production and distribution process and can be aptly defined as ultimate form of consumption taxation.
(b) Interpretation of statutes---
----Fiscal statute---Ambiguity---Effect---Such provisions must be strictly construed and if there is any ambiguity, it has to be resolved in favour of taxpayer.
Pakistan through Secretary Finance and another v. Kohat Cement Company and others PLD 1995 SC 659 rel.
(c) Sales Tax Act (VII of 1990)---
----Ss. 7A & 8 (g)---Sales Tax Special Procedures Rules, 2007, Rr.58F(2) & 58C(1)---Constitution of Pakistan, Art. 199---Constitutional petition---Value Added Tax (VAT)---Notices of recovery---Stage of import---Petitioner company was aggrieved of notice issued by authorities for recovery of VAT---Validity---Importer was held entitled to deduct import tax paid during a tax period for the purposes of taxable supplies made from output tax---Value addition tax paid at import stage formed part of input tax---Only caveat was that refund of excess input tax over output would not be refunded to a registered person---Petitioner company was paying value addition tax and would not be able to claim tax credit in terms of S. 7 of Sales Tax Act, 1990, read with Rules---Petitioner company was barred from doing so in terms of S. 8(g) of Sales Tax Act, 1990, as goods and services were acquired for personal or non-business consumption---Such worked discriminately for petitioner company in relation to other importers similarly placed---High Court set aside notices issued by authorities in respect of payment of value addition tax as the same were without lawful authority and of no legal effect---High Court also set aside demand for payment of value addition tax by show cause notices---Petition was allowed in circumstances.
Muhammad Younas v. Central Board of Revenue PLD 1964 SC 113; Messrs FMC United (Pvt.) Ltd. v. Federation of Pakistan and 3 others 2011 PTD 346 and Amreli Steels (Pvt.) Ltd. and others v. Federation of Pakistan and others 2004 PTD 2930 rel.
Khurram Shehbaz Butt for Petitioner.
Syed Sajjad Haider Rizvi and Sarfaraz Ahmad Cheema for FBR/Respondents.
Date of hearing: 22nd June, 2015.
2016 P T D 257
[Lahore High Court]
Before Ayesha A. Malik, J
Messrs FIRDOUS CLOTH MILLS (PVT.) LTD. through Company Secretary
Versus
FEDERATION OF PAKISTAN through Ministry of Finance and others
W.Ps. Nos.6363, 6903, 8211 and 1234 of 2015, heard on 9th June, 2015.
(a) Sales Tax Act (VII of 1990)---
----Ss. 38 & 40-B---Constitution of Pakistan, Art. 199---Constitutional petition---Entry into premises of taxpayer---Authorized officer, jurisdiction of---Petitioner was a company registered with Sales Tax Authorities and was aggrieved of entry of authorities into its premises without issuing any prior notice to it---Validity---Objective of Ss. 38 & 40-B of Sales Tax Act,1990, was to give authorized officer access to premises as well as record and documents of registered person---While S. 38 of Sales Tax Act,1990, contemplated a visit to premises, S. 40-B of Sales Tax Act,1990, allowed authorized officers to stay at the premises for a given period of time to monitor the premises, sale and stock position of registered person---Primary requirement of both the sections was a notice to taxpayer---Authorities, in the present case, issued a notice stating material evidence on the basis of which monitoring was necessary to investigate into allegations of tax fraud and evasion of tax---High Court declined to interfere in the matter---Petition was dismissed in circumstances.
Messrs Food Consults (Pvt.) Ltd., Lahore and others v. Collector (Central Excise and Sales Tax), Lahore and 2 others 2004 PTD 1731; Collector of Sales Tax and others v. Messrs Food Consults (Pvt.) Ltd. and another 2007 PTD 2356; Taj International (Pvt.) Ltd. and others v. Federation of Pakistan and others 2014 PTD 1807; Chairman, Central Board of Revenue and others v. Messrs Haq Cotton Mills (Pvt.) Ltd., Burewala 2007 PTD 1351; Dr. Ghulam Mustafa v. The State and others 2008 SCMR 76; Rana Shahid Ahmad Khan v. Tanveer Ahmad and others 2011 SCMR 1937; Kamalia Sugar Mills Ltd. v. Federation of Pakistan and others 2015 PTD 221; West Pakistan Tanks Terminal (Pvt.) Ltd. v. Collector (Appraisement) 2007 SCMR 1318 and Muhammad Asif and another v. Director Public Instruction, Punjab and another 2005 PLC (C.S.) 1434 ref.
(b) Sales Tax Act (VII of 1990)---
----Ss. 40 & 40-B---Entry into premises---Search warrant, requirement of---Principle---When an authorized officer enters the premises under S. 40-B of Sales Tax Act,1990, a warrant is not required under S. 40 of Sales Tax Act,1990---Need for a warrant arises when any officer of Inland Revenue has reason to believe that any document or record of a registered person may be useful or relevant to investigation and that document or record is not at the business or manufacturing premises of registered person but at some other place, then the officer may, after obtaining a warrant from Magistrate, enter that place and cause a search to be made at any time.
Collector of Sales Tax and Central Excise (Enforcement) and another v. Messrs Mega Tech (Pvt.) Ltd. 2005 PTD 1933 rel.
Arslan Akhtar for Petitioner (in W.Ps. Nos.6363 and 6903 of 2015).
Ali Sibtain Fazli for Petitioner (in W.Ps. Nos.12324 and 8211 of 2015).
Muhammad Zikria Sheikh, DAG, Sarfraz Ahmad Cheema, Dr. Ishtiaq Ahmad Khan, Additional Commissioner, LTU, Lahore, Malik Afzal, ACIR, Muhammad Sohail, ACIR and Muhammad Rashid Naseem, Auditor for Respondents.
Date of hearing: 9th June, 2015.
2016 P T D 270
[Lahore High Court]
Before Muhammad Sajid Mehmood Sethi, J
Messrs ASIA POULTRY FEEDS (PVT.) LTD.
Versus
FEDERAL BOARD OF REVENUE and others
W.P. No.8466 of 2015, decided on 14th July, 2015.
(a) Income Tax Ordinance (XLIX of 2001)---
----Ss. 161, 205, 221 & 233---Circular No. 4, dated 02.04.2011---Constitution of Pakistan, Art. 199---Constitutional petition---Maintainability---Failure to pay tax collected or deducted---Default surcharge---Rectification of mistake in calculation of tax---Brokerage or commission---Double assessment, permissibility of---Agricultural produce---Grower certificate, submission of---Requirement---Deputy Commissioner, Inland Revenue, issued show cause notices to petitioner for three Tax Years for which orders under S. 161 read with S. 205 of Income Tax Ordinance, 2001 had already been passed under proceedings initiated earlier---Contention by petitioner was that once proceedings under S. 161 read with S. 205 of Income Tax Ordinance, 2001 had been finalized, second order for same year was not sustainable---Department took plea that first order was silent regarding issue as to submission of grower certificate or details of commission of agents during proceedings---Validity---If liability in impugned show cause notices was palpably unlawful, ultra vies, without jurisdiction or with mala fide intent, such action was to be nipped in the bud---If dispute had arisen between parties in respect of fiscal right based upon statutory instrument, same could easily be determined in constitutional jurisdiction---Present constitutional petition against impugned show cause notices was, therefore, maintainable---Earlier proceedings under S. 161 read with S.205 of Income Tax Ordinance, 2001 against petitioner had already been finalized resulting into creation of demands against him---Department, in earlier proceedings, had passed orders after consideration and examination of relevant record for relevant period---No justification, therefore, existed for initiation of fresh proceedings---Issue on basis of which proceedings had been re-initiated by successor-in-office had already been deliberated in light of prevalent circulars, and contentions of petitioner had been accepted---Petitioner's claim that he had purchased agricultural produce during relevant period through commission agents had been accepted by department while passing (earlier) order under S. 161 read with S. 205 of Income Tax Ordinance, 2001---CBR---Circular No.4 of 2011, dated 02.04.2011 had clearly provided that if purchases were made through commission agents then grower certificates were not required if tax had been withheld on commission in terms of S. 233 of Income Tax Ordinance, 2001---If there was any mistake, deficiency or error in calculation of tax, same could be rectified under S. 221 of Income Tax Ordinance, 2001---When assessment had been made in respect of income, any error or omission appearing therein could be rectified under S. 221 of Income Tax Ordinance, 2001, and fresh assessment could not be made in that respect as that would be double assessment, which was not permissible under law---Impugned show cause notices issued under S.161 read with S. 205 of Income Tax Ordinance, 2001 were declared illegal and without lawful authority---Constitutional petition was allowed in circumstances.
2010 PTD (Trib.) 150; PTR No.325 of 2010; Messrs Usmania Glass Sheet Factory Ltd., Chittagong v. Sales Tax Officer, Chittagong PLD 1971 SC 205; Mughal-e-Azam Banquet Complex v. Federation of Pakistan and others 2011 PTD 2260 and Northern Power Generation Company Ltd. v. Federation of Pakistan and others 2015 Lah. 3623 rel.
(b) Income Tax Ordinance (XLIX of 2001)----
----S. 221----Rectification of mistake---Fresh assessment for errors and omissions---Permissibility---If there is any mistake, deficiency or error in calculation of tax, same can be rectified under S. 221 of Income Tax Ordinance, 2001---When assessment has been made in respect of income of taxpayer, any error or omission appearing therein can be rectified under S. 221 of Income Tax Ordinance, 2001---Fresh assessment cannot be made in that respect as that will be double assessment, which is not permissible under law.
(c) Constitution of Pakistan---
----Art. 199---Constitutional petition---Maintainability---Fiscal rights, determination of---If dispute arises between parties in respect of fiscal right based upon statutory instrument, same can be determined in constitutional jurisdiction.
Messrs Usmania Glass Sheet Factory Ltd., Chittagong v. Sales Tax Officer, Chittagong PLD 1971 SC 205 rel.
Khurram Shehzad Butt for Petitioner.
Syed Khalid Javed Bukhari, Advocate/Legal Advisor for F.B.R. for Respondent.
2016 P T D 296
[Lahore High Court]
Before Abid Aziz Sheikh and Shahid Karim, JJ
Mian MUHAMMAD SHARIF
Versus
INCOME TAX APPELLATE TRIBUNAL, LAHORE
P.T.R. No.17 of 1996, heard on 6th July, 2015.
(a) Limitation---
----Void order---Principle---Limitation runs against void order.
Gen. (R.) Parvez Musharraf v. Nadeem Ahmed (Advocate) and another PLD 2014 SC 585 rel.
(b) Words and phrases---
----"Void", "void ab initio", "voidable", "illegal" and "irregular orders"---Distinction---Term 'void order' means when it is made by Court, Tribunal or other authority which had no jurisdiction either as regards the subject matter, pecuniary value or territorial limits---Such an order has been described as amounting to 'usurpation of power unwarranted by law' and accordingly nullity in law---Order made by a court or authority having necessary jurisdiction is not an order void ab initio but an order which may be set aside on sufficient cause being shown in that behalf---Void act must also be distinguished from illegal or irregular act---Void act is an act without jurisdiction and nullity; an illegal or irregular act is an act within jurisdiction and is not void---Court or Tribunal acts illegally when it acts in breach of some law and with material irregularity when it commits some error of procedure in the course of trial.
Abdul Majeed and 6 others v. Muhammad Subhan and 2 others 1999 SCMR 1245; Abdul Rehman and others v. Ghulam Muhammad through L.Rs. and others 2010 SCMR 978 and Muhammad Raz Khan v. Government of N.W.F.P. PLD 1997 SC 397 rel.
(c) Limitation---
----Question of limitation is a mixed question of law and facts.
Haji Muhammad Shah v. Sher Khan and others PLD 1994 SC 294 rel.
(d) Limitation Act (IX of 1908)---
----S. 5---Condonation of delay---Precondition---Limitation is a mixed question of law and fact and sufficient cause must be beyond the control of a party concerned and nothing has to be deemed to be in good faith which is not done with due care and attention---Such are the standards which have to be borne in mind while dilating upon and adjudicating such issues.
Mst. Khadija Begum and 2 others v. Mst. Yasmeen and 4 others PLD 2001 SC 355 rel.
(e) Limitation Act (IX of 1908)---
----S. 5---Condonation of delay---Principle---Delay of each day has to be explained.
(f) Income Tax Ordinance (XXXI of 1979)---
----S.136(2)---Limitation Act (IX of 1908), S. 5---Void order---Appeal---Condonation of delay---Grievance of assessee was that appeal filed before Income Tax Appellate Tribunal was barred by time and it could not condone delay of one year and two months on the ground of political pressure and influence when such pressure was not proved on file---Validity---Authorities were obliged to have brought necessary evidence on record which could show that one of the directors happened to be Prime Minister of Pakistan at the relevant time, did in fact exert political pressure and prevented filing of appeal timeously---No evidence was lead in such regard by the authorities and the Tribunal also did not refer to any evidence or material which could show and bring home the allegation---Bald assertion or allegation on the part of authorities was not sufficient to accept their plea regarding political pressure---Income Tax Appellate Tribunal should have framed issues to determine the grounds for sufficient cause urged by the department---Law of limitation ran against void order too which like an illegal order was liable to be set aside---Law of limitation had conferred a substantive right and was not a mere technicality to be treated casually---In matters of inordinate delay court should be slow to condone delay as rights had come to vest in the other party---Question of limitation was a mixed question of law and fact and reasons should have been clearly spelt out to seek an entitlement for condonation---If it was needed, evidence should have been led to establish the relevant facts necessary to bring home the plea of condonation---In matters of condonation, government or its departments were not entitled to a different treatment and no preference was due to them---High Court set aside the judgment passed by Income Tax Appellate Tribunal---Reference was allowed in circumstances.
Dr. Muhammad Javaid Shafi v. Syed Rashid Arshad and others PLD 2015 SC 212; Ghulam Hussain Ramzan Ali v. Collector of Customs (Prventive), Karachi 2015 PTD 107; Messrs Blue Star Spinning Mills Ltd. v. Collector of Sales Tax and others 2013 SCMR 587; Province of Sindh and others v. Ghulam Fareed and others 2014 SCMR 1189; The Chief Settlement Commissioner, Lahore v. Raja Mohammad Fazil Khan and others PLD 1975 SC 331; Muhammad Akbar Shah v. Muhammad Yusuf Shah and others PLD 1964 SC 329; PLD 1975 BJ 29; Muhammad Ismail v. Abdul Rashid and 2 others 1983 SCMR 168; Bashir Ahmad v. Government of the Punjab 1985 SCMR 333; Col.(Retd.) Ayub Ali Rana v. Dr.Carlite S. Pune and another PLD 2002 SC 630; Income Tax Officer and another v. Messrs Chappal Builders 1993 PTD 1108; Messrs Central Insurance Co. and others v. The Central Board of Revenue, Islamabad and others 1993 PTD 766; (2002) 253 ITR 798 (SC); Hyderabad Development Authority through M.D., Civic Centre, Hyderabad v. Abdul Majeed and others PLD 2002 SC 84; Mian Muhammad Nawaz Sharif v. The State PLD 2009 SC 814; 1987 SCMR 1119; Chairman/Secretary, Pakistan Railways, Ministry of Railways, Government of Pakistan, Islamabad and others v. Muhammad Sharif Javaid Warsi PLD 2003 SC 6 and Government of Pakistan through Ministry of Works and another v. Messrs Malbrow Builders, Contractor, Sialkot 2006 SCMR 1248 ref.
Syed Ibrar Hussain Naqvi, A.K. Dogar, Tariq Aziz and Shahid Parvaiz Jami for Petitioner.
Syed Sajjad Haider Rizvi for Respondent.
Date of hearing: 6th July, 2015.
2016 P T D 358
[Lahore High Court]
Before Muhammad Sajid Mehmood Sethi, J
Messrs M.Z. INTERNATIONAL
Versus
The ASSISTANT COMMISSIONER INLAND REVENUE AUDIT-5 and another
Writ Petition No.12904 of 2010, heard on 3rd September, 2015.
(a) Sales Tax Act (VII of 1990)---
----Ss. 11(4) & 36(3)---Order-in-original---Nature---Limitation prescribed by Ss. 11(4) & 36(3) of Sales Tax Act, 1990---Delay of 175 days---Effect---Show-cause notice was issued on 11-5-2009 and order-in-original was passed on 31-5-2010---Validity---Law required passing of order-in-original within 120 days excluding extended period---Period prescribed by Ss. 11(4) & 36(3) of Sales Tax Act, 1990 for completion of adjudication proceedings was mandatory and not directory---Order in the present case was passed with inordinate delay of 175 days even after excluding period of 30 days for adjournment taken by taxpayer and period of 60 days for extension granted by Department---Extension of time for adjudication granted by Department on 10-5-2010 was patently time barred as limitation provided in S. 36(3) of Sales Tax Act, 1990 had already expired---Department had not shown any reasonable justification for such delay in adjudication---Order-in-original dated 31-5-2010 was hit by time limitation as provided in Ss.11(4) & 36(3) of Sales Tax Act, 1990---Order-in-Original was set aside---Constitutional petition was allowed, in circumstances.
Messrs Hanif Straw Board Factory through Proprietor v. Additional Collector (Adjudication), Customs, Central Excise and Sales Tax, Gujranwala and others 2008 PTD 578 and Messrs Super Asia Muhammad Din Sons (Pvt.) Ltd. through Chief Executive v. Collector of Sales Tax, Gujranwala and another 2008 PTD 60 rel.
(b) Sales Tax Act (VII of 1990)---
----S. 36(3)---Order of recovery of tax not levied or short levied---Limitation---Order under S. 36(3) of Sales Tax Act, 1990 must be passed within period prescribed in proviso to S. 36(3) of Sales Tax Act, 1990.
Messrs Meraj Din v. Collector Customs, Excise and Sales Tax (Appeals), Lahore and others 2009 PTD 2004; Messrs Tanveer Weaving Mills v. Deputy Collector Sales Tax and others 2009 PTD 762; 2009 PTD 1978; Messrs Hanif Straw Board Factory through Proprietor v. Additional Collector (Adjudication), Customs, Central Excise and Sales Tax, Gujranwala and others 2008 PTD 578 and Messrs Pakistan Ordnance Factories (POF) Wah, Cantt v. Collector of Customs, Sales Tax and Central Excise Adjudication), Islamabad and others 2012 PTD 1016 rel.
(c) Limitation---
---Government departments could not be put at higher pedestal in matter of limitation, rather they were supposed to act within statutory period.
(d) Constitution of Pakistan---
----Art. 199---Constitutional jurisdiction of High Court---Scope---Alternate remedy---Effect---When an impugned order suffered from want of jurisdiction and was void ab-initio then writ was competent despite availability of alternate remedies.
Commissioner of Income Tax v. Eli Lilly Pakistan (Pvt.) Ltd and others 2009 SCMR 1279 = 2009 PTD 1392 rel.
M.M. Akram for Petitioner.
Ms. Kausar Parveen for Respondents.
Date of hearing: 3rd September, 2015.
2016 P T D 377
[Lahore High Court]
Before Shahid Jamil Khan and Muhammad Sajid Mehmood Sethi, JJ
COMMISSIONER INLAND REVENUE
Versus
MUHAMMAD ALI
P.T.Rs. Nos.328 to 333, 337 to 345 and 347 to 351 of 2009 and 86 to 93 of 2008, decided on 14th September, 2015.
(a) Income Tax Ordinance (XLIX of 2001)---
----Ss. 114, 115, 120, 153, 153(6) & 153(1)(b)---Payments for goods, services and contracts---Deduction of tax at source---Scope---Section 153 of Income Tax Ordinance, 2001 dealt mainly with deduction of tax at source on transactions specified in S. 153(1) of Income Tax Ordinance, 2001----Under S. 153(6) of Income Tax Ordinance, 2001 deducted tax was final tax on transactions except transactions under S. 153(1)(b) of Income Tax Ordinance, 2001---Person falling under Final Tax Regime had to file statement under S. 115 of Income Tax Ordinance, 2001 instead of Normal Tax Return under S. 114 of Income Tax Ordinance, 2001---Under S. 169(3) of Income Tax Ordinance, 2001 tax deducted at source was taken to be assessment order under S. 120 of Income Tax Ordinance, 2001 in the same way as return filed under S. 114 of Income Tax Ordinance, 2001 was taken to be an assessment order for all purposes of Income Tax Ordinance, 2001.
(b) Income Tax Ordinance (XLIX of 2001)---
----Ss. 122 & 177---Amendment of assessment---Scope---Assessment order created through fiction of law could be amended by invoking provisions of S. 122 of Income Tax Ordinance, 2001 either through process of Audit under S. 177 of Income Tax Ordinance, 2001 or otherwise---Jurisdiction of Commissioner or Taxation Officer, under S.122 of Income Tax Ordinance, 2001 was distinguishable from jurisdiction envisaged under S. 170 of Income Tax Ordinance, 2001.
(c) Income Tax Ordinance (XLIX of 2001)---
----S. 170---Income Tax Rules, 2002, R. 71---Disclosure of total income of relevant tax year---Scope---Section 170 of Income Tax Ordinance, 2001 deal with conditions, procedure and powers for issuing or refusing refund---Rule 71 of Income Tax Rules, 2002 provided that an application for refund of tax would be in pro forma specified in Part VI of First Schedule to Income Tax Rules, 2002---Taxpayer had to disclose in application the total income of relevant tax year, tax chargeable in respect of total income and amount of tax paid and such application was to be verified and accompanied by documents specified in pro forma and was required under Income Tax Ordinance, 2001.
(d) Income Tax Ordinance (XLIX of 2001)---
----Ss. 170, 170(2) & 170(3)----Refund---Commissioner, duty of---Scope---While exercising jurisdiction under S. 170 of Income Tax Ordinance, 2001, Commissioner was required to see first that whether requirements of S. 170(2) of Income Tax Ordinance, 2001 were met; and under S. 170(3) of Income Tax Ordinance, 2001 he had to satisfy himself through probing into supportive document that tax was overpaid---Commissioner could adjust the overpaid amount of tax against any other tax due from taxpayer----After being so satisfied, Commissioner had to refund the remaining portion of overpaid ta--- After inquiring into correctness of overpaid tax, if Commissioner was not satisfied then he should pass a written order of reducing or refusing claimed refund after giving an opportunity of being heard to taxpayer---Order of refund or its refusal or reduction was to be passed within 45 days under S. 170(4) of Income Tax Ordinance, 2001.
(e) Income Tax Ordinance (XLIX of 2001)---
----Ss. 120 & 170---Refund---Procedure---Scope---Perusal of S. 170 of Income Tax Ordinance, 2001 in juxtaposition with S. 120 of Income Tax Ordinance, 2001 showed that S. 170(2)(b) of Income Tax Ordinance, 2001 while providing a condition of filing of an application for refund stated that such application should be made within two years of date on which Commissioner had issued assessment order---Refund could be claimed on basis of an assessment order and if an amount was paid in excess of chargeable tax, as determined in assessment then it could be claimed as refund under S. 170(1) of Income Tax Ordinance, 2001---Section 170 of Income Tax Ordinance, 2001 gave powers only to see whether claimed refund was supported by evidence or not.
(f) Income Tax Ordinance (XLIX of 2001)---
----Ss. 120, 122 & 170----Refund---Commissioner, duty of---Scope---Assessment order under S. 120 of Income Tax Ordinance, 2001 was an order for all purposes of Income Tax Ordinance, 2001 including issuance or rejection of refund under S. 170 of Income Tax Ordinance, 2001, therefore, Commissioner could not go behind such assessment order while exercising jurisdiction under S. 170 of Income Tax Ordinance, 2001---Only course available to Commissioner was to assume jurisdiction under S. 122 of Income Tax Ordinance, 2001 by issuing a show-cause notice, proposing amendment of such assessment order and Commissioner could proceed under both jurisdictions simultaneously---In case, assessment order was amended in accordance with law then Commissioner could refuse to process the application for refund because very basis of refund application was the assessment order which was not in field.
Commissioner of Income Tax/Wealth Tax, Multan Zone, Multan v. Rehman Enterprises 2008 PTD 1897 ref.
Ch. Muhammad Shakil and Khadim Hussain Zahid for Applicants (in PTR Nos. 328 to 333, 337 to 345 and 347 to 351 of 2009).
Amjad Hussain Malik for Applicants (in PTR Nos. 86 to 93 of 2008).
Nemo for Respondent.
Date of hearing: 14th September, 2015.
2016 P T D 461
[Lahore High Court]
Before Muhammad Sajid Mehmood Sethi, J
Messrs J.K. BROTHERS PAKISTAN (PVT.) LTD. through Director
Versus
The ADDITIONAL COMMISSIONER INLAND REVENUE and another
Writ Petition No.24581 of 2011, heard on 31st August, 2015.
(a) Sales Tax Act (VII of 1990)---
----S. 11(4)---Amount recoverable with notice---Limitation---Scope---Refund claim of petitioner pertained to tax period of April, 2005 and specified period of five years was to expire in May, 2010 but show cause notice regarding said refund had been issued on 28-05-2011---Validity---If a law prescribed period of time for recovery of money then after its lapse, recovery was not enforceable---Section 11(4) of Sales Tax Act, 1990 provided a period of limitation of five years for issuance of show cause notice and notice in present case having been issued after one year of expiry of relevant date was barred by limitation and thus was without lawful authority and of no legal effect and was liable to be set aside---Constitutional petition was allowed, accordingly.
Collector of Customs, Sales Tax (West), Karachi v. Messrs K and A Industries, Karachi 2006 PTD 537; XEN Shahpur Division v. Collector Sales Tax (Appeals) Collectorate of Customs Federal Excise and Sales Tax, Faisalabad and 2 others 2008 PTD 1973; Messrs Gulistan Textile Mills Ltd., Karachi v. Collector (Appeals) Customs Sales Tax and Federal Excise, Karachi and another 2010 PTD 251; West Pakistan Tanks Terminal (Pvt.) Ltd. v. Collector (Appraisement) 2007 SCMR 1318; Deputy Commissioner of Income Tax/Wealth Tax, Faisalabad and others v. Messrs Punjab Beverage Company (Pvt.) Ltd. 2007 PTD 1347; Collector of Sales Tax and Central Excise, Lahore v. Zamindara Paper and Board Mills and others 2008 SCMR 615 and Mughal-e-Azam Banquet Complex through Managing Partner v. Federation of Pakistan through Secretary and 4 others 2011 PTD 2260 ref.
Federation of Pakistan through Secretary, Finance, Islamabad and others v. Messrs Ibrahim Textile Mills Ltd. and others 1992 SCMR 1898; Collector of Customs, Sales Tax (West), Karachi v. Messrs K and A Industries, Karachi 2006 PTD 537; Messrs Rose Colour Laboratories Nayab No. 1 (Pvt.) Ltd. v. Chairman, C.B.R. and others 2003 PTD 1047; Abdul Sattar v. Federation of Pakistan through Secretary, Revenue Division/Chairman, Central Board of Revenue, Islamabad and others 2006 PTD 1171; Pakistan International Airlines Corporation v. Central Board of Revenue, Islamabad and others 1990 CLC 868 and Assistant Collector Customs and others v. Messrs Khyber Electric Lamps and others 2001 SCMR 838 rel.
(b) Constitution of Pakistan---
----Art. 199---Sales Tax Act (VII of 1990), S. 11---Show-cause notice---Constitutional Jurisdiction of High Court--- Maintainability---Scope---Contention of Department was that constitutional petition against show cause notice under S.11 of Sales Tax Act, 1990 was not maintainable---Held, that if an act was illegal and facts of case confirmed the same illegality then there was no bar in exercising Constitutional jurisdiction---If show cause notice was ultra vires, without jurisdiction or with mala fide intent then such action was to be nipped in bud---In such circumstances, Constitutional petition was maintainable.
Northern Power Generation Company Ltd. v. Federation of Pakistan and others 2015 PTD 2052 rel.
M.M. Akram for Petitioner.
Sarfraz Ahmad Cheema for Respondents.
Date of hearing: 31st August, 2015.
2016 P T D 467
[Lahore High Court]
Before Abid Aziz Sheikh and Shahid Karim, JJ
COMMISSIONER INLAND REVENUE
Versus
Messrs AMTEX LTD.
S.T.R. No.9 of 2015, decided on 11th November, 2015.
Sales Tax Act (VII of 1990)---
----Ss. 3, 7, 21, 73 & 47---Input tax adjustment---Blacklisted suppliers---Blacklisting of suppliers subsequent to transaction with taxpayer---Effect and scope---Department impugned order of Appellate Tribunal whereby refund on invoices was allowed to the taxpayer---Contention of the Department was that suppliers of taxpayer were blacklisted and suspended units, therefore, invoices issued by them could not be used to claim input tax adjustment/refund of sales tax---Validity---Perusal of order of Appellate Tribunal revealed that finding of fact had been recorded to the effect that taxpayer had made payments to its suppliers through banking channels by complying with provisions of S. 73 of the Sales Tax Act, 1990 and that at the time of making such transactions, said suppliers were enjoying their status as operative persons having normal behavior and no dispute existed as to the fact that refund was denied only for the reason that the suppliers were only subsequently blacklisted---Validly issued invoices by suppliers when such suppliers were active and registered, would not be effected by subsequent blacklisting of such suppliers unless invoices in question were specifically declared fake through a speaking order after hearing the parties and if the same had a direct nexus with subsequent blacklisting of the said supplier(s)---Refund, in the present case, therefore could not have been denied to the taxpayer and order of Appellate Tribunal could not be interfered with---Reference was answered accordingly.
Commissioner Inland Revenue v. Tariq Poly Pack (Pvt.) Ltd. 2015 PTD 2256 rel.
Ms. Saba Saeed Sheikh for Applicant.
Khubaib Ahmad for Respondent.
2016 P T D 483
[Lahore High Court]
Before Mrs. Ayesha A. Malik, J
K.B. ENTERPRISES
Versus
FEDERATION OF PAKISTAN and others
W.P. No.12664 of 2015, decided on 2nd June, 2015.
Sales Tax Act (VII of 1990)---
----Ss. 11(3) & 46---Constitution of Pakistan, Art. 199---Constitutional petition---Recovery of sales tax---Second show cause notice during pendency of appeal before Appellate Tribunal---Double jeopardy---Petitioner/taxpayer sought direction to set aside second show-cause notice issued to petitioner in respect of matter in which appeal of Department was pending before Appellate Tribunal---Validity---Appeal of the Department was pending in the same matter with respect to which second show cause notice was issued, therefore, no occasion existed to issue a fresh show cause notice to petitioner---High Court set aside impugned show-cause notice and directed Department to pursue appeal before Appellate Tribunal---Constitutional petition was allowed, accordingly.
Khubaib Ahmad for Petitioner.
Sarfraz Ahmad Cheema for Respondents.
2016 P T D 511
[Lahore High Court]
Before Shahid Jamil Khan and Muhammad Sajid Mehmood Sethi, JJ
COMMISSIONER OF INCOME TAX/WEALTH TAX
Versus
Mst. HAMEEDA BEGUM
I.T.A. No.14 of 1998, decided on 29th October, 2015.
Income Tax Ordinance (XXXI of 1979)---
----Ss. 66A, 59 & 55---Self-assessment----Assessment on basis of return---Powers of Inspecting Additional Commissioner to revise Deputy Commissioner's order---Exercise of powers under S. 66A of the Income Tax Ordinance, 1979 in absence of order in writing under S.59 of the Income Tax Ordinance, 1979---Factual and legal position of exercise of powers under S. 66A of the Income Tax Ordinance, 1979 before insertion of proviso to S. 59(4) of the Income Tax Ordinance, 1979---Order passed against taxpayer under S. 66A of the Income Tax Ordinance, 1979 was set aside by Appellate Tribunal on the ground that Assessing Officer was required to pass an order in writing under S.59(1) of the Income Tax Ordinance, 1969, and since no such order was passed in the present case, provisions of S. 66A of the Income Tax Ordinance, 1979 could not have been invoked---Contention of Department was, inter alia, that S. 66A of the Income Tax Ordinance, 1979 could be invoked in terms of proviso to S. 59(4) of the Income Tax Ordinance, 1979----Validity----Section 59 of the Income Tax Ordinance, 1979 showed that procedure was given therein for dealing with a return qualified in terms of Self Assessment after being filed under S. 55 of the Income Tax Ordinance, 1979 and Deputy Commissioner was required to assess the income and determine payable tax through an order in writing under S. 59(1) of the Income Tax Ordinance, 1979; however he was restrained from passing such an order after time specified in S. 59(4) of the Income Tax Ordinance, 1979----Necessary effect of not passing order in writing was that payable tax worked out as per declaration in the return stood accepted under the scheme, however, vide amendment in the year 1995, a proviso was added to S. 59(4) of the Income Tax Ordinance, 1979 whereby under an order under S. 59(1) of the Income Tax Ordinance, 1979 was deemed to have been passed---"Order by Deputy Commissioner" as stated in S. 66A of the Income Tax Ordinance, 1979 was a precondition for invoking provisions of S. 66A of the Income Tax Ordinance, 1979---High Court observed that an order passed by operation of law (fiction), could also be subjected to powers under S.66A of the Income Tax Ordinance, 1979; however, fact that such insertion of proviso to S. 59(4) of the Income Tax Ordinance, 1979 was made on 02.7.1995 could not be ignored, and factual and legal position till such insertion of proviso was that in absence of an assessment order in writing, provisions of S. 66A, could not be invoked---Present case related to period prior to insertion of said proviso to S. 59(4) of the Income Tax Ordinance, 1979; therefore S.66A could not have been invoked in the case---Impugned order therefore could not be interfered with---Appeal was dismissed, accordingly.
Commissioner of Income Tax/Wealth Tax, Zone-C, Lahore v. Messrs Haroon Medical Store, Sheikhupura 2003 PTD 1530 rel.
Saeed-ur-Rehman Dogar for Appellant.
Shoaib Ahmad Sheikh, Shahbaz Butt and Muhammad Iqbal Hashmi for Respondents.
Date of hearing: 29th October, 2015.
2016 P T D 527
[Lahore High Court]
Before Muhammad Sajid Mehmood Shethi, J
Messrs CHAUDHARY SUGAR MILLS LTD.
Versus
CHIEF COMMISSIONER and 2 others
W.P. No.17504 of 2012, decided on 1st September, 2015.
Sales Tax Act (VII of 1990)---
----Ss. 36(1), 3 (1A), 45-A & 66----Constitution of Pakistan, Art. 199---Constitutional petition---Maintainability---Recovery of tax erroneously refunded---Power of Federal Board of Revenue or Commissioner to call for records---Refund to be claimed within one year---Past and closed transaction---Second show cause notice, validity of---Revisional powers of Federal Board of Revenue and Commissioner---Collector (Refund) rejected refund of amount claimed by petitioner under S. 3 (1A) of Sales Tax Act, 1990; but Appellate Tribunal, declaring rejection of refund illegal, set aside order of rejection---Department in compliance of appellate order, passed Sales Tax Refund Order and refunded amount as claimed by petitioner---Assistant Commission (LTU), later, issued second show cause notice to the petitioner on ground that as incidence of tax had been passed on to consumers, earlier refund had been erroneously made and proposed recovery of same under S. 36 (1) of Sales Tax Act, 1990---Validity----Department could not assail order passed by Appellate Tribunal, which had attained finality and could not deviate from said order---Department while passing Sales Tax Refund Payment Order, had made specific reference to the Appellate Order and judgment of Supreme Court whereby levy of one per cent had been set aside---Refund amount claimed had been examined, processed, sanctioned and adjusted in favour of petitioner in terms of S. 66 of Sales Tax Act, 1990---In presence of Appellate order and refund order, respondents were not justified to issue second show cause notice, as matter of refund had become past and closed transaction---Respondents could not reopen the matter at their own sweet will and whims---Respondents, for all intents and purposes, had accepted and acknowledged finality of Appellate order in favour of petitioner---Once matter was settled finally and conclusively between parties, that too up to level of Appellate Tribunal, department had no jurisdiction to go beyond spirit of (Appellate) order, which was binding on them under law---Order of Appellate Tribunal was very clear and same had already determined controversy between parties finally and conclusively, leaving no merit of any further interpretation---Under S. 45-A of Sales Tax Act, 1990, any impropriety and illegality in any order or decision passed by Officer of Inland Revenue could be checked by Federal Board of Revenue or by Commissioner himself by exercising their revisional powers---No other provision existed in Sales Tax Act, 1990 authorizing sales tax functionary to review or reopen past and closed transaction---Provisions of S. 45-A of Sales Tax Act, 1990 did not empower any other authority subordinate to Federal Board of Revenue or to Commissioner to reopen and review order passed lawfully---Issuance of impugned show cause notice reopening past and closed transaction by department having no revisional jurisdiction was act of assumption of wrong jurisdiction---Impugned show cause notice was illegal and without lawful authority---Constitutional petitioner, in circumstances, was maintainable---Impugned show cause notice was held illegal and without lawful authority---Constitutional petition was allowed in circumstance.
Edulji Dinshaw Limited v. Income-tax Officer 1990 PTD 155 = PLD 1990 SC 399; Messrs Julian Hoshang Dinshaw Trust and others v. Income Tax Officer, Circle XVIII South Zone, Karachi and others 1992 PTD 1 = 1992 SCMR 250; Gatron (Industries) Limited v. Government of Pakistan and others 1999 SCMR 1072; Irshad Ahmed and another v. Federation of Pakistan and 6 others 2009 PTD 1949; Army Welfare Sugar Mills Ltd. v. Federation 1992 SCMR 1652; Pak Suzuki Motor v. Secretary Revenue Division 2007 PTD 501 and Deputy Commissioner of Income Tax/Wealth Tax, Faisalabad and others v. M/s. Punjab Beverages Company (Pvt.) Ltd. 2007 PTD 1347 ref.
Mughal-e-Azam Banquet Complex through Managing Partner v. Federation of Pakistan through Secretary and others 2011 PTD 2260; Messrs Tandlianwala Sugar Mills Ltd. and others v. Federation of Pakistan and others 2001 PTD 2094; Arshad Hussain v. Collector of Customs and others 2010 PTD 104; Zarai Taraqtati Bank Limited and others v. Mushtaq Ahmed Korai 2007 SCMR 1698; Noor Muhammad and others v. Ghulam Rasul and others 1999 SCMR 705; Messrs Ashar International (Pvt.) Ltd. Faisalabad v. C.I.R., Faisalabad 2011 PTD (Trib.) 2347 and Northern Power Generation Company Ltd. v. Federation of Pakistan and others 2015 PTD 2052 rel.
Muhammad Akram Nizami for Petitioner.
Sarfraz Ahmed Cheema for Respondents.
Date of hearing: 25th August, 2015.
2016 P T D 556
[Lahore High Court]
Before Muhammad Ameer Bhatti and Mahmood Ahmad Bhatti, JJ
MUHAMMAD AWAIS
Versus
SPECIAL JUDGE CUSTOMS and 3 others
I.C.A. No.101 in W.P. No.1388 of 2015, heard on 8th September, 2015.
(a) Customs Act (IV of 1969)---
----S. 185-A---Cognizance of offence by Special Judge---Scope---No provision existed in Customs Act, 1969 or in general law which empowered Investigating Officer to make an arrest of a witness produced by an accused or named by him/her to disprove the allegation made against him/her---Special Court had no jurisdiction to issue a warrant for arrest of a defence witness at the stage of investigation at the behest of an Investigating Officer.
(b) Criminal trial---
----Falsity of stand of an accused could not absolve the prosecution of onerous responsibility to prove its case nor can an accused or his/her witness be convicted for the sole reason that he/she failed to substantiate his/her defence.
(c) Customs Act (IV of 1969)---
----S.185-A---Cognizance of office by special Judge---In the present case, witness not only filed an affidavit but also furnished documents in support of his statement---Investigating Officer was supposed to verify said documents and to form an opinion whether they were genuine or fabricated---If the Investigating Officer was of the view that authenticity of documents could not be established, he might discard them at his own level, leaving the rest to the Court as and when witness was produced and examined by accused and prosecution would have an ample opportunity to impeach his credit or discredit and expose him---To obtain order of warrant for his arrest to join investigation as was manifest from application moved by Investigating Officer before Customs Judge in the present case, did not sit well with the criminal jurisprudence.
(d) Customs Act (IV of 1969)---
----Ss. 166, 185 & 185-F---Constitution of Pakistan, Arts. 4, 5, 10-A & 199---Law Reforms Ordinance (XII of 1972), S.3, proviso---Intra-court appeal---Powers of Special Judge (Customs)---Scope---Contention of Department was that order passed by Special Judge (Customs) under S.166 and S. 185 of Customs Act, 1969, an appeal/revision was provided to challenge the validity of such an order, thus intra-court appeal was incompetent in view of bar contained in proviso of S.3 of Law Reforms Ordinance, 1972----Held, that impugned order was not passed by any gazetted officer of Customs rather it was the Duty Judge (Customs)---Plain reading of Ss. 166, 185 & 185-F of Customs Act, 1969, banked upon by Department, made it manifest that no power resided in Special Judge (Customs) to pass such an order---Order for arrest of accused having not been passed under Customs Act, 1969, accused was not supposed or bound to challenge the same under S.185-F Customs Act, 1969 rather his challenge to the same was and remained that such order was coram non judice and passed without jurisdiction and without lawful authority and as such was amenable to Constitutional jurisdiction of High Court----Under Art. 4 of the Constitution it was an inalienable right of every citizen to be treated in accordance with law and per Art. 5 of the Constitution, it was inviolable obligation of Investigating Officer and Duty Judge (Customs) to operate within the bounds of law----Article 10-A of the Constitution guaranteed due process of law which reinforced the stance of accused---Intra-Court appeal was, therefore, maintainable.
(e) Constitution of Pakistan---
----Art.199---Constitutional jurisdiction High Court---Scope---Criminal Investigation was to be carried out in accordance with law but if an Investigation Officer armed himself with authority and powers not conferred upon him by law of the land, on the strength of an illegal and unlawful order obtained by him by making misrepresentation to the Court; then High Court would be abdicating its jurisdiction by not stopping such Investigation Officer in his tracks and it would be a negation of rule of law---High Court was bound to uphold Constitutional guarantees rather than perpetuating illegalities.
Sardar Muhammad Lateef Khan Khosa for Appellant.
Pervaiz Khan Tanauli Standing Counsel for Pakistan, Farhat Nawaz Lodhi and Muhammad Amin Feroz Khan along with Muhammad Saleem, Inspector Customs in person for Respondents.
Date of hearing: 8th September, 2015.
2016 P T D 589
[Lahore High Court]
Before Muhammad Sajid Mehmood Sethi, J
Messrs SHV ENERGY PAKISTAN (PVT.) LTD.
Versus
PROVINCE OF THE PUNJAB and others
W.P. No.7397 of 2012, decided on 26th August, 2015.
(a) Administration of justice---
----Doing of an act---Principle---Where law requires an act to be done in a particular manner, it has to be done in that manner alone---Such dictate of law cannot be termed as technicality.
Muhammad Anwar and others v. Mst. Ilyas Begum and others PLD 2013 SC 255 rel.
(b) General Clauses Act (X of 1897)---
----S. 24-A---Order with reasons---Scope---In every case in which appeal or revision lies, the authority passing order is required to record findings and discuss material available on record, so that appellate court may examine whether the order passed is in accordance with material available on record or there is any misreading or non-reading of evidence or any material evidence available on record has been ignored causing miscarriage of justice.
Adamjee Jute Mills Ltd. v. The Province of East Pakistan and others PLD 1959 SC (Pak.) 272; Gouranga Mohan Sikdar v. The Controller Import and Export and 2 others PLD 1970 SC 158; Mollah Ejahar Ali v. Government of East Pakistan and others PLD 1970 SC 173; Muhammad Ibrahim Khan v. Secretary, Ministry of Labour and others 1984 SCMR 1014; Al-Hadayat Textile through Proprietor v. Soneri Bank Ltd. 2003 CLD 105 and Waqar Alam Saeed v. District Coordination Officer/Chairman and 3 others 2005 YLR 1742 rel.
(c) Punjab Professionals and Trades Tax Rules, 1977---
----Rr. 3 & 4(4)---Constitution of Pakistan, Art. 199---Constitutional petition---Notice of recovery---Condemned unheard, principle of---Applicability---Petitioner company assailed notice issued by authorities for recovery of professional tax on the ground that the same was passed without providing any opportunity of hearing to them---Validity---Before issuing demand notice in question mandatory provisions of R. 4 of Punjab Professionals and Trades Tax Rules, 1977 were not complied with by authorities---High Court observed that it was expedient for the safer administration of justice and declared the demand notices in question illegal and without lawful authority and remanded the matter to authorities with direction to decide the same through a speaking order, after affording opportunity of being heard to all concerned including petitioner company---Petition was disposed of accordingly.
Muhammad Jameel Das (W. Gopal Das) and another v. The Pakistan through Secretary, Ministry of Communication, Government of Pakistan and others 1999 CLC 541; Federation of Pakistan and others v. Shaukat Ali Mian and others PLD 1999 SC 1026; Hazara (Hill Tract) Improvement Trust and others v. Mst. Qaisra Elahi and others 2005 SCMR 678; Province of the Punjab through Collector District Khushab, Jauharabad and others v. Haji Yaqoob Khan and others 2007 SCMR 554; Overseas Pakistanis Foundation and others v. Sqn. Ldr. (Retd.) Syed Mukhtar Ali Shah and another 2007 SCMR 569; Muhammad Sharif v. Settlement Commissioner and others 2007 SCMR 707; Masal Khan and another v. The State 2010 SCMR 1399; Messrs Gulistan Textile Mills Ltd. v. Collector (Appeals) Customs Sales Tax And Federal Excise, Karachi and another PTD 2010 Kar. 251 Section Officer, Government of Punjab, Finance Department and others v. Ghulam Shabbir 2010 SCMR 1425 and Province of Punjab v. Sargodha Textile Mills and others PLD 2005 SC 988 ref.
Deputy Commissioner of Income Tax / Wealth Tax, Faisalabad and others v. Messrs Punjab Beverages Company (Pvt.) Ltd. 2007 PTD 1347 distinguished.
Muhammad Irfan v. Tariq Mehmood 2011 CLC 1610; Muhammad Maqsood v. Kausar Nisar 2000 YLR 1698; Evacuee Trust Property Board v. Sheikh Abdul Sattar and another 2009 SCMR 1223 and Nazir Ahmad Panhwar v. Government of Sindh through Chief Secretary, Sindh 2005 SCMR 1814 rel.
Muhammad Ajmal Khan for Petitioner (in W.Ps. Nos.7397/2012 and 9426/2012).
Abid Minhas for Petitioner (in W.Ps. Nos. 23428/2011 and 25362/2011).
Shahab-ud-Din for Petitioner (in W.P. No.7986/2012).
Wali Muhammad Khan, A.A.G. and Mian Muhammad Abid, Law Officer, E&T Deptt.
2016 P T D 643
[Lahore High Court]
Before Atir Mahmood and Zafarullah Khan Khakwani, JJ
COMMISSIONER INLAND REVENUE
Versus
MADINA COTTON GINNERS AND OIL MILLS
Sales Tax Reference No.4 of 2013, decided on 25th May, 2015.
Sales Tax Act (VII of 1990)---
----Ss. 26, 33, 34, 3 ,6 & 47---Monthly return---Imposition of penalty for non-furnishing of monthly return---Interpretation of S.26 of the Sales Tax Act, 1990---Imposition of penalty for non-filing of monthly return where supply was zero rated---Penalty and additional tax imposed on taxpayer for non-filing of monthly return was set aside by Appellate Tribunal on the ground that there was no justification of imposition of penalty on tax payer by treating him as a non-filer since there was no loss of revenue as the taxpayers supply was zero rated----Validity----Words "tax due and paid" and "such other information", used in S.26 of the Sales Tax Act, 1990 showed intention of Legislature that if tax was paid the return shall be filed showing the tax due and paid coupled with any other information and if no tax is paid then the return shall be filed mentioning such other information for non-payment of tax and that it may be zero rated supply---Word "shall" when read together with expression "such other information" made it imperative to file return even if there was zero rated supply during tax period---Section 26 of the Sales Tax Act, 1990 made it compulsory upon the registered person to file return within due date irrespective of the fact that he paid the tax or not or that during the tax period the supply was zero-rated --Words "indicating the purchases and the supplies" used in S.26 of the Sales Tax Act, 1990 included supplies even at zero rate----Section 33 of the Sales Tax Act, 1990 unambiguously described non-filing of return within due date as an offence and provided that if any registered person did not file return as required under S.26 of the Sales Tax Act, 1990 he shall be subjected to penalty---By providing such penal provision of law, the intention of Legislature became all clear that irrespective of fact whether tax has been paid or not, filing the return was mandatory and non-submission of return within due date would amount to commission of an offence and it was imperative for the registered person to file a return and ignorance of the same carried punishment in shape of penalty---High Court observed that it was mandatory for a registered person to file return under S.26 of the Sales Tax Act, 1990 even in case of zero rated supply and non-submission of the same would hold such person liable under the provisions of S. 33 of the Sales Tax Act, 1990 and provisions of Ss.3, 6 & 26(1) of the Sales Tax Act, 1990 remained operative and functional and did not become redundant even in cases of zero rated supply----Reference was answered, accordingly.
Miss Zartaj Naeem for Applicant.
Muhammad Siddique Chohan for Respondent.
Date of hearing: 8th April, 2015.
2016 P T D 654
[Lahore High Court]
Before Muhammad Sajid Mehmood Sethi, J
Messrs AMINA Z. BEAUTY SALON through Managing Member
Versus
FEDERATION OF PAKISTAN through Secretary General and 3 others
W.P. No.21996 of 2015, decided on 18th September, 2015.
Punjab Sales Tax on Services Act (XLII of 2012)---
----Ss. 24 & 56---Punjab Sales Tax on Services (Enforcement) Rules, 2014, R. 6---Recovery of sales tax---Statutory notice, non-issuance of---Effect---Petitioner was an "association of persons" engaged in business of beauty parlors and beauty clinics---Authorities served notice upon petitioner for compulsory registration/enrollment and on receipt of reply, the business premises of petitioner was sealed---Validity---Authority neither communicated any grounds for proceeding against petitioner by issuing mandatory show cause notice under S. 24(2) of Punjab Sales Tax on Services Act, 2012, nor sought any representation or provided opportunity of hearing to petitioner---Without fulfilling all requisite formalities for fixing liability of petitioner the authority simply proceeded to adopt coercive measures---Authority should have followed minimum requirement of principles of natural justice i.e., issuance of notice to petitioner---Taxing authorities could not demand amount without issuing show cause notice and providing opportunity of hearing and fixing liability in terms of relevant provisions of law---High Court directed the authority to first get petitioner registered and after conducting audit of petitioner's business, issue show cause notice and provide opportunity of hearing, hereafter, liability against petitioner could be fixed and resultantly set aside the order passed by the authority.
Messrs Bissma Textile Mills v. Federation of Pakistan and others 2002 PTD 2780; Messrs Kind Traders v. Dy. Collector and 2 others 2008 PTD 1551; Executive Engineer, Qadirabad Barrage Division, Qadirabad and others v. Ejaz Ahmad 2007 SCMR 1860; Habib Bank Limited v. Ghulam Mustafa Khairati 2008 SCMR 1516 and Dr. Ashfaq Ahmad Khan v. Deputy Commissioner of Income Tax, Peshawar and others 2012 PTD 1329 rel.
Muhammad Ajmal Khan for Petitioner.
Akhtar Ali Kureshi, Standing Counsel for Pakistan.
Muhammad Ijaz, Assistant Advocate General, along with Nadeem Salah-ud-Din, Deputy Secretary (Legal) Punjab Revenue Authority.
2016 P T D 786
[Lahore High Court]
Before Shahid Jamil Khan and Muhammad Sajid Mehmood Sethi, JJ
COMMISSIONER INLAND REVENUE, LAHORE
Versus
SARITOW SPINNING MILLS LTD., LAHORE
P.T.R. No.643 of 2010, decided on 21st September, 2015.
(a) Income Tax Ordinance (XLIX of 2001)---
----Ss. 21(g) & 133---Sales Tax Act (VII of 1990), S. 34---Allowable deduction---Scope---Authorities were aggrieved of the decision made by Income Tax Appellate Tribunal whereby it was held that additional tax under S. 34 of Sales Tax Act, 1990, for late payment of sales tax was not in the nature of "fine" therefore, it was not hit by statutory disallowance of S. 21(g) Income Tax Ordinance, 2001---Validity---Any expense incurred by assessee by way of payment of fine/penalty, late payment charges etc. in breach of some law, then such an expense was not allowable deduction within the scope of provision of S. 21(g) of Income Tax Ordinance, 2001---No equity about tax and no presumption as to a tax---Nothing was to be read in and nothing was to be implied---Court had only to look fairly at the language used---If a person sought to be taxed came within the letter of the law, he must be taxed, however great hardship could thereby be involved---If the State could not bring subject within the letter of law he was free, howsoever, apparent it might be that his case was within what might be called the spirit of law---Even if two views were possible from reading of any provision of law even then the view which favored citizen/assessee had to be given preference over the second view for the reason, firstly that charge upon the subject were to be imposed by clear and unambiguous words, secondly, fiscal provision of a statute was to be construed liberally in favour of taxpayer---In case of any substantial doubt, the same was to be resolved in favour of citizen---Statutory principle of law was that the things should be done as they were required to be done in law or not at all---High Court declined to interfere in the findings passed by Income Tax Appellate Tribunal and question of law was answered in affirmative against authorities---Reference was dismissed in circumstances.
Sui Southern Gas Company Ltd. v. Commissioner of Income-Tax, Companies-V, Income-Tax Building, Shahrah-e-Kamal Ataturk, Karachi 2000 PTD 3741 rel.
(b) Interpretation of statutes---
----Meaning of words---Principles---Letter of law has to be interpreted in the sense it has been used and expressed---Words used are to be construed in their ordinary and natural sense and if different words are sued by legislature, the object is to convey different meaning.
Muhammad Asif Hashmi for Applicant.
Maqsood Ahmad for Respondent.
2016 P T D 910
[Lahore]
Before Ayesha A. Malik, J
QAISAR ABBAS and others
Versus
MEMBER (TAXES) BOR, PUNJAB and others
W.P. No.15628 of 2015 and 130 other Petitions, heard on 26th October, 2015.
(a) Interpretation of statutes---
----Fiscal statute---Retrospective effect---Principle---Tax statute operates prospectively and not retrospectively unless clearly intended---Where the legislative intent is clearly provided to give retrospective effect to a statutory provision, tax can apply with retrospective effect.
Zila Council, Sialkot through Administrator v. Abdul Ghani Proprietor Iqbal Brothers, Sialkot and others PLD 2004 SC 425 and Muhammad Ilyas v. The State 2009 SCMR 1042 rel.
(b) Punjab Agricultural Income Tax Act (I of 1997)---
----Ss.3-B & 7---Punjab Agricultural Income Tax Rules, 2001, R.14---Agricultural income tax, charging of---Procedure---Retrospective effect---Petitioners were landowners and they were aggrieved of notices issued by authorities for recovery of agricultural income tax for assessment years 2012 and 2013, whereas the provision was applicable to assessment year beginning from 1-7-2014---Validity---Purpose of S. 3-B of Punjab Agricultural Income Tax Act, 1997, was to ensure that agricultural income was paid, at least, on the declared agricultural income---Provision of S. 3-B of Agricultural Income Tax Act, 1997, was to operate irrespective of powers provided to levy and assess tax under S. 3 of Agricultural Income Tax Act, 1997---Section 3-B of Agricultural Income Tax Act, 1997, did not override charging section but was a part of charging section which essentially required an owner to pay agricultural income tax on agricultural income he had declared---Intent of charging section to the extent of levy and assessment where agricultural income was declared in income tax return was clarified by S. 3-B of Agricultural Income Tax Act, 1997---Authorities simply declared amount of agricultural tax due over a period of one, two or three years without even showing breakup for each year---Such was contrary to the provisions of law as in the first instance under Agricultural Income Tax Act, 1997, a tax return must be filed by an owner of land chargeable to tax---Secondly there must be an assessment order for an assessment year as owner of land had a right to challenge assessment order under S. 7 of Agricultural Income Tax Act, 1997---Section 3-B, Agricultural Income Tax Act, 1997 provided that an assessment order was required as it would disclose basis of calculation of tax levied---Even if the amount was taken from income tax return of owner at the rate specified in Second Schedule, an assessment order must be issued by Collector---High Court set aside recovery notices issued by authorities, as the same were illegal and in violation of mandatory provisions of law---Constitutional petition was allowed in circumstances.
Asif Khan vice Rai Muhammad Yasin, Malik Ejaz Ahmad Phulerwan, Rai Akhtar Suleman, Muhammad Nasir Khan, Mian Haseeb ul Hassan, Abdul Waheed Halib, Masood Ahmed, Ghulam Murtaza, Muhammad Bilal Pervaiz, Khan Muhammad Vehniwal, Rana Muhammad Afza, Imtiaz Hussain Khan Baloch, Saeed Akhtar Khan, Ch. Muhammad Pervaiz Jatala, Imran Maiken, Gul Shah, Muhammad Mohsin Virk, Rana Rashid Akram Khan, Rao Mujahid, Ishfaq Qayyum Cheema, Danish Ahmed Mukaram, Ch. Shahid Hussain, Zafar Iqbal Chohan, Abid Nazir Sial, Tariq Mahmood Ansari, M. Zafar Iqbal Mian, Malik Matee Ullah, Rai Barkhurdar Kharal, Mian Luqman, Rai Muhammad Shahbaz Bhatti for himself and vice Sh. Rasheed Ahmad, Ch. Muhammad Pervaiz Zia, Ms. Ummara Bashir, M. Arif Malhi and Khalid Mahmoud Ansari, M.A. Ghaffar ul Haq and Muhammad Waqas Latif for Petitioners.
Ch. Sultan Mahmood, AAG with Saif Ahmad Bhatti, Law Officer, BOR and Arif Mehdi, Deputy Secretary Recovery, BOR for Respondents.
Date of hearing: 26th October, 2015.
2016 P T D 1003
[Lahore High Court]
Before Shahid Karim, J
Messrs ALLAH TAWAKKAL STEEL MILL
Versus
FEDERATION OF PAKISTAN and others
W.P. No.16029 of 2010, heard on 6th July, 2015.
(a) Limitation---
----Where limitation had been prescribed for doing an act by an authority, under the law, the same had to be done within such period of limitation, and if the same was not done or undertaken within such period; the act shall be without jurisdiction.
Messrs Shafiq Traders through Proprietor v. Collector of Customs and another 2007 PTD 2092 and 2011 SCMR 967 rel.
(b) Sales Tax Act (VII of 1990)
----S.11(5)---Constitution of Pakistan, Art. 199---Constitutional petition---Assessment of tax---Petitioner taxpayer impugned order of Commissioner under S. 11(5) of the Sales Tax Act, 1990 for assessment of tax----Contention of the petitioner was that impugned order was ultra vires and without lawful authority as the same had been passed beyond a period of 180 days from issuance of show-cause notice to the petitioner---Held, that per S. 11 of the Sales Tax Act, 1990; beyond a period of 120 days of the issuance of the show-cause notice, the Commissioner may extend the period for reasons to be recorded and extended period could not exceed ninety days---Such mandate of law was very clear and intention of the Legislature was that matter of adjudication by officer of revenue should be concluded within a period of 120 days and in case the same was not done, the matter should be referred to Commissioner for an extension who may do so upon valid grounds and for reasons which had to be recorded in writing---Extension of such period was conspicuously missing in the present case and it was not disputed by the parties that the show-cause notice was served upon the petitioner on 28.7.2009 whereas order-in-original was dated 01.07.2010, which was almost one year beyond the period of issuance of show-cause notice---Order-in-original, in the present case, had clearly been passed beyond the time prescribed under S. 11(5) of the Sales Tax Act, 1990---Impugned order-in-original was set aside, and Constitutional petition was allowed, accordingly.
Messrs Shafiq Traders through Proprietor v. Collector of Customs and another 2007 PTD 2092 and 2011 SCMR 967 ref.
2008 PTD 60; Messrs Hanif Straw Board Factory through Proprietor v. Additional Collector (Adjudication) Customs, Central Excise and Sales Tax, Gujranwala and 2 others 2008 PTD 578; Messrs Meraj Din through Partner v. Collector Customs, Excise and Sales Tax (Appeals), Lahore and 2 others 2009 PTD 2004 and Messrs Tanveer Weaving Mills through Director Finance v. Deputy Collector Sales Tax and 4 others 2009 PTD 762 rel.
Muhammad Ajmal Khan for Petitioner.
Muhammad Asif Hashmi for Respondents.
Date of hearing: 6th July, 2015.
2016 P T D 1070
[Lahore High Court]
Before Muhammad Sajid Mehmood Sethi, J
AGRI FROCE CHEMICALS
Versus
FEDERATION OF PAKISTAN and others
W.P. No.8986 of 2015, decided on 16th June, 2015.
Sales Tax Act (VII of 1990)---
----S. 7---Sales tax, recovery of---Pendency of appeal---Grievance of petitioner was that authorities attempted to recover disputed sales tax during pendency of appeal before authorities---Validity---Authorities were not empowered to recover tax amount demanded from petitioner/tax payer till decision of appeal before Commissioner (Appeals)---High Court directed the Commissioner Inland Revenue (Appeals) to take up stay application of petitioner against notice of recovery and to decide the same and that till the time appeal was finally determined or application of stay was decided, operation of notice of recovery against petitioner would remain suspended---Constitutional petition was disposed of accordingly.
Central Board of Revenue v. Chanda Motors 1993 SCMR 39; Sun Rise Bottling Co. (Pvt.) Ltd. v. Federation of Pakistan 2006 PTD 535; 2006 PTD 1054; 2006 PTD 535; 2009 PTD 1715 and Messrs Manga Processing Industries (Pvt.) Ltd. v. Federation of Pakistan and others 2014 PTD 2005 rel.
Sh. Zafar ul Islam and Tanveer Ahmed for Petitioner.
Syed Khalid Javed Bukhari, Advisor of F.B.R. on Court's call.
2016 P T D 1078
[Lahore High Court]
Before Ayesha A. Malik, J
K.B. ENTERPRISES through Partner
Versus
FEDERATION OF PAKISTAN through Secretary and 4 others
W.P. No.12664 of 2015, decided on 2nd June, 2015.
Income Tax Ordinance (XLIX of 2001)---
----Ss. 122(9) & 131---Constitution of Pakistan, Art. 199---Constitutional petition---Fresh show-cause notice issued during pendency of appeal before Appellate Tribunal---Scope---Contention of petitioner/taxpayer was that appeal had been filed by Department against the order of Commissioner of Inland Revenue which was still pending and since the matter was pending before Appellate Tribunal, Department could not issue a fresh show cause notice on the same matter to the petitioner---Held, that since appeal of Department was pending before Appellate Tribunal, there was no occasion to issue a fresh show-cause notice, hence, impugned show-cause notice was set aside and Department was directed to pursue their appeal before Appellate Tribunal---Constitutional petition was allowed accordingly.
Khubaib Ahmad for Petitioner.
Sarfraz Ahmad Cheema for Respondents.
2016 P T D 1093
[Lahore High Court]
Before Shahid Jamil Khan and Sardar Muhammad Sarfraz Dogar, JJ
COMMISSIONER OF INCOME TAX
Versus
FRESH JUICES LTD.
W.T.A. No.36 of 2003, decided on 24th June, 2015.
(a) Finance Act (XII of 1991)---
----S.12(10)---Wealth Tax Act (XV of 1963), S.27---Corporate Asset Tax---Appeal, revision or rectification---Scope---Interpretation of S.12(10) of the Finance Act, 1991---Perusal of S.12(10) of Finance Act, 1991 showed that provisions of Wealth Tax Act, 1963 were borrowed and applied for purpose of providing appeal, revision or rectification under said section---Said sections would be read in S.12(10) of Finance Act, 1991 which were specifically borrowed---Appeal could not be claimed as a right unless provided by statute---Language of S.12(10) of Finance Act, 1991 suggested that omission of S.27 of Wealth Tax Act, 1963 while mentioning other sections of the Wealth Tax Act, 1963 was deliberate---Legislature had intentionally omitted to mention S.27 of Wealth Tax Act, 1963 in S.10(12) of Finance Act, 1991---Corporate Asset Tax was therefore, one time levy and legislature had put an end to litigation up till Appellate Tribunal level.
Sheikh Muhammad Usman v. Learned Judge Banking Court No.1, and another 2015 CLD 257 and Malik Umar Aslam v. Mrs. Sumaira Aslam and others 2014 SCMR 45 rel.
(b) Appeal (civil)---
----Scope---Appeal was not a natural or an inherent right of litigant but was a statutory right granted by law---Right of appeal could only be availed if the same was granted by law.
Mughal Surgical (Pvt.) Ltd. and others v. Presiding Officer, Punjab Labour Court No.7 and others 2006 SCMR 590 and Muzaffar Ali v. Muhammad Shafi PLD 1981 SC 94 rel.
Shahid Sarwar Chahal and Malik Asad on behalf of Muhammad Ilyas Khan along with Dr. Ishtiaq Ahmad Khan, Additional Commissioner Inland Revenue, LTU, Lahore for Applicant.
Zulfiqar Khan, Rasheed Ahmad Sh. and Maqsood Ahmad for Respondents.
2016 P T D 1103
[Lahore High Court]
Before Syed Mansoor Ali Shah, J
INSTITUTE OF ARCHITECTS, PAKISTAN (LAHORE CHAPTER)
Versus
PROVINCE OF PUNJAB and others
W.P. No.4407 of 2015, heard on 25th January, 2016.
(a) Punjab Revenue Authority Act (XLIII of 2012)---
----Ss.3, 5 & 8---Punjab Sales Tax on Services Act (XLII of 2012), Preamble & Ss. 6 & 39---Punjab Revenue Authority---Public sector organization---Appointments to public sector organization---Validity of proceedings---Improper or non-constitution of statutory public sector organization/authority---Effect---Contention of the petitioner was, inter alia, that the Punjab Revenue Authority ("Authority") had not been lawfully constituted under S. 3 of the Punjab Revenue Authority Act, 2012 and that the appointment of the Chairperson and Members of said Authority by the Provincial Government had not been done in accordance with provisions of the Punjab Revenue Authority Act, 2012 and therefore, all actions taken by the said Authority were illegal---Validity---Legal establishment of the Authority, as a corporate body, was to be done through a notification under S. 3(1) of Punjab Revenue Authority Act, 2012 and admittedly, no such notification had been issued to date; hence the Authority had not been legally established under law---Contention of the respondents that S. 8 of Punjab Revenue Authority Act, 2012 provided that existence of any vacancy or any defect in the constitution of the Authority did not render the acts, proceedings, decisions, orders of the Authority invalid was not tenable; since said S. 8 of Punjab Revenue Authority Act, 2012 presupposed that the Authority had been lawfully established and constituted in the first place and the same was not a protection clause that covered for the failure of the Provincial Government to establish or constitute the Authority---No Rules or Regulations had so far been framed under Punjab Revenue Authority Act, 2012 and the Provincial Government had not determined the manner for the appointment of the Chairperson or Members of the Authority and it was submitted on behalf of the Provincial Government that no such policy or decision to such effect existed---Chairperson and Members, in the present case, were appointed through various notifications issued by the Provincial Government and perusal of said notifications indubitably revealed that the Authority had never been established---Chairperson of the said Authority had held himself out as the Authority itself, and transacted business of the Authority and also framed various Rules, and the Provincial Government granted approval to the said Rules, knowing well that the Authority had yet not been established or constituted and the said Rules had been put up for approval only by an individual---Chairperson had also appointed all the staff and the employees of the Authority singlehandedly---No open, fair and transparent process was followed by the Provincial Government in selecting members of the Authority and in absence of Rules, appointment of Members was ultra vires the Punjab Revenue Authority Act, 2012 besides being a fraud on the statute---No provision existed in the Punjab Revenue Authority Act, 2012 for appointment of ex-offico members and therefore the same done through notifications, in the present case, was without lawful authority---Appointments of both the Chairpersons, through notifications lacked transparency, openness and a deliberative and consultative process and was at best a case of pick and choose, which reeked of official arbitrariness besides being facially discriminatory----High Court that declared failure to establish the Authority under Punjab Revenue Authority Act, 2012 rendered all acts done by the Chairperson, purporting to be the Authority, as void ab initio and since Punjab Revenue Authority had never been established under S. 3(1) of the Punjab Revenue Authority Act, 2012, therefore appointments of the Chairperson and Members of the same were in violation of the provisions of Punjab Revenue Authority Act, 2012, and hence all actions, decisions, and orders passed by the said Authority, including all Rules framed thereunder, were without lawful authority and legal force, and that all appointments of officers made under S. 39 of the Punjab Sales Tax on Services Act, 2012, by the Authority also stood vitiated---High Court observed that the Provincial Government may properly establish and constitute the Punjab Revenue Authority in terms of S. 3 of the Punjab Revenue Authority Act, 2012 and principles of law---Constitutional petitions were allowed, accordingly.
Chief Secretary Punjab and others v. Abdul Raoof Dasti 2006 SCMR 1876; PLD 2012 SC 132; Enayat Ali and others v. Province of West Pakistan and others PLD 1968 Kar. 552; The Sargodha Bhera Bus Service Limited and others v. The Province of West Pakistan PLD 1959 SC 127; Muhammad Arif and another v. The State and another 1993 SCMR 1589; Syed Wajid Ali and 4 others v. Globe Automobiles Ltd. and another 1993 SCMR 819 and Krishna Kumar Singh and another v. State of Bihar (1998) 5 SCC 643 rel.
(b) Public Law---
----Autonomous Public Sector Authority / Entity---Purpose of setting up a distinct autonomous Authority as opposed to a department or attached department of the Government---Purpose, scope and extent of such autonomy, described.
Revenue Administration: Autonomy in Tax Administration and the Revenue Authority Model by Wailliam Crandall. Fiscal Affairs Department, International Monetary Fund, June, 2010 rel.
(c) Words and phrases---
----"Ex-officio", meaning of---"Ex offico" was a Latin phrase meaning from the office, used to describe something said or done officially or by right of office or position.
Free Dictionary by Farlex rel.
(d) Civil service---
----Parameters for appointments to public sector organisations---Principles of open, fair, objective, consultative, deliberative, and transparent selection/appointment process---Jurisprudence and case-law, examined.
2014 SCMR 949; 2013 SCMR 1159; PLD 2012 SC 132 and Mushtaq Ahmad Mohal and others v. The Honourable High Court, Lahore and others 1997 SCMR 1043 rel.
(e) Public Law---
----Public sector organisations---Institutional integrity and distinctive competence---Scope---Administrative agencies, like all other institutions, develop special capabilities and proficiencies in the performance of their tasks and to say that an institution had integrity was to suggest that it was faithful to the functions, values, and distinctive set of unifying principles that defined its special competence and character---Preservation of institutional integrity involved protecting the institution from injury, destruction or decay and also protecting institutional processes, values, and unifying principles that determined an institution's distinctive competence---Integrity, at the institutional level, implied an organization that defined, and acted within a strong code of ethical conduct and positive values, and that adopted no tolerance of attitudes, actions and activities by its employees or partners that deviate from such code---Said concept was strongly interlinked with the principle of transparency, implying openness, communication and accountability and as far as organizations and institutions were concerned, the key aspect was that an integrity-based organization performed its tasks in line with its intended purpose, and was operated in a transparent, accountable, decent, ethical, faultless and invulnerable manner---Behaviour of the individuals was consistent with the values and goals that were being followed, and the organization and their associates took all necessary steps to do their work in compliance with such values---Institutional integrity in the public sector was particularly important due to the public character of these institutions that implied public trust in the institution's practices, operations, and policies.
Leadership of Public Bureaucracies: The Administrator as Conservator. By Larry D. Terry. 2nded, Routledge; Principles and Approaches in Ethics Assessment, Institutional Integrity, Agata Gurzawska University of Twente, June 2015 and Centre for Public Interest Litigation v. Union of India AIR 2011 SC 1267 rel.
(f) Public Functionary---
----Functions of---Public officials to act as trustees---Public interest---Duty of loyalty---Duty of trusteeship---Collective Good---Scope---Public officials do not act for their own sake but rather for the sake of the public interest---Role of the public official in a democracy, like the role of the State itself, was to serve the interest of the public and its members---Government in itself had no "private" interest of its own and existed for the sake of individuals---Representatives of the Government had no "self" interest that must be protected; and they must act to achieve the collective interest---Duty of the loyalty sought to prevent the serious concern that representatives of the Government would develop their own interests and use the tremendous power granted them for purposes that did not reflect the collective good---Said duty of loyalty sought to guarantee that the government took care of the public and not itself---Duty of trusteeship imposed derivative duties upon the state and trusteeship required fairness, and fairness required integrity, relevance, equality, and reasonableness---List of principles derived from the position of trusteeship was not closed, and list of values derived from the duty of fairness was not fixed---Values and principles, by nature, were on the one hand stable and on the other hand evolving and were sown in the soul of the nation and were not subject to passing trends and as such were full of vitality, and they evolve to provide fitting solutions to new problems.
Aharon Barak - The Judge in a Democracy. P/220-222 rel.
Syed Reza Ali for Petitioner (in Writ Petitions Nos.4407/2015, 27698/2014 and 18112/2014).
Imtiaz Rashid Siddiqui, Barrister Shehryar Kasuri, Muhammad Humzah and Raza Imtiaz for Petitioners (in Writ Petitions No. 18213/2013, 11627/2014, 28272/2013, 25950/2013, 16851/2015, 14764/2015, 14918/2015, 14766/2015, 14299/2015, 37683/2015 and 38187/2015)
Salman Akram Raja and Malik Ahsan Mehmood for Petitioner (in Writ Petitions Nos.17350/2013, 6498/2014 and 26963/2013).
Naveed A. Andrabi for Petitioner (in W.Ps. Nos.21463/2015, 5983/2015, 23273/2015, 7207/2014, 17854/2013, 11510/2014 and 40307/2015).
Mansoor Usman Awan for Petitioner (in Writ Petitions Nos.24049/2013, 5028/2013 and 4725/2013).
Waseem Ahmad Malik for Petitioner (in Writ Petitions Nos. 578/2014, 582/2014, 580/2014, 571/2014, 1380/2014, 767/2014, 5403/2014, 5389/2014, 773/2014, 818/2014, 822/2014, 803/2014, 729/2014, 817/2014, 575/2014, 777/2014, 732/2014, 815/2014, 1019/2014, 5391/2014, 5398/2014, 5401/2014, 5353/2014, 5396/2014, 1028/2014, 8812/2014, 5407/2014, 5405/2014, 1009/2014, 1010/2014, 1026/2014, 1378/2014, 18674/2014, 18936/2014, 1753/2016, 727/2016, 374/2016, 32897/2015, 1887/2016 and 40156/2015).
Muhammad Masood Chishti and Waseem Ahmad Malik, (in W.P. No.14508/2013).
Uzair Karamat Bhandari, Mian Muhammad Kashif and Muhammad Suhail Tipu for Petitioners (in Writ Petitions Nos.8208/2014, 39392/2015 and 39601/2015)
Muhammad Ajmal Khan, Mian Abdul Ghaffar and Sumaira Khanum for Petitioners (in Writ Petitions Nos. 5803/2013, 31549/2015, 31540/2015, 31979/2015, 31547/2015, 29795/2015, 31538/2015, 28663/2015, 28664/2015, 28650/2015, 12646/2015, 4130/2015 and 39286/2015).
Dr. Ilyas Zafar and Syed Nasir Ali Gillani for Petitioners (in W.P. No.6253/2015).
Shezada Mazhar, Jawad Khan Lodhi and Asad Raza for Petitioners (in Writ Petitions Nos.15945/2015 and 20091/2015).
Muhammad Mohsin Virk, Abu Baker Haider and Shahzad Saleem Bhatti, for Petitioner (in Writ Petitions Nos.31403/2015, 31400/2015, 31405/2015, 20440/2015, 35011/2015).
Abdul Waheed Habib for Petitioner (in Writ Petitions Nos.35537/2015, 32971/2015, 32959/2015 and 34216/2015).
Moiz Tariq for Petitioners (in Writ Petitions Nos. 1565/2016, 1567/2016, 1572/2016, 1573/2016, 37646/2015, 35140/2015, 35187/2015, 35406/2015, 35282/2015, 35334/2015, 35255/2015, 35267/2015, 35186/2015, 37650/2015, 37653/2015, 37656/2015, 37658/2015, 36098/2015, 35139/2015, 35271/2015, 35306/2015, 35360/2015, 35405/2015, 38392/2015, 38405/2015, 35834/2015, 35836/2015, 35841/2015, 35843/2015, 35844/2015, 35845/2015, 35851/2015, 35852/2015, 35853/2015, 35854/2015, 35855/2015, 35856/2015, 35280/2015 and 36450/2015).
Zulfiqar Khan and Tanveer Hussain for Petitioners (in Writ Petitions Nos. 18809/2014, 18805/2014, 18969/2014, 18806/2014, 18804/2014, 19559/2014, 18968/2014, 18812/2014, 18808/2014, 18807/2014, 18811/2014, 30594/2015, 30577/2015, 30593/2015, 1264/2016 and 35822/2015).
Raja Jehanzeb Akhtar for Petitioner (in W.P. No. 5316/2015).
Adnan Ahmad for Petitioner (in W.P. No.38907/2015).
Syed Muhammad Ijaz for Petitioner (in W.P. No.40373/2015).
Masood Ahmad Wahla for Petitioner (in W.P. No.698/2016).
Malik Sahib Khan Awan for Petitioner (in W.P. No.36023/2015).
Rana Hamad Aslam for Petitioner (in W.P. No.37725/2015).
Zia Haider Rizvi and Sajjad Haider Rizvi for Petitioners (in Writ Petitions Nos.26223/2015 and 33043/2015).
Zulfiqar Ali Khan for Petitioner (in W.P. No.19739/2015).
Sikandar Javed for Petitioner (in Writ Petitions Nos.23327/2015, 30339/2015, 24749/2015, 24885/2015 and 24750/2015).
Khurram Shahbaz Butt for Petitioner (in Writ Petitions Nos.11850/2013 and 21536/2015).
Sumair Saeed Ahmad for Petitioner (in Writ Petitions Nos.29695/2015 and 29696/2015)
Khubaib Ahmad for Petitioner (in Writ Petitions Nos.31248/2015 and 31236/2015).
Muhammad Amir Sohail for Petitioner (in Writ Petitions Nos.8789/2015 and 19078/2015).
Ghulam Murtaza for Petitioner (in Writ Petitions Nos.11807/2014 and 11802/2014).
Sirdar Ahmad Jamal for Petitioner (in Writ Petitions Nos.8072/2014 and 8397/2014).
Assad Ullah Jaral for Petitioner (in Writ Petitions Nos.11034/2015 and 11027/2015).
Hamza H. Rashid and Ch. Saeed Ashraf for Petitioners (in Writ Petitions Nos.723/2015, 27465/2015 and 23314/2015).
Imran Anjum Alvi for Petitioners (in Writ Petitions Nos.1375/2015, 4489/2015, 2915/2015, 2665/2015, 2081/2015, 2681/2015 and 1373/2015).
Saqib Akram Gondal for Petitioner (in Writ Petitions Nos.17365/2015, 17364/2015, 17366/2015 and 17367/2015).
Ch. Riaz Ahmad Basra for Petitioner (in W.P. No.12686/2014).
Awais Ahmad Bhatti for Petitioner (in W.P. No.15486/2015).
Hyder Ali Khan for Petitioner (in W.P. No.4124/2015).
Zulfiqar Ali Khan for Petitioner (in W.P. No.997/2014).
Jawad Hassan, Haider Zaman Qureshi and Rana Muhammad Asif for Petitioner (in W.P. No.33002/2013).
Malik Muhammad Ali Awan for Petitioner (in W.P. No.31877/2015).
Barrister Ahmad Umar Saqib for Petitioner (in W.P. No.16874/2013).
Sardar Kalim Ilyas for Petitioner (in W.P. No.32573/2013).
Hamza Khan for Petitioner (in W.P. No.33876/2014).
Syed Samar Hussain for Petitioner (in W.P. No.15864/2013).
Akhtar Javaid Malik for Petitioner (in W.P. No.8845/2014).
Ali Sibtain Fazli, Hasham Ahmad and Umer Tariq Gill for Petitioners (in W.P. No.7995/2014).
Mian Muhammad Ismail Thaheem for Petitioner (in W.P. No.7686/2014).
Mian Muhammad Irfan for Petitioner (in W.P. No.9130/2014).
Shahid Pervaiz Jami and Mudassar Shujauddin for Petitioners (in W.P. No.11841/2014).
Mustafa Kamal for Petitioner (in W.P. No.23521/2014).
Rao Muhammad Faisal Iqbal for Petitioner (in W.P. No.7052/2013).
Ch. Waseem Ahmad and Aamir Ch. for Petitioners (in W.P. No.16565/2015).
Afzal Bashir and Rao Qasim Ali Khan for Petitioners (in W.P. No.38767/2015).
Kh. Mahmood Ayaz for Petitioner (in W.P. No.18183/2015).
Fawad Malik Awan for Petitioner (in W.P. No.21516/2015).
Khalil-ur-Rehman for Petitioner (in W.P. No.174/2015).
Nasar Ahmad and Ch. Muhammad Jahangir Wahla, Deputy Attorney Generals for Respondents.
Anwaar Hussain and Ahmad Hasan Khan, Assistant Advocate Generals, Punjab.
Sajid Ijaz Hotiana, Afzal Hussain Malik, Muhammad Awais Khalid, Umer Sharif and Barrister Muhammad Ahmad Pansota for Respondent PRA.
Sarfraz Ahmed Cheema for Respondents (in Writ Petitions Nos.5028/2013, 7052/2013, 11802/2014, 25950/2015 and 29257/2015).
Ch. Muhammad Zafar Iqbal for Respondent.
Sarfraz Akhtar for Respondent P.T.A. (in Writ Petitions Nos.32573/2013 and 14508/2013).
Ibrar Ahmad for Respondent FBR (in W.P. No.26223/2015).
Ali Raza Kabir for Respondent No.3 (in W.P. No.16874/2013).
Ayyaz Shaukat for Respondent No.4 (in W.P. No.16874/2013).
Ghulam Subhani for Respondent No.6 (in W.P. No.5316/2015).
Qaisar Abbas and Mohsin Mumtaz, Research Associates and Civil Judges, Lahore High Court Research Centre (LHCRC).
| | | --- | | It is our misfortune that when we are looking for individuals to serve our own-selves, we search for the best of doctors, the best of architects, the best of lawyers, the best of engineers, the best of cooks, the best of butlers and so on but when it comes to selecting similar individuals to serve the public, we get swayed by nepotism, by petty personal interests and by other similar ulterior and extraneous considerations and settle for the ones not worthy of serving the public in the requisite manner. Supreme Court of Pakistan |
Date of hearing: 25th January, 2016.
2016 P T D 1146
[Lahore High Court]
Before Shahid Jamil Khan and Muhammad Sajid Mehmood Sethi, JJ
COMMISSIONER OF INCOME TAX
Versus
KHUSHNOOD AHMED
P.T.R. No.414 of 2008, decided on 30th November, 2015.
Income Tax Ordinance (XLIX of 2001)---
----Ss. 133 & 153---Reference---Payments for goods and services---Omission of word 'professional' from S.153(9)(b), Income Tax Ordinance, 2001---Effect---Income tax authorities contended that exclusion from federal tax regime was only for 'professional' services and not for other services---Validity---If legislature intended to restrict the provision only for professional services, for taxation under federal tax regime, there was no need to omit the word 'professional' from S.153(9)(b) of Income Tax Ordinance, 2001---Sale of goods under clause (a) and services under clause (b) of S. 153(9) of Income Tax Ordinance, 2001, were specifically excluded in 153(9)(c) of Income Tax Ordinance, 2001---Authorities while interpreting S. 153(9)(c) of Income Tax Ordinance, 2001, in their own manner were ignoring grammatical rule that phrase 'other than a contract for' would also be read as the phrase 'the rendering of or providing of services', besides reading it with the phrase 'the sale of goods'---Expression 'rendering of or providing of services under a contract' would be excluded from clause (c) of S. 153(9) of Income Tax Ordinance, 2001---Reference was dismissed in circumstances.
Messrs Premier Mercantile Services (Pvt.) Ltd. v. Commissioner of Income Tax, Karachi 2007 PTD 2521; Commissioner of Income Tax/Wealth Tax, Multan Zone, Multan v. Rehman Enterprises 2008 PTD 1897; Commissioner of Income Tax v. Cress Gas Carriers, Sahiwal 2010 PTD 2349; Commissioner Inland Revenue (Legal) RTO v. Ever Green Trading Co. 2011 PTD 549 and Messrs Central Insurance Co. and others v. The Central Board of Revenue, Islamabad and others 1993 SCMR 1232 ref.
Muhammad Asif Hashmi for Applicant.
Ehsan-ur-Rehman Sheikh, Amjad Hussain Malik, Liaquat Ali Chaudhry, Javed Athar, Muhammad Yahya Johar, Shahid Sarwar Chahil, Saba Saeed Sheikh, Qamar Farooq, Muhammad Zahid on behalf of Sajjad Haider Rizvi and Bashir Hussain Ch. on behalf of Mian Yusuf Umar, for Applicants in connected Tax References.
Nadeem Mahmood Mian, Standing Counsel.
Mehmood Aslam Lilla, Director Law (FBR) and Babar Nawaz, Deputy Director (FBR).
Waheed Shahzad Butt, for Respondent.
Muhammad Ajmal Khan and Moshtaq Ahmad Mohal, for Respondents in connected Tax References.
Date of hearing: 30th November, 2015.
2016 P T D 1168
[Lahore High Court]
Before Shahid Karim, J
Messrs ARSHAD CORPORATION (PVT.) LTD. through General Manager Finance
Versus
FEDERAL BOARD OF REVENUE, ISLAMABAD and 2 others
W.P. No.24400 of 2013, decided on 10th December, 2015.
(a) Income Tax Ordinance (XLIX of 2001)---
----S. 115(4)---"Return of income" and "statement"---Distinction---Filing of a return of income and of a statement are two different regimes and run parallel to each other---In case a person is obliged to file a statement merely in terms of S. 115(4) of Income Tax Ordinance, 2001, the person stands discharged with regard to his tax liability.
(b) Income Tax Ordinance (XLIX of 2001)---
----S. 120(4)---Commissioner, powers of---Scope---Provisions of S. 120(4) of Income Tax Ordinance, 2001, merely give Commissioner the power to issue notice to taxpayer in case return of income furnished is not complete.
(c) Income Tax Ordinance (XLIX of 2001)---
----Ss. 114, 115, 120 & 154---Income Tax Rules, 2002, Rr. 34 & 39---Audited accounts of the company---Assessees were aggrieved of order passed by Commissioner declaring their returns as invalid returns---Validity---Assessees were not classified as persons included in the ambit of S. 114 of Income Tax Ordinance, 2001---Provisions of S. 120 of Income Tax Ordinance, 2001, could not be called in aid by the authorities to declare the statement filed by petitioners as invalid---Provisions of S. 120(4) of Income Tax Ordinance, 2001, did not have any nexus with the provisions of S. 115(4) of Income Tax Ordinance, 2001, and it was otiose and unlawful for Assistant Commissioner Inland Revenue to rely upon it in order to base order in question---Notice under S. 114(4) of Income Tax Ordinance, 2001, was also ultra vires the powers of Assistant Commissioner in case of the assessees since that provision vested in the Commissioner with the power to issue notice to require any person to file a return of income and who had failed to do so to furnish a return of income for that year---Least that was required of authorities to issue an order under S. 120 of Income Tax Ordinance, 2001 as also to issue a notice in terms of S. 114(4) of Income Tax Ordinance, 2001 was to determine as a fact that liability of assessees was not the final liability and deduction so made from proceeds of export was not the final tax in terms of S. 115(4) of Income Tax Ordinance, 2001---High Court declared orders and notices in question issued to assessees without lawful authority and of no legal effect---Constitutional petition was allowed in circumstances.
Shahbaz Butt and Khurram Shahbaz Butt for the Petitioner.
Saeed ur Rehman Dogar for Respondent.
Asif Hashmi, for Respondents (in W.P. No.32754 of 2013).
Date of hearing: 24th November, 2015.
2016 P T D 1328
[Lahore High Court]
Before Ayesha A. Malik, J
HONDA ATLAS CAR PAKISTAN LTD.
Versus
FEDERATION OF PAKISTAN and others
W.P. No.9491 of 2006, decided on 22nd January, 2016.
Federal Excise Act (VIII of 2005)---
----Ss. 2(3), 2(12a), 3 & First Sched.---Federal Excise General Order No. 4 of 2006, dated---Imposition of Federal Excise Duty on franchise services---"Franchise services"---Definition, nature and scope---Petitioner, engaged in the business of manufacture and sale of automobiles, challenged levy of federal excise duty for franchise services provided to the petitioner under a Licence and Technical Assistance Agreement with a foreign automobile manufacturer---Contention of petitioner, inter alia, was that it did not receive "franchise services", in terms of the definitions of the words "franchise" and "services" under Ss. 2(23) & 2(12a) of the Federal Excise Act, 2005, respectively---Validity---Franchising was a business relationship between the parties where the franchisor serviced and facilitated the business of the franchisee within defined parameters---In the present case, perusal of the agreement between petitioner and the foreign automobile manufacturer revealed that the petitioner ran its business in accordance with the foreign automobile manufacturer's model and the petitioner essentially purchased a business package from the foreign automobile manufacturer which entailed provisions of services aimed at guaranteeing a uniform operation and style of the product and for such services, the petitioner paid a fee and royalty---Fact that technical assistance and know-how under the agreement remained the proprietary right of the foreign automobile manufacturer did not mean or suggest the same was not a service provided by the foreign automobile manufacturer; and furthermore, the fact that the petitioner manufactured the automobiles did not take the ambit of the agreement out of franchise services, as the petitioner manufactured and sold said automobiles in Pakistan and also proved after sale services---Franchise services provided by the foreign automobile manufacturer were for manufacture, sale and all related services provided by the petitioner and the same fell within the ambit of "franchise" and "services" under the Federal Excise Act, 2005---Agreement between the parties in fact provided a way of doing business to the petitioner, which tantamount to a service provided by foreign automobile manufacturer and therefore, since the same was a service provided to the petitioner which originated outside Pakistan but was rendered in Pakistan, petitioner was liable to pay federal excise duty under S.3 of the Federal Excise Act, 2005---Constitutional petition was dismissed, in circumstances.
Dr. MB Ankalsaria v. Commissioner of Wealth Tax, Karachi 1992 SCMR 1755; Diamond Food Industries Limited v Joseph Wolf GmbH & Co. and another 2004 CLD 343 and Amin Textile and others v. Federation of Pakistan and others 2002 CLC 1714 ref.
(b) Franchise---
----Franchise agreement---Connotation---'Franchisor' and 'franchisee'---Rights and obligations---Franchise agreement allowed the franchisee the right to use the mark or patent of a franchisor for a royalty or fee and the franchisee must ensure that the goods or services maintained the uniformity and standard of the franchisor's goods or services----Franchisor provided technical assistance and know-how to protect its mark or patent so as to ensure uniformity in quality and therefore, a franchisor shared its business model with all relevant details so that the franchisee could use the patent, logo or mark of the franchisor and maintain the standard, style, quality and look of the product or services provided, as if it was given by the franchisor itself---Franchisor must grant the franchisee the right to use its patent or mark or logo, that was its intellectual property, to the extent necessary to operate the franchisee business---Franchisor also provided the assistance and know-how in support of the business and helped solve problems along the way.
Waleed Khalid and M. Shoaib Rashid for Petitioner.
Muhammad Zikria Shikh, DAG for Pakistan.
Sarfraz Ahmad Cheema and Shahzad Ahmad Cheema for Respondents.
Date of hearing: 22nd January, 2016.
2016 P T D 1470
[Lahore High Court]
Before Ayesha A. Malik, J
TAHIR ABBAS and others
Versus
GOVERNMENT OF PUNJAB and others
W.P. No.4406 of 2016 with others connected petitions, heard on 16th March, 2016.
(a) Punjab Agricultural Income Tax Act (I of 1997)---
----Ss. 3, 4 & 2---Punjab Agricultural Income Tax Rules, 2001, Rr. 5, 6, 12 & 13---Assessment of agricultural income tax---Procedure---Filing of Return of income---Scope---Limitation for assessment---Best judgment assessment---Assessment orders by the Collector for several different assessment years---Validity---First assessment order passed by the Collector was for the assessment year 2012-13 i.e. 01-07-2012 to 31-06-2013---Said order was passed on 12-01-2016 which was time barred as more than two years had passed from the date of impugned order---No assessment or recovery could be made for said assessment year---Assessment order was to be passed at the end of the assessment year and thereafter the tax be collected---Assessment year would start from July and end twelve months thereafter---Authorities were directed to ensure to follow the requirements of law and pass assessment orders for each assessing year at the prescribed time---Collector had to determine as to which tax was higher to be paid on cultivated land or on agricultural income---Collector must pass speaking order to show as to how he calculated and assessed the tax from the owner of the property---Nothing was on record to explain and justify the impugned assessment orders which were not a speaking order---Assessment orders did not give any detail on the basis of which the figures had been calculated and tax had been assessed---Agricultural income tax return filed by the owner of the land must be taken into consideration for assessment of agricultural income tax---Every owner of the land had to file a return on or before 30th of December following income year---Collector could extend the date for filing of returns but no extension of time could be given beyond 30 days---Where no return was filed, notice must be issued to the owner by the Collector requiring the return to be filed---If no return was filed, then the Collector could pass assessment order based on his "best judgment assessment"---Impugned assessment orders passed by the Collector were set aside and cases were remitted for passing fresh order after following the required process of law---Constitutional petition was allowed in circumstances.
(b) Administration of justice---
----Mandate of the law must be strictly followed.
Saeed Akhtar Khan, Ch. Muhammad Idrees, Intizar Hussain, Mian Abdul Aziz, Iqbal Khurshid Mughal, Mian Kashif Abbas, Muhammad Shafique Anjum, Ch. Zulfiqar Ali, M.A. Ghaffar ul Haq, Ch. Irfan Sadiq Tarrar, Muhammad Kamran ur Rashid Meo, Sh. Muhammad Akram, Ghulam Rasool Sail and Mian Tariq Husain for Petitioners.
Ch. Sultan Mahmood, AAG, with M. Khalid, AC Kamalia and Rizwan Nazir, Deputy Secretary (Recovery Board of Revenue, Punjab for Respondents.
Date of hearing: 16th March, 2016.
2016 P T D 1649
[Lahore High Court]
Before Shahid Jamil Khan, J
Messrs KASHMIR SUGAR MILLS LTD.
Versus
FEDERATION through Secretary Revenue and others
W.P. No.27266 of 2012, decided on 13th January, 2016.
Federal Excise Act (VII of 2005)---
----Ss. 3 & 42---Recovery of federal excise duty---Show cause notice---Interpretation of any provision by Federal Board of Revenue---Scope---Petitioner was aggrieved of show cause notice issued by adjudicating authority and consequential orders-in-original passed as consequence of interpretation by Federal Board of Revenue---Validity---Primary jurisdiction to interpret any provision was vested with quasi-judicial authorities under Federal Excise Act, 2005, which should not be by passed merely because taxpayer was offering another interpretation---No jurisdictional defect was found in issuance of show cause notice, therefore, no interference was warranted to such extent---Authorities followed interpretation made by Federal Board of Revenue through order-in-original and the same was against provisions of S. 42 of Federal Excise Act, 2005---High Court directed the petitioners to plead their cases as well as interpretation before Adjudicating Authority by reply to show cause notices already issued and set aside order-in-original---Adjudicating Authority was directed to proceed in the matter with independent mind after addressing all points raised or to be raised by petitioners before it---Constitutional petition was allowed accordingly.
Deputy Commissioner of Income Tax/Wealth Tax, Faisalabad and others v. Messrs Punjab Beverage Company (Pvt.) Ltd. 2007 PTD 1347 ref.
Mughal-e-Azam Banquet Complex through Managing Partner v. Federation of Pakistan through Secretary and 4 others 2011 PTD 2260; Northern Power Generation Company Limited v. Federation of Pakistan and others 2015 PTD 2052; Attock Cement Pakistan Ltd. v. Collector of Customs, Collectorate of Customs and Central Excise, Quetta and 4 others 1999 PTD 1892 and Messrs Central Insurance Co. and others v. The Central Board of Revenue, Islamabad and others 1993 SCMR 1232 rel.
Akhtar Ali and Sumair Saeed Ahmad for Petitioners.
Sarfraz Ahmad Cheama, Ch. Zafar Iqbal and Tariq Saleem Sheikh, Dr. Ishtiaq Ahmad Khan, Commissioner, Inland Revenue, LTU, Lahore for Respondents.
Date of hearing: 13th January, 2016.
2016 P T D 1695
[Lahore High Court]
Before Abid Aziz Sheikh and Shahid Karim, JJ
COMMISSIONER INLAND REVENUE
Versus
Messrs AMTEX LTD.
S.T.R. No.9 of 2015, decided on 11th November, 2015.
Sales Tax Act (VII of 1990)---
----Ss. 3, 7, 21 & 47---De-registration, blacklisting and suspension of supplier---Issuance of refund---Validly issued invoices by supplier would not be affected by subsequent blacklisting of such supplier unless such invoices were specifically declared fake through speaking order after hearing the parties and having direct nexus with subsequent blacklisting of supplier---In the present case, when transaction was made, the suppliers were active and duly registered and invoices in question had no direct nexus with the subsequent blacklisting and suspension of supplier---Refund could not be denied to assessee merely for the reason that supplier was blacklisted and registration suspended subsequently---Reference was answered accordingly.
Commissioner Inland Revenue v. Tariq Poly Pack (Pvt.) Ltd. 2015 PTD 2256 rel.
Ms. Saba Saeed Sheikh for Applicant.
Khubaib Ahmad for Respondent.
2016 P T D 1736
[Lahore High Court]
Before Muhammad Sajid Mehmood Sethi, J
PUNJAB BEVERAGES CO. (PVT.) LTD. through General Manager Finance
Versus
FEDERATION OF PAKISTAN through Ministry of Finance and others
Writ Petition No.16047 of 2010, decided on 20th January, 2016.
(a) Interpretation of statutes---
----"Statute" and "administrative instructions"---Conflict---Scope---In case of conflict between a statute and instructions of Department, instructions/orders of the department are to be ignored and statute law has to be followed.
The Central Board of Revenue, Islamabad and others v. Sheikh Spinning Mills Limited, Lahore and others 1999 SCMR 1442 rel.
(b) Federal Excise Act (VII of 2005)---
----S.2(12a)---Federal Excise Rules, 2005, R.43-A(1)---S.R.O. No.561(I)/2006, dated 5-6-2006---Franchise services---Proof---Federal Excise Duty, recovery of---Show cause notice---Alternate remedy---Petitioner company assailed show cause notice issued for recovery of Federal Excise Duty on the ground of franchiser and franchisee relationship---Plea raised by authorities was that alternate remedy was available to petitioner---Validity---In order to attract levy of Federal Excise Duty for services rendered, which included franchise services within the contemplation of law, authorities were under a legal duty to establish an identifiable link between franchiser and franchisee of services rendered against a fee or consideration---Authorities proceeded on ill-founded assumptions as there was nothing on record to prove that petitioner had paid for services either to franchiser---In absence of such payments there was no question of any amount to be payable by way of Federal Excise Duty for 'services' rendered---Authorities failed to bring on record any franchise agreement or any proof of payments for services rendered by alleged franchiser against a fee or consideration---Show cause notice issued by authorities was without any lawful basis and was declared to be illegal and of no legal effect---High Court observed that no purpose would be served in requiring petitioner to pursue alternate remedies---Constitutional Petition was allowed in circumstances.
Messrs Northern Bottling Company (Pvt.) Ltd.'s case (Sales Tax Reference No.5 of 2003; Iqbal Hussain through authorized attorney v. Federation of Pakistan through The Secretary, Revenue Division and 2 others 2010 PTD 2338 and Commissioner Inland Revenue, Peshawar v. Messrs Northern Bottling Company (Pvt.) Ltd. and another C.Ps. Nos. 1742 and 1743 of 2014 fol.
Nagina Silk Mill, Lyallpur v. The Income-Tax Officer, A-Ward Lyallpur and another PLD 1963 SC 322; Edulji Dinshaw Limited v. Income-Tax Officer PLD 1990 SC 399; Messrs Ulian Hoshang Dinshaw Trust and others v. Income-Tax Officer, Circle XVIII South Zone, Karachi and others 1992 SCMR 250; Al Ahram Builders (Pvt.) Ltd. v. Income Tax Appellate Tribunal 1993 SCMR 29; Messrs Chenab Cement Product (Pvt.) Ltd. and others v, Banking Tribunal, Lahore and others PLD 1996 Lah. 672; United Business Lines, S.I.E. Gujranwala and another v. Government of Punjab through Secretary, Local Government, Lahore and 5 others PLD 1997 Lah. 456; Attock Cement Pakistan Ltd. v. Collector of Customs, Collectorate of Customs and Central Excise, Quetta and 4 others 1999 PTD 1892; Messrs Shamim & Co. v. Tehsil Municipal Administration, Multan City through Nazim and 2 others 2004 YLR 366; Commissioner of Income Tax v. Messrs Eli Lilly Pakistan (Pvt.) Ltd. 2009 PTD 1392; Abbas Corporation v. Appellate Tribunal and another 2005 PTD 803; Deputy Commissioner of Income Tax/ Wealth Tax, Faisalabad and others v. Messrs Punjab Beverage Company (Pvt.) Ltd. 2007 PTD 1347; Mughal-e-Azam Banquet Complex through Managing Partner v. Federation of Pakistan through Secretary and 4 others 2011 PTD 2260; Lone Cold Storage Lahore v. Revenue Officers, Lahore Electric Power Co. and others 2010 PTD 2502; Messrs Riaz Bottlers v. Federation of Pakistan W. P. No.1812 of 2010 and Commissioner Inland Revenue Zone-III v. Messrs Northern Bottling Company (Pvt.) Ltd. and others S.T.R. No.5 of 2013 ref.
Ali Sibtain Fazli for Petitioner.
Sarfraz Ahmad Cheema, Sultan Mehmood, Izhar-ul-Haque Sheikh, Agha Muhammad Akmal Khan and Tariq Manzoor Sial for Respondents.
Date of hearing: 11th December, 2015.
2016 P T D 1761
[Lahore High Court]
Before Muhammad Sajid Mehmood Sethi, J
Messrs EAC ENGINEERING (PVT.) LTD. through Chief Executive
Versus
The FEDERATION OF PAKISTAN through Secretary Ministry of Law and 3 others
Writ Petition No.36936 of 2015, heard on 21st January, 2016.
Sales Tax Special Procedure (Withholding) Rules, 2007---
----Rr.1 & 2(2)(A)---Disputed question of fact---Collection of sales tax---Show cause notice was issued to petitioner for short withholding of sales tax as it was withholding agent---Validity---High Court in its Constitutional jurisdiction could not go into question involving minute details nor could it decide facts of which either no foundation was laid or otherwise involved disputed question of fact which necessitated taking of evidence---Questions raised by petitioner could not be resolved without entering into process of inquiry which rendered constitutional petition incompetent---Petitioner failed to point out that notice in question was illegal, without lawful authority and coram non judice---High Court directed Deputy Commissioner Inland Revenue to decide notice in question strictly in accordance with law after granting opportunity of hearing to petitioner and other concerned---Petition was dismissed accordingly.
Yousaf Ali v. Muhammad Aslam Zia and 2 others PLD 1958 SC 104; Mian Muhammad Nawaz Sharif v. President of Pakistan and others PLD 1993 SC 473; Federation of Pakistan and others v. Shaukat Ali Mian and others PLD 1999 SC 1026; National Bank of Pakistan and 117 others v. SAF Textile Mills Ltd. and another PLD 2014 SC 283; Province of the Punjab through Collector District Khushab, Jauharabad and others v. Haji Yaqoob Khan and others 2007 SCMR 554; Overseas Pakistanis Foundation and others v. Sqn. Ldr. (Retd.) Syed Mukhtar Ali Shah and another 2007 SCMR 569; Messrs Shah Nawaz Khan and Sons v. Government of N.-W.F.P. and others 2015 SCMR 945; Director, Directorate-General of Intelligence and Investigation and others v. Messrs Al-Faiz Industries (Pvt.) Limited and others 2006 SCMR 129; Messrs Ayesha Textile through Managing Partner v. Deputy Collector (Incharge Audit Division), Sales Tax and Central Excise Lahore and 4 others 2005 PTD 2442; Commissioner of Income Tax, Zone-C, Lahore v. Messrs Margalla Textile Mills Ltd., Lahore 2008 PTD 1982; Sui Northern Gas Pipelines v. Deputy Commissioner Inland Revenue and others 2014 PTD 1939; Muhammad Jameel Das (W. Gopal Das) and another v. The Pakistan through Secretary, Ministry of Communication, Government of Pakistan 2 others 1999 CLC 541; Messrs Ahmad Traders through Sole Proprietor v. Frontier Works Organization (F.W.O.) headquarters, Rawalpindi through Director-General and another 2008 CLC 1132; Messrs FMC United (Pvt.) Ltd. v. Federation of Pakistan and others W.P. No.19897 of 2013, Messrs Hirnina and Co. Pakistan Ltd. Karachi v. Commissioner of Sales Tax Central, Karachi 1971 SCMR 128; Engineer Iqbal Zafar Jhagra and Senator Rukhsana Zuberi v. Federation of Pakistan and others 2014 PTD 243; The Collector of Sales Tax and others v. Superior Textile Mills Ltd., and others PLD 2001 SC 600; Messrs Mandiali Paper Mills Ltd. Lahore v. Collector of Central Excise and Sales Tax, Lahore and 2 others 2006 PTD 2429; Inspecting Additional Commissioner of Income-Tax and others v. Messrs MICRO PAK (Pvt.) Limited and others 2002 PTD 877; Commissioner of Income Tax, Zone-C, Lahore v. Messrs Margalla Textile Mills Ltd., Lahore 2008 PTD 1982 and Sui Northern Gas Pipelines v. Deputy Commissioner Inland Revenue and others 2014 PTD 1939 ref.
Muhammad Ajmal Khan and Sumaira Khanum for Petitioners.
Abrar Ahmad for Respondents.
Date of hearing: 21st January, 2016.
2016 P T D 1790
[Lahore High Court]
Before Muhammad Sajid Mehmood Sethi, J
Messrs BISMA TEXTILE MILLS LTD., LAHORE through Chief Executive
Versus
FEDERATION OF PAKISTAN through Secretary Revenue Division Chairman and 2 others
Writ Petition No.5832 of 2009, decided on 29th December, 2015.
(a) Income Tax Ordinance (XLIX of 2001)---
----S. 221---Rectification, powers of---Scope---Assessee assailed notices on the ground that income tax officer had no powers to rectify assessment order in original---Objection raised by authorities was that the petition under Art. 199 of the Constitution was not maintainable---Validity---Rectification jurisdiction was a very limited jurisdiction which could only be exercised for rectifying mistake apparent on the record or which was floating on the surface of the record---Such jurisdiction could not be assumed to set aside a well-reasoned order which was passed after due deliberation, application of mind and due consideration of relevant provisions of law and the applicable case-law---Notices in question were not legally justified therefore, objection of maintainability of Constitutional petition was overruled and Constitutional petition was held to be maintainable---High Court set aside notices in question as the same were illegal and without lawful authority---Constitutional petition was allowed accordingly.
Commissioner of Income-Tax, East Pakistan v. Fazlur Rahman PLD 1964 SC 410; Commissioner of Income Tax, Karachi v. Messrs Shadman Cotton Mills Ltd., Karachi through Director 2008 PTD 253; Commissioner of Income-Tax Company's II, Karachi v. Messrs National Food Laboratories 1992 SCMR 687; Arshad Hussain v. Collector of Customs and others 2010 PTD 104; Zarai Taraqtati Bank Limited and others v. Mushtaq Ahmed Korai 2007 SCMR 1698; Noor Muhammad and others v. Ghulam Rasul and others 1999 SCMR 705; Mughal-e-Azam Banquet Complex v. Federation of Pakistan and others 2011 PTD 2260 and Northern Power Generation Company Ltd. v. Federation of Pakistan and others 2015 PTD 2052 ref.
(b) Constitution of Pakistan---
----Art.199---Constitutional petition---Maintainability---Notices issued to the petitioner were not legally justified, constitutional petition in the matter was maintainable.
Sajid Ijaz Hotiana for Petitioner.
Ch. Muhammad Yasin Zahid, for Respondents.
Date of hearing: 20th November, 2015.
2016 P T D 1899
[Lahore High Court]
Before Muhammad Khalid Mehmood Khan and Shahid Bilal Hassan, JJ
MUHAMMAD ASHRAF
Versus
STATE LIFE INSURANCE CORPORATION OF PAKISTAN through Chairman and another
E.F.A. No.860 of 2015, heard on 5th April, 2016.
Insurance Ordinance (XXXIX of 2000)---
----S. 118(2)---Insurance claim---Execution of decree---Decretal amount, calculation of---Insurance Tribunal decreed claim directing insurance company to pay group claims along with liquidated damages---Insurance company, pending appeal, deposited decretal amount as security for suspension of execution of decree---Plea raised by decree holder was that in terms of decree, insurance company was liable to pay decretal amount along with 5% liquidated damages on monthly rests basis---Validity---Insurance company had deposited a sum of Rs.4,427,403 but that amount was not payable to decree holder and decree was not realized on deposit of amount with the Court---Executing Court had erred in law while holding that insurance company had deposited amount of decree in Court and as such, decree stood satisfied---Decree was to be satisfied on payment of entire decretal amount as ordered by Trial Court---Insurance company objected the calculation/amount payable in terms of decree---High Court directed Executing Court to calculate decretal amount as per terms of decree by remanding the matter with direction to insurance company to pay the amount of decree on date fixed by Court---High Court allowed Executing Court to adjust already paid amount to decree holder while calculating decretal amount and to decide objections of insurance company about calculation of decretal amount---Appeal was allowed accordingly.
Liaqat Ali Butt for Appellant.
Abrar Ahmad for Respondents.
Date of hearing: 5th April, 2016.
2016 P T D 2004
[Lahore High Court]
Before Shahid Karim, J
HAIDER INDUSTRIES through Managing Partner and others
Versus
FEDERATION OF PAKISTAN through Secretary, Law Division at Islamabad and others
Writ Petition No. 30425 of 2014, decided on 12th January, 2016.
(a) Income Tax Ordinance (XLIX of 2001)----
----Ss. 53, 147, 148 & Second Sched., Part III, Cl. 72-B---SRO No. 717(I)/14 dated 7.8.2014---Exemptions and tax concessions in Cl. 72B Second Sched. of Income Tax Ordinance, 2001---Scope---Tax collected at import stage---Nature---Taxpayers were industrial undertakings within the meaning of S.2(29-C) of Income Tax Ordinance, 2001 and importing raw material for the purpose of self-consumption, regarding which advance tax was liable to be collected at import stage in terms of S. 148 of the Ordinance, and the tax thus collected was adjusted against the tax liability of the petitioners for that tax year while furnishing the return of total income under S. 168 of the Ordinance---Petitioners challenged Notification/SRO No. 717(I)/14 dated 7.8.2014 to the extent of conditions Nos. V and VIII thereof on the ground that said conditions were in the nature of restriction, as opposed to the purpose of Cl.72B of Second Sched. of the Ordinance---Validity---Clause 72B of Second Schedule of the Ordinance provided that a certificate would only be issued by the Commissioner if an application for the certificate was filed in the manner and conditions as specified by notification in the official gazette issued by the Board for the purpose of that clause---Words 'issued by the Board for the purpose of this clause' were pivotal, which had to be read in the context of the issuance of the notification by the Board---Notification, which had to be issued by the Board was circumscribed and hedged in by the purpose delineated and expressed by Cl. 72B, and the "said purpose" was that the provisions of S. 148 of the Ordinance would not apply to an industrial undertaking if the tax liability for the current tax year had been paid on the basis of determined tax liability higher than preceding two tax years---Said purpose was the corner stone of Cl. 72B of Second Sched. and the same could not be allowed to be defeated by an evasive device or a contraption---Board could not have travelled beyond the purpose enumerated in Cl. 72B---Purpose of Cl. 72-B was the grant of exemption from the operation of S. 148 of the Ordinance, and said purpose could not have been nullified or stunted by the insertion of conditions V and VIII of impugned Notification by the Board---Clauses V and VIII of the Notification/SRO were nothing but digression of the powers given in the Cl. 72B, proviso of Second Sched. of the Ordinance to suit the Board's fancy---Terms 'manner and conditions' used in proviso of Cl. 72B must be construed in the context of the purpose and the relief contemplated by the said clause---Clause 72B made the provisions of S. 148 of the Ordinance inapplicable to an industrial undertaking---Insertion of proviso to Cl. 72B of Second Schedule of the Ordinance was not tantamount to rendering the main enactment as redundant and the same was merely an exception about the application of a certain provision and its generality to certain cases---Purposive reading of the proviso to Cl. 72B, would show that the manner and conditions referred to in the proviso had a nexus to the formalities and form of the application to be filed and the proviso could not add to the conditions laid down in Cl. 72B---Conditions that were to be attached to any exemption were to be enacted by the Legislature under S. 53(1)(d) of the Ordinance and it was not within the powers of the Board to enact any such conditions; therefore, Conditions V and VIII of impugned Notification were void---High Court, declared Notification No.S.R.O. 717(I)/14 dated 7.8.2014 as ultra vires the powers of the Board and of no legal effect to the extent of Conditions V and VIII laid down therein---Said conditions were held not be read as part of the Notification---Principles.
Under section 53(1)(c) of Income Tax Ordinance, 2001, the income or class of income or person or class of persons specified in the Second Schedule of the Ordinance would be exempted from the operation of any provision of the Ordinance subject to any condition and to the extent specified therein. Petitioners had paid the tax liability for the current tax year (subject matter of present petitions) on the basis of the determined tax liability on the higher side of the preceding two tax years, and the petitioners claimed that they were entitled to an exemption from the applicability of the provisions of S. 148 of the Ordinance. Section 148 of the Ordinance mandated that the advance tax would be collected by the Collector of Customs from every importer of goods on the value of the goods at the rate specified in Part II of First Schedule of the Ordinance. Section 148 (7) provided that the tax required to be collected under section 148 of the Ordinance would be final tax on the income of the importer arising from the imports; however, the same was subject to section 148(1) of the Ordinance, under which section 148(7) of the Ordinance would not apply in the case of imports of certain goods mentioned in section 148(7). Petitioners were although industrial undertakings and had imported raw material etc., but under clause 72B of Second Schedule of the Ordinance, they would be caught by the mischief of section 148(7) of the Ordinance, which meant that the petitioners would be liable to pay the duty on import at the time of the imports and would file their final returns and seek a refund of the excess amount which would be found due to the petitioners.
Tax collected at the import stage was in the nature of advance tax and if the same was continued to be collected despite the payment of the higher of the immediately two preceding years tax liability, the same would inevitably result in the creation of refunds in favour of the tax payers for which they would have to go through a long drawn cumbersome process, which would in turn increase the cost of the capital of the petitioners. Seeking refund by the industrial undertakings was the nemesis of the industrial undertakings vis-à-vis Federal Board of Revenue and the very purpose and intention underlying clause 72B of Second Schedule of the Ordinance was to unshackle the industrial undertakings from the vortex of seeking a refund.
Clause 72B of Second Schedule of the Ordinance provided that a certificate would only be issued by the Commissioner if an application for the said certificate was filed before the Commissioner in the manner and after fulfilling the conditions as specified by notification in the official gazette issued by the Board for the purpose of that clause. Words 'issued by the Board for the purpose of this clause' were pivotal, which had to be read in the context of the issuance of the notification by the Board. Notification, which had to be issued by the Board was circumscribed and hedged in by the purpose delineated and expressed by clause 72B, and the said purpose was that the provisions of section 148 of the Ordinance would not apply to an industrial undertaking if the tax liability for the current tax year had been paid on the basis of determined tax liability for the higher of the preceding two tax years. Said purpose was the corner stone of clause 72B and the same could not be allowed to be defeated by an evasive device or a contraption. Board could not have travelled beyond the purpose enumerated in clause 72B. Purpose of clause 72-B was the grant of exemption from the operation of section 148 of the Ordinance, and said purpose could not have been nullified or stunted by the insertion of Conditions V and VIII of impugned Notification by the Board in the Notification.
Clauses Nos.V and VIII of impugned Notification/SRO were nothing but digression of the powers given in the clause 72B, proviso of Second Schedule of the Ordinance to suit the Board's fancy. A proviso conditioned the principal matter that it qualified almost always the matter immediately preceding. Proviso to clause 72B must have been construed in the context of the general proposition regarding the true construction of the term 'proviso'.
T.S. Eliot, "Hamlet" (1919), in Selected Essays and Reading Law: The Interpretation of Legal Texts by Antonin Scalia and Bryan A. Garner rel.
Delegation must be in accordance with the statute. Purpose of clause 72B of Second Schedule of the Ordinance was grounded in practical considerations, and the intention was to rid the importers/ manufactures from the shackles of seeking a refund and in the process block their capital, which raised the question before the Court that whether said purpose could be whittled down and withdrawn through delegated powers, which ran counter to the main enactment of section 53 of the Ordinance.
De Smith's Judicial Review, Seventh Edition rel.
Presumption against ineffectiveness existed in the interpretation of all laws. A textually permissible interpretation that furthers rather obstructs the document's purpose should have been favoured. Interpretation always depended on context, the context always included effectiveness, and evident purpose always included effectiveness.
Reading Law: The Interpretation of Legal Texts by Antonin Scalia and Bryan A. Garner rel.
Cause 72B of Second Schedule of the Ordinance related to issuance of a certificate and the proviso related to that part of clause 72-B only. Holistic reading of the Conditions V and VIII of the impugned Notification would mean that the certificate would never be issued and effectively clause 72B would be rendered redundant. Laying down a condition did not include within it a condition to do away with the exemption. Terms 'manner and conditions' used in proviso of clause 72B must be construed in the context of the purpose and the relief contemplated by clause 72B. Respondents' contention, that the Conditions V and VIII had been designed to thwart any attempt on the part of the manufacturers to misuse the concession, could not be the basis of said conditions, as said purpose had to be expressed by the Legislature itself or delegated in clear terms, as the same could not have been assumed to have existed by the Board or culled out by its own subjective rules of deduction. Rest of the stipulations and terms comprising the 'manner and conditions' (apart from the Conditions V and VIII) were comprehensive enough to guard against any such attempt by the manufacturers.
Present case involved devolution, instead of delegation of, powers. Devolution (of powers) on the Board was based on the principle that was, in general, a Minister was not obliged to bring his own mind to bear upon a matter entrusted to him by a statute but he might act through a duly authorized officer. Manner and conditions for the issuance of a certificate could not have been prescribed by the Legislature in detail; thus, the same had been left to be determined by the Board by a latitude to the nature underlying the process.
Carltona Ltd. v. Commissioner of Works (1943) 2 All ER 560 and Customs and Excise Commissioner v. Cure and Deely Ltd. (1962) 1 Q.V 340 rel.
Clause 72B of Second Schedule of the Ordinance had its provinance in section 53 of the Ordinance. Legislature, in terms of section 53(1)(d) of the Ordinance, might have exempted from the operation of any provision of the Ordinance, any income or classes of income or persons of classes of persons specified in the Second Schedule. Clause 72B made the provisions of section 148 of the Ordinance inapplicable to an industrial undertaking. Clause 72B provided a condition to the effect that an industrial undertaking mast have paid the tax liability for any of the preceding two tax years, whichever was higher, and a certificate to that effect was to be issued by the concerned Commissioner; thus, clause 72B envisaged twin conditions to be fulfilled, and the proviso of clause 72B related to the latter condition. Condition as to issuance of the certificate was directly relatable to the payment of tax liability for the current year; said condition had been contemplated by section 53(1)(d) of the Ordinance, on basis of which exemption from the application of section 148 of the Ordinance would be granted. Sweep and scope of the proviso of clause 72B was wedded to the payment of tax liability, which was the basic notion. Proviso of clause 72B was merely concerned with the procedural formalities to be complied with, as the same introduced the process of filing of applications for obtaining a certificate which was the primary object of the proviso. Purposive reading of the proviso of clause 72B, therefore, would show that the manner and conditions referred to in the proviso had a nexus to the formalities and form of the application to be filed and the proviso could not add to the conditions laid down in clause 72B. Conditions that were to be attached to any exemption were to be enacted by the Legislature under section 53(1)(d) of the Ordinance and it was not within the powers of the Board to enact any such conditions; therefore, the Conditions V and VIII of impugned Notification were void.
Principle of promissory estoppel was applicable in the present case. [p. 2031] BB
Messrs Friendship Textile Mills and others v. Government of Balochistan and others 2004 SCMR 346 rel.
Insertion of a proviso to clause 72B of Second Schedule of the Ordinance could not be tantamount to rendering the main enactment as redundant and the same was merely an exception about the application of a certain provision and its generality to certain cases.
2011 SCMR 1560 and Hashwani Hotel Cases's 2007 SCMR 1131 = 2007 PTD 1473 rel.
Applying the principle of unjust enrichment to the present case, the Legislature, by clause 72B of Second Schedule of the Ordinance, had clearly intended to give a benefit to the petitioners and other persons in a similar situation. Federal Board of Revenue, by insertion of Conditions V and VIII in the Impugned Notification, had tried to unjustly enrich itself in clear violation of the mandate of clause 72B and its purpose. Unjust enrichment gave rise to restitutionary remedies. In any case where a claimant had paid tax which was not due, the restitutionary claim lied against the revenue authority that had received the payment. Petitioners, however, raised the ground of unjust enrichment in the general broad sense of the term without the context of restitution in mind, as the ground was more in the nature of ultra vires receipt of the tax, and the petitioners did not want to make the payment, made under a mistake of law, to be restituted at a later stage.
Messrs Pfizer Laboratories Ltd. v. Federation of Pakistan and others PLD 1998 SC 64; MCB Bank Ltd. v. Deputy Commissioner Inland Revenue and others 2015 PTD 911; The Principles of the Law of Restitution; The Law of Restitution, Andrew Burrows; Lipkin Gorman v. Karpuale Ltd. [1991] 2 AC 548 and Woolwich Equitable Building Society v. I.R.C [1993] A.C 70 rel.
High Court, therefore, declared the impugned Notification as ultra vires the powers of the Board and of no legal effect to the extent of Conditions V and VIII laid down therein, holding that the conditions would not be read as part of the Notification. Constitutional petition was allowed in circumstances.
(b) Income Tax Ordinance (XLIX of 2001)----
----S. 147----Advance tax paid by the taxpayer---Meaning, scope and purpose discussed.
Law and Practice of Income Tax by Huzaima Bukhari and Dr. Ikram ul Haq; Commissioner of Income Tax v. M/s. Habib Sugar Mills Ltd. 1993 PTD 343; Call Tell and another v. Federation of Pakistan and others 2005 PTD 833; Lone Cold Storage, Lahore v. Revenue Officers, Lahore Electric Power Co. and others 2010 PTD 2502; Messrs Riaz Bottlers (Pvt.) Ltd. v. LESCO (W.P. No.38 of 2010); Sui Northern Gas Pipelines v. Deputy Commissioner Inland Revenue and others 2014 PTD 1939 and Filters Pakistan (Private) Limited v. Federal Board of Revenue through Member Customs and 2 others 2010 PTD 2036 rel.
(c) Income Tax Ordinance (XLIX of 2001)----
----S. 53 & Second Sched.----Exemptions and tax concessions in the Second Schedule---Reduction of tax burden---Methods----Individual taxpayer reduce his tax burden either by way of tax evasion, which was a criminal offence, or tax avoidance, which did not involve unlawful conduct, or tax mitigation, whereby the taxpayer incurred expenditure which reduced his taxable income or his taxable assets or expenditure which the Parliament wished to encourage or reward by a tax allowance or deduction---Section 53 of the Ordinance deals with the exemptions and tax concessions to be given in the Second Schedule of the Ordinance and the same relates to the income or class of income or person or class of persons specified in that Schedule, that shall be exempted from tax under the Ordinance subject to any conditions and to the extent specified therein; said provision also deals with the income or class of income or persons or class of persons, who are subject to tax under the Ordinance at such rate as may be specified or who are allowed a reduction in tax liability under the Ordinance---Said provision also related to the exemption from the operation of any provision of the Ordinance subject to any conditions and to the extent specified therein---Federal Government, in terms of S. 53 (2) of the Ordinance, is empowered to make such amendment in the Second Schedule of the Ordinance by adding therein any clause or condition or making any change in any clause or condition.
Lord Templeman, Formerly a Lord of Appeal in Ordinary (UK), in his Article Tax and the Taxpayer Published in Volume 117 (2001) rel.
(d) Income Tax Ordinance (XLIX of 2001)----
----S. 148, Second Sched., Cl. 72B----Summary of historical background of the provisions.
(e) Interpretation of statutes----
----Taxing statute----Rules of interpretation---If a provision of a taxing statute can be reasonably interpreted in two ways, the interpretation, which is favourable to the assessee has to be accepted.
CIT v. Naga Hills Tea Co. Ltd. AIR 1973 SC 2524 and Kerala Financial Corporation v. CIT (1994) 4 SCC 375 rel.
(f) Interpretation of statutes----
----Taxing provisions/fiscal provisions---Rules of strict interpretation---Exemptions under a taxing statute must be strictly construed; however, said rule is not absolute in its application.
Sutherland on Statutory Construction (Third Edition vol. 3); Swadeshi Polytex Ltd. v. Collector of Central Excise (1990) 2 SCC 358; Interpretation of Taxing Statutes by Markandey Katju (Second Edition); Maxwell on the Interpretation of Statutes, twelfth edition, page 256 and Messrs Mehran Associates Limited v. The Commissioner of Income Tax, Karachi 1993 SCMR 274 rel.
(g) Interpretation of statutes----
----Proviso---Meaning, scope and purpose.
2011 SCMR 1560; Elahi Cotton Mill's case PLD 1997 SC 582; Hashwani Hotel Cases's 2007 SCMR 1131 = 2007 PTD 1473 T.S. Eliot, "Hamlet" (1919), in Selected Essays and Reading Law: The Interpretation of Legal Texts by Antonin Scalia and Bryan A. Garner rel.
(h) Interpretation of statutes----
----Presumption against ineffectiveness exists in the interpretation of all laws---Textually permissible interpretation that furthers rather obstructs the document's purpose should be favoured---Interpretation always depends on context, the context always includes effectiveness, and evident purpose always includes effectiveness.
Reading Law: The Interpretation of Legal Texts by Antonin Scalia and Bryan A. Garner rel.
(i) Delegation of powers----
----Scope and parameters.
De Smith's Judicial Review, Seventh Edition rel.
(j) Estoppel----
----'Promissory estoppel', principle of---Scope.
Messrs Friendship Textile Mills and others v. Government of Balochistan and others 2004 SCMR 346 rel.
Khurram Shehbaz Butt, Imtiaz Rashid Siddiqui Shaharyar Kasuri, Hashim Aslam Butt, Ch. Anwar ul Haq, Muhammad Ajmal Khan, Adnan Goraya, Hassan Kamran Bashir, Javed Iqbal Qazi, Shahid Pervaiz Jami, Mudassar Shuja ud Din, Rana Muhammad Afzal, Farhan Shahzad, Sh. Muhammad Akram, Muhammad Saad Khan, Ch. Muhammad Ali, Muhammad Mohsin Virk, Muhammad Humzah and Usman Ali Virk Mukhtar Awan for Petitioners.
Sarfraz Ahmad Cheema, Javed Athar, Liaqat Ali Chaudhry, Muhammad Asif Hashmi for Respondents.
Tahir Mahmood Ahmad Khokhar, Standing Counsel for Pakistan.
Date of hearing: 17th December, 2015.
2016 P T D 2043
[Lahore High Court]
Before Syed Mansoor Ali Shah and Shujaat Ali Khan, JJ
DIRECTOR OF INTELLIGENCE AND INVESTIGATION
Versus
ASLAM HASHIM BUTT
I.C.A. No. 119 of 2014, decided on 22nd April, 2016.
(a) Sales Tax Act (VII of 1990)----
----S. 37----Qanun-e-Shahadat (10 of 1984), Art. 12---Pakistan Legal Practitioners and Bar Councils Rules, 1976, Chap. XII, Part-B, R. 134---Power to summon persons to give evidence and produce documents in inquiries under Sales Tax Act, 1990---Scope and validity---Confidential communication with legal advisors---Principles---Privileged communication---Scope---Whether an officer of the Sales Tax, Inland Revenue could summon petitioner, an advocate, while dealing with investigation of a criminal case against his client/the registered person under Sales Tax Act, 1990 and ask him to disclose identity of the client---Single Bench of the High Court had already set aside the summons issued to the petitioner under S. 37 of Sales Tax Act, 1990---Department contended that said registered person had caused colossal loss to the National Exchequer, therefore, the petitioner, being a responsible citizen, was bound to disclose the identity of the person/client while representing him to enable the Investigation Officer to conduct the investigation of the criminal case in a transparent and fair manner---Validity---Criminal case had been registered against the registered person relating to the fraudulent tax adjustments prior to the engagement of the petitioner as a counsel of the registered person, and nothing was available on the record to establish the involvement or connivance of the petitioner in the alleged default/fraud by the registered person---Investigation (into the tax liabilities/evasions) of the registered person had no nexus with the professional duties of the petitioner---Department, therefore, could not require the petitioner to share information regarding identity of his client, merely due to the fact that the petitioner had represented him in the proceedings pending before the Commissioner, Inland Revenue---Principle, as laid down in Art. 12 of Qanun-e-Shahadat, 1984 which provided a shield to a counsel against disclosure of confidential communication taking place inter se the counsel and his client during the course of the agency, enjoyed universal acknowledgement---Under Chapter XII of Pakistan Legal Practitioners and Bar Councils Rules, 1976, an advocate was bound to maintain confidentiality about the facts which came into his knowledge as a result of an engagement---Rule 134 of Part B, Chapter XII of Pakistan Legal Practitioners and Bar Councils Rules, 1976, provided that a member of a Bar was under a bounden duty to maintain high standards of his profession, in addition to his own dignity---Investigation Officer could use all means available to him under Sales Tax Act, 1990, but, in no way, could he ask the petitioner (counsel) to disclose identity of his client---High Court, maintaining impugned order of Single Judge of the Court, dismissed the intra court appeal.
Section 37 of Sales Tax Act, 1990 provided that an officer of Sales Tax, Inland Revenue, conducting an investigation or inquiry into a matter, was empowered to summon any person to give evidence or to produce documents or to perform any other act relating to the inquiry. Petitioner/Counsel, however, having not been equipped with any material relating to the criminal case under investigation before the Investigation Officer, could neither be summoned to tender evidence, nor could he be required to produce any document.
Department had issued the show cause notice to the registered person, who was being represented by the petitioner/counsel before the Commissioner, Inland Revenue. Petitioner was, therefore, under legal and ethical duty not to disclose the identity of his client before anybody, including the Investigation Officer, which might prejudice his case before any authority. Department, being so much curious to unearth the identity of the registered person, could have ordered for the personal appearance of that person, who had filed reply to the show cause notice, and in the event of his default, the penal action could have been taken against said person; but the department, by no stretch of imagination, could compel the petitioner to expose the personal bio-data of the person/his client. Advocate enjoyed immunity from appearance before the Investigation Officer, unless he was personally involved in the commission of an offence cognizable under Sales Tax Act, 1990. Impugned order of Single Judge of the High Court was, therefore, upheld. Intra court appeal was dismissed in circumstances.
Swindler & Berlin ET AL. v. United State (524 U.S. 399 (1998); Muhammad Maqsood Sabir Ansari v. District Returning Officer, Kasur and others PLD 2009 SC 28; Syed Ali Nawaz Gardezi v. Lt. Col. Muhammad Yusuf PLD 1963 SC 51; Municipal Corporation of Greater Bombay and another v. Vijay Metal Works, Bombay AIR 1982 Bom. 6 ref.
Canon 4 of the Model Code of Professional Responsibility (American Bar Association) rel.
(b) Counsel and client---
----Relationship of counsel and client---Nature and scope---Counsel-client relationship, being fiduciary in nature, could not be allowed to be betrayed at any cost---Entire legal system would collapse if the members of the Bar were compelled to disclose about any fact, which formed part of the privileged communication---Counsel-client privilege enjoyed a pivotal role in the legal system with the result that no authority was permitted to enquire from an advocate about any matter which he had come across during the course of his engagement with his client---Counsel, opting to share anything with somebody about which he came across during the period of his engagement by a particular party, would not only lower down the dignity of the profession but would also be guilty of misconduct---Nobody, while sharing information/material in respect of a particular matter, would depend upon his counsel, if such practice was permitted to be followed---Court could not allow a public functionary to force a counsel to disclose the antecedents of his client, which fell under the privileged communication.
Prudential PLC and another v. Special Commissioner of Income Tax and another 2013 SCMR 403 (U.K.); United States in Upjohn Co. v. United State 449 U.S. 383 (1981) and Regina v. Debry Magistrates Court [1995] UKHL 18 rel.
Salman Faisal and Ms. Farah Malik for Appellant.
Anwaar Hussain, Assistant Advocate General assisted by Rutaaba Gull for Respondent.
Ahmad Yar Khan assisted by Abdul Sami Qureshi and Ahmad Hafeez Opal with Respondent. Assisted by Mohsin Mumtaz, Research Officer.
2016 P T D 2058
[Lahore High Court]
Before Ayesha A. Malik, J
SUPREME TUBE INDUSTRIES (PVT.) LIMITED
Versus
FEDERATION OF PAKISTAN and others
Writ Petition No. 3479 of 2013, heard on 16th March, 2016.
(a) Sales Tax Act (VII of 1990)----
----Ss.2(14) & 2(20)----'Input tax'/'output tax'----Meaning and scope---Input tax, as defined in S. 2 (14) of Sales Tax, 1990, is a tax levied under the Act on the supply of goods to the persons, which means that input tax is paid by the registered person on purchase of goods in the course of or in furtherance of his business---Sales tax being a value added tax, the input tax is the value added to the price of the goods purchased by the registered person---Output tax, on the other hand, as defined in S. 2 (20) of Act, is the tax levied under the Act on supply of goods, made by the person, thus, the tax is levied on the sale of goods made by the registered person during the course of or in furtherance of his business, and the same is the value added to the price of the goods sold by the registered person---Taxable supplies are, therefore, subject to sales tax when the same are bought and sold in the course of business, through different transactions, executed by the registered person---Levy of tax is an ongoing process in a series of transactions where every registered person in the supply chain pays sales tax---Difference between the sales tax paid at the time of purchase (input tax) and the tax paid at the time of sale (output tax) is the amount chargeable to sales tax under Sales Tax Act, 1990.
(b) Sales Tax Act (VII of 1990)----
----Ss. 3, 7, 8, 8B & 73----Scope of tax---Determination of tax liability---Tax credited not allowed---Adjustable input tax---Certain transactions not admissible---Scope---Section 3 of the Act levies sales tax and S.7 subject to Ss. 8 & 8 B of the Act determines the tax liability---Section 7(1) of the Act makes the registered person entitled to deduct input tax from output tax for the purpose of determining its tax liability---Section 7(2) of the Act mandates the requirement, on the basis of which the entitlement of the registered person to claim adjustment would be made---Section 73 of the Act imposes a further condition requiring the registered person to make all payments through proper banking channel in order to claim input tax adjustment---Section 8 of the Act relates to tax credit and sets out when the registered person will not be entitled to claim adjustment of input tax---Section 8 B of the Act restricts the adjustments of input tax in a tax period to 90%.
(c) Sales Tax Act (VII of 1990)----
----Ss.7 & 8 B----Determination of tax liability---Adjustable input tax---Basic right to seek input tax adjustment is provided for in S. 7 of the Act, which determines the tax liability of the registered person---Entitlement of the registered person for adjustment of input tax is based on documented record or invoices pertaining to the purchases and sales made during a tax period; hence, the adjustment claimed and its admissibility has to be assessed by the authorities to establish the tax liability---Section 8 B of the Act does not grant the right to claim adjustment, as the same only quantifies the extent of the adjustment which would be allowed in a tax period.
(d) Sales Tax Act (VII of 1990)----
----S. 8 B----Constitution of Pakistan, Art. 23---Adjustable input tax---Constitutionality---'Unreasonable restriction', principle of---Applicability---Fundamental right as to provision of property---Petitioners challenged the show cause notice, which provided that the petitioner had claimed excessive input tax adjustments for amounts which were not admissible as per S. 7 read with Ss. 8 & 8 B of Sales Tax Act, 1990---Petitioners also challenged the vires of S. 8 B of the Act on ground that the provisions of the section, being confiscatory, were ultra vires the provisions of Art. 23 of the Constitution, as the department granted input tax adjustment up to 90% of the output tax for every tax period and retained 10% of the adjustable amount to be carried forward each month, and consequently, at the end of each year, any amount pending on account of that 10% was refunded to the petitioners on their application---Petitioners contended that retention of the 10% adjustable amount each accumulated into large amounts of money at the end of each tax years, and thus, the petitioners were deprived of their money throughout each tax year, which they would otherwise invest into their business to prevent financial constraints, and that retention of 10% adjustable amount fell within the ambit of unreasonable restriction on their right to input tax adjustment as guaranteed under Art. 23 of the Constitution---Validity---Fact that S. 8B of SalesTax Act, 1990 allowed the department to retain 10% of the adjustable amount meant that the department was confiscating the property of the petitioners resulting in unjust enrichment---Petitioners, in the present case, however, had not shown that what amounts they were entitled to, which had been retained by the department for each month, nor had any of them, except one petitioner, quantified their proprietary right, that was being confiscated---Petitioners, without demonstrating the actual confiscation and deprivation, had challenged the vires of S. 8 B of the Act---Legislature, in its wisdom, had legislated S. 8 B of Act for the efficacious fulfillment of the objects and purposes of Sales Tax Act, 1990---In determining reasonableness of the restriction imposed under the law, the Court must bear in mind the competing interest so as to serve the public purpose---Basic purpose of S. 8B of the Act was to recover tax and to encourage the taxpayers to document its transactions, so that a tax activity could be charged with the required tax---Section 8 B of the Act, therefore, had a rational nexus with the purpose of Sales Tax Act, 1990 and with the scheme thereof, which required adjustment of input tax to determine the tax liability and a refund of excessive amounts to the registered persons---Petitioner had failed to establish infringement of any fundamental right; therefore, question of proportionality did not arise---Restriction imposed in terms S. 8 B of the Act was reasonable, and as such, the same did not deprive the registered persons of any property or amounts due to them---Clear violation of a fundamental right must be evident when a law was challenged---Cases in hand had been built on conjectures and presumptions, as no particulars or financial implications had been provided---Petitioners were obliged to show as to how their proprietary right was being infringed and what amounts they were entitled to for the purposes of input tax adjustment; without the same, strong presumption of constitutionality, legality and reasonableness was attached to S. 8 B of the Act---Petitioner should have filed their respective replies to the impugned show cause notices to show that they had not claimed any excessive adjustment---Constitutional petition could not be filed against a show cause notice, since only a notice had been served, for which a reply must be submitted---Case of one of the petitioners, who showed that some amounts due to him from the audited accounts, being a case of personal hardship, did not justify a challenge to the constitutionality of S.8B of the Act---Constitutional petition was dismissed in circumstances.
D.G. Khan Cement Company Ltd. through Chief Financial Officer v. Federation of Pakistan through Secretary Ministry of Law and 3 others PLD 2013 Lah. 693 and Muhammad Nasir Mahmood and another v. Federation of Pakistan through Secretary Ministry of Law, Justice and Human Rights Division, Islamabad PLD 2009 SC 107 ref.
All Pakistan Newspapers Society and others v. Federation of Pakistan and others PLD 2012 Sindh 129; Mst. Ummatull ah through Attorney v. Province of Sindh through Secretary Ministry of Housing and Town Planning, Karachi and 6 others PLD 2010 Kar. 236 and Federation of Pakistan through Secretary, Ministry of Finance and others v. Haji Muhammad Sadiq and others 2007 CLD 1 = 2007 PTD 67 rel.
Khurram Shahbaz Butt, Muhammad Ajmal Khan, Hashim Aslam Butt, Naveed Zafar Khan, Zahid Ateeq Chaudhary, H. M. Majid Siddiqui, Javed Iqbal Qazi, M.M. Akram, Muhammad Nauman Yahya, Muhammad Mohsin Virk, Abdul Waheed Habib, Sami Ullah Zia, Muhammad Amir Qadeer, Muhammad Shahid Baig, Muhammad Rehman and Muhammad Asif Rana for Petitioners
Muhammad Zikria Sheikh, DAG and Muzammil Akhtar Shabbir, DA G. for Respondents
Muhammad Yahya Johar for Respondent FBR/Commissioner.
Ch. Muhammad Zafar Iqbal, Sarfraz Ahmad Cheema, Muqtedir Akhtar Shabbir, Ch. Imtiaz Ali, Ibrar Ahmad, Ahmad Hassan Khan, Imran Rasool, Kunwar Riaz Ahmad Khan, Mrs. Kausar Parveen, Ehsan ur Rehman Sheikh, Saeed ur Rehman Dogar, Liaqat Ali Chaudhary, Shahid Sarwar Chahil, Mian Qamar-ud-Din, Muhammad Asif Hashmi, Raza Ashfaq Sheikh, Secretary (IR) Operations, FBR. Zulqarnain Tirmazi, Commissioner Zone-I, LTU for Inland Revenue.
Dates of Hearing: 4th, 11th December, 2015, 27th January, 10th and 16th March, 2016.
2016 P T D 2074
[Lahore High Court]
Before Shahid Karim, J
MAPLE LEAF CEMENT FACTORY LTD.
Versus
FEDERAL BOARD OF REVENUE and others
Writ Petition No. 18703 of 2008, heard on 12th April, 2016.
Income Tax Ordinance (XLIX 2001)----
----Ss.174(3), 165 & 158---Income Tax Rules, 2002, R. 44(4)---Statements/records, production of---Requirement---Time of deduction of tax---Annual statements of tax collected or deducted---Petitioners challenged the notices issued by the Deputy Commissioner, Enforcement and Collection, whereby, the petitioners had been asked to furnish the annual statement of withholding tax as prescribed under S. 165 of Income Tax Ordinance, 2001, along with reconciliation statement as per R. 44(4) of Income Tax Rules, 2002---Question before the High Court was if a taxpayer did not maintain accounts and documents beyond a period of five years (now six years), as stipulated in S. 174(3) of the Ordinance, could the taxpayer be held liable or compelled to produce that record---Department, in the present case, had required the petitioners to produce accounts and documents for two purposes; firstly, for purposes of reconciliation with the audited accounts submitted by the petitioner and the tax deductions claimed; and , secondly, for the purposes of conduct of audit of the petitioner's accounts by the Commissioner---In terms of S. 158 of the Ordinance, a person was required to deduct tax from an amount paid by the person would deduct tax inter alia in other cases at the time the amount was actually paid---Proper construction of S. 174(3) of the Ordinance could only be put by reading the entire S. 174 holistically---Section 174 of the Ordinance obliged a taxpayer and imposed a duty upon him to maintain such accounts, documents and records as might be prescribed, which, being a mandatory and compulsory duty cast upon the taxpayer, must have been complied with, and the only exception was where the taxpayer was authorized by the Commissioner not to do that---One of the purposes of S. 174 of the Ordinance was that where the departmental authorities, who were tasked to recover an amount of tax allegedly not paid or to recover an amount of deduction wrongly claimed by the taxpayer, those proceedings must have been initiated expeditiously and with all deliberate speed and preferably within the period mentioned in S. 174(3) of the Ordinance---Rule 44 (4) of Income Tax Rules, 2002 required a person to furnish an annual statement under S. 165 (1) of the Ordinance, as also monthly statement under S. 165(2) of the Ordinance, in case that person was responsible for collecting or deducting tax under Division II or Division III of Part V of Chapter X of the Ordinance, and the said statement would be accompanied by the evidence of deposit of tax collected---Person, who was required to furnish statements under S. 165 (1) or 165 (2) of the Ordinance, would, whenever he was required by the Commissioner, furnish a reconciliation of the amounts mentioned in the annual and monthly statements with the amounts mentioned in the return of income etc.---Petitioners, however, were obliged to maintain those records for five years (now six years), and thus, it would not be lawful for the Department to ask for those records (beyond that period)---Taxpayer was neither under compulsion or obligation to maintain the record beyond a period of five years (now six years), nor S. 174(3) of the Ordinance had laid down a penalty to be imposed on a taxpayer in case the record was not maintained under the provisions of S. 174---Department although could proceed with the impugned notices, but it would be debarred from proceeding against the petitioners in any manner to enforce the compliance of the impugned notices or to require the petitioners compulsorily to produce the record---Constitutional petition was dismissed in circumstances.
Messrs Bilz (Pvt.) Ltd. v. Deputy Commissioner of Income Tax, Multan and another 2002 PTD 1 distinguished.
Habib Bank Ltd. v. Federation of Pakistan through Secretary, Revenue Division and 5 others 2013 PTD 1659 rel.
Shahbaz Butt for Petitioner.
Liaqat Ali Chaudhry for Respondents.
Date of Hearing: 12th April, 2016.
2015 P T D 2091
[Lahore High Court]
Before Abid Aziz Sheikh and Shahid Karim, JJ
PRIME COMMERCIAL BANK LTD.
Versus
INCOME TAX APPELLATE TRIBUNAL, LAHORE and others
P.T.Rs. Nos.270, 271 and 272 of 2005, decided on 1st March, 2016.
(a) Income Tax Ordinance (XXXI of 1979)---
----Ss. 24, 133 & Cl. 3 of Part IV of the Second Schedule ---- Deductions not admissible ---- Allowance of perquisites paid by certain corporations ---Interpretation of exemption contained in clause 3 of Part IV of the Second Schedule to the Income Tax Ordinance, 1979 ---- Question before the High Court was whether the exemption contained in clause 3 of Part IV of the Second Schedule to the Income Tax Ordinance, 1979 applied only to banking companies and Financial Institutions owned and controlled by the Federal Government and in particular whether the word "or" contained therein, was used conjunctively or disjunctively --- Held, that upon holistic reading of said clause it was clear that the said clause applied only to a banking company which was owned and controlled by the Federal Government only and not to any other banking company --- High Court observed that it was not necessary to see whether the term "or" in the said clause was to be read disjunctively or conjunctively as the intention of the Legislature was clear that the clause should apply to banking companies owned and controlled by Federal Government only---When Clause 3 of Part IV of the Second Schedule to the Income Tax Ordinance, 1979 was enacted, only banking companies which were wholly owned and controlled by the Federal Government existed, as a result of the nationalization of banking companies --- Privatization process of banking companies commenced at a much later stage and thus only banking companies in contemplation of the Legislature while enacting said clause, were banking companies owned and controlled by the Federal Government---Use of the term "or" merely accentuated and emphasized the separate nature of the two entities, that were, banking companies and financial institutions and must not be confused to lay a distinction between "or" as categorizing banking companies on the one hand and financial institutions wholly owned and controlled by the Federal Government on the other ---Words "owned and controlled by the Federal Government" were intended to attach to both the terms and the word "or" has been used in a disjunctive sense for the limited purpose of bringing home the legislative intent that one juristic person may not include the other, and there could be no doubt that the legislative intent was clear and did not require the Court to read "or" as "and" in the said clause---Reference was answered accordingly.
Commissioner of Income Tax v. Habib Bank Ltd., and ANZ Grindlays Bank 2014 SCMR 1557; Sutherland, Statutory Construction 3rd Edition Part-3 Page 296 and Muhammad Arif and others v. District and Sessions Judge, Sialkot and others 2011 SCMR 1591 rel.
(b) Interpretation of statutes---
----Taxing Statute/Rules---Exemptions---Exemptions, under taxing statutes, should be construed strictly---As a general rule, grant of exemption should be construed in such a way which gives rigid interpretation against assertion of the taxpayer, and in favour of the taking power, and basis of said rule was the same as that supporting rule of strict construction of positive revenue loss; that burden of taxation should be distributed equally and fairly among members of the society.
Sutherland, Statutory Construction 3rd Edition Part-3 Page 296 rel.
Dr. Ikram ul Haq for Petitioner.
Liaqat Ali Choudhary for Respondents.
Date of hearing: 1st March, 2016.
2016 P T D 2111
[Lahore High Court]
Before Shahid Karim, J
Messrs ASFAQ TRADING COMPANY through Proprietor
Versus
COLLECTOR OF CUSTOMS, MODEL CUSTOMS COLLECTORATE, LAHORE through Deputy Collector of Customs (Group-1), Lahore
Writ Petition No. 3 of 2011, decided on 6th April, 2016.
(a) Customs Act (IV of 1969)----
----Ss. 18, 25 & 25-A----Valuation Ruling No. 272, dated 28.09.2010---Goods dutiable---Value of imported and exported goods---Power to determine the customs value---Petitioner filed G.D in terms of S. 78 of Customs Act, 1969 for the customs clearance, on which, the department, assessing the goods mentioned in the G.D, enhanced the value of the goods on basis of Valuation Ruling No. 272---Question was as to whether said Valuation Ruling, rendered under S. 25-A of Customs Act, 1969, could be applied retrospectively to the goods already imported into Pakistan---Words 'goods imported into Pakistan' would have the same meaning as the term 'imported goods' as used in S. 25 of Customs Act, 1969, and the same could be used synonymously---Levy of customs duties could only be made on goods which actually stood imported---Section 25-A of Customs Act, 1969 applied not only to the 'goods imported into Pakistan' but also to 'goods exported out of Pakistan'---In case of exportation, the stage for valuation ruling would necessarily arise prior to exportation---Section 131 of the Act would be rendered ineffective and redundant if the term 'exported goods' as used in S. 25-A of the Act was taken to mean goods which had undergone exportation---Valuation ruling would only have to be resorted to when doubt arose with regard to determination of value of any goods, and doubt would arise after the goods had been imported and awaited clearance---Valuation Ruling, too, was to be handed down in respect of 'imported goods' (or goods exported out of Pakistan)---Latin phrase "noscitur a sociis" meant that "it is known by its associates"---Terms 'goods imported into Pakistan' and 'imported goods', were birds of the same feather and must flock together---High Court, holding the Valuation Ruling to be applicable to the petitioner's goods, maintained the impugned order---Principle.
Words 'goods imported into Pakistan', had although been used in sections 18 and 25-A of Customs Act, 1969, but no reasonable basis existed to hold that said words in both provisions carried the same connotation. Rule that 'words or expressions used in the same statute in different sections should be given the same meaning, unless the context otherwise requires' was not without exceptions and the same did admit to deviations in appropriate cases. No plausible reasons existed to restrict, by judicial construction, the meaning of the words 'goods imported into Pakistan' to merely goods which were yet to be imported; as same would be legislating by judicial overreaching and not interpreting a provision of law.
John M. Marshall, The Evolution of a Judicial Philosophy: Selected Opinions and Papers of Justice John M. Harlan 291 (1969); Reading Law: The Interpretation of Legal Texts by Antonin Scalia and Bryan A. Garner and Felix Frankfurter, Some reflections on the Reading of Statutes rel.
Words 'goods imported into Pakistan' would have the same meaning as the term 'imported goods' used in section 25 of Customs Act, 1969, and the same could be used synonymously, and there was no reason to put a different meaning on the two terms. Both said terms referred to goods which stood imported and the difference merely lay in the manner of expression and no more. In case meaning to the terms 'goods imported into Pakistan' had to be given a meaning so as to relate to goods yet to be imported into Pakistan, by insertion of the syntax 'to be', then, on the same analogy, the term could be lent a different meaning by importing the word 'already' into the term as to read thus: 'goods already imported into Pakistan'.
Applying section 18 of Customs Act, 1969 to 'goods to be imported into Pakistan' and not to goods already imported, would be a fallacy, and that would run counter to the very concept of S. 18. Section 18 of the Act was related to levy of customs duties, and the levy of customs duties could only be made on goods which actually stood imported. In terms of section 18(1) of the Act, the rates, at which the customs duties levied, would be prescribed in the First Schedule, but that was only in relation to prescribing the rates. Levy of customs duties would be on goods which had been imported or imported goods; the two terms were synonymous in terms of section 18(5) of Customs Act, 1969. Legislature had used the two terms interchangeably.
Section 25-A of Customs Act, 1969 applied not only to the 'goods imported into Pakistan' but also to 'goods exported out of Pakistan'. Customs value of any goods exported out of Pakistan too, thus, was, contemplated both by section 25-A and section 18 of the Act. In terms of section 131 of the Act, no goods would be loaded for exportation until the owners of any goods, which were to be exported, had assessed and paid his liability of duty, taxes and other charges. In case of exportation, the stage for valuation ruling would necessarily arise prior to exportation, which meant that a doubt as to the value of exported goods might arise at the time of exportation and a valuation ruling would be required to be rendered. Section 131 of the Act would be rendered ineffective and redundant if the term 'exported goods' as used in section 25-A of the Act was taken to mean goods which had undergone exportation. Legislature's intention was to trigger the tool of valuation ruling at the pre-import as well as post-import stages, and distinction could be drawn with regard thereto. Section 25-A of the Act reconfigured the sequential in section 25. Said purpose could neither be nullified nor belittled by putting a nuanced meaning on the words 'goods imported into Pakistan' in contradistinction to the words' imported goods'.
Valuation ruling would only have to be resorted to when doubt arose with regard to determination of value of any goods, and doubt would arise after the goods had been imported and awaited clearance. Holding that section 25-A of the Act did not apply to goods already imported, would have the effect of ouster of jurisdiction under section 25-A of the Act, which ran counter to the intention of the Legislature. Significance of the words 'after following the scheme and sequential order as laid down under section 25' under in section 25-A (I) of the Act, could not be discounted or lost sight of; said words lent credence to the notion that the valuation ruling, too, was to be handed down in respect of imported goods (or goods exported out of Pakistan), and no reason existed to bifurcate the subsection (I) in order to apply the same to two situations.
Latin phrase 'noscitur a sociis' meant 'it is known by its associates'. Terms 'goods imported into' and 'imported goods, were birds of the same feather and must flock together. Impugned Valuation Ruling No. 272 dated 28.09.2010 would apply to the goods imported by the petitioner.
Sadia Jabbar v. Federation of Pakistan and others PTCL 2014 CL 537 distinguished.
Reading Law: The Interpretation of Legal Texts by Antonin Scalia and Bryan A. Garner rel.
(b) Customs Act (IV of 1969)----
----S. 25-A----Power to determine customs value---Origin and purpose.
Understanding International Business and Financial Transactions by Jerold A. Friedland rel.
(c) Customs Act (IV of 1969)----
----Ss. 18, 25 & 25-A----Goods dutiable---Value of imported and exported goods---Interpretation of S.25 & S.25-A, Customs Act, 1969---Power to determine the customs value---Construction, rules of---Principles---Interpreting S. 25-A in relation to Ss. 18 & 25 of Customs Act, 1969 in view of the setting of said provisions, is an important consideration---Sections 25 & 25-A of the Act are related to determination, while, S. 18 of the Act is concerned with the levy of customs duty---Section 25-A of the Act, being an exception to S. 25, must be applied to the same set of events as S. 25 of the Act, and both provisions have to be read together keeping in view the underlying purpose of S. 25-A and the intention of the Legislature---Events in S. 25 of the Act dealt with the determination of value of imported goods, which have already been imported and awaited clearance for home consumption or to be cleared from a warehouse.
(d) Administration of justice---
----Invitation to judicial lawmaking results inevitably in 'a lessening, on the one hand, of judicial independence, and, on the other, of legislative responsibility, thus polluting the bloodstream of system of government.
John M. Marshall, The Evolution of a Judicial Philosophy: Selected Opinions and Papers of Justice John M. Harlan 291 (1969) rel.
(e) Interpretation of statutes---
----'Omitted-case Canon', rule of----Scope---Rule of 'Omitted-case Canon', states that nothing is to be added to what the context states or reasonably implies, that is, a matter not covered, is to be treated not covered.
Reading Law: The Interpretation of Legal Texts by Antonin Scalia and Bryan A. Garner rel.
(f) Interpretation of statutes---
----Whatever temptations, the statesman of policymaking might wisely suggest, construction must eschew interpolation and evisceration---Judge must not read in by way of creation.
Felix Frankfurter, Some reflections on the Reading of Statutes rel.
(g) Interpretation of statutes---
----Rule that 'words or expression, used in the same statute in different sections, should be given the same meaning, unless the context otherwise requires' is not without exceptions and the same does admit to deviations in appropriate cases.
(h) Words and phrases----
----'Noscitur a sociis'---Meaning.
Reading Law: The Interpretation of Legal Texts by Antonin Scalia and Bryan A. Garner rel.
Umar Ahmad Khan for Petitioner.
Izhar ul Haq Sheikh for Respondent.
Date of Hearing: 25th March, 2016.
2016 P T D 2171
[Lahore High Court]
Before Ayesha A. Malik, J
FAISALABAD ELECTRIC SUPPLY COMPANY LIMITED (FESCO) through Director
Versus
FEDERATION OF PAKISTAN through Secretary Finance and 4 others
Writ Petition No.14247 of 2014, decided on 5th January, 2016.
Income Tax Ordinance (XLIX of 2001)---
---S. 235---Electricity consumption---Collection of advance tax on the amount of electricity bill---Scope---Federal Board of Revenue issued clarification that advance tax had to be collected on the gross amount of electricity bill---Contention of petitioner was that advance tax must be collected on the electricity consumed and not on the total electricity bill---Validity---Advance tax was to be charged on the electricity consumed and not on the total billed amount which would include sales tax, income tax and in some cases further tax and extra tax---Advance income tax could not be levied on sales tax---Impugned clarification of Federal Board of Revenue was set aside---Constitutional petition was allowed in circumstances.
Deputy Collector of Customs, Railway Station, Lahore v. Messrs Abdul Ghaffar Abdul Rehman and others 2005 PTD 194 and 1994 PTD 848 rel.
Mian Ashiq Hussain for Petitioner.
Syed Muhammad Haider Kazmi vice Miss. Kausar Parveen for Respondents.
Mirza Nasar Ahmad, D.A.G.
2016 P T D 2183
[Lahore High Court]
Before Shahid Jamil Khan and Muhammad Sajid Mehmood Sethi, JJ
KAMALIA SUGAR MILLS LTD.
Versus
CUSTOMS CENTRAL EXCISE AND SALES TAX APPELLATE TRIBUNAL and others
S.T.R. No.5 of 2005, decided on 23rd December, 2015.
(a) Interpretation of statutes---
----Fiscal statute---Exemption clause is to be construed strictly---In case of doubt or two interpretations, resolve should tilt towards chargeability, which is presupposed in case of an exemption.
(b) Sales Tax Act (VII of 1990)---
----Ss. 2(46), 3(1A) & 47---Notification No. SRO 208(I)/98, dated 31-3-1998---Further tax---Exemption---Jurisdiction of High Court---Income Tax Appellate Tribunal had found that exemption under notification SRO 208(I)/98, dated 31-3-1998, did not include further tax levied under S. 3(1A) of Sales Tax Act, 1990---Validity---Levy and charge of tax under S. 3 (1A) of Sales Tax Act, 1990, was in addition and different from tax levied and charged under S.3(1) of Sales Tax Act, 1990---Section 3(1A) of Sales Tax Act, 1990, being not on the statute book on the date when Notification SRO 208(I)/98, dated 31-3-1998, was issued, the exemption could not be allowed as envisaged by the notification---High Court, under its advisory jurisdiction, was to answer proposition of law and statutory authorities including Appellate Tribunal were required to give effect to the binding opinion of High Court---High Court was not to settle as to how and when "Further Tax" would be charged---Reference was dismissed in circumstances.
Messrs Kamalia Sugar Mills Ltd., Kamalia v. Superintendent, Intelligence and Investigation (Customs and Central Excise), Regional Office Lahore and another 2002 PTD 632; Collector of Customs and others v. Ravi Spinning Ltd. and others 1999 SCMR 412; Messrs Gadoon Textile Mills and 814 others v. WAPDA and others 1997 SCMR 641; Sohail Jute Mills Ltd. and others v. Federation of Pakistan through Secretary, Ministry of Finance and others PLD 1991 SC 329; The Treasurer of Charitable Endowments for Pakistan v. Central Board of Revenue and 2 others 1986 MLD 1731; Tandlianwala Sugar Mills Ltd. and others v. Federation of Pakistan through Secretary, Ministry of Finance, Revenue and Economic Affairs, Islamabad and others 2001 SCMR 1398 and Hashwani Hotels Limited v. Government of Pakistan and others PTCL 2008 CL 45 ref.
Ali Sibtain Fazli, Imtiaz Rashid Siddiqui, Barrister Shehryar Kasuri, Sh. Naveed Masud, Syed Moazzam Ali Shah, Khalid Ishaque, Ijaz Ahmad Awan, Nauman Mushtaq Awan, Tariq Aziz, Mian Abdul Ghaffar, Salman Akram Raja, Ch. Muhammad Asghar Saroha, Mujtaba Jamal and Shahid Pervez Jami for Applicants (in connected S.T.Rs.).
Sarfraz Ahmad Cheema, Ch. Muhammad Zafar Iqbal, Izharul Haque, Ahmad Raza, Muhammad Raza Qureshi and Mrs. Kausar Parveen for Respondents (in connected S.T.Rs.).
Date of hearing: 15th December, 2015.
2016 P T D 2227
[Lahore High Court]
Before Shahid Jamil Khan and Muhammad Sajid Mehmood Sethi, JJ
Messrs TIME TRADING CO.
Versus
FEDERATION OF PAKISTAN and others
I.C.A. 241 of 2015, decided on 16th May, 2016
Customs Act (IV of 1969)---
----Ss. 25A & 25D---Customs value---Determination---Appellant was aggrieved of method of valuation circulated and being followed by Customs Authorities---Validity---Petition under Art.199 of the Constitution merely against a valuation ruling under S.25A of Customs Act, 1969, was not maintainable because alternate remedy under S.25D of Customs Act, 1969, was available---Exercise of Constitutional jurisdiction had become necessary to the extent of circulation of valuation ruling by Customs Authorities---Circulation in question was not supported by any provision of law and was illegal---Division Bench of High Court directed the parties to appear before Director General Valuation, who was directed to pass speaking order after recording and attending grounds raised by parties concerned---High Court restrained the authorities from taking any adverse action/order against appellant till the decision of the matter by Director General Valuation---Intra court appeal was allowed accordingly.
Muhammad Anwar and others v. Mst. Ilyas Begum and others PLD 2013 SC 255 rel.
Mian Abdul Bari Rashid for Appellant.
Sheraz Zaka for Petitioner (in connected W.P. No.30801 of 2014).
Nadeem Mehmood Mian for Respondents.
Saleem Ahmad Malik, Inspector and Zaka Ullah, Appraiser FBR in person.
Date of hearing: 16th May, 2016.
2016 P T D 2242
[Lahore High Court]
Before Muhammad Sajid Mehmood Sethi, J
URBAN DEVELOPERS ASSOCIATES through Managing Partner
Versus
COMMISSIONER INLAND REVENUE and 5 others
Writ Petition No.23426 of 2015, decided on 22nd April, 2016.
(a) Federal Excise Act (VII of 2005)---
----S. 9---Payment of duty---Liability---Intendment or presumption on interpretation of law---Scope---Bank account of petitioner was attached on the basis of alleged tax demand raised by authorities---Validity---Person sought to be taxed could only be taxed when he come within the letter of law---No one could only look for intendment or language used in law and there was no room for intendment or presumption on interpretation of law---If revenue seeking to tax could not bring subject within letter of law, the subject was free, no matter such a construction of law could cause serious prejudice to the revenue---No one could be taxed unless the charging provision had clearly imposed obligation---High Court declared orders/actions attaching bank account of petitioner to be illegal and without lawful authority---High Court directed the authorities to refund the amount illegally recovered from petitioner---Constitutional petition was allowed in circumstances.
A & B Food Industries Limited v. Commissioner of Income Tax/Sales, Karachi 1992 SCMR 663 and Commissioner Inland Revenue, Lahore v. Saritow Spinning Mills Ltd., Lahore 2016 PTD 786 ref.
(b) Interpretation of statutes---
----Fiscal statute---Two interpretations---Charging section of a fiscal statue is key and pivotal provision, which imposes a fiscal liability upon a taxpayer/person thus it should be strictly construed and applied, so far the revenue is concerned---Where a provision is susceptible to two possible interpretations, it should be liberally considered in favour of taxpayer/citizen particularly where there is substantial doubt about import and application of a charging section, such doubt must be resolved in favour of taxpayer/citizen---Courts has to go by language clearly employed by Legislature in a fiscal statue and the same has to be interpreted to the benefit of subject and benefit of any ambiguity should go to him---Any person can be made liable when clearly shown to be falling within its scope and is made liable under letter of law.
Collector of Customs, Customs House, Lahore and 3 others v. Messrs S. M. Ahmad & Company (Pvt.) Limited, Islamabad 1999 SCMR 138; Star Textile Ltd. and 5 others v. Government of Sindh through Secretary Excise and Taxation Department, Sindh Secretariat, Karachi and 3 others 2002 SCMR 356; Messrs Bilz (Pvt.) Ltd. v. Deputy Commissioner of Income-Tax, Multan and another 2002 PTD 1; Province of the Punjab through Secretary, Government of the Punjab Excise and Taxation Department and others v. Muhammad Aslam and others 2004 SCMR 1649 and Jamnadas Mehta v. Mst. Hajiani Mariam Bai and others (PLD 1964 (W.P.) Kar. 43 rel.
Sh. Aqeel Ahmed for Petitioner.
Imran Rasool for Respondents.
2016 P T D 2253
[Lahore High Court]
Before Shahid Jamil Khan and Muhammad Sajid Mehmood Sethi, JJ
The COMMISSIONER INLAND REVENUE
Versus
Messrs HARAL TEXTILE MILLS LIMITED
P.T.R. Nos.497 to 509 of 2012, decided on 9th May, 2016.
Income Tax Ordinance (XXXI of 1979)---
----Ss. 2 (32), 50, 52 & 86---Deduction of tax at source---Failure to deduct or pay tax---Liability of person---Scope---Customs Authorities were aggrieved of order passed by Income Tax Appellate Tribunal deciding appeals filed by assessees which were remanded by Supreme Court---Validity---Absurdity could not be attributed to any legislation at the altar of literal interpretation---Court was to harmonize and save the law---Word 'person responsible' defined in S.50(9) of Income Tax Ordinance, 1979, was only for the purpose of making payment and withholding tax on behalf of a company, local authority or an association of persons, as envisaged under S.50(4) of Income Tax Ordinance, 1979---Assessee could not be proceeded against under S.52 of Income Tax Ordinance, 1979, for recovery of tax not withheld---High Court set aside the order passed by Income Tax Appellate Tribunal and remanded the matter to the Tribunal for decision afresh---Reference was allowed accordingly.
Muqtedier Akhtar Shabir, Muzamil Akhtar Shabir and Ahmad Hassan Khichi for Applicant.
Sumair Saeed Ahmad for Respondent No.1.
Muhammad Iqbal Hashmi and Ms. Raisa Sarwat for Respondent No.1 in connected petitions.
Date of hearing: 9th May, 2016.
2016 P T D 2371
[Lahore High Court]
Before Muhammad Sajid Mehmood Sethi, J
MUHAMMAD AKBAR LEGHARI and 2 others
Versus
The FEDERATION OF PAKISTAN through Revenue Division, Islamabad and 4 others
Writ Petition No.9766 of 2011, decided on 21st June, 2016.
Income Tax Ordinance (XLIX of 2001)----
----S. 153----Constitution of Pakistan, Art. 247---Payments for goods, services and contracts---Applicability to Tribal Areas---Petitioners assailed the order regarding issuance of certificate by Federal Government, which provided that the contractors, being the residents of Provincially Tribal Areas/Federal Administered Tribal Areas were executing contracts in the Tribal Areas but were receiving payments from Federal or Provincial Governments in settled territories, were not exempted from withholding tax deductible under S. 153 of Income Tax Ordinance, 2001---Income tax laws had not been extended or made applicable to Tribal Areas in terms of Art. 247 of the Constitution, therefore, any action taken under any provision of the Ordinance with regard to the business in the Tribal Areas would be without jurisdiction and lawful authority, and that a Company, having been located in the Tribal Areas, was exempted from payment of income tax, and that the jurisdiction of the High Court under Art. 199 against the same, in such circumstances, could be invoked---High Court, therefore, disposed of the Constitutional petition accordingly.
Messrs TA. Industries through Proprietor v. Federation of Pakistan through Secretary, Finance Ministry of Finance, Government of Pakistan, Islamabad and 4 others 2008 PTD 1563; Syed Abid Hussain Shah v. Federal Government of Pakistan, Islamabad through Secretary, Finance Ministry of Finance , Islamabad and 2 others 2008 PTD 1547; Commissioner of Income-Tax, Peshawar v. Messrs Gul Cooking Oil and Vegetable Ghee (Pvt.) Ltd. through the Chief Executive and 6 others 2003 PTD 1913 and Dr. Najibullah Khan v. Federation of Pakistan through the Secretary, Ministry of Finance, Government of Pakistan, Islamabad and 4 others 2003 PTD 2083 fol.
Qamar-uz-Zaman Butt for Petitioners.
Agha Ahmad Khan and Tariq Manzoor Sial, for Respondent No.3.
Malik Muhammad Tariq Rajwana and Malik Muhammad Hussain Rajwana for Respondents. Nos.4 and 6.
2016 P T D 2396
[Lahore High Court]
Before Shahid Karim, J
Messrs ROYAL STEEL MILLS through Managing Member and another
Versus
The FEDERATION OF PAKISTAN through Secretary Ministry of Law, Islamabad and 2 others
Writ Petition No.21808 of 2016, decided on 23rd June, 2016.
Income Tax Ordinance (XLIX of 2001)---
----S. 205----Civil Procedure Code (V of 1908), O. XXXIX, Rr.1 & 2---Default surcharge---Temporary injunction granted/extended beyond the subject-matter of appeal---Validity---Subject matter of the appeal before the Commissioner (Appeals) was in relation to the default surcharge under S. 205 of Income Tax Ordinance, 2001---Commissioner had passed the stay order and later extended the same from time to time---Commissioner, having validly passed the earlier (initial stay) order with regard to the subject matter of the appeal (even if the same had been extended beyond the scope of the subject matter of the appeal), had no power to recall said order---Commissioner, in order to rectify the mistake (stay order extended beyond the scope of the subject matter of the appeal), had committed another mistake while recalling the entire stay order---High Court modified the impugned order to the extent that the stay order would be deemed to have been in operation and not recalled to the extent of the amount of default surcharge which was the subject matter of the appeal---Constitutional petition was accepted in circumstances.
Ajmal Khan for Petitioner.
Sarfraz Ahmad Cheema for Respondents on Court's call.
2016 P T D 2409
[Lahore High Court]
Before Abid Aziz Sheikh and Shahid Karim, JJ
COMMISSIONER OF INCOME/WEALTH TAX
Versus
MUHAMMAD AMIN
P.T.R. No.132 of 2002 and C.M. No.45 of 2016, decided on 10th December, 2015.
Income Tax Ordinance (XXXI of 1979)---
----Ss. 136(1), 1(2) & 156---Reference---Limitation---Refusal to refer question of law to High Court---Miscellaneous application against original order dated 07-02-2001 was dismissed on 28-08-2001 which did not merge in original order---Effect---Authorities were required to challenge original order dated 07-02-2001 separately within limitation as application under S.136(1) of Income Tax Ordinance, 1979 was filed on 04-01-2002---Validity---Application was barred by time and Income Tax Appellate Tribunal rightly declined to refer the matter to High Court---Order of Income Tax Appellate Tribunal dated 07-02-2001 could not be rectified under S.156 of Income Tax Ordinance, 1979, unless there was any mistake or error apparent on record---High Court declined to frame and answer proposed question of law---Reference was dismissed in circumstances.
Messrs Hong Kong Chinese Restaurant, Main Boulevard Gulberg, Lahore v. Assistant Commissioner of Income Tax Circle 6, Lahore and another 2002 PTD 1878; Commissioner of Income Tax v. Messrs Rizwan Brothers 2005 PTD 2537 and Commissioner of Income Tax/Wealth Tax v. Muhammad Naseem Khan 2013 PTD 2005 rel.
Javed Athar for Applicant.
Kamran Shahid for Respondent.
2016 P T D 2422
[Lahore High Court]
Before Abid Aziz Sheikh and Shahid Jamil Khan, JJ
Messrs ENGLISH SHOES (PVT.) LTD.
Versus
The COMMISSIONER OF INCOME TAX/WEALTH TAX
P.T.R. No.166 of 2003, decided on 23rd January, 2015.
Income Tax Ordinance (XXXI of 1979)---
----Ss. 62(1) & 136---Reference---Declared income, rejection of---Non-issuance of notice---Income Tax officer rejected declared income by taxpayer and estimated higher income without issuing notice under S.62 of Income Tax Ordinance, 1979---Validity---Mandatory notice under proviso to S.62(1) of Income Tax Ordinance, 1979 was not issued therefore, entire subsequent proceedings and orders had become illegal and wholly void---Appellate authority and Income Tax Appellate Tribunal were required to accept declared version of taxpayer instead of remanding case to assessing officer to fill in defects and lacuna in assessment order---High Court accepted declared version of taxpayer regarding assessment years in question---Reference was allowed in circumstances.
Mughal Technical Industries (Pvt.) Limited v. CIT Central Zone, Lahore 1996 PTD 263; Collector, Sahiwal and 2 others v. Muhammad Akhtar 1971 SCMR 681 and Mst. Maryam Yunus v. Director of Education, Cantonment and 2 others PLD 1990 SC 666 ref.
Commissioner Income Tax v. Messrs Ayesha Woolen Mills (Pvt.) Limited 2014 PTD 215 fol.
Shoaib Ahmed Sheikh for Applicant.
Muhammad Ashif Hashmi and Raja Sikandar Khan for Respodnent.
Date of hearing: 23rd January, 2015.
2016 P T D 2525
[Lahore High Court]
Before Muhammad Sajid Mehmood Sethi, J
ALI HAIDER KHAN
Versus
PROVINCE OF THE PUNJAB through Chief Secretary and 7 others
Writ Petition No. 33336 of 2015, heard on 25th March, 2016.
(a) Income Tax Ordinance (XLIX of 2001)---
----Ss. 236-A & First Sched., Part-IV, Div. VIII---Vires of law---Petitioner was a successful bidder in a public auction and was supposed to deposit advance income tax every week but he failed--- Plea raised by petitioner was that demand of advance income tax under S. 236-A of Income Tax Ordinance, 2001 was ultra vires the Constitution and inconsistent with other provisions of Income Tax Ordinance, 2001---Validity---Criteria before Court for determining vires of a provision of a law was that Court must be able to hold beyond any iota of doubt that violation of the Constitutional provision was so glaring that legislative provision under challenge could not stand---Without such violation of Constitutional provisions, law made by Parliament or a State Legislature could not be declared bad---High Court declined to interfere in the matter---Constitutional petition was dismissed in circumstances.
State of M.P. v. Rakesh Kohli and another 2013 SCMR 34; Badshah Gul Wazir v. Government of Khyber Pakhtunkhwa and others PLD 2014 Pesh. 210; Zaman Cement Company (Pvt.) Ltd. v. Central Board of Revenue and others 2002 SCMR 312; Ardeshir Cowasjee and 11 others v. Sindh Province and others 2004 CLC 1353 and Syed Muhammad Murtaza Zaidi v. Motor Registration Authority and others 2010 CLC 494 rel.
Messrs Mehran Associates Limited v. The Commissioner of Income-Tax, Karachi 1993 SCMR 274; Government of Sindh through Secretary and Director General, Excise and Taxation and another v. Muhammad Shafi and others PLD 2015 SC 380 and Bismillah and Co. and others v. Secretary, Ministry of Finance, Government of Pakistan and others 2006 SCMR 652 ref.
(b) Income tax---
----Double taxation---Scope---Double taxation can be made by Legislature through an express enactment---Unless there is any prohibition or restriction on power of Legislation to legislate on same subject matter, even double taxation cannot be declared illegal or void---Rule of avoidance of double taxation is merely a rule of construction, therefore, it ceases to have application when Legislature expressly enacts a law which results in double taxation of same income.
Mian Ayaz Anwar v. Federation of Pakistan through Secretary Interior and 3 others PLD 2010 Lah. 230; Warid Telecom (Pvt.) Ltd. and others v. Federation of Pakistan and others 2014 PTD 752 and Riaz Hanif Rahi v. Federation of Pakistan through Ministry of Law and Justice, Islamabad and 9 others PLD 2015 Isl. 7 rel.
(c) Interpretation of statutes---
----Harmonious construction---Applicability---All provisions of statute have to be read together and harmonious construction is to be placed on such provisions so that no provision is rendered nugatory---Statute must be read as an organic whole and all its provisions must be harmoniously reconciled instead of picking out inconsistency between different provisions---Redundancy cannot be attributed to any provision of law rather wisdom of Legislature even in case of any conflict of two provisions, rule of harmonious interpretation is followed.
Abdul Razzaq Khokhar v. Province of Punjab through Secretary to Government of Punjab and others 1990 SCMR 183; Market Committee Khudian through its Administrator v. Town Committee Khudian through its Chairman 1992 SCMR 1403; Qazi Hussain Ahmad, Ameer Jamaat-e-Islami Pakistan and others v. General Pervaiz Musharraf, Chief Executive and others PLD 2002 SC 853; Aftab Shahban Mirani and others v. Muhammad Ibrahim and others PLD 2008 SC 779 and District Bar Association, Rawalpindi and others v. Federation of Pakistan and others PLD 20154 SC 401 rel.
Ch. Atif Rasool for Petitioner.
Akhtar Ali Kureshi, Standing Counsel for Pakistan.
Muhammad Ejaz, Assistant Advocate-General, Usman Arif, Mushtaq Abbas, Malik Abdullah Raza and Sarfraz Ahmad Cheema for Respondents.
2016 P T D 2548
[Lahore High Court]
Before Abid Aziz Sheikh and Shahid Karim, JJ
COMMISSIONER INLAND REVENUE, MULTAN
Versus
Messrs BANK AL-HABIB LTD.
T.R. No.1 of 2012, decided on 19th January, 2016.
(a) Income Tax Ordinance (XLIX of 2001)---
----Ss. 132 & 133---Reference---Scope---Jurisdiction of High Court is special advisory jurisdiction and different from its appellate and revisionary jurisdictions under Civil Procedure Code, 1908, or any other law---Essence of advisory jurisdiction under S. 133 of Income Tax Ordinance, 2001 is restricted to order by Appellate Tribunal under S.132 of Income Tax Ordinance, 2001.
(b) Income Tax Ordinance (XLIX of 2001)---
----Ss. 132 & 133---Reference---Maintainability---Remand order---Partial decision---During pendency of appeal before Appellate Tribunal, Full Bench of Tribunal was constituted and matter was remanded to Appellate Authority to re-decide one issue afresh, while remaining issues were still pending before Appellate Tribunal---Validity---Reference was not maintainable against remand order of Tribunal as there was no conclusive finding of the Tribunal on record---Piecemeal order of Full Bench of Appellate Tribunal, where main appeal was yet to be decided under S. 132 of Income Tax Ordinance, 2001, could not be assailed by way of reference before High Court under S. 133 of Income Tax Ordinance, 2001---Both the parties would have a right to challenge final order for disposal of appeals by Appellate Tribunal under S. 132 of Income Tax Ordinance, 2001, before proper forum--- Reference was dismissed in circumstances.
Haji Muhammad Yousaf v. Commissioner of Income Tax and Wealth Tax Companies Zone, Faisalabad 2006 PTD 72; M/s. E.M. Oil Mills and Industries Ltd. v. Commissioner of Income Tax 2011 PTD 2708; The Commissioner of Income Tax, Central Zone 'B', Karachi v. Messrs Electronic Industries Ltd. 1988 PTD 111; Islamuddin and 3 others v. The Income Tax Officer and others 2000 PTD 306; M/s. Bostan International v. Commissioner of Income Tax, Zone C. Karachi 2010 PTD 1275; Commissioner of Income Tax and Wealth Tax, Sialkot Zone v. Messrs Maqsood Ahmad Gill 2007 PTD 1757; Commissioner of Income Tax v. Bihar Alloy Steels Ltd. 1995 PTD 1189; Messrs Hong Kong Chinese Restaurant, Main Boulevard Gulberg, Lahore 2002 PTD 1878; Commissioner of Income Tax/Wealth Tax, Faisalabad Zone, Faisalabad v. Muhammad Sharif 2009 PTD 536; Commissioner of Income Tax v. Standard Food 2005 PTD 101; Commissioner of Income Tax v. Messrs Rizwan Brothers 2005 PTD 2537 and Commissioner Inland Revenue v. Messrs MACCA CNG Gas Enterprises and others 2015 PTD 515 rel.
Liaqat Ch. and Agha M. Akmal Khan for Applicant.
Dr. Ikram ul Haq, Mansoor Beg and Sarfraz Ahmad Cheema for Respondent (in T.R. Nos. 14, 16, 18 and 21 of 2014).
2016 P T D 2567
[Lahore High Court]
Before Shahid Jamil Khan and Muhammad Sajid Mehmood Sethi, JJ
Messrs MULTAN ELECTRIC POWER CO. LIMITED (MEPCO) through Chief Executive
Versus
COMMISSIONER, INLAND REVENUE (WHT), REGIONAL TAX OFFICER, MULTAN and another
Tax Reference No. 27 of 2014, heard on 6th June, 2016.
(a) Income Tax Ordinance (XLIX of 2001)---
----S. 235---Advance tax---Advance tax deductible on electricity consumption---Scope---Appellate Tribunal Inland Revenue and Commissioner Inland Revenue (Appeals) had found that practice of charging withholding tax after including the sales tax was justified---Questions before the High Court were that whether the Appellate Tribunal had failed to appreciate the fact that advance income tax under S. 235 of Income Tax Ordinance, 2001 was deductible on the electricity consumption under S. 235(2) of the Ordinance and not on gross amount of electricity bill as contemplated in S. 235(1) of the Ordnance; that whether the Appellate Tribunal had erred at law and given effect to the interpretation of S. 235 of the Ordinance made in the Judgment of Sindh High Court titled 'Commissioner Inland Revenue Zone-I RTO v. Hyderabad Electric Supply Co. (HESCO)' in ITRA No. 68/2012, and that whether the clarification of Federal Board of Revenue dated 8th June, 2013 regarding charging of Income Tax under S. 235 of the Ordinance on electricity bill had prospective effect and the CIR(A) had erred at law while holding otherwise, that such clarification had retrospective effect, which was against the dictums of the Superior Courts---Division existed between electricity consumption bill and the gross electricity bill; whereas, the advance tax was required to be charged on the basis of electricity consumption only and in the manner electricity consumption charges were charged; therefore, the gross electricity bill, which included excised duty, income tax, G.S.T and N.J, was not relevant for the purposes of charging advance tax at the rates specified in Part-IV of the First Schedule of the Income Tax Ordinance, 2001---Sections 235(1) & 235(2) of the Ordinance were to be read in harmony and not in isolation, and there was no ambiguity or conflict between the two provisions---Subject was not to be taxed unless the charging provision clearly imposed obligation, and even if he came within letter of law, then he had to be taxed to the extent and limitation provided therein, not beyond its scope settled therein---Person sought to be taxed, could only be taxed when he came within the letter of law---In case the revenue seeking to tax could not bring the subject within letter of law, the subject was free, no matter such a construction might cause serious prejudice to the revenue---In case of fiscal statutes, where two reasonable interpretations of a provision were possible, interpretation favouring taxpayer would be adopted in such cases---Charging provisions would be construed strictly, but ambiguity therein would be resolved in favour of the assessee---Charging section in one fiscal statute demands its strict interpretation and application insofar as the revenue was concerned, but where the same was susceptible to two possible interpretations, it should have been liberally construed in favour of the tax payer, particularly, where there was doubt about the true import and application of a charging section---High Court, therefore, answered the questions in affirmative in favour of the petitioners---Reference was disposed of accordingly.
Messrs Fazal Textile Mills Limited, Karachi v. Secretary, Revenue Division, Islamabad 2009 PTD 1983; Messrs A.A. Brothers through Proprietor v. Federation of Pakistan through Secretary, Ministry of Finance (Revenue Division), Islamabad and 3 others 2010 PTD 2101 and Messrs Maverick Petrogas (Pvt.) Limited, Lahore v. A.C.I.R., MAC-01, RTO-II, Lahore 2013 PTD (Trib.) 595 ref.
Abdul Razzaq Khokhar v. Province of Punjab through Secretary to Government of Punjab and others 1990 SCMR 183; Market Committee Khudian through its Administrator v. Town Committee Khudian through its Chairman 1992 SCMR 1403; Qazi Hussain Ahmad Ameer Jamaat-e-Islami Pakistan and others v. General Pervez Musharraf Chief Executive and others PLD 2002 SC 853; Aftab Shahban Mirani and others v. Muhammad Ibrahim and others PLD 2008 SC 779; District Bar Association, Rawalpindi and others v. Federation of Pakistan and others PLD 2015 SC 401; A & B Food Industries Limited v. Commissioner of Income Tax/Sales, Karachi 1992 SCMR 663; Commissioner Inland Revenue, Lahore v. Saritow Spinning Mills Ltd., Lahore 2016 PTD 786; Pakistan Industrial Development Corporation v. Pakistan through the Secretary, Ministry of Finance 1992 SCMR 891; Collector of Customs, Customs House, Lahore and 3 others v. Messrs S.M. Ahmad & Company (Pvt.) Limited, Islamabad 1999 SCMR 138; Pakistan through Secretary Finance and others v. Messrs Lucky Cement and another 2007 SCMR 1367; Accountant-General, Sindh and others v. Ahmed Ali U. Qureshi and others PLD 2008 SC 522; Government of Sindh through Secretary and Director General, Excise and Taxation and another v. Muhammad Shafi and others PLD 2015 SC 380; Azad Jammu and Kashmir Government through Chief Secretary, Muzafarabad and 2 others v. Ch. Khadim Hussain 2005 CLC 1025; The Pakistan Motor Transport and others v. Secretary to Government of Punjab 1991 MLD 1212; Salfi Textile Mills Limited and another v. City District Government of Karachi through D.C.O. and another 2013 CLD 2120; Aftab Ahmed Khan Sherpao v. Commissioner of Income Tax/Wealth Tax, Peshawar 2013 PTD 185; Messrs Nishat Dairy (Pvt.) Ltd. through Company Secretary v. Commissioner Inland Revenue and 4 others 2013 PTD 1883 and Messrs Citibank NA v. Commissioner Inland Revenue and another 2014 PTD 284 rel.
(b) Interpretation of statutes---
----Harmonious construction----Scope---In case of any conflict of two provisions, the rule of harmonious interpretation is followed---Statute must be read as an organic whole and all its provisions must be harmoniously reconciled instead of picking out inconsistency between different provisions---All provisions of a statute have to be read together and harmonious construction is to be placed on such provisions as that no provision is rendered nugatory.
Abdul Razzaq Khokhar v. Province of Punjab through Secretary to Government of Punjab and others 1990 SCMR 183; Market Committee Khudian through its Administrator v. Town Committee Khudian through its Chairman 1992 SCMR 1403; Qazi Hussain Ahmad Ameer Jamaat-e-Islami Pakistan and others v. General Pervez Musharraf Chief Executive and others PLD 2002 SC 853; Aftab Shahban Mirani and others v. Muhammad Ibrahim and others PLD 2008 SC 779 and District Bar Association, Rawalpindi and others v. Federation of Pakistan and others PLD 2015 SC 401 rel.
(c) Interpretation of statutes---
----Intendment or presumption---Scope---One can only look for the intendment or language used in law and there is no room for intendment or presumption on interpretation of law.
A & B Food Industries Limited v. Commissioner of Income Tax/Sales, Karachi 1992 SCMR 663 and Commissioner Inland Revenue, Lahore v. Saritow Spinning Mills Ltd., Lahore 2016 PTD 786 rel.
(d) Interpretation of statutes---
----Words should be read in their ordinary, natural and grammatical meaning, subject to the rider that in construing the words in the legislative instrument/provision of law, the most liberal construction should be put upon the words so that the same may have effect in their widest amplitude.
Pakistan Industrial Development Corporation v. Pakistan through the Secretary, Ministry of Finance 1992 SCMR 891; Collector of Customs, Customs House, Lahore and 3 others v. Messrs S.M. Ahmad & Company (Pvt.) Limited, Islamabad 1999 SCMR 138; Pakistan through Secretary Finance and others v. Messrs Lucky Cement and another 2007 SCMR 1367; Accountant-General, Sindh and others v. Ahmed Ali U. Qureshi and others PLD 2008 SC 522; Government of Sindh through Secretary and Director General, Excise and Taxation and another v. Muhammad Shafi and others PLD 2015 SC 380; Azad Jammu and Kashmir Government through Chief Secretary, Muzafarabad and 2 others v. Ch. Khadim Hussain 2005 CLC 1025; The Pakistan Motor Transport and others v. Secretary to Government of Punjab 1991 MLD 1212; Salfi Textile Mills Limited and another v. City District Government of Karachi through D.C.O. and another 2013 CLD 2120; Aftab Ahmed Khan Sherpao v. Commissioner of Income Tax/Wealth Tax, Peshawar 2013 PTD 185; Messrs Nishat Dairy (Pvt.) Ltd. through Company Secretary v. Commissioner Inland Revenue and 4 others 2013 PTD 1883 and Messrs Citibank NA v. Commissioner Inland Revenue and another 2014 PTD 284 rel.
(e) Interpretation of statutes---
----Fiscal statute---Principles---Where two reasonable interpretations of a provision were possible, interpretation favouring taxpayer would be adopted in such cases---Charging provisions would be construed strictly, but ambiguity therein would be resolved in favour of the assessee---Charging section in one fiscal statute demands its strict interpretation and application insofar as the revenue was concerned, but where the same was susceptible to two possible interpretations, it should have been liberally construed in favour of the tax payer, particularly, where there was doubt about the true import and application of a charging section.
Barrister Malik Kashif Rafiq Rajwana for Applicant.
Agha Muhammad Akmal Khan and Tariq Manzoor Sial for Respondents.
2016 P T D 2616
[Lahore High Court]
Before Abdul Sami Khan, J
MUHAMMAD AKRAM
Versus
The STATE and another
Criminal Miscellaneous No. 7691-B of 2015, decided on 23rd July, 2015.
Customs Act (IV of 1969)---
----Ss. 156(1), (77), (81) & (82)---Criminal Procedure Code (V of 1898), S. 498---Bail before-arrest, grant of---Principles---Accused, as Incharge of warehouse, was alleged to have released goods consignment on basis of fake documents submitted by owner of goods---Accused was not named in FIR, and his name had been introduced through supplementary statement---Supplementary statement, prima facie, had no value in eye of law---Accused had neither prepared fake documents in question nor had same been submitted by him for release of smuggled goods---Accused had released goods after receiving letter from concerned authority---Accused had, therefore, released goods while adopting proper procedure---Investigating officer had failed to establish any proximity of accused with owner of goods to substantiate allegations leveled against him---Owner of goods had already deposited whole tax evasion amount in Government Treasury---Owner of goods had also sworn affidavit to the effect that he had handed over documents for their onward processing---Prosecution had not established that accused had released goods with prior knowledge that documents were fake---Principal accused, owner of goods, had already been released on post-arrest bail---Accused was not beneficiary of impugned tax evasion; rather he had only dealt with documentation in releasing goods---Prosecution had also not leveled any allegations on accused that he had released goods after receiving illegal gratification and conniving with owner of goods---Accused had been made scapegoat to save skin of his high-ups---Accused was government servant, and there was no chance of his abscondance---Accused was not expected to tamper with prosecution evidence---Accused was not previous convict, nor involved in any criminal case---Investigation of case was complete---Nothing was to be recovered from accused---Application for bail was allowed accordingly.
Muhammad Ajmal Adil for Petitioner with Petitioner in person.
2016 P T D 203
[Peshawar High Court]
Before Yahya Afridi and Muhammad Daud Khan, JJ
Messrs TAJ PACKAGES COMPANY (PVT.) LTD. through Manager
Versus
The GOVERNMENT OF PAKISTAN through Federal Secretary Finance and Revenue Division and 6 others
Writ Petition No.916-P of 2013, decided on 30th April, 2015.
(a) Constitution of Pakistan---
----Arts. 247 & 258---Federally Administered Tribal Areas or Provincially Administered Tribal Areas---Applicability of law---Any law or principle laid down for Azad Jammu and Kashmir is not applicable to Federally Administered Tribal Areas or Provincially Administered Tribal Areas.
(b) Sales Tax Act (VII of 1990)---
----S. 3---Sales Tax---Scope---Sales tax is an indirect tax and when paid at import stage it is to be passed on to ultimate consumer through adjustments to be made in output taxes by each person in production and commercial chain leading to final consumer as provided under the enabling provisions of the Sales Tax Act, 1990.
(c) Income Tax Ordinance (XLIX of 2001)---
----Ss. 4, 148(7) & 168(2)(b)---Advance Tax---Scope---Advance tax is declared as final tax but there are exceptions to the same which have been provided in proviso to S. 148(7) of Income Tax Ordinance, 2001, which keeps advance tax paid on imports including machinery and raw material, to be utilized by importer from being declared the final tax---Such advance tax paid by importer, is to be adjusted as tax credit within the contemplation of S. 168(2)(b) of Income Tax Ordinance, 2001---Although, advance tax collected under S. 148 of Income Tax Ordinance, 2001, has not been included in taxable income, as provided under S. 4 of Income Tax Ordinance, 2001, yet payments made thereunder have been expressly brought within the scope of charging section by its clear stipulation in S. 4(5) of Income Tax Ordinance, 2001.
(d) Income Tax Ordinance (XLIX of 2001)---
----S. 4---Sales Tax Act (VII of 1990), S. 3---"Income tax" and "sales tax"---Distinction---Though the two taxes are conceptually different taxes; under Income Tax Ordinance, 2001, being a direct tax, while sales tax under Sales Tax Act, 1990, being an indirect tax, yet the legislature in its wisdom had placed two taxes in respective enactments in a manner whereby scope and burden on the payer of the two taxes have a very striking similarity---Any legal finding on one is surely applicable upon the other.
(e) Precedent---
----Principle of following precedent---Scope---When precedent of High Court rendered by a Bench comprising of equal or more judges did not take into consideration the clear principle laid down by Supreme Court, then High Court has to follow ratio decidendi of the decision of Supreme Court.
Pak Turk Enterprises' case 2015 CLC 1 rel.
(f) Sales Tax Act (VII of 1990)---
----S. 3---Income Tax Ordinance (XLIX of 2001), Ss. 4 & 148---Constitution of Pakistan, Arts. 199 & 247---Constitutional petition---Taxes, exemption from---Petitioners were carrying on their business in Federally Administered Tribal Areas and Provincially Administered Tribal Areas and they were aggrieved of advance tax and sales tax levied upon imports made by them for consumption within the territorial jurisdictions of Federally Administered Tribal Areas and Provincially Administered Tribal Areas---Persons carrying on business in Federally Administered Tribal Areas or Provincially Administered Tribal Areas did not require specific exemption from Federal Government, through any subordinate legislation---Such persons were granted express immunity from those taxing enactments, such as the Income Tax Ordinance, 2001 and the Sales Tax Act, 1990, which had not been extended to those areas, under Art. 247(3) of the Constitution---High Court declared that advance tax charged on import under S. 148 of the Income Tax Ordinance, 2001, was not payable by petitioners importing goods for its utilization or consumption in Federally Administered Tribal Areas or Provincially Administered Tribal Areas---High Court further declared that sales tax charged under S. 3(1)(b) of the Sales Tax Act, 1990, was not payable by petitioners importing goods for its utilization of consumption in Federally Administered Tribal Areas or Provincially Administered Tribal Areas; that the Federal Government to take appropriate steps to ensure that persons carrying on business in Federally Administered Tribal Areas or Provincially Administered Tribal Areas were rendered immunity from the payment of taxes under Income Tax Ordinance, 2001, and Sales Tax Act, 1990, as the said statutes had not been extended to said areas within the contemplation of Art. 247(3) of the Constitution; that the Federal Government to take necessary steps to formulate a uniform policy for seeking securities from the persons importing goods for its consumption and utilization in Federally Administered Tribal Areas and Provincially Administered Tribal Areas so that immunity provided under the Constitution would not be abused and in case imported goods were utilized or sold outside that areas then the revenue of the State would be recoverable from the security so provided; that till the decision was taken by Federal Government regarding security mechanism, the Federal Board of Revenue would obtain from petitioners postdated cheques for payment of taxes at import stage under Sales Tax Act,1990, and Income Tax Ordinance, 2001, as security for goods destined for utilization and consumption in Federally Administered Tribal Areas or Provincially Administered Tribal Areas; that postdated cheques would be returned to petitioners upon production of consumption certificates duly issued by concerned authorities as specified in notification dated 28-2-2011 and liability was fixed upon petitioners to approach authorities for issuance of consumption certificates---Constitutional petition was disposed of accordingly.
Gul Cooking Oils's case Writ Petition No.1278 of 1999; Gul Cooking Oil's case Civil Appeal No.1578 of 2000 (2003 PTD 1913); Master Foam's case PLD 2005 SC 373; Mahsud Ghee Industries' case CPLA No.307 of 2004; Gul Cooking Oil's case 2008 PTD 169; Mahsood Ghee Industries's case CRP 64/2007; Messrs Lal Ghee Oil Mills' case 2010 PTD 438; Excellence Plastic's case W.P. No.2212 of 2006; Roshni Mat's case W.P. No.1845 of 2005; Abdul Shakoor Proprietor's case Tax Reference No.15 of 2009 and Messrs Afridi Poly Propylene Industries' case W.P. No.453 of 2004 ref.
Isaac Ali Qazi for Petitioner.
Ishtiaq Ahmad (Junior), Shahid Raza Malik, Ghulam Shoaib Jally and Syed Muhammad Attique Shah, Additional Attorney General for Respondents.
Date of hearing: 7th April, 2015.
2016 P T D 325
[Peshawar High Court]
Before Yahya Afridi and Irshad Qaiser, JJ
COMMISSIONER INLAND REVENUE
Versus
SHER AKBAR KHAN
Tax Reference No.46 of 2010, decided on 23rd June, 2015.
(a) Income Tax Ordinance (XLIX of 2001)---
----Ss. 170, 153, 122 (5A) & 115 (4)----CBR Circular No.1 of 2005 (Income Tax), dated 5-5-2005---Refund---Payments for goods, services and contracts---Determination---Persons not required to furnish return of income---Amendment of assessment---Presumptive Tax Regime and Final Tax liability---Applicability---Amendments introduced in S. 153 of Income Tax Ordinance, 2001 vide Finance Act, 2005---Nature and effect---Assessee, labour contractor, who had provided labour services to a company, having filed returns in terms of S. 115(4) of Income Tax Ordinance, 2001 regarding three consecutive tax years, claimed refund for the same, which were accepted by Additional Commissioner (Audit)---Said assessment was, however, subsequently, amended under S.122(5A) of the Ordinance on ground that the assessee had wrongly filed returns under S. 115(4) of the Ordinance, as the payment received on account of labour contract was final tax liability; the assessee was, therefore, assessed under Presumptive Tax Regime and tax deducted was treated as Final Tax liability---Assessing Officer rejected claim of the assesses; whereas, the same was accepted by Appellate Tribunal---Department contended that the services provided by the assessee were not professional services, hence, the same did not come within the purview of S. 153(1)(b) of Income Tax Ordinance, 2001, and instead, the same came within the ambit of S. 153(1)(c) of the Ordinance and tax deducted would, therefore, be final tax under S.153(6) of the Ordinance---Assessee pleaded that amendments introduced in S.153 of Income Tax Ordinance, 2001, vide Finance Act, 2005 being explanatory in nature and having retrospective effect, were applicable to the present case as the same had introduced the term 'providing of' which had covered the services rendered by the assessee---Validity---Initially, vide Finance Act, 2002, word 'professional' had been omitted form S. 153(1)(a) of Income Tax Ordinance, 2001; whereas, in order to achieve true intent of legislature, words 'providing of' were inserted therein, vide Finance Act, 2005---Amendments introduced vide Finance Act, 2002 intended to expand the term 'services', which intent of legislature however had not been appreciated in true sense---Legislature, in order to clarify its intent had inserted the words 'providing of'---High Court observed that as per FBR Circular No. 1 of 2005 (Income Tax), dated 5-5-2005 which provided that with omission of word 'professional' from the law in 2002, an erroneous impression was created that the meaning of term 'services' had been restricted, and in order to dispel that impression, a clarifactory amendments had been made whereby the words 'or providing of' had been inserted in S.153 of Income Tax Ordinance, 2001, which had made withholding tax on all types of services adjustable---Amendments, introduced in S.153 of Income Tax Ordinance, 2001, could surely be termed as declaratory and remedial legislation, as the sole intent of legislature was to clarify the confusion caused in the pre-existing provisions of S.153 of Income Tax Ordinance, 2001---High Court observed that a clarifactory amendment in fiscal statute operated retrospectively, because the same clarified ambiguity, and that courts had always treated clarifactory amendments as retrospective amendments, even in cases where the purpose behind such amendment was to nullify earlier judgments---Amendments introduced vide Finance Act, 2005, being remedial and declaratory in nature, had retrospective effect, and the same would apply to relevant tax years in question---Assessee was entitled to claim refund under S. 170 of Income Tax Ordinance, 2001, regarding the taxes already paid, as he would not come within the presumptive tax regime under S. 153 (6) of Income Tax Ordinance, 2001---Reference was answered in negative in circumstances.
Messrs Premier Mercantile Services (Pvt.) Ltd's. case 2007 PTD 2521 distinguished.
Messrs Ever Green Trading Company's case 2011 PTD 549; Messrs Rehman Enterprises case 2008 PTD 1897; Messrs Criss Gas case 2010 PTD 2349; Khurshid Ahmed's case 2008 PTD 1243 and Mehboob Ali's case PLD 1976 S.C 483 ref.
Reckit and Colman's case 2001 PLC 245; Messrs Dewan Cement's case 2010 PTD 1717; Messrs Travel Walji's case 2015 PTD 550 and Rai Ramkrishna's case AIR 1963 SC 1667 rel.
(b) Interpretation of statutes---
----Remedial or declaratory legislation---Scope and effect---Legislative measures introduced to clarify a position or remedy any defect in the pre-existing law are known as declaratory or remedial legislation---Remedial or declaratory legislation has to be given retrospective effect, unless contrary intention is clearly intended by the legislature and so expressly or impliedly provided therein.
Reckit and Colman's case 2001 PLC 245; Messrs Dewan Cement's case 2010 PTD 1717 and Messrs Travel Walji's case 2015 PTD 550 rel.
Rehmanullah for Petitioner.
Muhammad Ijaz Sabi for Respondent.
Date of hearing: 23rd June, 2015.
2016 P T D 470
[Peshawar High Court]
Before Yahya Afridi and Rooh-ul-Amin Khan, JJ
WALI SHAH through Attorney
Versus
COLLECTOR OF CUSTOMS and 3 others
Customs Reference No.11 of 2015, decided on 9th September, 2015.
(a) Customs Act (IV of 1969)---
----S. 179(1)---S.R.O. No.886/2012 dated 18-7-2012---Power of adjudication---Variation of jurisdiction---Scope---Provisions of S.179(1) of Customs Act, 1969 had been made subject to variation by Department and it was in this context that, S.R.O. No.886/2012 dated 18-7-2012 was issued by Department wherein jurisdiction aspects of Officers of Customs in the Adjudication Collectorate were stipulated---Such provisions superceded certain jurisdiction attributes provided under S.179(1) of the Customs Act, 1969.
(b) Customs Act (IV of 1969)---
----S.179(1)---S.R.O. 886/2012 dated 18-7-2012---Adjudication, power of---Application of S.R.O. 886/2012 dated 18-7-2012---Scope---Bare reading of S.R.O. 886/2012 dated 18-7-2012 would reveal that territorial jurisdiction of five Collectors of Customs had been clearly defined, however, jurisdictions of said officers had been expressly excluded to entertain certain subject matters, stipulated in para-3 of said SRO which included issues relating to technical violation of Import Policy---S.R.O. 886/2012 dated 18-7-2012 did not vary pecuniary limits of Collector of Customs and the same remained as expressed in S.179(1) of Customs Act, 1969---Pecuniary limit, expressly provided under S.179(1) of Customs Act, 1969 was not disturbed and it remained applicable to all Officers of Customs, irrespective of whether they were in the Adjudication Collectorate or other Collectorate such as preventive or intelligence---Case of the importer, in such circumstances, could not be adjudicated by an Officer of Customs in the Adjudication Collectorate as there was a clear bar provided under para-3 S.R.O. 886/2012 dated 18-07-2012---Reference was answered accordingly.
Aamir Bilal, for Petitioner.
Muhammad Habib Qureshi and Muhammad Tamil for Respondents.
Date of hearing: 9th September, 2015.
2016 P T D 832
[Peshawar High Court]
Before Yahya Afridi and Rooh-ul-Amin Khan, JJ
COMMISSIONER OF INLAND REVENUE (LEGAL), PESHAWAR
Versus
KHALID UMAR KHAN
Tax Reference No. 40-P of 2014, decided on 9th September, 2015.
(a) General Clauses Act (X of 1897)---
----S. 24-A---Speaking order---Scope---Tribunal and quasi-judicial authorities are under legal obligation to give plausible reason, absence whereof can render the order liable to judicial chastisement---Courts and quasi-judicial authorities should record reason for their conclusion to enable aggrieved party/appellant or higher Courts to exercise their jurisdiction properly and in accordance with law---Reasoning alone can enable a higher or appellate Court to appreciate controversy in issue in its correct and true perspective and to hold whether conclusion recorded by Court, whose order is assailed, is sustainable in law and whether subordinate Court has adopted a correct legal approach---To sub-serve the purpose of justice delivery system, it is essential that Court should record detailed reasons for their conclusion and decide the matter through a speaking order---Stating a reason by administrative and quasi-judicial authorities is a well-accepted norm and its compliance is stated to be mandatory.
(b) Income Tax Ordinance (XLIX of 2001)---
----Ss. 120(1), 128(4)(5) & 133(1)---Reference---Additional evidence, production of---Principle---Commissioner Inland Revenue (Appeals) allowed the assessee to produce additional evidence and then set aside the assessment order---Appellate Tribunal Inland Revenue maintained the order passed by Commissioner Inland Revenue (Appeals)---Validity---Admission of additional evidence in such a manner at appellate stage was against the mandate of S. 128(5) of Income Tax Ordinance, 2001, as the same was not referred to any right of parties to produce evidence but was dependent solely on the satisfaction of Commissioner Inland Revenue (Appeals) and it was for him to decide that the appellant was prevented by sufficient cause from producing such material or evidence before the Commissioner---Mere fact that evidence sought to be produced was vital and important for decision of case would not provide a sufficient cause to allow its admission at the appellate stage specially when the evidence was available to taxpayer at the initial stage and was not produced by him---Provisions of S. 128(4) invested Commissioner Inland Revenue (Appeals) with the power to call for required particulars being necessary for arrival at just and proper conclusion in appeal and also made further inquiry in the matter involved in appeals---First part of S. 128(5) of Income Tax Ordinance, 2001, placed absolute bar on the Commissioner not to admit any documentary material or evidence which was not produced at the time of initial proceedings, while the second part empowered the petitioner to exercise discretion for admitting additional documentary material if the appellant had satisfied Commissioner Inland Revenue (Appeals) that he was prevented by sufficient cause from doing so---Commissioner Inland Revenue (Appeal) was under legal obligation to state reason for his satisfaction while admitting additional material or evidence---Order and judgment of Commissioner Inland Revenue (Appeals) and Appellate Tribunal Inland Revenue were set aside and cases were remanded to Commissioner Inland Revenue (Appeals) for decision afresh after providing proper opportunity of hearing the parties---High Court directed the authorities to state reason for admitting additional material or evidence, if any, strictly in accordance with the mandate of S.128(5) of Income Tax Ordinance, 2001---Reference was answered in affirmative.
Zia-ur-Rahman v. Syed Ahmad Hussain 2014 SCMR 1015 and Tehsil Nazim TMA, Okara v. Abbas Ali 2010 SCMR 1437 ref.
Mian Naveed Gul Kakakhel for Petitioners.
Muhammad Haroon for Respondents.
Date of hearing: 9th September, 2015.
2016 P T D 1188
[Peshawar High Court]
Before Rooh-ul-Amin Khan and Yahya Afridi, JJ
COLLECTOR OF SALES TAX AND FEDERAL EXCISE
Versus
Messrs ARMY WELFARE TRUST
Tax Reference No.49 of 2008, decided on 12th January, 2016.
(a) Central Excise Act (I of 1944)---
----S. 4(2)---Federal Excise Act (?? of 2005), S. 34(3)---Sales Tax Act (VII of 1990), S. 26---Central Excise Rules, 1944, R. 10---Notification SRO no. 561(1)/94, Dated 09-06-1994---Reference---Misdeclaration or false information---Conscious act---Proof---Assessee was submitting "Nil" returns of sales tax in terms of S. 26 of Sales Tax Act, 1990, and had been providing breakup of 'retail prices' for the purpose of levy of Central Excise Duty---During audit, the authorities issued show cause notice for recovery of Central Excise Duty, alleged to have been evaded by assessee---Appeal filed by assessee was allowed by Customs, Central Excise and Sales Tax Appellate Tribunal and order-in-original was set aside---Validity---No 'conscious act' on the part of assessee to make any mis-declaration, or file any false information or enter into any collusion with any officer of the Revenue, in order to avoid any payment of Central Excise Duty---Action of assessee, even if taken to be against the letter of law, was an error of law, which in the crucial period was common and it was evident from number of cases arising from different jurisdictions requiring adjudication on the very definition of value for the purpose of calculating central excise duty payable by a manufacturer, as provided under S. 4(2) of Central Excise Act, 1944---Show cause notices issued by authorities were barred by time as disputed action of assessee could only be agitated by Revenue within a period of one year under R. 10(1) of Central Excise Rules, 1944---During the crucial period involved in the Reference, sales tax was exempted under S.R.O. No. 561(I)/94, dated 9-6-1994 and the same could not be excluded by the assessee from the notional value of retail price for the purpose of determining central excise duty, as it was expressed mandate of S. 4(2) of Central Excise Act, 1944---High Court declined to interfere in the decision made by Customs, Central Excise and Sales Tax Appellate Tribunal---Reference was answered accordingly.
The Australian Oxford Dictionary; Chambers 20th Century Dictionary; Concise Oxford English Dictionary; Dewan Cement Ltd.'s case 2009 SCMR 1126; Lucky Cement's case 2003 PTD 1002 and 2007 PTD 1656 ref.
(b) Central Excise Rules, 1944---
----R. 10(2) & (3)---Show-cause notice---Provision of law, non-mentioning of---Effect---Merely stating provision of law, without any justification for the same in the body of notice, does not qualify the notice to be invoked under the stated provision of law.
Khyber Electric Lamps's case 201 SCMR 838 rel.
(c) Federal Excise Act ( of 2005)---
----S. 34(3)---Reference---Jurisdiction of High Court---Scope---High Court in its jurisdiction under S.34, Federal Excise Act, 2005 is to only render legal opinion on questions of law and would not counter the same when there is nothing absurd or unreasonable in the finding so as to warrant a different opinion.
Abdur Rauf Rahila and Ishtiaq Ahmad for Petitioners.
Ali Sibtain Fazil and Ibadur Rehman for Respondents.
Date of hearing: 12th January, 2016.
2016 P T D 1256
[Peshawar High Court]
Before Yahya Afirid and Qaiser Rashid, JJ
Messrs REHMAN COTTON MILLS LTD.
Versus
FEDERATION OF PAKISTAN through Secretary Cabinet Division and 2 others
Writ Petition No.918 of 2015, decided on 4th February, 2016.
(a) Interpretation of statutes---
----Explanation to a provision---Object and scope decided.
Following are the object and scope of an "Explanation" given with a provision:--
(i) To explain the meaning and intendment of the Act itself.
(ii)- Where there is any obscurity or vagueness in the main enactment, to clarify the same so as to make it consistent with the dominant object which it seems to subserve.
(iii) To provide an additional support to the dominant object of the act in order to make it meaningful and purposeful.
(iv) An Explanation cannot in any way interfere with or change enactment or any part thereof but where some gap is left which is relevant for the purpose of the Explanation, in order to suppress the mischief and advance the object of the Act it can help or assist the Court in interpreting the true purport and intendment of the enactment and right with which any person under a statute has been clothed or set at naught the working of an Act by becoming an hindrance in the interpretation of the same.
Legislature may employ an Explanation as a deeming provision in a fiscal statute and thereby create chargeability. Effect of a judicial decision can be nullified through valid legislation. Provision relating to recovery of tax and duties had to be interpreted liberally in a manner to ensure recovery thereof by the revenue.
(b) Income Tax Ordinance (XLIX of 2001)---
----Ss.177 & 214-C, Explanation [Inserted by Finance Act (XXII of 2013)]---Show cause notice---Commissioner Income Tax, jurisdiction of---Assessee assailed show cause notice on the ground that it could not have been issued under S.177 of Income Tax Ordinance, 2001 by Commissioner, without balloting carried out by Federal Board of Revenue under S.214-C of Income Tax Ordinance, 2001---Validity---Legislature, after Finance Act, 2013, had expressed its clear intent regarding powers of carrying out audit by Commissioner under S.177 of Income Tax Ordinance, 2001---Power of Commissioner for such purpose was independent of authority of Federal Board of Revenue of S.214-C of Income Tax Ordinance, 2001---High Court declined to interfere in the show cause notice issued by the authorities---Petition was dismissed in circumstances.
Chen One's case 2012 PTD 1815; Messrs Northern Bottling's case W.P. No.1232 of 2012; N.S. Bindra's Interpretation of Statutes Tenth Edition by M.N. Rao and Amita Dhanda; Interpretation of Statutes by Vepa P. Sarathi; Interpretation of Statutes by M.P. Tandon's; Escoigne Properties Ltd. v. IRC (1958) AC 549; Muhammad Hussain Patel's case PLD 1981 SC 1; Naveed Textile Mills Ltd.'s case PLD 1984 SC 92; Chief Administration of Auqaf, Punjab's case PLD 1991 SC 596; Sardar Farooq Ahmad Khan Laghari's case PLD 1999 SC 57; Bismillah and Co.'s case 2006 SCMR 652; S.Sundaram Pillai's case AIR 1985 SC 582; Burmah Sheel Oil Storage's case AIR 1961 SC 315; First Income Tax Officer Salem's case AIR 1967 SC 81; Bihta Cooperative Development Cane Marketing Union's case AIR 1967 SC 389; Hiralal Rattanlal's case AIR 1973 SC 1034; D. G.Mahajan's case AIR 1977 SC 915; Mian Nazeer's case 1992 SCMR 883; Amjad Hussain Dilawari's case 1992 SCMR 1272; Molasses Trading's case 1993 SCMR 1905; Punjab Steel's case 1993 SCMR 2267; M.Y. Electronics Industries (Pvt.) Ltd.'s case 1998 SCMR 1404; Al-Samrez Enterprise's case 1986 SCMR 1917; Gatron Industries Ltd.'s case 1999 SCMR 1072; Zaman Cement Company (Pvt.) Ltd.'s case 2002 SCMR 312; Asbestos Cement's case 1993 PTD 343 and Trustee of Port of Karachi's case 1989 PTD 1048 ref.
Ishtiaq Ahmad Senior for Petitioner.
Rehmanullah, Syed Arshad Hussain Shah, DAG for Respondents.
Date of hearing: 4th February, 2016.
2016 P T D 2257
[Peshawar High Court]
Before Yahya Afridi and Rooh-ul-Amin, JJ
Messrs CHERAT PACKAGING LTD., STAFF PROVIDENT FUND AND GRATUITY, PESHAWAR
Versus
FEDERATION OF PAKISTAN through Secretary Finance and Economic Affairs, Revenue Division, Islamabad and 9 others
Writ Petition No. 3564-P of 2015, decided on 24th May, 2016.
(a) Income Tax Ordinance (XLIX of 2001)---
----Ss.53(1), 122-B, 151, 159(2), 206, Second Sched., Part-I, clause 57(3), Second Sched., Part-IV, clause 47B & Sixth Sched. VI---Exemption certificate---Trust---Grievance of taxpayers was that they were not required to obtain or produce exemption certificate and in turn the payer of their profits on investments was not to deduct income tax under Ss.151 & 159 (2) of Income Tax Ordinance, 2001---Validity---Provisions of S.151 read with S.159(2) of Income Tax Ordinance, 2001, commanded the 'payer' who while acting and withholding agent on behalf of the Revenue, to deduct taxes at source at the time of making payment to persons---Complete immunity could not be given to all funds, who claimed to be validly approved under Income Tax Ordinance, 2001---Once the Commissioner granted such approval/recognition certificate to a fund under enabling provisions of Schedule-VI to Income Tax Ordinance, 2001, then it could only be interfered with, as and when the same was revoked---Allowing persons to seek immunity from operation of S.151 of Income Tax Ordinance, 2001, on the basis of such certificate, without its period of validity stated therein, would leave much room for its abuse---Trust, though approved and falling within the purview of clause 47B of Part-IV of Schedule-II to Income Tax Ordinance, 2001, also fell within the mischief of requiring to produce exemption certificate to withholding agent under S.151 of Income Tax Ordinance, 2001, to avail exemption from payment of income tax on their profits under clause 57(3) of Part-I of Second Schedule to Income Tax Ordinance, 2001---High Court declined to interfere in the matter---Constitutional petition was dismissed in circumstances.
Atlas Income Fund's case rel.
(b) Interpretation of statutes---
----Fiscal statute---Procedural provision---While reviewing cases relating to fiscal matters, provision concerning procedure or tax recovery mechanism provided in Income Tax Ordinance, 2001, are to be strictly construed in favour of Revenue and not the subject.
Messrs Eli Lilly's case 2009 SCMR 1279 rel.
Ishtiaq Ahmad (Senior) for Petitioners.
Ishtiaq Ahmad (Junior) for Respondents.
Date of hearing: 26th April, 2016.
2016 P T D 2388
[Peshawar High Court]
Before Yahya Afridi and Muhammad Younis Thaheem, JJ
KHAN WALI
Versus
The COLLECTOR MCC, PESHAWAR and 2 others
Custom Reference No. 32-P of 2015, decided on 18th February, 2016.
Customs Act (IV of 1969)---
----Ss. 157, 180, 181, 196 & 2(s)(iii)---S.R.O. No. 499(1)/2009, dated 13.06.2009---Reference---Confiscation of goods---Extent---Issuance of show-cause notice before confiscation of goods or imposition of penalty---Option to pay fine in lieu of confiscated goods---Permissibility---Customs control over conveyances and goods---'Smuggled goods'---Scope---Petitioner's vehicle in question, along with the other vehicles was seized by the Customs authorities, wherein foreign origin cloth was being smuggled; the same vehicle had been seized before in earlier seizure cases by the Customs authorities, which was released on redemption of fine @ 20 % of the value of the vehicle with the warning that 'if the vehicle is intercepted for the second time for offence of smuggling, the same will be liable to confiscation', which meant that the vehicle in question had been repeatedly used for the purpose of smuggling goods---S.R.O. No. 499(1)/2009, dated 13.06.2009, provided that 'smuggled goods' or even the vehicle exclusively conveying the 'smuggled goods' would come within the mischief of the notification and it would not be permissible to release the vehicle on payment of redemption fine in lieu of its confiscation; therefore, no option would be given to pay fine in lieu of confiscation of such vehicle seized for the second time in the act of smuggling---Petitioner had failed to furnish any plausible explanation that the goods recovered from the vehicle were not prohibited under S. 181 of Customs Act, 1969---Adjudicating Officer had rightly ordered confiscation of the vehicle, which was duly maintained by the Customs Appellate Tribunal---Impugned order of confiscation, therefore, needed no interference by the High Court---Reference was answered in negative.
Muhammad Rafiq for Petitioner.
Barrister K.G. Sabir for Respondents.
Date of hearing: 18th February, 2016.
2016 P T D 582
[Balochistan High Court]
Before Muhammad Kamran Khan Mulakhail and Naeem Akhtar Afghan, JJ
Messrs UNITED AGRO CHEMICALS through authorized dealer and another
Versus
GOVERNMENT OF PAKISTAN through Collector Customs House and 2 others
C.P. No.798 of 2015, decided on 15th October, 2015.
Customs Act (IV of 1969)---
----Ss. 2(s), 156(1)(8)(i) & 171---Constitution of Pakistan, Art. 199---Constitutional petition---Smuggling---Imported fertilizer---Three trucks loaded with DAP fertilizer were taken into possession by the authorities on the ground that the same contained fertilizer to be smuggled out of Pakistan---Validity---Seized DAP fertilizer was lawfully imported and was seized by respondents in the interior of country and not at the Pak-Afghan border, therefore, no Provisions of Customs Act, 1969, had been violated---If the trucks loaded with DAP fertilizer were seized near Pak-Afghan border, the situation would have been altogether different---Mere presumption of authorities that seized trucks loaded with imported DAP fertilizer were going to be smuggled to Afghanistan through unauthorized route could not be made a basis to seize the same or to initiate proceedings against petitioner under the provisions of Customs Act, 1969, particularly when the same were under transportation in the interior of country and not at the Pak-Afghan border---High Court declared that interception of trucks, loaded with imported DAP fertilizer, its subsequent seizure and issuance of notice to petitioner under S. 171 of Customs Act, 1969, were without lawful authority and of no legal effect---High Court directed the authorities to release/return the trucks loaded with imported DAP fertilizer to petitioner and quashed proceedings initiated by authorities and notices issued to petitioner under S. 171 of Customs Act, 1969---Petition was allowed in circumstances.
State v. Anwar Khattak PLD 1990 FSC 62 and Ghulam Murtaza v. State 1987 MLD 1948 rel.
Collector of Customs v. Universal Gateway Trading Corporation 2005 SCMR 37 distinguished.
H. Shakeel Ahmed and Sadbar Jan for Petitioners.
Syed Ikhlaq Shah, Standing Counsel for Respondents.
Date of hearing: 7th October, 2015.
2016 P T D 1419
[Balochistan High Court]
Before Muhammad Ejaz Swati and Jamal Khan Mandokhail, ZAHIR KHAN AND BROTHERS, ENGINEERING AND CONSTRUCTORS through Partner
Versus
FEDERAL BOARD OF REVENUE through Member and 4 others
C.P. No.751 of 2014, decided on 9th November, 2015.
(a) Customs Act (IV of 1969)---
----Ss. 25-D, 79, 80 & 193---Valuation ruling---Importer was aggrieved of valuation ruling whereby price declared by importer was found to be on lower side---Validity---Customs Officer after examination, assessed duty and taxes leviable on goods imported, which was required to be paid by the importer---Such sort of assessment was in order of Customs Officer passed under S. 80 of Customs Act, 1969 on receipt of goods determined under S. 79 of Customs Act, 1969 by the importer---Order passed under S. 80 of Customs Act, 1969 was an appealable order whereas, Valuation Ruling was required to be challenged under S.25-D of Customs Act, 1969---Importer had remedy under Ss. 193 & 25-D of Customs Act, 1969, by approaching concerned forum available in the hierarchy under Customs law---Constitutional Petition was dismissed in circumstances.
2015 SCMR 630; 2006 PTD 909; Messrs Flying Board and Paper Products (Pvt.) Ltd. v. Deputy Collector of Customs, Dry Port, Lahore 2006 SCMR 1648 = 2006 PTD 2354 and Syed Arshad Ali and others v. Pakistan Telecommunication Company Ltd. and others 2008 SCMR 314 ref.
(b) Constitution of Pakistan---
----Art. 199---Constitutional jurisdiction of High Court---Scope---Provision of Art. 199 of the Constitution was not meant to short-circuit statutory proceedings---High Court could exercise such jurisdiction when it was found that order assailed was without jurisdiction or apparently contrary to settled provisions of law or was likely to result in miscarriage of justice.
Qazi Ghulam Dastagir and Mirza Luqman for Petitioner.
Sher Shah Kasi, Deputy Attorney General along with Haji Azam Law Officer for Respondents Nos. 1 to 4.
Mushtaq Ahmed Anjum for Respondent No.5.
Date of hearing: 29th September, 2015.
2016 P T D 78
[Supreme Court of Pakistan]
Present: Jawwad S. Khawaja, Sh. Azmat Saeed and Mushir Alam, JJ
HASSAN ALI GRAINS (PVT.) LTD. and others
Versus
GOVERNMENT OF PAKISTAN through Secretary M/o Finance and others
Civil Appeals Nos.1553 to 1570 of 2007 and Civil Appeal No. 170 of 2009, decided on 6th April, 2015.
(Against the judgment dated 15-2-2007 of the High Court of Sindh, Karachi passed in Constitutional Petitions Nos.D-415/86, D-542/86, D-431/86, D-564/86, D-439/86, D-364/86, D-429/86, D-491/86, D-389/86, 395/86, 391/86, D-436/86, D-437/86, D-579/86, D-432/86, D-576/86, D-515/86 and D-516 of 1986)
Customs Act (IV of 1969)---
----S.18D---Levy of fee and service charges---Regulatory duty---Scope---Regulatory duty imposed by Federal Government---Validity---Regulatory duty which was imposed by government on 7-4-1986 and reduced on 17-4-1986 vide two notifications dated 7-4-1986 and 17-4-1986 respectively did not amount to a confiscatory levy---Appeal was dismissed.
Government of Pakistan and others v. Muhammad Ashraf and others PLD 1993 SC 176 ref.
Zahid Ibrahim, Advocate Supreme Court for Appellants (in C.As. Nos.1553 - 1554 of 2007).
Mirza Hafeez-ud-Din, Advocate Supreme Court for Appellants (in C.A. No.170 of 2009).
Nemo for Appellants (in other appeals).
Sajid Ilyas Bhatti, DAG and Saleem Shahzad, S.O. M/o Finance for the Federation.
M. Bilal, Senior Advocate Supreme Court, Babar Bilal, Advocate Supreme Court, Ch. Akhtar Ali, Advocate-on-Record for F.B.R.
Raja Abdul Ghafoor, Advocate-on-Record for F.B.R. (in all cases except C.A. No.170 of 2009).
Muhammad Naeem Qazi, Advocate Supreme Court for F.B.R. (in C.A. No.170 of 2009).
Date of hearing: 6th April, 2015.
2016 P T D 564
[Supreme Court of Pakistan]
Present: Ejaz Afzal Khan, Qazi Faez Isa and Maqbool Baqar, JJ
SUPERINTENDENT, CENTRAL EXCISE, SHEIKHUPURA---Appellant
Versus
FAUJI SUGAR MILLS, SANGLA HILLS, SHEIKHUPURA and others---Respondents
Civil Appeal No.1348 of 2006, decided on 18th November, 2015.
(On appeal from the judgment dated 10-3-2005 in C.A. No.3/2002 passed by the Lahore High Court Lahore)
(a) Tax/duty---
----Duties and taxes could not be imposed/charged on the basis of assumptions or conjecture.
(b) Central Excises Act (I of 1944)---
----S. 12A & First Sched.---S.R.O. No. 455(I)/96 dated 13-6-1996---S.R.O. No.456(I)/96 dated 13-6-1996---Manufacturing of cane sugar---Zero excise duty---Contradictory S.R.Os. open to different interpretations---Interpretation favourable to tax payer would prevail---SRO issued later in time would be applicable---Object of S.R.O. No.455(I)/96 dated 13-6-1996 was to encourage manufacturers of sugar to export a certain quantity of the sugar produced, and if they did so then no excise duty would be payable on it and if they exported less than the stipulated minimum they would have to pay excise duty on the quantity which fell below the said minimum quantity of sugar at the prescribed rate---Federal Government also issued S.R.O. No. 456(I)/96 on the very same date as S.R.O. No. 455(I)/96, i.e. 13th June, 1996, and both said SROs stated that they would come into effect on 13th June, 1996---Both said SROs were in respect of the quantum of excise duty payable on the very same kind of sugar (cane sugar) that was produced---S.R.O. No. 455(I)/96 brought down the rate of excise duty to "Nil", or in other words, no excise duty was payable---Two SROs in question contradicted each other with regard to the matter of 'cane sugar' and the contradiction therein could not be reconciled---High Court was correct in finding that latter S.R.O. 456(I)/96 was beneficial to the tax payer/manufacturer and since apparently the provisions of the two SROs [i.e. S.R.O. No. 455(I)/96 and S.R.O. No. 456(I)/96], were contradictory which could not be reconciled, the tax payer/manufacturer was justified in seeking application and protection of the latter SRO; that the manufacturer sought application and protection of the S.R.O. No. 456(I)/96 which though issued on the same day as S.R.O. No. 455(I)/96, was obviously issued latter in time, which was evident from its number---S.R.O.456(I)/96 brought down the excise duty to "Nil", therefore, no excise duty could be chargeable even if the manufacturer in question did not export any sugar in the said period---Judgment of the High Court did not call for any interference---Appeal was dismissed accordingly.
Mehran Associates Ltd. v. Commissioner of Income Tax 1993 PTD 69 and Government of Sindh v. Muhammad Shafi PLD 2015 SC 380 ref.
(c) Statutory Regulatory Order (SRO)---
----Contents of---Whenever the Federal Government in exercise of its powers issued SROs, the same should be intelligible and must not be open to misinterpretation or to more than one meaning.
Sheikh Izhar-ul-Haq, Advocate Supreme Court for Appellant.
Malik Shakil-ur-Rehman, Advocate Supreme Court, Raja Abdul Ghafoor, Advocate-on-Record and Muhammad Azam Chattha, Legal Advisor for Respondent No.1.
Ex parte for Respondents Nos.2 and 3.
Date of hearing: 9th November, 2015.
2016 P T D 867
[Supreme Court of Pakistan]
Present: Mian Saqib Nisar, Sh. Azmat Saeed and Maqbool Baqar, JJ
The COLLECTOR OF SALES TAX AND CENTRAL EXCISE, LTU, KARACHI
Versus
Messrs PAK SUZUKI CO. LTD., KARACHI
Civil Appeal No. 515 of 2006, decided on 18th December, 2015.
(On appeal from the Order dated 8-9-2005 of the High Court of Sindh, Karachi, passed in Sales Tax Appeal No.214 of 2001)
(a) Interpretation of statutes---
----Remedial and curative enactments/statutes---Liberal interpretation---Retroactive application---As a general rule, courts look with favour upon remedial and curative enactments, which were beneficial in nature and were interpreted in the context of the evil to be cured and the mischief to be remedied---Provisions of such enactments were to be liberally construed so as to advance the remedy and suppress the mischief and to ensure that the legislative intent, in such behalf, was not frustrated---Remedial and curative statutes generally were retroactive in their application and applied to pending proceedings---In the absence of the express words to the contrary, such enactments should not ordinarily be construed to destroy vested rights, create new liabilities and obligations or disturb past and closed transactions---With regard to judgments passed prior to enactment of a remedial or curative statute, the finality thereof may be disturbed and destroyed during the pendency of appeal there-against, if such was the intention of the Legislator, which could be fairly gathered from the express words employed in the remedial or curative enactment.
(b) Sales Tax Act (VII of 1990)---
----S. 47(11)---Section 47(11) of Sales Tax Act, 1990, remedial and curative effect---Appeals/references 'pending' before any Appellate forum or court---Section 47(11) of Sales Tax Act, 1990 in its application extended to "pending" appeals or references, before any court, including the Supreme Court.
(c) Sales Tax Act (VII of 1990)---
----S. 47(11)---Remedial and curative effect of S. 47(11) of Sales Tax Act, 1990 applied only to "pending" appeals or references, and not to appeals or references which were not pending on the date when S. 47(11) came into force i.e. 1-7-2006.
Plain reading of section 47(11) of the Sales Tax Act, 1990, revealed that two conditions must be fulfilled before said section could be applicable; firstly, the appeal or references ought to have been filed with the approval of the Commissioner and, secondly, the reference or appeal was pending before an Appellate Forum of the Court. Only upon the satisfaction of both said conditions was the remedial and curative effect of section 47(11) of Sales Tax Act, 1990 attracted. Hence, section 47(11) of Sales Tax Act, 1990 applied (only) to "pending" appeals and references and defect in any such appeals or references alone stood cured and remedied. Intention of the legislature was not to extend the remedial and curative effect of section 47(11) of the Sales Tax Act, 1990 to appeals or references, which were not pending on the date when the said subsection came into force i.e. 1-7-2006. Had the intention of the Legislature been to the contrary, appropriate words to such effect would have been employed.
Syed Arshad Hussain Shah, Advocate Supreme Court along with M.S. Khattak, Advocate-on-Record for Appellant.
Syed Naveed Andrabi, Advocate Supreme Court for Respondent.
Date of hearing: 6th November, 2015.
2016 P T D 1180
[Supreme Court of Pakistan]
Present: Anwar Zaheer Jamali, C.J., Sh. Azmat Saeed and Qazi Faez Isa, JJ
HABIB SAFE DEPOSIT VAULT (PRIVATE) LTD.
Versus
The PROVINCE OF SINDH through Secretary Finance and others
Civil Appeal No. 911 of 2015, decided on 21st December, 2015.
(On appeal from the judgment dated 22-5-2015 in C.P. No. D-2603 of 2015 passed by the High Court of Sindh Karachi)
(a) Sindh Sales Tax on Services Act (XII of 2011)---
----S. 2(79) & Second Sched, Tariff Headings 98.13, 9813.4900 & 9813.4910---Sales tax (15%) on services provided by Banking companies and 'other persons dealing in any such service'---Company running the business of providing safe deposit lockers to its customers---Such company was not a "banking company" but it would come within the phrase 'other persons' dealing in banking service, thus, liable to pay 15% sales tax.
Tariff Headings 98.13 of Second Schedule to Sindh Sales Tax on Services Act, 2011 provided that sales tax at the rate of 15% was imposed on services provided by Banking companies and 'other persons dealing in any such service'. Company in question, which ran the business of providing safe deposit lockers to its customers, argued that it was not a Banking company, thus it was not subject to the 15% sales tax. Revenue authorities claimed that company in question was liable to pay sales tax as it could not be excluded from "other persons" who dealt in "any such service", whether or not such company was a Banking company.
Company in question was not a Banking company but it did provide services of safe deposit lockers/safe vault to its customers, hence, it would come within the ambit of the phrase 'other persons' dealing in banking service as provided under Tariff Headings 98.13 of Second Schedule to Sindh Sales Tax on Services Act, 2011, which prescribed a rate of 15% sales tax. Company in question was thus liable to pay sales tax at 15% on the services that it provided.
(b) Interpretation of statutes---
----Tax statute---Tax rates mentioned in Tariff heading and subheading of a statute---Where a particular rate of tax was prescribed under a specific subheading, which was different from the general rate of tax mentioned in the tariff heading, the rate of tax prescribed in the subheading would apply on the principle that the specific excluded the general.
State v. Zia-ur-Rahman PLD 1973 SC 49 and Neimat Ali Goraya v. Jaffar Abbas Inspector/Sargeant Traffic 1996 SCMR 826 ref.
Agha Faisal, Advocate Supreme Court and Tariq Aziz, Advocate-on-Record for Appellant.
Sheryar Qazi, Additional Advocate-General for Respondent No.1.
Syed Ahmad Hassan Shah, Advocate Supreme Court for Respondents Nos. 2 and 3.
Date of hearing: 17th November, 2015.
2016 P T D 1339
[Supreme Court of Pakistan]
Present: Ejaz Afzal Khan, Sardar Tariq Masood and Faisal Arab, JJ
COMMISSIONER OF INCOME TAX, PESHAWAR
Versus
Messrs ISLAMIC INVESTMENT BANK LTD.
Civil Appeal No. 1086 of 2009, decided on 16th December, 2015.
(On appeal against the order dated 29-1-2009 passed by the Peshawar High Court, Peshawar in T.R. No. 48 of 2007)
(a) Interpretation of statutes---
----Repealed statute---Provisions of a repealed statute preserved by a saving clause in the repealing statute---When a statute repeals an earlier statute and it was an unqualified repeal, then the effect of such repeal was that the earlier statute got repealed in its entirety---However, where the Legislature intended to preserve any power or inchoate right in relation to the repealed statute, then a saving clause was incorporated in the repealing statute whereby certain provisions were preserved from getting repealed to the extent and with regard to the subject mentioned in the saving clause---Provisions of the repealed law that were so preserved were to be regarded as if the repealed statute was still in operation.
(b) Income Tax Ordinance (XLIX of 2001)---
----S. 239(1)---Income Tax Ordinance (XXXI of 1979) [since repealed], Preamble---Section 239(1) of the Income Tax Ordinance, 2001 as a saving clause---Scope---Section 239 of the Income Tax Ordinance, 2001, by its very nature, being a saving clause, was intended to preserve certain powers and procedures contained in the repealed Income Tax Ordinance, 1979---Several procedures for the correct assessment of income and determination of tax liability were devised in the repealed Income Tax Ordinance, 1979---Section 239(1) of the Income Tax Ordinance, 2001, in fact saves the entire set of procedures prescribed under the repealed law [Income Tax Ordinance, 1979] through which the exercise of reaching at the correct calculation of total income and the tax payable thereon could be undertaken with regard to the periods covered under the repealed Income Tax Ordinance, 1979---Section 239(1) of the Income Tax Ordinance, 2001 encompassed within its ambit all types of assessments that could be made to a tax return---In simple terms, assessment was relatable to all stages of assessments that could be made to a tax return under the provisions of the repealed Income Tax Ordinance, 1979---Replacement of old law with a new one was never intended to affect the right of the department to revise an assessment order that had been made under the provisions of the repealed Income Tax Ordinance, 1979, but was intended only to devise a new method and mechanism to determine income and the tax payable for the post repeal era---Hence, the whole purpose of incorporating S. 239 of Income Tax Ordinance, 2001 was to preserve certain powers and procedures laid down in the repealed Income Tax Ordinance, 1979, so that it could be subsequently enforced in the post repeal era only in matters that related to the period covered under the repealed Income Tax Ordinance, 1979.
(c) Income Tax Ordinance (XLIX of 2001)---
----Ss. 122(5A) & 239(1)---Income Tax Ordinance (XXXI of 1979), S.66A [since repealed]---General Clauses Act (X of 1897), S. 6---Original assessment order relating to period of repealed Income Tax Ordinance, 1979 i.e. on or before 30-06-2002---Commissioner serving notice to tax-payer under S. 122(5A) of Income Tax Ordinance 2001, to amend such original assessment order---Legality---Sending of such notice under the Income Tax Ordinance, 2001 was technical mistake as the repealed Income Tax Ordinance, 1979 was the applicable law for revising/amending such assessment---Section 239 of Income Tax Ordinance, 2001, had preserved the powers of the tax authorities to amend assessments orders pertaining to the period falling under the repealed Income Tax Ordinance, 1979---Notice for reopening/amending the assessment in the present case, thus, should have been issued under S. 66A of the repealed Income Tax Ordinance, 1979---Supreme Court treated notice under S. 122(5A) of Income Tax Ordinance, 2001 to be notice issued under S. 66A of the Income Tax Ordinance, 1979 and directed Commissioner, Income Tax (Appeals) to decide the appeal afresh.
Honda Shahrah-e-Faisal Association of Persons, Karachi v. Regional Commissioner of Income Tax, Karachi 2005 PTD 1316 not approved.
Income Tax Ordinance, 1979, stood repealed with effect from 30-06-2002 and was replaced by the Income Tax Ordinance, 2001, which came into operation immediately thereafter i.e. with effect from 01-07-2002. Section 239(1) of the Income Tax Ordinance, 2001, provided that any assessment that was to be made for the income years ending on or before 30-06-2002, the same had to be made under the provisions of the repealed Income Tax Ordinance, 1979, as if Income Tax Ordinance, 2001, had not come into force. The question that arose in the present case was whether the Commission Income Tax was justified in revising an assessment order relating to the period covered under the repealed Income Tax Ordinance, 1979, by invoking the provisions of section 122(5A) of the Income Tax Ordinance, 2001, that was inserted on 01.07.2003 i.e. one year after the Income Tax Ordinance, 2001, came into operation.
Provisions of Income Tax Ordinance, 2001, could not be interpreted in a manner so as to take away the powers of the Taxing Authority to revise, within the prescribed period of time, any assessment order that was passed under the provisions of the repealed Income Tax Ordinance, 1979.
Honda Shahrah-e-Faisal Association of Persons, Karachi v. Regional Commissioner of Income Tax, Karachi 2005 PTD 1316 not approved.
Income Tax Ordinance, 2001, had preserved the powers of the tax authorities to revise assessments orders pertaining to the period falling under the repealed Income Tax Ordinance, 1979, i.e. on or before 30-06-2002, and for such purpose Section 239(1) was incorporated in the Income Tax Ordinance, 2001 as a saving clause. Additionally, assessments from period of repealed Income Tax Ordinance, 1979 could also be revised/amended on the strength of the provisions of section 6 of the General Clauses Act, 1897 as the charge of tax stood created, in the present case on or before 30.06.2002 thus transforming the State's right to claim tax into a vested right. Had the Income Tax Ordinance, 2001, not come into existence, the assessment in the present case could have been amended under the repealed Income Tax Ordinance, 1979, within five years of its finalisation i.e. within five years from 14-5-2003, when the initial assessment order in the present case was passed. This right to revise the assessment in question could be exercised under the provisions of the repealed Income Tax Ordinance, 1979, uptill 13-05-2008 which right was never given up under any provision of the Income Tax Ordinance, 2001. In the present case, on the strength of section 239(1) of the Income Tax Ordinance, 2001 the machinery provided under section 122(5A) of the same Ordinance, was brought into play to send a notice for the assessment year in question. This was only a technical mistake because in terms of section 239 (1) of the Income Tax Ordinance, 2001, notice for reopening the assessment in question should have been issued under section 66A of the repealed Income Tax Ordinance, 1979. It thus did not follow that the notice was invalid under the law.
Supreme Court treated notice under section 122(5A) of Income Tax Ordinance, 2001 to be notice issued under section 66A of the Income Tax Ordinance, 1979 and directed Commissioner, Income Tax (Appeals) to decide the appeal afresh.
(d) Interpretation of statutes---
----Amendment---Provision incorporated in a statute through an amendment that was procedural in nature---Retrospective rule of construction was to be applied to such provision---Such a provision had to be construed as if it was incorporated on the date when the main enactment reached the statute book.
(e) Income Tax Ordinance (XLIX of 2001)---
----S. 239(1) [as amended by the Finance Act, 2002]---Income Tax Ordinance (XXXI of 1979), Preamble [since repealed]---Retrospective effect of amended S. 239(1) of Income Tax Ordinance, 2001---Merely because the amended S. 239(1) was inserted in the Income Tax Ordinance, 2001, on 01-07-2003 instead of 1-7-2002 when the parent statute i.e. Income Tax Ordinance, 2001 came into operation, it could not be said that a vacuum was created in giving effect to it from the date when the main enactment came into operation---By virtue of the amended S. 239(1), the powers or inchoate rights relating to income years covered under repealed Income Tax Ordinance, 1979, to the extent mentioned in S. 239 of the Income Tax Ordinance, 2001, were to continue to be exercised/enforced on the basis of the procedures prescribed in the repealed law as if the repealed Income Tax Ordinance, 1979 was still in operation---Provisions of S. 239(1) of Income Tax Ordinance, 2001 applied retrospectively.
Honda Shahrah-e-Faisal Association of Persons, Karachi v. Regional Commissioner of Income Tax, Karachi 2005 PTD 1316 not approved.
Commissioner of Income Tax v. Asbestos Cement Industries Ltd. 1993 SCMR 1276 and Fazal Dad v. Mst. Sakina Bibi and another 1997 MLD 2861 ref.
(f) Income Tax Ordinance (XLIX of 2001)---
----Preamble---General Clauses Act (X of 1897), S. 6---Liability to pay income tax---Accrued on the tax payer on the last day of the income year/accounting year creating a vested right in favour of the State---Provisions in income tax law relating to its assessment were thus machinery provisions only for the purpose of quantifying the liability to pay income tax, which liability had become absolute on completion of the income year/accounting year.
Liability to pay income tax accrues on the taxpayer on the last day of the income year/accounting year, though the tax became payable after it was quantified in accordance with the procedures laid down in the Income Tax law. Thus a vested right in favour of the State was created at the end of each accounting year, though the exercise of (i) making an assessment on the basis of ascertainable data of income and expenditure, or (ii) revising an assessment order where it was found that there was sufficient material to hold that the original assessment was prejudicial to the interest of the revenue, took place at some later stage. These procedural exercises were undertaken only with the object of reaching at the correct calculation of yearly income but the real liability to pay tax had already accrued on the last day of the income year i.e. on the last day of the accounting year thereby creating a vested right in favour of the State. It may be understood as an expense that has already accrued but was payable later. Thus provisions in income tax law relating to its assessment were machinery provisions only for the purpose of quantifying the liability. Seeking revision of a tax return at any subsequent stage had nothing to do with the creation of charge on the tax-payer that had become absolute on completion of the income year/accounting year.
Chatturam v. Commissioner of Income Tax AIR 1947 FC 32; Wallace Brothers and Co. Ltd. v. Commissioner of Income Tax AIR 1948 PC 118 = PLD 1948 PC 67 and Kalwa Devadattam v. Union of India AIR 1964 SC 880 ref.
(g) Companies Ordinance (XLVII of 1984)---
----S. 316---Suits stayed in winding up order---Scope---Section 316 of the Companies Ordinance, 1984, was attracted when winding up order was passed or provisional manager was appointed---Mere filing of winding up proceedings did not attract the provision of S. 316 of the Companies Ordinance, 1984.
Ghulam Shoaib Jalley, Advocate Supreme Court for Appellant.
Syed Mudassar Ameen, Advocate Supreme Court for Respondent.
Date of hearing: 16th December, 2015.
2016 P T D 1393
[Supreme Court of Pakistan]
Present: Mian Saqib Nisar, Iqbal Hameedur Rahman and Tariq Parvez, JJ
COMMISSIONER OF INCOME TAX LEGAL DIVISION, LAHORE and others
Versus
KHURSHID AHMAD and others
Civil Appeals Nos. 1084 to 1098 of 2008, 1481 to 1529 of 2009, 254 and 255 of 2011, 310 of 2012, 1235 to 1270 of 2015 and Civil Petitions Nos. 2595 and 2596 of 2009, decided on 5th April, 2016.
(Against the judgments dated 10.4.2008, 27.5.2009, 17.2.2009, 31.3.2010, 24.12.2014, 19.11.2014, 27.5.2009 of the Lahore High Court, Lahore passed in PTR Nos.12, 13, 14, 15 & 16/2004, ITAs Nos. 242, 246 & 601/1999, 268 & 806/2000, 294, 295 & 296/1999, 49/2000, 82/2002, PTR Nos.402/2003, 117/2000, 403 & 404/2003, 216 & 217/2005, 59, 60, 153, 154, 155, 156, 187, 188, 246 & 588/2006, 589, 19, 20, 67, 86, 88, 87, 89, 90, 234, 277, 278, 295, 401, 515, 516 & 621/2007, W.P.No.1654/2009, PTR No.7991/2002, W.Ps. Nos.8317, 10124 & 10125/2002, PTR Nos.91/2007, 103/2005, 194, 195, 236 & 247/2006, 373, 417, 319, 400, 326 & 327/2007, ITA No.357/1998, PTR Nos.303/2014, 1947, 467, 468, 469, 470, 471, 152, 557, 558, 559, 560, 561, 372, 242, 448, 446, 447, 376, 377, 378, 379 & 380/2012, 202, 324 & 203/2013, 381, 382, 383, 384, 205, 213, 363, 364, 393 & 159/2012 and W.Ps.Nos.17139 and 17659/2008)
(a) Interpretation of statutes---
----'Explanation' appended to a section of an enactment/statute---Scope and function---Such explanation stipulates the meaning of a word, term, or phrase, and becomes part and parcel of the enactment---Function of such an explanation is to clear the ambiguity and explain the meanings of the words used in the section to which it is appended---Such explanation is an intrinsic aid available to the reader to understand and appreciate the statute and particularly the section to which such explanation has been affixed.
Naveed Textile Mills Ltd. v. Assistant Collector (Appraising) Custom House, Karachi and others PLD 1984 SC 92 and Chief Adminsitrator of Auqaf, Punjab, Lahore v. Koura alias Karam Ilahi and another PLD 1991 SC 596 ref.
(b) Interpretation of statutes---
----Declaratory statutes/provisions---Scope---Purpose of declaratory provisions or declaratory statutes was to remove doubts which existed, or may exist, in the meaning or effect of a provision or statute, as the case may be.
(c) Income Tax Ordinance (XXXI of 1979) [since repealed]---
----S. 80D---Minimum tax liability---'Turnover from all sources' and 'aggregate of declared turnover' (as used in S.80D of the Income Tax Ordinance, 1979)---Meaning and interpretation---Said phrases were to be necessarily read in conjunction with the explanation to S. 80D(2) of the Income Tax Ordinance of 1979 for the purposes of determination of minimum tax liability---Word 'turnover' specifically defined in S. 80D of the Income Tax Ordinance 1979 could not be interpreted in a way so as to widen or enlarge the scope of the said section by interpreting 'turnover' to include income from 'all sources'.
(d) Interpretation of statutes---
----Where the legislature defined, in the same statute, the meaning of a word used therein, such definition most authoritatively expressed its intent---Such definition and construction was binding on the courts.
Interpretation of Statutes 11th Edn. by N.S. Bindra ref.
(e) Interpretation of statutes---
----Words defined in a statute---When a word had been defined (in a statute) to give it a specific meaning, such definition was prima facie restrictive and exhaustive.
Vanguard Fire and General Insurance Co. Ltd. Madras v. Fraser and Ross AIR 1960 SC 971 ref.
(f) Income Tax Ordinance (XLIX of 2001)---
----S. 113 [as it existed prior to its omission by the Finance Act (I of 2008]---Minimum tax liability---"Turnover"---Meaning---Phrase 'turnover from all sources' used in S.113(1) of the Income Tax Ordinance, 2001 [as it existed prior to its omission by the Finance Act, 2008] was to be read in conjunction with the meaning of 'turnover' provided in S.113(3), which was exhaustive in nature and nothing further could be added thereto---Phrase 'turnover', thus, did not cover all sources under various heads of income.
Upon a plain reading of the definition of 'turnover' provided in section 113(3) of the Income Tax Ordinance of 2001 it was manifest that turnover meant: (i) gross receipts derived from the sale of goods; (ii) gross fees for the rendering of services or giving benefits including commissions; (iii) gross receipts from the execution of contracts; and (iv) the company's share of the amounts stated above of any association of persons of which the company was a member. Meaning in the said subsection had been assigned to the word 'turnover' used in section 113 and therefore the phrase 'turnover from all sources' in section 113(1) was to be read in conjunction with such definition [provided in section 113(3)] which was exhaustive in nature and nothing further could be added thereto. Phrase 'turnover', thus, does not cover all sources under various heads of income.
(g) Income Tax Ordinance (XLIX of 2001)---
----S. 113 [as it existed prior to its omission by the Finance Act (I of 2008]---Income Tax Ordinance (XXXI of 1979) [since repealed], S.80D---Minimum tax liability---Scope---Aggregate of the declared turnover as defined in S.80D of the Income Tax Ordinance, 1979 from the sale of goods, rendering, giving or supplying of services or benefits or execution of contracts had to be taken into account for determining the minimum tax liability of 0.5% of the turnover---If no tax, for whatever reason, was payable/paid, then the amount worked out at the rate of 0.5% of the turnover would be the minimum tax payable---If the tax payable/paid was less than 0.5% of the turnover, then the minimum tax payable would be the difference/balance between the tax payable/paid and 0.5% of the turnover---Similar analysis would apply to S.113 of the Income Tax Ordinance of 2001[as it existed prior to its omission by the Finance Act, 2008], where the aggregate of the taxpayer's turnover from the sale of goods, rendering of services or giving of benefits including commissions and the execution of contracts had to be taken into account in order to determine the minimum liability of 0.5% of the turnover for each tax year (or 1% of the turnover for each tax year, depending on the tax year involved, as S.113 was subsequently amended vide Finance Act, 2013 and the percentage of minimum liability prescribed therein was increased to 1%).
(h) Interpretation of statutes---
----Fiscal or taxing statute---Strict and literal approach was to be adopted while interpreting fiscal or taxing statute---Court could not read into or impute something when the provisions of a taxing or fiscal statute were clear.
Pearl Continental Hotel and another v. Government of N.-W.F.P. and others PLD 2010 SC 1004; Star Textile Ltd. and 5 others v. Government of Sindh through Secretary Excise and Taxation Department, Sindh Secretariat, Karachi and 3 others 2002 SCMR 356; Aslam Industries Ltd., Khanpur v. Pakistan Edible Corporation of Pakistan and others 1993 SCMR 683; Messrs Mehran Associates Limited v. The Commissioner of Income Tax, Karachi 1993 SCMR 274; A & B Food Industries Limited v. Commission of Income-Tax/Sales, Karachi 1992 SCMR 663; Collector of Customs (Preventative) and 2 others v. Muhammad Mahfooz PLD 1991 SC 630 and Messrs Hirjina and Co. (Pakistan) Ltd. Karachi v. Commissioner of Sales Tax Central, Karachi 1971 PTD 200 ref.
(i) Income Tax Ordinance (XLIX of 2001)---
----Ss. 113 [as it existed prior to its omission by the Finance Act (I of 2008] & 169---Income Tax Ordinance (XXXI of 1979) [since repealed], S.80D---Minimum tax liability---Turnover, calculation of---Receipt of income subject to 'Presumptive Tax'---Nothing in the wording of S.80D of Income Tax Ordinance, 1979 and S.113 of the Income Tax Ordinance, 2001 suggested that for the purposes of calculating the turnover for the said sections receipts of income subject to the Presumptive Tax Regime were excluded---Minimum tax payable under S.80D of the Income Tax Ordinance, 2001 was leviable on the aggregate of declared turnover from all sources including receipts covered by Ss. 80C & 80CC of the Income Tax Ordinance, 1979---Minimum tax payable under S. 113 of the Income Tax Ordinance, 2001 was leviable on the aggregate turnover from all sources including receipts and tax under the Presumptive Tax Regime of the Income Tax Ordinance, 2001---Legislature did not intend that tax already paid/payable in respect of deemed income which was assessed as final discharge of the tax liability under S.169 of the Income Tax Ordinance, 2001 or under any other provision of the said Ordinance would be excluded from the purview of 'tax payable or paid', because the Legislature did not expressly provide so.
(j) Income Tax Ordinance (XLIX of 2001)---
----S. 113 [as it existed prior to its omission by the Finance Act (I of 2008]---Income Tax Ordinance (XXXI of 1979) [since repealed], S.80D---Minimum tax liability---Turnover, calculation of---Exclusion of amounts treated as deemed income and assessed as or covered by final discharge of tax liability for which tax was separately paid/payable from the term 'turnover' could not be implied in the provisions of S.80D if the Income Tax Ordinance, 1979 and S.113 of the Income Tax Ordinance, 2001, as the same had not been so expressed.
(k) Interpretation of statutes---
----Taxing statute---No equitable construction of taxing statutes.
Understanding Statutes (2008 Edn.) by S.M. Zafar and Star Textile Ltd. and 5 others v. Government of Sindh through Secretary Excise and Taxation Department Sindh Secretariat, Karachi and 3 others 2002 SCMR 356 ref.
(l) Income Tax Ordinance (XLIX of 2001)---
----Ss. 113 [as it existed prior to its omission by the Finance Act (I of 2008] & 115(4)---Income Tax Ordinance (XXXI of 1979) [since repealed], Ss.80D & 143B---Minimum tax liability---Turnover, calculation of---'Presumptive Tax'---Filing of a statement---Mere filing of a statement under S.143B of the Income Tax Ordinance, 1979 (as opposed to a return under S.55 which was for the Normal Tax Regime) for income falling under the Presumptive Tax Regime (i.e. Ss. 80C, 80CC etc.) was not a reason to bring it out of the definition of 'turnover' when the law, i.e. the explanation to S. 80D(2), expressly provided otherwise---Same applied to the corresponding provisions of the Income Tax Ordinance, 2001, in that mere filing of a statement under S.115(4) of the Income Tax Ordinance, 2001, which (section) was pari materia to S.143B of the Income Tax Ordinance, 1979, did not mean that the income contained in such statement would automatically fall outside the scope of 'turnover' provided by S.113 of the Income Tax Ordinance, 2001---If such income falling under the Presumptive Tax Regimes of both the Ordinances was to be excluded from the ambit of 'turnover' as provided in S.80D of the Income Tax Ordinance, 1979 and S.113 of the Income Tax Ordinance, 2001 the Legislature would have explicitly mentioned it.
(m) Interpretation of statutes---
----Schedule to a statute---Schedule to a statute could be used as an intrinsic aid to interpret the statute's provisions---Schedule was as much a part of the statute, and was as much an enactment as any other part.
(n) Income Tax Ordinance (XXXI of 1979) [since repealed]---
----Ss. 50(4)(a), 80C(2)(a)(i) & First Sched., Part 1, Section E, clause (i)---Presumptive tax---'Services rendered' pursuant to 'execution of a contract'---Services rendered necessarily flowed from execution of a contract, but execution of a contract would not necessarily result in rendering of services---In other words, where services were being rendered, prior execution of a contract would not per se attract the Presumptive Tax under S.80C of the Income Tax Ordinance, 1979, rather it would be excluded by virtue of the exception in S.80C(2)(a)(i) of the said Ordinance---Income derived from 'services rendered', thus, was not subject to the Presumptive Tax Regime of S.80C of the Income Tax Ordinance, 1979, which stood specifically excluded from said section.
(o) Income Tax Ordinance (XXXI of 1979) [since repealed]---
----S. 50(4)(a)---Cash purchase and/or purchase of raw material---No deduction of tax at source---On-the-spot cash purchases or sales by vendors to walk-in-customers did not fall within the purview of 'supply of goods' as envisaged by S.50(4)(a) of the Income Tax Ordinance, 1979, and thus were not subject to withholding (deduction of tax at source) provisions.
Cash purchase and/or purchase of raw material did not fall within the purview of 'supply of goods' as envisaged by S.50(4)(a) of the Income Tax Ordinance, 1979. Sales by sellers/vendors to their walk-in customers or on-the-spot cash purchases were not to be included within the purview of 'supply of goods', thereby subjecting such walk-in/on-the-spot cash purchases to the withholding provisions. Section 50(4)(a) of the Income Tax Ordinance, 1979 could in no way be said to be designed to levy such a tax on consumers for payments made on the spot or window purchases. 'Supply of goods' as mentioned in section 50(4) of the Income Tax Ordinance, 2001 could not be extended to include 'sale of goods' by sellers/vendors at their retail outlets to walk-in customers.
Commissioner of Income Tax/Wealth Tax v. Messrs Ellcot Spinning Mills Ltd. 2008 PTD 1401 ref.
Messrs Bilz (Pvt.) Ltd. v. Deputy Commissioner of Income Tax, Multan and another 2002 PTD 1 distinguished.
(p) Interpretation of statutes---
----Terms in a statute---'Ordinary meaning' and 'technical meaning'---Context of the term---Where an enactment used a term which had both an ordinary and a technical meaning, the question as to which meaning the term was intended to have was determined by the context---If the context was technical, the presumption was that the technical meaning of the term was intended to be used; otherwise the ordinary meaning was taken as meant---Secondly, words used in a statute relating to a particular trade, business or transaction were to be construed as having the meaning which everybody conversant with that trade, business or transaction knew and understood.
Messrs Asbestos Cement Industries Ltd. v. Lahore Municipal Corporation and others 1994 SCMR 262 ref.
(q) Words and phrases---
----"Supply"---Meaning.
Concise Oxford English Dictionary (11th Edn.); Chambers 21st Century Dictionary (1999 Edn.) and Combridge Dictionaries Online ref.
(r) Words and phrases---
----"Sale"---Definition.
Chambers 21st Century Dictionary (1999 Edn.) and Concise Oxford English Dictionary (11th Edn.) ref.
(s) Words and phrases---
----"Supply" and "sale"---Distinction stated.
Sarfraz Ahmed Cheema, Advocate Supreme Court for Appellants (in C.As. 1485, 1486, 1489 to 1492, 1495, 1503, 1515 and 1525 of 2009).
Ibrar Ahmed, Advocate Supreme Court for Appellants (in C.As. 1235 to 1249, 1258, 1259 and 1270/15, 1488, 1507 and 1520 of 2009).
Muhammad Nawaz Waseer, Advocate Supreme Court for Appellants (in C.As. 1250 to 1257/2015 and 1496 to 1499 of 2009).
Muhammad Aamir Malik, Advocate Supreme Court for Appellants (C.As. 1501, 1502, 1493 to 1495 and 1527/2009 and 1084 and 1089 of 2008).
Dr.Ishtiaq Ahmed, Commissioner Inland Revenue, Muhammad Iqbal Bhawana, Chief Legal FBR and Habib Qureshi, Advocate Supreme Court for Appellants.
Salman Akram Raja, Advocate Supreme Court for Respondents (in C.A. 1089 of 2008).
M. Iqbal Hashmi, Advocate Supreme Court for Respondents (in C.As.1493, 1494/2009 and 1235/2015).
M. Ajmal Khan, Advocate Supreme Court for Respondents (in C.As. 1507, 1521 and 1527 of 2009).
Dr. Ikramul Haq, Advocate Supreme Court (On Court's Call).
Dates of hearing: 26th and 27th January, 2016.
2016 P T D 1655
[Supreme Court of Pakistan]
Present: Ejaz Afzal Khan and Qazi Faez Isa, JJ
MAJEED AND SONS STEELS (PVT.) LTD. and others
Versus
FEDERATION OF PAKISTAN through Secretary M/o Economic Affairs, Islamabad and others
Civil Petitions Nos. 2532 to 2549 and 2580 of 2015, 2594 to 2600 of 2015, 2602 to 2603 of 2015 and 2608 to 2633 of 2015, decided on 18th September, 2015.
(On appeal against the judgment dated 28-8-2015 and 8-9-2015 passed by the High Court of Sindh Karachi in Constitution Petitions Nos.D-1494, D-873, D-1581, D-1582, D-1583, D-1729, D-1730, 2442, D-2758, D-2759, D-2760, D-3541, D-4015, D-4016, D-4087, D-4187, D-4521, 4583, D-4561, D-4563, D-4381, D-4289, D-2414, D-4218, D-4562, D-4564, D-4380, D-4565, D-4767, D-2972, D-4289, D-4218, 4377-D, 2387, D-4218, D-4072, 4032-D, 4370-D, 4402-D, 4217-D, 4886-D, 4218-D, D-344, D-4768, D-4217, D-1877, D-2387, D-4370, D-4378, D-344, D-4796, D-4288 of 2015)
(a) Customs Act (IV of 1969)---
----S. 18(5), proviso---General Agreement on Tariffs and Trade (GATT), Art. XXIV, Clause 5(b)---Proviso to S. 18(5) of Customs Act, 1969, interpretation of---Scope and application of said Proviso had been expressly limited to multilateral trade agreements, thus bilateral trade agreements could not be read into the said Proviso.
Proviso to section 18(5) of Customs Act, 1969 ("Proviso") provided that " the cumulative incidence of customs-duties leviable under subsections (1), (3) and (5) shall not exceed the rates agreed to by the Government of Pakistan under multilateral trade agreements". Absence of the word bilateral from the said Proviso was significant and self-speaking. Bilateral trade agreements could not be read into the said Proviso. When the provisions of the Customs Act, 1969 were clear and unambiguous, court should not supply (an) omission and read in the statute what had been deliberately omitted.
Attorney General v. Bihari, re Australia Factors Limited (1966) 67 S.R. (N.S.W.) 150 ref.
(b) Customs Act (IV of 1969)---
----S. 18(5), proviso---General Agreement on Tariffs and Trade (GATT), Art. XXIV, Cl. 5(b)---Regulatory duty/customs duty on imported goods---Cumulative incidence of customs duties leviable under S. 18(1), (3) & (5) of the Customs Act, 1969---Rate of such duties should not exceed the rates agreed to by the Government of Pakistan under multilateral trade agreements.
Munir A. Malik, Senior Advocate Supreme Court, Syed Rafaqat Hussain Shah, Advocate-on-Record, Shahbaz Butt, Advocate Supreme Court, Khurram Saeed, Advocate Supreme Court, Mehmood A. Sheikh, Advocate-on-Record and Faiz-ur-Rehman, Advocate-on-Record for Petitioners.
Raja Muhammad Iqbal, Advocate Supreme Court, Raja Abdul Ghafoor, Advocate-on-Record, Khurram Raza, Advocate Supreme Court and Ali Waheed Khan, Dy. Director of Customs MCC-Appraisement (EAST) Karachi for Respondents.
Date of hearing: 15th September, 2015 (Judgment Reserved)
2016 P T D 1999
[Supreme Court of Pakistan]
Present: Nasir-ul-Mulk, C.J., Amir Hani Muslim and ljaz Ahmed Chaudhry, JJ
COMMISSIONER OF INCOME TAX, PESHAWAR and others
Versus
Messrs PAKISTAN ELECTRIC FITTINGS MANUFACTURING COMPANY LIMITED
Civil Appeal No. 761 of 2000, decided on 20th January, 2016.
(On appeal from the judgment of the High Court of Sindh, at Karachi, dated 3-1-2000 passed in ITA No.158 of 1998)
Income Tax Ordinance (XXXI of 1979) [since repealed]---
----Ss. 136 & 137---Constitution of Pakistan, Art. 185(3)---Judgment of .High Court---Scope---Tax authority impugning judgment of High Court by filing 'petition for leave to appeal' before the Supreme Court instead of an `appeal'(under S. 137 of the Income Tax Ordinance, 1979)-7 Maintainability---Contention of tax payer was that under .S. 137 of the Income Tax 'Ordinance, 1979, an 'appeal' had to be filed before the Supreme Court against the judgment of the High Court delivered under S.136 of the said Ordinance, whereas the tax authority in the present case filed a 'petition for leave' to appeal before the Supreme Court---Contention of tax authority that since the High Court had entertained an appeal against the order of the Tribunal, when only a reference was maintainable, thus the judgment of the High Court could not be treated as having been delivered in a reference filed under S. 136 of the Income Tax Ordinance, 1979; and in such circumstances a petition for leave to appeal was maintainable-Validity-Whether the High Court was possessed with powers or not to entertain the appeal under S. 136 of the Income Tax Ordinance, 1979, the impugned order in the present case was passed under that provision of law and thus appeal under S. 137 of the said Ordinance and not a petition for leave to appeal was maintainable-Even otherwise time limitation for filing the appeal was 30 days while petition for leave to appeal impugning judgment of High Court was filed, with a delay of about 2 months-Petition for leave to appeal was thus barred by time even if treated as an appeal.
Akhtar Ali Mehmood, Advocate Supreme Court and Raja Abdul Ghafoor, Advocate-on-Record for Appellants.
Abdul Qadir Khan, Advocate Supreme Court for Respondent. Sohail Mahmood, DAG on Court's Notice.
Date of hearing: 20th January, 2015.
2016 P T D 2269
[Supreme Court of Pakistan]
Present: Mian Saqib Nisar, Iqbal Hameedur Rahman and Maqbool Baqar, JJ
Messrs MUSTAFA IMPEX, KARACHI and others
Versus
The GOVERNMENT OF PAKISTAN through Secretary Finance, Islamabad and others
Civil Appeals Nos.1428 to 1436 of 2016, decided on 18th August, 2016.
(Against the order dated 9-3-2016 of the Islamabad High Court, Islamabad passed in ICAs. Nos.204, 205, 210/2014 and 793 of 2013, W.Ps. Nos. 3025 to 3027 of 2014 and ICAs. Nos.201 and 202 of 2014).
(a) Sales Tax Act (VII of 1990)---
----Ss. 3(2)(b), 3(6), 4(c), 8(1)(b), 13(2)(a) & 71---Constitution of Pakistan, Arts. 77, 90 & 98---Rules of Business, 1973, Rr.3(3), 4(2), 16 & 27---Exemption from sales tax, withdrawal/modification of---Notifications issued on the basis of the approval of the Secretary and the Advisor of the relevant Division---Constitutionality---Secretary or Advisor did not have any power to make subordinate or delegated legislation---Such power had been conferred solely and exclusively on the Federal Government in terms of S.3 of the Sales Tax Act, 1990---Neither the constitutional provisions, nor the Rules of Business, 1973 conferred power on a Secretary or head of a Division, to be treated as the Federal Government---Secretary of the Revenue Division was not empowered under R. 4(2) read with R. 3(3) of the Rules of Business, 1973 to issue notifications pertaining to modifications of tax merely because the subject fell within the scope of his responsibilities---Although the Rules of Business, 1973 covered legislative work, but said Rules did not confer power on the Executive to enact legislative measures---Rules of Business, 1973 neither conferred a power to make fiscal changes, nor could they, on any meaningful interpretation of the Constitution, conceivably confer such a power---Parliament could confer functions on subordinate authorities on the recommendation of the Federal Government, in terms of Art. 98 of the Constitution, however said provision did not contemplate the transfer of legislative powers of any nature whatsoever to subordinate officials---Levy of tax was the function of Parliament---Giving such function/power to the Executive per se, would amount to a negation of the doctrine of parliamentary supremacy and the doctrine of separation of powers---Breach of R. 16 of the Rules of Business, 1973 by the Government in issuing the notifications for withdrawal/modification of exemption from sales tax was fatal to the case of the Government---Consequently the impugned notifications were declared ultra vires and were struck down---Appeal was allowed accordingly.
Article 77 of the Constitution only enabled the levy of tax under law. Levy of a tax inevitably implied a restriction of a citizen's right to property. Payments of tax amounted to a corresponding deprivation of property and, since the right to property was a fundamental right, this could only be done by means of strict compliance with the law. Breach of Rule 16 of the Rules of Business, 1973 by the Government in issuing the notifications for withdrawal/modification of exemption from sales tax was fatal to the case of the Government.
Concept of 'business of Government' included not merely executive matters but also those which pertained to legislation. Rule 27 of the Rules of Business, 1973 stipulated that the Division concerned shall be responsible for determining the contents of the proposed legislation and for consultation with other Divisions. All this was part of the legislative business which was governed by the Rules of Business, 1973, however, once the proposed legislation was finalized and then placed before the House (Parliament), the powers of the Executive, as such, came to an end; the legislature took over. Although the Rules of Business, 1973 covered legislative work, but said Rules did not confer power on the Executive to enact legislative measures. All statutory rules, including those of a fiscal nature, were subordinate legislation. Power to enact subordinate legislation had to be conferred by substantive law; the Rules of Business, 1973 which merely regulated procedural modalities, could not conceivably do so.
Chairman, Federal Board of Revenue (FBR), who was the ex officio Secretary of the Revenue Division was not empowered under Rule 4(2) read with Rule 3(3) of the Rules of Business, 1973 to issue notifications pertaining to modifications of tax merely because the subject fell within the scope of his responsibilities. Mere fact that a certain Division was going to deal with a specified subject in terms of the Rule of Business, 1973, did not confer any extra, or additional, constitutional or statutory powers on the said Division. The conferment of power, the exercise of power and the formal notification of the exercise of power were all independent (albeit interlinked) concepts. Chairman FBR, in his capacity as Secretary to the Revenue Division could no doubt make proposals pertaining to modification of tax policy. He could either directly, or through his subordinate officials, process proposals. However, the Chairman's power did not extend any further. The power to make fiscal changes was a substantive power, and moreover, one of great constitutional importance. The Rules of Business, 1973 neither conferred such a power, and nor could they, on any meaningful interpretation of the Constitution, conceivably confer such a power. If the Rules of Business, 1973 were to be amended to purportedly confer such a power, the amendment would be clearly ultra, vires.
Neither the Secretary, nor the Advisor, had any power to make subordinate or delegated legislation. This power had been conferred solely and exclusively on the Federal Government in terms of section 3 of the Sales Tax Act, 1990. Indeed it could not have been conferred on any other subordinate authority, or body, without violating the Constitution.
Certain powers had been conferred on the Federal Government under the Sales Tax Act, 1990. The conferment of such a power on any other authority would be clearly unconstitutional. It was up to the Federal Government to allocate, through the modality of the Rules of Business, 1973 which of the different Divisions was to deal with the matter. But this did not mean that the Revenue Division had been transformed into the Federal Government. Secretary of the Revenue Division had full power and authority to process a case relating to fiscal matters. Once he had processed it, he then had to forward it, in accordance with the normal constitutional channels, to the Federal Government, for decision. In other words, the decision would then be taken by the Cabinet comprising of the Prime Minister and the Ministers. The mere fact that the Secretary of the Revenue Division had processed the case did not elevate his status to that of the Federal Government. Neither the constitutional provisions, nor the Rules of Business, 1973 conferred power on a Secretary or head of a Division, to be treated as the Federal Government.
Article 98 of the Constitution provided that the Parliament, could confer functions on subordinate authorities on the recommendation of the Federal Government, however said provision did not contemplate the transfer of legislative powers of any nature whatsoever to subordinate officials. All it permitted was the discharge of certain functions by designated officials. The transfer of legislative powers would be a clear cut violation of the structure of the Constitution and the concept of separation of powers.
Levy of tax was the function of Parliament under Article 77 of the Constitution. Such powers, if given to the Executive per se, would amount to a negation of the doctrine of parliamentary supremacy and the doctrine of separation of powers.
Secretary, a Minister or the Prime Minister were not the Federal Government and the exercise, or purported exercise, of a statutory power exercisable by the Federal Government by any of them, especially, in relation to fiscal matters, was constitutionally invalid and a nullity in the eyes of the law.
Fiscal notifications enhancing the levy of tax issued by the Secretary, Revenue Division, or the Minister, were ultra vires. Consequently the impugned notifications were declared ultra vires and were struck down. Appeal was allowed accordingly.
(b) General Clauses Act (X of 1897) ---
----S. 3(8ab)---"Federal Government"---Concept of the term 'Federal Government" in relation to five different phases before and after creation of Pakistan stated.
(c) Constitution of Pakistan--
----Art. 99---Constitution (Eighteenth Amendment) Act (X of 2010), S.31---Conduct of business of Federal Government---Scope---Changes made in Art.99 of the Constitution through the Constitution (Eighteenth Amendment) Act, 2010 elaborated.
Two important changes which have been made in Article 99 of the Constitution by the Constitution (Eighteenth Amendment) Act, 2010 were that;
(i) the power of delegation to officers and subordinate authorities had been taken away, and
(ii) the making of rules had been made mandatory.
Two significant inferences followed from such changes.
(i) The executive power of the Federal Government had now been channelized and the exercise thereof was to be through the mandatory modality of Rules of Business. These Rules were therefore binding on the Government and a violation of the terms thereof could be fatal to the exercise of executive power.
(ii) Whereas originally the Federal Government had the power to delegate any of its functions to officers or authorities i.e. it would have been possible to delegate functions pertaining to fiscal matters to the Finance Ministry; this was no longer possible.
(d) Rules of Business, 1973 ---
----R. 16---Cases to be brought before Cabinet---Discretionary power of
the Prime Minister---Scope---In terms of R. 16 of the Rules of Business, 1973, the Prime Minister had been given discretionary power in the matter of cases brought before the Cabinet, however exercise thereof was circumscribed by certain conditions; first, that there must be a conscious application of mind by the Prime Minister to the existing circumstances justifying the need for such departure through passing of a reasoned and formal order prior to the action taken, and, second, determining whether the constitutional provisions justified such a departure.
(e) Constitution of Pakistan---
----Art. 91---Rules of Business, 1973, Rr. 16, 17, 18, 20---Decision making by the Prime Minister---Consultation with the Cabinet---Cabinet being the supreme body of the Executive, with a high constitutional status, could not and ought not to be treated as a mere rubber stamp for decision making by the Prime Minister---Constitution envisaged a parliamentary form of Government which was based on decision making by the Cabinet---To turn the Cabinet into a rubber stamp in pursuit of decision making by the Prime Minister to the exclusion of his Cabinet would violate the letter and spirit of the Constitution, as it would reduce a cabinet form of government into a prime ministerial one which was a concept alien to the Constitution.
(f) Rules of Business, 1973 ---
----Rr. 2 & 27 & Part E---Concept of "business of Government"- Scope-Rxecutive' and 'legislative' matters---Word "business" was defined in terms of R. 2 of the Rules of Business, 1973 to mean all work done by the Federal Government---Concept of 'business of Government' included not merely executive matters but also those which pertained to legislation.
(g) Constitution of Pakistan---
----Art. 99(3)---Rules of Business, 1973---Nature of---Mandatory and binding on the Government---Authority to frame rules was normally conferred by an Act of Parliament-M the case of the Rules of Business, 1973 such authority flowed from the Constitution itself [Article 99(3)]---Federal Government did not have the discretion to not follow the provisions of the Rules of Business, 1973---Following the Rules of Business, 1973 was mandatory and binding on die Government and a failure to follow them would lead to an order lacking any legal validity---Framer of rules was as much bound by the content thereof as anyone else was subject thereto---Constitutionally mandated rules (such as the Rules of Business, 1973) were closely intertwined with the concept of good governance for and in the public interest---Allowing a departure therefrom would be detrimental to open and transparent forms of governance--- To allow the Executive to depart from the language of the Rules of Business, 1973 in its discretion, would be to permit, and legitimize, unconstitutional executive actions.
Ahmad Nawaz Shah, Senior Intelligence Officer, Director General, Intelligence and Investigation (Customs and Excise), Islamabad v. Chairman, Central Board of Revenue, Islamabad and 10 others 2002 SCMR 560 ref.
(h) Rules under a statute--
--Mandatory and binding in nature---Rules were framed to achieve a certain objective and to achieve this within the channels relating to the devolution and flow of statutory authority---In the absence of compelling reasons to the contrary all rules were, and should be considered to be mandatory and binding-Burden of proof laid on anyone asserting that the rules in question were directory and not mandatory---Such persons must establish that there was a sound and powerful reason why the rules should not be considered mandatory and binding---Said principle applied with redoubled force, for and in relation to two sets of rules; firstly, constitutionally mandated rules e.g. the Rules of Business, 1973 and secondly, rules framed under fiscal enactments.
(i) Rules under a statute--
--Mandatory and binding in nature-Government department violating explicit provisions of certain rules (framed under a statute)---Condonation of such violation-Scope-In each and every case the presumption of law would be that the rules were mandatory and should be observed and followed---Only if a compelling public interest was established as a reason for non-compliance with the tales i.e. other than inadvertence, or negligence, or incompetence then, and only then, could the court consider whether or not to condone the breach in the observance of the rules.
(j) Constitution of Pakistan ---
----Arts. 41, 48 & 90---"Federal Government"--- Concept and scope---President was not part of Federal Government; he was the Head of the State---Federal Government consisted of the Prime Minister and the Federal Ministers (i.e. the Cabinet) and not the President.
(k) Rules of Business, 1973---
----Rr. 2 & 27---Concept of "business of Government"---`Executive' and 'legislative' matters---Separation of powers between the "Executive" and "Legislature"---Scope-Concept of 'business of Government' included not merely executive matters but also those which pertained to legislation---Rule 27 of the Rules of Business, 1973 stipulated that the Division concerned shall be responsible for determining the contents of the proposed legislation and for consultation with other Divisions-All this was past of the legislative business which was governed by the Rules of Business, 1973, however, once the proposed legislation was finalized and then placed before the House (Parliament), the powers of the Executive, as such, came to an end; the legislature took over---Although the Rules of Business, 1973 covered legislative work, but said Rules did not confer power on the Executive to enact legislative measures---All statutory rules, including those of a fiscal nature, were subordinate legislation---Power to enact subordinate legislation had to be conferred by substantive law; the Rules of Business, 1973 which merely regulated procedural modalities, could not conceivably do so.
(l) Rules of Business, 1973---
----R. 7(2) & Sched. IV---Power of Secretary of a Division to authenticate by signature all orders and other instruments made, or executed, in the name of President---Such power was a purely formal power---Exercise of such power established the genuineness of the document, it did not confer the statutory power to issue such a document.
(m) Constitution of Pakistan---
----Art. 97---Extent of executive authority of the Federation---Scope--Use of the phrase "subject to the constitution" in Art.97 of the Constitution---Connotation---Said phrase indicated that the executive authority of the Federation, as exercised by the Federal Government, was subordinated to the constitutional schema in relation to the conferment of constitutional powers and responsibility on the three organs of the State.
(n) Constitution of Pakistan ---
----Art. 98---Parliament conferring functions on subordinate authorities on the recommendation of the Federal Government---Scope--Designated functions could only be conferred on officers or authorities who were subordinate to the Federal Government; they could not be conferred on private entities or companies.
(o) Legislation---
----Subordinate legislation---Fiscal notifications-Regulation and issuance of fiscal notifications was in the nature of subordinate legislation
(p) Pakistan Telecommunication (Re-Organization) Act (XVII of 1996)---
----S. 2 (fa)---Constitution of Pakistan, Art. 90---Definition of "Federal Government" as given under S.2(fa) of the Pakistan Telecommunication (Re-Organization) Act, 1996---Vires---In terms of Art.90 of the Constitution "Federal Government" meant the Prime Minister and the Ministers--- Whereas S.2(fa) of the Pakistan Telecommunication (Re-Organization) Act, 1996 defined the "Federal Government" as being the Ministry of Information Technology and Telecommunication for purposes of the said Act---Constitutionality--Statutory definition must yield before the provisions of the Constitution---Statutory definition of "Federal Government" provided under the Pakistan Telecommunication (Re-Organization) Act, 1996 was, thus, clearly violative of Art. 90 of the Constitution and, therefore, was ultra vires and a nullity.
(q) Constitution of Pakistan---
----Art. 89 --- Power of the President to promulgate Ordinance --Nature of such power was legislative, since it contemplated a change, or alteration, in the corpus of laws in the country; it was not quasi-legislative power.
(r) Words and phrases---
----"Government"---Connotation---Word "government", in its normal connotation, was equivalent to the term "Executive".
(s) Constitution of Pakistan---
----Art. 91---"Cabinet"---Scope---Cabinet was a composite concept and its components were the Prime Minister and the Federal Ministers.
(t) Rules of Business, 1973 ---
----R. 16(2)---Constitution of Pakistan, Art. 91---Power of Prime Minister to by-pass the Cabinet---Vires of---Prime Minister could not exercise the powers of the Cabinet by himself---Prime Minister executed policy decisions, he did not take them by himself---Rule 16(2) of the Rules of Business, 1973 which enabled the Prime Minister to dispose of matters by by-passing the Cabinet was, thus, ultra vires (the Constitution).
Prime Minster was the head- of the Cabinet. He was the single most important person in the Cabinet, but he did not stand in the position of the Cabinet. He was neither a substitute nor a surrogate for the Cabinet. He could not exercise its powers by himself. The reason that he could not stand in the position of the Cabinet was because the Cabinet was, in fact, the Federal Government. Treating the office of the Prime Minister as being equivalent to that of the Cabinet, would mean that the Prime Minister, by himself, as a single individual, would become the Federal Government. This was simply inconceivable.
Function of the Chief Executive (Prime Minister) was to execute and implement the policy decisions taken by Cabinet i.e. the Federal Government. Chief Executive executed policy decisions; he did not take them by himself. The Prime Minister could not take decisions by himself, or by supplanting or ignoring the Cabinet because the power to take decisions was vested with the Federal Government i.e. the Cabinet, and unilateral decisions taken by him would be a usurpation of power.
Decisions of the Federal Government were the decisions of the Cabinet and not of the Prime Minister. Any decisions taken by the Prime Minister on his own initiative lacked the authority of the law or the Constitution.
Rule 16(2) which enabled the Prime Minister to dispose of matters by by-passing the Cabinet was, thus, ultra wires (the Constitution).
(u) Constitution of Pakistan---
----Arts. 82(3), 83, 84, 86 & 91---Prime Minister---Discretionary governmental spending/expenditure---Authorization by Cabinet --- Any discretionary spending at the initiative of the Prime Minister alone was manifestly unconstitutional and contrary to law---Prime Minister could not make fiscal changes on his own and nor could he engage in discretionary spending by himself---In all such cases the prior decision of the Cabinet was required, since it was unambigiously that body alone which was the Federal Government---Ex post facto approval (of expenditure) by the Cabinet would not suffice since money once spent could not be unspent---All discretionary spending without the prior approval of the Cabinet was contrary to law and would make the Prime Minister personally responsible for such action.
Action against distribution of development funds by Ex-Prime Minister Raja Pervaiz Ashraf (PLD 2014 SC 131) ref.
(v) Constitution of Pakistan---
--Arts. 89 & 91---Power of President to promulgate Ordinance---Scope---Prior approval of the Cabinet---Ordinance making power could only be exercised after a prior consideration by the Cabinet---Ordinance issued without the prior approval of the Cabinet was not valid.
(w) Constitution of Pakistan ---
----Arts. 70 & 91---Introduction of Bill in Parliament---Approval by Cabinet---No bill could be moved in Parliament on behalf of the Federal Government without having been approved in advance by the Cabinet---Cabinet had to be given a reasonable opportunity to consider, deliberate on and take decisions in relation to all proposed legislation, including a Finance Bill or an Ordinance or an Act---Actions by the Prime Minister on his own, in such regard, were not valid and would be ultra vires the Constitution.
Mian Muhammad Athar, Advocate Supreme Court and Shafqat Mahmood Chohan Advocate Supreme Court for Petitioners (in CAs. Nos.1428 to 1434 and 1436 of 2016).
Farhat Nawaz Lodhi, Advocate Supreme Court and Syed Rifaqat Hussain Shah, Advocate-on-Record for Petitioner (in C.P. No.1435 of 2016).
Sh. Izhar-ul-Haq, Advocate Supreme Court and M.S. Khattak, Advocate-on-Record for Respondent No.3 (in C.As. 1428 and 1430 of 2016 and Respondent No.2 in C.As. Nos. 1429, 1431, 1432 and 1433/2016).
Raja Muhammad Iqbal, Advocate Supreme Court for Respondents Nos.5 and 6 (in C.As. 1428 and 1430/2016 and Respondent Nos.4 and 5 (in C.As.1429 and 1431 of 2016).
Ms. Misbah Gulnar Sharif, Advocate Supreme Court and M.S. Khattak, Advocate-on-Record for Respondent No.4 (in C.As 1428, 1430 and 1433 of 2016 and Respondent No.3 in C.As. 1429, 1431, 1435 and 1436 of 2016).
Khalil Dogar, Advocate Supreme Court for Respondent No.7 (in C.As. 1432 and 1434/2016 and Respondent No.6 in C.A. 1433/2016).
Ch. Muhammad Zafar Iqbal, Advocate Supreme Court for Respondent No.7 (in C.As. Nos. 1429 and 1431/2016, Respondent No.8 in C.As. 1428, 1430 and 1433/2016, Respondent No.4 in C.As. 1432 and 1434/2016).
Muhammad Waqar Rana, Additional Attorney General, Abid Hussain Channa, S.O.M/o Finance and Sajid Javed, Legal Assistant M/o Finance (On Court's call).
Syed Ali Zafar, Advocate Supreme Court (Amicus Curiae).
Dates of hearing: 23rd and 24th May, 2016.
2016 P T D 2355
[Supreme Court of Pakistan]
Present: Mian Saqib Nisar, Faisal Arab and Tariq Pervez, JJ
INDUS TRADING AND CONTRACTING COMPANY
Versus
COLLECTOR OF CUSTOMS (PREVENTIVE), KARACHI and others---
Civil Appeal No. 1600 of 2006, decided on 4th January, 2016.
(On appeal against the judgment dated 8-3-2006 passed by the High Court of Sindh, Karachi in C.Ps. Nos. 223, 224, 225 and 226 of 2003)
(a) Customs Act (IV of 1969)---
----S. 18(3)---Constitution of Pakistan, Art, 199---Constitutional petition before High Court---Maintainability---Regulatory duty, levy of---Importer challenging levy of regulatory duty on an imported item---Forum---When a regulatory duty was charged, the importer ought to challenge the same before the forum provided under the Customs Act, 1969 instead of invoking the jurisdiction of the High Court under Art.199(1) of the Constitution.
(b) Customs Act (IV of 1969)---
----S. 18(3)---S.R.O. No.1050(I)/95, dated 29-10-1995---Regulatory duty, levy of---Import of items free from customs duty---Federal Government could impose regulatory duty on items which were free from customs duty by way of subordinate legislation [Statutory Regulatory Order (SRO)]---Statutory customs duty under S. 18(1) of Customs Act, 1969 were distinct from regulatory duty under S. 18(3) [previously S. 18(2)] of the same Act---Chargeability of regulatory duty had no nexus with the chargeability or grant of exemption with regard to the statutory customs duty falling under S. 18(1) of the Customs Act, 1969.
Appellant-company imported certain life saving drugs which were free from customs duty on the basis of concession granted under the Finance Act, 1995. However vide S.R.O. No. 1050(I)/95 dated 29th October, 1995, Federal Government imposed 5% ad valorem regulatory duty on such drugs. Appellant-company challenged levy of such regulatory duty on the basis that as long as import of life saving drugs was free from customs duty on the basis of the concession granted under the Finance Act, 1995, no duty, much less regulatory duty, could have been lawfully charged, and that the imposition of regulatory duty under the impugned S.R.O. No. 1050(1)/95 being based on subordinate legislation was therefore illegal.
Statutory customs duty under section 18(1) and regulatory duty under section 18(3) [previously section 18(2)] of the Customs Act, 1969 were two distinct categories of duties. One should not be taken to be the same as the other. Where import or export of any commodity enjoyed exemption from statutory customs duty, even then the Federal Government could impose regulatory duty, within the confines described in section 18(3) of Customs Act, 1969 through subordinate legislation. Where the legislature granted exemption from the payment of customs duty that fell under section 18(1) of the Customs Act, 1969 the same could not be made basis to avoid payment of regulatory duty imposed subsequently unless there was also a promise that such concession would also be applied to regulatory duty, in case it was levied in future. As the exemption from customs duty in the present case, did not contain such a promise it could not be applied to a regulatory duty, which was competently levied under a different nomenclature. Regulatory duty, in the present case, was, therefore, levied competently.
Collector of Customs v. Ravi Spinning Ltd. 1999 SCMR 412 ref.
(c) Constitution of Pakistan---
----Art. 199(1)---Constitutional jurisdiction of the High Court---Not to be invoked where alternative forum under a special law, duly empowered to decide the controversy was available and functioning---Invoking Constitutional jurisdiction of the High Court and by-passing the proper forum was contrary to the intention of the provisions of Art.199(1) of the Constitution and it also over-burdened the High Courts---High Courts must deprecate such tendency.
Ordinarily, the jurisdiction of the High Courts under Article 199 of the Constitution should not be invoked where alternative forum under a special law, duly empowered to decide the controversy was available and functioning. Where a special law provided legal remedy for the resolution of a dispute, the intention of the legislature in creating such remedy was that the disputes falling within the ambit of such forum be taken only before it for resolution. The very purpose of creating a special forum was that disputes should reach expeditious resolution headed by quasi-judicial or judicial officers who with their specific knowledge, expertise and experience were well equipped to decide controversies relating to a particular subject in a shortest possible time. Therefore, in spite of such remedy being made available under the law, resorting to the provisions of Article 199(1) of the Constitution, as a matter of course, would not only demonstrate mistrust on the functioning of the special forum but it also over-burdened the High Courts with a very large number of such cases. This in turn resulted in delay in the resolution of the dispute as a large number of cases got decided after several years. These cases ought to be been taken to forum provided under the Special law instead of the High Courts. Such bypass of the proper forum was contrary to the intention of the provisions of Article 199(1) of the Constitution which conferred jurisdiction on the High Court only and only when there was no adequate remedy available under any law. Where adequate forum was fully functional, the High Courts must deprecate such tendency at the very initial stage and relegate the parties to seek remedy before the special forum created under the special law to which the controversy related.
(d) Customs Act (IV of 1969)---
----Ss. 18(3) & 25---Regulatory duty, calculation of---Regulatory duty on import of an item which is free from customs duty---Where import of an item was totally exempted from customs duty, the regulatory duty on such item, which was to be charged ad valorem, was computed on the basis of the value of the goods to be determined under the provisions of S. 25 of the Customs Act, 1969.
Yousuf Re-Rolling Mills v. Collector of Customs PLD 1989 SC 232 ref.
Issaq Ali Qazi, Advocate Supreme Court for Appellant.
Raja Muhammad Iqbal, Advocate Supreme Court and Raja Abdul Ghafoor, Advocate-on-Record for Respondent No.1.
Ex parte for Respondents Nos.2 - 3.
Date of hearing: 4th January, 2016.
2016 P T D 2393
[Supreme Court of Pakistan]
Present: Asif Saeed Khan Khosa and Manzoor Ahmad Malik, JJ
MUHAMMAD ASIF
Versus
The STATE and others
Criminal Petition No. 4-L of 2016, decided on 4th February, 2016.
(Against the order dated 4-12-2015 passed by the Lahore High Court, Lahore in Criminal Miscellaneous No.15427-B of 2015)
Criminal Procedure Code (V of 1898)---
----S. 498---Sales Tax Act (VII of 1990), Ss. 2(37), 33(5), 33(8), 33(11-C), 33(12), 33(13) & 33(16)---Evasion of sales tax---Pre-arrest bail, grant of---Accused was director of a business concern and the allegation against him and his co-accused was that the record recovered from their business premises disclosed huge discrepancies pointing towards a wilful and deliberate evasion of the sales tax---Order-in-original passed by the competent authority fixing liability upon the accused was completely set aside by the Appellate Tribunal---Department had filed a Reference against order of Appellate Tribunal, which was pending before the High Court with no interim relief in favour of the Department---Present FIR was based upon a permission granted and a direction issued by the competent authority in Inland Revenue, which in turn was based upon the liability of the accused determined by the Department but if the said determination of the liability itself had been set aside (by the Appellate Tribunal) then the foundation of the present criminal case appeared to be shaken and in the absence of any determined or established liability of the accused insistence by the investigating agency upon arrest of the accused may smack of lack of bona fide on its part---Apart from that the allegations levelled against the accused required explanation of the record of his business concern and the accused was likely to be handicapped in his defence if he was taken into custody---Even if the accused was admitted to bail he still had to keep on joining the investigation if and when required to do so by the investigating agency and if he failed to do so then that may be considered to be a valid ground for seeking cancellation of his bail---Supreme Court clarified that if the Reference presently pending before the High Court was decided in favour of the Department and if the accused's liability was determined on the basis of the answer to the Reference even then the Department may have a basis to apply for cancellation of the petitioner's bail---Accused was admitted to pre-arrest bail accordingly.
Shahzada Mazhar, Advocate Supreme Court with Petitioner in person for Petitioner.
Asjad Javaid Ghural, Additional Prosecutor-General, Punjab for the State.
Umar Riaz, Advocate Supreme Court, Mrs. Tasneem Amin, Advocate-on-record with Respondent No.2 in person.
Date of hearing: 4th February, 2016.
2016 P T D 2539
[Supreme Court of Pakistan]
Present: Mian Saqib Nisar, Sh. Azmat Saeed and Faisal Arab, JJ
COLLECTOR OF CUSTOMS
Versus
Messrs BEST WAY CEMENT and another
Civil Appeals Nos. 427 and 428 of 2009, decided on 27th April, 2016.
(On appeal against the judgment dated 27.1.2009 passed by the High Court of Sindh, Karachi in Special Customs Reference Applications Nos. 348 and 349 of 2007)
Customs Act (IV of 1969)---
----S. 19---S.R.O. 575(I)/2006 dated 5.6.2006---S.R.O. 530(I)/2005 dated 6.6.2005---Import of trucks---Exemption from customs duty and sales tax--- On-Highway dump trucks imported by cement manufacturing company---On-Highway trucks were designed for long distance highway transportation and thus were not part of the plant of a cement factory---In contrast on account of the specific design and utility of Off-Highway dump trucks in the industrial process of cement production the same fell within the ambit of plant---Company which had imported On-Highway trucks was not entitled to claim exemption under S.R.O. 575(I)/2006 dated 5.6.2006 and S.R.O. 530(I)/2005 dated 6.6.2005---Supreme Court directed the customs authorities to recover the customs duties and sales tax on all imported On-Highway trucks.
Companies/respondents, who were cement manufacturing enterprises, imported certain trucks. Upon arrival of the trucks companies claimed exemption from duty in excess of 5% in terms of Serial No.21 of S.R.O. 575(I)/2006 dated 5.6.2006 and 0% sales tax in terms of S.R.O. 530(I)/2005 dated 6.6.2005 by declaring that the imported trucks fell within the ambit of plant as provided in S.R.O. 575(I)/2006 dated 5.6.2006. The entire basis for treating the trucks to be part of the plant of their respective cement factories was that the imported trucks were Off-Highway trucks imported for their utilization in the industrial process of their respective cement factories, hence they be regarded as part and parcel of their cement manufacturing activity. Upon physical examination of the imported trucks, the Customs Examination Staff found that the imported vehicles were not Off-Highway dump trucks but simply On-Highway trucks. Customs authorities classified the imported trucks under PCT Heading 8704.2290 which attracted 30% ad valorem customs duty and 15% Sales Tax.
Trucks imported by the companies being On-Highway trucks were designed for long distance highway transportation. These trucks could mount container on its chassis for loading goods. As On-Highway truck was meant for long hauls, it also had a bunk in its cabin for its use as driver's sleeping area. In contrast to such utility, the Off-Highway dump truck was specifically designed for use in difficult terrains where the activities of mining, quarrying or construction of big buildings were carried out. Purely on account of the specific design and utility of Off-Highway dump trucks in the industrial process of cement production that the same were brought within the ambit of plant. On the other hand, trucks that were imported by the companies, being On-Highway trucks and not Off-Highway dump trucks, were rightly treated by the Customs authorities as not being a part of the plant of a cement factory.
Companies which had imported On-Highway trucks were not entitled to claim exemption under S.R.O. 575(I)/2006 dated 5.6.2006 and S.R.O. 530(I)/2005 dated 6.6.2005. Supreme Court directed the customs authorities to recover the customs duties and sales tax on all On-Highway trucks imported by the companies in terms of PCT Heading 8704.2290.
Raja Muhammad Iqbal, Advocate Supreme Court for Appellant (in both cases).
Salman Akram Raja, Advocate Supreme Court for Respondents (in both cases).
2016 P T D 2874
[Supreme Court (AJ&K)]
Before Mohammad Azam Khan, C.J. and Ch. Muhammad Ibrahim Zia, J
Civil Appeal No.339 of 2015
COMMISSIONER INLAND REVENUE, MUZAFFARABAD
Versus
MUHAMMAD ABBAS QADRI
Civil Appeal No.340 of 2015
COMMISSIONER INLAND REVENUE, MUZAFFARABAD
Versus
KH. MUHAMMAD ANWAR
Civil Appeal No.341 of 2015
COMMISSIONER INLAND REVENUE, MUZAFFARABAD
Versus
MIR AND SONS PSO DEALERS, CHELLAH BANDI, MUZAFFARABAD
Civil Appeal No.342 of 2015
COMMISSIONER INLAND REVENUE, MUZAFFARABAD
Versus
MEHBOOB-UR-REHMAN TAREEN
Civil Appeal No.343 of 2015
COMMISSIONER INLAND REVENUE, MUZAFFARABAD
Versus
MEHBOOB-UR-REHMAN TAREEN
Civil Appeal No.344 of 2015
COMMISSIONER INLAND REVENUE, MUZAFFARABAD
Versus
RIZWAN IRSHAD
Civil Appeal No.345 of 2015
COMMISSIONER INLAND REVENUE, MUZAFFARABAD
Versus
Messrs NATIONAL INSURANCE COMPANY LTD.
Civil Appeal No.346 of 2015
COMMISSIONER INLAND REVENUE, MUZAFFARABAD
Versus
Kh. ABDUL HAMEED, PROPRIETOR SHAHEEN CLOTH HOUSE, MUZAFFARABAD.
Civil Appeal No.347 of 2015
COMMISSIONER INLAND REVENUE, MUZAFFARABAD
Versus
Khawaja ANSAR JAVED, PROPRIETOR REHMAN AND SONS CMH ROAD, MUZAFFARABAD
(On appeal from the judgment of the High Court dated 07.04.2015 in Civil References Nos.32-38 and 55 of 2011 and 11/2012)
Civil Appeals Nos.341 to 347 of 2015, decided on 15th June, 2016.
(a) Limitation Act (IX of 1908)---
----S. 4---Suit, appeal and application---Limitation---Computation of period---Public holiday----If the day of termination of limitation was a public holiday, the same had to be excluded while computing limitation.
(b) Income Tax Ordinance (XLIX of 2001)---
----S. 133---Reference to High Court---Direct reference to High Court under S. 133 of the Income Tax Ordinance, 2001 after amendment vide Finance Act, 2005---Effect of such amendment on references pertaining to tax-years before said amendment took effect---Scope---Reference filed by Department directly to the High Court under provisions of the amended S. 133 of the Income Tax Ordinance, 2001 was dismissed on ground that said reference pertained to a tax-year before the said amendment took effect, therefore direct reference to the High Court, under post-amendment S. 133 of the Income Tax Ordinance, was not competent---Validity---Statutory provisions applicable at the time of order of Appellate Tribunal and filing of references in the present case had to be considered and the tax year was not relevant---Relevant amendment to S. 133 of the Income Tax Ordinance, 2001 was made with effect from 1st July, 2005 and at the time of filing of the references in the year 2011, according the enforced statutory provisions of S. 133 of the Income Tax Ordinance, 2001; the taxpayer or Department had a right to prefer an application, directly to the High Court stating any question of law, whereas before the amendment of S. 133 of the Income Tax Ordinance, 2001, in year 2005, such direct reference under S. 133 of the Income Tax Ordinance, 2001 was not competent, rather the taxpayer or Department had to submit application along with documents to the Appellate Tribunal requiring it to refer to the High Court a question of law arisen out of an appellate order---After amendment to S. 133 of the Income Tax Ordinance, 2001 vide Finance Act, 2005, no such requirement remained in force---Impugned order of High Court was therefore not sustainable and was accordingly recalled and the matter was remanded to the High Court for decision on merit---Appeals were allowed, accordingly.
Syed Nazir Hussain Shah Kazmi for Appellant (in Civil Appeal No.339 of 2015).
Syed Shahid Bahar for Respondent (in Civil Appeal No.339 of 2015).
Syed Nazir Hussain Shah Kazmi for Appellant (in Civil Appeal No.340 of 2015).
Respondent in person (in Civil Appeal No.340 of 2015).
Syed Nazir Hussain Shah Kazmi for Appellant (in Civil Appeal No.341 of 2015).
Mir Abdul Latif for Respondent (in Civil Appeal No.341 of 2015).
Syed Nazir Hussain Shah Kazmi for Appellant (in Civil Appeal No.342 of 2015).
Syed Shahid Bahar for Respondent (in Civil Appeal No.342 of 2015).
Syed Nazir Hussain Shah Kazmi for Appellant (in Civil Appeal No.343 of 2015).
Syed Shahid Bahar for Respondent (in Civil Appeal No.343 of 2015).
Syed Nazir Hussain Shah Kazmi for Appellant (in Civil Appeal No.344 of 2015).
Syed Shahid Bahar for Respondent (in Civil Appeal No.344 of 2015).
Syed Nazir Hussain Shah Kazmi for Appellant (in Civil Appeal No.345 of 2015).
Ch. Muhammad Manzoor for Respondent (in Civil Appeal No.345 of 2015).
Syed Nazir Hussain Shah Kazmi for Appellant (in Civil Appeal No.346 of 2015).
Syed Shahid Bahar for Respondent (in Civil Appeal No.346 of 2015).
Syed Nazir Hussain Shah Kazmi for Appellant (in Civil Appeal No.347 of 2015).
Syed Shahid Bahar for Respondent (in Civil Appeal No.347 of 2015).
2016 P T D 1921
[Supreme Court of UK]
Present Lord Neuberger, President, Lord Mance, Lord Reed, Lord Carnwath and Lord Hodge
COMMISSIONERS FOR HER MAJESTY'S REVENUE AND CUSTOMS---Appellant
Versus
UBS AG and another---Respondents
Decided on 9th March, 2016.
(On appeal from [2014] EWCA Civ 452)
Per Lord Reed, JSC: Lord Neuberger (President), Lord Mance, Lord Carnwath & Lord Hodge, JJSC agreeing.
(a) Income tax---
----Purposive construction of provisions of a taxing statute---Income tax, avoidance of---Share scheme designed by banks to avoid income tax on the payment of bonuses to employees---Statutory exemption from income tax was conferred on the award to employees of "restricted securities" i.e. shares which were subject to provision for their forfeiture if some contingency occurred---Banks, in the present case, rather than paying bonuses to employees directly, instead gave them redeemable shares in offshore companies set up for the purposes of the availing the statutory exemption----Conditions were attached to the shares making them subject to forfeiture if certain contingency occurred, but the contingencies (conditions)were unlikely events having no business or commercial purpose---After the exemptions had accrued (by contingency not occurring) employees were free to redeem shares for cash---Question was as to whether statutory exemption from income tax would apply to the shares issued to the employees---Revenue authority assessed tax on such shares as if the employees had been paid the bonuses in cash---Validity---Transactions, in the present case, had 'no real world purpose of any kind', and a purposive interpretation of the taxing statute would suggest that they had been inserted for the sole purpose of tax avoidance---Statutory exemption, in the present case, was only intended to encourage workers to own stakes in their companies and counter opportunities for tax avoidance---Statutory exemption for "restricted securities" in the present case should be construed as limited to provision for a commercial or business purpose---On this basis, Parliament could not have intended to encourage the award of shares to employees, where the same had no purpose other than obtaining an exemption from income tax---Bonus schemes formed by the banks, in the present case, had no commercial or business purpose, thus, they did not fall within the statutory exemption---Supreme Court (UK) held that bonuses awarded by banks, to employees in the form of redeemable shares in offshore companies, in order to take advantage of statutory exemption from income tax, should be treated, for income tax purposes, as if they had been paid in cash , and thus income tax was payable on the bonuses, based on the value of the shares awarded to the employees.
Two banks, in the present case, entered into schemes designed to avoid the payment of income tax on bankers' bonuses, by taking advantage of the exemptions from income tax provided under Chapter 2 of Part 7 of the Income Tax (Earnings and Pensions) Act 2003("ITEPA 2003") as amended by Schedule 22 to the Finance Act 2003. Specifically under section 425(2) of ITEPA 2003, an exemption from income tax was conferred on the award to employees of "restricted securities", defined by section 423 as shares which were subject to provision for their forfeiture if some contingency occurred.
Banks invoked a scheme whereby they set up (offshore) companies merely for the purposes of the scheme, which undertook no activities beyond its participation in the scheme, and they were to be liquidated upon the termination of the scheme. Memorandum and articles of said companies contained conditions designed to comply with the statutory exemption, and the shares of the company were to be allocated to specified employees in lieu of a cash bonus. In the case of the first bank shares in the offshore company were given to the employees attached with the condition for an immediate and automatic sale of the shares if, on any date during a specified three week period, the closing value of the FTSE 100 Index exceeded a defined "trigger level", the probability of which was unlikely but in any event was hedged against so that in the event of a forced sale the employees would not be materially worse off. In the case of the second bank shares in the offshore company were given to the employees attached with a condition that an employee would forfeit his shares if he voluntarily resigned or was dismissed for misconduct during the first eight weeks after the company was set up. Neither contingency was likely to occur, not least because its occurrence lay largely within the control of the employee, for whom it would have significant financial consequences. In case of both banks, once the exemptions from income tax conferred by sections 425(2) and 429 of ITEPA 2003 had accrued, the shares were redeemable by the employees for cash. Revenue authority took the view that the banks were to be treated as having paid the relevant employees cash sums equal to their share allocation and therefore the statutory exemption would not apply and income tax was to be paid on the value of the shares.
Context and background of exemptions contained in Part 7 of the Income Tax (Earnings and Pensions) Act 2003 ("ITEPA 2003") indicated that its main purpose was to promote employee share ownership by encouraging share incentive schemes and to counteract consequent opportunities for tax avoidance. Parliament could not have intended to encourage by exemption from tax the award of shares to employees where the award of shares had no purpose whatsoever other than the obtaining of the exemption itself, a matter reflected in the fact that the shares were in a (offshore) company which had been brought into existence merely for the purposes of the scheme, which undertook no activities beyond its participation in the scheme and was liquidated upon the termination of the scheme. The encouragement of such schemes, unlike the encouragement of employee share ownership or share incentive schemes, would have no rational purpose. The provision in section 423 of ITEPA 2003 conferring the exemption was to be construed as being limited to conditions having a business or commercial purpose and did not apply to commercially irrelevant conditions the only purpose of which was the obtaining of the exemption from income tax.
Fact that Parliament has expressly dealt with tax avoidance in Chapters 3A to 3D of ITEPA 2003 did not support the inference that they were exhaustive and that Parliament could not be taken to have had any wider, unexpressed, intention to counter tax avoidance under the said statute.
In the case of the first bank, the restrictive condition - whether the FTSE 100 rose by a specified amount during a three week period - was completely arbitrary. It had no business or commercial rationale beyond tax avoidance. Such a condition was simply not relevant to the application of section 423 of ITEPA 2003, which section was concerned with "provision" having a genuine business or commercial purpose. Applying section 423 of ITEPA 2003 to the case of the first bank, viewed from a commercially realistic perspective, the condition to which the shares were subject should be disregarded, with the consequence that the shares were not "restricted securities" within the meaning of section 423 of ITEPA 2003. Such conclusion was fortified by the fact that economic effect of the restrictive condition was in any event nullified by the hedging arrangements, except to an insignificant and pre-determined extent (namely 0.8% at most). Shares in question, thus, did not fall within the statutory exemption from income tax.
Restrictive condition in the case of the second bank - 'employee would forfeit his shares if he voluntarily resigned or was dismissed for misconduct during the first eight weeks after the company was set up'- was equally artificial. Forfeiture provision operated for only a very short period, during which the possibility that it might be triggered lay largely within the control of the employee who would be adversely affected. It had no business or commercial purpose, and existed solely to bring the securities within the scope of the statutory exemption. Second bank deliberately included a contingency which created a minor risk, but one which the parties were willing to accept in the interests of the scheme. The scheme should therefore be considered as it was intended to operate, without regard to the possibility that it might not work as planned. Shares in question, thus, did not fall within the statutory exemption from income tax.
Income tax was payable on the bonuses, based on the value of the shares awarded to the employees. Value of the shares had to be assessed as at the date of their acquisition, and the restrictive conditions attached to the shares must be taken into account, as ordinary taxation principles required the tax to be based on the shares' true value.
(b) Interpretation of statutes---
----Purposive approach---Modern approach to statutory construction was to have regard to the purpose of a particular provision and interpret its language, so far as possible, in the way which best gave effect to that purpose.
Barclays Mercantile Business Finance Ltd. v. Mawson [2004] UKHL 51 ref.
(c) Interpretation of statutes---
----Fiscal or taxing statute---Purposive approach---Purposive approach to statutory construction could be extended to tax cases---Analysis of the facts depended on such purposive construction of the statute.
W T Ramsay Ltd v Inland Revenue Comrs [1982] AC 300 ref.
(d) Income Tax---
----Tax avoidance schemes---Meaning and scope---Tax avoidance schemes commonly included elements which had been inserted without any business or commercial purpose but were intended to have the effect of removing the transaction from the scope of the charge---Where an enactment was of such character, and a transaction, or an element of a composite transaction, had no purpose other than tax avoidance, it could usually be said that to allow tax treatment to be governed by transactions which had no real world purpose of any kind was inconsistent with that fundamental characteristic---Where schemes involved intermediate transactions inserted for the sole purpose of tax avoidance, it was quite likely that a purposive interpretation would result in such steps being disregarded for fiscal purposes---However in contrast to that the count in numerous cases have decided that elements inserted into a transaction without any business or commercial purpose did not prevent the composite transaction from falling within a charge to tax, or bring it within an exemption from tax, as the case might be---Ultimate question was whether the relevant statutory provisions, construed purposively, were intended to apply to the transaction, viewed realistically.
Barclays Mercantile Business Finance Ltd v Mawson [2004] UKHL 51; Collector of Stamp Revenue v Arrowtown Assets Ltd [2003] HKCFA 46; (2003) 6 ITLR 454, para 35; Inland Revenue Comrs v Burmah Oil Co Ltd 1982 SC (HL) 114; Furniss v Dawson [1984] AC 474; Carreras Group Ltd v Stamp Comr [2004] UKPC 16; [2004] STC 1377; Inland Revenue Comrs v Scottish Provident Institution and Tower M Cashback LLP 1 v Revenue and Customs Comrs [2011] UKSC 19 and [2011] 2 AC 457 ref.
Paul Lasok QC, Richard Vallat and Anneliese Blackwood (Instructed by The General Counsel and Solicitor for HM Revenue and Customs) for Appellant.
Kevin Prosser QC (Instructed by Pinsent Masons LLP) for Respondent (UBS AG).
David Goy QC and Nicola Shaw QC (Instructed by Slaughter and May) for Respondent (DB Group Services (UK) Ltd).
Date of hearing: 3rd December, 2015.