PTD 2019 Judgments

2019 P T D (Trib.) 2035

[Anti-Duping Appellate Tribunal]

Before Mian Fasih-ul-Mulk, Chairman and Ahmed Owais Pirzada, Member

Messrs LAL DIN AUTOPARTS (PVT.) LTD., LAHORE

Versus

NATIONAL TARIFF COMMISSION, ISLAMABAD and another

Appeal No. 118 of 2017, decided on 14th May, 2019.

Anti-Dumping Duties Act (XIV of 2015)---

----Ss. 2(d), 15, 16, 24, 29 & 37---Appeal---Anti-dumping---Investigation---Free Trade Competition---Domestic industry alleged dumped imports of Cold Rolled Coil/Sheets (CRC) exported by all exporters from China and Ukraine and sought imposition of Anti-Dumping duty upon such imports---National Tariff Commission after completing examination decided to levy definitive anti-dumping duty on dumped imports in question---Appellant who was an importer was aggrieved of result of investigation by National Tariff Commission---Validity---Cold Rolled Coil/Sheets (CRC) produced by domestic industry was refined process product of 100% imported Hot Rolled Coil/Sheets (HRC)---Investigated product was Cold Rolled Coil/Sheets (CRC) which was very different from Hot Rolled Coil/Sheets (HRC) and no comparison could be made between these two products---Anti-Dumping Appellate Tribunal declined to treat Hot Rolled Coil/Sheets (HRC) at par with Cold Rolled Coil/Sheets (CRC) as mere simultaneous export and production of such two different products as referred by importer did not prove similarity between such two different products---Volume of dumped imports during POI from exporting countries was above negligible quantity and dumping margin for each country was also more than de-minimis level---Weighted average export price charged by exporters from exporting countries also showed that there had been a price competition between imports of investigated product---National Tariff Commission rightly passed/rightly assessed cumulative effects on duped imports from exporting countries on domestic industry---National Tariff Commission while determining material injury did not ignore healthy gains in production from growth figures submitted by parties contrary to provision of S. 15 of Anti-Dumping Duties Act, 2015---Analysis of injury made by National Tariff Commission was based on totality of various injury factors and not a particular injury---List of injuries caused to domestic industry was sufficient to conclude that domestic industries suffered injury due to dumping of investigated product---Imposing of anti-dumping duty was exception to general rule of free trade and was not relevant as National Tariff Commission had strictly applied provision of law to fulfill objectives of Anti-Dumping Duties Laws---Anti-Dumping Appellate Tribunal ignored such plea of importer as same was generic in nature---Objective of Anti-Dumping Duties Act, 2015 was to ensure level playing field to domestic industries and anything that came up otherwise was to be checked by National Tariff Commission therefore, reference of general rule of free trade was not relevant---Anti-Dumping Appellate Tribunal declined to interfere in Final Determination Report of National Tariff Commission---Appeal was dismissed in circumstances.

Assad Ullah Jaral for Appellant.

Waqas Aamir, Legal Advisor, NTC, Islamabad for Respondent No.1.

Jabbar Hussain, an associate of Saifullah Khan, Learned Counsel for private Respondent No.2.

2019 P T D (Trib.) 1885

[Appellate Tribunal Punjab Revenue Authority]

Before Habib Ullah Amir, (D&SJ) Judicial Member and Shahzad Mehmood Gondal, Accountant Member

Messrs AL BASHIR COLD STORAGE

Versus

COMMISSIONER (APPEALS) PRA, LAHORE

Appeal No. 11 of 2019, decided on 14th March, 2019.

Punjab Sales Tax on Services Act (XLII of 2012)---

----Ss. 24, 35, 48, 60 & 66---Punjab Sales Tax on Services (Adjudication and Appeals) Rules, 2015, R. 12---Wilful default---Scope---Penalty, reduction of---Taxable service---Taxpayer was a cold storage service provider and was aggrieved of show-cause notice and fine imposed by revenue authorities on late filing of returns on grounds that registration was done prior to imposition of fine penalty---Revenue authorities claimed that fine was reduced upon disclosure of registration---Validity---Show-cause notice did not clearly explain that since when taxpayer failed to submit the returns---Show-cause notice was issued, in a general manner, ignoring principles of natural justice, fairness, reasonableness and neutrality which was to be strictly observed in adjudication proceedings---Taxpayer had already been registered before receipt of show-cause notice, therefore, there was no mens rea or wilful default on his part---Intention of Legislature was that purpose of levying penalty was to deter assessee from repeating default in future but it could not be made as a resource mobilization/revenue generation measures---Appellate Tribunal Revenue Authority set aside order passed by Commissioner (Appeals) Punjab Revenue Authority as such aspect of matter was ignored---Appeal was allowed in circumstances.

Nemo for Appellant.

Muhammad Afzal, D.R. for Respondent.

2019 P T D (Trib.) 1786

[Customs Appellate Tribunal]

Before Jehanzaib Wahlah, Member Judicial-III

Messrs AZIZ IMPEX, KARACHI and others

Versus

ASSISTANT DIRECTOR, DIRECTORATE GENERAL OF PCA, KARACHI and 3 others

Custom Appeals Nos. K-923 to K-925 of 2017, decided on 18th April, 2019.

(a) Customs Act (IV of 1969)---

----Ss. 32, 32A, 79 & 223---Customs General Order No. 12 of 2002, Paras 2(ii) & (v)---General Rules of Interpretation, Rr. 1 & 6---SRO No. 1261(I)/2007, dated: 21-12-2007---SRO No. 568(I)/2014, dated 26-06-2014---Mis-declaration---Fiscal fraud---Officers of Customs to follow orders of the Federal Board of Revenune (Board)---Functions to be performed by "Classification Centre"---Issuance of public notice by "Classification Committee"---Invitation to single importer for discussion on classification---Effect---Appellant imported sweetened condensed milk falling under PCT heading 0402.9900---Competent authority passed assessment order on higher value and upheld the assessment order under declared PCT heading 0402.9900 and extended benefit of SRO No. 1261(I)/2007, dated: 21-12-2007---Assistant Director, Directorate General of Post Clearance Audit, after delivery of consignment, issued audit observation alleging mis-declaration of PCT heading based on advice given by Chairman, "Classification Committee" in a public notice---Public notice had changed the classification as from PCT heading 0402.9900 to PCT heading 1901.9090, which attracted 10% regulatory duty under SRO No. 568(I)/2014, dated: 26-06-2014---Deputy Collector (Adjudication) issued show-cause notice alleging mis-declaration of PCT and ordered for recovery of duty and taxes---Appeal filed before Collector of Customs (Appeals) was dismissed---Validity---Held, that Chairman, Classification Committee, was required to seek expert opinion and issue notices to the importers of sweetened condensed milk of PCT heading 0402.9900 before reclassifying same for the purpose of assessment of levy of duty and taxes under PCT heading 1901.9090---Public notice could not be treated as valid and legal due to the fact that none of the stake holders were called for deliberation, instead it was issued on predetermined formed opinion evident from the fact that direction contained in clause (v) of para 2 of Customs General Order 12 of 2002 was ignored---Public notice had only invited a single importer who desired to get the PCT heading changed for obtaining benefit of duty and taxes at that point of time---Classification adopted by Chairman, Classification Committee, was based on faulty interpretation of General Interpretation Rr. 1 & 6---No question of substitution of milk with vegetable fat arose in preparation of condensed/concentrated milk, instead water was removed by the process of boiling and after it became thicker, sugar was added as enunciated in PCT heading 0402.9900, such interpretation of PCT heading 0402.9900 was strengthened from decision of World Customs Organization---Chairman, Classification Committee, was not empowered to issue public notice in terms of sub-para (ii) of Customs General Order 12 of 2002---Collector of Customs was empowered to issue public notice after obtaining validation from the Board as ordered in Customs General Order 9 of 2004---Compliance of Orders, Instructions and Directions of the Board was mandatory under S. 223, Customs Act, 1969 and no defiance was permitted---Appellate Tribunal annulled the public notice issued by Chairman, Classification Committee, Audit Observations/Contravention Report, and set aside the order passed by Customs authorities being illegal, null and void ab initio---Appeal was allowed, accordingly.

Messrs Nayatl (Pvt.) Ltd. v. Appellate Tribunal Customs, Islamabad and others 2019 PTD 288; Muhammad Waheed v. Customs Appellate Tribunal 2016 PTD 35 and 2019 SCMR 282 rel.

(b) Customs Act (IV of 1969)---

----Ss.26A, 211, 3DD & 32---SRO No. 500(I)/2009 dated: 13.06.2009---Mis-declaration---Conduct of the audit---Issuance of notice before conducting the audit---Scope---Assistant Director, Directorate General of Post Clearance Audit issued audit observation and framed contravention report---Deputy Collector (Adjudication) issued show-cause notice alleging mis-declaration of PCT heading and thereafter ordered for recovery of evaded amount of duty and taxes---Appeal filed before Collector of Customs (Appeals) was dismissed---Contention of appellant was that Assistant Director, Directorate General of Post Clearance Audit had not issued any notice or summon before conducting audit---Contention of department was that audit was conducted on the basis of goods declaration available in the data reservoir---Validity---Audit of importer accounts/ record maintained under the provisions of S. 211, Customs Act, 1969 had to be conducted by officials of Directorate of Post Clearance Audit as per mechanism provided in S. 26A, Customs Act, 1969---Appropriate officer was empowered to conduct audit, inquiry or investigation of an importer for the purpose of ascertaining the correctness of any declaration, document or statement; for determining the veracity of any declaration, document or statement; for determining the liability of any person for duty, taxes, fees, surcharge, fines or penalties; or for ensuring compliance with all other laws---Appropriate officer, prior to proceeding with said exercise, had to either summon or give a notice and reasonable time to produce accounts and record---Audit of importer could only be conducted on the basis of accounts/record---Conducting of audit on the basis of record available on the CCS Reservoir was not permitted---Super-structure built on such audit observation, show-cause notice and order-in-original no matter how strong had to fall---Appeal was allowed, accordingly.

(c) Administration of justice---

----A thing has to be done as it has been prescribed to be done, doing the same in any others manner renders it illegal and void ab initio.

2002 PTD 2457; PLD 1971 SC 61; PLD 1973 SC 236; E.A. Avans's case PLD 1964 SC 536; 2001 SCMR 838; 2003 SCMR 1505 and Director General of Intelligence and Investigation and others v. Messrs Al-Faiz Industries (Pvt.) Ltd. and others 2006 SCMR 129 rel.

(d) Customs Act (IV of 1969)---

----Ss. 3DD, 32, 32A, 79 & 180---Income Tax Ordinance (XLIX of 2001), Ss. 228, 230A, 207 & 177---Sales Tax Act (VII of 1990), S. 30DD---SRO No. 42(I)/2010, dated: 23-01-2010---Mis-declaration---Recovery of income tax---Recovery of sales tax---Show-cause notice---Audit by Income tax authorities---Directorate General of Post Clearance Audit---Jurisdiction---Scope---Assistant Director, Directorate General of Post Clearance Audit issued audit observations and framed contravention report---Deputy Collector (Adjudication) issued show-cause notice alleging mis-declaration of PCT heading and thereafter ordered for recovery of evaded amount of duty, income tax and sales tax---Appeal filed before Collector of Customs (Appeals) was dismissed---Validity---Assistant Director, Directorate General of Post Clearance Audit, had not been appointed/designated as officer of Inland Revenue by the legislature, instead Directorate General of Inland Audit had been designated as officer of Inland Revenue under S. 228, Income Tax Ordinance, 2001 and for overseeing the collection of withholding tax, Directorate General of Withholding Tax had been established under S. 230A of Income Tax Ordinance, 2001---Neither Directorate General of Post Clearance Audit nor its Assistant Director was empowered to exercise the powers of an officer of Inland Revenue under S. 207 for conducting audit under S. 177, Income Tax Ordinance, 2001---Assistant Director, Directorate General of Post Clearance Audit was indeed appointed as officer of Inland Revenue under S. 30DD of Sales Tax Act, 1990---Board had delegated powers of audit through SRO No. 42(I)/2010, dated: 23-01-2010 to certain officers to the exclusion of others---Entire communication including the audit observations and contravention reports were prepared and served in the capacity of Assistant/Deputy Director of Post Clearance Audit, which power was not available to him in terms of SRO No. 42(I)/2010, dated: 23-01-2010---Appellate Tribunal declared the entire proceedings right from audit, audit observations and contravention reports to be of no legal effect---Appeal was allowed, accordingly.

Waseem Ahmed and others v. FOP and another 2014 PTD 1733 rel.

Chittaranjan Cotton Mills Ltd. v. Staff Union PLD 1971 SC 197; Raunaq Ali's case PLD 1973 SC 236; Messrs Unitex Tower Factory v. The Collector of Customs (Appeals ) and others PTD (Trib.) 889; Messrs Silver Corporation v. The Additional Collector of Sales Tax (Adjudication), Karachi III K-106 of 2003; 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; Ali Muhammad v. Hussain Buksh and others PLD 1976 SC 37 and Land Acquisition Collector, Noshehra and others v. Sarfraz Khan and others PLD 2001 SC 514 ref.

(e) Customs Act (IV of 1969)---

----S. 179---Power of adjudication---Pecuniary jurisdiction---Scope---Assistant Director, Directorate General of Post Clearance Audit issued audit observations and framed contravention report---Deputy Collector (Adjudication) issued show-cause notice alleging mis-declaration of PCT heading and thereafter ordered for recovery of evaded amount of duty and taxes---Appeal filed before Collector of Customs (Appeals) was dismissed---Validity---Section 179, Customs Act, 1969 expressed that the powers of adjudication had to be determined by the authority adjudicating the case on the basis of "amount of duty and taxes involved, excluding the conveyance"---Amount of duty and taxes involved in the present case was Rs. 4,82,295/---Case of such amount fell within the powers of Assistant Collector of Customs in terms of clause (iv) of subsection (1) of S. 179, Customs Act, 1969---Deputy Collector had issued show-cause notice and passed order-in-original by usurping the powers of Assistant Collector---No one was allowed to usurp the powers of the adjudicating authority---Said usurpation rendered the act of issuance of show-cause notice and passing of order-in-original without power and jurisdiction, hence, null, void ab initio and coram non judice--- Appeal was allowed, accordingly.

(f) Jurisdiction---

----Exercise of jurisdiction by an authority was mandatory requirement and its non fulfillment entailed the entire proceedings to be coram non judice.

PLD 1963 SC 663; PLD 1971 SC 184; PLD 1976 SC 514; 1983 SCMR 1232; 1984 CLC 1517; PLD 1995 Kar. 587; PLD 1992 SC 486; 2001 SCMR 103; 2004 CLD 373; PLD 2004 SC 600; PLD 2005 SC 842; 2009 PTD (Trib.) 1996; 2009 PTD 1112; 2010 PTD (Trib.) 832; 2010 PTD 465; 2010 PTD (Trib.) 1636; 2011 PTD (Trib.) 2114; 2011 PTD (Trib.) 2557 and PLD 2014 SC 514 ref.

(g) Customs Act (IV of 1969)---

----S. 180---Sales Tax Act (VII of 1990), Ss. 3, 6, 7, 33, 34 & 26---Income Tax Ordinance (XLIX of 2001), S. 148---Show-Cause Notice---Time and manner of payment of sales tax---Determination of sales tax liability---Offences and penalties---Default surcharge---Collection of income tax at import stage---Scope---Section 3, Sales Tax Act, 1990, being a charging section cannot be invoked by anyone other than an officer of Inland Revenue---Section 6 contains machinery provision that lays down the procedure relating to collection of sales tax at import stage like customs duty, hence, cannot be used to charge anyone for an offence---Section 7 of the Sales Tax Act, 1990 speaks about determination of sales tax liability at the time of filing sales tax return under S. 26 of the said Act which is also a machinery section---Section 33 of the said Act contains penal clauses synonymous to S. 156(1) of Customs Act, 1969---Section 34 of Sales Tax Act, 1990 speaks about default surcharge to be paid by the taxpayer upon confirmation of charges---Section 148, Income Tax Ordinance, 2001 is a section containing machinery provision akin to S. 6 of Sales Tax Act, 1990, which empowers Customs authorities to collect income tax like customs duty on imported goods---Provisions which provide a mechanism/mode of collection are not to be construed as charging provisions even through inapt interpretation as it could neither abridge nor expand the scope of a charging section in an Act/Ordinance---Said provisions are independent under which no charge can be invoked---No show-cause notice can be issued under said sections---Issuance of show-cause notice while invoking irrelevant/erroneous provisions renders same illegal and as such void ab initio.

Pakistan Television Corporation Ltd. v. Commissioner Inland Revenue (Legal), LTU, Islamabad and others 2019 SCMR 282 rel.

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 and Rose Color v. Chairman, CBR 2013 PTD 813 ref.

(h) Customs Act (IV of 1969)---

----Ss. 180 & 202---Income Tax Ordinance (XLIX of 2001), Ss. 162(1) & 140---Sales Tax Act (VII of 1990), Ss.11 & 48---Show-cause notice---Recovery of government dues---Recovery of income tax from the person from whom income tax was not collected or deducted---Recovery of tax from persons holding money on behalf of a taxpayer---Assessment of sales tax---Recovery of arrears of sales tax---Jurisdiction of Customs Collectorates to recover income tax and sales tax---Scope---Assistant Director, Directorate General of Post Clearance Audit, issued audit observations and framed contravention report---Deputy Collector (Adjudication) issued show-cause notice alleging mis-declaration of PCT heading and thereafter ordered for recovery of evaded amount of duty, income tax and sales tax---Appeal filed before Collector of Customs (Appeals) was dismissed---Validity---Deputy Collector of Customs figured nowhere in S. 11, Sales Tax Act, 1990 or S. 162(1), Income Tax Ordinance, 2001---Deputy Collector was not empowered to lay hands on the matter falling within the ambit of Ss. 3, 6, 7A & 11, Sales Tax Act, 1990 and S. 162(1), Income Tax Ordinance, 2001---Said sections least empowered the officers of Customs to initiate adjudication/recovery proceedings for the short collected/paid sales tax and income tax either due to collusion or connivance or inadvertence, error or misconstruction---Show-cause notice had to be issued under the provision of S. 11, Sales Tax Act, 1990 and S. 162(1), Income Tax Ordinance, 2001 for the recovery of income and sales tax---Authority to issue show-cause notice under said sections was Officer of Inland Revenue and Commissioner of Income Tax---Customs Collectorates had the power to collect and enforce payment of sales tax and income tax at the time of clearance---Plea that Customs Collectorate was empowered to recover the short paid amount of sales tax and income tax at the import stage under S. 202, Customs Act, 1969 was based on mistaken belief---Customs collectorate could recover the amount of sales tax and income tax only upon receipt of notice from the officer of Inland Revenue and Commissioner of Income Tax in terms of S. 48, Sales Tax Act, 1990 and S. 140, Income Tax Ordinance, 2001 for recovery of adjudged amount of sales tax and income tax after due process of law---Appellate Tribunal held that Customs Collectorates had the authority to collect sales tax and income tax at import stage in the capacity of collecting agent and could recover escaped/short paid customs duty and regulatory duty levied on the imported goods under S. 202, Customs Act, 1969, but had no power to adjudicate the cases of recovery of sales tax and income tax falling within the ambit of S. 11, Sales Tax Act, 1990 and S. 162(1), Income Tax Ordinance, 2001---Appeal was allowed, accordingly.

2011 PTD (Trib.) 110; 2010 PTD (Trib.) 2086; SCRA No. 01 of 2010; 2004 PTD 801; C.P. No. D-216 of 2013; 2015 PTD 702, 2016 PTD (Trib.) 969; 2016 PTD (Trib.) 1008, 2016 PTD (Trib.) 2125; Appeal No. K-1635 of 2014; Appeal No. K-1029 of 2016; Appeal No. K-1030 of 2016; Appeal No. K-1343 of 2015; 2016 PTD (Trib.) 2463 and 2017 PTD (Trib.) 481 ref.

(i) Customs Act (IV of 19

--69)--- --Ss. 193, 193A, 195, 80 & 83---Customs Rules, 2001, Rr. 438 & 442---Constitution of Pakistan, Art. 13---Appeal to Collector (Appeals)---Issuance of show-cause notice in appeal---Power of Board or Collector to pass certain orders---Checking of goods declaration by Customs---Clearance for home consumption---Double jeopardy---Scope---Assistant Director, Directorate General of Post Clearance Audit, after delivery of consignment, issued audit observations and framed contravention report---Deputy Collector (Adjudication) issued show-cause notice alleging mis-declaration of PCT heading and thereafter ordered for recovery of evaded amount of duty and taxes---Appeal filed before Collector of Customs (Appeals) was dismissed---Validity---Assessment order passed under S. 80, Customs Act, 1969 and R. 438, Customs Rules, 2001 and thereafter passing of clearance order under S. 83, Customs Act, 1969 and R. 442, Customs Rules, 2001 by the authority could not be disturbed by any authority for the purpose of preparing contravention report and adjudication proceedings---Only course left for Assistant Director, Directorate General of Post Clearance Audit, was to challenge the clearance order before Collector of Customs (Appeals) under S. 193, Customs Act, 1969 in exercise of powers delegated upon him through SRO No.500(I)/2009, dated: 12-06-2009---Assistant Director, Directorate General of Post Clearance Audit, could incorporate all the apprehensions, misreading of facts and contravention of the provisions of Customs Act, 1969 or Customs Rules, 2001 in the appeal---Collector of Customs (Appeals) could issue show-cause notice, where the duty and taxes had either not been levied or short paid, under S. 193A, Customs Act, 1969---Assistant Director, Directorate General of Post Clearance Audit, instead of adhering to the prescribed method available in Customs Act, 1969 reopened the assessment/clearance order under S. 195, Customs Act, 1969 under which no power was vested with him or Deputy Collector---Where the right of appeal had been accorded by the legislature in the provision of S. 193, Customs Act, 1969, the provision of S. 195, Customs Act, 1969 was un-operational and could not be exercised even by the authority defined therein---Transaction stood passed and closed and attained finality and could not be disturbed by virtue of non filing of appeal---Issuance of show-cause notice and order-in-original fell under the ambit of "double jeopardy" not permitted under Art. 13 of the Constitution---Appeal was allowed, accordingly.

Messrs Paramount International (Pvt.) Ltd., Karachi v. Secretary Revenue Division 2014 PTD 1256 and Messrs World Trade Corporation v. Central Board of Revenue 1989 MLD 4310 rel.

(j) Customs Act (IV of 1969)---

----Ss. 180, 179 & 193---Show-cause notice---Power of adjudication---Appeal to Collector---Scope---Fresh order could not be passed in the presence of appealable order even through issuance of show-cause notice under S. 180, Customs Act, 1969 while exercising powers under the provisions of S. 179, Customs Act, 1969.

Messrs Smith Kline French v. Pakistan 2004 PTD 3020 rel.

(k) Customs Act (IV of 1969)---

----Ss. 32, 80 & 83---Constitution of Pakistan, Art. 25---Mis-declaration on filing of goods declaration---Partial treatment---Scope---Assistant Director, Directorate General of Post Clearance Audit, after delivery of consignment, issued audit observations and framed contravention report---Deputy Collector (Adjudication) issued show-cause notice alleging mis-declaration of PCT heading and thereafter ordered for recovery of evaded amount of duty and taxes---Appeal filed before Collector of Customs (Appeals) was dismissed---Validity---Deputy Collector (Adjudication) charged appellants for mis-declaration under the provision of S. 32, Customs Act, 1969 merely on the basis of assumption/presumption that the appellants transmitted goods declaration on the basis of erroneous PCT, in order to hoodwink the customs and to evade the amount of duty and taxes---Importers had no role to play in examination carried out by the subordinates of Deputy Collector (Appraisement) with the assistance of officials of Terminal Operator---Officials of customs confirmed the declarations and passed assessment/clearance orders while accepting the declarations as true and correct--- Alleged mis-declaration could not have been possible unless said officials were hands in glove with importers---No charges had been levelled under S. 32(2), Customs Act, 1969 against the officials---Said action of department proved that importers had been met with partial treatment, which was not permitted under Art. 25 of the Constitution---Appeal was allowed, accordingly.

2002 SCMR 312; 2009 PTD 1507; 2005 SCMR 492 and 2010 SCMR 431 rel.

Nadeem Ahmed Mirza (Consultant) for Appellants.

Umair Jehangir, A.O. and Sadiq, A.O. for Respondents.

Date of hearing: 19th February, 2019.

2019 P T D (Trib.) 36

[Customs Appellate Tribunal]

Before Muhammad Nadeem Qureshi, Member (Judicial-I) and Muhammad Nazim Saleem, Member (Technical-II)

Messrs I.T. IMPEX, KARACHI

versus

The DIRECTOR GENERAL and another

Customs Appeal No.K-24 of 2016, decided on 1st April, 2018.

(a) Customs Act (IV of 1969)---

----Ss. 25, 25-A & 25-D---Valuation Ruling---Determination of customs value of goods---Value of imported goods, had to be determined by the Customs Authorities under S.25 of the Customs Act, 1969---Director, Directorate General of valuation, was not empowered to fix the value of imported goods through Ruling in exercise of power vested under S.25-A(1) of the Customs Act, 1969; Board was to issue a notification on the subject---If a mandatory condition for exercise of jurisdiction was not fulfilled, the entire proceedings, would become illegal and suffering from want of jurisdiction---If an action had been taken or order had been passed without having competency under the respective provisions of law, same was to be declared illegal and without jurisdiction---Goods of the importer , in the present case, were assessed on declared value till the issuance of impugned Ruling and there was no cause available with the Director of the Directorate of Valuation to issue fresh Ruling as the facts and circumstances remained the same and no surge in import was notified in the subsequent period---Representative of the department, had failed to negate the argument of the importer---Provisions of S.25 of the Customs Act, 1969 were to be followed in sequential manner barring certain exceptional cases where massive group under invoices was rampant, which was not visible in the present case---Resort to subsequent method was not permissible without any exception that was without exhausting the sequence indicated in S.25 of the Customs Act, 1969 as it would annihilate and terminate the spirit and essence of the transactions value, which in the first instance had to be established as colourable and tainted---Valuation Ruling was coram non judice, ab initio void and of no legal effect---Order-in-Revision passed by Director General of valuation was set aside, in circumstances.

Mansab Ali's case PLD 1971 SC 124; Chittaranjan Cotton Mills Ltd. v. Staff Union PLD 1971 SC 197; Raunaq Ali's case PLD 1973 SC 236; Messrs Shahid Impex v. Director General of Valuation 2014 PTD (Trib.) 674; Messrs AFU International v. Director General of Valuation 2016 PTD (Trib.) 1305; 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 CL 537; Faco Trading Company v. Members Custom, Federal Board of Revenue and others 2013 PTD 825 and Goodwill Traders, Karachi v. FOP 2014 PTD 176 ref.

(b) Interpretation of statutes---

----Plain language of the law was to be applied.

Nadeem Ahmed Mirza for Appellant.

Shahdad Mari, Appraiser, P.A. for Respondents.

2019 P T D (Trib.) 50

[Customs Appellate Tribunal]

Before Omar Arshad Hakeem, Member (Judicial) and Imran Tariq, Member (Technical)

Messrs SHAUKAT SOAP AND GHEE INDUSTRIES (PVT.) LTD., GUJRANWALA

Versus

ADDITIONAL COLLECTOR OF CUSTOMS (ADJUDICATION), GUJRANWALA

C.A. No.125/LB of 2016, decided on 28th April, 2017.

(a) Customs Act (IV of 1969)---

----Ss. 18, 32, 79, 80, 156(1)(12-A), 194-A & 202---DTRE Rules, Rr.337-A & 337-F---Object of 'DTRE' Scheme---S.R.O. No.450(I)/ 2001, dated 18-6-2001---Recovery of evaded duties and taxes---Appellant unit acquired 'DTRE Approval' for duty and taxes remitted in import of one of its raw materials i.e. inedible tallow' for the purpose of consumption in Laundry Soap---DTRE Approval was accorded on the condition of consumption of import revenue remitted merchandise in export to Afghanistan---Non-compliance with the condition laid out under 'DTRE Scheme', triggered recovery proceedings which was crystallized by forums below---DTRE Scheme was wrapped round duty and tax remission for the purpose of exports---Object of DTRE Scheme was to neutralize the incidence of duty and taxes on the imported or locally procured content of the export product---Neutralization was provided by way of grant of duty and tax remission against the exported goods, subject to fulfilment of certain mandatory condition, stipulated thereunder---Objective condition embodded in said scheme was that the remitted goods be consumed in exported merchandise---Legislative logic behind those remissions was to assist the genuine bona fide exporters to become more competitive and thus enhance the annual foreign exchange earnings of the country---When the appellant unit voluntarily opted for Duty and Tax Remission Scheme and undertook to abide by the conditions stipulated under it ipso facto waived the provisions of S.32 of the Customs Act, 1969; through application of 'doctrine of waiver' and was absorbed in the schematics of 'DTRE Scheme' and the conditions and recovery provisions entailed thereunder---Liability to return duty and taxes arising subsequent to the date of clearance of goods on account of infringement of the conditions stipulated under the 'DTRE Scheme', was akin to continuing obligation and the date of clearance of the goods, could not be the date for determining limitation---In the light of the recovery provision enshrined under Rr.307-A, 307-E of the DTRE Rules, the date for raising demand, could be counted only from the date of show-cause notice when infringement was alleged---Shield of limitation constructed by appellant against impugned demand being based on gross misinterpretation of law, was rejected---Recoveries, effected through the impugned show-cause notice being unaffected by the shackles of limitation, were held to be in accordance with law---Appeal was dismissed; impugned order-in-original was upheld and authorities were directed to enforce recoveries of the evaded/adjudged duties and taxes, along with default surcharge/additional duties under S.202 of the Customs Act, 1969 and penalty under S.156(1)(12-A) of the Customs Act, 1969.

(b) Words and phrases---

----"Remission"---Meanings, explained.

Webster's Third New International Dictionary (Unabridged) and Black's Law Dictionary ref.

Abu Zar for Appellant.

2019 P T D (Trib.) 66

[Customs Appellate Tribunal]

Before Jehanzaib Wahlah, Member Judicial-III

Messrs JIUZHOU HENGTONG MACHINERY, ISLAMABAD

versus

ASSISTANT COLLECTOR OF CUSTOMS and another

Custom Appeal No.K-04 of 2018, decided on 18th October, 2018.

(a) Customs Act (IV of 1969)---

----Ss. 2(a)(Kka), 25, 32, 79 & 80---Customs Rules, 2001, Rr.433 & 438---SRO No.. 371(I)/2002, dated 5-6-2002---Import Policy Order, 2016-2018---Customs value of good---Determination---Mis-declaration---Scope---Importer, delivered respective documents to the clearing Agent and as per pre-requisite deposited upfront duty---Nominated examiner opined that the goods imported were old and used which were banned items---Nominated Officer passed assessment order for levy of duty and taxes and referred the same to the Principal Appraiser with the remarks based on examination report, who framed contravention report with the allegation that importer had imported "Auto Parts" as against 'Drill Machine Spare Parts" falling under PCT Heading 8431.4300, and as such not importable under Import Policy Order, 2016-2018 which were liable to be confiscated and referred the matter to Additional Collector Law, who approved the same and transmitted to Collector of Customs, who passed order-in-original on the same date and ordered confiscation of "drilling spare parts" out-rightly on the premise that those were not importable and penalty was imposed---Validity---Alleged order-in-original had not been passed with application of mind independently, instead on pre-determined/formed opinion, having no warrant of law, rendering the order based, suffered from the vice of self-interest or tardy, indolence and incompetence---Vital lapses, illegalities committed by collector of customs which were visibly floating on the surface of impugned order confirmed that it had not been passed on objective consideration, rather on extraneous---Such type of orders were always deemed to be treated as illegal, void, arbitrary and a result of misuse of authority vested in public functionary---Order passed by collector of customs was in violation of basic principles of good governance and mandatory requirement of S.24-A of General Clauses Act---In the present case no misdeclaration was apparent---Collector of Customs was not empowered to issue show-cause notice in the case where there existed no revenue lose---Cases of such nature, were to be dealt by the competent authority as defined in S.2(a) of the Customs Act, 1969, whereas collector of customs was non entity---Examining official attended the goods in question in very callous and haphazard manner, rendering some of the goods as rusty, otherwise those were new---Even, if it was considered that goods were old and used (second hand), those were importable and least fell within the ambit of Serial No.7 of Appendix-C to the "Import Policy Order 2016, 2018" by virtue of the fact that those fell under Cl.(3) of Para 9(ii) of the Import Policy Order, 2016, which with clarity expressed in regard to imports of second hand and re-conditioned parts of plant machinery and equipment---Appellant was entitled to import even old and used spare parts itself or through its sub-contractor without any restriction---Department was assessing the old and used machinery/spare parts in negation to the devised procedure, on the basis of some devised criteria having no warrant of law---Appellant had been needlessly dragged into litigation despite not warranted under law---Impugned show-cause notice was vacated and order passed by Collector of Customs was set aside being illegal and void ab initio---Collector of Customs was directed to issue delay detention certificate in terms of S.14-A(2) of the Customs Act, 1969.

PLD 1964 SC (Pak) 673; 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; PLD 1995 SC (Pak) 272; PLD 1970 SC 158; PLD 1970 SC 173; 1984 SCMR 1014; 2012 PTD (Trib.) 619; PLD 1971 SC 184; PLD 1976 SC 514; 1992 ALD 449; 2004 PTD 624; PLD 2004 SC 600; PLD 2005 SC 842; 2009 PTD 1112; 2010 PTD 465; 2010 PTD (Trib.) 1636; Messrs Paramount International (Pvt.) Ltd. v. FOP and others 2014 PTD 1256; Izhar Alam Farooqi Advocate v. Sheikh Abdul Sattar Lasi and others 2008 SCMR 240; Sardar Ahmed Yar Khan Jogzai v. Province of Balochistan 2002 SCMR 1022; Faqir Abdul Majeed Khan v. District Returning Officer and others 2006 SCMR 1713; Ali Muhammad v. Chief Settlement Commissioner 2001 SCMR 1822; PLD 1958 SC 104; PLD 1973 SC 326; PLD 2002 SC 630; 2003 SCMR 50; 2004 SCMR 25; 2004 SCMR 1798; PLD 2005 SC 842; Collector Excise and Land Customs and others v. Rehm Din 1987 SCMR 1840; Syed Muhammad Razi v. Collector of Customs, (Appraisement), Karachi and 2 others 2003 PTD 2821; AIR 1954 SC 747; AIR 1963 SC 1811; AIR 1970 SC 1453; AIR 1971 SC 1017 and PLD 2005 SC 193 ref.

(b) Administration of justice---

----Finding of fact not based on material available on record was illegal and arbitrarily---Such finding without discussing and considering material available was violative of established principles of appreciation of evidence on record and not sustainable in law---Principle that every judicial or quasi judicial finding should be based on reasons containing the justification for the finding in order itself was an established principle of dispensation of justice.

Nadeem Ahmed Mirza for Appellant.

Jam Muhammad Akram, A.O. for Respondents.

2019 P T D (Trib.) 106

[Customs Appellate Tribunal]

Before Syed Sardar Hussain Shah, Member (Judicial)

MUHAMMAD RASHEED

Versus

The COLLECTOR OF CUSTOMS, MCC, PESHAWAR and 2 others

Appeal No. Cus. 204/PB of 2016, decided on 4th May, 2018.

Customs Act (IV of 1969)---

----Ss. 2(s)(iii), 16, 17, 156(1)(8)(89) & 168---SRO No.499(I)/2009, dated 13-6-2009---Seizure and confiscation of vehicle on suspicion of being non-duty paid/smuggled one---Staff of the Customs Mobile Squad intercepted the vehicle---Appellant produced photocopy of registration book of vehicle, which was found to be suspicious---Vehicle was detained under S.17 of the Customs Act, 1969 for verification---Forensic Science Laboratory reported that chassis number of vehicle had been found cut and welded---Detention of vehicle was converted into proper seizure under S.168 of the Customs Act, 1969 for violation of Ss.2(s)(iii) & 16 of the Customs Act, 1969 and was confiscated outright under S. 156(1)(8)(89) of Customs Act, 1969, read with SRO No.499(I)/2009, dated 13-6-2009---Reports of two different Laboratories, confirmed that chassis number of the vehicle was cut and welded---Nothing had been produced by the appellant to rebut the charges and to prove that the vehicle was lawfully imported/duty paid or purchased from the local market against proper sales tax invoice---Order-in-original passed by Additional Collector of Customs (Adjudication), was upheld and appeal was dismissed.

Sardar Abdur Rauf for Appellant.

Musa Khan, Superintendent/D.R. for Respondents.

2019 P T D (Trib.) 116

[Customs Appellate Tribunal]

Before Syed Sardar Hussain Shah, Member (Judicial)

HIKMATULLAH

Versus

The MAJOR, ANTI-SMUGGLING OFFICER, PESHAWAR and 3 others

Appeal No. Cus. 117/PB of 2017, decided on 30th July, 2018.

Customs Act (IV of 1969)---

----Ss.2(s), 16, 156(1)(8), 156(1)(89), 168 & 179---Imports and Exports (Control) Act (XXXIX of 1950), S.3---Notification FE.4/92-SB, dated 28.11.1992---Smuggling---Seizure and confiscation---Scope---Law enforcing Force recovered Pakistan currency, allegedly being smuggled out of Pakistan---Deputy Collector of Customs (Adjudication) vide order-in-original confiscated the recovered currency---Collector of Customs (Appeals) upheld the order-in-original and dismissed the appeal---Validity---Appellant was citizen of Pakistan as he produced his Computerized National Identity Card; two business cards showing him the Managing Director of companies; another card of All Pakistan Commercial Exporters showing him an Associate member and a certificate issued by Political Agent in respect of residence and business of appellant---No offense was committed by appellant when there was no evidence to suggest that he was making an attempt to smuggle the currency out of Pakistan---Law Enforcing Force was not authorized to seize goods at the Border, which was a Customs station---Orders passed by adjudicating authorities were set aside by the Tribunal.

Ishtiaq Ahmed for Appellant.

Muhammad Zahid, Superintendent/D.R. for Respondents.

2019 P T D (Trib.) 125

[Customs Appellate Tribunal]

Before Syed Sardar Hussain Shah, Member (Judicial)

ZARTAN KHAN

Versus

The COLLECTOR OF CUSTOMS/(APPEALS), PESHAWAR

Appeal No. Cus. 230/PB of 2014, decided on 19th February, 2018.

Customs Act (IV of 1969)---

----Ss. 2(s), 16 & 156(1)(8)(89)---SRO No.172(I)/2013, dated 5-3-2013---Seizure and confiscation of vehicle---Customs Intelligence and Special Checking Squad seized a vehicle on violation of Ss.2(s) & 16 of Customs Act, 1969, punishable under S.156(1)(8)(89) of the said Act---Importer, availed Amnesty Scheme introduced vide SRO No. 172(I)/ 2013, dated 5-3-2013 for release of smuggled/non-duty paid vehicle on payment of duties and taxes---Importer according to said scheme produced vehicle before the Customs staff for assessment and clearance---Customs authorities took into possession the vehicle in question and referred the same to Director FSL for analytical test for its chassis frame number---Importer also paid the duty and taxes in accordance with law to the Customs Authorities---Report of chemical analysis was positive---No mala fide existed to defraud the Government---Vehicle was not smuggled one as the importer had produced valid documents of purchase---Impugned order, whereby vehicle was confiscated, was set aside and authorities were directed to return the vehicle to the importer.

Ajoon Khan for Appellant.

Syed Zaman, Inspector of Customs for Respondent.

2019 P T D (Trib.) 135

[Customs Appellate Tribunal]

Before Muhammad Nazim Saleem, Member (Technical-II)

Messrs INAYAT INTERNATIONAL TRADING CO., PESHAWAR

versus

The COLLECTOR OF CUSTOMS (APPEALS), KARACHI and another

Customs Appeal No.K-820 of 2016, decided on 10th June, 2017.

Customs Act (IV of 1969)---

----Ss. 18 & 25---Customs Value of goods---Determination---"High Efficiency Agricultural Irrigation Submersible Pump", were imported declaring at the rate of unit value of US $ 15.5000; whereas correct description of goods was "Deep Well Submersible Pump with Built-in Motor made of Stainless Steel Body along with Pump" assessable at value of US $ 30.000---Importer had not declared correct description of the goods---Department assessed the value at US $ 30 per piece based on relevant data available---Value of goods was changed with the change in description which showed that importer deliberately misdeclared description so that same could be assessed at lower value---Importer had not rebutted the argument of department that some of the Pumps had size and specification, which were used for domestic purpose and not for agriculture---Exemption of customs duty and sales tax in Fifth Schedule to the Customs Act, 1969 and Sixth Schedule to the Sales Tax Act, 1990, respectively was subject to the condition that the goods were used for "agriculture purpose"---Goods in question were also manufactured locally---Preamble of the Fifth Schedule to Customs Act, 1969, clearly stipulated that the benefit of the Schedule was not available to locally manufactured goods---Importer had contended that locally manufactured Pumps were made of stainless steel, whereas in imported Pumps only outer body was made of steel---Importer could not justify said claim with any certification from the Engineering Development Board---No legal or factual reason existed to interfere with the impugned order-in-appeal, which was upheld being a lawful order, in circumstances.

Adeel Awan for Appellant.

Noor Alam Durani, Principal Appraiser for Respondents.

2019 P T D (Trib.) 147

[Customs Appellate Tribunal]

Before Syed Sardar Hussain Shah, Member (Judicial)

NAZAR MUHAMMAD

versus

The COLLECTOR OF CUSTOMS (APPEALS), PESHAWAR and 2 others

Appeal No. Cus. Remand No.233/PB of 2016, decided on 6th April, 2018.

Customs Act (IV of 1969)---

----Ss. 157, 168 & 201---Seizure and confiscation of vehicle---Customs staff seized a Truck and the driver of the Truck at the time of seizing, produced an Afghan Road Pass---Truck was confiscated and on appeal impugned order was set aside and Truck was released to the owner, with direction, that same should be re-exported to Afghanistan under proper customs escort---Customs Authorities, however, auctioned the Truck and sale proceeds was handed over to the Attorney of the appellant/owner of the Truck---Demand notice was issued to the appellant for refund of duty and taxes which was not deducted from the sale proceeds---Assistant Collector (Auction Cell) ordered the appellant to deposit the duties and taxes---Appeal the appellant before the Collector of Customs (Appeals) was dismissed---Validity---Order of Collector of Customs (Appeals), whereby the Truck was restored to its owner, and its re-export to Afghanistan, was not challenged by the Customs Authorities before any forum and the same had attained finality---Appellant, was not liable to pay the duty and taxes as the Collector of Customs (Appeals), had restored the Truck to its owner---Duty of the Customs Authorities was to first collect the expenses of sale, then pay the freight or other charges if any payable in respect of the goods then to pay the customs duty, other taxes and dues payable and thereafter the balance, if any was to be paid to the owner of the goods---Impugned order-in-appeal, passed by Collector of Customs (Appeals) and order-in-original passed by Collector (Appeals) and order-in-original passed by Collector (Auction Cell), were set aside and appeal was allowed.

Muhammad Rafique Mohmand for Appellants.

Musa Khan, Superintendent Customs for Respondent.

2019 P T D (Trib.) 165

[Customs Appellate Tribunal]

Before Muhammad Nazim Saleem, Member (Technical-II)

DEPUTY COLLECTOR OF CUSTOMS, KARACHI

Versus

Messrs MUNEEB STEEL, LAHORE and another

Customs Appeal No.K-15 of 2017, decided on 10th June, 2017.

Customs Act (IV of 1969)---

----Ss. 19-A, 33 & 81---Provisional assessment of duty---Refund---Consignment was declared to contain "cold rolled Steel Sheets and Coils in Secondary Quality" under PCT heading 7209.1610 at unit value of US $ 400 PMT---Subject goods were assessed provisionally at US $ 494 PMT by securing differential amount of duty and taxes in shape of post dated cheque, pending clarification of value from the Directorate General of Customs Valuation---Directorate General of Customs Valuation directed that contracts/LCs opened on or after 1.3.2009 up to 31.5.2009 could be assessed at US $ 345 PMT---Declared value of the importer at US $ 400 PMT was higher than the value determined by the Directorate General of Customs Valuation---Importer approached Securities Section of the Collector for release/refund of their Security (cheque), but security cheque was got en-cashed by the department on 21-6-2012 as the provisional assessment was made on 22-5-2009, and the time period of provisional assessment had expired much before the encashment of the cheque in question---Subsequently, the Collectorate directed the importer to furnish the documents in support of his refund claim, proving thereby that incidence of duty and taxes had not been passed on to the end consumer in terms of S.19-A read with S.33 of Customs Act, 1969---Importer instead of furnishing the same, contested the matter that S.19-A of Customs Act, 1969 was not applicable to his case as the differential amount of duty and taxes were secured provisionally---Adjudicating Officer vide order-in-original held that charges against the importer was proved---Appellate authority set aside the order of Adjudicating Officer---Validity---Appellant department had complicated case by getting cheque encashed perhaps in a drive for "earning" revenue---Department, instead of finalizing the provisional determination within six months, as required under S.81(2) of the Customs Act, 1969, after three years got encashed the post-dated cheque---Department was bound to finalize assessment by 21.11.2009 as the provisional assessment was done on 22.5.2009---Said final determination could have been done much before expiry of mandatory period of six months; as the Directorate General, Customs Valuation had decided the matter vide letter dated 13.6.2001 by advising the appellant department to assess the goods at value US $ 345 PMT---Department's failure to comply with mandatory provision of law was a serious omission---Directorate General Customs Valuation, had directed the department that two amounts were to be refunded/ returned to the importer; (i) difference between US $ 400 PMT and US $ 494 PMT (Post dated cheque); and (ii) difference between US $ 354 PMT and US $ 400 PMT---Importer had deposited duty and taxes as per declared value US $ 400 PMT---Said process should have been completed within few days/weeks of receiving advice from the Directorate General, Customs Valuation on---Department had attended the case, not only in the extremely non-professional manner, but had deprived the importer of his legitimate money for long 8 years for no fault of him, which was quite disturbing and detestable---Collector of Customs was directed to immediately return both the amounts to the importer without any loss of time.

Nemo for Appellant.

Adeel Awan for Respondent No.1.

2019 P T D (Trib.) 173

[Customs Appellate Tribunal]

Before Syed Sardar Hussain Shah, Member (Judicial)

KHYBER TEA AND FOOD COMPANY, PESHAWAR and 2 others

versus

The COLLECTOR OF CUSTOMS (APPEALS), PESHAWAR and 2 others

Appeal No. Cus. 106/PB of 2012, decided on 19th July, 2018.

Customs Act (IV of 1969)---

----Ss.2(s), 16, 156(1)(8), (89), 168 & 179---Imports and Exports (Control) Act (XXXIX of 1950), S.3---"Smuggling"---Seizure and confiscation---Scope---Customs staff intercepted truck, loaded with foreign origin tea bags---Occupants of the truck failed to produce any documents regarding the bags---Deputy Collector of Customs vide Order-in-Original confiscated the tea---Collector of Customs (Appeals) upheld the Order-in-Original and dismissed the appeal---Validity---Importer company had imported 210 bags of tea from Kenya through goods declaration---Company, after clearing of the same, sold 110 bags to the appellant company; sales invoice was issued by importer company in favour of appellant company---Nothing was available on the file which suggested that the recovered tea was not that one which was imported and sold out through documents---Customs Appellate Tribunal set aside the orders passed by adjudicating authorities and allowed the release of tea uncondictionally to the appellant.

Waliullah and Fakhr-e-Alam Paracha Managing Director for Appellants.

Musa Khan and Muhammad Zahid, Superintendent Customs for Respondents.

2019 P T D (Trib.) 187

[Customs Appellate Tribunal]

Before Muhammad Nadeem Qureshi, Member (Judicial-I)

Messrs HAFEEZ MOTOR STORE and another

versus

DEPUTY COLLECTOR OF CUSTOMS and another

Customs Appeals Nos.K-1507 to K-1511 of 2015, decided on 20th July, 2018.

(a) Customs Act (IV of 1969)---

----Ss. 80, 83, 29, 155Q, 215, 32, 180, 193 & 194A---Customs Rules, 2001, Rr. 438 & 442---S.R.O. No.371(I)/2002 dated: 15-06-2002---Checking of goods declaration by Customs---Clearance of goods---Restriction on amendment of goods declaration---Show-cause notice---Electronic notice---Manual service of order--- Right to file appeal---Limitation---Scope---Appellant imported consignment of wind shield glasses and filed goods declaration--- Appraiser examined the goods and found the goods as per declaration---Software of WeBOC passed clearance order and the appellant obtained delivery of goods from the terminal---Deputy Collector of Customs (Appraisement) passed reassessment order after a lapse of 10 months and created recovery by amending the existing assessment order---Reassessment order was not communicated to appellant, instead it was communicated verbally by the Deputy Collector of Customs (Appraisement)---Appeal by appellant before Collector of Customs (Appeals) was dismissed on the ground of limitation---Validity---Clearance of consignment had been made under Software of WeBOC regime and after passing of clearance order appellant had obtained delivery of goods from the terminal---Any correspondence under the said regime had to be transmitted online without any exception---Officials of customs were bound to intimate in regards to passing of reassessment order and creating of recovery manually after clearance of goods through the software of WeBOC regime---Importer had to be served so as to enable him to avail the remedy under the provisions of S. 193 or S.194A, Customs Act, 1969---View message as contemplated in Ss. 155Q & 215, Customs Act, 1969 for payment of created recovery amount was not transmitted/served, instead reassessment order was kept as guarded secret and surfaced only when the appellant intended to file fresh goods declaration for his newly arrived consignment at the terminal---Appellant obtained reassessment order and filed appeal before Collector of Customs (Appeals)---Office of Collector of Customs (Appeals) entertained the appeal without any objection of the same being time barred, meaning thereby that it was admitted for regular hearing on merits---Appellate Authority had to examine the reason for delay sympathetically when appellant was proceeded against ex parte during adjudication proceedings---No limitation ran against ab initio void order---Recovery was created in isolation without issuance of show-cause notice and in usurpation of powers delegated to the Principal Appraiser---Reassessment order was held to have been passed without lawful authority and as such null, void ab initio and coram non judice.

Rehmat Bibi and others v. Punno Khan and others 1986 SCMR 962; Syed Haji Abdul Wahid and another v. Syed Sirajuddin 1996 SCMR 2296; 2002 PTD 2457; PLD 11971 SC 61; PLD 1973 SC 236; PLD 1964 SC 536; 2001 SCMR 838; 2003 SCMR 1505; PLD 1996 Kar. 68 and PLD 1971 SC 184 ref.

2010 PTD (Trib.) 1491; 2010 PTD (Trib.) 1359; 2012 PTD (Trib.) 637; Laser Praxis Deplix Clinic Lahore v. Customs Central Excise and Sales Tax Appellate Tribunal 2002 PTD 549; Controller of Land Acquisition v. Mst. Khatiji and others (1987) 56 Tax 130; Ali Muhammad v. Hussain Bux and another PLD 1976 SC 37 and FOP v. Metropolitan Steel Corporation 2002 PTD 87 rel.

(b) Limitation---

----No limitation runs against void ab initio order.

Rehmat Bibi and others v. Punno Khan and others 1986 SCMR 962 and Syed Haji Abdul Wahid and another v. Syed Sirajuddin 1996 SCMR 2296 ref.

Ali Muhammad v. Hussain Bux and another PLD 1976 SC 37 and FOP v. Metropolitan Steel Corporation 2002 PTD 87 rel.

(c) Customs Act (IV of 1969)---

----Ss. 3DD, 26A, 80, 179, 180, 193 & 195---Customs Rules, 2001, R. 438---S.R.O. No. 500(I)/2009 dated: 13-06-2009---Directorate General of Post Clearance Audit---Audit---Checking of goods declaration by Customs---Power of adjudication---Jurisdiction---Procedure---Past and closed transaction---Appeal by Customs Authorities---Scope---Appellant imported wind shield glasses and filed goods declaration---Software of WeBOC passed clearance order and the appellant obtained delivery of goods from the terminal---Deputy Collector of Customs (Appraisement) passed reassessment order after a lapse of 10 months and created recovery by amending the existing assessment order---Validity---Legislature had inserted S.3DD in Customs Act, 1969 through which Directorate General of Post Clearance Audit was created and its officers were delegated powers through S.R.O. No.500(I)/2009 dated 13-06-2009 for conducting audit of import books of account which included every aspect of declaration made by the importer and assessment order passed by the competent authority---Directorate General of Post Clearance Audit could prepare audit observation and forward it to the importer for clarification and if the reply failed to settle the issue frame contravention report and forward it to the Clearance Collectorate which shall forward it to the respective Collectorate of Customs Adjudication for issuance of show-cause notice and passing of order-in-original---Deputy Collector of Customs (Appraisement) assumed the jurisdiction of Directorate General of Post Clearance Audit under S.26A, Customs Act, 1969---Only course left for the Deputy Collector of Customs (Appraisement) was to file an appeal before Collector of Customs (Appeals)---Deputy Collector of Customs (Appraisement), instead of the prescribed method, reopened the assessment/clearance order under S.195, Customs Act, 1969 which powers were either vested with the Federal Board of Revenue or the Collector of Customs---No appeal had been filed against the assessment order within the stipulated period of 30 days resultantly, it attained finality and could not be disturbed being a past and closed transaction.

Messrs Paramount International (Pvt.) Ltd. Karachi v. Secretary Revenue Division 2014 PTD 1256 rel.

(d) Customs Act (IV of 1969)---

----S. 80---Assessment of duty---Checking of goods declaration by customs---Reassessment---Post clearance---Scope---Reassessment under S. 80(3), Customs Act, 1969 after release of goods is permitted only after documents have been called for as expressed in subsection (2) of S. 80 and upon receipt of documents or the information so transmitted/ submitted or the statement given by the importer to the Customs Authorities found to be incorrect in respect of earlier assessment.

(e) Customs Act (IV of 1969)---

----Ss. 205, 79(1), 80, 83 & 131---Customs Rules, 2001, Rr. 438, 442, 444 & 450---Amendment of documents---Goods declaration---Checking of goods declaration by Customs---Clearance of goods---Clearance of goods for export---Assessment by customs---Release of imported goods---Filing and validity of declaration for export of goods---Examination of goods for export---Scope---No amendment under S.205, Customs Act, 1969 is allowed in the columns of the declared value, quantity or description after removal of the goods from the Customs for home consumption as contemplated in S. 79(1), Customs Act, 1969 after passing of valid assessment/clearance order under Ss.80 & 83, Customs Act, 1969 & Rr. 438 & 442 of Customs Rules, 2001 or after shipment of the exported goods through goods declaration for export transmitted under S. 130 & R. 444 after completion of codal formalities defined in S. 131 & R. 450 or wherein customs reference number is allotted to the goods declaration electronically.

(f) Customs Act (IV of 1969)---

---- S.32(2)---Show-cause notice---Mandatory requirement---Scope---Deputy Collector of Customs (Appraisement) after clearance of goods passed reassessment order and issued demand notice for recovery of short paid amount of duty and taxes due to inadvertence of Customs officials---Validity---Such type of recovery could only be made by passing an order after issuance of show-cause notice under S. 32(3), Customs Act, 1969---No show-cause notice had been issued, in the present case, despite mandated under the law, issuance of show cause notice being a pre-requisite could not be dispensed with under any circumstances---Recovery/demand notice communicated through reassessment order having been issued in isolation/vacuum, such was without any lawful authority hence, null and void ab initio.

Forte Pakistan (Pvt.) Ltd., Karachi v. The Director General of Intelligence and Investigation (Customs and Excise), Karachi and another 2006 PTD 978 and Assistant Collector of Customs, Dry Port Peshawar v. Messrs Khyber Electric Lamp MFG Co., Ltd., Peshawar 2001 SCMR 838 rel.

(g) Customs Act (IV of 1969)---

----S. 180---Sales Tax Act (VII of 1990), S. 6---Income Tax Ordinance (XLIX of 2001) S. 148---Show-cause notice---Recovery of Sales Tax and Income Tax---Power to adjudicate post clearance---Scope---Customs officials were empowered to collect Sales Tax and Income Tax leviable on imported goods in the capacity of collecting agents in exercise of powers vested under S. 6, Sales Tax Act, 1990 and S. 148, Income Tax Ordinance, 2001---Customs officials were not authorised to create recovery of Sales Tax and Income Tax at post clearance stage.

Nadeem Ahmed Mirza, Consultant for Appellants.

Nisar Ahmed, A.O. for Respondents.

2019 P T D (Trib.) 212

[Customs Appellate Tribunal]

Before Muhammad Nadeem Qureshi (Member Judicial-I) and Muhammad Nazim Saleem (Member Technical-II)

Messrs AL-AMNA INTERNATIONAL

Versus

The DIRECTOR, DIRECTORATE GENERAL OF INTELLIGENCE AND INVESTIGATIONS, FBR-KARACHI and 2 others

Customs Appeal No.K-150 of 2014, decided on 16th April, 2018.

(a) Sales Tax Act (VII of 1990)---

----S. 13 & Sched. VI, Table 1, Sr. Nos.15 & 61---Exemption---Bottled and canned fruits---Scope---Appellant imported bottled and canned fruits and sought exemption from payment of sales tax under Serial No.15 of Table 1 of Schedule VI of Sales Tax Act, 1990---Software of PaCCS and WeBOC accepted the goods declarations for exemption---Director Project of software WeBOC, later on, restricted the software to the extent of PCTs mentioned in column No. 3 of Table 1---Appellant filed representation against the said act of Director Project of software WeBOC---Appellant was then advised to claim exemption under Serial No.61 of Table 1 which was to be amended by the Assessing Officer at the time of passing orders under S.80, Customs Act, 1969---Appellant started transmitting goods declarations under Serial No. 61 and Assessing Officer upon review allowed the exemption under Serial No. 15---Deputy Collector (Assessment), after release of goods, passed reassessment order and Directorate General Intelligence and Investigations (FBR) forwarded the contravention report to Collector of Customs (Adjudication), who issued show cause notice and thereafter directed appellant to pay sales tax, additional sales tax, income tax and imposed penalty---Plea of department was that exemption of sales tax claimed by appellant under Serial No. 61 only covered re-import of Pakistan goods and there was no exemption available to imported goods/fruits (except imported from Afghanistan)---Validity---Table No.1 is for import and supply and had to be read in conjunction with Note 1, which stipulated that exemption would be admissible on the basis of description of the goods as mentioned in column No. 2 of the Schedule---Pakistan Customs Tarrif (PCT) classification of heading was provided for ease of reference and commodity classification purpose only, meaning thereby that if any PCT was not incorporated in column No.3 and the goods so imported answered the description of the goods as mentioned in column No. 2 of the Schedule, exemption was available to those under respective serial number of Table 1 of Sixth Schedule to the Sales Tax Act, 1990 without any exception---Legislature, through Serial No. 15 had denied exemption on the imported fruit whether fresh, frozen or preserved with the exception of bottled or canned meaning thereby that imported canned or bottled fruits were exempt from the payment of sales tax---Even if it was presumed for sake of arguments that there existed anomaly or ambiguity in Serial No. 15 same would lead to two or more interpretations, even then it had to be resolved in favour of the appellant---Appellate Tribunal set aside the orders passed by customs authorities and allowed the appeal.

1989 CLC 146 and 2011 PTD (Trib.) 79 fol.

1993 SCMR 274; 2005 SCMR 728; 2007 PTD 1656; 2008 PTD 1227 and Messrs General Food Corporation's case 2016 PTD (Trib.) 277 ref.

(b) Customs Act (IV of 1969)---

----Ss. 32, 80, 83, 193 & 180---Customs Rules, 2001, R. 442---SRO No.371(I)/2001 dated: 15.06.2001---SRO No.486(I)/2007 dated 09.06.2007---Show-cause notice---Post clearance audit---Procedure---Jurisdiction---Past and closed transaction---Scope---Directorate General Intelligence and Investigations (FBR) after clearance of imported goods prepared contravention report and forwarded the same to Collector of Customs (Adjudication)---Collector of Customs (Adjudication) issued show cause notice and thereafter directed recovery of sales tax, additional sales tax, income tax and imposed penalty---Validity---Directorate General Intelligence and Investigations (FBR) assumed the powers to conduct post clearance audit---Directorate of Post Clearance Audit was entitled to revise every aspect of declaration and assessment order---If after completion of audit any discrepancy or ambiguity was found in the documents it had to prepare audit observation and serve on the importer for justification, if he failed to justify, contravention report had to be framed under S.32(2A), Customs Act, 1969---Contravention report had to be forwarded to the Collector of Clearance Collectorate who then was to forward the same to Collectorate of Customs (Adjudication) for issuance of show cause notice---Official of Directorate General Intelligence and Investigations (FBR) after passing of assessment order and thereafter passing of clearance orders could not prepare contravention report---Only course left to the officials of Directorate General Intelligence and Investigations (FBR) was to challenge clearance order before Collector of Customs (Appeals) through an appeal---Collector of Customs (Appeals) could issue show cause notice to the importer under S.32, Customs Act, 1969---No appeal having been filed against the assessment order passed by the appropriate officer within the stipulated period of 30 days, resultantly said order attained finality and could not be disturbed being a past and closed transaction---Preparation of contravention report was held to be null, void ab initio and corum non judice.

Messrs Paramount International (Pvt.) Ltd., Karachi v. Secretary Revenue Division 2014 PTD 1256 and Waseem Ahmed and others v. FOP and another 2014 PTD 1733 fol.

Messrs Mustafa Impex v. Government of Pakistan through Secretary Finance, Islamabad PLD 2016 SC 808 = 2016 PTD 2269 ref.

(c) Customs Act (IV of 1969)---

----Preamble---"Import stage"---Meaning and scope---Import stage means the time of clearance of the goods so imported not those which have been released/cleared.

(d) Customs Act (IV of 1969)---

----S.195---Federal Board of Revenue has no mandate to interpret the provision of the Act or amend the provision; it could only give opinion; it is for the judicial fora to interpret the provision of statute.

Central Insurance Co. v. Central Board of Revenue 1993 SCMR 1232; Messrs Lever Brother Pakistan Ltd. v. Customs Sales Tax and Central Excise Appellate Tribunal, Karachi 2005 PTD 2462 and Qazi CNG Station, Gujrat and another v. Directorate General of Intelligence and Investigation-FBR, Karachi and 2 others 2016 PTD (Trib.) 107 fol.

(e) Customs Act (IV of 1969)---

----Ss. 18, 202 & 180---Sales Tax Act (VII of 1990), Ss. 6 & 11---Income Tax Ordinance (XLIX of 2001), Ss. 148 & 162---Recovery of Sales Tax and Income Tax at import stage---Jurisdiction---Power to adjudicate---Show-cause notice---Scope---Clearance Collectorates have the authority to collect Sales Tax and Income Tax at import stage in the capacity of collecting agents in terms of S.6 of Sales Tax Act, 1990 and S.148 of Income Tax Ordinance, 2001 sans recovery proceedings---Clearance Collectorates are also empowered to recover escaped/short paid customs duty and regulatory duty levied on the imported goods under S.18, Customs Act, 1969 in exercise of the powers conferred under S. 202, Customs Act, 1969 after due process of law, but have no powers in any case 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), Income Tax Ordinance, 2001.

(f) Customs Act (IV of 1969)---

----Ss. 32 & 180---Show-cause notice---Jurisdiction---Recovery of other taxes before addition of "taxes" in S.32---Scope---Collector of Customs (Adjudication) issued show-cause notice and thereafter directed recovery of sales tax, additional sales tax, income tax and imposed penalty---Purportedly offending import transactions took place during the years 2012 to 2013--- Expression "taxes" was added in S. 32(2), Customs Act, 1969 with effect from 01.07.2014 by virtue of Finance Act, 2014, meaning thereby that before the referred date it was only the evasion of customs duty which fell within the mischief of S. 32, Customs Act, 1969---Invocation of S. 32, Customs Act, 1969 for recovery of sales tax, and other consequential taxes, on the imports, which took place in the year 2012 to 2013 before coming into being of the said provision, was neither warranted nor permissible under the law.

Nadeem Ahmed Mirza, Consultant for Appellant.

Saud Hassan Khan, I/O for Respondent No.1.

Ashfaq Ahmed, Principal Appraiser for Respondent No.2.

2019 P T D (Trib.) 281

[Customs Appellate Tribunal]

Before Syed Sardar Hussain Shah, Member (Judicial)

Messrs DEANS INDUSTRIES

Versus

COLLECTOR OF CUSTOMS (ADJUDICATION) and another

Appeal No. Cus. 349/PB of 2015, decided on 25th September, 2018.

Customs Act (IV of 1969)---

----Ss. 3-DD, 25, 32, 79, 80, 156 & 180---Determination of customs value of goods---Mis-declaration---Recovery of short payment of duty/taxes---Audit team after scrutiny, pointed out short payment of duty/taxes on import/clearance of non-woven fabric---Contravention case was lodged against the importer---Validity---Importer in goods declaration had given the classification under PCT heading 5603-1100; quantity and value was also mentioned correctly, which was not objected to by the Officer under S.80 of the Customs Act, 1969---Goods assessed by the competent officer, were out of charge and consumed by the importer, at the stage when goods were non-existent and department had failed to draw a sample of goods at the time of examination, which could have been subjected to laboratory test, there was no method for determination of classification---Value was also declared correctly under S.25 of the Customs Act, 1969---Post clearance audit was conducted by the staff of port, which was void ab initio and coram non judice---Impugned order-in-original was passed after more than 9 months of issuance of show-cause notice; whereas order-in-original was to be passed within 120 days of the issuance of show-cause notice, extendable by 60 days by the Collector of Customs (Adjudication), but in the case Collector of Customs (Adjudication) had not extended any time and impugned order was passed beyond the time limit---Limitation provided under S.79(3) of the Customs Act, 1969 was mandate of law---Every person had to be dealt with in accordance with law---Stipulation of law had to be adhered to and complied with in letter and spirit---Appeal was allowed and impugned order was set aside.

Danish Ali Qazi for Appellant.

Muhammad Zahid, Superintendent/D.R. and Javaid Iqbal, Apraiser for Respondents.

2019 P T D (Trib.) 317

[Customs Appellate Tribunal]

Before Muhammad Nadeem Qureshi, Member (Judicial-I)

Messrs MOBILE AUTOS

Versus

DEPUTY COLLECTOR OF CUSTOMS and another

Custom Appeal No.K-1273 of 2016, decided on 18th August, 2018.

(a) Customs Act (IV of 1969)---

----Ss. 198 & 156---General Clauses Act (X of 1897), S. 24-A---Customs Rules, 2001, R. 435---S.R.O. No.499(I)/2009 dated: 13.06.2009---Power to weigh and examine goods---Examination of imported goods---Confiscation of goods---Application of judicial mind---Speaking order---Scope---Show-cause notice---Erroneous provision, invocation of---Effect---Appellant imported parts and accessories of motor vehicles---Appraiser opted for examination of the goods prior to assessment---Appraiser completed the assessment through which he changed the PCT Heading of all the items---Principal Appraiser termed the same as an act of mis-declaration and prepared contravention report---Weight of appellant's consignment was found to be 8570 kgs as against declared weight of 7325 kgs i.e. equivalent to 16.99 percent loss to the exchequer---Additional Collector of Customs (Adjudication) converted the contravention report into show-cause notice and ordered for confiscation of imported goods subject to redemption of those upon payment of fine and penalty in addition to determined value of duty and taxes---Validity---Additional Collector of Customs (Adjudication) issued show-cause notice in a very casual and perfunctory manner, without considering that it was a vital document, which should be prepared with utmost care after going through the provisions of Customs Act, 1969 and jurisdiction/powers vested upon him---Department invoked provisions of S. 33, Sales Tax Act, 1990 and S. 148, Income Tax Ordinance, 2001, which contained procedure for collection of advance income tax---Both the said sections were not charging sections for short paid/collected sales or income tax---Show-cause notice having been issued by invoking erroneous/irrelevant provisions was palpably illegal and without power/jurisdiction---Any superstructure built thereupon, no matter how strong it might be, had to crumble down---Appellate Tribunal vacated the show-cause notice and set aside the order passed thereon.

2003 PTD 1275; 2005 PTD 480; 2003 PTD 1593; 2002 MLD 130; 2002 MLD 180; PTCL 2001 CL 558; 1992 SCMR 1898; 2013 PTD 813; 2002 PTD 2457; PLD 1971 SC 61; PLD 1973 SC 236; PLD 1964 SC 536; 2001 SCMR 838; 2003 SCMR 1505; 2006 SCMR 129; PLD 1996 Kar. 68; 2006 PTD 978; PLD 1971 SC 184; 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; PLD 1995 SC (Pak) 272; PLD 1970 SC 158; PLD 1970 SC 173 1984 SCMR 1014 and 2012 PTD (Trib.) 619 ref.

(b) Customs Act (IV of 1969)---

----S. 25(2)(b)(iii) & First Sched.---Qanun-e-Shahadat (10 of 1984), Art. 117 & 121---Constitution of Pakistan, Arts. 13 & 18---Double taxation---Freedom of trade---Unit of measurement---Tare weight---Gross weight---Weight of packing, exclusion of---Cost of packing payable by importer---Burden of proof---Scope---Appellant imported parts and accessories of motor vehicles---Appraiser opted for examination of the goods prior to assessment---Appraiser completed the assessment through which he changed the PCT Heading of all the items---Principal Appraiser termed the same as an act of mis-declaration and prepared contravention report---Weight of appellant's consignment was found to be 8570 kgs as against declared weight of 7325 kgs i.e. equivalent to 16.99 percent loss to the exchequer---Additional Collector of Customs (Adjudication) converted the contravention report into show-cause notice and ordered for confiscation of imported goods subject to redemption of those upon payment of fine and penalty in addition to determined value of duty and taxes---Validity---Allegation of excess weight was worked out on the basis of self devised procedure by adding tare weight in the gross weight---Duty and taxes had to be levied on the unit of measurement (UOM) incorporated against each PCT Heading of the goods---Plea of department was that gross and tare weight had to be added in the net weight of goods and had to be construed as measurement (UOM) as notified against each PCT Heading---Department's interpretation was inapt and based on misconception of the UOM and in derogation to the First Schedule to the Customs Act, 1969---Contents of imported goods had to be weighed without packing, which was disposed of as trash after unwrapping---Duty and taxes had to be charged/collected on the goods actually imported for use/consumption of general public---Nevertheless, addition of cost of packing material in the value of imported goods had to be made only when it was confirmed that cost of packing was not included in the price of imported goods---Onus to prove that cost of packing was actually paid by importer was on the department and unless it was proved through tangible incriminating evidence, the cost of packing could not be added---Generation of such type of revenue was in derogation of provisions of S. 25, Customs Act, 1969 and Arts. 13 & 18 of the Constitution---Appellate Tribunal vacated the show-cause notice and set aside the order passed thereon.

1992 PTD 593; 2003 PTD (Trib.) 928; 2010 PTD 1515 and 2009 PTD (Trib.) 2025 ref.

(c) Customs Act (IV of 1969)---

----S. 198---Customs Rules, 2001, R. 435---Constitution of Pakistan, Arts. 4 & 25---Power to weigh and examine goods---Examination of imported goods---Change of PCT Headings---Scope---Individuals to be dealt in accordance with law---Discrimination---Rule of precedence---Appellant imported parts and accessories of motor vehicles---Appraiser opted for examination of the goods prior to assessment---Appraiser completed the assessment through which he changed the PCT Heading of all the items---Principal Appraiser termed the same as an act of mis-declaration and prepared contravention report---Weight of appellant's consignment was found to be 8570 kgs as against declared weight of 7325 kgs i.e. equivalent to 16.99 percent loss to the exchequer---Additional Collector of Customs (Adjudication) converted the contravention report into show-cause notice and ordered for confiscation of imported goods subject to redemption of those upon payment of fine and penalty in addition to determined value of duty and taxes---Validity---Appellant imported body protectors, rubber mats accessories for motor cars, chrome shaded ornaments and plastic strip kits---Appraiser classified the goods under PCT Headings of body protector for vehicles and rubber mats sets, assorted chrome shaded ornaments and window visor---Department's classification was misconceived as goods found during examination were bonnet guards made of plastic and had to be pasted or fixed on the bumpers for decoration/beautification---Goods imported by appellant were not essential components of motor vehicles to be used/affixed for dedicated operation of its engine sans which a vehicle could not even start or run---Imported goods were made for protecting vehicle floor from dust/mud and were to be used for decoration/beautification and protection from sun/rain---Department had been assessing the goods under same heading as was declared by appellant---Department could not deviate from their own precedents for penalizing or lading extra duty and taxes in a solitary case---Issuance of show-cause notice while ignoring precedents was illegal and not permissible under the law---Department had given a differential treatment to the appellant which amounted to act of discrimination under Arts. 4 & 25 of the Constitution---Appellate Tribunal vacated the show-cause notice and set aside the order passed thereon.

2002 SCMR 312; 2009 PTD 1507; 2005 SCMR 492 and 2010 SCMR 431 foll.

Nadeem Ahmed Mirza for Appellant.

Ghulam Mustafa Kathia, A.O. for Respondents.

2019 P T D (Trib.) 365

[Customs Appellate Tribunal]

Before Muhammad Nadeem Qureshi, Member (Judicial-I) and Muhammad Nazim Saleem, Member (Technical-II)

Messrs SAA IMPORT AND EXPORTS and 4 others

Versus

THE DIRECTOR GENERAL and another

Customs Appeals Nos.K-388 to K-390, K-490 and K-1416 of 2017, decided on 27th February, 2018.

(a) Customs Act (IV of 1969)---

----Ss. 25, 25-A & 25-D---Customs value of goods---Determination---Importers, being aggrieved from Valuation Ruling by Director General Customs Valuation, filed a revision application with Director (Valuation), contending that despite determination of prices under S.25 of the Customs Act, 1969, Director General Customs Valuation committed a grave illegality in addition to discrimination with the importers, in increasing the value in comparison to earlier valuation rulings---Importers were neither called nor been noticed for their participation before Director General Customs Valuation and order in revision was passed in persona creating the order in rem---Director General, Customs Valuation, could exercise powers and discharge duties under Ss.25-A & 32 of Customs Act, 1969---Subsection (3) of S.25-A of the Customs Act, 1969, empowered the Director General Customs Valuation to determine the customs value of imported goods in case of any conflict in the customs value determined under S.25 of the Customs Act, 1969---Impugned orders passed by the authorities to govern the procedure of adjudication had no warrant under the law, and derogatory from the statutory provisions of law as envisaged under S. 25-D of the Customs Act, 1969---Order-in-revision passed by the Director General Customs Valuation, having no adherence with the statutory requirements; being derogatory to the specific provisions of S.25-D of the Customs Act, 1969, was declared as without lawful authority and was set aside by the Appellate Tribunal.

S.M. Naqi son of Syed Muhammad Hussain, Karachi v. Collector of Customs (Adjudication-I) and others Customs Reference No.157 of 2008; AIR 1954 SC 747; AIR 1963 SC 1811; AIR 1970 SC 1453; AIR 1971 SC 1017; PLD 2005 SC 193; 2002 SCMR 312; 2009 PTD 1507; 2005 SCMR 492 and Khyber Tractors (Pvt.) Ltd. v. Government of Pakistan PLD 2005 SC 482 ref.

(b) Jurisdiction---

----If the mandatory condition for exercising of jurisdiction by a court, Tribunal or Authority is not fulfilled then the entire proceedings to follow would become illegal and suffer from want of jurisdiction---Any order passed in continuation of said proceedings or revisions equally would suffer from illegalities and would be without jurisdiction.

Abdul Latif for Appellants (C.As. Nos. K-388 to K-390 of 2017).

Nadeem Mirza for Appellant (C.As. Nos. K-490 and K-1416 of 2017).

Allison Stephen, P.A. for Respondents.

2019 P T D (Trib.) 469

[Customs Appellate Tribunal]

Before Syed Tanvir Ahmed, Member Technical-III

FATIMA INDUSTRIES (PVT.) LTD., KARACHI

Versus

DEPUTY COLLECTOR and 2 others

Customs Appeal No.K-448 of 2018, decided on 30th August, 2018.

(a) Customs Act (IV of 1969)---

----Ss.79, 32, 45, 25(1) & 166---Customs Rules, 2001, Rr. 113 & 433---Customs General Order No. 12 of 2002 dated 12.06.2002 Para.78---S.R.O. No.499(I)/2009 dated 13.06.2009---Declaration---False statement---Knowledge of declarant---Scope---Transaction value of imported goods---Determination---Power to summon persons to give evidence and produce documents---Scope---Method of valuation---Price actually paid or payable---Import General Manifest---Shipping Company, duty of---Issuance of show-cause notice---Procedure---Appellant imported old and used crimping machine at declared value of US $ 2000 whereas invoice of a higher value of US $ 20,000 was found in the container---Deputy Collector of Customs (Adjudication) vide order-in-original confiscated the machine, imposed redemption fine and personal penalty---Appeal filed before Collector of Customs (Appeals) was dismissed---Validity---Appellant had produced a letter of supplier in which it was stated that its staff negligently made mistake by typing wrong value of US $ 20,000 in invoice instead of correct value---Department rejected the document of supplier but did not verify the letter or send email or conducted inquiry to confirm its veracity---Invoice found in the container could not be treated as direct evidence---Invoice did not qualify as "transaction value" in the absence of any evidence or proof---Appellant/importer was not responsible for invoice found in the container he had no knowledge of said invoice, therefore there was no reason to believe that the declaration submitted by him was false in material particulars---Shipping companies were to place invoice of the shipped goods for filing Import General Manifest---Appellate Tribunal allowed the appeal and vacated the show-cause notice.

Fazal Kader Chowdri v. Crown PLD 1952 FC 19 ref.

(b) Customs Rules, 2001---

----Rr. 113 & 433---Customs General Order No. 12 of 2002 dated 12.06.2002, Para. 41---Customs Act (IV of 1969), S. 223---Constitution of Pakistan, Arts. 18 & 25---Imports declaration---Method of valuation---Price actually paid or payable---Valuation of second hand machinery---Officers of Customs to follow Federal Board of Revenue's orders---Freedom of trade---Discrimination among importers---Scope---Appellant imported old and used crimping machine at declared value of US $ 2000 whereas invoice of a higher value of US $ 20,000 was found in the container---Department assessed his imported old and used machinery at the rate of US $ 38.46/kg for levy of duty and taxes as against his competitors whose old and used machinery of the same origin had been assessed for levy of duty and taxes at the rate of US $ 1.4 to 1.46/kg depending on their condition---Attitude of department negated the level playing field for maintaining of healthy and fair competition---Assessment of other importer's consignments of the same origin for payment of lesser amount of duty and taxes as against appellant was infringement of his fundamental rights, being in derogation of Art. 18 of the Constitution---Determination of value for levy of duty and taxes of the imported old and used machinery under any other method contrary to Para. 41 of Customs General Order No. 12 of 2002 dated 12.06.2002 was a nullity, tantamounting to defiance of the order of the Federal Board of Revenue---Adherence to the instructions, directions and orders of the Board was mandatory on the field formations during the performance of their prescribed duty in terms of S. 223, Customs Act, 1969---No defiance was permitted under any pretext or circumstances---Deviation from orders rendered the whole proceedings without lawful authority and jurisdiction---Machinery was ordered to be assessed on the basis of 90 days data and invoice value---Appeal was allowed accordingly.

2010 SCMR 431 ref.

2002 PTD 976; 2002 SCMR 312; 2009 PTD 1507; 2005 SCMR 492; Syed Muhammad Razi v. Colletor of Customs, (Appraisement) Karachi and 2 others 2003 PTD 2821 and Muhammad Waheed v. Customs Appellate Tribunal 2016 PTD 35 foll.

(c) Customs Act (IV of 1969)---

----Preamble---Declaration---Meaning---Declaration referred to the nature, description and value of goods so that assessing officer could apply appropriate tariff rate for assessment and charging of duty and taxes levied thereon.

Vithoba Syamna v. Union of India AIR 1957 Bom. 321 ref.

Nadeem Ahmed Mirza for Appellant.

Wasif Ullah for Respondents.

2019 P T D (Trib.) 615

[Customs Appellate Tribunal]

Before Muhammad Nadeem Qureshi, Member Judicial-I, Tahir Zia, Member Judicial-II and Muhammad Nazim Saleem, Member Technical-II

Messrs MASROOR HUSSAIN and 4 others

Versus

DIRECTOR GENERAL OF P.C.A. and 2 others

Customs Appeals Nos.K-928 to K-931 and K-971 of 2013, decided on 13th July, 2016.

Per Muhammad Nazim Saleem, Member Technical-II; Tahir Zia, Judicial Member-II dissenting. [Minority View]

(a) Customs Act (IV of 1969)---

----Ss. 25, 32, 79, 80 & 83---S.R.O. No.165(I)/2011, dated 3-3-2011---S.R.O. No. 42(I)/2010 dated 23-1-2010---Pakistan Customs Tarrif Heading 2202.1010, & Heading 2202.9000---Determination of customs value of goods---Misdeclaration of classification of goods---Import of "Aerated Water/Drinks" against goods declaration, which were correctly classified under PCT Heading 2202.1010 chargeable to Federal Excise Duty at 12% of the retail price---Goods were imported through Collectorate of MCC of "Pakistan Automated Customs Clearance System" (PACCS) by declaring incorrect PCT 2202.9000 without payment of Federal Excise Duty---Additional Collector of Customs adjudicated the case and passed order-in-original holding that importer by misdeclaring the classification had deprived the Government of its legitimate revenue and ordered importer to deposit all taxes under the law with penalty within specified period---Appeal against order-in-original was rejected by Collector of Customs (Appeals)---Central issue involved in the case pertained to classification of soft drink (Pepsi, Dew, 7-Up etc.)---Importer classified the same under PCT Heading 2202.9000; whereas the department's contention was that same were classified under PCT Heading 2202.1010, which besides duty and taxes also attracted Federal Excise Duty at 12% of the retail price---Department's case was that importer deliberately misdeclared classification in order to avoid payment of Federal Excise Duty, despite the fact that there was clear PCT classification (by description) of aerated water viz 2202.1010---Department's contention was that the imported goods namely soft drink fell under PCT Heading 2202.1010 attracting Federal Excise Duty at 12% of the retail price---Plea of the importer was that system of 'Paccs' had cleared their goods declarations which would mean that declaration made in goods declaration were correct---Validity---Importers had not given technical point/reason to justify their claim for PCT Heading 2202.9000 whereas department laid emphasis that "Soft drinks" passed through process of inclusion of carbon dioxide, were aerated waters which had specific PCT classification namely 2202.1010 attracting levy of Federal Excise Duty at 12% of the retail price besides duty/taxes---Importer had contended that S.32(2) of the Customs Act, 1969, was not attracted in the case as there was no misdeclaration on their part---Importer had filed goods declaration and self-assessed their goods as per S.79(1)(b) of the Customs Act, 1969 and then the inbuilt system of "PaCCs" had cleared the same under S.80 of the Customs Act, 1969 without any allegation---Impugned order-in-appeal was upheld, in circumstances. [Minority View]

[Case-law referred].

Per Tahir Zia, Member (Judicial-II); Muhammad Nadeem Qureshi, Judicial-I, agreeing. [Majority View]

(b) Customs Act (IV of 1969)---

----Ss. 25, 32, 79, 80, 83, 193 & 198---PCT Heading 2202.1010, PCT Heading 2202.9000---Customs Rules, 2001, Rr.433, 435 & 438---Determination of customs value of goods---Mis-declaration of classification of goods---Importers transmitted goods declaration under S.79(1) of the Customs Act, 1969 and R.433 of Customs Rules, 2001 with the MCC of 'PaCCs', containing description of goods as aerated soft drink, under PCT Heading 2202.9000 which were selected either by the system directly for assessment or examination in terms of S.198 of the Customs Act, 1969 and R.435 of Customs Rules, 2001---Assessing Officer passed assessment order under S.80 of the Customs Act, 1969 and R.438 of Customs Rules, 2001 and communicated the messages to the importers for payment of additional amount of duty and taxes or filing review against the assessment order---Assessing Officer had doubt about the declaration, and suggested for conduction of examination under the respective section/Rule and referred the same to the Assistant/Deputy Collector of the Group for endorcement after affirmation of the said fact---Goods declaration were referred for examination and the officer of the Customs posted at the Terminal, after examining of the goods physically, posted the report in the system, prominently indicating the drinks namely Pepsi, Dew, Miranda, 7-Up etc. for perusal of the Assessing Officer---Assessing orders in the goods declaration corresponding to appeals had been passed by the competent authority under S.80 of the Customs Act, 1969 on the basis of entire declaration after receipt of examination report---Assessment order was validly passed by competent authority---Collector of Customs of clearance Collectorate and Additional Collector of Customs were not allowed to take a complete U-turn at belated stage start adjudication of past and closed transactions through issuance of show-cause notices and adjudication orders under S.179 of the Customs Act, 1969, where a lawful course had been prescribed by the legislature in S.195 of the Customs Act, 1969 for reopening of such decisions or orders by Board of Collectors---Order or decision passed or taken by the subordinate Officer could only be corrected in revisional power and not under S.32 of the Customs Act, 1969---When the consignments were released on the basis of commercial documents and physical examination by the examining and assessing officer, the charge subsequently levelled against the importers under S.32 of the Customs Act, 1969 were unsubstantiated---Framing of contravention report by Director General, and forwarding that to Collectorate as well as issuance of show-cause notice and subsequently passing order-in-original were act of assumption of wrong jurisdiction---Order-in-appeal passed by Collector of Customs (Appeal), had no nexus with the show-cause notice or grounds of memo. of appeal---Said act of Collector of Customs (Appeal) was sufficient to prove that he had travelled beyond the scope of show-cause notice, which was not permitted under the law---Decisions on the basis of fact, not incorporated in the show-cause notice and grounds of appeal, would be deemed to be palpably illegal---Whole proceedings were infested with inherent legal infirmities and substantive illegalities, tantamounted to patent violation of mandatory statutory provisions---Order passed by Collector of Customs (Appeal) was without power/jurisdiction, hence, ab initio void and coram non judice by virtue of the fact that all of them ignored provisions of law and law settled by superior courts---Conduction of audit and preparation of contravention report by Director General, PCA, and show-cause notice and passing of order-in-original as well as order-in-appeal by Additional Collector of Customs and Collector of Customs (Appeal) respectively, were ab initio, illegal and void and of no legal effect---Same were annulled and set aside---Appeals were allowed accordingly. [Majority View]

[Case-law referred].

Per Muhammad Nadeem Qureshi, Member Judicial-I agreeing with Tahir Zia, Judicial Member II. [Majority View]

(c) Customs Act (IV of 1969)---

----Ss. 25, 32, 79, 80, 83, 193, 194 & 194-A---Constitution of Pakistan, Art.4---Determination of customs value of goods---Mis-declaration of classification of goods---Passing order in excess of jurisdiction---Provisions of Ss.193(1) & 194(1) of Customs Act, 1969, were amended through Finance Act, 2012; by virtue of said amendment, appeals filed against the order passed by Additional Collector stood ousted from the Collector of Customs (Appeals) jurisdiction w.e.f. 1-7-2012; resultantly, appeal lying with Collector of Customs (Appeals) against the orders of Additional Collector, had to be decided by him on or before 30-6-2012, and in case of non-decision by 30-6-2012, it was mandated upon him to transfer the appeals to Customs Appellate Tribunal to whom jurisdiction was assigned by the legislature under S.194-A of the Customs Act, 1969 w.e.f. 1-7-2012---Collector of Cusoms (Appeals) to the contrary, passed order dated 4-7-2013; rendering the order so passed in excess of jurisdiction and as such void ab initio and coram non judice---Assumption of jurisdiction by Collector of Customs (Appeals) in the present matter, was against said provision of law---No forum could take cognizance of a matter beyond its jurisdiction, prescribed in the relevant law---Inherent defect, could not be cured to defeat the provisions of statute or enactments effecting the jurisdiction of the forum---Every citizen had in alienable right to have protection of law and be treated in accordance with law in terms of Art.4 of the Constitution---Order passed against a person by any forum against express provisions of law on the subject, if allowed to be stayed in tact, would cause serious prejudice to the legal right of citizen---When a forum/court would suffer from want of inherent jurisdiction, no act or consent or acquiescence in the proceedings could vest such forum/court with such jurisdiction---No question of waiver or estopal was attracted in such circumstances---Order passed or an act done by the court or the Tribunal, incompetent to entertain proceedings, was without jurisdiction---Jurisdictional defect could not be removed by mere conclusion of proceedings of passing of order-in-original and order-in-appeal---Decision on the basis of facts/grounds not incorporated in the show-cause notice, would be deemed to be palpably illegal---Collector of Customs (Appeals) passed order-in-appeal on alien facts which had no nexus, either with charter of show-cause notice or the grounds of memo of appeal---Case of importers revolved around the import of cold drinks (aerated water) and the order of Collector of Customs (Appeals) spoke out "Non Alocoholic Bear"---Said act of Collector of Customs (Appeals) proved that he travelled outside the charter of show-cause notice, not permitted under law. [Majority View]

[Case-law referred].

(d) Administration of justice---

----When a law required an act to be done in a particular manner, it had to be done in that manner alone, not otherwise---Being custodian of law, it was the duty of the court to follow the legal obligation and interpretation made thereon by the courts as well as the legislature---Observations of the higher Courts and the intention of the Legislature and interpretations, which led to manifest the absurdity, was to be avoided---Courts were under statutory obligations to supply the omission with a view to prevent the defeat of the very objects of the rules, and could fill in the gaps, in a piece of legislature, when plain construction would lead to absurd results---Responsibility of the Court to give effect to the true and patent intentions of law makers and to supply the omissions in order to avoid and prevent the manifest and try to follow undoubted intentions of the legislation.

[Case-law referred].

(e) Interpretation of statutes---

----Interpretation which was more in consonance with the avowed policy decipherable from its title and Preamble of the statute, was to be preferred to an interpretation with a view to avoid to abridge abrogate or infringe those rights which had accrued in favour of the parties by any mean.

Nadeem Ahmed Mirza for Appellant.

Rizwan Mahmood, Deputy Collector, Arif Maqbool, Senior Auditor and Faiz Mudassir, A.O. for Respondents.

2019 P T D (Trib.) 704

[Customs Appellate Tribunal]

Before Muhammad Nadeem Qureshi, Member Judicial-I

Messrs EMRAN MOMIN TOKHI LTD. through Representative

Versus

The PRINCIPAL APPRAISER and 2 others

Customs Appeal No.K-980 of 2016, decided on 23rd October, 2018.

(a) Customs Act (IV of 1969)---

----Ss. 129 & 180---Customs Rules, 2001, R. 473---Afghanistan Pakistan Transit Trade Agreement, 2010, Art. 3, Para 2---Transit trade---Processing of Afghan Transit---Trade---Misinformation---Show-cause notice---Procedure---Jurisdiction of customs authorities---Scope---Appellant, importer of Afghanistan, imported miscellaneous goods and transmitted Transit Trade Information---Examination of goods transpired that their weight and quantity was in excess to the information---Deputy Collector of Customs (Adjudication) issued show-cause notice and ordered for confiscation of goods, for submission of insurance guarantee and imposed penalty---Collector of Customs (Appeals) dismissed the appeal against aforesaid order---Validity---If any discrepancy was found in documents or goods corresponding to Transit Trade Information during the course of scrutiny or upon examination, said fact had to be reported to Directorate General of Transit Trade for initiation of legal proceedings, by virtue of the fact that the goods had to be transited without levy of duty and taxes---No consequences flow in the entire procedure for exchequer of Pakistan---Directorate General of Transit Trade could take cognizance of any discrepancy in the documents/goods and it was competent to issue show-cause notice to the clearing agent of the importer of Afghanistan for seeking justification of the discrepancy and if no convincing explanation was given, pass an observation for preparation of complaint for submission with the Ministry of Commerce, Pakistan, for onward submission with the Ministry of Commerce, Afghanistan, for placing before Afghanistan Pakistan Co-ordination Authority in terms of para. 2 of Art. 3 of Afghanistan Pakistan Transit Trade Agreement, 2010---Appellate Tribunal vacated the show-cause notice and set aside the orders passed thereon---Appeal was allowed accordingly.

(b) Administration of justice---

----Public functionaries---Jurisdiction---Superior officer is not empowered to exercise quasi judicial powers of his subordinate in the matter of adjudication.

(c) Customs Act (IV of 1969)---

----Ss. 2(la) & 129---"Goods Declaration and Transit Trade Information"---Distinction---Scope---Documents transmitted to the Directorate General of Transit Trade for transit of the goods through Customs Computerized System is not "goods declaration" as defined in S. 2(la), Customs Act, 1969---Documents transmitted for transit under the provision of S. 129, Customs Act, 1969 cannot be construed as a "goods declaration" under any pretext or even through inapt interpretation.

(d) Customs Act (IV of 1969)---

----Ss. 2(s), 129 & 156(1)(64)---Customs Rules, 2001, Rr. 484Q & 484D---Afghanistan Pakistan Trade Transit Agreement, 2010---Transit trade---Removing of goods from terminal---Pilferage of goods during the course of transit---Non-submission of Cross Border Certificate---Smuggling---Scope---Clause 64 of S. 156(1), Customs Act, 1969 and R. 484Q, Customs Rules, 2001 are applicable only in such situation wherein the importer of Afghanistan or his clearing agent removes the goods from the terminal/port in clandestine manner without completion of formalities of transit trade envisaged in Afghanistan Pakistan Transit Trade Agreement, 2010 or pilfered those during the course of transit or wherein Cross Border Certificate was not submitted along with verification of the Afghanistan Government as per expression of clause (b) of R. 484D(1) of the Customs Rules, 2001---Concerned person shall be charged under S. 2(s) & S. 129, Customs Act, 1969 and shall be awarded punishment for criminal intent under Cl. 64 of S. 156(1), Customs Act, 1969.

(e) Customs Act (IV of 1969)---

----Ss. 32 & 32A---Mis-declaration---Fiscal fraud---Scope---Where there is no revenue loss, provisions of S.32(1)(2) or 32A, Customs Act, 1969 cannot be invoked. [p. 716] G

PLD 1996 Kar. 68; 2003 PTD 52 and 2007 PTD 2215 ref.

(f) Customs Act (IV of 1969)---

----Ss. 168, 79 & 129---S.R.O. No. 499(I)/2009 dated 13.06.2009---Seizure of things liable to confiscation---Declaration and assessment for home consumption---Transit trade---Scope---S.R.O. No.499(I)/2009 dated 13.06.2009 has no application to the transited goods.

(g) Administration of justice---

---Thing should be done as it is required to be done or not at all.

2002 PTD 2457; PLD 1971 SC 61; PLD 1973 SC 236; PLD 1964 SC 536; 2003 SCMR 1505; Director General of Intelligence and Investigation and others v. Messrs Al-Faiz Industries (Pvt.) Ltd. and others 2006 SCMR 129; PLD 1996 Kar. 68; 2006 PTD 978 and PLD 1971 SC 184 fol.

Nadeem Ahmed Mirza for Appellant.

Raja Shakeel for Respondents.

Date of hearing: 13th September, 2018.

2019 P T D (Trib.) 739

[Customs Appellate Tribunal]

Before Syed Sardar Hussain Shah, Member (Judicial)

SHAFI ULLAH

Versus

ADDITIONAL COLLECTOR OF CUSTOMS (ADJUDICATION), PESHAWAR and 2 others

Appeal No. Cus. 12/PB of 2016, decided on 1st August, 2018.

Customs Act (IV of 1969)---

----Ss. 2(s), 16, 156(1)(8), 156(1)(89), 168, 179 & 187---Imports and Exports (Control) Act (XXXIX of 1950), S.3---Smuggling---Seizure and confiscation---Accused an Afghan national, was apprehended near the Boarder allegedly smuggling Pakistan currency, out of Pakistan---Additional Collector of Customs (Adjudication) vide order-in-original confiscated the recovered currency---Validity---Appellant was an Afghan national and had entered into Pakistan through valid documents---Nothing was available on file to ascertain that the appellant's intention was to go out of Pakistan---No doubt burden of proof as to the lawful possession of the goods was on the person committing offence under S.187, Customs Act, 1969, but said section came into force when the initial burden of commission of an offence was discharged by the prosecution---Order passed by the adjudicating authority was set aside by the Tribunal.

Muhammad Hayat Khan for Appellant.

Muhammad Zahid, Superintendent/D.R. for Respondents.

Date of hearing: 1st August, 2018.

2019 P T D (Trib.) 800

[Customs Appellate Tribunal]

Before Muhammad Nadeem Qureshi, Member (Judicial -I) and Dr. Zulfiqar A. Malik, Member (Technical-I)

UNIVERSAL AUTO ENGINEERING

Versus

The DIRECTOR GENERAL and 2 others

Customs Appeal No.K-837 of 2018, decided on 23rd October, 2018.

(a) Customs Act (IV of 1969)---

----S. 25---Customs value---Determination---Sequential order---Scope---Customs value has to be determined after following the methods laid down in S. 25, Customs Act, 1969---Valuation methods are provided under subsections (1), (5), (6), (7) & (8) of S. 25 Customs Act, 1969, which are set out in a sequential order of application---Where the customs value cannot be determined under subsection (1) of S. 25 of the Act, it is to be determined by proceeding sequentially through the subsequent methods---If the importer does not request reversal of orders of methods under subsection (7) and subsection (8) of the said S.25, the normal order of the sequence is to be adhered to---Phraseology of the methods and the application thereof is so intertwined that there is no escape from sequential application---Slight leverage has provided under subsection (1) of S. 25 to choose a method of determination, however it cannot be applied at random. [p. 821] A

(b) Customs Act (IV of 1969)---

----S. 25---Customs Rules, 2001, Rr. 110 & 121---Customs value---Determination---Fall back method---Scope---Application of fall back method is not unbridled, first of all it has to be established that all the valuation methods when applied in sequential order could not yield result---Fall back method allows application of any of previous methods in a flexible manner---Under no circumstances fall back method suggests departure from scheme of determination of value provided under subsections (1), (5), (6), (7) & (8) of S. 25, Customs Act, 1969---Said method only permits reasonable degree of flexibility in application of a method chosen from the provided methods to determine customs value, however, the customs value so determined shall, to the greatest extent possible, be based on previously determined customs values of identical goods---In addition, the application of fall back method is subject to Rules---Explanation of reasonable flexibility provided in R. 121, Customs Rules, 2001, also pertains to only three methods that is identical goods, similar goods and deductive method which entails that there is no probability of reasonable flexibility under transaction value method and computed method---While determining customs value fall back method or for that purpose under any method, it is prohibited to apply arbitrary or fictitious value--Same is provided under R. 110 of Customs Rules, 2001.

(c) Customs Act (IV of 1969)---

----Ss. 25 & 25A---Customs Rules, 2001, Rr. 110 & 121---General Clauses Act (X of 1897), S. 24A---Customs value---Determination---Fall back method---Sequential order---Scope---Director of Customs (Valuation) determined customs value for Rear Engine Intercity CBU Buses---Revision filed against valuation ruling was dismissed---Validity---Customs value of Rear Engine Intercity Buses had been determined under S. 25(9), Customs Act, 1969---Director Valuation brushed aside all methods of valuation and jumped over to subsection (9) of S.25, Customs Act, 1969 for determination of value---Valuation Ruling as well as the order-in-revision, revealed that transaction value method was found inapplicable---Valuation ruling ascribed, wide variation in values declared to customs as the only reason, whereas the revision order stated that relevant supporting documents were not provided by the importer---Director Valuation did not elaborate the reasons to reject the transaction value---In view of the presence of verifiable import data, coupled with load port GD's there was no reason to reject identical goods method and similar goods method in one sentence---Reason provided for such rejection was again wide variation in declared values of subject goods---No scope or concept of declared value existed under S. 25 or 25A of the Customs Act, 1969---Whole scheme of valuation of goods was based upon transaction value---If transaction value of imported goods could not be determined then the transaction value of identical or similar goods in that order would be the customs value---Valuation ruling must be a speaking order, as per mandatory requirement of S. 24-A, General Clauses Act, 1897---Valuation ruling and order-in-revision lacked the warrant of law, therefore, same was declared as void and illegal.

Shahzad Ahmad Corporation v. Federation of Pakistan 2005 PTD 23; 2002 PTD 2457; PLD 1971 SC 61; PLD 1973 SC 236; PLD 1964 SC 536; 2001 SCMR 838; 2003 SCMR 1505; Director General of Intelligence and Investigation and others v. Messrs Al-Faiz Industries (Pvt.) Ltd. and others 2006 SCMR 129; PLD 1996 Kar. 68; 2006 PTD 978; PLD 1971 SC 184 and Collector of Customs v. Abdul Majeed Khan and others 1997 SCMR 371 ref.

Sadia Jabbar v. Federation of Pakistan 2018 PTD 1746 and Triple M. (Pvt.) Ltd. v. Federation of Pakistan 2002 YLR 2792 ref.

(d) Customs Act (IV of 1969)---

----Ss. 25A & 25---Customs value, determination of---Predetermination of customs value---Transaction value---Group under-invoicing---Determination---Fixation---Scope---Section 25A permits but it does not mandatorily require, predetermination of customs value---Principal method of determining customs value is, and must remain with S. 25 of the Act---Section 25A of the Customs Act, 1969 is not intended to be a substitute for S. 25 of the Act nor can it be resorted to in such manner and with such frequency that it marginalizes the latter provision---Section 25A is merely an adjunct to S. 25 of the Act to be resorted to in particular circumstances and for an appropriate period---Intention of legislature in enacting S. 25A, was not to create a statutory bye-pass to the Valuation Agreement---Issuance of valuation ruling under S. 25A cannot be regarded as limited only to those cases where the Department concludes that there is group under-invoicing, the section also cannot be used for the wholesale determination of customs value---Such an approach would, in effect, transform the "determination" permissible under S. 25A to an impermissible "fixation" of value, which in essence would be violative to Valuation Agreement.

Muhammad Arif Moton and Muhammad Adnan Moton for Appellants.

Muhammad Aslam, Principal Appraiser Valuation along with M. Iqbal V.O. for Respondents.

Date of hearing: 16th October, 2018.

2019 P T D (Trib.) 834

[Custom Appellate Tribunal]

Before Muhammad Nazim Saleem, Member Technical-II

Messrs PAK INTERNATIONAL

Versus

DEPUTY COLLECTOR OF CUSTOMS and another

Customs Appeal No. K-1073 of 2016, decided on 3rd November, 2017.

Customs Act (IV of 1969)---

----Ss. 25, 32 & 79---Mis-declaration---Declaration of home consumed goods under self-assessment system in terms of S.79 of the Customs Act, 1969---Said declaration was processed under first appraisement system; goods were re-assessed in presence of staff of Collectorate's Intelligence Unit---In view of variation in both the examination reports, goods were re-examined in the presence of Additional Collector of Customs---Facts on record depicted that the importer, had willfully and deliberately mis-declared the description and PCT heading; some undeclared items were also detected; besides, excess weight of goods was found in order to evade payment of duty and taxes---Adjudicating official vide order-in-original, held that the charges against the importer were established---Stance taken by the importer was that it was a case of "Tripple Jeopardy" as department had thrice examined his consignment and thrice assessed the same customs duty and taxes; that consignment was allowed "out of charge" by the customs authorities, but after that authorities blocked the consignment by instructing the Terminal Incharge of the Port; that goods having been allowed "out of charge" by the Customs Officers, it was a past and closed transaction; that department was not legally authorized to re-examine the consignment and re-assess the same to duty and taxes and that only option left with the department was to file appeal against the assessment order---Validity---Consignment, though was allowed "out of charge" but it had not left the port premises due to the reason that the customs authorities had put the consignment under 'hold' in the automated system of 'WeBOC'---On the issue of mis-declaration of weight, the importer had not been able to putforth any convincing ground in the defence---Final examination having been carried out under the personal supervision of a senior officer of Customs, no ground existed at all to cast any doubt on the intention of the said officer---Provisions of Customs Act, 1969, were unambiguously applicable for collection, payment and recovery of short levied/short paid amount of sales tax---Customs Officers, were fully competent to, not only collect sales tax at import stage, but also to make recovery of the short-levied/short-paid amount and were also competent to invoke relevant provision of the Sales Tax Act, 1990 and Income Tax Ordinance, 2001---No ground existed to interfere with the impugned order-in-original, same was held to be a lawful order.

[Case law referred].

Nadeem Ahmed Mirza and Mirza Abeer for Appellant.

Abdul Rasheed, Principal Appraiser for Respondents.

Date of hearing: 11th July, 2017.

2019 P T D (Trib.) 876

[Customs Appellate Tribunal]

Before Syed Sardar Hussain Shah, Member (Judicial)

COLLECTOR OF CUSTOMS, MODEL CUSTOMS COLLECTORATE, PESHAWAR

Versus

TAWAB JAN and another

Appeal No. Cus. 381/PB of 2017, decided on 13th March, 2018.

Customs Act (IV of 1969)---

----Ss. 2(s), 16, 156(1)(8)(89) & 168---Seizure of allegedly smuggled goods---Staff of Customs Intelligence and Special Checking Squad intercepted a Truck carrying foreign auto parts---Driver of the Truck having failed to produce any proof regarding legal import of said goods, same were seized under S.168 of the Customs Act, 1969---Additional Collector of Customs (Adjudication), vide order-in-original, released said goods---Validity---Goods in question were imported after payment of leviable duties and taxes which were cleared through goods declaration---Said goods being on way in the Truck were seized---Said goods were legally imported and cleared from Dryport---Goods in question were rightly released to rightful owner unconditionally---No illegality and irregularity was noticed in the order-in-original---In absence of any misreading and non-reading of evidence, impugned order was upheld and appeal was dismissed.

Musa Khan, Superintendent Customs for Appellant.

Muhammad Rafiq Khan for Respondents.

Date of hearing: 13th March, 2018.

2019 P T D (Trib.) 1006

[Customs Appellate Tribunal]

Before Syed Sardar Hussain Shah, Dr. Syed Muhammad Anwar, Members (Judicial) and Qurban Ali Khan, Member (Technical)

Messrs GADOON TEXTILE MILLS LTD.

Versus

COLLECTOR OF CUSTOMS MODEL CUSTOMS COLLECTORATE, PESHAWAR and another

Cus. No.245/PB of 2016, decided on 3rd April, 2018.

Per Qurban Ali Khan, Member (Technical) Syed Sardar Hussain Shah Hussain, Member

(Judicial) not agreeing [Minority view]

(a) Customs Act (IV of 1969)---

----Ss. 156(1)(10-A)(14), 18, 19 & 32(3A)---Customs Rules, 2001, R. 307A---Violation of condition in respect of exempted goods---Short-levied duty---Unaccounted-for un-exported goods---Show-cause notice---Scope---Department during post exportation audit of DTRE approval observed that the appellant/unit had deposited duty/taxes on the left-over quantity of goods not consumed during the validity period of DTRE on concessionary rates---Collector of Customs (Adjudication) assessed the left-over quantity of DTRE bond to statutory duty---Validity---Appellant had two options under the DTRE rules; firstly, either it could have sought extension from the concerned authority for utilization of the goods in question for manufacturing; secondly, appellant could have sold out those goods to another DTRE user without payment of duty and taxes---Appellant did not exercise any of the said two options, but used one concessionary regime, which was DTRE and hence, could not avail another exemption notification at the same time for the same goods---Appellant had sold out the goods in question in open market at market price and did not deserve to claim concessionary treatment, as the benefit of exemption could not be extended to local market---Concessionary notification, which appellant could have availed for local disposal of goods related to import stage, had already passed in the case---Appellant having obtained permission of the Regulatory Collector before local sale of goods, mala fide could not be attributed to the appellant---Appeal was allowed to the extent of imposition of penalty. [Minority view]

Per Syed Sardar Hussain Shah, Member Judicial and Dr. Syed Muhammad Anwar, Member Judicial agreeing [Majority view]

(b) Customs Act (IV of 1969)---

----Ss. 156(1)(10-A)(14), 18, 19 & 32(3A)---Customs Rules, 2001, Rr. 307A, 352(6a)---SRO 450(I)/2001 dated: 18.06.2001---SRO No.567(I)/2006 dated: 05.06.2006---Sales Tax Act (VII of 1990), S.4---SRO No. 1125(I)/2011 dated: 31.12.2012---Income Tax Ordinance (XLIX of 2001), Second Schedule, Part II, Clause (9C) [since omitted]---Violation of condition in respect of exempted goods---Short-levied duty---Ex-bond Goods Declaration---Unaccounted-for un-exported goods---Show-cause notice---Scope---Appellant was a DTRE user who applied for import of raw material, which could be used for manufacturing products for export---Appellant was allowed exemption from payment of duty and taxes and he imported the goods---Bond wherein raw material was stored remained suspended for a considerable period by Customs Authorities due to certain cases, which were decided by the Federal Board of Revenue in favour of the appellant---Meanwhile, appellant lost his client in the international market---Appellant applied for ex-bonding of raw material imported under manufacturing bond in DTRE scheme against just payment of leviable taxes and duty---Model Customs Collectorate allowed clearance of goods subject to payment of leviable duty/taxes including additional duty/taxes---Appellant paid customs duty at the rate of 6 percent, sales tax at the rate of 2 percent and advance income tax at the rate of 1 percent against clearance of bonded goods for home consumption/local sale---Audit was conducted and no objection was raised---Audit report was re-examined and it was found that appellant had deposited duty and taxes on concessionary rates and not on statutory rates---Validity---Appellant had applied to Customs Authorities for release of balance quantity of staple fiber, which was allowed---S.R.O. No.567(I)/2006 dated: 05.06.2006, Serial No. 124 of Table (ii) under H.S. Code No. 5503-2010 provided customs duty at the rate of 6 percent on the goods in question---SRO No. 1125(I)/2011 dated: 31.12.2012 provided leviable duty of sales tax at the rate of 1 percent for manufacturer---Clause (9C) of Part II, Second Schedule of Income Tax Ordinance, 2001 provided the payable income tax at the rate of 1 percent---Objection that appellant had availed benefits/concessions/ exemptions of two schemes simultaneously was misconceived--- Appeal was allowed and order of Collector of Customs (Adjudication) was set aside.

(c) Customs Act (IV of 1969)---

----S. 179---Power of adjudication---Show-cause notice---Delay of 270 days---Order on show-cause notice was passed after 270 days of its issuance---Plea of department was that technicalities of law should not be allowed to impede the interest of justice or should become an insurmountable hurdle for that purpose---Validity---Mandate and compliance of law was not a technicality, rather it was a stipulation of law, which had to be adhered to and complied with in letter and spirit.

(d) Constitution of Pakistan---

-----Art. 4---Right of individuals to be dealt with in accordance with law---Scope---Every person had to be dealt in accordance with law and it was an inalienable right of every citizen to be so dealt with.

Istiaq Ahmad for Appellant.

Muhammad Azeem, Supdt. and Fayaz Khattak, Inspector for Respondents.

Date of hearing: 29th January, 2018.

2019 P T D (Trib.) 1045

[Customs Appellate Tribunal]

Before Muhammad Sajid Abbasi, Member (Judicial-II)

BADAR COMPUTER ENTERPRISES

Versus

The DEPUTY COLLECTOR OF CUSTOMS and 3 others

Customs Appeal No.K-1783 of 2016, decided on 5th September, 2018.

(a) Customs Act (IV of 1969)---

----Ss. 186, 179, 168, 180, 83 & 80---Customs Rules, 2001 Rr. 438 & 442---Import Policy Order, 2013, Appendix G---S.R.O. No. 371(I)/2002, dated 15-06-2002---Detention of goods pending payment of fine or penalty---Power of adjudication---Seizure of things liable to confiscation---Show-cause notice---Checking of goods declaration by Customs---Clearance of goods---Assessment---Release of imported goods---Scope---Appellant imported consignment comprising of several kinds of fabric---Appellant filed goods declaration, assessing officer examined the goods and passed assessment orders---Inbuilt delegated authority of Customs Computerized System (CCS) passed clearance order in terms of S. 83, Customs Act, 1969---Appellant approached the terminal operator for delivery of goods who showed his inability to deliver due to the fact that Deputy Collector of Customs (Appraisement) had blocked the goods declaration---Appellant approached Deputy Collector of Customs (Appraisement) who informed him that goods in question seemed to be of Indian origin and re-examination was required---Re-examination was conducted and it revealed the same result as that of earlier assessment order---Deputy Collector of Customs (Appraisement) framed contravention report and forwarded the same to the Assistant Collector of Customs (Adjudication) for issuance of show-cause notice---Assistant Collector of Customs (Adjudication) confiscated the goods and imposed penalty equivalent to the value of goods---Collector of Customs (Appeals) dismissed the appeal---Validity---Consignment of an import could be detained under S. 186, Customs Act, 1969 after payment of leviable duty and taxes and order of clearance, if any adjudication order against the said importer was in field and wherein fine/penalty imposed upon him, had not been paid or in a case where contravention report had been framed in an under-clearance consignment for imposition of penalty---In absence of availability of both the conditions of S. 186, Customs Act, 1969 consignment of an importer could not be detained---No such order was available in the present case to the contrary the consignment of the appellant was detained by Deputy Collector of Customs (Appraisement) after passing of valid assessment/clearance order on the premise that the goods so imported seemed to be of Indian origin as against China---Detention under the said pretext was not permissible under the provision of S. 186, Customs Act, 1969---Deputy Collector of Customs (Appraisement) was not empowered to detain the consignment of appellant for seizing subsequently under S. 168(1), Customs Act, 1969, for preparation of contravention report and initiation of adjudication proceedings---Illegal act of Deputy Collector of Customs (Appraisement) rendered the entire exercise right from detention till passing of Order-in-Original and Order-in-Appeal without lawful authority and jurisdiction---Appellate Tribunal vacated the show-cause notice and set aside the order passed thereon.

Messrs O.S. Corporation v. FOP and others 2015 PTD 560 ref.

Amir Siddiqui v. Federation of Pakistan and 3 others 2014 PTD 582 fol.

(b) Customs Act (IV of 1969)---

----Ss. 3DD, 26A, 80, 179 & 180---Customs Rules, 2001, R. 438---S.R.O. No.500(I)/2009, dated 13-06-2009---Audit---Checking of goods declaration by customs---Power of adjudication---Jurisdiction---Procedure---Appellant imported consignment comprising of several kinds of fabric and filed goods declaration---Assessing officer examined the goods and passed assessment orders---Inbuilt delegated authority of Customs Computerized System passed clearance order in terms of S. 83, Customs Act, 1969---Appellant approached the terminal operator for delivery of goods who showed his inability to deliver on the ground that Deputy Collector of Customs (Appraisement) had blocked the goods declaration---Appellant approached Deputy Collector of Customs (Appraisement) who informed that goods in question seemed to be of Indian origin and re-examination was required---Re-examination was conducted which revealed the same result as that of earlier assessment order---Despite the very fact Deputy Collector of Customs framed contravention report and forwarded the same to the Assistant Collector of Customs (Adjudication) for issuance of show-cause notice---Assistant Collector of Customs (Adjudication) confiscated the goods and imposed penalty equivalent to the value of goods---Validity---Directorate General of Post Clearance Audit and its officers were delegated powers through S.R.O. No. 500(I)/2009, dated 13-06-2009 for conducting audit of import books of account which included every aspect of declaration made by the importer and assessment order passed by the competent authority---Directorate General of Post Clearance Audit could prepare audit observation and forward it to the importer for clarification and if the reply failed to settle the issue, frame contravention report and forward the same to the Clearance Collectorate which was to forward it to the respective Collectorate of Customs Adjudication for issuance of show-cause notice and passing of order-in-original---Deputy Collector of Customs (Appraisement) and Assistant Collector of Customs (Appraisement) in the present case, had assumed the powers of officials of Directorate General of Post Clearance Audit and conducted the post clearance audit of the goods declaration of importer---Preparation of contravention report by Deputy Collector of Customs (Appraisement) was without lawful authority and superstructure built thereon was void ab initio and coram non judice.

(c) Customs Act (IV of 1969)---

----Ss. 180, 32 & 32A---SRO No. 886(I)/2012, dated 18-07-2012---Show-cause notice---Jurisdiction---False statement---Fiscal fraud---Scope and imported consignment comprising of several kinds of fabric and filed goods declaration---Assessing Officer examined the goods and passed assessment orders---Inbuilt delegated authority of Customs Computerized System passed clearance order in terms of S. 83, Customs Act, 1969---Appellant approached the terminal operator for delivery of goods who showed his inability to deliver in view of the fact that Deputy Collector of Customs (Appraisement) had blocked the goods declaration---Appellant approached Deputy Collector of Customs (Appraisement) who informed that goods in question seemed to be of Indian origin and re-examination was required---Re-examination was conducted and it revealed the same result as that of earlier assessment order---Despite the very fact Deputy Collector of Customs (Appraisement) detained the consignment, framed contravention report and forwarded the same to the Assistant Collector of Customs (Adjudication) for issuance of show-cause notice---Assistant Collector of Customs (Adjudication) confiscated the goods and imposed penalty equivalent to the value of goods---Validity---Federal Government through SRO No. 886(I)/2012, dated 18-07-2012 had formed Collectorate of Customs Adjudication for adjudication of cases wherein revenue loss to the exchequer was visible---Present case fell within the domain of Collectorate of Customs Adjudication and contravention report was rightly forwarded by Deputy Collector of Customs (Appraisement) to the Collectorate of Customs Adjudication but Assistant Collector of Customs (Adjudication), in the present case, laid hands on the exclusive jurisdiction of Collectorate of Customs Adjudication---Said act of Assistant Collector of Customs (Adjudication) tantamounted to transgression which rendered the entire proceedings without jurisdiction, void ab initio and 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, Nowshehra and others v. Sarfraz Khan and others 2006 PTD 2237; Pak Suzuki Motors Company Ltd., Karachi v. Collector of Customs, Karachi 2009 PTD (Trib.) 1996 and 2010 PTD (Trib.) 832 ref.

(d) Customs Act (IV of 1969)---

----Ss. 179 & 180---S.R.O. No.371(I)/2002 dated 15-06-2002---Power of adjudication---Show-cause notice---Pecuniary jurisdiction---Scope---Assistant Collector of Customs issued show-cause notice and confiscated appellant's imported goods---Validity---Expression of S. 179, Customs Act, 1969, was very clear in regards to determination of the powers of the Adjudicating Authority on the basis of amount of duty and taxes involved excluding the conveyance and not the amount of evaded duty and taxes---Present case involved amount of Rs. 22,00,880, competent authority was Additional Collector of Customs to adjudicate the case of said amount under clause (ii) of S. 179(1), Customs Act, 1969---Assistant Collector of Customs had issued the show-cause notice while usurping the powers of his superiors, show-cause notice, in circumstances, was issued without lawful authority and jurisdiction.

(e) Customs Act (IV of 1969)---

----Ss. 80, 2(a), 4 & 180---Import Policy Order, 2013, Appendix-G & para 5(B)(iii) Sr. Nos. 357 & 358,---S.R.O. No.371(I)/2002, dated 15-06-2002---Import of goods of Indian origin---Checking of goods declaration---Adjudicating Authority---Powers and duties of officers of Customs---Show-cause notice---Scope---Assistant Collector of Customs issued show-cause notice and confiscated appellant's imported goods---Validity---Cases of goods of Indian origin had to be dealt with by competent authority at the time of passing assessment order---Principal Appraiser had the jurisdiction in terms of S.R.O. No. 371(I)/2002, dated 15-06-2002 to adjudicate such cases---Show-cause notice issued by Assistant Collector of Customs was usurpation of the powers of his subordinate, the Principal Appraiser, which he could only exercise under S. 4, Customs Act, 1969, during the course of administrative work and not for the purpose of adjudication---Show-cause notice was held to have been issued without lawful authority and jurisdiction.

Messrs Paramount International (Pvt.) Ltd. v. FOP and others 2014 PTD 1256; Izhar Alam Farooqi Advocate v. Sheikh Abdul Sattar Lasi and others 2008 SCMR 240; Sardar Ahmed Yar Khan Jogzai v. Province of Balochistan 2002 SCMR 1022; Faqir Abdul Majeed Khan v. District Returning Officer and others 2006 SCMR 1713; Ali Muhammad v. Chief Settlement Commissioner 2001 SCMR 1822 rel.

(f) Customs Act (IV of 1969)---

----Ss.180, 156, 25 & 25A---Sales Tax Act (VII of 1990), S. 33(11)(c)---Income Tax Ordinance (XLIX of 2001), S. 148---Show-cause notice---Confiscation of goods---Transaction value---Power to determine customs value---Collection agent---Scope---Assistant Collector of Customs issued show-cause notice and confiscated appellant's imported goods---Assistant Collector of Customs invoked S. 11C of Sales Tax Act, 1990 and S. 148, Income Tax Ordinance, 2001---Validity---No Section by the number 11C was available, instead clause 11(c) was present in S. 33 of Sales Tax Act, 1990, which was a machinery section---Likewise, S. 148, Income Tax Ordinance, 2001 was also a machinery section as it contained procedure for collection of Income Tax levied at import stage on the value determined either under S. 25, Customs Act, 1969 or with the application of valuation ruling issued by the Directorate General of Valuation---No charge under said sections of the Sales Tax Act, 1990 and Income Tax Ordinance, 2001, could be invoked---Show-cause notice was held to be void ab initio and of no legal effect.

Asstt. 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 Sarwar International v. Addl. Collector of Customs 2013 PTD 813 ref.

(g) Customs Act (IV of 1969)---

----Preamble---Federal Board of Revenue and Ministry of Law and Justice could only give opinion and have no mandate to interpret the provision of an Act or amend its provisions---Judicial fora could only interpret the provisions of statute.

Messrs Lever Brother Pakistan Ltd. v. Customs Sales Tax and Central Excise Appellate Tribunal, Karachi 2005 PTD 2462 and Qazi CNG Station, Gujrat and another v. Directorate General of Intelligence and Investigation-FBR, Karachi and 2 others 2016 PTD (Trib.) 107 rel.

(h) Customs Act (IV of 1969)---

----Ss. 179, 202 & 180---Sales Tax Act (VII of 1990), Ss. 11 & 48---Income Tax Ordinance (XLIX of 2001), Ss.140 & 162---Show-cause notice---Recovery of government dues---Recovery of arrears of sales tax---Recovery of tax from persons holding money on behalf of a taxpayer---Collection agents---Power of adjudication---Scope---Customs Collectorates do not have the power to collect Sales Tax and Income Tax as duty at import stage---Customs Collectorates can recover the amount of Sales Tax and Income Tax upon receipt of notice from the Officer of Inland Revenue and Commissioner of Income Tax, in terms of S. 48 of Sales Tax Act, 1990 & S. 140 of Income Tax Ordinance, 2001 for recovery of the adjudged amount of Sales Tax and Income Tax after due process of law---Clearance Collectorates have the authority to collect Sales Tax and Income Tax at import stage in the capacity of collecting agents and can recover escaped/short paid customs duty and regulatory duty levied on the imported goods but do not have the powers to adjudicate cases of short recovery of Sales Tax and Income Tax.

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; Collector of Customs, Islamabad v. Global Marketing Services and another, v. Model Customs Collectorate and another SCRA No. 01/2010; Al-Haaj Industrial Corporation (Pvt.) Ltd., Peshawar v. Collector of Customs (Appraisement) 2004 PTD 801; Messrs Lucky Cement Ltd. v. Federation of Pakistan and others C.P. No. D-216/2013; Shujabad Agro Industry (Pvt.) Ltd. v. Collector of Customs and 8 others 2014 PTD 1963; Muhammad Measum and others v. FOP and 2 others 2015 PTD 702; Asif Textile Trading v. Directorate General I&I-FBR 2016 PTD (Trib.) 969; Phillip Morris (Pakistan) Ltd, Karachi v. Additional Collector of Customs 2016 PTD (Trib.) 1008; Al-Fajer Associates v. Directorate General of Intelligence and Investigations-FBR 2016 PTD (Trib.) 2125; Pepsi Cola Export Corporation, Karachi v. Directorate General of Post Clearance Audit and 2 others Appeal No.K-1635/2014; Messrs M.R. Sons, Karachi v. Directorate General of Intelligence and Investigations-FBR Appeal No. K-1029/2016; Messrs Muhammad Imran, Karachi v. Directorate General of Intelligence and Investigations-FBR Appeal No. K-1030/2016; Messrs Rightway Trading Company, Karachi v. Deputy Collector of Customs, MCC of Appraisement-West and 3 others Appeal No. K-1343/2015; Messrs Zubair Wali Ahmed Zai Ltd. v. The Principal Appraiser, Directorate of Transit Trade and others 2016 PTD (Trib.) 2463; Singer Pakistan Ltd. v. Collector of Customs and 2 others 2017 PTD (Trib.) 481; 1994 CLC 1612, 1990 PTD 29, 2005 PTD 23; 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 SCMR 129 ref.

(i) Customs Act (IV of 1969)---

----Ss. 2(a), 32, 80, 83, 193, 193A & 195---Customs Rules, 2001, R. 438---S.R.O. No. 371(I)/2002, dated 15-06-2002---Adjudicating authority---Assessment---Checking of goods declaration by Customs---Clearance of goods---Appeal---Procedure---Show-cause notice---Jurisdiction---Past and closed transaction---Scope---Appellant imported consignment comprising of several kinds of fabric---Appellant, importer filed goods declaration; Assessing Officer examined the goods and passed assessment orders---Inbuilt delegated authority of Customs Computerized System passed clearance order in terms of S. 83, Customs Act, 1969---Appellant approached the terminal operator for delivery of goods who showed his inability to deliver due to the fact that Deputy Collector of Customs (Appraisement) had blocked the goods declaration---Appellant approached Deputy Collector of Customs (Appraisement) who informed that goods in question seemed to be of Indian origin and re-examination was required---Re-examination was conducted and it revealed the same result as that of earlier assessment order---Despite the very fact Deputy Collector of Customs (Appraisement) detained the consignment under S. 186, Customs Act, 1969 on the basis that the goods were of Indian origin and as such were not importable under Appendix G to the Import Policy Order, 2013---Deputy Collector of Customs (Appraisement) framed contravention report and forwarded the same to the Assistant Collector of Customs (Adjudication) for issuance of show-cause notice---Assistant Collector of Customs (Adjudication) confiscated the goods and imposed penalty equivalent to the value of goods---Collector of Customs (Appeals) dismissed the appeal---Validity---Once an assessment order was passed, it could not be disturbed by any authority by preparing contravention report---Only course available to the Deputy Collector of Customs (Appraisement) was to challenge the assessment order before Collector of Customs (Appeals)---Collector of Customs (Appeals) could issue show-cause notice to the appellant/importer under S. 32, Customs Act, 1969---Instead of adhering to the prescribed method, Deputy Collector of Customs (Appraisement) reopened the assessment/ clearance order under S. 195, Customs Act, 1969, under which no powers were vested either with Deputy Collector of Customs (Appraisement) or Assistant Collector of Customs (Adjudicated)---By virtue of non-filing of appeal against the assessment order, transaction attained finality and became past and closed transaction which could not be disturbed---Appellate Tribunal vacated the show-cause notice and set aside the order passed thereon.

Messrs Paramount International (Pvt.) Ltd., Karachi v. Secretary Revenue Division 2014 PTD 1256; Messrs Smith Kline French v. Pakistan 2004 PTD 3020 and Messrs World Trade Corporation v. Central Board of Revenue 1989 MLD 4310 rel.

(j) Customs Act (IV of 1969)---

----S. 180--- Show-cause notice--- Issuance--- Scope--- Orders of adjudication having been passed outside the charter of show-cause notice were declared to have been passed without lawful authority.

Collector Excise and Land Customs and others v. Rehm Din 1987 SCMR 1840; Adam v. Collector of Customs, Karachi PLD 1969 SC 446; Muhammad Sadqain v. Collector of Customs (Appraisement) 2006 PTD 2742 and Messrs Exide Pakistan Ltd. v. Deputy Collect of customs (Adjudication-III), Karachi 2004 PTD 1449 ref.

Nadeem Ahmed Mirza for Appellant.

Zakaullah, A.O. for Respondents.

Date of hearing: 15th August, 2018.

2019 P T D (Trib.) 1090

[Customs Appellate Tribunal]

Before Syed Sardar Hussain Shah, Member (Judicial)

Messrs LUCKY CEMENT LIMITED, PESHAWAR

Versus

The SUPERINTENDENT CUSTOMS REBATE, PESHAWAR and another

Appeal No. Cus. 136/PB of 2017, decided on 2nd July, 2018.

Export Policy Order, 2005---

----S. 8(1)(a)---SRO No. 450(I)/2001, dated 18-6-2001---SRO No. 931(I)/2007, dated 11-9-2007---SRO No. 613(I)/2007, dated 16.6.2007---Export of cement to Afghanistan---Claim for repayment of customs duty---Rejection of claim being barred by time---Scrutiny of the duty drawback claims revealed that, all the claims were filed after expiry of limitation period of 210 days as provided under SRO No. 450(I)/2001, dated 18-6-2001 and SRO No. 931(I)/2007, dated 11-9-2007---Superintendent of Customs (Rebate), vide his order-in-original had rejected the payment of claims of the appellant for violation of provisions of said SROs---Collector of Customs (Appeals), Collector of Customs (Appeals) upheld the order-in-original---Validity---Cases of export to Afghanistan against claims of rebate were under correspondence with the Federal Board of Revenue and Ministry of Commerce---Ministry of Commerce had devised a way out under which such claims could be considered by the Department pending the receipt of verification from Afghan Customs Department---Officer concerned sanctioning rebate claims, was competent to condone the delay in filing of claims, provided that the exporter had sufficient justification in his favour that the delay was beyond his control---Matter in question being under correspondence and was yet to be resolved the delay occurred in a way, was beyond the control of appellant---Sanctioning authority should have condoned the delay at the time of sanctioning of rebate or according to the procedure devised by the Ministry of Commerce---Contention of Departmental Representative that claims of rebate were not admissible being filed beyond the stipulated period of 210 days, did not hold the reasons---Department had not taken into consideration Ministry of Commerce's instructions issued vide OM No.16(1)/2005-E.I. dated 17-8-2007 as communicated by Federal Board of Revenue---Tribunal observed that claims of rebate filed by the appellant should have been considered in the light of those instructions, and action should have been taken if they had failed to produce the verified documents from the respective quarters---Delay was condoned with the directions to the department to sanction the rebate claims, filed by the appellant.

Danish Ali Qazi for Appellant.

Mussa Khan, Superintendent/D.R. for Respondents.

Date of hearing: 2nd July, 2018.

2019 P T D (Trib.) 1129

[Customs Appellate Tribunal]

Before Jahanzaib Wahlah, Member (Judicial-III)

Messrs HASSAN INTERNATIONAL, FAISALABAD

Versus

The DIRECTORATE GENERAL OF INVESTIGATION AND INTELLIGENCE-F.B.R., KARACHI and 3 others

Custom Appeal No. K-250 of 2018, decided on 20th December, 2018.

(a) Customs Act (IV of 1969)---

----Ss. 186, 83 & 2(s)---Misdeclaration---Smuggling---Scope---Detention of goods pending payment of fine and penalty---Clearance of goods for home consumption---Directorate General of Intelligence and Investigation detained the goods of appellant at the exit gate after their release by Clearance Collectorate and charged the importer for mis-declaration---Validity---Section 186 of Customs Act, 1969 came into play if any case had been adjudicated by competent authority against importer through which it had been held that the charges were established as levelled in the show-cause notice and fine and penalty was imposed and the importer had not paid the some or any inquiry or that investigation in respect of any goods was underway and imposition of penalty was under consideration---Appropriate officer was empowered to detain the forthcoming goods of the same importer till the time fine and penalty was not paid---Lawfully cleared goods could not be detained under any pretext by any officer of customs, as regard to the officials of Directorate General of Intelligence and Investigation, they could detain the goods which were either "smuggled" or detained goods of the person involved in smuggling but not imported goods---Power to detain imported goods under the provision of S.186, Customs Act, 1969 was only available to the officials of Clearance Collectorate upon availability of either of two conditions available in subsection (1) of S. 186, Customs Act, 1969---Detention of goods of importer was not permitted even by the officials of Clearance Collectorate in the absence of availability of any of the said two conditions---Detention of goods by Directorate General of Intelligence and Investigation was held to be without lawful authority and jurisdiction---Appeal was allowed.

Amir Siddiqui v. Federation of Pakistan and 3 others 2014 PTD 582 and Messrs O.S. Corporation v. FOP and others 2015 PTD 560 rel.

(b) Customs Act (IV of 1969)---

----Ss. 3A, 177, 9, 10, 80, 83, 186, 168(1) & 2(s)---Customs Rules, 2001, Rr. 438 & 442---SRO No. 486(I)/2007 dated 9-6-2007---SRO No. 118(I)/83 dated 12-12-1983---Detention of goods pending payment of fine and penalty---Seizure of things liable to confiscation---Clearance of goods---Assessment of goods---Restriction on possession of goods in certain areas---Scope---Directorate General of Intelligence and Investigation detained the goods of appellant at the exit gate after their release by Clearance Collectorate and charged the importer for mis-declaration---Plea of Directorate General of Intelligence and Investigation was that, Directorate being watchdog of revenue division, it was empowered to detain, seize any consignment cleared by Clearance Collectorate, in case of mis-declaration of description, quantity, quality, weight, PCT, erroneous/non-application of valuation ruling and allowance of exemption---Validity---Officers of Directorate General of Intelligence and Investigation had power within the territory of Pakistan to thwart the act of "smuggling"---Jurisdiction of officers of Directorate General of Intelligence and Investigation in principle was restricted to the territory not falling within the ambit of Ss.9 & 10 of Customs Act, 1969 and beyond five kilometers of the border of India and Iran---Goods of importer were not brought into Pakistan from any other route, instead were brought from the defined port after completion of all codal formalities i.e. passing of assessment and clearance order---Consignment of importer stood ousted from the definition of "smuggled" goods and could not be detained under the provision of S. 186, Customs Act, 1969---Directorate General of Intelligence and Investigation could only initiate proceedings for the act of smuggling, which could not be invoked against any importer in case of evasion/short payment of duty and taxes on cleared goods---Detention of goods, in the present case, by Directorate General of Intelligence and Investigation and subsequent proceedings were held to be of no legal effect, as such void ab initio and coram non judice---Appeal was allowed.

2002 PTD 2457; PLD 1971 SC 61; PLD 1973 SC 236; PLD 1964 SC 536; 2001 SCMR 838; 2003 SCMR 1505; PLD 1996 Kar. 68; 2006 PTD 978 and PLD 1971 SC 184 ref.

(c) Customs Act (IV of 1969)---

----Ss. 3A, 3DD, 26 & 26A---SRO No.500(I)/2009 dated 13-6-2009---Directorate General of Intelligence and Investigation---Directorate General of Post Clearance Audit---Powers and jurisdiction---Scope---Directorate General of Intelligence and Investigation detained the goods of importer at the exit gate after their release by Clearance Collectorate and charged the importer for mis-declaration---Validity---Officials of Directorate General of Intelligence and Investigation assumed the powers of officials of Directorate General of Post Clearance Audit and conducted post clearance audit of goods declaration of importer in the absence of availability of powers---Officials of Directorate General of Intelligence and Investigation were not permitted under the law to transgress the jurisdiction/powers of Directorate General of Post Clearance Audit---Post Clearance Audit conducted by officials of Directorate General of Intelligence and Investigation was held to be without jurisdiction---Appeal was allowed.

(d) Customs Act (IV of 1969)---

----Ss. 195, 3A, 194A, 32, 25, 25A, 79, 80, 83 & 180---Customs Rules, 2001, Rr. 438 & 442---Powers of Federal Board of Revenue or Collector of Customs to pass certain orders---Mis-declaration---Determination of customs value---Goods declaration---Assessment of goods---Clearance of goods---Show cause notice---Scope---Directorate General of Intelligence and Investigation detained the goods of importer at the exit gate after their release by Clearance Collectorate and charged the importer for mis-declaration---Validity---Section 195, Customs Act, 1969 empowered the Collector of Customs or Federal Board of Revenue (Board) to call for record of any order/decision passed by subordinate officer for determination of their legality or propriety, in case any illegality or impropriety was apparent, said authorities were empowered to re-open the same and pass a fresh order may deem fit after issuance of show-cause notice---Order passed by Collector or Board was appealable before Appellate Tribunal---Officials of Directorate General of Intelligence and Investigation were not empowered to initiate action of detention and seizure of imported goods for evasion or short payment of duty and taxes, as that would tantamount to reopening of assessment order under S.195, Customs Act, 1969---Detention of goods by Directorate General of Intelligence and Investigation and subsequent proceedings were held to be of no legal effect, as such void ab initio---Appeal was allowed.

2002 PTD 2457; PLD 1971 SC 61; PLD 1973 SC 236; PLD 1964 SC 536; 2001 SCMR 838; 2003 SCMR 1505; PLD 1996 Kar. 68; 2006 PTD 978 and PLD 1971 SC 184 ref.

(e) Administration of justice---

----Jurisdiction---Nobody is allowed to act beyond the scope of allotted sphere of jurisdiction and powers.

2002 PTD 2457; PLD 1971 SC 61; PLD 1973 SC 236; PLD 1964 SC 536; 2001 SCMR 838; 2003 SCMR 1505; PLD 1996 Kar. 68; 2006 PTD 978 and PLD 1971 SC 184 ref.

(f) Customs Act (IV of 1969)---

----S. 3A---Sales Tax Act (VII of 1990), S.30A---Income Tax Ordinance (XLIX of 2001), S. 230---SRO No. 776(I)/2011 dated 19-8-2011---Directorate General of Intelligence and Investigation---Jurisdiction---Scope---Directorate General of Intelligence and Investigation detained the goods of importer at the exit gate after their release by Clearance Collectorate; charged the importer for mis-declaration and created recovery of duty, income tax and sales tax---Validity---Officials of Directorate General of Intelligence and Investigation were not appointed as officers of Inland Revenue therefore entire act of preparation of contravention report in the matter relating to sales tax and income tax was without power and jurisdiction, as such coram non judice---Appeal was allowed.

Waseem Ahmed and others v. FOP and another 2014 PTD 1733 rel.

(g) Customs Act (IV of 1969)---

----S. 180---Sales Tax Act (VII of 1990), Ss. 3, 6, 7, 33 & 34---Income Tax Ordinance (XLIX of 2001), S. 148---Determination of sales tax liability---Jurisdiction---Show-cause notice---Time and manner of payment of sales tax---Offences and penalties---Default surcharge---Collection of income tax at import stage---Scope---Section 3, Sales Tax Act, 1990, being a charging section cannot be invoked by any Authority other than an officer of Inland Revenue---Section 6 of the said Act is a machinery section that lays down the procedure relating to collection of sales tax at import stage while S.7 lays down about determination of sales tax liability at the time of filing sales tax return, thus a machinery section---Section 33 of Sales Tax Act, 1990 contains penal clauses synonymous to S.156(1) of Customs Act, 1969---Section 34 of Sales Tax Act, 1990 deals with default surcharge to be paid upon contravention and establishment of charge---Section 148, Income Tax Ordinance, 2001 prescribes the procedure for collection of income tax at import stage by the authorities referred therein---Said sections are independent under which no charge can be invoked---No show-cause notice can be issued under aforesaid sections which are independent and have no nexus with each other---Issuance of show-cause notice while invoking irrelevant/erroneous provisions renders the same void ab initio and of 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 and Rose Color v. Chairman, CBR 2013 PTD 813 ref.

(h) Customs Act (IV of 1969)---

----Ss. 32, 179 & 202---Sales Tax Act (VII of 1990), Ss. 11, 30 & 48---Income Tax Ordinance (XLIX of 2001), Ss. 148, 162, 228 & 140---Mis-declaration---Power of adjudication---Short recovery of income tax and sales tax---Jurisdiction---Scope---Assessment of sales tax---Recovery of arrears of sales tax---Recovery of income tax from persons holding money on behalf of a taxpayer---Collection of income tax at import stage---Recovery of income tax from the one from whom tax was not collected or deducted---Internal audit of income tax---Scope---Directorate General of Intelligence and Investigation detained the goods of importer at the exit gate after their release by Clearance Collectorate---Deputy Collector of Customs (Adjudication) issued show-cause notice and passed order-in-original---Appeal filed against order-in-original was dismissed---Plea of department was that incorporation of word "taxes" in Ss. 32 & 179, Customs Act, 1969 was sufficient for creating recovery of sales tax and income tax---Validity---Existence of word "taxes" in S.32 of Customs Act, 1969 did not empower the Deputy Collector of Customs (Adjudication) to assume powers under the provisions of S.11(2) & (3) of Sales Tax Act, 1990 and S. 162(1) of Income Tax Ordinance, 2001---Deputy Collector of Customs (Adjudication) could not invoke said sections---Word "taxes" in Ss.179 & 32 of Customs Act, 1969 was only for assuming powers on the basis of involved amount of duty and taxes by appropriate adjudicating authority---Despite existence of word "taxes" in both the Ss.179 & 32 of the Customs Act, 1969, adjudicating authority had to issue show-cause notice within the respective applicable provisions of Customs Act, 1969 only---Customs Collectorate could recover the amount of sales tax and income tax upon receipt of notice from the officer of Inland Revenue and Commissioner of Income Tax in terms of S.48, Sales Tax Act, 1990 and S. 140, Income Tax Ordinance, 2001 but had no powers to adjudicate the cases of short recovery of sales tax and income tax---Show-cause notice issued by Deputy Collector of Customs (Adjudication) was held to be void and of no legal effect.

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; Collector of Customs, Islamabad v. Global Marketing Services and another v. Model Customs Collectorate and another SCRA No. 01/2010; Al-Haaj Industrial Corporation (Pvt.) Ltd., Peshawar v. Collector of Customs (Appraisement) 2004 PTD 801;Messrs Lucky Cement Ltd. v. Federation of Pakistan and others C.P. No. D-216/2013; Shujabad Agro Industry (Pvt.) Ltd. v. Collector of Customs and 8 others 2014 PTD 1963; Muhammad Measum and others v. FOP and 02 others 2015 PTD 702; Asif Textile Trading v. Directorate General I&I-FBR 2016 PTD (Trib.) 969; Phillip Morris (Pakistan) Ltd., Karachi v. Additional Collector of Customs 2016 PTD (Trib.) 1008; Al-Fajer Associates v. Directorate General of Intelligence and Investigations-FBR 2016 PTD (Trib.) 2125; Pepsi Cola Export Corporation, Karachi v. Directorate General of Post Clearance Audit and 02 others Appeal No. K-1635/2014; Messrs M.R. Sons, Karachi v. Directorate General of Intelligence and Investigations-FBR Appeal No. K-1029/2016; Messrs Muhammad Imran, Karachi v. Directorate General of Intelligence and Investigations-FBR Appeal No. K-1030/2016; Messrs Rightway Trading Company, Karachi v. Deputy Collector of Customs, MCC of Appraisement-West and 3 others 2018 PTD (Trib.) 1318; Messrs Zubair Wali Ahmed Zai Ltd. v. The Principal Appraiser, Directorate of Transit Trade and others 2016 PTD (Trib.) 2463; Singer Pakistan Ltd v. Collector of Customs and 2 others 2017 PTD (Trib.) 481; 1994 CLC 1612; 1990 PTD 29 and 2005 PTD 23 ref.

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 SCMR 129 rel.

(i) Customs Act (IV of 1969)---

----Ss. 80, 193, 193A & 180---Customs Rules, 2001, R. 438---Constitution of Pakistan, Art. 13---SRO No. 486(I)/2007 dated 9.6.2007---Assessment of imported goods---Appeal to Collector (Appeals)---Procedure in appeal---Show-cause notice---Double jeopardy---Scope---Assessment order passed by competent authority, cannot be disturbed by any authority by preparing contravention report and overlapping the existing assessment order for initiation of adjudication proceedings---Only course available before Customs authorities is to challenge the assessment order before Collector of Customs (Appeals)---Customs authorities are entitled to incorporate all apprehensions, misreading of facts and contravention of provisions in appeal---Collector of Customs (Appeals), if considers that duty and taxes have been either not levied or short paid on the basis of goods found subsequent to clearance, is empowered to issue showcause notice---In the presence of an appealable order, fresh order cannot be passed even in the shape of reassessment order or through issuance of show-cause notice---Passing of assessment order in such a way falls within the ambit of "double jeopardy" not permitted under Art. 13 of the Constitution.

Messrs Smith Kline French v. Pakistan 2004 PTD 3020 and Messrs World Trade Corporation v. Central Board of Revenue 1989 MLD 4310 rel.

(j) Customs Act (IV of 1969)---

----Ss. 195 & 193---Power of Federal Board of Revenue (Board) or Collector to suo motu pass orders---Appeal to Collector (Appeals)---Scope---When the right of appeal has been accorded by legislature under the provision of S.193, Customs Act, 1969 the provision of S.195 of said Act is un-operational and cannot be exercised even by the Authority defined therein.

Messrs Paramount International (Pvt.) Ltd., Karachi v. Secretary Revenue Division 2014 PTD 1256 and Collector of Customs and others' case C.P.L.A. No.105-K of 2014 fol.

(k) Customs Act (IV of 1969)---

----Ss. 79(1), 180, 80, 83 & 198---Customs Rules, 2001, Rr. 435, 438 & 442---Declaration---Show-cause notice---Examination, assessment and clearance of goods---Scope---Section 79(1), Customs Act, 1969 cannot be invoked in the show-cause notice particularly when the goods were selected for examination and were released after passing valid assessment/clearance order.

(l) Customs Act (IV of 1969)---

----Ss. 79(1), 2(kka), 45 & 180---Declaration---Documents---Shipping bill of exporting country---Import general manifest---Show-cause notice---Scope---Directorate General of Intelligence and Investigation detained the goods of importer at the exit gate after their release by Clearance Collectorate---Deputy Collector of Customs (Adjudication) issued show-cause notice on the basis of shipping bill of the exporting country and passed order-in-original---Appeal against order-in-original was dismissed---Validity---Documents warranted for filing/transmitting goods declaration under the provision of S.79(1), Customs Act, 1969 are commercial invoice, packing list, bill of lading or air way bill or documents used for customs clearance, whether or not signed, initialed or otherwise authenticated, which are contract, pro forma invoice, letter of credit, certificate of origin, health certificate, free trade area certificate or akin documents---Shipping bill filed by the shipper at the port of loading or the value available on the website of foreign country's customs figure nowhere in the definition of documents available in S.2(kka), Customs Act, 1969---Shipping bill of exporting country was not warranted for filing import general manifest under S. 45, Customs Act, 1969---Contents of shipping bill filed by the exporter at the port of shipment with country of export could not be deemed to be construed as an "information" or "document" under Customs Act, 1969 for framing of contravention report and issuance of show-cause notice---Reliance on exporting country's shipping bill was held to be misconceived, suffered from legal infirmity and could not be made a tool for penalizing the importer---Appeal was allowed.

(m) Customs Act (IV of 1969)---

----Ss. 32A & 79(1)---Customs Rules, 2001, R. 433---Declaration---Fiscal fraud---Scope---Directorate General of Intelligence and Investigation detained the goods of importer at the exit gate after their release by Clearance Collectorate---Deputy Collector of Customs (Adjudication) issued show-cause notice on the basis of shipping bill of the exporting country, charged importer for fiscal fraud and passed order-in-original---Appeal filed against order-in-original was dismissed---Validity---Invocation of S.32A, Customs Act, 1969 by the Deputy Collector of Customs (Adjudication) was illegal and void as no document had been uploaded by importer in the goods declaration, which was concocted, altered, mutilated, false, forged, tampered or counterfeit---Clauses (b) and (c) of S.32A, Customs Act, 1969 were irrelevant as importer never gave any information electronically or by any other means corresponding to shipping bill of exporting country referred in the show-cause notice---Section 32A(d), Customs Act, 1969 did not apply as importer never altered, mutilated or suppressed any finding of any customs functionaries or any document in the computerized record---Section 32A(e), Customs Act, 1969 was irrelevant as no attempt, abetment or connivance in any action mentioned in said provisions was committed by importer---Show-cause notice issued by invoking irrelevant provisions was held to have been issued without lawful authority and was declared as void ab initio---Appeal was allowed.

1991 PTD 551 and 2006 PTD 2190 = 2006 PCr.LJ 1427 rel.

(n) Customs Act (IV of 1969)---

----S. 193A---Procedure in appeal---Extension of time by Federal Board of Revenue (Board) after lapse of 120 days---Scope---Collector of Customs had to pass order within a period of 120 days from the date of receipt of appeal---Appeal was filed by appellant on 16-12-2016, and an order had to be passed on or before 15-4-2017---No extension was granted by Collector prior to lapse of initial period due to the fact that no "exceptional circumstances" were available---Collector, for validating the delay in passing order, placed reliance on extension granted by Board which was nothing more than giving a lease of life---Matter could not be revived even through artificial support when the issue was liable to be annuled---Order passed by Collector of Customs (Appeals) was barred by 221 days, hence void ab initio and not enforceable under law.

Khalid Mahmood v. Collector of Customs 2009 SCMR 1881; 2017 PTD 1756; Collector of Customs Sales Tax Gujranwala and others v. Super Asia Mohammad Deen and Sons and others 2017 SCMR 1427; 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.

(o) General Clauses Act (X of 1897)---

----S. 24A---Reasons for decision---Scope---Where any Authority, Court or Tribunal gave a finding of fact which was not based on material available on record the same became perverse and a perverse finding of fact, which was violative of the established principles of appreciation of evidence on record, was not sustainable in law---Every judicial or quasi-judicial finding was to be based on reasons containing the justification for the finding in the order itself.

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; PLD 1995 SC (Pak) 272; PLD 1970 SC 158; PLD 1970 SC 173; 1984 SCMR 1014; 2012 PTD (Trib.) 619 and 2016 PTD 589 ref.

Nadeem Ahmed Mirza (Consultant) for Appellant.

Rasheed Alam (Deputy Superintendent) for Respondents.

2019 P T D (Trib.) 1242

[Customs Appellate Tribunal]

Before Muhammad Sajid Abbasi, Member Judicial-II

Messrs SHAIKH & CO. through Messrs Masood Anwar & Co., Karachi

Versus

The ADDITIONAL COLLECTOR OF CUSTOMS, (ADJUDICATION-I), KARACHI and 2 others

Custom Appeal No.K-67 of 2017, decided on 27th November, 2018.

(a) Customs Act (IV of 1969)---

----Ss. 32, 180 & 156(1)(14)---Sales Tax Act (VII of 1990), Ss. 2(16), 4(c), 3(2)(b), 3(6) & 71---SRO No. 1125(I)/2011 dated 31.12.2011---Show-cause notice---Short levied sales tax---Mis-declaration---Zero rating---Special procedure for payment of sales tax---Manufactured---Produced, semi-finished product---Scope---Appellant imported "Belt strips/Composition Leather" and claimed benefit under SRO No. 1125(I)/2011 dated 31.12.2011---Goods, upon examination, were found as declared, consequent to which assessment order was passed while allowing benefit under the aforesaid SRO---Inbuilt authority of Customs Computerized System passed clearance orders, subsequent to which consignments were delivered to the appellant, importer---Director, Directorate of Post Clearance Audit conducted audit of the goods declarations and observed that the appellant had illegally availed the benefit of SRO No. 1125(I)/2011 dated 31.12.2011 as the goods imported by him were in finished form and no further work was desired to be done---Contravention report was framed and appellant was served with show-cause notice---Appellant was ordered to pay amount of evaded duty/taxes in addition to penalty---Validity---Examination report nowhere confirmed that goods imported by appellant were in finished state and ready to wear, instead goods were in semi-finished shape and had to undergo the process of further finishing that is punching of holes, affixing of buckles, preparing of loops and cropping/stitching, etc---Allegation of customs authorities stood negated from the definition given in S.2(16), Sales Tax Act, 1990, which stated that "if any article imported in same condition was either converted into another distinct article or product or was so changed, transformed or reshaped and it became incapable of being put to use differently or distinctly or included any process incidental or ancillary to the completion of manufactured product, it fell within the definition of manufacture or produce"---Not material, whether appellant imported same state goods or raw material as he had to sell that after value addition and transforming same into a distinct item and had to pay further tax on his sale as enunciated in respective condition of SRO No. 1125(I)/2011 dated 31.12.2011, no question of evasion or short payment of tax could be raised---Appellate Tribunal set aside the orders passed by Customs Authorities and allowed the appeal.

2006 PTD 2627 rel.

(b) Customs Act (IV of 1969)---

----Ss. 180 & 26A---Sales Tax Act (VII of 1990), S. 11(4)---Income Tax Ordinance (XLIX of 2001), S. 162---SRO No. 1125(I)/2011 dated 31.12.2011---Assessment of sales tax---Audit of sales tax---Recovery of income tax---Jurisdiction of customs authorities---Scope---Appellant/ importer claimed benefit under SRO No. 1125(I)/2011 dated 31.12.2011, which was allowed and his goods were cleared---Directorate of Post Clearance Audit, observed that appellant had illegally availed benefit under said SRO---Show-cause notice was issued and appellant was imposed penalty---Validity---Clearance Collectorate could allow the benefit under SRO No. 1125(I)/2011 dated 31.12.2011, only upon verification that importer was doing business in one of the five sectors, was registered with the regional tax office and appeared in the active taxpayers list available on the website of Federal Board of Revenue---Post clearance audit of entitlement to claim benefit of sales tax at the reduced rate under regime of said SRO rested with officials of Inland Revenue Services---Said officials were empowered to recover the inadmissible benefit granted/allowed by the officials of Clearance Collectorate at import stage under the provisions of subsections (3) & (4) of S.11 of Sales Tax Act, 1990 and likewise for income tax under S.162(1) of Income Tax Ordinance, 2001---Appellate Tribunal set aside the orders passed by Customs Authorities and allowed the appeal.

(c) Customs Act (IV of 1969)---

----S. 180---Sales Tax Act (VII of 1990), Ss. 3, 6, 7 & 34---Income Tax Ordinance (XLIX of 2001), S. 148---Show-cause notice---Jurisdiction of Customs Authorities---Assessment of sales tax---Time and manner of payment of sales tax---Determination of sales tax liability---Default surcharge for non-payment of sales tax---Advance income tax at import stage---Scope---Additional Collector of Customs (Adjudication) issued show-cause notice and re-assessed payable customs duty, sales tax, additional sales tax and income tax---Validity---Additional Collector of Customs (Adjudication) invoked Ss. 3, 6, 7 & 34 of Sales Tax Act, 1990 and S.148, Income Tax Ordinance, 2001 despite being an officer of Customs---Section 3, Sales Tax Act, 1990 was a charging section but under the said section appropriate authority was an officer of Inland Revenue Services---Section 6, Sales Tax Act, 1990 defined the mode and manner of collection of sales tax at import stage by Customs Authority; it was not a charging section but a machinery section---Section 7, Sales Tax Act, 1990 determined the tax liability at the time of filing sales tax return; it was also a machinery section---Section 34, Sales Tax Act, 1990 imposed default surcharge to be paid upon contravention and establishment of said charge under said charging section---Section 148, Income Tax Ordinance, 2001 prescribed the procedure for collection of income tax at import stage by the authorities referred therein---Provisions of Income Tax Ordinance, 2001 and Sales Tax Act, 1990, are independent under which no charge can be framed---No show-cause notice could be issued under said provisions of both the statutes---Issuance of show-cause notice by invoking irrelevant/erroneous provisions, rendered the show-cause notice void ab initio and of no legal effect. [p. 1249] B

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 and 2013 PTD 813 ref.

Ali Muhammad v. Chief Settlement Commissioner 2001 SCMR 1822; All Pakistan Newspaper Society and others v. FOP and others PLD 2004 SC 600 and Khyber Tractor (Pvt.) Ltd. v. Pakistan Through Ministry of Finance, Revenue and Economic Affairs PLD 2005 SC 842 rel.

(d) Customs Act (IV of 1969)---

----Ss. 80, 83, 193, 195 & 180---Customs Rules, 2001, Rr. 432 & 442---Constitution of Pakistan, Art. 13---Checking of goods declaration---Clearance of goods---Past and closed transaction---Appeal to Collector of Customs (Appeals)---Powers of Federal Board of Revenue or Collector of Customs to revise orders---Show-cause notice---Double jeopardy---Scope---Director, Directorate of Post Clearance Audit, conducted post clearance audit of goods wherein he observed illegalities---Additional Collector of Customs (Adjudication) issued show-cause notice; reassessed duty/taxes and imposed penalty---Validity---Order passed by competent authority under Ss.80 & 83, Customs Act, 1969 and Rr. 438 & 442, Customs Rules, 2001 could only be corrected by the revisional authority in exercise of powers under S.195, Customs Act, 1969---Section 195, Customs Act, 1969 empowered the Board or Collector of Customs to examine suo motu the record of any proceedings (passing of assessment order is a proceedings by any means/standard) for the purpose of satisfying itself or himself as to the legality or propriety of any decision or order passed by subordinate officer---Orders passed on conclusion of transaction under Ss.80 & 83, Customs Act, 1969 and Rr. 438 & 442, Customs Rules, 2001, became appealable under S.193, Customs Act, 1969---Failure to file appeal led to the assessment orders attaining finality and becoming a past and closed transaction which could not be disturbed or reopened by any authority or court---Preparation of contravention report and issuance of show-cause notice tantamounted to double jeopardy not permitted under Art. 13 of the Constitution---Appellate Tribunal set aside the order passed by Customs Authorities and allowed the appeal.

PLD 1975 SC 331; 2002 CLC 705; 2004 PTD 624; 2007 PTD 1895; 2009 PTD (Trib.) 1925; 2005 PTD (Trib.) 135; 2010 PTD (Trib.)759; 2010 PTD (Trib.) 1283 and 2010 PTD (Trib.) 2523 ref.

Messrs Paramount International (Pvt.) Ltd. v. FOP and others 2014 PTD 1256; Messrs World Trade Corporation v. Central Board of Revenue 1989 MLD 4310 and 2004 PTD 3020 rel.

Saeed Masood Anwar for Appellant.

Nemo for Respondent No.2.

Nemo for Respondent No.3.

2019 P T D (Trib.) 1266

[Customs Appellate Tribunal]

Before Syed Sardar Hussain Shah, Member (Judicial)

The COLLECTOR OF CUSTOMS, PESHAWAR

Versus

Messrs JAN'S BUILDERS, PESHAWAR

Appeals Nos. Cus. 44, 40, 41, 42 and 43/PB of 2017, decided on 27th November, 2018.

(a) Imports and Exports (Control) Act (XXXIX of 1950)---

---S. 3---Import Policy Order, 2016, Paras. 15, 9(1), Appendix-E, Para. 3(1) & Appendix-I---Import Policy Order, 2013, Paras. 4, 9(ii)(v), Appendix H & Appendix B, Part II Sr. No. 27 [since amended]---Customs Act (IV of 1969), Ss. 32, 16 & 156(1)(9), (14) & (90)---Import of second hand vehicle by construction company---Conditions of import---Used Mobile Clinic---Procedural requirements---Pre-shipment inspection---Amendment in Import Policy Order, 2013---Effect---Mis-declaration---Scope---Examination report transpired that vehicle in question was Model 1997---Show-cause notice was issued wherein allegations levelled against importer were that it could not import a vehicle which was more that 5 years old; that it could not import Mobile Clinic and that it misclassified the PCT Code by using Code No. 8705.9000 instead of 8702.9090---Additional Collector of Customs (Adjudication) vacated the show-cause notice and released the vehicle unconditionally---Validity---Para 4 of Import Policy Order, 2013 provided that amendments made in Import Policy Order were not applicable to such imports where bill of lading or letter of credit was opened prior to the amendment---Import Policy Order, 2016 was promulgated on 18.04.2016 which restricted the import of vehicle which was more than 5 years old---Letter of credit was established by the importer on 20.10.2015 and the vehicle was imported under said letter of credit, hence the amendments brought through Import Policy Order, 2016 did not hit the importer---Serial No. 27 of Part II of Appendix B of Import Policy Order, 2013 did not restrict or impose any condition on import of Mobile Clinic by a construction company---Use of word "etc" in Para. 9(ii)(v) of Import Policy Order, 2013 indicated that construction company was entitled to import additional unspecified items in a series---Import of Mobile Clinic was classified in Serial No. 27 of Part II of Appendix B of Import Policy Order, 2013 and PCT Code No. 8705.9000---Only condition mentioned in Said Serial No. 27 was inspection/certificate from internationally recognized inspection agencies specialized in the field---Imported vehicle was inspected by pre-shipment inspection company which certified the vehicle as Mobile Clinic---Appeal against importer was dismissed.

Collector of Customs (Preventive), Karachi v. Pakistan State Oil, Karachi 2011 SCMR 1279 = 2011 PTD 2220 and Messrs Baig Enterprises v. Federation of Pakistan 2015 PTD 181 ref.

(b) Customs Act (IV of 1969)---

----S.25---"Declaration"---Connotation---Declaration referred to the nature, description and value of goods so that the assessing officer could apply appropriate tariff rates for assessment and charging.

Vithoba Syamna v. Union of India AIR 1957 Bom. 321 fol.

(c) Words and phrases---

----Claim---Meaning---Claim means a demand for something due to or demanded as a right.

(d) Customs Act (IV of 1969)---

----S. 32---Mis-declaration---In order to attract S.32, it must be established that a person who alleged to have made any statement in a document, submitted to the Customs Authorities, must be false to his knowledge, and it would depend upon the facts and circumstances of each case.

Eastern Rice Syndicate v. Collector of Customs PLD 1959 SC 364 fol.

(e) Customs Act (IV of 1969)---

----S. 180---Show-cause notice---Case of the department could not go beyond the scope of the show cause notice.

The Collector of Customs and Central Excise v. Rahim Din 1987 SCMR 1840 ref.

Muhammad Zahid, Supdtt/D.R. for Appellants.

Aamir Bilal for Respondents.

2019 P T D (Trib.) 1326

[Customs Appellate Tribunal]

Before Ch. Muhammad Shabbir Gujjar, Member (Judicial)

IMRAN KHAN and 2 others

Versus

DEPUTY DIRECTOR, INTELLIGENCE AND INVESTIGATION-FBR, MULTAN and another

Custom Appeals Nos. 452, 453 and 454/LB of 2017, decided on 25th June, 2018.

Customs Act (IV of 1969)---

----Ss. 2(s), 16, 156(1)89(i) & 17---Imports and Exports (Control) Act (XXXIX of 1950), S.3---SRO No. 499(I)/2009, dated 13-6-2009---Smuggling---Seizure and confiscation of vehicle alleged to be smuggled one---Seizing agency intercepted a truck, reported to be smuggled/non-duty paid---Driver of the vehicle in question produced photo copies of registration book, goods declaration, sales tax invoice and so many other documents, but department seized the vehicle---Driver, owner of the vehicle, were called upon to show-cause as to why the seized vehicle might not be confiscated and penal action taken against the importer and driver---Validity---Appellant importer of the vehicle, which was a registered Construction Company with Pakistan Engineering Council, had duly annexed with the appeal bill of lading, invoice, cash payment receipt challan, sales tax invoice, preshipment inspection certificate, bill of entry verification/confirmation of bill of entry/import documents etc.---Legal requirements were furnished, in circumstances at the time of examination as well as adjudication---Neither pre-shipment inspection certificate nor list of pre-shipment company had ever been challenged by the department---Import Policy Order, 2013 had provided that Construction Companies were allowed to import specialized vehicle mounted machinery, crane lorries etc.---Ministry of Commerce had earlier clarified that Truck Mounted Cranes/Crane Lorries were importable subject to fulfilment of conditions laid down in Para. 9(ii)(v) of Import Policy Order, 2013---Department was at liberty to check mis-use of such like specialized truck and take action under law, but not authorized to disturb the genuine companies who imported the same for its special purpose and use---Record had revealed that the department had itself admitted the validity of imported documents as well as registration documents---Vehicle in questions was cleared lawfully through goods declaration on payment of customs duty and other taxes---Import documents were valid, genuine and verified one---No tampered chassis number was noticed by the Forensic Laboratory Report---Appeals were accepted by the Tribunal and impugned orders passed by the lower fora, were set aside---Department was directed to release the vehicle unconditionally to its lawful owner after verification.

Messrs Elga Control v. Federation of Pakistan and others 2010 PTD 487; Messrs Eastern Construction Company's case 2015 PTD 963 and 2010 PTD 467 ref.

Abdul Salam Sajid for Appellant.

Awais Komboh for Respondent.

2019 P T D (Trib.) 1506

[Customs Appellate Tribunal]

Before Jehanzaib Wahlah, Member (Judicial-III)

Messrs EKADA CORPORATION, KARACHI

Versus

The DEPUTY COLLECTOR OF CUSTOMS, GROUP-II, MCC OF PMBQ, KARACHI and another

Custom Appeal No. K-919 of 2017, decided on 20th October, 2018.

(a) Customs Act (IV of 1969)---

----S.25A---Sales Tax Act (VII of 1990), S.13, Sixth Sched., Sr.79---Exemption---Declaration of customs value---Scope---Appellant imported cheese in bulk packing of 2.3 kgs and claimed exemption from payment of sales tax under Sr.79 of Sixth Schedule to the Sales Tax Act, 1990---Principal Appraiser of Customs refused to grant exemption of sales tax by holding that goods were packed under brand name---Validity---Directorate General of Valuation had determined valuation of cheese in packing of 1kg or above as imported in bulk packing---Goods imported by appellant weighing 2.3 kgs, therefore, stood exempted from payment of sales tax---Appellate Tribunal set aside the orders passed by Customs Authorities and allowed the appeal.

(b) Customs Act (IV of 1969)---

----S. 223---Officers of Customs to follow Federal Board's orders---Scope---Board has no mandate to interpret the provisions of the Act, it can only give an opinion; it is for the judicial fora to interpret the provisions of statute. [p. 1511] A

Central Insurance Co. v. Central Board of Revenue 1993 SCMR 1232; Messrs Lever Brother Pakistan Ltd. v. Customs Sales Tax and Central Excise Appellate Tribunal, Karachi 2005 PTD 2462 and Qazi CNG Station, Gujrat and another v. Directorate General of Intelligence and Investigation-FBR, Karachi and 2 others 2016 PTD (Trib.) 107 rel.

(c) Words and phrases---

----"Retail"---Meaning. [p. 1512] C

Merriam Webster Dictionary and Ed Alexender v. United States 78 Cust. Ct. 137, C.D 4699 (1977) rel.

(d) Words and phrases---

----"Import"---Meaning. [p. 1513] E

Black's Law Dictionary Seventh Edition and East and West Steamship Company v. The Collector of Customs PLD 1976 SC 618 rel.

(e) Words and phrases---

----"Sale"---Definition. [p. 1513] F

The New Lexicon Webseter's Dictionary of the English Language Encyclopedic Edition and The Chamber Dictionary rel.

(f) Interpretation of statutes---

----Taxing statute---Authorities, while interpreting a taxing statute must look into the words of the statute and interpret the same in the light of what is clearly expressed---Authorities cannot imply anything which is not expressed, and cannot import provision in the statute so as to support assumed deficiency---No intendment possible; no equity about a tax and no presumption as to tax---Nothing is to be read in, nothing is to be implied in the statute---Fair look at the language used and nothing else is to be done.

Abbasi Steel Industries Ltd v. Collector of Customs 1989 CLC 1463 and Messrs Fazal Ellahi v. Additional Collector of Customs 2011 PTD (Trib.) 79 ref.

(g) Interpretation of statutes---

----Taxing statute---If there are two or more interpretations of one provision pertaining to levy of tax on account of anomaly/ambiguity, the one favourable to taxpayer has to be adopted by the court.

1993 SCMR 274, 2005 SCMR 728, 2007 PTD 1656 and 2008 PTD 1227 ref.

(h) Interpretation of statutes---

----Taxpayer was not to be made to suffer on account of bad drafting of statute. [p. 1514] I

2004 PTD 901 rel.

(i) General Clauses Act (X of 1897)---

----S. 24A---Every judicial or quasi judicial finding should be based on reasons.

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 2619; 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 ref.

Nadeem Ahmed Mirza, Consultant for Appellant.

Manzoor Ahmed Rajper, Principal Appraiser for Respondents.

2019 P T D (Trib.) 1519

[Customs Appellate Tribunal]

Before Jehanzaib Wahlah, Member (Judicial-III)

Messrs ZAINAB ENTERPRISES, KARACHI and another

Versus

The DEPUTY DIRECTOR, DIRECTORATE GENERAL OF VALUAION, KARACHI and 2 others

Custom Appeals Nos. K-37 and K-38 of 2018, decided on 22nd December, 2018.

(a) Customs Act (IV of 1969)---

----S. 81---Customs Rules, 2001, Rr. 439 & 440---Provisional determination of liability---Provisional clearance---Finalization of provisional assessment---Scope---Appellant had assailed order of Director, Directorate General of Valuation, whereby he re-determined the value of imported goods---Appellant during pendency of appeal filed application for release of imported consignment---Appellate Tribunal directed release of consignment upon payment of duty and taxes in accordance with the declared value upon deposit of pay order for the differential between the declared and assessed value---Appellate Tribunal, later on, allowed the appeal---Deputy Collector of Customs passed assessment order through which he finalized the assessment while construing the case as one of provisional release and assessed the goods of appellant to higher rate by using identical goods method---Validity---Consignment of appellant was released on the order of Apellate Tribunal by Deputy Collector of customs and not in exercise of powers vested upon him under the provisions of S. 81(1) of Customs Act 1969---Appellate Tribunal had not directed Deputy Collector of Customs to determine value of goods---Powers under provisions of S. 81, Customs Act, 1969 and R. 439(a), Customs Rules, 2001 could be exercised by Deputy Collector of customs when the value declared by importor seemed to be incorrect---Appellate Tribunal set aside the orders passed by Customs authorities and allowed the appeal.

(b) Customs Act (IV of 1969)---

---S. 81---Provisional determination of liability---Scope---Period for determination of value started from the date of determination of provisional assessment---Final assessment order had to be made by the officer of Customs or Directorate General of Valuation within a period of 6 months without any exception, however, if final assessment could not be made within 6 months, Collector or Director could extend the period further but not more than 90 days, subject to availability of "exceptional circumstances" and recording of those after serving a notice to the importer.

Khalid Mahmood v. Collector of Customs, Custom House, Lahore 2009 SCMR 1881 and The Collector of Customs, PMBQ, Karachi v. Messrs International Industries Ltd, Karachi C.P.L.A. No. 728-K of 2010 rel.

(c) Customs Act (IV of 1969)---

----S. 193A---Procedure in appeal---Extension of time after lapse of 120 days---Scope---Collector of Customs had to pass order within a period of 120 days from the date of receipt of appeal---Such period could be extended for further 60 days upon availability of "exceptional circumstances" and recording of those after serving notice and hearing the taxpayer---Appeal was filed by appellant on 28-4-2017, an order against which had to be passed on or before 26-4-2017---No extension was granted by Collector prior to lapse of initial period; to the contrary, Collector obtained extension from Federal Board of Revenue which extension was without lawful authority as the period had been extended after expiry of initial period of 120 days---Order passed by Collector of Customs (Appeals) was barred by time and as such of no legal effect---Appellate Tribunal set aside the order passed by Collector of Customs (Appeals) and allowed the appeal.

Khalid Mahmood v. Collector of Customs, Custom House Lahore 1999 SCMR 1881; Messrs Fazal Ellahi and Sons v. Deputy Collector of Customs and others 2007 PTD 2119; 2007 PTD 117; M/s. Super Asia Muhammad Din Sons (Pvt.) Ltd. v. Collector of Sales Tax Gujranwala and another 2008 PTD 60 and The Collector of Sales Tax, Gujranwala and others v. Messrs Super Asia Muhammad Din Sons and others 2017 SCMR 1427 rel.

Nadeem Ahmed Mirza, Consultant for Appellant.

Inayatullah, Appraiser for Respondent.

2019 P T D (Trib.) 1537

[Customs Appellate Tribunal]

Before Muhammad Nadeem Qureshi, Member (Judicial-I)

Messrs AL-HIRA INTERNATIONAL, FAISALABAD

Versus

The DEPUTY COLLECTOR OF CUSTOMS, GROUP-IV, MCC OF APPRAISEMENT WEST, KARACHI and 2 others

Customs Appeal No. K-1614 of 2015, decided on 23rd October, 2018.

Customs Act (IV of 1969)---

----Ss. 156, 32, 32A & 198---Customs Rules, 2001, R. 435---SRO No. 1286(I)/2015 dated 24.12.2015---Pakistan China Free Trade Agreement---Mis-declaration---Concealment---Confiscation of goods---Weight of packing---Examination of goods---Free Trade Area Certificate---Document of origin of goods---Scope---Appellant imported Polyester Rayon Dyed Fabric from China---Examination of goods revealed that appellant in fact imported "Armani" brand fabric declaring it of "China" origin as against "Italy" (printed on goods)---Weight of goods was found in excess by 562 kgs as against declared 3700 kgs---Principal Appraiser framed contravention report---Deputy Collector of Customs (Adjudication) issued show-cause notice; passed order-in-original and confiscated the goods---Collector of Customs (Appeals) dismissed the appeal---Validity---Examiner instead of determining the net weight of the fabric by weighing a meter of fabric relied upon the packing list and added the weight of card board roll, carton and polypropylene fabric wrapped thereon as integral part of the weight of fabric---No excess quantity had been imported by the appellant---Edges of fabric negated the allegation of customs authorities as those were weaved with the inscription of "Super Fine 300's Cashmire Wool Made in Italy"---Said weave meant that the wool was made of Italy not fabric---Free Trade Area Certificate confirmed that all goods were produced in China---Free Trade Area Certificate was a valid document for determination of origin of goods---Appellate Tribunal set aside the orders passed by Customs Authorities and allowed the appeal.

Nadeem Ahmed Mirza, Consultant for Appellant.

Zafar Umrani, Principal Appraiser D/R/ for Respondents.

2019 P T D (Trib.) 1555

[Customs Appellate Tribunal]

Before Ch. Muhammad Shabbir Gujjar, Member (Judicial)

The COLLECTOR OF CUSTOMS, MCC (PREVENTIVE), LAHORE through Assistant Collector of Customs, AFU, Lahore

Versus

Messrs MUBARAK VISION, LAHORE and others

Custom Appeal No. 204/LB of 2018, decided on 26th June, 2018.

Customs Act (IV of 1969)---

----Ss. 19 & 20---Sales tax---Exemption, claim for import of consignment comprising "Ophthalmic Surgical Knives" and goods declaration was filed claiming exemption of sales tax under Serial No.52-A of Sixth Schedule to the Sales Tax Act, 1990---Consignment was imported for further supply to a Hospital---Physical examination by Customs Examination authorities showed that the description and other assessment related particulars were as per the goods declaration---Appraising Officer having refused the claim of exemption of sales tax, importer filed First review and then Second review which were rejected by Deputy Collector---Appeal to Collector of Customs (Appeals), was accepted---Validity---Collector of Customs (Appeals) had correctly observed that the authorities below had not applied their judicious mind while holding that importer was not entitled to avail the exemption of sales tax---Material on record had fully supported that the importer through an agreement would make the supply of imported goods to Hospital run by the Federal or Provincial Government or for charitable purposes---Importer, in the present case through a valid agreement with the Hospital, duly supported by a purchase order, made arrangements for the supply of the goods in question to a charitable hospital---Exemption of sales tax under serial number 52-A of Table to Sixth Schedule of Sales Tax Act, 1990, was available to the importer---Collector of Customs (Appeals) had rightly declared that impugned goods were meant for supply of said Hospital and qualified for exemption of sales tax---Department was not in a position to point out any illegality or infirmity in the order-in-appeal passed by the Collector of Customs (Appeals) which was maintained and appeal by the department was dismissed, being devoid of any merits.

PLD 2014 Sindh 224; 2006 SCMR 129 and 2003 SCMR 1505 ref.

Nadeem Mehmood Mian for Appellant.

Ch. Sakhi Muhammad for Respondents.

2019 P T D (Trib.) 1567

[Customs Appellate Tribunal]

Before Jehanzaib Wahlah, Member (Judicial-III)

Messrs STAR ENTERPRISES, KARACHI

Versus

The DEPUTY DIRECTOR, DIRECTORATE GENERAL OF P.C.A., KARACHI and 2 others

Custom Appeal No. K-1269 of 2017, decided on 15th December, 2018.

(a) Customs Act (IV of 1969)---

----S. 26A---Conduct of audit---Procedure---Notice to importer---Scope---Prior to conducting audit, the appropriate officer has to either summon, give notice and reasonable time to importer for production of accounts and records---Conducting of audit on the basis of record available in 'Customs Computerized System' is not permissible.

(b) Administration of justice---

----A thing has to be done as it has been prescribed to be done, adoption of any other method renders same illegal and void ab initio.

2002 PTD 2457; PLD 1971 SC 61; PLD 1973 SC 236; E.A Avans's case PLD 1964 SC 536; 2001 SCMR 838; 2003 SCMR 1505; Director General of Intelligence and Investigation and others v. M/s. Al-Faiz Industries (Pvt.) Ltd. and others 2006 SCMR 129; PLD 1996 Kar. 68; 2006 PTD 978 and PLD 1971 SC 184 ref.

(c) Customs Act (IV of 1969)---

----S. 3DD---Income Tax Ordinance (XLIX of 2001), Ss. 177 & 207---Directorate General of Post Clearance Audit---Jurisdiction---Audit by income tax authorities---Scope---Directorate General of Post Clearance Audit is not empowered to exercise the powers of an officer of Inland Revenue under S.207 of the Income Tax Ordinance, 2001 for conducting audit.

(d) Customs Act (IV of 1969)---

----S. 180---Sales Tax Act (VII of 1990), Ss. 3, 6, 7, 33 & 34---Show-cause notice---Time and manner of payment of sales tax---Determination of sales tax liability---Offences and penalties---Default surcharge---Scope---Section 3, Sales Tax Act, 1990, being a charging section cannot be invoked by anyone other than an officer of Inland Revenue---Section 6 is a machinery section that lays down the procedure relating to collection of sales tax at import stage---Customs authorities, with the exception of Clearance Collectorate, cannot charge anyone under the said section---Section 7 provides determination of sales tax liability at the time of filing sales tax return, and thus a machinery section---Section 33 contains penal clauses synonymous to S. 156(1) of Customs Act, 1969 and S.34 provides about default surcharge to be paid upon contravention and establishment of charge---Both the sections are independent under which no charge can be invoked---No show-cause notice can be issued under said sections---Issuance of show-cause notice while invoking irrelevant/erroneous provisions renders the same void ab initio and of 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. Addl. Collector 2002 MLD 180; State Cement v. Collector PTCL 2001 CL 558; Kashmir Sugar v. Collector 1992 SCMR 1898 and Sarwar International v. Addl. Collector of Customs 2013 PTD 813 ref.

(e) Customs Act (IV of 1969)---

----S. 3---Sales Tax Act (VII of 1990), Ss. 11 & 48---Income Tax Ordinance (XLIX of 2001), Ss. 162(1) & 140---Officer of customs---Jurisdiction---Assessment and recovery of sales tax---Recovery of arrears of sales tax---Recovery of tax from persons holding money on behalf of a taxpayer---Recovery of tax from the person from whom tax was not collected or deducted---Scope---Section 11, Sales Tax Act, 1990 and S. 162(1), Income Tax Ordinance, 2001 empower the officer of Inland Revenue and Commissioner of Income Tax to initiate adjudication/recovery proceedings for the short collected/paid sales tax and income tax either due to collusion, connivance, inadvertence, error or misconstruction---Customs Collectorates can recover the amount of sales tax and income tax only upon receipt of notice from the officer of Inland Revenue and Commissioner of Income tax in terms of S. 48 of Sales Tax Act, 1990 and S. 140 of Income Tax Ordinance, 2001 for recovery of adjudged amount of sales tax and income tax after due process of law.

2011 PTD (Trib.) 110; 2010 PTD (Trib.) 2086; SCRA No. 01/2010; 2004 PTD 801; C.P. No. D-216/2013; 2015 PTD 702; 2016 PTD (Trib.) 969; 2016 PTD (Trib.) 1008; 2016 PTD (Trib.) 2125; Appeal No. K-1635/2014; Appeal No. K-1029/2016; Appeal No.K-1030/ 2016; Appeal No. K-1343/2015; 2016 PTD (Trib.) 2463 and 2017 PTD (Trib.) 481 ref.

(f) Customs Act (IV of 1969)---

----Ss. 180, 80, 83, 193 & 193A---Customs Rules, 2001, Rr. 438 & 442---SRO No.371(I)/2001 dated: 15-6-2001---SRO No.500(I)/2009 dated 13-6-2009---Show-cause notice---Checking of goods declaration by Customs---Clearance of goods---Appeal to Collector (Appeals)---Procedure in appeal---Scope---Clearance order cannot be disturbed by any authority by preparing contravention report and initiating adjudication proceedings---After passing of clearance order, only course available before officer of Customs is to challenge the said order before the Collector of Customs---Collector of Customs (Appeals) is empowered to issue show-cause notice to the importer---In the presence of appealable order, fresh order cannot be passed even through issuance of show-cause notice.

Messrs Paramount International (Pvt.) Ltd., Karachi v. Secretary Revenue Division 2014 PTD 1256; Messrs Smith Kline French v. Pakistan 2004 PTD 3020 and Messrs World Trade Corporation v. Central Board of Revenue 1989 MLD 4310 rel.

(g) Customs Act (IV of 1969)---

----Ss. 193 & 195---Appeal to Collector of Customs (Appeals)---Powers of Federal Board of Revenue or Collector of Customs to pass certain orders---Scope---When the right of appeal has been provided by legislature in the provision of S. 193 of Customs Act, 1969, S. 195 becomes un-operational and cannot be exercised even by the authority defined therein.

Nadeem Ahmed Mirza, Consultant for Appellant.

Asif Maqbool, Assistant Director and Umair Jehangir, A.O. for Respondents.

2019 P T D (Trib.) 2004

[Customs Appellate Tribunal]

Before Muhammad Sajid Abbasi, Member (Judicial-II)

Messrs MANSOOR ISRAR LTD., AFGHANISTAN

Versus

The PRINCIPAL APPRAISER, DIRECTORATE GENERAL OF TRANSIT TRADE, KARACHI and another

Custom Appeal No. K-104 of 2017, decided on 5th September, 2018.

(a) Customs Act (IV of 1969)---

----Ss. 1, 79(1), 128 & 129---Customs Rules, 2001, R. 473(6)---Afghanistan-Pakistan Transit Trade Agreement, 2010---Declaration---Transit of goods across Pakistan to a foreign territory---Scope---Appellant, an importer of Afghanistan duly registered with Ministry of Commerce and Industry of Afghanistan, imported several articles of home consumption---Examination of goods transpired that fabric colour and pattern was akin to the one used by armed forces and that weight and quantity of some goods were in excess to the declaration---Appellant was issued a show-cause notice and was ordered to furnish extra insurance guarantee to cover the excess quantity---Plea of importer was that show-cause notice could not be issued to an importer of Afghanistan---Validity---Customs Act, 1969 was only applicable on the people of Pakistan with the exception of Ss. 127 to 129, Customs Act, 1969---Appellant imported goods for home consumption in Afghanistan under Afghanistan-Pakistan Transit Trade Agreement, 2010---Any discrepancy found in import documents submitted for transit of goods had to be reported by Directorate General Transit Trade to the Ministry of Commerce, Afghanistan, through Ministry of Commerce, Pakistan and subsequently had to file complaint before Afghanistan-Pakistan Transit Trade Co-ordination Authority---Officials of customs in Pakistan were not empowered to proceed under the Customs Act, 1969---Ministry of Commerce, Afghanistan, was the appropriate authority to proceed against an importer of Afghanistan in accordance with their Import Policy Order or relevant law---Customs officials in Pakistan had no locus standi to serve show-cause notice to the appellant---Appellate Tribunal vacated the show-cause notice and set aside the order passed thereon.

Messrs Najab Zarab Ltd. v. Government of Pakistan PLD 1993 Kar. 93; FOP v. Jamal Din and others 1996 SCMR 727; C.P. No.D-2410 of 2010; PLD 1996 Kar. 68; 2006 PTD 978 and PLD 1971 SC 184 fol.

2005 PTD (Trib.) 1324; 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; PLD 2004 SC 600; PLD 2005 SC 842; 2001 SCMR 1822; PLD 1971 SC 124; PLD 1971 SC 197; PLD 1973 SC 236; 2013 PTD (Trib.) 353 and 2015 PTD (Trib.) 1422 ref.

(b) Words and phrases---

----"Discrepancy"---Connotation---Disagreement; variance of facts or sentiment; state of being discrepant; and discrepant means inconsistence; at variance.

The Chambers Dictionary 1997 Edition and The Lexicon Webster Dictionary of English Language Encyclopedic Edition rel.

(c) Customs Act (IV of 1969)---

----Ss. 129 & 79(1)---Transit Trade---Declaration---Exemption from duty and taxes---Scope---Goods imported in Pakistan for transit to foreign country are not leviable to duty and taxes, which are otherwise leviable and to be paid in case of filing goods declaration under S.79(1), Customs Act, 1969.

(d) Administration of justice---

----Public functionaries---Duty of---Superior officer is not empowered to exercise quasi judicial powers of his subordinate officer in the matter of adjudication.

(e) Customs Act (IV of 1969)---

----Ss. 156(1)(64), 128 & 129---Customs Rules, 2001, R. 484Q---Scope---Section 156(1)(64), Customs Act, 1969 is only applicable where the foreign importer or his clearing agent removed the goods from the terminal/port in clandestine manner without completion of codal formalities of Transit Trade Agreement or pilfered the goods during the course of transit or where cross border verification is not submitted.

(f) Administration of justice---

----A thing was to be done as it was required to be done or not at all.

2002 PTD 2457; PLD 1971 SC 61; PLD 1973 SC 236; E.A Avans's case PLD 1964 SC 536; 2001 SCMR 838; 2003 SCMR 1505; and Director General of Intelligence and Investigation and others v. Messrs Al-Faiz Industries (Pvt.) Ltd. and others 2006 SCMR 129 fol.

Nadeem Ahmed Mirza Consultants for Appellant.

Shakeel Raja, Appraiser for Respondents

2019 P T D (Trib.) 2045

[Customs Appellate Tribunal]

Before Syed Sardar Hussain Shah, Member (Judicial)

HIDAYAT ULLAH

Versus

ADDITIONAL COLLECTOR CUSTOMS (ADJUDICATION), MCC, PESHAWAR and 2 others

Custom Appeal No.184/PB of 2018, decided on 5th September, 2018.

Customs Act (IV of 1969)---

----Ss. 2(s), 16, 17 & 168---Imports and Exports (Control) Act (XXXIX of 1950), S. 3---S.R.O. No.172(I)/2013, dated 5.3.2013---S.R.O. No.185(I)/2013, dated 8-3-2013---Smuggling---Seizure and confiscation--Amnesty scheme---Customs staff stopped vehicle for want of its legal import documents---Driver failed to produce any legal import documents and the vehicle was detained for verification of its legal status---Vehicle was examined through Forensic Science Laboratory, which reported that chassis number of vehicle was tampered---Deputy Collector of Customs (Adjudication) vide order-in-original confiscated the vehicle---Collector of Customs (Appeals) upheld the order-in-original and dismissed the appeal---Validity---Appellant had taken the benefit of Amnesty Scheme vide S.R.O. No.172(I)/2013, dated 5-3-2013 and S.R.O. No.185(I)/2013, dated 8.3.2013---Vehicle was produced before Deputy Collector Customs for physical inspection and for payment of duty and taxes, which was examined and the examiner/inspector reported that chassis number of the vehicle was genuine and not tampered---Deputy Collector Customs directed the Motor Registration Authority to register the vehicle against original copy of order-in-original, original challan and no-objection certificate and confirmed the payment of leviable duty/taxes and redemption fine---Appellant produced all those documents to the Motor Registration Authority and also paid all dues as per challan of the Excise and Taxation Department---Vehicle was registered in the name of appellant and registration number was allotted ---Chassis number before the chemical treatment and after the chemical treatment was different but the customs authorities allowed the registration of the vehicle in that position---Chassis number was not tampered later on but it was like that at the time of production of the vehicle before Customs authorities---Customs authorities were responsible for examination of the vehicle at the time of production of the same---Vested right accrued to the appellant through actions and inactions of the Customs authorities---Customs Appellate Tribunal set aside the orders passed by adjudicating authorities and allowed the release of vehicle unconditionally to the appellant.

Irshad Ahmad Durrani for Appellant.

Muhammad Zahid, Superintendent/D.R. for Respondents.

2019 P T D (Trib.) 2092

[Customs Appellate Tribunal]

Before Syed Sardar Hussain Shah, Member (Judicial) and Qurban Ali Khan, Member (Technical)

Messrs KHYBER TEA AND FOODS COMPANY, PESHAWAR

Versus

The COLLECTOR OF CUSTOMS, MODEL CUSTOMS COLLECTORATE, PESHAWAR and 2 others

Custom Appeal No. 549/PB of 2017, decided on 28th May, 2018.

(a) Customs Act (IV of 1969)---

----Ss. 2(s), 16, 17, 156(1)(8)(89), 157, 158 & 171---Imports and Exports (Control) Act (XXXIX of 1950), S.3---Smuggling---Seizure and confiscation of allegedly smuggled goods---Search of a truck showed that there were foreign origin goods loaded thereon---Occupants of the truck having failed to produce any legal documents/lawful possession of said goods, Customs staff seized the goods and the truck---Deputy Collector Adjudication Customs, vide order-in-original ordered outright confiscation of seized goods and released the truck against 20% redemption fine---Validity---Sales tax invoices showed by the driver to the Customs Officials, were not accepted by the Customs Authorities---Fact that all the import documents along with sales tax invoices were produced and Adjudicating Officer as well as Collector (Appeals), confiscated the goods in violation of S.25-A of General Clauses Act---Duty and obligation of public functionaries was to redress the grievances of citizen with reason after applying independent mind---Authorities could not prove its case against the appellants regarding violation of Ss.2(s), 16 & 157 of the Customs Act, 1969, read with S.3(3) of Imports and Exports (Control) Act, 1950, punishable under S.156(1)(8)(89) of the Customs Act, 1969---Seized goods were notified items and were not landed items and were importable under the import policy; any presumption of its being smuggled required direct evidence, which was absent in the case---Authorities were directed to immediately work out the entire sale proceeds, which were payable to the appellants and release the vehicle unconditionally---Redemption fine imposed on the truck was also ordered to be remitted.

2004 PTD 791; 2012 PTD 1343; 2012 PTD 1632; 2002 PTD 470; 2001 PTD 2097 = 2001 SCMR 1376; 2001 PTD 2982; 2004 PTD 788; 2013 PTD (Trib.) 600; 2016 PTD (Trib.) 80; 2015 PTD 990; 2013 PTD 327; 2015 PTD 2480; 2017 PTD 1497; 2006 PTD 1056; PLD 1992 SC 364; PLD 2017 SC 99; 2012 PTD 428 and 2012 PTD 28 rel.

(b) Admission---

----Fact not rebutted, would amount to admission.

2007 PTD 167 rel.

(c) Customs Act (IV of 1969)---

----Ss. 2(s), 16, 17, 25 & 179(iii)---Determination of approximate value of seized goods---Seizing Officer by himself had determined the approximate value of the seized goods; whereas the determination of the value of the seized goods was the domain of Appraiser, and not Superintendent Customs of the seizing agency---Domain of Superintendent Customs was to prevent the smuggling and not to determine value of the seized goods---Approximation of value of seized goods had no room in the law, rather the perfect valuation had the value in the eye of law---Seizing Officer did not associate the appellant during the proceedings of the evaluation and assessment of seized goods---Seizing officer must associate the owner of the goods or his agent at the time of evaluation and assessment of the seized goods---Duty and taxes involved in the case being Rs.52,33,600, Deputy Collector had wrongly assumed the jurisdiction by issuing the show-cause notice---Order-in-original passed by Deputy Collector (Adjudication) was violation of S.179(iii) of the Customs Act, 1969.

2015 PTD 462; 1999 PTD 4126 and 2006 SCMR 1713 rel.

(d) Customs Act (IV of 1969)---

----Ss. 16, 17, 179(3) & 180---Issuance of show-cause notice before confiscation of goods or imposition of penalty---Object---Purpose of issuance of show-cause notice was to get, accused know about the allegation levelled against him and prepare his defence, which was the right of appellant/accused to defend himself and produce the evidence of legal import and lawful possession of the goods---No provision existed in the Customs Act, 1969 and any other law that accused could not produce the documentary evidence in support of his version at any stage---Provisions of S.179(3) of the Customs Act, 1969, required that the case should be adjudicated within a period of 120 days from the date of show-cause notice---Period between the issuance of show-cause notice and passing of order-in-original being six months, order-in-original was barred by time---Case was to be mandatorily decided within the period specified by Customs Act, 1969. 2017 SCMR 1427 = 2017 PTD 1756; 2007 SCMR 1095; 2008 PTD 60; PLD 2005 Pesh. 214; 2007 SCMR 1256; 2010 SCMR 1408; 2006 PTD 340 and PTCL 2005 CL 841 rel.

(e) Administration of justice---

----Where law required a thing to be done in a particular manner, it would be legal and valid only if it was done in that manner and not otherwise.

(f) Customs Act (IV of 1969)---

----S. 19---Exemption---Once the goods imported into the country for home consumption and issued a sales tax invoice under S.23 of the Sales Tax Act, 1990 in respect of the said goods; the provisions of Customs Act, 1969 were not applicable, because the importer had already paid customs duty, sales tax, income tax, regulatory duty, federal excise duty, as well as additional customs duty at import stage.

Ghazanfar Ali Jatoi, Hussain Ahmed Sherazi and Fakhre-e-Alam Paracha Managing Director for Appellants.

Musa Khan, Superintendent and Fayyaz Khattak Inspector for Respondents.

2019 P T D (Trib.) 2202

[Customs Appellate Tribunal]

Before Syed Sardar Hussain Shah, Member (Judicial)

DIN MAMAMIN and another

Versus

The COLLECTOR OF CUSTOMS, PESHAWAR

Custom Appeal No. 421/PB of 2010, decided on 10th July, 2018.

Customs Act (IV of 1969)---

----Ss. 2(s), 16, 17 & 156(1)(8)(89)---Imports and Exports (Control) Act (XXXIX of 1950), S.3(1)(3)---SRO No. 499(I)/2009, dated 13-6-2009---Smuggling---Outright confiscation of foreign origin vehicle on allegation of smuggling---Vehicle in question was intercepted by Customs Staff and on demand, appellants/owners of vehicle produced "No objection certificate" issued by Assistant Collector Customs---Same having been found doubtful, vehicle was detained under S.17 of Customs Act, 1969 for necessary verification---Subsequently vehicle was examined through Forensic Science Laboratory and in view of its report, vehicle prima facie was found being non-duty paid/smuggled and was seized and confiscated---Appeal against order of Additional Collector was rejected by Collector Customs (Appeals)---Validity---Evidence on record had revealed that said vehicle bearing same chasis number, was intercepted in the year 2008 by the Customs Staff, which was released to the rightful owner against payment of redemption fine and leviable duties and taxes---Appellant was the driver of the vehicle at the relevant time and was still the driver of the same vehicle---Said vehicle was cleared in Amnesty Scheme of 2008 but was once again intercepted by the Customs staff, while being driven by the same driver---Record and laboratoy's reports had revealed that the engine number was the same, while chemical report in the present case indicated that the chassis number was welded and refitted---Case of the prosecution was doubtful for the reasons that the vehicle had been apprehended by the Customs Staff and had been twicely examined through Chemical Examiner---Benefit of the doubt would be considered in favour of appellants/accused persons---Appellate Tribunal ordered for unconditional release of the vehicle to the lawful owner on production of proper registration and documents while setting aside order-in-original and order-in-appeal filed by authorities below, in circumstances.

Mehrab Gul for Appellants.

Musa Khan, Superintendent/D.R. for Respondent.

2019 P T D (Trib.) 2224

[Customs Appellate Tribunal]

Before Muhammad Nadeem Quershi, Member (Judicial-I) and Dr. Zulfiqar A. Malik, Member (Technical-I)

MUHAMMAD SALMAN SAMANA

Versus

The ADDITIONAL COLLECTOR OF CUSTOMS (ADJUDICATION-I), KARACHI and another

Customs Appeal No.K-927 of 2017, decided on 19th July, 2018.

(a) Customs Act (IV of 1969)---

----Ss. 2(s), 16, 139 & 156---Foreign Exchange Regulations Act (VII of 1947), Ss.8(2) & 24---Imports and Exports (Control) Act (XXXIX of 1950), S.3---Baggage Rules, 2006, Rr.2(b) & 3---Smuggling---Confiscation of foreign currency---Appellant/passenger, who was travelling abroad was intercepted and foreign currency (10,000 US$) was recovered from him---Adjudicating Officer vide impugned order-in-original confiscated the currency---No evidence was available to establish the element of mens rea (guilty mind) on the part of the appellant, he could not be saddled with the offence of smuggling---No charge of mis-declaration or mis-statement was on record within the meaning of S.32 of the Customs Act, 1969---Oral declaration made by appellant in terms of S.139 of the Customs Act, 1969 read with Rr.2(b) & 3 of the Baggage Rules, 2006, was to be accepted by the Officers---Neither, it was a case of smuggling within the meaning of S.2(s) of Customs Act, 1969, nor it was a case of import in violation of Import Policy Order within the meaning of S.16 of the Customs Act, 1969, read with S.3 of the Imports and Exports (Control) Act, 1950---Charge framed for the said provisions of law was liable to be dropped, in circumstances---Department was directed by the Tribunal to return the amount of currency equivalent to US$10,000 to the appellant.

2005 SCMR 492 ref.

(b) Interpretation of statutes---

----Interpretation which was more in consonance with the avowed policy decipherable from Title and Preamble of the statute was to be preferred rather to abridge, abrogate or infringe those rights which had accrued in favour of the parties by any means.

M.H. Awan for Appellant.

Nemo for the Respondents.

Date of hearing: 19th July, 2018.

JUDGEMENT

MUHAMMAD NADEEM QURESHI, (MEMBER JUDICIAL-I).-- We intend to dispose of instant appeal filed by the appellant, Mr. Muhammad Salman Samana, against Order-in-Original No.723/2016-17 dated 01.06.2017, pass by Additional Collector of Customs, (Adjudication-I), Customs House, Karachi.

1. Brief facts of the case are that, present appellant/passenger was intercepted by Shift Incharge at International Departure Hall, JIAP, Karachi on 27.01.2017, while he was travelling to Dubai by Emirates Flight No. EK-0607 from Karachi, he was intercepted and recovery of foreign currency as per detail mentioned in the Show-Cause Notice under Section 171 of the Customs Act, 1969. In view of the facts and circumstances of the case, it is established that, the appellant has committed an offence which attracts the provisions of Sections 2(s), 16, (32) and 139 of the Customs Act, 1969 punishable under clauses (8), (9) and (70) of Section 156(1) of the Customs Act, 1969 read with notification of State Bank of Pakistan No. F.E.1/20/2015-SB dated 01.06.2015. The adjudicating officer vide impugned Order-in-Original confiscated the foreign currency and the seized Pakistani Passport may be handed over to the owner unconditionally.

2. Being aggrieved and dissatisfied with the impugned Order-in-Original the appellant filed the instant appeal before this Customs Appellate Tribunal on the grounds incorporated in the Memo of Appeal.

3. On behalf of the Appellant Mr. Muhabbat Hussain Awan, Advocate, appeared and contended that the Appellant has been holding USA Passport and residing in USA for the last may years and really did not know the prevailing foreign exchange law in Pakistan, therefore, he was unaware of the amount fixed for taking out of country during the foreign journey Actually it is an exception case. He further contended that, the appellant being American National as well cannot attempt to commit offence of smuggling of currency of petty amount actually it was happened due to ignorance of law, which can be treated as exceptional case. He further contended that, the appellant was restrained not to declare the excess amount on Declaration Form under Section 139 of the Customs Act, 1969 only to make out a case against appellant which is not just and fair in the eyes of natural justice. He further contended that the adjudicating officer had decided the case without hearing the appellant although he was present at the time of hearing but was not allowed to say anything which is highly objectionable being discrimination. He prayed that the Honorable Customs Appellate Tribunal may be pleased to vacate the show-cause notice and set-aside the impugned Order-in-Original with the directions to concerned Customs Authorities to release the whole confiscated foreign currency amount in the interest of justice.

4. On behalf of the Respondents nobody appeared nor filed any cross objections as required under subsection (4) of Section 194-A of the Customs Act, 1969, respondent only filed para-wise comments, same are hereby taken on record for assistance of court.

5. Arguments heard and concluded. After perusal of the record of the case as well as the oral and written arguments extended by both the parties, by doing so and after the careful scrutiny of the record it has been observed that the appellant has forwarded a sufficient cause and cogent reason to justify and placed legal arguments in support of plea. When the impugned order is unable to appreciate the legal point that according to clause (i) of the Notification No.F.E.2/98-SB dated 21.07.1998 notified by the State Bank of Pakistan in terms of Section 8(2) of the Foreign Exchange Regulations Act, 1947, where under such notification the confiscation of the foreign currency is to be made over and above the permissible limit of US$ 10,000/-. For resolving such aspect of the case and before giving any observation, we would prefer to go through the relevant provisions of law invoked in the case with reference to the smuggling it has been defined under Section 2(s) of the Customs Act, 1969 which reads as under:--

"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."

1. The currency has been included in sub-clause (i) of this clause. After equating the said definition with the State Bank of Pakistan's notification, it is clear from the context that in accordance with the foreign currency circular, State Bank of Pakistan permitted to take out maximum amount of US$ 10,000 on a foreign trip. Therefore, we are clear in our mind without having any element of doubt that, upto limit of US$ 10,000/-provisions of Section 2(s) of the Customs Act, 1969 are not attended. Such limit, in other words also does not have any embargo under Section 24 of the Foreign Exchange Act, 1947 on to the person to prove that he had requisite permission from the State Bank of Pakistan as required under Section 24 of the Foreign Exchange Act, 1947

2019 P T D (Trib.) 2248

[Customs Appellate Tribunal]

Before Syed Sardar Hussain Shah, Member (Judicial)

AZIMULLAH and another

Versus

The COLLECTOR CUSTOMS, MCC, PESHAWAR and 3 others

Custom Appeal No. 26/PB of 2018, decided on 2nd August, 2018.

Customs Act (IV of 1969)---

----Ss. 2(s), 16 & 157---Customs Rules, 2001, R.72(3)---SRO No. 1332(I)/2012, dated 24-10-2012---Confiscation of vehicle allegedly smuggled one---Release of vehicle against payment of redemption fine---Customs Special Checking Squade intercepted a truck and occupant/owner of truck on demand produced registration book but failed to produce any documentary evidence regarding legal import/payment of duty and taxes paid thereon---Deputy Collector of Customs (Adjudication) vide order-in-original released the mounted body of the truck against payment of 30% redemption fine in addition to duty/taxes---Collector of Customs (Appeals) vide order-in-appeal, ordered outright confiscation of vehicle in question---Chassis frame of vehicle was purchased by one, who after purchase of the vehicle handed over its ownership and possession to the other; who according to the rules registered the vehicle with Motor Registration Authority---Record had revealed that vehicle was non-duty paid only to the extent of "mounted body"---No doubt mounted body without payment of duty and taxes was illegal, but amount of Rs.8,45,000 paid by appellant was not a small amount to purchase a chassis frame and use it without body---Outright confiscation of vehicle, which was auctioned by the Customs Authorities allowing the purchaser to register the same with the Authority and to use it would harm the norms of justice---Order-in-appeal passed by the Collector of Customs (Appeals) was set-aside by the Tribunal with direction to department to release the vehicle on payment of duty and taxes with redemption fine of 30% of the customs value of the mounted body with further fine of Rs.100,000. Wahid Ali Khan for Appellants.

Muhammad Zahid, Superintendent Customs for Respondents.

2019 P T D (Trib.) 2255

[Customs Appellate Tribunal]

Before Syed Sardar Hussain Shah, Member (Judicial)

MUHAMMAD TAHIR

Versus

The COLLECTOR OF CUSTOMS (APPEAL), MCC, PESHAWAR and another

Custom Appeal No. 120/PB of 2017, decided on 17th July, 2018.

Customs Act (IV of 1969)---

----Ss. 2(S), 16 & 139---Imports and Exports (Control) Act (XXXIX of 1950), S.3---SRO No. 760(I)/2013, dated 2-9-2013---Smuggling---Baggage of appellant/passenger, who arrived through International Flight, was checked through scanning machine, which led to the recovery of foreign origin 50 Kgs of Silver grains---Appellant only produced invoice, but failed to produce the requisite documents and foreign exchange for the import of said silver grains---Appellant despite lapse of 30 days could not produce documents for lawful possession of impugned goods---Detention of goods was converted into seizure---Deputy Collector of Customs (Adjudication), vide order-in-original, released the seized goods to the appellant on payment of leviable duties and taxes plus redemption fine at 20% of the customs value---Collector of Customs (Appeals) set aside order-in-original---Validity---Appellant requested to the Customs authorities that as the goods in question were brought through an authorized route, he could be allowed to clear it on payment of all duties and taxes---Detention memo. showed the goods having been detained for want of duties and taxes and was not seized under S.168 of the Customs Act, 1969---No notice under S.171 of the Customs Act, 1969 was served on the appellant rather one month's time was given for payment of duties and taxes for clearing the detained goods---Appellant could not pay the duties and taxes at the time of detention of the goods but produced the invoice of purchase of the item---Nothing was on file to show questioning the appellant by the Customs authorities to prove legality of his goods at the time of import---Case of the department was that appellant had not paid duties and taxes at the time of his arrival and not that of smuggling---Appellate Tribunal allowed appeal, set-aside, order-in-appeal passed by Collector of Customs (Appeals), and order-in-original passed by Deputy Collector of Customs, was upheld.

Muhammad Hayat Khan for Appellant.

Muhammad Zahid, Superintendent/D.R. for Respondents.

2019 P T D (Trib.) 2284

[Customs Appellate Tribunal]

Before Ch. Muhammad Shabbir Gujjar, Member (Judicial) and Imran Tariq, Member (Technical)

Messrs 99-STAR CORPORATION, LAHORE and 3 others

Versus

ADDITIONAL COLLECTOR OF CUSTOMS, MCC, LAHORE and others

Custom Appeals Nos.181/LB, 179/LB in Order-in-Original Nos. 60 and 61 of 2012, decided on 14th June, 2018.

Customs Act (IV of 1969)---

----Ss. 15, 16, 32 & 181---SRO No. 499(I)/2009, dated 13-6-2009---Charge of mis-declaration of description, weight, value or classification of goods---Imposition of penalty---Adjudicating authority on charge of mis-declaration confiscated goods with option to the importers to redeem goods on payment of fine equal to 35% of assessed value in addition to payment of duty and taxes leviable thereon---Different penalties were also imposed upon clearing agents due to mis-declaration on their part---Validity---Contention of importers was that the pitch of fine fixed for mis-declaration vide clauses of SRO 499(I)/2009, dated 13-6-2009, no more held the field in view of amendment of S.15 of the Customs Act, 1969 (vide Finance Act, 2011)---After said amendment the pitch of fine fixed by the Board for the contravention of S.32 vide cls. (a) to (g) under Serial-1 of the Table of SRO 499(I)/2009, dated 13-6-2009, had become redundant and no redemption fine could be imposed on basis thereof by the adjudicating authority---Correct declaration was made by the importers---Goods were examined and assessed to duty and taxes which were paid and no loss to revenue was caused in that regard; as such S.32 of the Customs Act, 1969, was not attracted---Impugned orders passed by adjudicating authority, were set aside being devoid of any merits.

Messrs Al-Hamad Edible Oil Ltd and others v. Collector of Customs 2003 PTD 552; Federation of Pakistan and others v. Messrs Seman Diplomatic Bonded Warehouse 2007 SCMR 1881 and Collector of Customs v. Khan Muhammad PLD 1986 SC 92 ref.

Mohammad Taimoor Ali Sial for Appellants.

Zulqarnain, I.O. for Respondents.

2019 P T D (Trib.) 2310

[Customs Appellate Tribunal]

Before Syed Sardar Hussain Shah, Member (Judicial)

MUHAMMAD ASLAM

Versus

COLLECTOR OF CUSTOMS (APPEALS), ISLAMABAD and 3 others

Custom Appeal No.271/PB of 2017, decided on 30th July, 2018.

Customs Act (IV of 1969)---

----Ss. 16 & 156(1)(9)(90)---Imports and Exports (Control) Act (XXXIX of 1950), S.3---Prohibition on import---Seizure---Used Truck was imported under "Personal Baggage Scheme" and filed goods declaration showed the Model year of said truck as 2012---Website of the manufacturer company transpired the year of manufacture of the truck as 1999---Truck in question being model of more than five years old as ascertained from the website of manufacturers was not importable in terms of S.16 of the Customs Act, 1969 and S.3(1) of Imports and Exports (Control) Act, 1950 and Import Policy Order, 2016 and was punishable under cl.(9) of subsection (1) of S.156 of the Customs Act, 1969---Deputy Collector of Customs (Adjudication), vide order-in-original, ordered outright confiscation of the truck---Appeal filed against order-in-original was dismissed by Collector of Customs (Appeals)---Validity---Lower fora had mentioned that the warranty book and log book recovered from the Dash Board of the truck in question was more than five years old---Both the officials of the Customs were not experts; without examining the truck by an expert opinion based on recovered documents could not be considered and was not a reliable evidence for seizure and confiscation of truck---Manufacturers had reported that truck was that of 2012 Model---Show-cause notice issued by department was of doubtful nature---In the light of report of manufacturers importer would not be deprived of his legal property, without bringing substantial, cogent and proper evidence---Sufficient material was on file which confirmed that truck's model was 2012---Both order-in-original and order-in-appeal were set aside by the Tribunal---Truck was ordered to be returned to original owner on the prevailing customs duty/taxes.

Gulab Shah for Appellant.

Muhammad Zahid, Superintendent Customs and Pir Muhammad, Appraiser for Respondents.

2019 P T D (Trib.) 2325

[Customs Appellate Tribunal]

Before Ch. Muhammad Shabbir Gujjar, Member (Judicial) Imran Tariq Member (Technical)

PAKISTAN CYCLE INDUSTRIAL COOPERATIVE SOCIETY, LAHORE

Versus

COLLECTOR OF CUSTOMS, LAHORE and others

Custom Appeal No. 214/LB of 2007, decided on 13th June, 2018.

Customs Act (IV of 1969)---

----Ss. 25 & 32---Determination of customs value of goods---Contravention report---Engineering Development Board (E.D.B.), submitted Contrvention Report and Deputy Collector of Customs, issued show-cause notice through which appellant/importer was called upon to pay duty and taxes to the tune of Rs.51,242,334 against import value of Rs.1,94,079,319---Additional Collector of Customs vide order-in-original upheld said demand of duty and taxes to the tune of Rs.22,357,988 Collector of Appeals dismissed the appeal---Validity---Appellant had contended that impugned orders had been passed without taking into account that 'EDB' had required that 3.800% short-fall in detention in the Motorcycle in question would attract rates of duty chargeable---On examination of letter of 'EDB', in respect of local assembly of Cars, it had transpired that nowhere was mentioned in said letter that formula available on the letter was applicable on all local assemblers of automotive vehicles including motorcycles---Formula for calculation of duties and taxes contained in said letter of 'EDB', was not relevant to the merits of the present appeal as same had been issued in context of implementation of shortfall in indigenization programme of Cars assembled by another company---Same was not applicable to the motorcycle assemblers---Department had also failed to justify the method of calculation of figure of Rs.22,459,036 which had been adjudged against the appellant---Authorities were directed to calculate the recoverable amount of duty and taxes on the formula applied in respect of demand notice to the appellant in another case.

Waseem Ahmad Malik for Appellant.

Intikhab Alam, Inspector for Respondent.

2019 P T D 141

[Federal Tax Ombudsman]

Before Mushtaq Ahmad Sukhera, Federal Tax Ombudsman

WAHEED SHAHZAD BUTT

Versus

The SECRETARY, REVENUE DIVISION, ISLAMABAD

Complaint No. 0594/LHR/IT of 2018, decided on 18th October, 2018.

Establishment of the Office of Federal Tax Ombudsman Ordinance (XXXV of 2000)---

----Ss. 9(2)(a) & 10---SRO No.1065(I)/2013, dated 20.12.2013---Jurisdiction of the Federal Tax Ombudsman---Nature and scope---Bar on the jurisdiction of the Federal Tax Ombudsman on matters which are sub-judice---Scope---Complaint against Department for failure to initiate proceedings against official(s) responsible for issuing an SRO which was declared illegal by High Court---Validity---High Court judgment whereby SRO No.1065(I)/2013, dated 20.12.2013 was declared illegal was now sub-judice before the High Court as an intra-court appeal, which was filed by Department against said order---Jurisdiction of the Federal Tax Ombudsman was, therefore, barred under S.9(2)(a) of the Establishment of the Office of Federal Tax Ombudsman Ordinance, 2000 and it did not matter if the said intra-court appeal was filed before or after filing of present complaint, since the High Court being a Constitutional Court shall take precedence over a quasi-judicial forum and ultimately its verdict would hold field---Complaint was dismissed, in circumstances.

Mian Munawar Ghafoor, Advisor, Dealing Officer.

Manzoor Hussain Kureshi, Advisor, Appraisal Officer.

Nemo for the Complainant.

2019 P T D 1198

[Federal Tax Ombudsman]

Before Mushtaq Ahmad Sukhera, Federal Tax Ombudsman

SAJJAD AHMED

Versus

The SECRETARY, REVENUE DIVISION, ISLAMABAD

Complaint No. 0175/LHR/IT of 2019, decided on 12th April, 2019.

Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000)---

----Ss. 2(3)(b)(ii), 9(2)(b) & 10(1)---Income Tax Ordinance (XLIX of 2001), Ss. 114(1), 127 & 170(4) & (5)---Refund of tax amount, delay in---Taxpayer was aggrieved of delay in process of his tax refund---Validity---Objections raised under S.9(2)(b) of Federal Tax Ombudsman Ordinance, 2000 was misconceived as taxpayer had already availed legal remedy of appeal for non-passing of order under S.170(4) of Income Tax Ordinance, 2001 by filing appeal under S.170(5) of Income Tax Ordinance, 2001---Failure of authorities to follow directions of Commissioner Inland Revenue (Appeals) was the reason that taxpayer filed complaint---Negligence, inattention, inefficiency, unjustified, oppressive and inaptitude in discharge of duties and responsibilities in not allowing appeal tantamount to maladministration in terms of S. 2(3)(b)(ii) of Federal Tax Ombudsman Ordinance, 2000---Federal Tax Ombudsman directed the Federal Board of Revenue to direct Commissioner Inland Revenue to give effect to appellate order and take necessary disciplinary action against Commissioner Inland Revenue for neglect, inattention and defying lawful order of Commissioner Inland Revenue (Appeals) which had attained finality---Complaint was allowed accordingly.

Shehzadi Polypropylene Industries v. Federation of Pakistan and others Writ Petition No.5999 of 2017 ref.

Mian Munawar Ghafoor, Advisor, Dealing Officer.

Manzoor Hussain Kureshi, Advisor, Appraisal Officer.

Rana Mushtaq Ahmad for Authorized Representative.

2019 P T D 1902

[Federal Tax Ombudsman]

Before Mushtaq Ahmad Sukhera, Federal Tax Ombudsman

FARYAL KHAN

Versus

The SECRETARY REVENUE DIVISION, ISLAMABAD

Complaint No. 312/ISB/IT of 2018, decided on 21st May, 2019.

Income Tax Ordinance (XLIX of 2001)---

----S.140---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), Ss. 10, 9 & 22---Jurisdiction, functions and powers of the Federal Tax Ombudsman---Award of costs and compensation and refunds of amounts---Maladministration---Complaint against unlawful recovery of tax demand from Bank account of complainant and undue delay in refund of the same---Contention of complainant was that a huge amount was withdrawn negligently and without due process of law from his Bank account, and there was undue delay in refund of the same, which entitled complainant to compensation in terms of S. 22 of the Establishment of Office of Federal Tax Ombudsman Ordinance, 2000---Validity---Refund to complainant was issued after a long delay only after complaint was filed before Federal Tax Ombudsman---Unlawful recovery of tax from complainant against whom no tax liability was outstanding and thereafter holding refund inexplicably showed incompetence, inefficiency, negligence and administrative excesses of Departmental officers----Onus probandi to establish quantum of costs incurred as well as of compensation was on complainant---Federal Tax Ombudsman recommended the Department to ensure that a certain amount be recovered from the negligent officers in equal share and the same be paid to complainant and initiate disciplinary proceedings against such officers, and to direct concerned Commissioner to issue additional payment for delayed refund to complainant---Complaint was disposed of, accordingly

Aftab Ahmed, Advisor for Dealing Officer.

Manzoor Hussain Kureshi, Advisor for Appraisal Officer.

Umer Khan Vardag for Authorized Representative.

Johar Ali Shah, DCIR, RTO, Abbottabad, Departmental Representative.

2019 P T D 1996

[Federal Tax Ombudsman]

Before Mushtaq Ahmad Sukhera, Federal Tax Ombudsman

ZEESHAN SHAHID

Versus

The SECRETARY, REVENUE DIVISION, ISLAMABAD

Complaint No.1600/LHR/IT of 2018, decided on 23rd April, 2019.

Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000)---

----Ss. 10, 2(3) & 9---Complaint against alleged non-authorized use of complainant's CNIC for fraudulent issuance of National Tax Number (NTN) in complainant's name and subsequent unlawful filing of return of income---Jurisdiction of the Federal Tax Ombudsman---Mal-administration---Scope---Contention of complainant, inter alia, was that after purchasing a vehicle, an agent unlawfully with the help of Department's officials used his CNIC for issuance of NTN and filing of return---Validity---CNIC was admittedly handed over with the complainant's consent to the agent for purpose of registration of vehicle and payment of taxes as non-filer, however, fake mobile number and email address had been used, due to the Department's withdrawal of a check whereby taxpayer were required to disclose/use SIM cards issued in their own names for purpose of registration---Such withdrawal of said check created a loophole in the IRIS module which was being exploited by unauthorized persons---Federal Tax Ombudsman observed that in the present case since complainant himself gave his CNIC to the agent who in turn took advantage of a systemic flaw, therefore maladministration could not be attributed to the Department---Federal Tax Ombudsman however, recommended that Department ensure that at the time of registration the taxpayer should provide his cellular phone number duly registered in his/her name at least thirty days earlier and that his/her email be required in the original IRIS module---Complaint was disposed of accordingly.

2014 PTD 1353; 2013 PTD 2226 and 2015 PTD 2401 ref.

Munwar Ghafoor and Manzoor Hussain Kureshi, Advisors for Dealing Officer Appraisal Officer.

Waheed Shahzad Butt for Authorized Representative.

2019 P T D 1608

[High Court (AJ&K)]

Before M. Tabassum Aftab Alvi, C J and Sadaqat Hussain Raja, J

COMMISSIONER INLAND REVENUE, MUZAFFARABAD and others

Versus

Khawaja MUHAMMAD ANWER, Proprietor Bismillah Traders, Distributor Haleeb Milk Gulshan Colony, Muzaffarabad and others

Civil References Nos. 32 to 38, 38-A of 2011, 11 and 55 of 2012, decided on 22nd February, 2019.

(a) Income Tax Ordinance (XLIX of 2001)---

----Ss. 177 & 214-C---Audit---Selection for audit by Federal Board of Revenue---Powers of Commissioner and Federal Board of Revenue to conduct audit of the taxpayer---Legislative history.

(b) Income Tax Ordinance (XLIX of 2001)---

----Ss. 177, 122 & 133---Reference to High Court---Power of Commissioner to conduct audit and issue amended assessment order---Scope---Taxpayers were aggrieved of audit conducted by Commissioner---Appellate Tribunal accepted the appeals on the ground that all the cases were selected for audit under S.177(4) of Income Tax Ordinance, 2001, whereas said S.177(4) was inserted in 2004, which was supposed to apply to the cases pertaining to the tax year 2005 and onwards---Validity---Cases of taxpayers were selected for audit on 24.01.2009 and 25.04.2009, the provisions of S. 177(4) were applicable to the cases of taxpayers, because from 13-09-2001 till 27.10.2009 the statute clearly provided that taxpayer had to be selected for audit by the Commissioner on the basis of statutory criteria developed by the Federal Board of Revenue or under S.177(4)---Commissioner had rightly selected cases of taxpayers for audit under S.177(4) of Income Tax Ordinance, 2001---Commissioner could amend assessment order under S.122(1) of Income Tax Ordinance, 2001 while S.122(2) imposed restriction on the Commissioner not to amend assessment order after the expiry of five years from the end of financial year---Commissioner, after expiry of five years could not issue an amended assessment order---High Court declared that observations of Appellate Tribunal were not correct in the eyes of law as the Tribunal had, without going into the merits of the case, concluded the matters on a single point of law---Cases were remanded to the Appellate Tribunal for decision on merits---Order accordingly.

(c) Income Tax Ordinance (XLIX of 2001)---

----S. 122---Amendment of assessment---Scope---Commissioner may amend an assessment order under S.122(1) of Income Tax Ordinance, 2001, however, under S.122(2) restriction has been imposed upon the Commissioner for not amending an assessment order after the expiry of five years from the end of financial year.

Syed Nazir Hussain Shah Kazmi for Appellant (in all cases).

Syed Shahid Bahar, Ch. Muhammad Manzoor, Mir Abdul Latif, Naser Masood Mughal and Muhammad Deen Shedai for Respondents.

2019 P T D (Trib.) 4

[Inland Revenue Appellate Tribunal]

Before Ch. Shahid Iqbal Dhillon, Judicial Member and Muhammad Ahmad Accountant Member

Messrs IMRAN PIPE MILLS (PVT.) LIMITED, LAHORE

Versus

C.I.R., ZONE-IV, R.T.O.

I.T.A. No.1563/LB of 2014, decided on 18th December, 2017.

(a) Income Tax Ordinance (XLIX of 2001)---

----Ss. 111, 122 & 214(c)---Amendment of assessment---Case of taxpayer was selected for audit under S.214(c) of the Income Tax Ordinance, 2001---Inland Revenue Officer "IRO" after examining the details filed by taxpayer, amended income of taxpayer at Rs.105,412,924 against the declared income of Rs.5,232,355---Commissioner Inland Revenue (A), "CIR(A)", confirmed the addition so made---Validity---Action of IRO to make certain credit receipts/sales and by treating import/local purchases fully verifiable and properly reconciled, on presumptive basis without any independent corroborative documentary evidence, had no legs to stand the test of appeal---Case was not of any of transactions exceeding the resources duly established by the taxpayer through strong documentary evidence---Heavy burden lay upon the department to point out specific facts of transaction in case of suppressed/concealed receipts/sales---Department had failed to prove any nexus whatever between the amount lying in the Bank through credit entries from fully known and verifiable sources and concealed/undisclosed/suppressed receipts/sales---All of those queries were well responded by the taxpayer with corroborative strong documentary evidence and successfully explained the factual position---Income Revenue Officer kept on going for inquiries---Said blunt factual flaw in the impugned order could not be ignored---Taxpayer had successfully explained all the deposits and the alleged discrepancies in its Bank deposits to the satisfaction of law, against which no mentionable arguments had been advanced by the officer---Additions under S.111 of Income Tax Ordinance, 2001 had been made without issuing specific and separate notice under the said section, which was sine qua non---Such additions merited deletion on legal plane---Mere fact of denial of allegation of mala fide or oblique motive, would not preclude the court from inquiring into the truth of allegations levelled against the Authority and granting appropriate relief to the aggrieved party---Inland Revenue Officer was not clear in his mind as to where and what was the violation of law in the case, except having clarity on one thing to create a huge demand of tax by treating certain credit entries in the Bank accounts as concealed income---Disposal of orders by IRO was mere a shot in the dark without consulting the record and submissions made by the taxpayer and also without pursuing applicable law---Officer had travelled beyond his lawful jurisdiction, probably with predetermined mind to make huge addition in income---Action of IRO by overstepping the provisions of law certainly was coram non judice and patently illegal---Commissioner (Appeal) had also recorded his findings in slipshod manner and did not record arguments of the counsel in his own words---Impugned order passed by CIR (A) was not a "decision" but simply a "disposal"---Order of CIR (A) was cryptic and devoid of reasons---Where no logical reasons were given, the order of CIR (A), was vitiated as being violative of rules of natural justice---Commissioner (Appeal), without appreciating the facts of the case and without applying his own mind, simply confirmed the treatment meted out by IRO in few words---Action of CIR (A) being in conflict with statutory stipulations and applicable case-law, were struck down for the sole reason that such type of dispensation of justice was unwarranted---Impugned orders of both the authorities below were found to be suffering from legal as well as factual infirmities and merited cancellation---Appeal of taxpayer was accepted on legal as well factual grounds; in circumstances.

1997 SCMR 524; 1997 SCMR 1849; Commissioner of Income Tax v. Pakistan Industrial Engineering Agencies Ltd. 1992 PTD 954; 2006 SCMR 129; Mian Muhammad Nawaz Sharif v. President of Pakistan and others 1993 PLD SC 473; PLD 1958 SC 104; 1971 SCMR 681; PLD 1972 SC 271; 1987 SCMR 1840; Mst. Shahida Zareen v. Iqrar Ahmed Siddiqui 2010 SCMR 1119; Messrs Shah Nawaz Khan and Sons v. Government of N.-W.F.P. and others 2015 SCMR 945; Habib Ullah v. Azmat Ullah PLD 2007 SC 271 and Rehman Shah and others v. Sher Afzal and others 2009 SCMR 462 ref.

(b) Interpretation of statutes---

----Where provision of law was apparently uncertain or ambiguous and admitted more than one equally possible interpretations, it was only then that in fiscal statutes interpretation favourable to a taxpayer could be made---Rule of beneficial interpretation of a provision was always subject to the conditions that two equally reasonable meanings of the provision were possible---Where language of statutory provision was clear, effect must be given to it.

PLD 1971 SC 375; PLD 1962 (W.P.) 809; 1992 SCMR 663; PLD 1977 Lah. 292 and 1993 SCMR 274 ref.

(c) Administration of justice---

----If power had been exercised on non-corroboration or non-application of mind to relevant factors, such exercise would be regarded as manifestly erroneous---If power, whether judicial, quasi judicial or administrative, was exercised on the basis of facts, which did not exist and which were patently erroneous, such exercise of power would stand vitiated.

(d) Administration of justice---

----Appellate authorities/judicial and quasi judicial authorities including officials/administrative or taxing authorities, while dispensing justice and exercising judicial or quasi judicial powers, were supposed to apply their mind to cases and to determine after evaluating those to give their verdict justified by reasons.

Engro Chemicals Pakistan Ltd. v. Additional Collector 2003 PTD 777 ref.

(e) Income Tax Ordinance (XLIX of 2001)---

----S. 132---Disposal of appeal by Appellate Tribunal---Tribunal was required to dilate upon all the questions of facts and law agitated before it so that High Court was not handicapped in deciding the question of law and if the Tribunal failed to pass proper judicial order by considering all the facts and points of law raised, it would amount to negation of justice---Every judicial order was to be a speaking order, particularly in tax matters, where the scope of appeal/reference before High Court was very limited---Appellate Tribunal was the last fact finding forum in hierarchy of taxation laws---Tribunal was bound to discharge its functions diligently---Any opinion on law by Appellate Tribunal would lose credence for consideration by High Court in advisory jurisdiction, if findings of fact arrived at by it was not trustworthy---If true facts were not ascertainable from available record, Appellate Tribunal was vested with vast powers under subsection (1) of S.132 of the Income Tax Ordinance, 2001 to call for any particulars relating to appeal, or cause further inquiry to be made by the Commissioner dealing the appeal proceedings---Rationale behind more than one appellate forums under taxation laws was to cross check the exercise of powers by the authorities and ensure proper taxation under the statute.

CIR v. Mehran Traders 2015 PTD 1330 ref.

(f) Administration of justice---

----When law required a thing to be done in a particular manner then it must be done in that manner or it should not be done at all.

Waheed Shahzad Butt for appellant.

Ms. Fouzia Adil, D.R. for Respondent.

2019 P T D (Trib.) 56

[Inland Revenue Appellate Tribunal]

Before Ch. Shahid Iqbal Dhillon, Judicial Member and Ghulam Mujtaba Bhatti, Accountant Member

Messrs K.B. ENTERPRISES, FAISALABAD

Versus

C.I.R. (APPEALS), R.T.O., FAISALABAD

S.T.A. No.465/LB of 2018, decided on 27th August, 2018.

Sales Tax Act (VII of 1990)---

----Ss. 3(1-A), 11, 23, 33, 34 & 73---Adjustment of inadmissible input tax---Imposition of penalty---Adjudicating authority, ordered recovery of amount on account of fake sales declared to blacklisted buyer to avoid payment of further tax against supplies made to unregistered person---Appeal against order of adjudicating authority was rejected by appellate authority below---Validity---Charge of fake sales declared to blacklisted buyer to avoid payment of further tax chargeable against sales made to unregistered person was totally based upon assumption and hypothesis---Appellant had supplied the alleged goods to registered buyer only under the coverage of proper sales tax invoices issued in terms of S.23 of Sales Tax Act, 1990 and due tax was also deposited by the appellant in the monthly sales tax returns---All payments had also been received through banking channel as required under S.73 of the Sales Tax Act, 1990---Liability to pay penalty and default surcharges was not a necessary consequence or corollary of every 'non-payment' of tax within stipulated period, but was subject to proof that non-payment of tax was knowingly or fraudulently with mala fide intention not to pay or evade the tax---Mere non-deposit of tax or failure to pay tax without element of mens rea, could not entail penalty on default surcharge---Neither any charge of wilful default nor charge to defraud the Government had been levelled against the appellant---In absence of any allegation in respect of the deliberate or wilful default, imposition of penalty and default surcharge was not only unjustified, but also illegal---Charge of inadmissible input tax adjustment against invoices of suspended/blacklisted units was also baseless; because appellant did hold valid sales tax invoices duly incorporated in suppliers' sales tax returns and summary statements for relevant tax period---Appellant had transacted all payments to the suppliers through Banking Channel by complying with the mandatory provisions of S.73 of the Sales Tax Act, 1990---Subsequent blacklisting of unit would not disentitle the buyer from his lawful right of input tax in respect of invoice issued when the suppliers were registered and active person unless the invoices were specifically declared fake through speaking order and had direct nexus with suspension/blacklisting of the alleged suppliers---Recovery of sales tax, in circumstances, was illegal and unlawful---Impugned show-cause notice and consequent orders of both the authorities below being devoid of legal substance were set aside and appeal filed by appellant/registered person was accepted as prayed for.

Messrs Coca Cola Beverages Pak Ltd.'s case 2017 PTD 2380; Messrs Nizam Impex (Pvt.) Ltd.'s case 2014 PTD 498; Messrs D.G. Khan Cement Factory Ltd.'s case 2004 SCMR 456 = 2004 PTD 1179; Commissioner Inland Revenue v. Messrs Amtex Limited, Faisalabad 2016 PTD 1695 and Commissioner Inland Revenue v. Messrs Al-Zamin Textile Mills (Pvt.) Ltd., Faisalabad 2018 PTD 986 ref.

Khubaib Ahmad for Appellant.

Naeem Babar, D.R. for Respondent.

2019 P T D (Trib.) 78

[Inland Revenue Appellate Tribunal]

Before Shahid Masood Manzar, Judicial Member and Mian Saeed Iqbal, Accountant Member

Ch. AHSAN ALI AHMED, ISLAMABAD

Versus

COMMISSIONER INLAND REVENUE, RTO, ISLAMABAD

I.T.A. No.369/IB of 2017, decided on 14th November, 2017.

Income Tax Ordinance (XLIX of 2001)---

----Ss. 120, 122(5-A),(9) & 170(4)---Federal Ombudsman Institutional Reforms Act (XIV of 2013), S.18---Claim for refused---Income Tax return filed by the taxpayer, was considered as assessment order in terms of S.120 of the Income Tax Ordinance, 2001; as a result of assessment, refund of Rs.21,202,142, became due to the taxpayer---While refund claim of the taxpayer was being processed, the Directorate of Intelligence and Investigation called for the assessment record---Taxpayer feeling that his claim of refund was being intentionally delayed, filed petition before the Federal Tax Ombudsman (FTO) for expeditious release of refund---Said petition of the taxpayer was favourably disposed of by the Ombudsman directing the department to pass the refund order under S.170(4) of the Income Tax Ordinance, 2001, in accordance with the provisions of law---Department instead of issuing the refund, started proceedings for amendment of assessment in the light of investigation report obtained from Directorate of Intelligence and Investment---Notice under S.122(9) of the Income Tax Ordinance, 2001 was issued through which the taxpayer was confronted on certain issues---Explanation/reply furnished by the taxpayer was turned down and order of amendment of assessment was passed by Additional Commissioner; various additions were made in assessment order in question resulting in tax demand---Taxpayer filed appeal against said order before Commissioner Inland Revenue (Appeal), ('CIR-A'), who summarily rejected the appeal, holding that according to S.18 of the Federal Ombudsman Institutional Reforms Act, 2013, no court or authority would have jurisdiction to entertain a matter which fell within the jurisdiction of the Ombudsman nor any court or authority could assume jurisdiction in respect of any matter pending with or decided by the Ombudsman---Grounds of appeal raised before the Commissioner (Appeals) were not considered for adjudication---Validity---Matter before the Federal Tax Ombudsman with regard to issue of refund, who decided the matter with certain directions and the Taxation Officer had passed the order under S.122(5-A) of the Income Tax Ordinance, 2001 which was appealable before Commissioner (Appeals) and he had to decide the appeal on merits under the law---Commissioner (Appeals) was the only forum to decide the appeal---Appellate Tribunal remanded the matter to Commissioner (Appeals) to decide the same considering arguments, the facts of the case on the basis of the grounds of appeal put forth before him, by affording reasonable opportunity of being heard to the parties.

2014 PTD 1377; 2013 PTD 788; 2012 PTD (Trib.) 1953; 2010 PTD (Trib.) 111; 2008 PTD (Trib.) 1491; 1999 PTD (Trib.) 2851; 1999 PTD (Trib.) 700; 1994 SCMR 2232; PLD 1990 SC 666; PLD 1964 SC 673; 1988 CLC 1318 and 1981 CLC 909 ref.

Rahat Shaheen Khokhar for Appellant.

Abdul Razzaque, D.R. for Respondent.

2019 P T D (Trib.) 120

[Inland Revenue Appellate Tribunal]

Before Ch. Shahid Iqbal Dhillon, Judicial Member and Ghulam Mujtaba Bhatti, Accountant Member

Messrs WAQAS ENTERPRISES, FAISALABAD

Versus

The CIR (APPEALS), R.T.O., FAISALABAD

S.T.A. No.395/LB of 2018, decided on 27th August, 2018.

(a) Sales Tax Act (VII of 1990)---

----Ss. 11(2), 21, 25, 33 & 34---Sales Tax Rules, 2006, R. 12---Assessment---Adjustment of inadmissible input tax---Certain discrepancies having been pointed out during audit of appellant's sales tax record, show-cause notice was issued to the appellant along with default surcharge and penalty---Adjudicating Officer vide order-in-original adjudged amount of Rs.2,814,747 against the appellant---Said order-in-original, was upheld by the Commissioner (Appeals)---Validity---Audit Staff had issued letters to the appellant for production of sales tax record for audit for the period in question and said letters were duly responded by the appellant and requisite records and information for said periods were provided by---Counsel for appellant had contended that (alleged) supplier was a suspended unit and no blacklisting order was passed within 90 days of basic hearing; Held, that suspension order of the unit in question therefore had become void ab initio and recovery of sales tax against his invoices had become illegal and unlawful; that department, without examining the record, had audited and made a number of audit observations creating liabilities; that penalty imposed against said charge was illegal, unlawful and highly unjustified---Order for suspension of registration being an interim order was required to be converted into final order effecting the blacklisting, which, if not visualized within a period of ninety days of basic proceedings, would become void ab intio and ultra vires of law---Recovery of sales tax on the strength of invoices of the appellant had become unlawful and all subsequent proceedings carried out on it were also illegal---Impugned show-cause notice as well as consequent orders of both the authorities below were declared to be illegal, ab initio void and were set aside.

(b) Administration of justice---

----If the doing of a thing was made lawful in a particular manner, doing of that thing in conflict with the manner prescribed, would be illegal and unlawful.

(c) Sales Tax Act (VII of 1990)---

----S. 8-B---Sales Tax Rules, 2006, R.34---Notification No. SRO 555(I)/2006, dated 15-6-2006---Adjustment and reclaim of input tax---Charge of violation of S.8-B(1) of Sales Tax Act, 1990 was misconstrued and mis-constructed by the tax functionaries; because a registered person was not legally allowed to adjust or reclaim input tax in excess of ninety percent of output tax for a particular tax period thereunder; that practice would carry round the twelve tax periods spreading over a financial year commencing from 1st July ending on 30th June, but at the end of that financial year, adjustment or refund was permissible to the registered person as per provisions of cl. (ii) of subsection (2) of S.8B of the Sales Tax Act, 1990, read with R.34 of Notification No. SRO 555(I)/2006, dated 5-6-2006---Taxpayer having legitimate right of money deposited in the national exchequer as a sacred trust on the Government, could not be deprived of on certain procedural lapses and technicalities.

Commissioner Inland Revenue v. Messrs Malik Enterprises S.T.R. No. 07/2015 rel.

Khubaib Ahmad for Appellant.

Naeem Babar, D.R. for Respondent.

2019 P T D (Trib.) 130

[Inland Revenue Appellate Tribunal]

Before Mrs. Ambreen Aslam, Judicial Member and Syed Tahir Raza Zaidi, Accountant Member

The COMMISSIONER INLAND REVENUE, ZONE-I, R.T.O., HYDERABAD

Versus

Messrs FATEH MOTORS LIMITED, HYDERABAD

S.T.A. No.214/KB of 2015, decided on 27th January, 2018.

Sales Tax Act (VII of 1990)---

----Ss. 11(2), 21, 33, 34, 45, 13 & 46---Adjustment of allegedly inadmissible sales tax---Purchase from blacklisted/suspended supplier---Taxpayer had declared purchases from the registered person for an aggregate amount of Rs.34,445,279 involving allegedly inadmissible adjustment of input sales tax of Rs.5,511,244---Taxpayer was served with show-cause notice---Adjudicating Officer/Deputy Commissioner Inland Revenue, not being satisfied with the contentions of the taxpayer, passed order-in-original for recovery of Rs.5,511,244 under S.11(2) of the Sales Tax Act, 1990 and also imposed penalty under S.33 and charged default surcharge under S.34 of the Sales Tax Act, 1990---Appellate authority/Commissioner Inland Revenue (A), vacated order of the Adjudication Authority---Validity---Allegation of the department against the taxpayer was that he was involved in purchases from black listed/suspended supplier---Record had revealed that said supplier was blacklisted/suspended after the date of the transactions---Supplier, at the time of business transaction with the taxpayer, in circumstances was not black listed/suspended and Adjudicating Officer had not verified the same---Contention of the taxpayer was that he had made all transactions with its supplier through Banking Channel---Adjudicating Officer, in circumstances, was required to verify the said transactions through Banking Channel or entry register but that had not been done---Impugned judgment of appellate authority did not require interference and same was upheld by the Tribunal.

2011 PTD (Trib.) 2619 ref.

Ram Chand, D.R. Appellant.

A.S. Jafri for Respondent.

2019 P T D (Trib.) 144

[Inland Revenue Appellate Tribunal]

Before Ch. Shahid Iqbal Dhillon, Judicial Member and Ghulam Mujtaba Bhatti, Accountant Member

Messrs FRESH POLY SACK (PVT.) LTD., FAISALABAD

Versus

The C.I.R.(APPEALS), R.T.O., FAISALABAD

S.T.A. No.196/LB of 2018, decided on 27th August, 2018.

Sales Tax Act (VII of 1990)---

----Ss. 2(35), 3, 11, 33, 34 & 46---Demand of sales tax on basis of consumption of electricity units---Examination of sales tax returns of assessee, certain discrepancies were pointed out---Department issued show-cause notice, to assessee demanding sales tax of Rs.2,402,4301 under S.11(3) of the Sales Tax Act, 1990 along with default surcharges and penalty under Ss.33 & 34 of the Act---Adjudicating Authority partially vacated demand of sales tax and upheld recovery of Rs.2,337,682---Commissioner (appeal) rejected the appeal---Validity---Suppression of sales had been alleged by the department merely on the basis of consumption of electricity units and not on the basis of actual supply of goods---Consumption of electricity units might have any nexus with that of production of goods and any correlation in between could have been made, but no direct relationship could be established in electricity with that of sales and supplies of taxable goods---Both the variables being completely independent to each other, no functional relationship could be established---Impugned demand of sales tax created on the basis of electricity units, was illegal and without lawful authority---Neither the Sales Tax Act, 1990 nor Rules made thereunder prescribed any procedure or formulage to calculate liability of sales tax merely on consumption of electricity units---Under S.3(1)(a) of the Sales Tax Act, 1990, sales tax was on sale and supply of goods which necessarily entailed 'delivery of goods' or 'receipt of money consideration'---No corroborating evidence for any clandestine removal of goods or for receipts of money consideration had been provided by the Department under S.2(35) of the Sales Tax Act, 1990 the yard-stick to charge and levy sales tax, was the sale constituting a taxable activity for a taxable supply---Assessment of sales tax on the basis of consumption of electricity units was not a safe rule and yard-stick to assess the production---Unless the department was in a position to prove that the assessee did more production and same had been transferred to another party, sales tax could not be charged---Impugned show-cause notice as well as consequent order of both the authorities below, were set aside being illegal and ab initio void, in circumstances.

Messrs Mashallah Paper Board Mills, Faisalabad v. The CIR, R.T.O., Faisalabad 2017 PTD 880 ref.

Khubaib Ahmad for Appellant.

Naeem Babar, D.R. for Respondent.

2019 P T D (Trib.) 150

[Inland Revenue Appellate Tribunal]

Before Ch. Shahid Iqbal Dhillon, Judicial Member and Dr. Muhammad Naeem, Accountant Member

COMMISSIONER INLAND REVENUE, R.T.O., FAISALABAD

Versus

Messrs R.J. COTTON WASTE FACTORY, FAISALABAD

S.T.A. No.46/LB of 2013, decided on 12th September, 2018.

Sales Tax Act (VII of 1990)---

----Ss. 7, 11, 36 & 46---SRO No.124(I)/2000, dated 15-3-2000---Recovery of refunded amount of sales tax---Scrutiny of sales tax record for relevant period, revealed firstly, that registered person had received sales tax refund against electricity bills, which neither contained sales tax registered number nor the name of registered person was on the Bill; secondly that registered person had received refund against the invoices of chemical, caustic soda, without its consumption in manufacturing process and thirdly, that registered person had allegedly received refund of sales tax against excess and unrealistic consumption of chemicals, which had not been actually consumed to the extent of its use as claimed by registered person in the manufacturing process---Registered person had also shown more production instead of its actual capacity so as to claim and receive excessive refund of sales tax thereon---Recovery of allegedly refunded amount of sales tax in its aggregate, was made adjudicated by Inland Revenue under the provisions of S.11(2) of Sales Tax Act, 1990 through its order-in-original---On Commissioner (Appeals), had accepted appeal of registered person---Validity---Held, evidence had established the factum of payment of input tax on electricity bills, particularly, when it also contained registration number of the registered persons, but not its name; even then input tax paid thereon was refunded to the registered person from his output tax due under S.7 of the Sales Tax Act, 1990---Alleged electricity bills did contain registered number of registered persons---Sales tax refund sanctioned on the strength of electricity bills, could not be disallowed---Appeal of Department was dismissed on said issue---Charges of inadmissible sales tax refund received on the invoices of caustic soda, were not maintainable as its use in bleaching process of dyed denim---Cut pieces/rags of textile fabrics had been alleged without any proper evidence and caustic soda was used for washing and also stimulated the process of bleaching of textile fabrics or rags thereof---Sales tax paid thereon was admissible for refund as use of caustic soda for washing and stimulating bleaching process was an established fact---Department had nothing tangible on record to controvert---Declaring excessive production and exaggerated consumption of chemicals for receiving excessive tax credit or refund thereof was again unfounded and unlawful---In manual process of bleaching of rags, no machinery or mechanical technique was involved---Cut pieces/rags of fabrics were bleached manually in water tanks/Hodies and put to sundry before its sale and supply---In absence of involvement of any plant and machinery or any mechanical technique in process of bleaching of rags, how officials of the department determined production on basis of manual process and made a comparison of its rated production capacity with that of actual one and in the same vein, had also observed excessive consumption of chemicals for excessive tax credit or refund thereon---Whole exercise was carried out by the department merely on surmises and presumption for which there was no room, particularly in fiscal matters---Appeal filed by the Department was rejected being devoid of any merits on legal as well as factual substance.

Messrs Inam Packages, Lahore v. Appellate Tribunal Customs, Central Excise and Sales Tax, Custom House, Lahore and 2 others 2007 PTD 2265; The Commissioner IR (Zone-II), R.T.O., Karachi v. Messrs H.R. Cotton Industries, Karachi 2001 PTD (Trib.) 2712; Messrs D.G. Khan Cement Company Limited, Lahore v. The CIR (Legal Division) R.T.O. Multan 2013 PTD (Trib.) 777 and Collectorate of Sales Tax, Faisalabad v. Messrs Azhar Corporation (Pvt.) Ltd., Faisalabad S.T.A. No. 134/LB/2009 dated 06.02.2010 ref.

None for Appellant.

Abuzar Hussain for Respondent.

2018 P T D (Trib.) 160

[Inland Revenue Appellate Tribunal]

Before Ch. Shahid Iqbal Dhillon, Judicial Member and Ghulam Mujtaba Bhatti, Accountant Member

Messrs AMTEX LIMITED, FAISALABAD

Versus

COMMISSIONER INLAND REVENUE (APPEALS), R.T.O., FAISALABAD

S.T.A. No.592/LB of 2018, decided on 27th August, 2018.

(a) Sales Tax Act (VII of 1990)---

----Ss. 10, 11, 23, 46 & 73---Refund of input tax---Assessee, had received refund of input tax for relevant tax periods on the strength of invoices issued by suspended/blacklisted units---Adjudication proceedings based on said omissions/irregularities, were initiated by the Taxation Officer and show-cause notice was issued---Adjudication proceedings were culminated in passing of an order adjudging recovery of Rs.4,268,584---Said order of taxation officer was challenged before CIR(A) who rejected the appeal---Validity---Assessee held valid sales tax invoices duly incorporated in suppliers' sales tax returns and summary statements for the relevant tax period---Subsequent blacklisting would not disentitle the buyer from his lawful right of input tax in respect of invoices issued when the suppliers were registered and active persons, unless those invoices were specifically declared false through speaking order and had direct nexus with suspension/ blacklisting---Invoices in question, had no direct nexus with the subsequent suspension and blacklisting of the alleged suppliers---Assessee had also transacted all payments to his suppliers through banking channel by complying with the mandatory provisions of S.73 of the Sales Tax Act, 1990---Refund could not be denied to the assessee, merely for the reason that suppliers were suspended and blacklisted subsequently---No provision existed in Sales Tax Act, 1990 and the Rules framed thereunder empowering the authorities to recover amount of tax refunded to a buyer due to subsequent suspension of registration and blacklisting of his suppliers---Impugned show-cause notice as well as consequent orders of both the authorities below were declared illegal, ab initio void and were set aside, in circumstances.

Commissioner Inland Revenue v. Messrss Amtex Limited, Faisalabad 2016 PTD 1695; Messrs Army Welfare Sugar Mills Ltd and others v. Federation of Pakistan and others 1992 SCMR 1652; Messrs Anoud Power Generation Limited and others v. Federation of Pakistan and others PLD 2001 SC 340 and Government of Pakistan v. Messrs Village Development Organization 2005 SCMR 492 ref.

(b) Sales Tax Act (VII of 1990)---

----Ss. 11 & 45-B---Appeal to Collector of Sales tax (Appeals)---Adverse finding in appellate order---Any adverse finding given in the appellate order on the allegations of violation of provisions of law, which were not primarily levelled and confronted in the show-cause notice, would render the entire proceedings illegal and void for the reason of breach of principles of natural justice, which was also breach of law---Order had been passed on the ground other than the grounds confronted to the taxpayer by way of issuance of show-cause notice, had no legal sanctity.

1987 SCMR 1840 ref.

Khubaib Ahmad for Appellant.

Naeem Babar, D.R. for Respondent.

2019 P T D (Trib.) 176

[Inland Revenue Appellate Tribunal]

Before Ch. Shahid Iqbal Dhillon, Judicial Member and Ghulam Mujtaba Bhatti, Accountant Member

Messrs ARSHAD CORPORATION (PVT.) LTD., FAISALABAD

Versus

The C.I.R.(APPEALS), R.T.O., FAISALABAD

S.T.A. No.696/LB of 2018, decided on 27th August, 2018.

Sales Tax Act (VII of 1990)---

----Ss. 11, 46 & 73---Claim for sales tax refund---Scrutiny of sales tax record of assessee for relevant periods, revealed that assessee had illegally claimed/received sales tax refund in violation of provisions of S.73 of the Sales Tax Act, 1990 by making late payments to its suppliers beyond specified period of 180 days from the date of issuance of tax invoice---Adjudication proceedings were initiated by the Taxation Officer by way of issuance of show-cause notice and culminated in passing of order adjudging recovery of sales tax---Said order was challenged before CIR(A) who rejected the appeal of assessee, upholding recovery of Rs.1,040,208 by its appellate order---Validity---No controversy existed in the manner of payments having been transacted through prescribed banking mode, but its time was delayed over 180 days beyond date of tax invoice---In the present case, no revenue loss was involved particularly when the alleged supplies had already paid output tax in the relevant tax periods---Demanding refunded amount of input tax back from buyer/assessee, despite it having been deposited by the suppliers in the National Exchequer, would definitely amount to double taxation, not permissible under the law---Refund of input tax was substantive right of the assessee, which could not be taken away or withheld on mere technicalities and procedural lapses---Payments had not been made to the suppliers within the specified time period, due to certain financial constraints and pecuniary hardships---Said procedural lapse and technical omission entailing no revenue loss at all was condoned to maintain assessee inalienable right of input tax and he could not be deprived of his statutory right of input tax due to any procedural omissions; because neither any procedural mistake would affect legal entitlement, nor lapse of procedure had not caused any prejudice to the Department---Acts of inadvertence on the part of an assessee due to any procedural mistake, would not create demand of sales tax---Impugned show-cause notice as well consequent orders of both the authorities below, were declared to be illegal, ab initio void and were set aside, in circumstances.

The CIR (Zone-II), R.T.O., Faisalabad v. Messrs Chawala Enterprises, Faisalabad 2017 PTD 846 and Messrs Pfizer Laboratories Ltd. v. Federation of Pakistan and others PLD 1998 SC 64 ref.

Khubaib Ahmad for Appellant.

Naeem Babar, D.R. for Respondent.

2019 P T D (Trib.) 179

[Inland Revenue Appellate Tribunal]

Before Shahid Masood Manzar, Judicial Member and Muhammad Riaz, Member

Messrs AL-HAQ AUTOS, RAWALPINDI

versus

COMMISSIONER INLAND REVENUE, R.T.O.

I.T.A. No.64/IB of 2016, decided on 17th March, 2016.

Income Tax Ordinance (XLIX of 2001)---

----Ss. 21(c), 111(1)(b), 120, 121(1)(d), 122(1)(5), 153(7)(i) & 177---Deduction not allowed in computing chargeable income---Best judgment assessment, amendment of assessment---Taxpayer, a motorcycle dealer, filed return of income declaring net profit---Taxpayer's case was selected for audit---Department confronted issues regarding under declaration of amounts received from principal company to taxpayer---Reply of taxpayer having not been found satisfactory, Assessing Officer proceeded to pass order under S.121(1)(d) of the Income Tax Ordinance, 2001---Total income of the taxpayer was assessed by making addition under S.111(1)(b) and S.21(c) of the Ordinance---Appellate authority confirmed the order passed by Assessing Officer---Validity---Purchases made by the taxpayer were not covered by S.21(c) of the Income Tax Ordinance, 2001, as same dealt with the specific expenses---Addition under said provisions of law, could be made on account of purchases---Assessing Officer had not established that taxpayer was a prescribed person under S.153(7)(i) of the Income Tax Ordinance, 2001 for the tax year under consideration; as a result, the addition made under S.21(c) of the Income Tax Ordinance, 2001 was illegal and stood deleted---Addition made under S.111(1)(b) of the Income Tax Ordinance, 2001, was also not legally maintainable as said section dealt with the case of any investment made by a person or being the owner of any money or valuable articles, which were not the facts of the present case---Order passed by Assessing Officer had revealed that from the beginning of proceedings through the issuance of show-cause notice till the finalization of assessment, the taxpayer had been confronted and proceeded under provisions of S.111(1)(d) of the Income Tax Ordinance, 2001---Assessing Officer invoked and applied the provisions of S.111(1)(d) as well as S.21(c) of Income Tax Ordinance, 2001, which were not applicable to the facts of the case---Addition made under S.111(1)(b) was also deleted---Order passed by Assessing Officer was not a best judgment assessment; but order passed by him appeared to be an order of amendment of assessment under S.122(1)(5) of the Ordinance---Assessing Officer appeared to be totally confused, while passing the order and making the addition to the income---Order passed by Assessing Officer as well as appellate authority below, being not maintainable, were vacated, in circumstances.

2013 PTD 837; 2015 PTD (Trib.) 2042; 2013 PTD 682; 2015 PTD 681; 2012 PTD 1444; 2016 PTD (Trib.) 7 and 2015 PTD (Trib.) 804 ref.

Atif Waheed for Appellant.

Masood Akhtar, D.R. for Respondent.

2019 P T D (Trib.) 206

[Inland Revenue Appellate Tribunal]

Before Shahid Masood Manzar, Judicial Member and Muhammad Majid Qureshi, Accountant Member

Messrs BENSON PHARMACEUTICALS, ISLAMABAD

versus

COMMISSIONER INLAND REVENUE, R.T.O., ISLAMABAD

I.T.As Nos. 642/IB and 643/IB of 2014, decided on 18th November, 2015.

(a) Income Tax Ordinance (XLIX of 2001)---

----Ss. 133, 153 & 170(4), Second Sched., Part-II, Cl.(24-A)---Refund, claim for---Taxpayer, a manufacturer and distributor of pharmaceuticals, filed return and claimed refund of amount on the basis of tax reduction under Cl.(24-A) of Part-II of Second Schedule to the Income Tax Ordinance, 2001---Order-in-original passed by the Assessing Officer was confirmed by the Commissioner (Appeals)---Validity---Tax under the provisions of S.153(1)(a) of Income Tax Ordinance, 2001, was required to be deducted on sale of goods, whereas under the provision of Cl.24-A of Second Schedule of the Ordinance, reduction in rate of tax required to be deducted under S.153(1)(a) of the Ordinance was allowed to the distributors on the sale of pharmaceuticals etc.---In the present case, the taxpayer a manufacturer who undoubtedly was a distributor, also entitled to said relief in respect of goods sold, which came under the ambit of S.153(1)(a) of the Income Tax Ordinance, 2001---Unqualified relief under Cl.24-A of Second Schedule of the Ordinance was available to the distributors of pharmaceuticals in respect of sale covered under the provisions of S.153(1)(a) of the Ordinance---Activity of a person as distributor was not affected because of his being a manufacturer, or importer---Reduction in the rate of tax deduct under S.153(1)(a) of Ordinance, under Cl.24-A of Part-II of Second Schedule of the Ordinance was available to all distributors of pharmaceutical products, without any pre-qualification---Taxpayer being a manufacturer-cum-distributor was entitled to relief under the provisions of Cl.24-A of Part-II of Second Schedule of the Ordinance to the extent of sales, liable to deduction of tax under S.153(1)(a) of the Income Tax Ordinance, 2001---Appeal of taxpayer succeeded in circumstances.

(b) Words and phrases---

----'Distributor' or 'distribution'---Meaning explained.

Black's Law Dictionary (8th Edition Page 509) and Oxford Dictionary (New 7th Edition Page 44) ref.

Atif Waheed for Appellant.

Waqas Hanif, D.R. for Respondent.

2019 P T D (Trib.) 228

[Inland Revenue Appellate Tribunal]

Before Muhammad Jawed Zakaria, Judicial Member and Syed Ayaz Mahmood, Accountant Member

Messrs QUETTA ELECTRIC SUPPLY CO. LTD., QUETTA

Versus

The COMMISSIONER INLAND REVENUE, ZONE-I, R.T.O., QUETTA

S.T.A. No.201/KB of 2017, decided on 25th June, 2018.

(a) Sales Tax Act (VII of 1990)---

----Ss. 11, 25, 33 & 34---Assessment of tax---Self-assessed tax---Selection of taxpayer---Show-cause notice, non-issuance of---Delegation of powers---Principle---Taxpayer was aggrieved of post remand proceedings where no fresh show-cause notice was issued under S.11(2) of Sales Tax Act, 1990 for recovery of additional tax liabilities without selection of case or without audit by Commissioner Inland Revenue---Validity---Appellate Tribunal Inland Revenue had remanded cases for fresh considerations after affording reasonable opportunity of being heard to the registered persons---Resultantly, original orders as well as show-cause notices were cancelled and set aside by Tribunal---Assessing Officer in order to initiate fresh consideration for tax periods under S.11 of Sales Tax Act, 1990, was to issue fresh show-cause notices and after affording reasonable opportunity of being heard, had to finalize proceedings after fulfilling conditions laid down under provisions of S.11 of Sales Tax Act, 1990---Assessing officer, in the present case, after remand of cases did not initiate proceedings under S.11 of Sales Tax Act, 1990 and instead of issuing fresh show-cause notices, issued hearing notice---Such order passed by assessing officer under Ss.33 & 34 of Sales Tax Act, 1990 without assessment of principal amount of tax and based on earlier show-cause notice were not maintainable, without jurisdiction which were set aside---No provision of delegation of powers like S.210 of Income Tax Ordinance, 2001 existed with the Commissioner Inland Revenue---Delegatee could not further delegate his powers and only Commissioner was competent and empowered to undertake assessment proceedings under S.11 of Sales Tax Act, 1990 and not any other officer---Show-cause notice issued under S.11 of Sales Tax Act, 1990 by Additional Commissioner Inland Revenue was of no legal effect as he was not empowered to issue notice and could not pass order in question, as, such powers exclusively vested with the Commissioner---Order-in-Original passed by Additional Commissioner Inland Revenue was without jurisdiction or in excess of jurisdiction and without any legal effect---Penalty and default without mala fide intention was not maintainable in the eyes of law---Such penalty and default and surcharge imposed were deleted---Appeal was allowed accordingly.

Hamza Nasir Wire v. Federation of Pakistan 2018 PTD 1071; Punjab Beverages Limited v. Federal Board of Revenue 2018 PTD 1251; Ghandhara Nissan Diesel v. Collector of Customs 2007 PTD 117; Super Asia Muhammad Din v. Collector of Sales Tax 2008 PTD 60; Hani Straw Board v. Additional Collector 2008 PTD 758; Leo Enterprises v. President of Pakistan 2009 PTD 1978; 2009 PTD (Trib.). 1263; D.G. Khan Cement Company Ltd. and others v. Federation of Pakistan and others 2004 PTD 1179 (SC) = 2004 SCMR 456; Bhola Waving Factory v. Customs, Excise and STAT 2004 PTD 1048; 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; Attock Cement Pakistan Ltd. v. Collector of Customs, Collectorate of Customs and Central Excise, Quetta and 4 others 1999 PTD 1892; Addl. Coll. (Adj.) Multan v. Nestle Milk Pak Ltd. 2005 PTD 1850; Messrs Lone China (Pvt.) Ltd. v. Additional Secretary to the Government of Pakistan Ministry of Finance, CBR Custom House, Karachi 1995 PTCL 415; Messrs Shahmurad Sugar Mills v. The Collector of Customs, Sales Tax and Federal Excise, Hyderabad 2009 PTD (Trib.) 500; Collector of Sales Tax and Federal Excise, Peshawar v. Messrs Associated Industries Ltd. Nowshera and others 2010 PTD (Trib.) 601; The State v. Asif Adil 1997 SCMR 209; Sajawal Khan v. Wali Muhammad and others 2002 SCMR 134; 2000 SCMR 1956; PLD 2005 Lah. 428 and Messrs Peshawar Electric Supply Co., Peshawar v. The CIR, RTO, Peshawar 2017 PTD 1091 ref.

(b) Sales Tax Act (VII of 1990)---

----S. 7---Sales Tax Special Procedures Rules, 2007, R. 58-H---Taxpayer supplier of electricity---Collection of tax---Adjustment of output tax to input tax---Scope---Withholding agent is buyer of goods and supplier of electricity cannot be treated as withholding agent---Such tax collected under R. 58-H of Sales Tax Special Procedures Rules, 2007 cannot be treated as tax withheld, rather it is a tax collected---Tax collected under R. 58-H of Sales Tax Special Procedures Rules, 2007 is output tax then as per S.7 of Sales Tax Act, 1990 supplier of electricity is entitled to adjust input tax against output tax.

Muhammad Muneeb (FCMA), A.R. for Appellant.

Rehmatullah Durrani, D.R., R.T.O. for Respondent.

2019 P T D (Trib.) 263

[Inland Revenue Appellate Tribunal]

Before Nadeem Azhar Siddiqi, Chairman and Agha Kafeel Barik, Member Technical

Messrs ALLIED BANK LTD.

Versus

ASSISTANT COMMISSIONER SRB

Appeal No.AT-205 of 2015, decided on 28th August, 2017.

(a) Sindh Sales Tax on Services Act (XII of 2011)---

----S. 23(2)---Right of hearing---Scope---Right of hearing, in tax matters, was to be provided to the taxpayer by the Assessing Officer as a matter of right as provided under S.23(2) of Sindh Sales Tax On Services Act, 2011.

(b) Sindh Sales Tax on Services Act (XII of 2011)---

----Ss. 23 & 30(7)---Failure to pay tax due on taxable services---Where after an audit, inquiry etc, Assessing Officer, was of the opinion that registered person had not paid tax due on taxable services provided by him, or had made short payment of tax, the Officer would make an assessment of sales tax actually payable---Assessing Officer, after inquiries made from the registered person through correspondence and examination of the quarterly returns had formed an opinion that the agency service provided by the registered person (Bank) to insurance companies, were also covered under the Heading 9813.4990 since 1-11-2011 and under Heading 9813.8100 prior to the said date---Held, by all standards and requirements of S.23 of Sindh Sales Tax On Services Act, 2011 notice dated 21-5-2012, to the registered person was a valid show-cause notice by which the unpaid/less paid sales tax amount was confronted, which as a logical consequence required the assessment order to be passed latest by 20-9-2011 (after 120 days from 21-5-2012, the date of first show-cause notice or any extended period) failing which it became time-barred.

(c) Sindh Sales Tax on Services Act (XII of 2011)---

----Ss. 2(95), 23 & 30(1)(3)---Filing of monthly returns---Legal issue taken by the appellant/taxpayer was that since the order-in-original comprised of a period of 3 years, it was not tenable and was void---Monthly returns were to be filed on monthly basis under S.30(1) of Sindh Sales Tax on Services Act, 2011; whereas there was also provision to file annual return under S.30(3) of the Act---No restriction or limitation lay in respect of the period which could be assessed under S.23 of the Act---No provision existed in the Act for the assessment period, which could be different from tax period as defined in S.2(95) of the Sindh Sales Tax on Services Act, 2011---Assessment under S.23 of the Sindh Sales Tax on Services Act, 2011, was not illegal only because it covered more than one tax periods.

(d) Sindh Sales Tax on Services Act (XII of 2011)---

----Ss. 2(79), 8, 10, 43 & 44---Sindh Sales Tax on Services Rules, 2011, R.30(2)(4); Code 98.13, sub-heading 9813.4000---Taxation of three services---On the three services; "Bancassurance" "rebate received from foreign banks" and "rebate from State Bank of Pakistan", the basis taken by Assistant Commissioner was that all said three services rendered by the appellant/taxpayer were subject to charge of tax, except those specifically exempt under R.30(2)(4) of Sindh Sales Tax on Services Rules, 2011---Said three services being not chargeable to tax under Sindh Sales Tax on Services Act, 2011, question of claiming exemption, would not arise---"Exempt service", would mean a taxable service which was exempt from tax under S.10 of Sindh Sales Tax on Services Act, 2011---Exemption related to a chargeable service and not in respect of a non-chargeable service---Non-chargeability would mean that no obligation to collect and pay arose---Sindh Sales Tax, was leviable on the services and not on service provider---Section 8 of Sindh Sales Tax on Services Act, 2011, provided the scope of tax and was a charging provision, again with reference to the value of a taxable service at the rates specified in the schedule, in which the taxable service was listed---Service or services, as defined under S.2(79) of the Sindh Sales Tax on Services Act, 2011 would mean "anything which was not goods and would include, but not limited to the services listed in the First Schedule of the Act---Service which was aimed to be taxed and covered under the scope of tax found place in the definition chapter as well; it would mean that it was not the service provider who was taxable, without reference to any specific service---All the main headings of Second Schedule had listed names of service providers---Service provider such as a Bank, would not become taxable on all services rendered by it---Only such services would fall under tax net which were enumerated under H.S. Code 98.13 and sub-headings which were specific in nature---If there was no specific classification under general tariff headings, it would be far more convenient for a taxation Officer to tax all services rendered by bank or any other service provider---Specific entry for the charge must exist; whereas in the case of appellant Bank, there was no specific entry for items that had been taxed---Code 9813.4000 applied by Assistant Commissioner, was a sub-heading---None of the three services in question, was covered under Code 98.13 or under sub-heading of 9813.4000---Order was itself redundant as it was silent after mention of functions of a service provider, without mentioning of any service even listed under Heading 9813.4000---Specific service enlisted in the Second Schedule, was necessary for taxability of service providers---Appellant/taxpayer, being a banking company and incorporated as such it could not indulge in the insurance business, nor it was an insurance company; three services which were the subject matter of the appeal, were not liable to tax during the period under appeal---Impugned order-in-original as well as order-in-appeal were set aside---Order of penalties under S.43 and default surcharge under S.44 of the Sindh Sales Tax on Services Act, 2011, having also been rendered as infructuous, was set aside.

Citi Bank NA's case 2014 PTD 284 and 2016 SCMR 484 = 2016 PTD 1180 ref.

Dr. Ikram-ul-Haq and Mansoor Baig for Appellant.

Naheed Ahmad AC, SRB for Respondent.

2019 P T D (Trib.) 334

[Inland Revenue Appellate Tribunal]

Before Shahid Masood Manzar, Judicial Member and Mian Saeed Iqbal, Accountant Member

Dr. SAJID NAZIR BHATTI

Versus

C.I.R., R.T.O., PESHAWAR

I.T.As. Nos. 1368/IB and 1369/IB of 2017, decided on 15th August, 2017.

(a) Income Tax Ordinance (XLIX of 2001)---

----Ss. 111, 116 & 122---Unexplained income or assets---Failure to file wealth statement---Amendment of assessment---Taxpayer, having failed to file wealth statement along with income tax returns, notices under S.116(1) of the Income Tax Ordinance, 2001 were issued---Taxpayer filed wealth statements and Assessing Officer noted that taxpayer did not declare any Bank account in the wealth statement---Assessing Officer finding that taxpayer had concealed the Bank accounts as well as amount credited during the tax years under consideration, issued notices under Ss.122(9)(5) & 111 of the Income Tax Ordinance, 2001 for making amendment in the assessment---Assessing Officer observed that no reason was given by the taxpayer as to why declaration was not correctly filed earlier and passed order for amendment of assessment---Appellate authority maintained order of Assessing Officer---Contention of taxpayer was that neither his case was selected for audit under Ss.214/177 of the Income Tax Ordinance, 2001, nor there existed any definite information in the hands of Assessing Officer which could legitimise the amendment of assessment, therefore, conduct of enquiries/amendment of assessment was without any basis and a nullity in the eye of law---Validity---Assessing Officer had acted in accordance with law, because taxpayer had failed to declare the closing balance/TDR and the credit entries---Version of the taxpayer that Assessing Officer had no definite information, was incorrect---No room existed to interfere with the order of Assessing Officer on that issue---Appeal of taxpayer failed on that account---Order accordingly.

(b) Income Tax Ordinance (XLIX of 2001)---

----Ss. 176 & 122(5)---Notice to obtain information or evidence to furnish any information relevant to tax leviable---Amendment of assessment---Taxpayer had challenged the exercise of jurisdiction of Assessing Officer under S.176 of the Income Tax Ordinance, 2001, contending that Assessing Officer had acted beyond jurisdiction as neither in the body of the notices issued nor in the amendment order the grant of permission to call information under S.176 of the Income Tax Ordinance, 2001 by concerned Commissioner Inland Revenue (CIR) was mentioned---Validity---Stance of taxpayer, was not correct as the Assessing Officer was properly given permission under S.176 of the Income Tax Ordinance, 2001 by commissioner vide a letter---Assessing Officer collected the information of the taxpayer under S.176 of the Income Tax Ordinance, 2001 because the information obtained, did not match with declared results---Obligation of the department was to initiate the proceedings and ask clarification from the taxpayer of discrepancies noted---Appeal filed by the taxpayer failed on that account---Order accordingly.

(c) Income Tax Ordinance (XLIX of 2001)---

----Ss. 116(3), 111 & 122---Discovery of omission or wrong statement in wealth statement---Furnishing of revised wealth statement---Assessing Officer found that the taxpayer did not declare any Bank account in his wealth statement, despite the fact that five Bank accounts in different Banks were being operated by the tax-payer---Said defect was confronted to the taxpayer and show-cause notice was issued for making amendment of already completed assessment---Taxpayer filed fresh wealth statement with the contention that his defects in wealth statements were not confronted to him and he was condemned unheard---Validity---Said contention was not supported by record---Order of Assessing Officer had shown that the taxpayer was properly confronted with regard to the defect in the wealth statements, when taxpayer filed new wealth statements, which were properly perused by the Assessing Officer---Question of being condemned unheard, did not arise as the taxpayer was given ample opportunities and was heard properly, but he failed to offer plausible explanation---Contention of taxpayer that he was condemned unheard, was repelled---Appeal of taxpayer failed on that account.

(d) Income Tax Ordinance (XLIX of 2001)---

----Ss. 111, 116 & 122---Unexplained income or assets---Additions made on account of Bank credit entries---Objection of the taxpayer was that addition made on account of Bank credit entries without bifurcating the nature and strength of credit entries, was a nullity in the eye of law---Validity---Commissioner Inland Revenue (Appeal)/ (CIR(A), had admitted in his order that the plea of taxpayer regarding issue in question was valid upto some extent, but since the Assessing Officer had already given credit of the cash balances and addition had been made, on account of unexplained balances contention of the taxpayer was repelled on that score---Observation of CIR (A) was doubtful, as on the one hand he admitted that taxpayer's plea was valid upto some extent and on the other hand upheld the action of Assessing Officer---For arriving at the fair conclusion, it was proper to remand the case on that score to Assessing Officer for considering the plea of the taxpayer afresh and decide the same in accordance with law---Taxpayer, was directed by the Appellate Tribunal to avoid seeking any adjournment and present his case with evidence/documents and necessary submissions as and when called/noticed by the Assessing Officer.

(e) Income Tax Ordinance (XLIX of 2001)---

----Ss. 111 & 122---Unexplained income or assets---Amendment of assessment---Valid sources in hand of taxpayer were; opening cash balance; salary income; hospital receipts---Taxpayer submitted that the placement of said sources in the shape of T.D.R's., being not illegal, the addition made on that account was patently illegal and unjustified---Validity---Taxpayer had not declared true particulars of assets/income and had concealed Bank balances/TDR's etc. for which no plausible explanation was offered, though he was properly confronted---Commissioner (Appeals) had observed that though in the revised wealth statement, those Bank accounts were not mentioned---Commissioner (Appeals) also observed that holding TDR's, and its non-declaration/ concealment, was an act cognizable under the law---No room existed to interfere with order of CIR (A) on that score---Appeal of taxpayer failed on that score.

(f) Income Tax Ordinance (XLIX of 2001)---

----S. 122---Amendment of assessment---Contention of taxpayer was that amendment of assessment on the basis of second show-cause notice, was illegal as the Assessing Officer had indulged in fishing and roving enquiries, because no such issue was raised in original show-cause notice---Validity---Commissioner Inland Revenue (Appeals) had rightly observed that no bar existed on issuing reminders subsequent to show-cause notice under S.122(9) of the Income Tax Ordinance, 2001 in case the first show-cause notice was not complied with---Assessing Officer, could issue as many reminders as he would think fit and until he was not satisfied that the taxpayer had been properly confronted/informed regarding the action to be taken---Taxpayer's version on that score was not accepted, appeal failed on that count.

2001 PTD (Trib.) 170 and 2015 PTD (Trib.) 2271 ref.

Mudassir Malik for Appellant.

Hayat Muhammad D.R. for Respondent.

2019 P T D (Trib.) 416

[Inland Revenue Appellate Tribunal]

Before Shahid Masood Manzar, Judicial Member and Muhammad Riaz, Accountant Member

AIRBLUE LIMITED

Versus

COMMISSIONER INLAND REVENUE, ZONE-I, ISLAMABAD

I.T.As. Nos. 572/IB of 2016, 794/IB and 795/IB of 2015, decided on 8th March, 2017.

(a) Income Tax Ordinance (XLIX of 2001)---

----Ss. 113, 120 & 122(5-A)---Amendment of assessment---Levying and charging minimum tax---Taxpayer, an Airline, filed income tax return for relevant year on due date and declared loss---Department initiated proceedings under S.122(5-A) of Income Tax Ordinance, 2001 and issued show-cause notice to the effect that taxpayer had not charged on the 'turnover', which had rendered the self-assessment erroneous---Adjudication Officer proceeded to amend the assessment and raised demand against the taxpayer---Appellate Authority on appeal remanded the case to Adjudicating Officer for de novo consideration---Taxpayer had declared a net turnover in his audited account on account of fare from passengers, cargo freight and excess baggage---Taxpayer submitted that minimum tax could only be charged or levied on the turnover under S.113(3) of Income Tax Ordinance, 2001 and any item not covered under the definition of "turnover", would be outside the ambit of minimum tax; that tax-payer was not subject to minimum tax because the fare and freight received by him fell outside the definition of 'turnover'---'Turnover' could only be applicable where the 'gross fees' was for the rendering of services and used in a very restricted manner---All such receipts which did not fall within the meaning or ambit of "gross fees" or "fees" were not subject to minimum tax---Department had conceaded that receipts of the taxpayer were for "fare and freight", which were subject to terminal taxes on goods and passenger---All the revenues of a company were not subject to minimum tax, but only those which fell under the definition, would be liable to minimum tax under S.113 of the Income Tax Ordinance, 2001---Gross amount received by the Airline under the head "fare from passenger", 'cargo freight' and 'excess luggage' did not fall within the ambit of "gross fee" for rendering services for giving benefits including commission as postulated in the definition of 'turnover' under S.113(3)(b) of the Income Tax Ordinance, 2001---Appeal of taxpayer was accepted and necessary relief was allowed to the taxpayer by deleting minimum tax under S.113 of the Income Tax Ordinance, 2001 by setting aside the orders passed by appellate authority below and Adjudicating Officer---Taxpayer was entitled for the carried forward of excess tax paid for adjustment against tax liability.

[Case-law referred].

(b) Words and phrases---

----"Fare"---Definition.

[Case-law referred].

(c) Words and phrases---

----'Freight'---Meaning explained.

[Case-law referred].

(d) Words and phrases---

----'Fee'---Meaning, explained.

[Case-law referred].

(e) Interpretation of statutes---

----Enactment to be given legal meaning as intended by the Legislator.

(f) Interpretation of statutes---

----Words or phrase in a statute---Proper and most known meanings to be considered---If there was more than one ordinary meaning the most common and well-established meaning be preferred---No different interpretation was permissible, except that transpired from the ordinary meaning of the provision---No one was allowed to play with the plain meanings.

(g) Income Tax Ordinance (XLIX of 2001)---

----S. 60-A---Deductable allowance---Liability to pay Workers' Welfare Fund---Levy was made by the department under the pretext of amendment brought in by the Finance Act, 2006 and Finance Act, 2008---Said amendments were declared unconstitutional by the High Court; which was subsequently affirmed by Supreme Court---Workers' Welfare Fund was not payable by taxpayer due to the fact that it did not fall under the definition of "Industrial Establishment" as postulated in S.2(F) of the Workers' Welfare Fund Ordinance, 1971.

[Case-law referred].

Tahir Razzaque Khan, FCA, Authorised Representative and Shaheer Bin Tahir for Appellant.

Said Munaf, Departmental Representative for Respondent.

2019 P T D (Trib.) 459

[Inland Revenue Appellate Tribunal]

Before Shahid Masood Manzar, Judicial Member and Mian Saeed Iqbal, Accountant Member

Messrs G.F.Z. AUTOS, RAWALPINDI

Versus

C.I.R., R.T.O., RAWALPINDI

S.T.A. No.471/IB of 2016, decided on 2nd June, 2017.

Sales Tax Act (VII of 1990)---

----Ss. 3, 6, 7, 8, 22, 23, 26, 34 & 36---Sales Tax Special Procedures Rules, 2007, R.58-T(i)---S.R.O. No.896(I)/2013, dated 4-10-2013---Determination of tax liability---Failure to pay extra sales tax---Taxpayer having failed to pay extra sales tax contravention proceedings culminated in passing of impugned order, whereby amount was established and held to be recoverable---Taxpayer being dissatisfied with order of Assessing Officer, filed appeal before Commissioner (Appeals) which was dismissed---Appeal mainly revolved around the question as to whether S.R.O. No.896(I)/2013, dated 4-10-2013 was applicable to the present case or not---Representative of the taxpayer, had furnished copy of Ruling, which had determined the customs value of old and used auto parts---Departmental Representative submitted that in the said ruling clear distinction had been made in new and used auto parts---Notification S.R.O. No.896(I)/2013, dated 4-10-2013, only mentioned auto parts and accessories, and same was not applicable to the case of the taxpayer---S.R.O. No.896(I)/2013, dated 4-10-2013, had mentioned only one category at Sr. 4 "Auto Parts and Accessories", which would mean that no bifurcation had been made between the "used" and "auto parts"---Where no bifurcation was made between the used/new auto parts, S.R.O. 896(I)/2013, dated 4-10-2013 would be considered to be applicable in both the cases---Commissioner (Appeals) had rightly dealt with the matter and impugned order needed no interference.

Faisal Iqbal Malik, ITP for Appellant.

Muhammad Akram, D.R. for Respondent.

2019 P T D (Trib.) 503

[Inland Revenue Appellate Tribunal]

Before Muhammad Jawed Zakaria, Judicial Member and Syed Ayaz Mehmood, Accountant Member

COMMISSIONER INLAND REVENUE, R.T.O., SUKKUR

Versus

AL-SANA OIL MILLS, SUKKUR

I.T.A. No.183/KB of 2015, decided on 17th September, 2018.

Income Tax Ordinance (XLIX of 2001)---

----Ss. 113, 122(5A) & Second Schedule, Part-III, Clause 8---Notification No. S.R.O. 1086(I)/2010 dated 30-11-2011---Tax liability, reduction of---Rebate---Taxpayer, status of---Taxpayer was aggrieved of fixing liability without allowing rebate as admissible under Second Schedule of Income Tax Ordinance, 2001---Appellate authority decided matter in favour of taxpayer---Validity---Notification No. S.R.O. 1086(I)/2010 dated 30-11-2011 provided that rebate was allowable @ 80% to fast moving consumer goods---Taxpayer being manufacturer and distributor was capable to earn a better margin of profit as compared to distributor who even did not possess title of goods---Goods were of higher value and carried small amount of profit---Higher value of product lower margin of profit, fast moving goods and disproportionate charge of tax under S. 113 of Income Tax Ordinance, 2001 @ 1% was main purpose to allow certain concessions in statute---Appellate Tribunal Inland Revenue maintained orders passed by appellate authority as authorities had failed to establish its claim---Appeal was dismissed in circumstances.

Messrs Super Rehman Oil Mills's I.T.A. No. 55/KB/2013; Messrs Rahman Solvent Plant and Cooking and Oil Mills I.T.A. No. 54/KB/2013; Messrs Insaf Oil Mills's I.T.A. No. 5656/KB/2013; Messrs Farooq Oil Mills's I.T.A. No. 59/KB/2013; Messrs Arfat Oil Mills's I.T.A. No. 62/KB/2013; Messrs Rehman Oil Mills and Machinery I.T.A. No. 247/KB/2013 and Messrs Al-Sana Oil Mill, Sukkar's case I.T.A. No.57/KB of 2013 ref.

Dr. Latif Mian, D.R. for Appellant.

M. Mehtab Khan for Respondent.

2019 P T D (Trib.) 520

[Inland Revenue Appellate Tribunal]

Before Ch. Shahid Iqbal Dhillon, Judicial Member and Muhammad Raza Baqir, Accountant Member

AHMAD PAPER CONE AND PACKAGES, MULTAN

Versus

C.I.R., R.T.O., MULTAN

M.A. (R) No.181/LB of 2016, in re: S.T.A. No.618/LB of 2015, decided on 26th May, 2016.

Sales Tax Act (VII of 1990)---

----Ss. 7, 8 & 46---Adjustment of input tax---Rectification of Tribunal's order, application for---Sales tax had been charged on the ground that applicant/registered person had adjusted/claimed input tax on the basis of fake/flying invoices issued by a gang of fraudsters vide order-in-original---Commissioner Inland Revenue (A) having upheld the treatment accorded by the Adjudicating Officer, applicant in appeal before Appellate Tribunal Inland Revenue, contending that no default was committed while making purchases from the suppliers, who were duly registered and active at the relevant time---Held, contention raised during course of appeal, having remained un-adjudicated, impugned order was recalled and accordingly rectified---High Court in its recent judgment, cited as 2015 PTD 2256 on similar circumstances, had held that the Tribunal should not feel shy to exercise its jurisdiction comprehensively by directing the Commissioner Appeals for production of relevant record and for making further enquiries and investigations in the matter of tax fraud---Since the contentions and the issue involved in the present case, were exactly similar, case was remanded to the Adjudicating Officer for fresh appraisal strictly in accordance with the directions of High Court.

CIR v. Tariq Poly Pack Ltd. 2015 PTD 2256 rel.

Riaz Ahmad Raja, ITP for Applicant.

Kashif Azhar, DR for Respondent.

2019 P T D (Trib.) 542

[Inland Revenue Appellate Tribunal]

Before Muhammad Jawed Zakaria, Judicial Member and Syed Ayaz Mahmood, Accountant Member

The COMMISSIONER INLAND REVENUE, ZONE-I, R.T.O.-II, KARACHI

Versus

Messrs I.P.P., KARACHI

S.T.A. No. 307/KB of 2016, decided on 6th December, 2018.

(a) Sales Tax Act (VII of 1990)---

----Ss. 2(37), 7, 8, 10, 11(3) & 38---Tax fraud, detection of---Raid---Procedure--- Responsibility of authorities--- Scope--- Authorities conducted raid on premises of taxpayer and passed order-in-original for recovery of short tax paid during periods from April, 2010 to June, 2012---Appellate authority set aside order passed against taxpayer---Validity---Action against taxpayer was taken under S.38 of Sales Tax Act, 1990 and charges of tax fraud were levelled---Authorities had already conducted sales tax audit of taxpayer for the same tax periods---Sales tax refunds against the same or similar supplies/sale or purchase were processed or issued to taxpayer continuously after due verifications and applying mind by the authorities---Before issuing refund, pre-audit was conducted and even post-refund audit was also conducted and concluded by tax officers---Such established genuineness of claim of taxpayer---Heavy responsibility was upon raiding authorities to take action under S.38 of Sales Tax Act, 1990 only after having firm and sufficient information and evidence of tax fraud against taxpayer and not merely on basis of presumption and assumption---Proceedings under S.38 of Sales Tax Act, 1990 initiated against taxpayer were illegal and without legal support---Requirements of S.38 of Sales Tax Act, 1990 were not fulfilled in imposing charge of tax fraud committed under S.2(37) read with S.11(3) of Sales Tax Act, 1990---Appellate Tribunal Inland Revenue declined to interfere in order passed by appellate authority---Appeal was dismissed in circumstances.

Pakistan Ordnance Factories (POF) Wah, Cant. v. Collector of Customs, Sales Tax and Central Excise Adjudication, Islamabad and others 2012 PTD 1016; Commissioner of Income Tax v. Hakim Ali Zardari SBLR 2006 SC 36/A; International Cigarette Industries (Pvt.) Ltd. v. ACIR 2013 PTD (Trib.) 843; FOP v. Messrs Ibrahim Textile Mills Ltd.1992 SCMR 1898; 2001 SCMR 838; 2017 PTD (Trib) 156; Messrs Fazal Paper Mills Ltd. Okara v. CIR RTO Lahore 2014 PTD (Trib) 448; 2011 PTD (Trib.) 866 and Iqbal and Sons v. Federation of Pakistan 2017 PTD 590 ref.

(b) Sales Tax Act (VII of 1990)---

----Ss. 7, 8 & 38---Tax fraud---Onus to prove---In case of tax fraud, it is prime responsibility of tax department to provide documentary evidence regarding non-relevancy of inputs claimed by taxpayer with goods manufactured and supplied as per provisions of Ss. 7 & 8 of Sales Tax Act, 1990.

2015 PTD 2256; 2004 PTD 868; 2013 PTD (Trib.) 2130; 2014 PTD (Trib.) 558; CIR v. Ali Hassan Metal Works 2018 PTD 108 and 2016 PTD (Trib.) 2744 rel.

(c) Administration of justice---

----Void order---Effect---If basic order is illegal and void then any superstructure built thereon is also illegal and liable to fall.

Pepsi Cola International's case 2017 PTD 636 rel.

Mrs. Farzana Altaf, D.R. for Appellant.

Tariq Mehmood Siddiqui, Consultant for Respondent.

2019 P T D (Trib.) 561

[Inland Revenue Appellate Tribunal]

Before Muhammad Jawed Zakaria, Judicial Member and Syed Ayaz Mehmood, Accountant Member

Messrs GALAXY INTERNATIONAL, KARACHI

Versus

COMMISSIONER INLAND REVENUE, WHT, ZONE RTO, KARACHI

S.T.A. No.469/KB of 2016, decided on 27th June, 2018.

Sales Tax Act (VII of 1990)---

----Ss. 3(7), 6, 7, 11(4A) [inserted by Finance Act (XXIX of 2016)], 26 & 33(5)---Withholding of sales tax---Recovery of short payment---Retrospectivity---Scope---Taxpayer was aggrieved of recovery notice issued by applying retrospective effect of S. 11(4A) of Sales Tax Act, 1990---Validity---Insertion of S. 11(4A) in Sales Tax Act, 1990 by Finance Act, 2016 was indicative of the fact that during tax period under consideration i.e., July 2009 to October 2012, recovery of withholding tax by departmental authorities under S. 11(2) of Sales Tax Act, 1990 was not legal---Retrospective effect to levy could not be given being charging section and it was applicable prospectively from date of insertion, i.e., 01-07-2016---Provisions of S. 11(2) of Sales Tax Act, 1990 only dealt with situations where registered person failed to pay tax due on supplies made by him or had made short payment or had claimed inadmissible tax credit---Provisions of S.11(2) of Sales Tax Act, 1990 did not deal with situation where any registered person failed to withhold sales tax---Legislature inserted new subsection (4A) in S. 11 of Sales Tax Act, 1990 by Finance Act, 2016 empowering departmental authorities to recover withholding sales tax but such power was not available with the department under S. 11(2) of Sales Tax Act, 1990---Appellate Tribunal Inland Revenue declared that subsection (4A) of S. 11 of Sales Tax Act, 1990 inserted through Finance Act, 2016 had no retrospective effect and was not applicable for tax period during December 2013 to January 2015---Appeal was allowed accordingly.

(2015) 112 Tax 139 (Trib.) and 2016 PTD (Trib.) 445 ref.

Adnan Siddiqui for Appellant.

Dr. Latif D.R. for Respondent.

2019 P T D (Trib.) 570

[Inland Revenue Appellate Tribunal]

Before Ch. Shahid Iqbal Dhillon, Judicial Member and Dr. Muhammad Naeem, Accountant Member

Messrs Z.A. COTTEX, FAISALABAD

Versus

The COMMISSIONER INLAND REVENUE (APPEALS) R.T.O., FAISALABAD

S.T.A. No.1499/LB of 2017, decided on 15th November, 2018.

Sales Tax Act (VII of 1990)---

----Ss. 11(2)(3), 33, 34 & 72-B---Sales Tax liability---Tax returns, filing of---Liability of taxpayer---Taxpayer, in the present case, was an illiterate person who had a Consultant for filing online tax returns who prepared fake invoices and caused huge lose to the national exchequer---Authorities issued show-cause notice to taxpayer for dishonestly filing wrong tax returns and imposed surcharge and penalty---Taxpayer was aggrieved of order passed by authorities whereby penalties and surcharge were maintained---Validity---Appellate authority had not given exhaustive judgment but retrieved to primitive assertions already taken in adjudication order---Appellate authority neither discussed FIR lodged by taxpayer against the consultant nor order of the High Court---Authorities neither conducted any inquiry against alleged buyers who had availed zero-rating of sales tax nor registered any criminal case against them for committing tax frauds at large scale not only against taxpayer but also against Government of Pakistan by preparing fake invoices in name of taxpayer's firm and had caused huge monitory loss to taxpayer as well as to the national exchequer---Taxpayer had appointed Sales Tax Consultant who prepared fake invoices during alleged tax years---Taxpayer gained knowledge of said fraud when field formations of Federal Board of Revenue issued notices to taxpayer for recovery of sales tax and consultant had pin code and password for online filing of sales tax returns of taxpayer's firm---Appellate Tribunal Inland Revenue set aside show-cause notices and orders passed by appellate authorities as same were illegal and void ab initio---Appeal was allowed accordingly.

Khubaib Ahmad for Appellant.

Nemo for Respondent.

2019 P T D (Trib.) 577

[Inland Revenue Appellate Tribunal]

Before Ch. Shahid Iqbal Dhillon, Judicial Member and Dr. Muhammad Naeem, Accountant Member

Messrs MUHAMMAD YOUSAF

Versus

The COMMISSIONER INLAND REVENUE (LYALLPUR ZONE), R.T.O., FAISALABAD

S.T.A. No.1426/LB of 2017, decided on 15th November, 2018.

(a) Sales Tax Act (VII of 1990)---

----Ss. 2(37), 11 & 21(2)---Sales Tax Rules, 2006, R. 12---Notification SRO No.555(I)/2006 dated 05-06-2006---Tax fraud---Coercive recovery of tax---Proceedings for blacklisting---Taxpayer was issued show-cause notice for tax deficit---During pendency of proceedings on show cause, authorities issued warning to suspend registration of taxpayer and taxpayer paid sum of Rs. 4.8 million as recovered amount---Validity---Taxpayer had neither admitted allegation of suppression of sales nor liability of sales tax whereas an amount of sales tax was coercively recovered by authorities which could not be equated with admission of charges and allegations---Show-cause notice issued for suspension of registration could also not be construed as confession of taxpayer as same was deposited ostensibly under threat of suspension of his registration and criminal prosecution apprehending physical arrest---Such mode of recovery by revenue department, without recourse to relevant provisions of Sales Tax Act, 1990 could only be termed as extortion---Any person depositing amount under any fear, stress or duress could not reasonably be expected its admission by him in event of recovery of tax unlike perpetual tax evader and habitual actor of fiscal crime---Neither any show-cause notice for assessment of sales tax or as case may be recovery of short levied or non-levied of sales tax under Ss.11(2) & 11(3) of Sales Tax Act, 1990 was issued nor any order adjudging liability of sales tax was passed---Whole exercise of recovery of sales tax was carried out without adhering to due process of adjudication as provided under law---Appellate Tribunal Inland Revenue set aside show-cause notice and order passed by Commissioner Inland Revenue as being illegal and void ab initio---Appellate Tribunal Inland Revenue also declared recovery of sales tax as illegal and without lawful jurisdiction---Appeal was allowed in circumstances.

(b) Sales Tax Act (VII of 1990)---

----S. 11---Coercive recovery---Administration of justice---Recovery of taxes from a taxpayer without due process of adjudication of case, which is his basic, fundamental, constitutional and natural right, cannot be equated with confession or admission of charges itself as same has to be adjudged upon---Coercive recovery from taxpayer under threat of suspension of registration without final determination of legitimate liability of taxpayer is illegal, without lawful jurisdiction and amounts to punishing him without due process of law provided under S.11 of Sales Tax Act, 1990.

Messrs G.M.H. Traders v. The Deputy Director, Directorate of Intelligence, Lahore 2009 PTD 1894; Messrs Ashraf Steel Mills v. The Director Intelligence and others 2014 PTD 1506; Messrs Taj International (Pvt.) Ltd. and others v. The Federal Board of Revenue and others 2014 PTD 1807 and Muhammad Afzal Shaheen v. Federation of Pakistan and others 2014 PTD 1919 rel.

(c) Sales Tax Act (VII of 1990)---

----Ss. 11 & 21(2)---Single show-cause notice---Suspension of registration and recovery of sales tax---Effect---Two independent proceedings under S.21(2) & S.11 of Sales Tax Act, 1990 cannot be initiated simultaneously with a single show-cause notice i.e., suspension of registration and recovery of sales tax.

Khubaib Ahmad for Appellant.

Nemo for Respondent.

2019 P T D (Trib.) 598

[Inland Revenue Appellate Tribunal]

Before Shahid Masood Manzar, Judicial Member and Muhammad Riaz, Accountant Member

MUHAMMAD NAZIR AHMED

Versus

The COMMISSIONER INLAND REVENUE, R.T.O., ISLAMABAD

I.T.A. No.676/IB of 2016, decided on 30th January, 2017.

Income Tax Ordinance (XLIX of 2001)---

----Ss. 114(4), 120, 122-C, 172 & 218(2)---Filing of return of income---Amendment of assessment---Notice under S.114(4) of the Income Tax Ordinance, 2001 for filing of income tax return for relevant year was issued to the taxpayer, but on due date neither anybody attended the office nor any application for adjournment was filed---Assessing authority made provisional assessment on the available information---Appeal filed by the taxpayer, against order of assessing authority, was dismissed by appellate authority---Plea of the taxpayer was that he being non-resident had not received any notice or order passed under S.122-C of the Income Tax Ordinance, 2001 and he was not served as per prescribed procedure---Taxpayer, further submitted that order against him was passed without appointing agent as he was working abroad since long and appointment of agent was prerequisite for assessment of non-resident person under S.172 of the Income Tax Ordinance, 2011---Notice was to be served upon the non-resident taxpayer as provided under S.218(2) and S.172 of the Income Tax Ordinance, 2001---Assessment proceedings having not been conducted in accordance with law, Appellant Tribunal could cancel the impugned orders being suffering from legal infirmity---Assessing authority, had not meted the correct treatment to the taxpayer by sending notice under Ss.114(4) & 122(c); whereas both said sections did not apply in the case where the taxpayer had filed his return on the due date---Assessing Officer, in such case, could invoke the provisions of S.122(5-A) of the Income Tax Ordinance, 2001---Passing of order of Assessing Officer in presence of deemed assessment, could not sustain in the eye of law---Impugned order of Assessing Officer and order of Commissioner (Appeals) being ab initio, void were vacated and appeal of taxpayer, was accepted.

Messrs Humayyun Ltd. v. Federation of Pakistan and others PLD 1991 SC 619; 2004 SCMR 456; 2002 PTD (Trib.) 300; 1967 PTD 189; I.T.A. No.69/IB of 2008; Circular No.RCIT/J/S/154/ SO-II/ 3544 and 2015 PTD 2346 ref.

Mirza Saqib Siddique for Applicant.

M. Faisal Mushtaq, D.R. for Respondent.

2019 P T D (Trib.) 610

[Inland Revenue Appellate Tribunal]

Before Muhammad Riaz, Accountant Member

Messrs MUGHAL ENGINEERING WORKS, RAWALPINDI

Versus

The COMMISSIONER INLAND REVENUE, R.T.O. RAWALPINDI

M.A. (AG) No.84/IB of 2015 and I.T.A. No.550/IB of 2013, decided on 21st December, 2016.

Income Tax Ordinance (XLIX of 2001)---

----Ss. 121(1)(d) & 177---Best judgment assessment---Taxpayer, an individual, who derived income from Engineering Work, filed income tax return---Case of taxpayer was selected for audit under S.177 of the Income Tax Ordinance, 2001 and he was required to produce books of account and related documents---Notices issued to the taxpayer having not been complied with, Assessing Officer proceeded to assess income of the taxpayer by disallowing receipts and expenses claimed by the taxpayer---Appeal filed against the order of Assessing Officer, was rejected---Validity---Income assessed by Assessing Officer was not justified, as estimation of receipts was not based on any information or material---Assessing Officer, after estimating his own receipts against the declared by the taxpayer, had added the expenses claimed without first deducting the same, which reflected the non-application of mind---Impugned order passed by Assessing Officer could not be held to be a best judgment assessment---Both orders, passed by Assessing Officer as well as of the appellate authority, were vacated---Appeal of taxpayer succeeded, in circumstances.

2012 PTD 1815 and 2013 PTD 1552 ref.

Atif Waheed for Appellant.

Tauqir Ahmed, D.R. for Respondent.

2019 P T D (Trib.) 751

[Inland Revenue Appellate Tribunal]

Before Shahid Masood Manzar, Judicial Member and Nadeem Dar, Accountant Member

Raja ABDUL GHAFOOR

Versus

C.I.R., R.T.O., RAWALPINDI

I.T.A. No.1414/IB of 2015, decided on 13th February, 2017.

(a) Income Tax Ordinance (XLIX of 2001)---

----Ss. 111(1) & 122---Unexplained income or assets---Amendment of assessment---Taxpayer filed income tax return for relevant year declaring income subject to Final Tax Regime and income subject to normal regime and department assessment income---Commissioner Inland Revenue (Appeals) noticed certain serious discrepancies on the part of taxpayer and remanded back/set aside said assessment order---Case was never selected for audit by Federal Board of Revenue (Board), but certain directions were given by the Board for particular investigation in the case---Department, without having any definite information nor selecting taxpayer for audit, proceeded to tax the taxpayer's three years' income---During said proceedings, the department acted in the manner which was irregular, discriminatory and intimidatory---Following instructions from the Board, department issued notices to the taxpayer who had no right to ask fish-type questions from taxpayer when the income tax return, was deemed as assessed and case was not selected for audit---Department without any legal justification, asked for taxpayer's reply when taxpayer had explained Bank account in its replies---When the taxpayer had already declared items in question, notice was issued to the taxpayer without any legal justification and any subsequent action emanating from illegal notice was liable to struck down---Assessment and orders of lower authorities, were vacated---Observations by CIR(A), were not serious or of any tax incidence---All incomes were correctly declared by the taxpayer in available columns---No reason existed, in circumstances, for Commissioner (Appeals) to set aside department's order and remand case to department, as department had no cause to proceed in the case---Law provided about "definite information" and "erroneous" assessment and neither of these was met in taxpayer's case---Orders of department as well as that of Commissioner (Appeals), being without legal sanction, were vacated and income tax return of the tax-payer was accepted following the principle that since mandatory statutory law was not complied with, subsequent proceedings became coram non judice.

PLD 2001 Quetta 20 ref.

(b) Administration of justice---

----When law would provide procedure for doing a thing in a particular manner then it must be done in the manner and not otherwise or it should not be done at all.

PLD 2005 SC 842 and 2005 PTD 106 ref.

Tanveer Ahmed for Appellant.

Mrs. Shabana Mumtaz, D.R. for Respondent.

Date of hearing: 13th February, 2017.

2019 P T D (Trib.) 792

[Inland Revenue Appellate Tribunal]

Before Mrs. Ambreen Aslam, Judicial Member and Syed Tahir Raza Zaidi, Accountant Member

Messrs AMRELI STEEL LTD., KARACHI

Versus

The COMMISSIONER (IR), LTU, KARACHI

S.T.A. No.254/KB of 2016, decided on 4th December, 2018.

Sales Tax Act (VII of 1990)---

----S. 45---Sales Tax Special Procedures Rules, 2007, Chap. XI, Cls. 58-F & 58-H---Payment of sales tax---Steel melters, re-rollers and ship breakers---Procedure---Taxpayer was in business of manufacturing steel reinforcement bars by running a re-rolling mill and was aggrieved of recovery of sales tax on basis of consumption of electricity units---Plea raised by taxpayer was that it was using gas for heating its furnaces as it was not melter and no electric furnace was installed at re-rolling mill---Validity---Provision of cl. 58-F of Chap. XI of Sales Tax Special Procedures Rules, 2007 was applicable to steel melting units, steel re-rolling units, composite units of melting and re-rolling and composite units having complete facility of melting, re-rolling and MS Cold Drawing, whether operated on electric power, natural gas or any other source of energy and regardless of type of electricity connection---Such provision dealt with applicability and had laid down categories of provisions to whom it would apply safely---Provision of cl. 58-F of Chap. XI of Sales Tax Special Procedures Rules, 2007 had introductory significance whereas Provision of cl. 58-H of Chap. XI of Sales Tax Special Procedures Rules, 2007 specifically dealt with payment of tax by steel melter, steel re-roller and also clarified mode of payment so also dealt with excluding entities and also emphasized that stainless steel products were excluded---Appellate Tribunal Inland Revenue set aside orders passed by forums below as authorities had misinterpreted that taxpayer used electricity for main activity whereas taxpayer was using gas for furnace heating process and for usage of gas it declared purchase along with sales tax paid on such purchase---Appeal was allowed in circumstances.

M. Umer Akhund for Appellant.

Raja Israr, D.R. for Respondent.

Date of hearing: 27th September, 2018.

2019 P T D (Trib.) 886

[Inland Revenue Appellate Tribunal]

Before Mrs. Ambreen Aslam, Judicial Member and Syed Tahir Raza Zaidi, Accountant Member

Messrs FATHER & SONS (PVT.) LIMITED, KARACHI

Versus

COMMISSIONER INLAND REVENUE, ZONE-V, CRTO, KARACHI

S.T.A. No.573/KB of 2017, decided on 30th April, 2018.

Sales Tax Act (VII of 1990)---

----Ss. 3, 8, 11(2) & 34; Sixth Schedule, Serials Nos.10 & 104---Taxpayer claimed exemption for sales tax/output tax on supplies of "Ispaghol Husk"---Said claim of taxpayer was denied by adjudicating authority holding that claimed exemption related to agriculture produce of Pakistan, not subjected to further process of manufacture; that taxpayer was registered as manufacturer and was engaged in supplies of consumer goods i.e. Sucral, Salt and Ispaghol and these products did not qualify for claimed exemption---Order passed by adjudicating authority was upheld by appellate authority---Validity---Counsel for taxpayer contended that appellate authority, had passed unjustified order, merely on the assumption treating the product/Ispaghol taxable without giving any plausible evidence---Taxpayer claimed that 'Ispaghol Husk' was out of scope of tax, as it was classified as "Ayurvedic Product" under Chapter 30 of First Schedule to the Customs Act, 1969 with PCT Heading 3003.9010 and 3004.9010 and enlisted as exempt supply under Serial No.104 of the Sixth Schedule to Sales Tax Act, 1990---Department considered the product "Ispaghol" as "Food Supplement", without any qualified reference and evidence, but with simple contention that "Ispaghol Husk" was a common household product which was used as Food Supplement by healthy people; whereas product "Ispaghol Husk" was recognized as Ayurvedic medicine---Departmental Representative had contended that 'Ispaghol' was a by-product of a plant and was not an agriculture produce, which did not qualify for exemption of sales tax---"Psyllium Husk" which was husk of the seed of the plantain, could not be considered as food supplements---Natural products were being used by the people to prevent illness, cure infection, relief, fever and heal wounds---Usage of said natural products could be called conventional usage---Under Serial No.104 of Sixth Schedule of Sales Tax Act, 1990, agricultural produce in question was not subject to any further process of manufacture---Psyllium was a seed (agricultural produce) and the husk/Ispaghol was not processed for manufacturing purpose---Ispaghol/husk did qualify for exemption in terms of Serial No.104 of the Sixth Schedule of Sales Tax Act, 1990---Appellate Tribunal declared that Ispaghol husk was not taxable being husk of Psyllium seed---Impugned orders were set aside, in circumstances.

Pakistan Television Corporation Limited v. Commissioner Inland Revenue (Legal) LTU, Islamabad and others 2017 PTD 1372 and Messrs Habib Industries (Pvt.) Ltd. Karachi v. I.A.C. Range-III, Company-IV, Karachi 2017 PTD (Trib.) 2316 ref.

Ajeet Sunder for Appellant.

Muhammad Salman, D.R. for Respondent.

Date of hearing: 7th March, 2018.

2019 P T D (Trib.) 939

[Inland Revenue Appellate Tribunal]

Before Muhammad Jawed Zakaria, Judicial Member and Syed Ayaz Mahmood Accountant Member

Messrs KARSAZ (PVT.) LTD., KARACHI

Versus

ADDITIONAL COMMISSIONER INLAND REVENUE, ZONE-II, E & C, KARACHI

M.A. (AG) No.171/KB of 2018 and S.T.A. No.256/KB of 2017, decided on 16th May, 2018.

(a) Sales Tax Act (VII of 1990)---

----Ss. 11, 25, 37 & 38---Assessment of tax---Self-assessed tax---Procedure---Show-cause notice---Preconditions---Proceedings under S.11 of Sales Tax Act, 1990 can only be initiated through process of audit under S. 25 of Sales Tax Act, 1990---Self-assessed amount of tax due by taxpayer in its sales tax returns can only be altered through fresh assessment of tax under S. 11 of Sales Tax Act, 1990 subject to process of selection of taxpayer through audit provided under S.25 of Sales Tax Act, 1990---Material evidence collected for show-cause notice under S. 11(2) of Sales Tax Act, 1990 needs to be credible and can at best, pass test of fair trial and due process, if it is an outcome of an inquiry or investigation envisaged under proviso to S. 25(2) of Sales Tax Act, 1990 and/or in Ss. 37/38 of Sales Tax Act, 1990---Anything short of such process not only would lead to persecution of taxpayer and may make mockery of fundamental right of fair trial.

Messrs National Tiles and Ceramics Ltd. v. C.I.R. (I.T.A. No.S.T.A. No.36/KB/2017) fol.

(b) Sales Tax Act (VII of 1990)---

----Ss. 11, 25, 33 & 34---Assessment of tax---Self-assessed tax---Selection of taxpayer---Show-cause notice, non-issuance of---Delegation of powers---Principles---Taxpayer was aggrieved of show-cause notice issued under S.11(2) of Sales Tax Act, 1990 for recovery of additional tax liabilities without selection of case or without audit by Commissioner Inland Revenue---Validity---No provision of delegation of powers like S.210 of Income Tax Ordinance, 2001 existed with Commissioner Inland Revenue---Delegatee could not further delegate his powers and only Commissioner was competent and empowered to undertake assessment proceedings under S.11 of Sales Tax Act, 1990 and not any other officer---Show-cause notice issued under S.11 of Sales Tax Act, 1990 by Additional Commissioner Inland Revenue was of no legal effect who was not empowered to issue notice and could not pass order in question as such powers exclusively vested with the Commissioner---Order-in-Original passed by Additional Commissioner Inland Revenue was without jurisdiction or in excess of jurisdiction and without any legal effect---Such show-cause notice issued under S.11 of Sales Tax Act, 1990 was ab initio void, illegal as notice was to be issued under S.25 of Sales Tax Act, 1990---Web-portal Evidence Showed that all the parties which were blacklisted subsequently were active taxpayers at the time of transactions---Appellate Tribunal Inland Revenue set aside the orders passed by officers below as same were without jurisdiction---Appeal was allowed accordingly.

2013 PTD 1536 and Messrs National Tiles and Ceramics Ltd. v. C.I.R. (I.T.A. No.S.T.A. No.36/KB/2017) rel.

2016 PTD 2332; Muhammad Ashraf Tiwana and others v. Pakistan and others 2013 SCMR 1159; Sahni Silk Mills (P) Ltd. and another v. Employee's State Insurance Corporation (1994) 5 Supreme Court Cases 346; Haji Meher Din v. Commissioner of Income Tax 2002 PTD 541; Hamza Nasir Wire v. Federation of Pakistan 2018 PTD 1071; Punjab Beverages Limited v. FBR 2018 PTD 1251; 2011 PTD (Trib.) 808 and 2011 PTD (Trib.) 773; 2011 PTD (Trib.) 808; 2013 PTD (Trib.) 2344; Attock Cement Pakistan Ltd. v. The Collector of Customs 1999 PTD 1892; D.G. Khan Cement Company Ltd. v. The Federation of Pakistan and others PLD 2013 Lah. 93; 2011 PTD 866; Government of Pakistan v. Messrs Village Development Organization 2005 SCMR 492; 2016 PTD (Trib.) 1877; Commissioner Inland Revenue, Faisalabad v. Messrs. Chenab Board, Faisalabad 2014 PTD (Trib.) 558; Messers Kamal Limited v. CIR (A), Faisalabad and others 2017 PTD (Trib.) 113; Messrs Deluxe Packages (Pvt.) Ltd., Karachi v. The CIR, Ad-II, RTO, Karachi 2013 PTD (Trib.) 892; Messrs Usman Fabrics, Faisalabad v. Collector of Sales Tax, Faisalabad 2010 PTD (Trib.) 1631; The CIR, Zone-III, RTO, Faisalabad v. Messrs Kamal Fabrics Faisalabad 2012 PTD (Trib.) 453; Silver Cotton Mills Ltd. v. Commissioner of Sales Tax, (West) 1984 PTD 216; Messrs Kashmir Edible Oils Ltd., Lahore v. Secretary Revenue Division Islamabad 2002 PTD 1805; 1997 SCMR 209; Messrs Silver Cotton Mills Ltd. v. Commissioner of Sales Tax (West), Karachi 1984 PTD 216 and Galaxy Textile Mills Ltd. v. Federation of Pakistan and others Writ Petition No. 17185/13 ref.

Nisarul Haq, FCA for Appellant.

Naveed ul Hasan, D.R. for Respondent.

Date of hearing: 22nd March, 2018.

2019 P T D (Trib.) 982

[Inland Revenue Appellate Tribunal]

Before Shahid Masood Manzar, Chairman and Dr. Muhammad Naeem, Accountant Member

Hafiz ABDUL KARIM

Versus

C.I.R., R.T.O., MULTAN

I.T.A. No.891/LB of 2016, decided on 14th November, 2018.

(a) Income Tax Ordinance (XXXI of 1979)---

----Ss. 122 & 129---Amendment of finalized assessment by Officer Inland Revenue---Number of mistakes had been made by the Officer while amending the assessment---Commissioner (Appeals) also passed a non-speaking order and annulled the amended assessment with the direction of reappraisal of the case by providing the department another opportunity to fill the lacuna which was illegal---If the basic order was void, then any superstructure built thereon was also liable to fall---Order of amendment of assessment by the Officer of Inland Revenue, therefore, was without lawful authority and jurisdiction.

(b) Administration of justice---

----If the basic order is void, then any superstructure built thereon is also liable to fall.

2011 PTD 2435; 2007 PTD 2601; 1994 SCMR 2232; 2010 PTD 819; 2010 PTD (Trib.) 2602; 2013 PTD (Trib.) 884; 2011 PTD (Trib.) 187 and 2012 PTD (Trib.) 1593 (ref.

Riaz Ahmad Raja, ITP for Appellant.

Attique-ur-Rehman, D.R. for Respondent.

Date of hearing: 4th October, 2018.

2019 P T D (Trib.) 1024

[Inland Revenue Appellate Tribunal]

Before Muhammad Jawed Zakaria, Judicial Member and Syed Ayaz Mahmood, Accountant Member

The COMMISSIONER INLAND REVENUE, ZONE-III, LTU, KARACHI

Versus

Messrs SITARA ENERGY LTD.

S.T.A. No.150/KB of 2016, decided on 3rd August, 2018.

(a) Interpretation of statutes---

----Ramedial and curative legislation--- Retrospective effect---Principles---Such legislation has retrospective effect---Beneficial executive orders/notifications have retrospective effect.

CIT v. Shahnawaz Ltd. and others 1993 SCMR 73; Ellahi Cotton Mills Ltd., and others v. Federation of Pakistan PLD 1997 SC 582 = 1997 PTD 1555 and 2004 PTD (Trib.) 2417 rel.

(b) Sales Tax Act (VII of 1990)---

----Ss. 3, 10, 11, 33 & 34---Sales Tax---Short payment---Surcharge and penalty---Retrospective effect---Jurisdiction---Taxpayer was aggrieved of notice issued by authorities for recovery of deficient sales tax---Appellate authority decided matter in favour of taxpayer on ground that reduction in rate of sales tax was beneficial which was retrospective in nature---Validity---Enactment reducing rate of sales tax from 17% to 16% did not, in any manner, come within ambit of curing a mistake, error or ambiguity and same could be termed as concessional to encourage taxpayers---Appellate authority ignored that sales tax was an indirect tax and any reduction in rate was in no way beneficial to a person or business registered for sales tax purposes---Any such benefit, in any case, was for the general public---Claim of taxpayer that reduction in rate of sales tax was available with retrospective effect as beneficial to them, was wrong and baseless---Indirect tax like sales tax was applicable on each and every transaction separately and once a transaction was completed and its effect transferred to final consumer/ general public, it became past and closed transaction, which could not be amended or corrected by assuming retrospective effect of a beneficial notification or executive order---Rate of sales tax could not be reduced through an executive order/notification---Appellate Tribunal Inland Revenue vacated the order passed by appellate authority---Appeal was allowed accordingly.

Concise Oxford Dictionary; Chambers Dictionary; Black's Law Dictionary (Ninth Edition) and State Bank of Pakistan v. Messrs Fiasal Mills Ltd. 1997 SCMR 1244 ref.

Abdul Hameed Sheikh, D.R. for Appellant.

Khadim Rasool, ITP for Respondent.

Date of hearing: 5th March, 2018.

2019 P T D (Trib.) 1081

[Inland Revenue Appellate Tribunal]

Before Shahid Masood Manzar, Judicial Member and Mian Saeed Iqbal, Accountant Member

Messrs GLOBAL HEALTH SERVICES (PUBLIC) LTD., ISLAMABAD

Versus

The C.I.R., L.T.U., ISLAMABAD

I.T.A. No. 256/IB of 2017, decided on 18th October, 2017.

Income Tax Ordinance (XLIX of 2001)---

----Ss. 161, 131 & 205---Income Tax Rules, 2002, R.44(4)---Charge of withholding tax on the gross amounts of expenses claimed under various heads, without examining the record---Appeal had been filed against order of Commissioner Inland Revenue (Appeals) passed under Ss.161/205 of Income Tax Ordinance, 2001; whereby Assessing Officer's action of charging withholding tax on the gross amounts of expenses claimed under various heads, without examining the records presented before the Assessing Officer, had been remanded for 'de novo' consideration---Orders passed by both the authorities suffered from legal as well factual infirmities---Appellant/taxpayer had proved its case, whereas the department had failed to discharge the grounds of appeal/arguments put on behalf of the appellant---Appellate Tribunal observed that ex parte order passed on the date not fixed for hearing, was not sustainable under the law; order passed without examination of detail/documents produced before the Assessing Officer, could not be set aside to punish the taxpayer without there being any fault on his part---Appellate Tribunal in case of the same appellant, had accepted the detail/documents for the relevant tax years, which were produced, and were not examined by the lower 'fora'---Taxpayer's appeal was allowed by the Appellate Tribunal.

2007 PTD 1203; 2014 YLR 485; 1973 PTD 283; 1975 PTD 58; 1995 PTD (Trib.) 1159; 2007 PTD (Trib.) 1203 and 2004 PTD 2040 (FTO) 1203 ref.

Ch. Nazir Ahmad for Appellant.

Mohiyuddin Ismail, D.R. for Respondent.

Date of hearing: 8th May, 2017.

2019 P T D (Trib.) 1100

[Inland Revenue Appellate Tribunal]

Before Mrs. Ambreen Aslam, Judicial Member and Syed Tahir Raza Zaidi, Accountant Member

Messrs NIT INCOME FUND, KARACHI

Versus

The C.I.R., ZONE-I, C.R.T.O., KARACHI

I.T.A. No.683/KB of 2018, decided on 22nd November, 2018.

Income Tax Ordinance (XLIX of 2001)---

---- Ss. 122, 129, 150 & Second Sched., Part-I, Clause-99 Proviso--- Non-Banking Finance Companies and Notified Entities Regulations, 2008, Regln. 63--- Dividends, issuance of--- Reinvestment of profit--- Scope--- National Investment Trust Limited was aggrieved of order passed by authorities rejecting claim of exemption though taxpayer had not issued any bonus units--- Validity--- Taxpayer issued dividends to shareholders and amongst them some shareholders purchased new shares by reinvesting profit amount--- Law permitted shareholders and taxpayers to do so in terms of Regln. 63 of Non-Banking Finance Companies and Notified Entities Regulations, 2008--- Dividend distribution was a money paid to shareholder out of current earning or accumulated profit of entity and all dividends were taxable income to recipient--- Bonus issued or certificates were sort of an offer of free additional shares to existing shareholders--- Taxpayer had neither issued bonus shares, additional units nor free additional shares to shareholders--- Taxpayer purchased/invested dividend/profit of shareholder by purchasing new shares with amount of dividend on behalf of shareholders--- Appellate Tribunal Inland Revenue set aside orders passed by forums below as authorities had misdirected themselves and misinterpreted the law--- Appeal was allowed in circumstances.

Amin Malik, F.C.A. for Appellant.

Muhammad Aslam Jamro, D.R. for Respondent.

2019 P T D (Trib.) 1108

[Inland Revenue Appellate Tribunal]

Before Shahid Masood Manzar, Judicial Member and Faheem-ul-Haq Khan, Accountant Member

Messrs PRIME TRADERS, ISLAMABAD

Versus

The C.I.R., R.T.O., ISLAMABAD

S.T.A. No.114/IB of 2015, decided on 9th January, 2017.

Sales Tax Act (VII of 1990)---

----Ss. 2(14), 7(2)(i), 8(1)(ca), 11, 25, 38 & 72-B---Assessment of tax---Input tax adjustment---Issuance of show-cause notice---Registered person had claimed inadmissible input adjustment against invoices---Input adjustment against blacklisted units, were also added in the show-cause notice---Assessing Officer initiated proceedings against the registered person for violation of provisions of Ss.2(14), 7(2)(i) & 8(1)(ca) of Sales Tax Act, 1990 and vide order-in-original was directed to deposit principal amount, default surcharge and penalty---Said order-in-original was upheld by the appellate authority---Validity---Registered person had made purchases during the years 2011, 2012; while the units were blacklisted and suspended in the year 2013 and the matter was resolved---No provision existed in Sales Tax Act, 1990 to save directly show-cause notice to any person under S.11(2)(3) of said Act, without following procedure as prescribed by Ss.25, 38 & 72-B of said Act---In the present case, no notice under Ss.25, 38, 72-B of Sales Tax Act, 1990, was issued as per law for assumption of jurisdiction of the case---Impugned show-cause notice being coram non judice and without lawful authority, superstructure built on the same would fall flat---Once the self assessed tax due was considered to be correct and final, any order suffering from patent illegality or without jurisdiction, would deserve to be knocked out---Orders passed by the authorities below having no legal sanctity in the eye of law were vacated/annulled in circumstances.

2013 PTD (Trib.) 2174; 2015 PTD 1; PLD 1991 SC 619; 2004 SCMR 456; 2002 PTD (Trib.) 300; 2014 PTD 1530; S.T.A. No.329/IB/2014; 2015 PTD (Trib.) 1094; S.T.A. No.142/IB/2014; S.T.A. No.1506/LB/2014; S.T.A. No.266/IB/2015; Writ Petition No.3515/2012 and S.T.A. No.1135/LB/2013 ref.

Mirza Saqib Sadeeq for Appellant.

Muhammad Altaf Khan, D.R. for Respondent.

Date of hearing: 6th January, 2017.

2019 P T D (Trib.) 1118

[Inland Revenue Appellate Tribunal]

Before Shahid Masood Manzar, Judicial Member and Mian Saeed Iqbal, Accountant Member

Messrs MUSLIM TRADERS, CHAKWAL

Versus

The C.I.R., R.T.O., RAWALPINDI

I.T.As. Nos.781/IB and 782/IB of 2016, decided on 2nd February, 2018.

Income Tax Ordinance (XLIX of 2001)---

----Ss. 2(68), 74, 161, 205 & 221---Tax year---Demand orders in piecemeal in respect of a tax year and passing of orders before completion of the tax year---Original proceedings for demand for the tax year 2014 comprising the period from July, 2013 to November, 2013 were finalized under Ss.161/205 of the Income Tax Ordinance, 2001 creating a demand through order passed on 28-1-2014---Subsequently on 22-9-2014 another order under Ss.161/205 of the Income Tax Ordinance, 2001 regarding the period of December 2013 to May, 2014 was also passed creating demand---Validity---Whole scheme of Income Tax Ordinance, 2001, revolved around a tax year which was of twelve months---Any order under provisions of Income Tax Ordinance, 2001 except specifically provided under the law in certain special cases, was to be passed in respect of a taxpayer---No piecemeal orders could be passed in respect of tax year---Both said orders passed for the tax year 2014 in piecemeal were legally not sustainable---Orders passed on 28.1.2014 for the period July 2013 to November 2013 before the completion of tax year, was also a premature order---Both (impugned) orders were annulled and declared as null and void, in circumstances.

Atif Waheed for Taxpayer.

Tahir Mehmood Bhatti, D.R. for Department.

Date of hearing: 11th October, 2017.

2019 P T D (Trib.) 1162

[Inland Revenue Appellate Tribunal]

Before Muhammad Waseem Ch., Judicial Member and Masood Akhtar Shaheedi, Accountant Member

Messrs GHANI GLASS LIMITED, LAHORE

Versus

COMMISSIONER INLAND REVENUE, L.T.U., LAHORE

M.As. Nos.185/LB and 186/LB of 2018, decided on 28th May, 2018.

Income Tax Ordinance (XLIX of 2001)---

----S. 131---Applications for recalling of order passed by Appellate Tribunal---Taxpayer had sought recalling of order earlier passed by Appellate Tribunal; wherein departmental appeals were accepted and order passed by Commissioner Inland Revenue (Appeals) was reversed---Grievance of the taxpayer was that while disposing of appeal, Tribunal had ignored the arguments of his counsel; that Tribunal passed the impugned orders after 3 months and 5 days of hearing of appeals and same were served after 117 days from date of hearing---Reasonable time for the pronouncement of judgments was 90 days as a settled principle---Contentions of the taxpayer were correct as record had revealed that order was passed by the Tribunal after 3 months and 5 days of hearing of appeals and same were issued after 5 days of the passing and were served after more than 117 days from the date of hearing, which was against the norms of justice---Applications were accepted and orders passed by Tribunal were recalled with direction to fix the appeals of the department in its original numbers as per roster arrangement.

PLD 2012 SC 923 and 2015 SCMR 1550 rel.

Waheed Shahzad Butt for Applicant.

Muhammad Sajid, D.R. (LTU) for Respondent.

2019 P T D (Trib.) 1166

[Inland Revenue Appellate Tribunal]

Before Muhammad Jawed Zakaria, Judicial Member and Syed Ayaz Mahmood, Accountant Member

Messrs DIAMOND FABRICS LIMITED, KARACHI

Versus

COMMISSIONER INLAND REVENUE, ZONE-V, L.T.U., KARACHI

M.A. (AG) No. 259/KB of 2018 and S.T.A. No. 589/KB of 2017, decided on 10th May, 2018.

Sales Tax Act (VII of 1990)---

----Ss. 7, 11, 25, 33 & 34---SRO No. 490/2004 dated 12-06-2004---SRO No. 450(I)/2013 dated 27-05-2013---Assessment of tax---Self-assessed tax---Selection for taxpayer---Show cause notice, non-issuance of---Delegation of powers---Principle---Input tax, adjustment of---Authorities disallowed input tax on grounds that proper evidence/ supporting documents by taxpayer---Plea raised by taxpayer was that proper opportunity of hearing was not allowed to him and claim of input sales tax was disallowed on presumptions---Validity---No provision of delegation of powers like S.210, Income Tax Ordinance, 2001 existed with the Commissioner---Delegatee could not further delegate his powers and only Commissioner was competent and empowered to undertake assessment proceedings under S. 11 of Sales Tax Act, 1990 and not any other officer---Show cause notice issued under S. 11 of Sales Tax Act, 1990 by Additional Commissioner Inland Revenue was of no legal effect who was not empowered to issue notice and could not pass order in question as such powers exclusively vested with the Commissioner---Order-in-Original passed by Additional Commissioner Inland Revenue was without jurisdiction or in excess of jurisdiction and without any legal effect---Action of authorities was even otherwise not lawful as input tax was otherwise related to taxable activity or related to taxable supplies---Items on which input tax was claimed were allowable under S. 7 of Sales Tax Act, 1990 and none of input tax was unrelated to taxable activities/supplies---Items on which input tax was claimed otherwise did not fall in negative list of SRO No. 490/2004 dated 12-06-2004 as amended by SRO No.450(I)/2013 dated 27-05-2013---Electrical fittings, pipes, wires, cables, etc., were those directly used in taxable activity thus falling outside ambit of SRO No. 490/2004 dated 12-06-2004 as amended---Appellate Tribunal Inland Revenue set aside order passed by lower appellate authority---Appeal was allowed in circumstances.

Hamza Nasir Wire v. Federation of Pakistan 2018 PTD 1071; Punjab Beverages Limited v. FBR 2018 PTD 1251; Messrs Ghandara Nissan Diesel Ltd. v. Collector, Large Taxpayers Unit and 2 others 2006 PTD 2066; Messrs Sheikh Spinning Mills Limited v. Federation of Pakistan and 2 others 2002 PTD 2959; Messrs Coca Cola Beverages Pakistan Limited, Gujranwala v. Collector of Sales Tax, Gujranwala 2012 PTD (Trib.) 1638; 2010 PTD (Trib.) 2144; Sanghar Sugar Mills's case PLD 2007 SC 517 = 2007 PTD 1902; 2002 PTD (Trib.) 475; 2004 PTD (Trib.) 681; 2007 PTD 2391; 2008 PTD 261; 2010 PTD (Trib.) 2144; 2012 PTD (Trib.) 1638 and 1993 SCMR 1905 ref.

Asif Haroon, FCA for Appellant.

Fauz Khalid, D.R. for Respondent.

2019 P T D (Trib.) 1201

[Inland Revenue Appellate Tribunal]

Before Muhammad Jawed Zakaria, Judicial Member and Syed Ayaz Mahmood, Accountant Member

Messrs INTERNATIONAL ENTERPRISES, KARACHI

Versus

COMMISSIONER INLAND REVENUE, ZONE-V, R.T.O., KARACHI

M.A. (Stay) No.440/KB of 2018 and S.T.A. No.355/KB of 2018, decided on 9th August, 2018.

(a) Sales Tax Act (VII of 1990)---

----S. 48---Income Tax Ordinance (XLIX of 2001), S. 128(1A) & (1AA)---Interim injunction, grant of by appellate Authority---Principles---Taxpayer was aggrieved of notice issued by taxation officer under S.48 of Sales Tax Act, 1990 which he assailed before appellate authority where appeal was pending---Appellate authority neither granted interim injunction against the order passed by taxation officer nor decided appeal---Validity---Appellate authority had power to grant interim relief whenever any appellant requested for such relief and had made out a prima facie case for grant of such relief---Such powers were to be exercised honestly, fairly, judicially and judiciously if not at least, quasi-judicially in accordance with the settled principles---While exercising jurisdiction, appellate authority had ancillary, inherent, implied or incidental power to grant interim relief, i.e., to grant stay against disputed demand made by taxation officer---Remedy of appeal before appellate authority was not inadequate and ineffective in absence of express power in statute to grant interim relief---When taxpayer in dispute with regard to assessment order or order pending in shape of appeal, had preferred appeal disputing whole or part of amount demanded taxpayer could approach to concerned Deputy Commissioner or Commissioner Inland Revenue/Taxation Officer Inland Revenue/Officer Inland Revenue requesting him not to take any coercive measures---Taxation Officer Inland Revenue or Inland Revenue Officer could also in his discretion stay recovery proceedings till such time appeal was pending before appellate forum---No mandatory need existed to file application by taxpayer before appellate authority time and again seeking stay of recovery of disputed tax---Appellate Tribunal Inland Revenue directed the appellate authority to either release/issue appellate order or grant unconditional stay till disposal of decision of main appeal and pass judicious speaking order after application of conscious mind---Appellate Tribunal Inland Revenue, however, restrained the Recovery Officer from adopting any coercive measures for recovery of disputed demand till decision of the appellate authority---Application was allowed accordingly.

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; 2003 PTD 1746 and Huawei Technologies Pakistan (Pvt.) Ltd. v. CIR, Islamabad 2016 PTD 1799 ref.

(b) Administration of justice---

----Inherent jurisdiction---Applicability---Principle---Statutes normally do not provide for each and every conceivable eventuality---Court, in respect of some unforeseen events arising in any case for which no provision has been made, are deemed to have inherent jurisdiction in interest of orderly dispensation of justice unless and until prohibited by statutory provisions of statute.

Prof. D.J. Galligan [On "Procedural Fairness" in Briks (ed), the Frontiers of Liability (Vol.1) (Oxford 1994); Prof. Galligan took support from Bentham [A Treatise of Judicial Evidence (London 1825); Galligan ["On 'Procedural Fairness' in Briks (ed), the Frontier of Liability (Vol. One) (Oxford 1994); 2010 PTD (Trib.) 557 and 1996 PTD (Trib.) 388 rel.

Nadeem Iqbal for Applicant.

Nemo for Respondent.

2019 P T D (Trib.) 1227

[Inland Revenue Appellate Tribunal]

Before Muhammad Waseem Ch., Judicial Member and Muhammad Majid Qureshi, Accountant Member

Messrs ASEAN INTERNATIONAL ISLAMABAD

Versus

COMMISSIONER INLAND REVENUE, R.T.O., ISLAMABAD

M.As. (Recall) Nos. 18/IB, 19/IB and 20/IB of 2015, decided on 19th February, 2015.

Income Tax Ordinance (XLIX of 2001)---

----Ss. 131 & 140---Recovery in disregard to stay order granted by Appellate Tribunal---Imposition of penalty---Assessing Officer, disregarding the stay granted by Appellate Tribunal, made recovery from the taxpayer---Taxpayer filed application against said recovery, being illegal, high handed tantamounted to contempt of court---Departmental representative regretted the recovery by stating that such incident had never occurred before and assured that, same would not happen again---Explanation given by Assessing Officer was nothing but a lame excuse---Assessing Officer stated that alleged recovery was not yet effected and department had already withdrawn the recovery notice under S.140 of the Income Tax Ordinance, 2001---Recovery process, in fact, had not been stopped, even after receipt of the stay order---Assessing Officer tried to mislead the Tribunal by giving impression that the recovery proceedings had been stopped after receipt of order---Orders of the Appellate Tribunal were binding on all field formations in letter and spirit---Any violation of the Tribunals order would seriously damage the dispute resolution infrastructure---Appellate Tribunal ordered that disputed amount should be immediately refunded to the taxpayer, under intimation to the Tribunal within seven days of receipt of order---Penalty of Rs.50,000, was also imposed upon Assessing Officer, which should be paid from his own pocket and deposited with Deputy Registrar of the Tribunal with direction that a suitable action against the concerned Officer for violation of orders of the Tribunal might be taken---Order accordingly.

Messrs Siza International Private Limited v. Federation of Pakistan Writ Petition No. 19567 of 2014 ref.

Atif Waheed for Taxpayer.

Mrs. Nazia Zeb, D.R. for Department.

2019 P T D (Trib.) 1235

[Inland Revenue Appellate Tribunal]

Before Jawaid Masood Tahir Bhatti, Chairperson and Muhammad Riaz, Accountant Member

Messrs ASEAN INTERNATIONAL SERVICE, ISLAMABAD

Versus

The COMMISSIONER INLAND REVENUE, ISLAMABAD

I.T.As. Nos. 963/IB, 964/IB and 965/IB of 2014, decided on 8th January, 2015.

Income Tax Ordinance (XLIX of 2001)---

----Ss. 124 & 152---Framing of fresh assessment on remand of case---Taxpayer, who filed income tax returns allegedly failed to discharge his responsibilities under the law to act as withholding agent---Show-cause notice issued to taxpayer---Taxpayer filed reply, which was not found satisfactory, Assessing Officer, treated taxpayer as taxpayer-in-default of tax and default surcharge were levied---On filing appeal against impugned order, Commissioner Inland Revenue (Appeals) remanded the case to the department for examination---Impugned order had shown that the taxpayer was provided several opportunities, but no evidence in support of his claims was ever submitted---Assessing Officer treated the taxpayer-in-default of tax and levied default surcharge---Assessing Officer, had passed the order despite the fact that against his previous order, Commissioner Inland Revenue (A), had remanded the matter---Validity---Assessing Officer had passed the order despite the fact that Commissioner (A) had remanded the matter---Such action of Assessing Officer was illegal---Such order of the Assessing Officer was upheld by the Commissioner (A)---Orders passed by Taxation Officer and Commissioner (Appeals), were cancelled, in circumstances---Appeals by the taxpayer, were allowed.

2008 PTD 1998; 2002 PTD 1195; 2002 PTD (Trib.) 3129 and 1985 PTD 375 ref.

Atif Waheed for Applicant.

Mrs. Nazia Zaib, D.R. for Respondent.

2019 P T D (Trib.) 1256

[Inland Revenue Appellate Tribunal]

Before Mrs. Seema Imran, Judicial Member and Saif Ullah Khan, Accountant Member

The COMMISSIONER INLAND REVENUE, R.T.O., SUKKUR

Versus

Messrs MUHAMMAD RAMZAN & CO., KANDHKOT

I.T.A. No.351/KB of 2015, decided on 12th December, 2018.

Income Tax Ordinance (XLIX of 2001)---

----Ss. 2(64), 4(5), 9(5), 11 & 122(5A)---Taxable income---Internally Displaced Persons Tax (IDPT), imposition of---Applicability---Taxpayer was aggrieved of calculation of taxable income by assessing officer and charging Internally Displaced Persons Tax (IDPT) at 5% on tax payable---Commissioner Inland Revenue (Appeals) issued order in favor of taxpayer disallowing imposition of IDPT by authorities---Validity---IDPT was introduced as 'income tax' on taxpayers on their 'taxable income' of one million rupees or more---Term 'taxable income' was specifically defined in Ss. 2(64) & 9 of Income Tax Ordinance, 2001---Provisions of S. 9(5) of Income Tax Ordinance, 2001 provided exclusion of certain amounts from computation of 'taxable income' in accordance with Ss.8 & 169 of Income Tax Ordinance, 2001---Such exclusions restricted levy of IDPT to income tax chargeable on normal income or incomes other than those covered under FTR/PTR---IDPT was liable on income tax chargeable on taxable income of more than one million rupees---Taxpayer declared normal taxable income of only Rs. 320,800/- which was less than one million rupees---Balance amount treated by assessing officer as taxable income was PTR income which was erroneously included in taxable income---Appellate Tribunal Inland Revenue declined to interfere in order passed by Commissioner Inland Revenue (Appeals) and maintained the same---Appeal was dismissed in accordingly.

Writ Petition No.2420 of 2010; I.T.A. No. 356/KB of 2015 and Syed Nasir Ali v. Pakistan Secretary Ministry of Law 2010 PTD 1924 ref.

Mukhtar Ahmed Shar, D.R. for Appellant.

Udha Ram Rajput for Respondent.

2019 P T D (Trib.) 1286

[Inland Revenue Appellate Tribunal]

Before Mrs. Ambreen Aslam, Judicial Member and Syed Tahir Raza Zaidi, Accountant Member

WASHDEV

Versus

The COMMISSIONER INLAND REVENUE, LARKANA ZONE, R.T.O., SUKKUR

I.T.A. No. 224/KB of 2018, decided on 10th September, 2018.

Income Tax Ordinance (XLIX of 2001)---

----Ss. 121(1)(d), 122 & 138(1)---Tax assessment---Show-cause notice, non-compliance of---Limitation---Effect---Taxpayer was aggrieved of assessment order passed by appellate authorities for not providing record for audit by the taxpayer---Taxpayer assailed that said notice and true copy was never received by him and that such proceedings were not in his knowledge---Validity---Beneath the order of District Collector Inland Revenue, signature with date was discernable, neither said testament bore name, address, CNIC number of receiver nor same bore sign and endorsement by witnesses in whose presence same was received---Every likelihood existed that signatures were of person who was assigned to deliver same to the taxpayer---Elucidate difference existed between signature of receiver of order in question and in signature of the taxpayer---Signature of taxpayer marked on Vakalatnama also proposed that signatures of taxpayer was different from the recipient of order in question---Appellate Tribunal Inland Revenue set aside order passed by appellate authorities and remanded the matter to decide same on merits after giving opportunity of being heard to the taxpayer---Appeal was allowed accordingly.

2004 PTD (Trib.) 106 rel.

Udha Ram Rajput for Appellant.

Mukhtar Ahmed Shar, D.R. for Respondent.

2019 P T D (Trib.) 1294

[Inland Revenue Appellate Tribunal]

Before Shahid Masood Manzar, Chairman

The COMMISSIONER INLAND REVENUE, SPECIAL RTO, MULTAN

Versus

Messrs ATTIQ-UR-REHMAN, MULTAN

I.T.A. No.866/LB of 2014, decided on 1st February, 2019.

Income Tax Ordinance (XLIX of 2001)---

---Ss. 214C, 177 & 182(1)(8)(a)---Selection for audit by the Board---Failure of taxpayer to produce the record of documents on receipt of first notice---Board selected the case of taxpayer for audit of his tax affairs---Deputy Commissioner Inland Revenue imposed penalty on failure of taxpayer to join audit proceedings---Commissioner Inland Revenue (Appeals) annulled the penalty order---Validity---Counsel of the taxpayer produced death certificate of the taxpayer---Commissioner Inland Revenue (Appeals) was justified to annul the order which was upheld---Appeal, being devoid of merits, was rejected.

Muhammad Sultan, D.R. for Appellant.

Riaz Ahmed Raja for Respondent.

2019 P T D (Trib.) 1317

[Inland Revenue Appellate Tribunal]

Before Ch. Shahid Iqbal Dhillon, Judicial Member and Dr. Muhammad Naeem, Accountant Member

Messrs NIAGRA MILLS (PVT.) LIMITED, FAISALABAD

Versus

C.I.R., CORPORATE ZONE, R.T.O., FAISALABAD

I.T.As. Nos. 514/LB and 515/LB of 2018, decided on 29th January, 2019.

(a) Income Tax Ordinance (XLIX of 2001)---

----Ss. 115, 114, 122, 120, 154 & 169---Persons not required to furnish return of income---Return of income---Amendment of assessment---Export---Tax collected or deducted as a final tax---Scope---Appellant filed statement in terms of S. 115(4) of Income Tax Ordinance, 2001 declaring export receipts covered under Final Tax Regime for the years 2014 and 2015 respectively---Declared receipts were deemed to be treated as assessment in terms of S. 120(1), Income Tax Ordinance, 2001---Additional Commissioner found that deemed assessments completed were erroneous insofar as prejudicial to the interests of revenue for the reasons communicated through show cause notice---Proceedings were concluded and deemed assessments were amended under S. 122(5A), Income Tax Ordinance, 2001; total income for tax years 2014 and 2015, subject to normal tax and capital gains, was assessed at the rate of 10%---Validity---Appellant exported 100% of its textile products after getting manufactured, as such, was under legal obligation to furnish the statement in terms of S. 115(4) instead of filing normal tax return under S. 114---Under S.115(4), such particulars in such forms and verified in such manner as prescribed on the basis of liability determined under S. 154 were to be declared as the deduction of tax so made was the final taxation under subsection (4) of S. 154 and the statement filed under subsection (4) of 115 was to be taken for all purposes of Income Tax Ordinance, 2001 to be an assessment order in terms of clause (b) of subsection (3) of S. 169---Authorities below had misinterpreted and misconstrued subsection (3) of S. 169---Section 169 merely referred that where all the income driven by a person was subjected to final taxation under subsection (1) or under Ss. 5, 6 & 7, the person was not required to furnish a return of income under S. 114---Said assessment had to be treated as having been made under S.120---Legislature by its wisdom added the word "and" in between the two phrases; one that "the person shall not be required to furnish a return of income under S. 114 of the Ordinance for the year" and the other "an assessment shall be treated to have been made under S. 120 of the Ordinance"---Both were injunctive and not disjunctive phrases and none could be read in isolation---Subsection (3) of S. 169 simply envisaged that the statement filed under S. 115 had to be taken as an assessment order under S. 120 without requiring the normal income tax return---When Ss.120 & 122 were read together, it became manifestly clear that only the order passed under S.120 was to be amended on complete and valid return and not otherwise; therefore, it did not mean that before proceeding under S. 122(5) or (5A), normal return of income was not required---If it was so then how come a deemed assessment, made under S. 120 on the basis of a statement filed under S. 115, could be held to be erroneous and prejudicial to the interest of revenue, until and unless the person furnished his manufacturing and profit and loss account or income and expenditure statement and balance sheet and also declared his taxable income---Invocation of proceedings under S. 122(5A) in the present case were illegal and also without lawful authority---Orders passed by authorities below were cancelled/annulled by the Tribunal---Appeals were allowed.

2016 PTD 1168 and Messrs Habib Construction Services (Pvt.) Limited, Lahore's case (I.T.A. No. 01/LB of 17) dated 13-11-2017 ref.

(b) Income Tax Ordinance (XLIX of 2001)---

----Ss. 169, 115, 114 & 154---Income Tax Rules, 2002, Rr. 34 & 39---Tax collected or deducted as a final tax---Persons not required to furnish a return of income---Return of income---Export---Statement in lieu of Return of income---Scope---Section 169(3) provided that where all the income derived by a person is subject to final taxation, he is not required to furnish a return of income under S. 114---Assessment under S. 115(4) was to be treated to have been made under S. 120, meaning thereby that person is exempt from filing of return of income under 114 for that tax year---Law itself provides as to what course of action that person will have to take in lieu of filing of return, such action has been enumerated in S. 115(4)---Under S. 115(4) any person who is not obliged to furnish a return for a tax year because all the person's income is subjected to final taxation, inter alia, under S. 154, that person was to furnish to the Commissioner a statement showing such particulars relating to the person's income for the tax year in such form and verified in such manner as may be prescribed---Rules 34 & 39 of Income Tax Rules, 2002 prescribe the different forms in which the return of income and the statement in lieu of return of income have to be filed respectively---Rule 39 refers to statement to be filed by a person where tax deduction is to be taken as a final discharge of tax liability under S. 169.

(c) Income Tax Ordinance (XLIX of 2001)---

----Ss. 115, 114, 169 & 120---Persons not required to furnish a return of income---Return of income---Tax collected or deducted as a final tax---Assessments---Scope---Filing of income tax return and of statement are two different regimes and run parallel to each other and in case a person is obliged to file his statement merely in terms of S. 115(4), he stands discharged with regard to his tax liability---No clear intent of the legislature with regard to the two categories of persons; one category was to file return of income and the other were required to file a statement in terms of S. 115(4) in case of final tax---By fiction also, the assessment made under S.169 shall be treated to have been made under S. 120 and the person shall also not be required to furnish a return of income under S. 114 for the tax year.

2016 PTD 1168 rel.

(d) Income Tax Ordinance (XLIX of 2001)---

----Ss. 120, 114 & 115---Assessment---Return of income---Persons not required to furnish a return of income---Scope---Section 120 has its genesis in and relates to the filing or failure thereof of a return of income---Subsection (4) of S. 120 merely gives the Commissioner the power to issue notice to the taxpayer in case the return of income furnished is not complete; it presupposes that a person is, in law, required to file a return of income in terms of S. 114---Section 120 relates to the filing of return under S. 114 and the consequences flowing therefrom---Provisions of S. 120 are not relatable to the filing of the statement under S. 115(4)---Section 114 obliges certain persons to furnish a return of income---Section 120(4) does not have any nexus with the provision of S. 115(4).

(e) Income Tax Ordinance (XLIX of 2001)---

----S. 122(5A)---Amendment of assessment---Pre-conditions---Scope---Two conditions are mandatory for invoking S. 122(5A), that the order should be erroneous in law or facts as well as prejudicial to the interest of Revenue and where one condition exists and the other is missing, proceedings under S. 122(5A) cannot be initiated.

Galaxo Laboratories Limited v. Inspecting Assistant Commissioner 1992 PTD 937; 2004 PTD 330; 2008 PTD (Trib.) 1491; 2009 PTD (Trib.) 121 and 2014 PTD (Trib.) 1101 ref.

Khubaib Ahmad for Appellant.

Nemo for Respondent.

2019 P T D (Trib.) 1338

[Inland Revenue Appellate Tribunal]

Before Shahid Masood Manzar Chairman and Dr. Muhammad Naeem, Accountant Member

Messrs HAFEEZ TRADERS AND GENERAL ORDER SUPPLIER, KHANEWAL

Versus

C.I.R., MULTAN ZONE, R.T.O., MULTAN

S.T.A. No.1715/LB of 2017, decided on 31st January, 2019.

Sales Tax Act (VII of 1990)---

----Ss. 2(37), 3, 48, 33(5) & 34(1)---Sales Tax Rules, 2006, R. 12(a)(i)(C)---Tax fraud---Abnormal tax profile---Scope of tax---Recovery of arrears of tax---Failure to deposit the amount of sales tax---Default surcharge---Scope---Department observed that registered person claimed credit of sales tax withheld without having invoice wise detail; that discrepancy existed between sales tax returns and income tax returns declared by registered person and that registered person had not charged and paid further tax at the rate of one percent on supplies made to unregistered persons---Validity---Show-cause notice and order-in-original proceedings were based on presumption which tantamount to fishing enquiry---Proceedings suffered from grave legal infirmities and substantive illegalities---Commissioner Inland Revenue failed to appreciate facts in a judicious manner---Appellate Tribunal accepted the appeal and declared the order passed by Commissioner Inland Revenue to be void ab initio, illegal and without jurisdiction.

2008 PTD (Trib.) 541 and S.T.A. No.166/LB of 2009 ref.

Riaz Ahmad Raja, ITP for Appellant.

Dr. Tanveer Hussain Bhatti, D.R. for Respondent.

2019 P T D (Trib.) 1347

[Inland Revenue Appellate Tribunal]

Before Muhammad Jawed Zakaria, Judicial Member and Syed Ayaz Mahmood, Accountant Member

Messrs M.F. & CO. Prop. Faisal, Karachi

Versus

The COMMISSIONER INLAND REVENUE, ZONE-I, R.T.O.-II, KARACHI

I.T.As. Nos. 348/KB of 2017 and 790/KB of 2018, decided on 17th October, 2018.

(a) Income Tax Ordinance (XLIX of 2001)---

---Ss. 111 & 122---Assessment order, revision of---Precondition---Assessment order is required to be amended on basis of "definite information"---Deputy Commissioner Inland Revenue court invoke, S.122(1) of Income Tax Ordinance, 2001 for acquiring jurisdiction to amend order under S.122(4) read with S.122(5) of Income Tax Ordinance, 2001 as the case may be.

(b) Income Tax Ordinance (XLIX of 2001)---

----Ss. 111(1)(b), (c) & 122---Assessment order, revision of---Scope---Statutory notice, non-issuance of---Taxpayer was engaged in import and subsequent sale of textile items---Authorities initiated proceedings under S.122(5) of Income Tax Ordinance, 2001 against the taxpayer on the basis of information with regard to purchase of a property by him---Deputy Commissioner Inland Revenue assumed jurisdiction under S.111(1)(b)/(c) of Income Tax Ordinance, 2001---Appeal filed by taxpayer against proceedings was dismissed by Commissioner Inland Revenue (Appeals) and order was maintained---Validity---Deputy Commissioner Inland Revenue was under legal obligation to specifically identify nature of suppressed income and issue notice in terms of S.122(5)(i), (ii) and (iii) of Income Tax Ordinance, 2001 highlighting fact that under which category case of taxpayer fell---Non-issuance of such notice meant that while passing amended assessment order, Deputy Commissioner Inland Revenue was not in possession of "definite information" and reasons assigned for additions/ disallowances while passing amended assessment order could not be termed as "definite information"---Entire proceedings, in circumstances, were void ab initio and illegal as simple issuance of notice under S.122(9) of Income Tax Ordinance, 2001 before conducting audit of taxpayer prior to confrontation audit report/objection/charge sheet for obtaining rebuttal/explanation by taxpayer was not enough to further proceed in matter for amending assessment order under S.122 of Income Tax Ordinance, 2001 which was already completed under law---Additions under S.111 of Income Tax Ordinance, 2001 were made without issuing specific and separate notice under S.111 of Income Tax Ordinance, 2001 which was sine qua non and no addition under S.111 of Income Tax Ordinance, 2001 could be made without independent, specific and separate notice under S.111 of Income Tax Ordinance, 2001---Appellate Tribunal deleted additions made under S.111 of Income Tax Ordinance, 2001 as 'definitive information' was missing from amended order while making addition under S.111(1)(b) and (c) of Income Tax Ordinance, 2001---Appeal was allowed accordingly.

I.T.A. No.51/KB/2014 dated 3.10.2014; CIR v. Dewan Steel Mills Karachi, I.T.A. No. 2505/LB/2015 dated 28.4.2016; I.T.A. No. 373/KB-2012 dated 5.4.2017; Dr. Azeem Alamani's case 2015 PTD 1242; The Commissioner Inland Revenue, Zone-I, RTO, Sukkur v. Messrs Ranipur CNG Station, Sukkur 2017 PTD 1839; 2011 PTD (Trib.) 2389; 2013 PTD 1749; CIR v. Jawed Metal I.T.A. No.64/KB/2015 dated 6.6.2018; 2013 PTD 884; 2007 PTD (Trib.) 2601; 2013 PTD 1083; 2012 PTD (Trib.) 312; Baksh Ali Lakho v. Executive District Officer (Education) 2015 MLD 1638; Black's Law Dictionary; 2014 PTD 2009 and Khalid Saeed v. Shamin Rizvi 2003 SCMR 1505 ref.

Abdul Khaliq Khan, ITP for Appellant.

Azhar Erum Memon, D.R. for Respondent.

2019 P T D (Trib.) 1453

[Inland Revenue Appellate Tribunal]

Before Muhammad Waseem Ch. Judicial Member and Dr. Tariq Mahmood Khan, Accountant Member

JAHANGIR KHAN TAREEN

Versus

COMMISSIONER INLAND REVENUE, ZONE-III, L.T.U., LAHORE

I.T.A. No. 2019/LB of 2016, decided on 5th November, 2018.

(a) Income Tax Ordinance (XLIX of 2001)---

----Ss. 122 & 111---Registration Act (XVI of 1908), S. 49---Amendment of assessment---Unexplained income or assets---Non-mentioning of specific subsection of in the show-cause notice---Effect---Non-registration of lease deed---Effect---Appellant filed return of income for the tax year 2011 which was treated as assessment order in terms of section 120, Income Tax Ordinance, 2001---Department raised a tax demand of Rs. 199.107 million against the appellant by making additions of Rs. 109 million on account of unexplained exempt income and Rs. 648.258 million on account of unexplained income in the garb of agriculture income by reference to the provisions of 111(1)(b) and 111(1)(c), Income Tax Ordinance, 2001---Validity---Addition of Rs. 109 million on account of unexplained exempt income, the nature of which had been explained through evidence by the appellant was gifts received from within the family through crossed cheques and hence were not liable to tax---No justification existed for the department to draw adverse inference by reference to discrepancies noticed in lease agreements covering 1,668 acres, with regard to claim of exemption on agriculture income attributable to 16,898 acres, which constituted 91% of aggregate leased land cultivated by the appellant---Non-registration of lease agreements under Registration Act, 1908 had no consequences under the provisions of Income Tax Ordinance, 2001 and claim of income could not be disputed so long as pre-requisite set out in the Income Tax Ordinance, 2001 were adequately fulfilled---Show-cause notice and subsequent amendment order was unlawful as the department failed to confront the appellant with the exact sub-clause of S.122(5) of Income Tax Ordinance, 2001 which was attracted to the case---Proceedings under S. 111(1) Income Tax Ordinance, 2001 with regard to furnishing of inaccurate particulars/concealment lacked jurisdiction for tax year 2011 as mandate to this effect was inserted in the statute vide Finance Act, 2011---Difference of agriculture income mentioned in nomination papers filed with Election Commission of Pakistan and stated in statutory return of income did not justify proceedings under S.111(1), Income Tax Ordinance, 2001---Taxpayer was not required to specify the holding of the land in nomination papers independent of the tax return---Appellate Tribunal annulled the orders passed by authorities below and accepted the appeal.

1997 PTD 47; 2001 PTD 1633 and 2002 PTD 117 ref.

2011 PTR 145; 2008 SCMR 615 and 2007 PTD 1804 rel.

C.P. No. 36 of 2016 fol.

(b) Income Tax Ordinance (XLIX of 2001)---

----S. 122(5)---Scope---Section 122(5), Income Tax Ordinance, 2001 is attracted exclusively where the department acquires "definite information" that some income has escaped the incidence of tax.

(c) Income Tax Ordinance (XLIX of 2001)---

----S. 122(5)--- 'Definite information'--- Connotation--- 'Definite information' is information that is exact, precise, fixed, clear, bounded and that having distinct limits.

1993 SCC 1049 ref.

Asim Zulfiqar Ali, F.C.A. and Mubashar Mirza, A.C.A. for Appellants.

Sarfraz Ahmad Cheema, L.A. and Waqas Aslam Bajwa, D.R. for Respondents.

2019 P T D (Trib.) 1516

[Inland Revenue Appellate Tribunal]

Before Masood Akhtar Shaheedi, Accountant Member

Messrs MASHALLAH PAPER BOARD MILLS, FAISALABAD and another

Versus

The COMMISSIONER INLAND REVENUE, R.T.O., FAISALABAD and another

S.T.As. Nos.14/LB and 56/LB of 2014, decided on 28th September, 2018.

Sales Tax Act (VII of 1990)---

----Ss. 11, 33(13) & 34---SRO No. 606(I)/2012, dated 1-06-2012---Adjustment of inadmissible input tax---Imposition of penalty---Beneficial notification---Retrospective effect---Scope---Taxpayer was alleged to have adjusted inadmissible input tax and failed to give plausible reason of his purchases shown to have been made from alleged supplier---Taxpayer before issuance of show-cause notice deposited the principal amount of sales tax but taxation officer imposed hundred percent penalty along with default surcharge---Commissioner (Appeals) reduced the penalty to twenty five percent along with default surcharge---Plea of taxpayer was that his case was covered under amnesty SRO No. 606(I)/2012, dated 1-06-2012---Department refused to extend the benefit of SRO No. 606(I)/2012, dated 1-06-2012 on the ground that taxpayer had deposited sales tax during November 2011, December 2011 and April 2012---Validity---SRO No. 606(I)/2012, dated 1-06-2012 extended benefit to such taxpayers against whom there was an outstanding amount of sales tax and the said amount was required to be paid by 25th June, 2012---Notification in question did not manifestly or otherwise bar such a person, who had paid the principal amount of sales tax before the date of its issuance, to avail benefit of SRO No. 606(I)/2012, dated: 1-06-2012---Said notification conferred a benefit, therefore, it did operate retrospectively---Taxpayer having paid the principal amount of sales tax even before issuance of show-cause notice was clearly entitled to the benefit of amnesty contemplated in SRO No. 606(I)/2012, dated: 1-06-2012---Show-cause notice and orders passed by authorities below were set aside---Appeal filed by taxpayer was accepted while appeal of department was dismissed.

Khubaib Ahmad and Ashfaq Ahmad, D.R. for Appellants.

2019 P T D (Trib.) 1562

[Inland Revenue Appellate Tribunal]

Before Muhammad Waseem Ch., Judicial Member and Masood Akhtar Shaheedi, Accountant Member

Messrs NIAGRA MILLS (PVT.) LTD., FAISALABAD

Versus

The COMMISSIONER INLAND REVENUE, R.T.O., FAISALABAD

S.T.A. No.587/LB of 2015, decided on 1st February, 2019.

(a) Sales Tax Act (VII of 1990)---

----S. 11---Constitution of Pakistan, Art. 13---Recovery of erroneously refunded amount of sales tax---Issuance of second show-cause notice---Protection against double jeopardy---Scope ---Directorate General of Intelligence and Investigation, FBR, during scrutiny of sales tax record of appellant observed that appellant had adjusted input tax against fake invoices issued by fictitious registered person without having any backup of purchases---Show cause notice for recovery of refunded amount of sales tax was issued; adjudication proceedings culminated in order for recovery of sales tax---Appeal filed before Commissioner (Appeals) was also dismissed---Contention of appellant was that adjudication in the present matter had been concluded upto the Appellate Tribunal against which departmental reference was pending adjudication before High Court---Validity---Issuance of second show-cause notice was patently illegal and unlawful when the same demand of sales tax against invoices of same registered person involving same tax period with the same charge sheet had already been adjudicated in favour of registered person by Commissioner (Appeals)---Department had filed appeal against said order before Appellate Tribunal which also was dismissed---Order of Appellate Tribunal was assailed by the department before High Court by way of filing sales tax Reference---Department could raise any grievance which it had with respect to recovery of sales tax in the sales tax Reference---Issuance of multiple show-cause notices not only defeated rationality and logic but also "due process of law"---Issuance of second show-cause notice and consequent orders were declared to be illegal, unlawful and were set aside---Appeal filed by registered person was allowed.

Messrs K.B. Enterprises, Faisalabad v. Federation of Pakistan and others 2016 PTD 483 rel.

(b) Sales Tax Act (VII of 1990)---

----S. 11---Issuance of second show-cause notice---Scope---Re-agitation of the same issue by the tax functionaries is against all the principles of administration of justice and fair play.

Messrs Ahsan Enterprises, Faisalabad v. The CIR(A), Faisalabad and others 2015 PTD (Trib.) 1839 rel.

Khubaib Ahmad for Appellant.

Tanveer Hussain Bhatti, D.R. for Respondent.

2019 P T D (Trib.) 1583

[Inland Revenue Appellate Tribunal]

Before Muhammad Waseem Chaudhary, Judicial Member and Masood Akhtar Shaheedi, Accountant Member

Messrs NASEEM PLASTIC HOUSE, FAISALABAD

Versus

The COMMISSIONER INLAND REVENUE, R.T.O., FAISALABAD

S.T.A. No. 875/LB of 2017, decided on 6th November, 2017.

(a) Sales Tax Act (VII of 1990)---

----Ss. 3, 6, 11, 22, 23, 26, 73 & 34---Assessment---Calculation of sales tax on the basis of consumption of electricity---Cash credits in bank account not to be deemed as the amount received on account of taxable supplies or in furtherance of taxable activity--- Scope---Certain discrepancies having been observed during audit of sales tax record, show-cause notice was issued to the appellant---Adjudicating Officer adjudged amount of Rs. 8,513,423 against the appellant---Said order was upheld by the Commissioner (Appeals)---Validity---No evidence was available to prove that receipts of money into the Bank accounts of the appellant were on account of taxable supplies of goods as envisaged under S. 3 of Sales Tax Act, 1990 and even there was no provision in the Sales Tax Act, 1990 purporting to deem the receipt of money to be a "sale"---Department failed to establish any nexus of Bank receipts appearing in Bank accounts of the appellant with that of sales and supplies---Department had to prove that any amount from undisclosed sources was in any way linked with taxable supplies or in furtherance of taxable activity as under the provisions of S. 3 of Sales Tax Act, 1990 sales tax could be charged, levied and paid on taxable supplies made by a registered person in the course or furtherance of any taxable activity carried on by him---Credit entries appearing in the Bank accounts of the appellant could not be treated as an amount received on taxable supplies or in furtherance of taxable activity particularly when the department had failed to bring any material evidence to substantiate its allegation against the appellant by corroborating Bank receipts with that of clandestine removal of alleged goods or with any taxable supply thereof---Consumption of electricity units, on the basis of which show-cause notice was issued, might have had any nexus with that of production of goods but no direct relationship could be established in electricity with that of sales and supplies of taxable goods---Both variables were completely independent to each other and as such, no functional relationship could be established---Demand of sales tax created on the basis of electricity units was declared to be illegal and without lawful authority---Provisions of S. 3 of Sales Tax Act, 1990 did not cover levy of sales tax on the basis of consumption of electricity units; but on dispossession and actual transfer of goods by the manufacturer to the other party---Sales tax could not be charged unless department proved that appellant produced extra quantity and transferred the same to another party---Show-cause notice and orders of both the authorities below, being devoid of legal substance, were set aside---Appeal was allowed.

Messrs Al-Hilal Motors Stores and others v. The Collector Sales Tax and Central Excise (East) Karachi and others 2004 PTD 868 and 2017 PTD (Trib.) 880 ref.

(b) Sales Tax Act (VII of 1990)---

----S. 3---Sales tax---Scope---Sales tax imposed on the basis of assumption or presumption is not warranted in law.

(c) Sales Tax Act (VII of 1990)---

----Ss. 3 & 2(35)---Sales tax---Scope---Taxable activity---Scope---Sales tax is levied on sale and supply of goods which necessarily entails delivery of goods or receipt of money consideration---Yardstick to charge and levy sales tax is the sale constituting a taxable activity for a taxable supply.

(d) Sales Tax Act (VII of 1990)---

----S. 33---Wrong filing of sales tax return---No specific penalty on account of wrong filing of sales tax return has been provided under section 33 of Sales Tax Act, 1990---Only a penalty of five thousand rupees has been mentioned for failing to furnish a return within due date.

(e) Sales tax---

----Issuance of show-cause notice---Essentials---Affected party needs to be confronted with specific provisions of law under which it is intended to be penalized.

Khubaib Ahmad for Appellant.

2019 P T D (Trib.) 1741

[Inland Revenue Appellate Tribunal]

Before Muhammad Jawed Zakaria, Judicial Member and Syed Ayas Mahmood, Accountant Member

RELACOM PAKISTAN (PVT.) LTD., KARACHI

Versus

The COMMISSIONER INLAND REVENUE, ZONE-III, LTU, KARACHI

I.T.A. No. 1113/KB of 2017, decided on 30th August, 2018.

Income Tax Ordinance (XLIX of 2001)---

----Ss. 120, 122(5A) & 153(6) Third Proviso---Amended proceedings---Reassessment---Change of opinion---Taxpayer, provider of telecommunication services and tax return filed by taxpayer was amended under S. 122(5A) of Income Tax Ordinance, 2001---Subsequently other assessing officer again invoked provisions of S. 122(5A) of Income Tax Ordinance, 2001 which order was maintained by Commissioner Inland Revenue (Appeals)---Validity---Tax deducted under clause (iii) of Second Proviso to S. 153(1)(b) of Income Tax Ordinance, 2001 and Third Proviso to S. 153(6) of Income Tax Ordinance, 2001 were adjustable for tax years 2009-2015 in hands of corporate taxpayers---While passing first amended order, assessing officer had already examined return of income filed by taxpayer and other assessing officer again by resorting to S. 122(5A) of Income Tax Ordinance, 2001 return/deemed order was examined which was tantamount to change of opinion and was not permissible under law---Tribunals/Courts and in particular, High Courts and Supreme Court were sentinel of justice and have been vested with extraordinary powers of judicial review and supervision to ensure that rights of citizens are duly protected---Appellate Tribunal Inland Revenue quashed subsequent amended assessment orders passed under S. 122(5A) of Income Tax Ordinance, 2001 and maintained first amended order passed under S. 122(5A) of Income Tax Ordinance, 2001---Appeal was allowed accordingly.

113 Tax 53; 2014 PTD (Trib.) 2085; 2013 PTD (Trib.) 900; 2013 PTD (Trib.) 788; 2012 PTD (Trib.) 1739; 2010 PTD (Trib.) 111; 2012 PTD (Trib.) 1593; 2013 PTD (Trib) 1557; I.T.A. No.799/KB/ 2014; I.T.A. No.1236/KB/2016; 2004 PTD (Trib.) 2449; 2001 PTD (Trib.) 2902; Glaxo Laboratories Limited's case 1992 PTD 932; S.N.H. Industries (Pvt.) Limited v. Income Tax Department and others 2004 PTD 330; Messrs United Builders Corporation, Mirpur v. Commissioner of Income Tax, AJ&K 1984 PTD 137; 1999 PTD (Trib.) 700; 2001 PTD (Trib.) 2902; 1969 PTD (Trib.) 144; Port Qasim's case C.P. No. 3797/2016; ARY Communication Ltd.'s case 2014 PTD (Trib.) 484; Messrs Shell Pakistan Ltd. v. The CIR, LTU, Karachi 2016 PTD 722; Messrs Interflow Communications (Pvt.) Limited's case I.T.As. Nos. 202 and 207/KB/2012 dated 27-10-2015; CIR v. Messrs HRSG Outsourcing (Pvt.) Ltd.'s case I.T.A. No. 1100/KB/2011 dated 19.03.2012; CIR v. Messrs United Human Resources (Pvt.) Limited) I.T.A. No. 1098/KB/2011; 2012 PTD 554; 1999 SCMR 563; PLD 1971 SC 252; 1977 SCMR 371 and PLD 1961 SC 119 ref.

Abdul Qadir Memon, A.R. for Appellant.

Ashfaque Ahmed Awan, D.R. for Respondent.

Date of hearing: 17th April, 2018.

2019 P T D (Trib.) 1825

[Inland Revenue Appellate Tribunal]

Before Ch. Shahid Iqbal Dhillon, Judicial Member and Dr. Muhammad Naeem, Accountant Member

COMMISSIONER INLAND REVENUE, ZONE-II, R.T.O., LAHORE

Versus

Messrs ENGINEERING ASSOCIATES (PVT.) LTD., LAHORE

S.T.A. No.303/LB of 2013, decided on 11th February, 2019.

Sales Tax Act (VII of 1990)---

----Ss. 2(37), 33(13), 46 & 47---Tax fraud---Imposition of penalty---Appeal to Appellate Tribunal during pendency of Reference before High Court---Scope---Registered person claimed input tax adjustment for the tax periods July 2005 to February 2011 which was found inadmissible---Commissioner Inland Revenue ordered recovery of principal amount of tax and imposed 100% penalty---Commissioner Inland Revenue (Appeals) upheld the charge of tax fraud as well as recovery of principal amount of tax but reduced the penalty from 100% to 25%---Registered person contended that it had assailed the order of Commissioner Inland Revenue (Appeals) before Appellate Tribunal in second appeal which was allowed and that department had filed a Reference before the High Court against the order of Appellate Tribunal which was pending adjudication, therefore, no further deliberation was required---Validity---Appellate Tribunal had already deleted the penalty and default surcharge---Department had filed a Reference against the order of Appellate Tribunal, matter was sub-judice before the High Court---Appeal filed by department having become infructuous, appeal was rejected. [pp. 1826, 1828] A, B & C

Rao Shahzad, D.R. for Appellant.

Hussain Ahmad Sherazi for Respondent.

Date of hearing: 6th February, 2019.

2019 P T D (Trib.) 1836

[Inland Revenue Appellate Tribunal]

Before Muhammad Jawed Zakaria, Judicial Member and Syed Ayaz Mehmood, Accountant Member

The COMMISSIONER INLAND REVENUE, ZONE-III, R.T.O., KARACHI

Versus

Messrs MODERN HOUSE, KARACHI

S.T.A. No.190/KB of 2014, decided on 12th June, 2018.

Sales Tax Act (VII of 1990)---

----Ss. 11(2), 33(5), 34(1) & 45-B---Sales Tax Special Procedures Rules, 2007, Chapter-II---Notification S.R.O. No. 480(I)/2007 dated 09.06.2007---Notification S.R.O. No. 608(I)/2014 dated 02.07.2014---Notification S.R.O. No. 1125(I)/2011 dated 31.12.2011---Retail turnover tax, payment of---Default surcharge, imposition of---Scope---Taxpayer was a sole propriety textile garment retailer who was audited and vide order-in-original was ordered to pay penalty and surcharge for short paid tax---Appellate authorities set aside order-in-original and declared that Notification S.R.O. No. 1125(I)/2011 dated 31-12-2011 did not apply to the case of taxpayer---Validity---Businesses that were exclusively engaged in retail sales were by intent and design both, and most explicitly excluded from application of Notification S.R.O. No. 1125(I)/ 2011 dated 31-12-2011 and Federal Board of Revenue had issued clarifications from time to time as to non-applicability of said SROs to retailers---Only those retailers fell within scope of such SROs who were manufacturers-cum-retailers and there were clarifications to that effect also issued from time to time by Federal Board of Revenue---Appellate Tribunal Inland Revenue declared that order-in-original was not in accordance with law and was properly set aside by appellate authorities---Appellate Tribunal Inland Revenue held that Chapter-II of Sales Tax Special Procedures Rules, 2007 was applicable to case of taxpayer and Notification S.R.O. No. 1125(I)/2011 dated 31-12-2011 had no relevance whatsoever to the case of taxpayer---Appellate Tribunal Inland Revenue upheld order-in-appeal as taxpayer had failed to establish its claim---Appellate Tribunal Inland Revenue further held that imposition of default surcharge under S. 34(1) of Sales Tax, 1990 and penalty under S. 33(5) of Sales Tax Act, 1990 was not recoverable from taxpayer---Appeal was dismissed accordingly.

Engineer Zafar Iqbal Jhagra v. Federation of Pakistan 2013 PTD 1491; Messrs Stylo Shoes, Lahore v. C.I.R. Zone-X, RTO II, Lahore 2015 PTD 2172; Messrs Mustafa Impex, Karachi and others v. The Government of Pakistan through Secretary Finance, Islamabad and others 2016 PTD 2269 and Commissioner Inland Revenue v. Adeel Brothers 2017 PTD 1579 ref.

Riaz Ali Shah, D.R. for Appellant.

Saifuddin Adeeb, (FCA) for Respondent.

Date of hearing: 16th January, 2018.

2019 P T D (Trib.) 1877

[Inland Revenue Appellate Tribunal]

Before Ch. Shahid Iqbal Dhillon, Judicial Member and Dr. Muhammad Naeem, Accountant Member

Messrs 4-A WEAVING FACTORY, FAISALABAD

Versus

COMMISSIONER INLAND REVENUE, R.T.O., FAISALABAD

S.T.A. No.661/LB of 2017, decided on 12th March, 2019.

Sales Tax Act (VII of 1990)---

----Ss. 11, 34 & 33---Assessment of sales tax and recovery of tax not levied or short-levied---Failure to furnish return within due date---Default surcharge---Scope---Appellant was charged for suppression/ concealment of un-registered sales/supplies; non-payment of sales tax and late filing of sales tax returns---Registered person was called upon to show cause under S. 11(2), Sales Tax Act, 1990, as to why sales tax may not be recovered alongwith default surcharge and penalty---Adjudication proceedings culminated in passing of order for recovery of sales tax alongwith default surcharge and penalty---Commissioner Inland Revenue (Appeals) upheld the action of assessing authority---Contention of registered person was that audit proceedings were completed under S. 11(3), Sales Tax Act, 1990 which section was inserted through Finance Act, 2012 dated 26.06.2012, therefore, recovery of sales tax not levied and not charged for the period starting from 1st July, 2009 to 30th July, 2012 could not be adjudged through impugned show-cause notice---Validity---Tax period involved in the present case was relevant to months of July 2011 to June 2012 and the assessing authority had illegally invoked the provisions of S. 11 to recover the tax for the said periods---Provisions of S. 11 came into statute book through Finance Act, 2012, therefore, said provisions were not applicable retrospectively---Appellate Tribunal allowed the appeal and vacated the orders passed by the authorities below.

2015 PTD (Trib.) 416 and 2018 PTD 2364 ref.

2015 PTD (Trib.) 416 rel.

M. Imran Rashid for Appellant.

Rao Shahzad, D.R. for Respondent.

Date of hearing: 12th March, 2019.

2019 P T D (Trib.) 1898

[Inland Revenue Appellate Tribunal]

Before Ch. Shahid Iqbal Dhillon, Judicial Member and Dr. Muhammad Naeem, Accountant Member

Messrs MOTI FABRICS (PVT.) LIMITED, FAISALABAD

Versus

COMMISSIONER INLAND REVENUE, RTO, FAISALABAD

I.T.As. Nos. 3194/LB to 3196/LB of 2018, decided on 10th April, 2019.

Income Tax Ordinance (XLIX of 2001)---

----Ss. 182, 114 & 214E---Failure to furnish income tax return within due date---Voluntary revision of return along with payment of 25% higher tax---Imposition of penalty---Purpose---Appellant e-filed its returns for income on 27-09-2016, 11-10-2017 and 25-12-2017 for the tax years 2014 to 2016 respectively---Deputy Commissioner after issuance of show-cause notice imposed penalty under S. 182, Income Tax Ordinance, 2001 for delay in filing returns---Appeal filed before Commissioner (Appeals) was dismissed---Validity---Section 182, Income Tax Ordinance, 2001 was by no means a charging provision and the intention of legislature was not to generate tax or revenue income and the purpose of the penal provision was not the source of mobilization---Section 182 was only a mode of ensuring collection of taxes and compliance thereof---Revenue department could not be allowed to use provision of S. 182 as substitute of normal assessment or new source of revenue/tax originating provisions---No loss of revenue was evident in the present case---Impression of department that the penalty had to be universally imposed, if there was default, was incorrect---Authorities were required to act fairly and honestly in penalty proceedings---Appellate Tribunal imposed token penalty instead of penalty calculated per day default for the tax year 2004 and deleted penalty imposed for the tax years 2015 and 2016 as the appellant had already revised its return voluntarily and fulfilled the actual liability---Appeals filed by taxpayer were allowed

2013 PTD 387 and Michael Fernandes v. C.W.T., Mysore, (1974) 95 ITR 532 (Mys) ref.

Muhammad Imran Rasheed for Appellant.

Ms. Bushra Jaffar, D.R. for Respondent.

Date of hearing: 10th April, 2019.

2019 P T D (Trib.) 1953

[Inland Revenue Appellate Tribunal]

Before Muhammad Waseem Ch., Judicial Member and Masood Akhtar Shaheedi, Accountant Member

The COMMISSIONER INLAND REVENUE, LTU, LAHORE

Versus

KOHNOOR ENERGY LTD., LAHORE

M.As. (R) Nos.255 to 258/LB of 2012, decided on 2nd April, 2019.

Income Tax Ordinance (XLIX of 2001)---

----Ss. 132 & 221---Disposal of appeals by Appellate Tribunal---Review---Rectification of mistake---Scope---Department filed applications for recall of order passed by Appellate Tribunal whereby orders of Commissioner (Appeals) and Additional Commissioner were annulled---Validity---Objections raised in the applications were in the nature of allegations contesting the original order of Tribunal for which proper and legal course was to file appeal---Issues raised in the applications were not in the nature of "mistakes apparent from the record" for which department had sought invoking of S. 221, Income Tax Ordinance, 2001---Power of review of its order by the Tribunal was not available in the Income Tax Ordinance, 2001---Applications were rejected.

2008 SCMR 204 = 2008 PTD 253; 1992 PTD 1632 and 1993 SCMR 1232 = 1993 PTD 766 ref.

C.I.T. v. Move (Pvt.) Limited 2013 PTD 2040 rel.

Rehan Safdar, DR, for the Appellant.

Mansoor Beg for Respondent.

2019 P T D (Trib.) 1990

[Inland Revenue Appellate Tribunal]

Before Ch. Shahid Iqbal Dhillon, Judicial Member and Wajid Akram, Accountant Member

The COMMISSIONER INLAND REVENUE, LTU, LAHORE

Versus

Messrs ALLIED BANK OF PAKISTAN, LAHORE

I.T.As. Nos. 374 and 375/LB of 2006, decided on 4th February, 2019.

Income Tax Ordinance (XXXI of 1979) [since repealed]---

----Ss. 62, 66A & 23---Amendment of assessment---Deductions---Depreciation against income from lease rentals---Scope---Original assessments finalized under S. 62 of Income Tax Ordinance, 1979 were modified under S. 66A by making an addition on account of income credited to suspense account and by making addition on account of lease rentals and the incomes of taxpayer---Commissioner Inland Revenue (Appeals) accepted the appeal of taxpayer on said issues---Department contended that Commissioner Inland Revenue (Appeals) was not justified in allowing depreciation allowance against gross leasing rental income---Validity---Inspecting Additional Commissioner had examined the account and had worked out delayed lease rental at his own by taking difference of lease rental receivable and lease rental actually received and calculated penal interest @ 24% per annum thereon and included the same in the income for the year---Commissioner Inland Revenue (Appeals) had observed that in addition to voluntarily offering penal interest as income of the taxpayer, the assessing officer could not himself determine the late payment recovery which was outside his powers---Depreciation against lease assets was allowable against lease rentals under S. 23(1)(v) of Income Tax Ordinance, 1979---Taxpayer had claimed depreciation against gross lease rentals whereas the Inspecting Additional Commissioner had restricted the same to the extent of net lease rentals (after allocation of proportionate expenses)---Commissioner Inland Revenue (Appeals) had allowed depreciation to the extent of gross lease rental instead of net lease rentals---Commissioner Inland Revenue (Appeals) had accepted the appeal of the taxpayer in accordance with law---Appellate Tribunal agreed with the findings of Commissioner Inland Revenue (Appeals) and held that the actions of Inspecting Additional Commissioner were not justified.

(1960) 2 Tax (III-130); 31 ITR 153; 48 ITR 548; 194 ITR 695 and CIT v. Faysal Islamic Bank of Bahrain, Karachi 2001 PTD 682 ref.

Waqas Aslam DR for Appellant.

Mansoor Beg for Respondent.

2019 P T D (Trib.) 2076

[Inland Revenue Appellate Tribunal]

Before Ch. Shahid Iqbal Dhillon, Judicial Member and Mohammad Raza Baqar, Accountant Member

Messrs EDUCATIONAL EXCELLENCE LIMITED, LAHORE

Versus

COMMISSIONER INLAND REVENUE, LTU, LAHORE

M.A. No.226/LB and I.T.A. No.914/LB of 2016, decided on 7th June, 2016.

Income Tax Ordinance (XLIX of 2001)---

----S. 113---Minimum Tax---Adjustment of---Scope---Appellant, while filing the return of income, claimed adjustment of minimum tax brought from tax years 2011, 2012 and 2013---Additional Commissioner observed that as the appellant had not paid any tax under normal tax regime, therefore, the credit under S. 113(2)(c), Income Tax Ordinance, 2001 was not available---Commissioner Inland Revenue (Appeals) rejected the appeal of taxpayer---Validity---Credit under S. 113(2)(c), Income Tax Ordinance, 2001 was beneficial in nature and it was incorporated to reduce burden of taxation on taxpayers earning lesser income or suffering losses---Section 113(2)(c), Income Tax Ordinance, 2001 had to be interpreted liberally---Legislature had extended a benefit in terms of S. 113(2)(c) of Income Tax Ordinance, 2001 which was in the nature of payback of tax recovered over and above the actual tax liability---Expression "no tax payable" used in S. 113(1)(e), Income Tax Ordinance, 2001 referred to zero tax payable---Minimum tax was required to be charged under S. 113(1)(e), Income Tax Ordinance, 2001 where "no tax" was "payable" or "paid" by a person or tax "payable" or "paid" was less than 1% of the turnover---Meanings associated to the terms "payable" or "paid" in S. 113(1)(e) had to be kept in view while interpreting S. 113(2)(c), Income Tax Ordinance, 2001---Zero tax "payable" or "paid" could not be considered in a manner so as to throw out the taxpayer from the ambit of S. 113(2)(c), Income Tax Ordinance, 2001---Appellate Tribunal held that S. 113(2)(c), Income Tax Ordinance, 2001 was applicable in loss cases or zero tax payable cases---Appeal of the taxpayer was allowed.

Messrs D.G. Khan Cement Company Limited's case I.T.A. No.441/LB of 2006. ref.

Rana Muhammad Afzal for Appellant.

Ms. Tehseen Muzaffar D.R. for Respondent.

2019 P T D (Trib.) 2162

[Inland Revenue Appellate Tribunal]

Before Muhammad Jawed Zakaria, Judicial Member and Syed Ayaz Mahmood, Accountant Member

Messrs MULTINET PAKISTAN (PVT.) LTD., KARACHI

Versus

The COMMISSIONER INLAND REVENUE, ZONE-III, LTU, KARACHI

I.T.As. Nos. 134/KB and 12/KB of 2015, decided on 20th August, 2018.

(a) Income Tax Ordinance (XLIX of 2001)---

----Ss. 120, 122(5A) & 177---Assessment order, amendment of---Principles---Taxpayer, a subsidiary of a foreign company, filed return of income which was treated as 'deemed assessment' under S. 120 of Income Tax Ordinance, 2001 and revised---Deemed amended order was considered as erroneous and prejudicial to the interest of revenue---Assessing authority passed amended order under S. 122(5A) of Income Tax Ordinance, 2001---Orders passed by assessing authority were maintained by Commissioner (Appeals)----Validity---Authorities could not seek details, documents and explanation to justify action under S. 122(5A) of Income Tax Ordinance, 2001 as same was against the spirit of said provision of law---Order under S. 122(5A) of Income Tax Ordinance, 2001 passed on whims, guesswork and assumptions was nothing, but erroneous and prejudicial to the interest of revenue---Appellate Tribunal set aside orders passed by authorities as same were not maintainable both on legal as well as factual planes---Appeal was allowed accordingly.

[Case-law referred]

I.T.As. Nos.1034-1037 and Messrs Bani Apparels's case I.T.A. No.648/KB of 2014 rel.

(b) Income Tax Ordinance (XLIX of 2001)---

----S. 122(5A)---Assessment order, amendment of---Roving inquiry---Scope---Assessing authorities under S.122(5A) of Income Tax Ordinance, 2001 cannot raise queries to constitute fishing and roving inquiries as same are not permitted in proceedings under S. 122(5A) of Income Tax Ordinance, 2001.

(c) Income Tax Ordinance (XLIX of 2001)---

----S. 122(5A)---Assessment order, amendment of---Prerequisites---Conditions of order being erroneous and prejudicial to interest of revenue are two limbs of 'erroneous and prejudicial' as envisaged in S. 122(5A) of Income Tax Ordinance, 2001---Such conditions simultaneously coexist, if one limb is missing then proceedings initiated under S. 122(5A) of Income Tax Ordinance, 2001 becomes null and void.

2014 PTD (Trib.) 2085; Meezan Bank Limited's case I.T.As. Nos. 181-185, 893, 1051, 1096; 1999 PTD (Trib) 2851; 2009 PTD (Trib) 121; 2012 PTD (Trib) 1593 and 2010 PTD (Trib.) 111 rel.

(d) Income Tax Ordinance (XLIX of 2001)---

----S. 122(5A)---Assessment order, amendment of---Scope---Orders under S. 122(5A) of Income Tax Ordinance, 2001 bear stamp of quasi-judicial nature and require to be supported by reasons to conclusion.

(e) Income Tax Ordinance (XLIX of 2001)---

----Ss. 120 & 122(5A)---Assessment order, amendment of---Powers of Commissioner---Power reposed on Commissioner is a power of judicial nature and such power is to be exercised lawfully with due application of mind---Such power cannot be exercised mechanically or at behest of some other Authority---Prejudice to revenue or an erroneous view can be amended but there should be added element of 'unsustainability' in deemed order under S. 120 of Income Tax Ordinance, 2001 which clothes Commissioner with jurisdiction to issue notice and proceed to make appropriate orders---Power of revision under S. 122(5A) of Income Tax Ordinance, 2001 can be exercised by Commissioner when he considers that order is "erroneous and prejudicial to interest of revenue"---Provisions of S. 122(5A) of Income Tax Ordinance, 2001 cannot be invoked when two views are possible---Error envisaged by S. 122(5A) of Income Tax Ordinance, 2001 is not one which depends on possibility or guesswork but it should be actually an error either of fact or law which caused prejudice to interest of revenue---Exercise of revisional power by Commissioner was not to become a fiat but should be within bounds of law and satisfy need of fairness in administrative action and fair play and full compliance with requirements of principles of natural justice---Scope of interference under S. 122(5A) of Income Tax Ordinance, 2001 is not to set aside merely unfavorable orders and bring to tax some more money to treasury nor said section is meant to get at sheer escapement of revenue which is taken care of by other provisions in Income Tax Ordinance, 2001.

(f) Interpretation of statutes---

----Fiscal law---Scope---Provisions of taxing statute are strictly interpreted and charges are imposed on taxpayers with clear and unambiguous language---Court/Tribunal should apply correct law whether litigants point out or not---If there are two reasonable views/interpretations possible, views favorable to subjects/citizens have to be adopted.

[Case-law referred]

(g) Income Tax Ordinance (XLIX of 2001)---

----S. 177---Selection of case for audit---Scope---Audit---Scope---No power has been provided under S. 177 of Income Tax Ordinance, 2001 to modify assessment or re-determine income of taxpayer---Audit is not a return of income which is being processed by officer doing audit---Audit officer is dealing with 'deemed assessment' which by process of law has acquired sanctity---Finalized assessment cannot just be modified or disturbed in continuation of proceedings of audit under S. 177 of Income Tax Ordinance, 2001---Audit is just a process to reach to a conclusion from where assessing officer can further modify an already assessed income.

(h) Administration of justice---

----Where law requires a thing to be done in a particular manner, unless it was done in the prescribed manner, same would be illegal.

Khalid Saeed v. Shamin Rizvi 2003 SCMR 1505 rel.

(i) Interpretation of Constitution---

----Principle---When Constitution speaks of "law", it is speaking of "law" as interpreted or declared by judges in exercise of judicial power of State.

Al-Jehad Trust v. Federation of Pakistan PLD 1997 SC 84, 193 rel.

(j) Constitution of Pakistan---

----Arts. 189 & 201---Decisions of Supreme Court and High Court---Scope---Where Supreme Court or High Court has interpreted a provision of Constitution or any enactment or statutory instrument, such interpretation is as much binding upon judicial and executive authorities as the Constitution, enactment or statutory instrument as the case may be.

Duport Steels Limited v. Sirs (1980) 1 All ER 529; Express Newspapers Limited v. MacShane (1980) 1 All ER 65; Scruttons v. Midland Silicones Limited (1962) 1 All ER 1, 7; Young v. Bristol Aeroplane Company (1946) 1 All ER 98; Brutus v. Cozens (1972) 2 All ER 1297; Young v. Bristol Aeroplane Co. (1944) 2 All ER 293, 298; Cooper v. Aaron [358 US 1; 3 L Ed 2d 5; Chief Commissioner v. Mrs. Dina Sohrab PLD 1959 SC 45; Messrs Farid Sons Ltd. Government of Pakistan PLD 1961 SC 537; Province of East Pakistan v. Noor Ahmed PLD 1964 SC 451; Multiline Associates v. Ardeshir Cowajee PLD 1995 SC 423; Muhammad Saleem v. Fazal Ahmad 1997 SCMR 314; Babar Shehzad v. Said Akbar 1999 SCMR 2518; Ardeshir Cowasjee v. Karachi Building Control Authority 1999 SCMR 2883; All Pakistan Newspapers Society v. Federation of Pakistan PLD 2004 SC 600, 617; Noor Ahmed v. State PLD 1982 Lah. 214; Ghulam Nabi v. Addl. District Judge 1983 CLC 2382; Rehmat Ali v. Jan Muhammad 1983 SCMR 1109; Province of East Pakistan v. DR. Azizul Islam PLD 1963 SC 296; Murad Ali v. Collector of Central Excise and Land Custom PLD 1963 W.P. Kar. 280; Nishat Talkies v. CIT 1989 PTD 591; Abdul Razzak v. The Collector of Customs 1995 CLC 1453; 1999 PTD (Trib.) 708; 1999 PTD (Trib.) 1494 and 1996 PTD (Trib.) 388 rel.

(k) Precedent---

----Ratio decidendum---Connotation---Ratio decidendum of a decision is judicial reason on which that decision is founded; it is what that case decides generally or rule of law for which it is an authority---Ratio decidendum is of universal application and binds subject, executive and subordinate courts alike---Principle decided has to be applied whenever a new case comes up for decision.

(l) Precedent---

----Binding nature---Applicability---Binding nature of a decision is of two types, one is in relation to facts and other is in relation to principle of law---Principle of law declared is treated as precedent and binding on all---Finding of facts binds only parties to decision itself and it is the ultimate decision that binds.

(m) Interpretation of statutes---

----Fiscal law---Harmonious interpretation---Scope---If there are two consistent, rationale/interpretations court was not to adopt such construction which may lead to some absurdity---Fiscal provision of a statute is to be construed liberally in favour of taxpayer and in case of any substantial doubt same is to be resolved in favour of taxpayer---If language used in statute is capable of two constructions, one which is consistent with good sense and fairness and other which would make its operation unduly oppressive, unjust or unreasonable or which may lead to strange, inconsistent results or otherwise introduce element of bewildering, uncertainty and practical inconvenience un-working of statute, court is to choose former---When State is inclined to give some benefit to a taxpayer, terms of provisions of policy should be interpreted in a liberal manner and with an intention to see that purpose for which policy is framed has been fulfilled and beneficiary is helped---Interpretation must not be such which may frustrate object of policy.

S.M. Rehan (FCA) for Appellant (in I.T.A. No.134/KB of 2015).

Abdul Salam, D.R. for Respondent (in I.T.A. No.134/KB of 2015).

Abdul Salam, D.R. for Appellant (in I.T.A. No.12/KB of 2015).

S.M. Rehan (FCA) for Respondent (in I.T.A. No.12/KB of 2015).

2019 P T D (Trib.) 2206

[Inland Revenue Appellate Tribunal]

Before Justice (R.) Nadeem Azhar Siddiqui, Chairman

Messrs RELIANCE COMMERCIAL ASSOCIATES

Versus

ASSISTANT COMMISSIONER, SRB, KARACHI and another

Appeal No. AT-42 of 2018, decided on 6th September, 2018.

Sindh Sales Tax on Services Act (XII of 2011)---

----Ss. 57, 58 & 59---Appeal before Commissioner (Appeals)---Decision in appeal---Procedure---Dismissal of appeal for non-prosecution---Availability of written arguments---Effect---Appellant was aggrieved of Commissioner's (Appeals) order whereby he had dismissed the appeal for non-prosecution---Validity---Sufficient material was available with the Commissioner (Appeals) to decide the appeal on merits---Principles of equity, justice and fairplay required that as far as practicable the case was to be decided on merits---Law favoured adjudication on merits and dismissal for non-prosecution was an exception and not a rule---Appeal before Commissioner (Appeals) was the first of its kind and was the case of first impression---Commissioner (Appeals) on the basis of grounds of appeal and written arguments, could have easily decided the appeal on merits---Twenty other appeals of similar nature were pending before the Commissioner (Appeals) and were reserved for orders---Order-in-appeal was set aside and the case was remanded to the Commissioner (Appeals) for decision on merits.

Imtiaz Ahmed v. Ghulam Ali PLD 1963 SC 382 rel.

Mohammad Yousuf for Appellant.

Pirah Ashfaq, AC-SRB for Respondent.

2019 P T D (Trib.) 2233

[Inland Revenue Appellate Tribunal]

Before Muhammad Jawed Zakaria, Judicial Member and Syed Ayaz Mehmood, Accountant Member

Messrs COSMOS INTERNATIONAL, KARACHI

Versus

The COMMISSIONER INLAND REVENUE, ZONE-IV, RTO-II, KARACHI

S.T.A. No. 54/KB of 2018, decided on 8th August, 2018.

(a) Sales Tax Act (VII of 1990)---

----Ss. 21, 2(37) & 38---Sales Tax Rules, 2006, Rr. 12 & 7---Blacklisting and suspension of registration of registered person---Tax fraud---Authorized officer to have access to premises, stocks, accounts and records---Non-declaration of new business premises---Effect---Appellant was blacklisted on the allegation that it's unit did not exist on the declared premises and that it charged output tax without holding stocks, hence, flying invoices were issued without physical transfer of goods---Validity---Section 21(2), Sales Tax Act, 1990 and R. 12 of Sales Tax Rules, 2006 mandatorily required Commissioner to be satisfied before framing criminal charge of issuance of fake invoices or committing tax fraud/evasion---Said provision and rule entailed an enquiry to be undertaken to collect evidence by Commissioner to come to a satisfaction that a drastic action such as suspension or blacklisting of registration was called---Term "satisfaction" was a term of art and connoted that there was enough material to form a definite opinion---Neither any adverse material or evidence was available on record nor such satisfaction was made out by Commissioner in the case, which could justify the action of suspension and subsequent blacklisting of appellant's registration---Order passed by Commissioner was not a speaking order---Tenor of the order manifested non-application of judicial mind and no valid reasons were assigned by Commissioner while coming to the conclusion that appellant had committed tax fraud by issuing fake invoices/flying invoices---Commissioner, later on at any stage of proceedings, did not visit business premises of appellant to confirm that stock available at such premises matched with the record or any contradiction was found---Non-declaration or late declaration of a new business premises/branch/godown or office by a registered person could not be considered as tax fraud---Impugned order of blacklisting was set-aside by the Tribunal with direction to immediately restore registration of the appellant from the date of its registration.

2008 SCMR 240; 2006 SCMR 1713; 2016 PTD 485; 2004 PTD 868; 2014 PTD (Trib.) 558; Aftab Shahban Mirani v. President of Pakistan and others 1998 SCMR 1863 and 2012 PTD 337 ref.

(b) Sales Tax Act (VII of 1990)---

----S. 21---"Satisfaction"---Connotation---"Satisfaction" was a term of art and connoted that there was enough material to form definite opinion.

(c) Qanun-e-Shahadat (10 of 1984)---

----Arts. 117 & 118---Burden of proof---Party making an allegation must bring material evidence to prove the same and any action which was based upon no evidence was not permitted under law---Adjudication based on mere presumption of fact was not sustainable under Arts. 117 & 118 of Qanun-e-Shahadat, 1984.

2004 PTD 868 rel.

(d) General Clauses Act (X of 1897)---

----S. 24-A---Exercise of power under enactment---Reasons for decision---Executive authority has been enjoined upon, as per S. 24-A of General Clauses Act, 1897 to give reasons for their orders---Every officer, authority or a person making any order was required to give reasons and any judicial findings without discussing necessary facts and material on record or evidence was not a judicial order and consequently was not sustainable in the eyes of law.

Adamjee Jute Mills Ltd. v. The Province of East Pakistan PLD 1959 SC 272; Gouranga Mohan Sikdar v. The Controller Import and Export and 2 others PLD 1970 SC 158 and Muhammad Ibrahim Khan v. Secretary, Minister of Labour and others 1984 SCMR 1014 ref.

(e) Taxation---

----Presumption---Nobody could be convicted merely on the basis of assumptions or presumptions and there was no room for any intentment in the fiscal matters and there was no presumption as to tax.

2004 PTD 868 rel.

(f) Sales Tax Act (VII of 1990)---

----Ss. 21 & 11---Blacklisting and suspension of registration of registered person---Assessment of tax---Scope---Blacklisting and suspension of a registration was an extreme step having paralyzing effect on business and on its financial reputation as well---Such action was to be taken as last resort after establishing gross violation of main factors i.e. (i) if registered person was found to have committed tax fraud and (ii) registered person had issued fake invoices---Due to sensitivity and severity of extreme action of blacklisting, legislature had assigned the powers of suspension and blacklisting under S. 21 to a senior officer i.e., a "Commissioner Inland Revenue"---Such action resulted in complete standstill of the business of the registered person, on the other hand, if an assessment order/order-in-original was passed under S. 11 and tax demand of billions of rupees was created, the business remained operative---Any order passed under S. 11 made only financial impact on business of only one person---Order of suspension or blacklisting any registered person was equal to complete closure and shutting down of business---Commissioner, as a result of suspension or blacklisting, basically declared transactions made by such person with other registered persons as illegal and void under the provisions of Sales Tax Act, 1990, which directly impacted legal right of such persons---Blacklisting order created hundreds or thousands of new litigations, which burdened tax judicial system---Appellate Tribunal observed that order of suspension or blacklisting had to be passed after full verification, complete scanning, satisfaction and authentication by Commissioner himself that tax fraud was established on registered person with documented concrete evidence.

Aqeel Ahmed for Appellant.

Latif Mian, D.R., R.T.O. for Respondent.

2019 P T D (Trib.) 2260

[Inland Revenue Appellate Tribunal]

Before Muhammad Jawed Zakaria, Judicial Member and Syed Ayaz Mahmood, Accountant Member

Messrs FAIZA PACKAGES, KARACHI

Versus

The COMMISSIONER INLAND REVENUE, ZONE-IV, RTO-III, KARACHI

S.T.A. No. 108/KB of 2017, decided on 1st June, 2018.

(a) Sales Tax Act (VII of 1990)---

----Ss.21, 8A, 7 & 73---Purchase from blacklisted/suspended supplier---Joint liability of registered persons in supply chain where tax unpaid---Scope---Determination of sales tax liability---Transactions to be made through Banking channel---Scope---Appellant was alleged to have purchased goods from blacklisted person---Validity---Taxpayer had made payment of input tax to his supplier and had no way to confirm that the alleged supplier had made the payment in government treasury or not---Taxpayer receiving taxable supplies was legally obliged to check 'validity and veracity' of the supplying person through electronic verification/E-portal verification which was done at the time of transactions---Tax functionaries were duty bound to check as to whether the supplier had made payment of tax due to them especially when he was filing his monthly sales tax returns and summaries of sales and purchases with the department---No concrete evidence was produced to prove that taxpayer was in the knowledge or had reasonable grounds to suspect that some or all of the tax payable in respect of supplies would go unpaid---Liability to pay tax jointly and severally under S. 8A, Sales Tax Act, 1990 came into play only when it was established with corroborating material evidence that registered person receiving taxable supplies from another registered person was in the knowledge or had reasonable grounds to suspect that some or all of the tax payable in respect of the supplies would go unpaid---Supplier of appellant was active when the transaction took place and it was subsequently blacklisted---Payments were made by appellant after adhering to the provisions of S. 73, Sales Tax Act, 1990---Requisite conditions under Ss. 7 & 73, Sales Tax Act, 1990, for claiming input tax were fulfilled by appellant---Department failed to produce any order regarding the blacklisting of supplier---Non-production of such order led to the presumption that supplier was not blacklisted at the time of issuance of invoices---Order of blacklisting passed by Commissioner Inland Revenue was vacated and active status of taxpayer as sales tax registered company was restored ante-dated---Appeal filed by taxpayer was allowed, accordingly.

2010 PTD (Trib.) 163 ref.

Messrs D.G. Khan Cement Company Ltd. v. The Federation of Pakistan and others Writ Petition No. 3515 of 2012; Messrs Imran Ali Lubricants v. Federation of Pakistan W.P. No. 394 of 2016 dated 8.3.2018; Commissioner IR v. Messrs Amtex Ltd. 2016 PTD 1695; CIR, Zone-III, RTO, Faisalabad v. Kamal Fabrics, Faisalabad 2012 PTD (Trib.) 453; Elahi Cotton Mills Ltd. v. Federation PLD 1997 SC 582; Madni Packages (Pvt.) Ltd. v. CIR 2015 PTD (Trib.) 1490 and Messrs Raab Packages (Pvt.) Ltd. v. CIR 2017 PTD (Trib.) 725 rel.

(b) Sales Tax Act (VII of 1990)---

----S. 8A---Joint liability of registered persons in supply chain where tax unpaid---Scope---Knowledge of buyer---Onus to prove---Provisions of S. 8A required that the buyer should have "knowledge" and "reasonable grounds" to suspect that the supplier will not eventually deposit the sales tax in national exchequer paid by him---Initial burden lies on the department to establish that the taxpayer had prior "knowledge" and "reasonable grounds" to suspect the supplier that sales tax paid to him will remain unpaid.

Messrs D.G. Khan Cement Company Ltd. v. The Federation of Pakistan and others Writ Petition No. 3515 of 2012 rel.

(c) Interpretation of statutes---

----Retrospectivity---Order or notification which confers rights and are beneficial will be given retrospective effect and those which adversely affect or invade upon the vested right can not be applied with retrospective effect.

Government of Pakistan v. Messrs Village Development Organization 2005 SCMR 492 and Messrs Brother Engineering (Pvt.) Ltd. 2004 PTD 2928 fol.

(d) Sales Tax Act (VII of 1990)---

----S. 21---Blacklisting and suspension of registration---Scope---Subsequent blacklisting of supplier could not be made a tool to deprive the registered person of a valuable right accrued in his favour for purchases or transactions made prior to the suspension of registration of such supplier.

Madni Packages (Pvt.) Ltd. v. CIR 2015 PTD (Trib.) 1490 fol.

(e) Taxation---

----Presumption as to taxpayer's intention---Taxpayer could not be presumed to be dishonest---No presumption was available against the bona fide or the honesty of a taxpayer and normally the authorities would not be justified in refusing to a taxpayer a reasonable opportunity of representing his views before deciding a matter---No presumption of bad faith against taxpayer was available unless there was sufficient material on record to establish and ascertain the bad faith---Pure guess or bare suspicion or stock phrase was not sustainable while framing assessment; 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. C.I.T. (1936) 4 ITR 95 (Bom.); A.S. Sivan Pillal v. C.I.T. (1958) 34 ITR 328 (Mad.); Dharajlal Girdharilal v. C.I.T. (1954) 26 ITR 736 (SC) and Dhakeswari Cotton Mills Ltd v. C.I.T. (1954) 26 ITR 755 (SC) rel.

Ms. Naheed A. Shahid for Appellant.

Dr. Latif Mian, D.R. for Respondent.

2019 P T D (Trib.) 2293

[Inland Revenue Appellate Tribunal]

Before Ch. Shahid Iqbal Dhillon, Judicial Member and Dr. Muhammad Naeem, Accountant Member

The COMMISSIONER INLAND REVENUE, ZONE-II, RTO, LAHORE

Versus

Messrs GHEE CORPORATION OF PAKISTAN (PRIVATE) LIMITED, LAHORE

I.T.As. Nos. 320/LB and 321/LB of 2012, decided on 6th February, 2019.

(a) Income Tax Ordinance (XLIX of 2001)---

----Ss. 122 & 29---Amendment of assessment---Bad debts---Scope---Taxpayer had claimed bad debts amounting to Rs. 13,306,000 and Rs. 48,867,000 for the tax years 2005 and 2006 respectively which were disallowed by Additional Commissioner Inland Revenue due to the sole reason that taxpayer had not fulfilled legal formalities and no evidence was provided to support that it had made adequate recovery arrangements---Appeal filed by taxpayer was allowed by Commissioner (Appeals)---Validity---Bad debts were written off in the accounts after duly considering the feasibility of recovery as the companies from whom amounts were due had been liquidated and no recovery was possible to be made under any stretch of imagination---Appeal was dismissed.

(1971) 82 ITR 147 (SC) and (1989) 179 ITR 387 ref.

(b) Income Tax Ordinance (XLIX of 2001)---

----Ss. 122, 18, 39 & 174---Amendment of assessment---Income from business---Income from other sources---Record to be maintained by taxpayer---Scope---Administrative expenses deducted by taxpayer were disallowed by Additional Commissioner Inland Revenue on the ground that taxpayer had not declared any business income under S. 18, Income Tax Ordinance, 2001 but income from other sources under S. 39, Income Tax Ordinance, 2001 was declared---Appeal filed by taxpayer was allowed by Commissioner (Appeals)---Validity---Additional Commissioner Inland Revenue had disallowed the expenses under various heads despite the fact that the same was attributable to the "business income" while taking a lenient view meaning thereby the Additional Commissioner Inland Revenue had no definite information regarding assessment order being erroneous and his action in disallowing the said expenses was totally based on mere presumption and guess work which had no place in the Income Tax Ordinance, 2001---Additional Commissioner Inland Revenue had disallowed administrative expenses under various heads totally on presumption by adopting 1/3rd formula, which was nothing but shooting in the dark and made the lump-sum ad hoc additions in a total void manner and in contravention of the procedure as laid down in S. 174, Income Tax Ordinance, 2001---Additional Commissioner Inland Revenue was required to confront the taxpayer by way of a specific notice and to express his intention to disbelieve any part of the disclosed version duly supported with documentary evidence---Appeal was dismissed, in circumstances.

(c) Interpretation of statutes---

----Fiscal statute---Where provision of law is apparently uncertain or ambiguous and admits more than one equally possible interpretations; it is only then that in fiscal statutes an interpretation favourable to a taxpayer can be made.

The Commissioner of Income Tax, East Pakistan v. Hossen Kasam Dada, Karachi PLD 1961 SC 375 ref.

(d) Interpretation of statutes---

----Beneficial interpretation---Beneficial rule of interpretation is always subject to the condition that two equally reasonable meanings of the provision are possible---Where language of statutory provision is clear, effect must be given to it.

1992 SCMR 663; PLD 1977 Lah. 292 and 1993 SCMR 274 ref.

(e) Income Tax Ordinance (XLIX of 2001)---

----S.2(15)---Debt---"Bad debt"---Proof---Conditions to be satisfied.

What is bad debt and what it implies is evident from the following:

Debt which is unlikely to be paid (for example, because of probable or actual financial failure of the debtor). Bad Debts may usually be treated as losses and written off against reserves for such debts.

The debts which are found to be irrecoverable are called bad debts. Before claiming an allowance for bad debts or irrecoverable loans under S.2(15) of the Income Tax Ordinance, 2001, the following conditions must be satisfied

The debts or loans must be relating to the business which is carried on by the assessee in the relevant accounting year;

The method of accountancy followed must not be on cash basis, but this condition will not apply in the case of moneylenders:

The loan must have been made in the ordinary course of business, profession or vacation and be incidental to the business;

The debt or loan must have become irrecoverable in the relevant accounting year and not prior to that year.

The sum allowed under this clause should not exceed the amount actually written off as irrecoverable in the books of the account.

Bad Debt is debt which is uncollectable; a permissible deduction for tax purposes in arriving at taxable income. A deduction is permitted if a business account receivable subsequently becomes worthless providing the income arising from debts was previously included in income. The deduction is allowed only in the year of worthlessness.

(f) Income Tax Ordinance (XLIX of 2001)---

----S. 2(15)---"Debt"---Scope---Where a taxpayer is entitled to receive a sum of money from another either at law or in equity, it is accepted that a debt exists for the purposes of S. 2(15) of Income Tax Ordinance, 2001---Debt is a sum of money due from one person to another---Debt exists where a certain amount of sum is owing from one person to another---'Debt' denotes not only the obligation of the debtor to pay, but also the right of the creditor to receive and enforce payment. (g) Income Tax Ordinance (XLIX of 2001)---

----Ss. 174 & 122---Record to be maintained by taxpayer---Amendment of assessment---Scope---Where a taxpayer produces books of accounts and supporting documents, the Assessing Officer shall by disagreeing with such accounts/version, give notice to the taxpayer of the defects in the accounts and provide an opportunity to explain his point of view about such defects---Assessing officer shall record the explanation of the taxpayer and the basis of computation of total income by the taxpayer in the assessment order. (h) Administration of justice---

----When law requires a thing to be done in a particular manner then it must be done in that manner or it should not be done at all.

(i) Income Tax Ordinance (XLIX of 2001)---

----S. 122---Amendment of assessment---Scope---Assessing officer is required to establish his own estimate after rejecting a returned version. (j) Income Tax Ordinance (XLIX of 2001)---

----S. 122---Amendment of assessment---Scope---Estimate of the Assessing officer must be based upon facts and circumstances of the case as borne out from the record and not on the basis of whims and desires.

Sehar Aftab, D.R. for Appellant.

Waheed Shahzad Butt for Respondent.

2019 P T D (Trib.) 2322

[Inland Revenue Appellate Tribunal]

Before Justice (R) Nadeem Azhar Siddiqui, Chairman

Messrs FALCON (PVT.) LTD.

Versus

ASSISTANT COMMISSIONER, SRB, KARACHI

Appeal No. AT-55 of 2018, decided on 5th September, 2018.

Sindh Sales Tax on Services Act (XII of 2011)---

----S. 58(4)---Procedure in appeal before Commissioner (Appeals)---Stay beyond sixty days period---Maxim: Actus curiae neminem gravabit---Scope---Appellant assailed order of Commissioner (Appeals) whereby he had declined to extend the stay beyond sixty days---Department, after the expiry of statutory period of sixty days, attached the bank account of appellant and recovered considerable amount---Validity---Appeal was pending before Commissioner (Appeals) which was reserved for order and during the pendency of appeal the statutory period for which the Commissioner (Appeals) could grant the stay lapsed---Appellant was not at fault if the appeal was not decided within a reasonable time---Tribunal observed that Commissioner (Appeals) was required to decide the appeals within a reasonable time in which the stay was granted---Coercive action against the taxpayer during pendency of appeal was highly objectionable---Appellate Tribunal directed the department to avoid such coercive action in the interest of justice and fairplay even if the stay was vacated---Case was covered by maxim actus curiae neminem gravabit (an act of court shall prejudice no man)---Appeal was allowed and stay against recovery of tax due was granted for a specific period.

PLD 2016 SC 872 rel.

S.M. Rehan, FCA and Ahsan Iqbal, Senior Manager, Sales Tax for Appellant.

Vickey Dhingra, AC, SRB for Respondent.

2019 P T D 288

[Islamabad High Court]

Before Athar Minallah, C.J. and Miangul Hassan Aurangzeb, J

Messrs NAYATEL (PVT.) LTD.

Versus

APPELLATE TRIBUNAL CUSTOMS, ISLAMABAD and others

Custom Reference No.8 of 2017, decided on 29th November, 2018.

Customs Act (IV of 1969)---

----Ss. 196 & 194---Customs General Order No. 10 of 2001, Chapt. (ii)(v)---Customs Classification Committee---Ruling/opinion of Customs Classification Committee---Following of ruling of Customs Classification Committee by Customs Appellate Tribunal----Scope--- Where mandatory requirement of inviting importer or his representative for discussion before Customs Classification Committee had not been fulfilled and importer had not been invited for discussion or afforded opportunity of hearing before the Customs Classification Committee, and such Committee made ruling adverse to the importer's interest, then requirements of Customs General Order No. 10 of 2001 had not been fulfilled---Order of Appellate Tribunal based on such opinion / ruling of Customs Classification Committee was therefore liable to be set aside.

Ayyaz Shaukat and Malik Sardar Khan for Applicants

Adnan Haider Randhawa for Respondent No.2.

Dr. Farhat Zafar for Respondent No.4.

2019 P T D 565

[Islamabad High Court]

Before Athar Minallah, C.J. and Miangul Hassan Aurangzeb, J

ADDITIONAL COLLECTOR, MODEL CUSTOMS, COLLECTORATE OF CUSTOMS, ISLAMABAD

Versus

Messrs SAFI AIRWAYS and another

Custom Reference No. 07 of 2018, decided on 23rd January, 2019.

(a) Customs Act (IV of 1969)---

----S. 79(1)---Import Policy Order, 2013, Para. 12(b), Sr. 31, Part-II, App. B---Declaration and assessment of item for home consumption---Import on import cum export basis---Scope---Respondent imported engine part of an aircraft which has been grounded at the airport---Import of item was stated to be for "home consumption"---Said item was released after payment of applicable duty and taxes---Imported item was fitted in the aircraft and was taken out of Pakistan---Respondent applied for refund of duties and taxes on the ground that imported item had been temporarily imported---Deputy Collector of Customs and Collector of Customs (Appeals) concurrently rejected respondent's claim for refund whereas Customs Appellate Tribunal allowed the claim---Validity---One of the conditions for import of aircraft and its parts was that importer must have valid license issued by Ministry of Defence which respondent did not hold---Respondent neither furnished an indemnity bond nor a Bank guarantee to the satisfaction of Customs authorities to ensure the re-export of imported item within a specified period---Respondent had declared the purpose of the import of item to be for "home consumption" and was unable to explain as to why he had made such a declaration if its intention was to temporarily import and take benefit of para. 12(b) of Import Policy Order, 2013---Order passed by Customs Appellate Tribunal was set aside---Reference was answered, accordingly by the High Court.

(b) Interpretation of statutes---

----Fiscal policy---Principle of strict construction of fiscal laws also applies to fiscal policies.

(c) Administration of justice---

---A thing required to be done in a particular manner must be done in that manner and none other.

Adnan Haider Randhawa for Applicant.

Moulvi Ejaz ul Haq for Respondents.

Ishtiaq Ahmed, Principal Appraiser, Model Customs Collectorate, Islamabad.

2019 P T D 587

[Islamabad High Court]

Before Athar Minallah, C.J. and Miangul Hassan Aurangzeb, J

OIL AND GAS REGULATORY AUTHORITY, ISLAMABAD

Versus

The COMMISSIONER INLAND REVENUE, ISLAMABAD

I.T.R. No.88 of 2009, decided on 14th January, 2019.

Income Tax Ordinance (XLIX of 2001)---

----Ss. 49, 4 & 80---Constitution of Pakistan, Arts. 165 & 165-A----Exemption of certain public property from taxation under Art. 165 of the Constitution-----Liability of income tax on statutory bodies/entities----Benefit of exemption of levy of income on income of Federal and Provincial Governments and local authorities under S.49 of the Income Tax Ordinance, 2001---Scope---Question before the High Court was whether certain statutory bodies including Regulatory Authorities and publicly owned Banks were entitled to exemption from payment of Income Tax under S.49(4) of the Income Tax Ordinance, 2001---Held, that no provision existed in statutes establishing the present statutory bodies exempting the same from payment of tax and the same could not be termed as "local authorities" under S.49 of the Income Tax Ordinance---Under Art. 165 of the Constitution, income or property of Federal Government can be liable to taxation under an Act of Parliament unless specifically exempted from the same and in the present case, there existed no statutory provision exempting present entities from exemption----Term "person" used in S.4 of the Income Tax Ordinance, 2001 included the Federal Government---Section 49(4) of the Income Tax Ordinance, 2001 was a declaratory legislation meant to achieve purpose which had already been achieved in Art. 165A of the Constitution and its insertion did not mean to imply that prior to its insertion, the present statutory bodies were exempt from payment of tax, and thus the same did not have retrospective effect---Reference was answered accordingly.

Deputy Managing Director, National Bank of Pakistan v. Atta ul Haq PLD 1965 SC 201; Pakistan Telecommunication Authority v. Commissioner Income Tax, Coys Zone Islamabad Tax Reference No.160/2008 and Securities and Exchange Commission of Pakistan v. Commissioner of Income Tax (Audit), LTU, Islamabad Income Tax Reference No.26 of 2010 rel.

Hafiz Munawar Iqbal and Imran Rasool for Petitioners (in I.T.Rs. Nos.45, 46, 47, 48 and 49/2012 and I.T.R.No.88 of 2009).

Shahid Iqbal for Petitioners (in I.T.Rs. Nos.79, 80, 82, 84, 87 and 88 of 2009, I.T.Rs. Nos.144, 146, 147 and 148 of 2011).

Saeed Ahmed Zaidi for Petitioners (in I.T.Rs. Nos.32, 33, 34 and 35 of 2012).

Tariq Rashid for Petitioners (in I.T.Rs. Nos.79, 80, 82, 84 and 87 of 2009).

Atif Waheed for Petitioners (in I.T.Rs. Nos.55, 56, 57 and 60 of 2012).

Muhammad Abu Bakar for Respondent/Z.T.B.L. (in I.T.Rs. Nos.45, 46, 47 and 48 of 2012, I.T.Rs. Nos.144, 146, 147, 148 of 2011 and I.T.R. No. 49 of 2012).

Syed Tauqeer Bukhari and Syed Tanseer Bukhari for Respondent/D.H.A. (in I.T.Rs. Nos.32, 33, 34 and 35 of 2012).

Babar Bilal and Ch. Abdul Khaliq Thind for Respondents.

2019 P T D 692

[Islamabad High Court]

Before Athar Minahllah, J

Messrs ATTOCK GEN LTD.

Versus

ADDITIONAL COMMISSIONER (AUDIT), LARGE TAXPAYER UNIT, ISLAMABAD and 3 others

W.P. No.4066 of 2012, decided on 9th July, 2015.\

(a) Show-cause notice---

----"Show cause"---Meaning---Show cause was a demand to produce a satisfactory explanation or excuse in connection with a motion or application to a court.

Black's Law Dictionary 8th Edition rel.

(b) Notice---

----Meaning--- Various types of notices---Notice was defined as legal notification required by law or agreement or imparted by operation of law as a result of some fact (such as recording of an instrument), definite legal cognizance, actual or constructive, of an existing right or title---One had notice of a fact or condition if such person had actual notice of it or had received information about it or had reason to know about it and knew about a related fact---Due notice was defined as sufficient and proper notice that was intended to, and likely to, reach a particular person or public and a notice that was legally adequate given the particular circumstance---Reasonable notice was notice that was fairly to be expected or required under particular circumstances---Notice could be described as intelligence by whatever means communicated, information, knowledge or Constitutional requirement of due process which included allegations, opportunity to answer and trial according to some settled course of procedure.

Black's Law Dictionary, 8th Edition and Words and Phrases, Vol. 28-B rel.

(c) Constitution of Pakistan---

----Art. 10A---Fundamental right to fair trial and due process of law---Issuance of show-cause notice---Scope---Show-cause notice was essentially an instrument whereby authorized person under law informed a person regarding allegation or facts which may form basis for proceedings against such person and may eventually culminate in an adverse order---Show-cause notice was the first requirement of compliance with due process and its purpose was to put a person to notice by giving sufficient information so as to provide an adequate opportunity of submitting an explanation---Authorized person after issuing a show-cause notice, was under mandatory obligation to provide a purposive and meaningful opportunity of hearing to the person to whom such notice was sent---Depending on facts and circumstances of each case, all such persons were to be provided opportunity to produce evidence and where necessary , an opportunity of cross-examination, and such requirement under Art. 10-A of the Constitution were an integral part of Fundamental Right of due process.

(d) Constitution of Pakistan---

----Art. 199---Income Tax Ordinance (XLIX of 2001), S.122(9) & (5)--- Constitutional petition---Show-cause notice was impugned by petitioner---Constitutional jurisdiction of High Court---Scope---Show-cause notice was not an adverse order unless it could be clearly shown to the satisfaction of the Court that it had been issued by an authority not vested with jurisdiction or it was issued for mala fide reasons---Exception to be made by the High Court for want of jurisdiction did not include every jurisdictional error and a wrong exercise of jurisdiction or interpretation of law could not be treated as want of jurisdiction---Constitutional jurisdiction was exercised if the Court was satisfied that the petitioner was an aggrieved party within context of Art. 199 of the Constitution and no other adequate remedy was provided for in law for such petitioner---If statutory remedies were provided, then the same had to be taken into consideration by the High Court and bypassing or circumventing statutory forums was to be discouraged---High Court was to advance the object and purpose of a statute and every effort should be made to uphold sanctity of Legislative intent, rather than defeating the same.

The Burmah Oil Company (Pakistan Trading) Ltd., Chittagong v. The Trustees of the Port of Chittagong PLD 1962 SC 113; Messrs Usmania Glass Sheet Factory Ltd. Chittagong v. Sales Tax Officer, Chittagong PLD 1971 SC 205; Messrs Julian Hoshang Dinshaw Trust and others v. Income Tax Officer, Circle XVIII South Zone, Karachi and others 1992 SCMR 250; Attock Cement Pakistan Ltd. v. Collector of Customs, Collectorate of Customs and Central Excise, Quetta and 04 others 1999 PTD 1892; Mir Muhammad Idris v. Federation of Pakistan through Secretary Ministry of Finance PLD 2011 SC 213; Sindh High Court Bar Association through Secretary v. Federation of Pakistan through Secretary, Ministry of Law and Justice, Islamabad PLD 2009 SC 789 ref.

Messrs Mutual Funds case 2010 PTD 1924; Messrs Shahbaz's case PLD 2013 Sindh 449 = 2013 PTD 969; Pakistan Chrome Tannery's case 2011 PTD 2643; Messrs Azgard Nine Ltd. v. Pakistan through Secretary and others PLD 2013 Lah. 282 = 2013 PTD 1030; Associated Industries Ltd., Amangarh Industrial Area, Nowshera and others v. Federation of Pakistan in W.P. No.1425 of 2010; Muhammad Hussain Kazi v. Government of the Punjab PLD 1983 SC 187; Allah Warayo Chana v. Aijaz Ahmad Khan 1999 SCMR 1880; Collector of Customs, Customs House, Lahore v. S.M. Ahmad and Company (Pvt.) Limited, Islamabad 1999 SCMR 138; Commissioner of Income Tax v. Hamdard Dawa Khana (Waqf) Pak PLD 1992 SC 847; Commissioner of Income Tax v. Eli Lilly Pakistan (Pvt.) Ltd. 2009 SCMR 1279; Muhammad Akram v. The State PLD 1996 SC 246; Gatron (Industries) Ltd. v. Government of Pakistan and others 1999 SCMR 1072; The Murree Brewery Co. Ltd. v. Pakistan through Secretary to GOP, Works and Division and 2 others PLD 1972 SC 279; The Tariq Transport Company, Lahore v. The Sargodha-Bhera Bus Service, Sargodha, and others PLD 1958 SC 437; Messrs Amin Textile Mills (Pvt.) Ltd. v. Commissioner of Income Tax and 02 others 2000 SCMR 201; Muhammad Ismail v. Fazal Zada PLD 1996 SC 246; Union of India and another v. Kunisetty Satyanarayana (2006) 12 Supreme Court Cases 28; Secretary, Min. of Defence and others v. Prabhash Chandra Mirdha AIR 2012 SC 2250; Union of India v. Hindalco Industries (2003) 5 Supreme Court Cases 194; Special Director and another v. Muhammad Ghulam Ghouse and another (2004) 3 Supreme Court Cases 440 and Union of India and another v. Kunisetty Satyanarayana AIR 2007 SC 906 rel.

Shaukat Ali Qureshi for Petitioner (in W.Ps. Nos. 4066/2012, 2241/2013, 3896/2013, 4474/2013 and 307/2014).

Hafiz Muhammad Idrees for Petitioner (in W.Ps. Nos. 2481/ 2013, 305/2014 and 306/2014).

Nadeem Anjum for Petitioner (in W.P. No.562/2014).

Muhammad Bilal, Saeed Ahmed Zaidi, Hafiz Munawar Iqbal, Babar Bilal, Dr. Farhat Zafar and Sheikh Anwar ul Haq for Respondents.

Date of hearing: 9th June, 2015.

2019 P T D 776

[Islamabad High Court]

Before Athar Minallah and Noor-ul-Haq N. Qureshi, JJ

Messrs SAADULLAH KHAN AND BROTHERS (SKB)

Versus

APPELLATE TRIBUNAL OF INLAND REVENUE and others

S.T.R. No.14 of 2012, decided on 8th April, 2015.

(a) Interpretation of statutes---

----Fiscal statute---Construction---Scope---While interpreting fiscal statute, the court looks at what was clearly said and there was no room for any intendment nor there was any equity about a tax---No presumption existed as to a tax and nothing was to be read in or implied and one could only look fairly at the language used ---Taxing statute had to be interpreted strictly and as a corollary any defect or omission could not be inferred---Parameters provided for in a taxing statute determined the chargeability and levy of tax.

Cape Brandy Syndicate v. Inland Revenue Commissioner, (1921)1 KB 64; Charles James Partington v. Attorney General (1869) LR 4 HL 100; Messrs Mirpurkhas Sugar Mills Limited v. Government of Sindh through Chief Secretary, Sindh and 2 others 1993 SCMR 920; Muhammad Younas v. Central Board of Revenue, Government of Pakistan and others PLD 1964 SC 113; The Commissioner of Income Tax, Karachi v. Mst. Khatija Begum, Partner, Shakil Impex, Karachi PLD 1965 SC 472; Messrs Hirjina and Co. (Pakistan) Ltd. v. Commissioner of Sales Tax Central, Karachi 1971 SCMR 128; Aslam Industries Ltd. Khanpur v. Pakistan Edible Corporation of Pakistan and others 1993 SCMR 683; Collector of Customs (Preventive) and 2 others v. Muhammad Mehfooz PLD 1991 SC 630; Commissioner of Income Tax (Central) Karachi v. Messrs Fakir Cotton Ginning and Pressing Industries Ltd., Gambat and another PLD 1991 SC 280; Government of West Pakistan and others v. Messrs Jabees Ltd. PLD 1991 SC 870; The Commissioner of Agricultural Income Tax East Bangal v. B.W.M. Abdur Rehman, Manager, Taki Bara Taraf Wards Estate 1973 SCMR 445; Messrs Mehran Associates Limited v. The Commissioner of Income Tax, Karachi 1993 SCMR 274; Collector of Customs (Appraisement) Karachi and others v. Messrs Abdul Majeed Khan and others 1977 SCMR 371; Messrs Star Textile Ltd. and 5 others v. Government of Sindh and 3 others 2002 SCMR 356; Government of Pakistan and others v. Messrs Hashwani Hotel Ltd. PLD 1990 SC 68; Federation of Pakistan and others v. Haji Muhammad Sadiq and others PLD 2007 SC 133; X.E.N. Shahpur Division v. Collector Sales Tax (Appeals) Collectorate of Customs Federal Excise and Sales Tax, Faisalabad and 2 others 2008 PTD 1973; Government of Pakistan and others v. Messrs Hashwani Hotel Ltd. PLD 1990 SC 68 and A & B Food Industries Limited v. Commissioner of Income-Tax/Sales, Karachi 1992 SCMR 663 rel.

(b) Sales Tax Act (VII of 1990)---

----Ss.33, 34 & 37-A---Provisions of Ss.33, 34 & 37-A, Sales Tax Act, 1990, being penal provisions, to be strictly construed.

(c) Sales Tax Act (VII of 1990)---

----S.3 & Preamble---Levy of sales tax---Adjudication by Sales Tax Authorities---Statutory obligation on adjudicating forums established under the Sales Tax Act, 1990---Onus of proof as to the liability of tax---Scope---Legislature, while enacting the Sales Tax Act, 1990 did not intend to reverse the onus of proof---When the Department asserted a fact, alleged that a person was liable to make payment of tax and the same had not been charged or levied, the former was burdened with a statutory duty to persuade the adjudicating forum by persuasion through preponderance of evidence that the facts asserted by it were highly probable to be true rather than being unreliable, false or doubtful---Degree and quality of evidence required for such persuasion rendered presumption or conjectures as alien---Preponderance of evidence inevitably had to be based on clear and convincing evidence and the standard can be described as "more probable than not"---Heavy duty existed on Department to persuade the adjudicating forums that the facts asserted against a taxpayer were highly probably to be true and the benefit of a doubt would lean in favour of taxpayer.

Miller v. Minister Pension (1947) 2 All ER 372 rel.

(d) Sales Tax Act (VII of 1990)---

----Ss. 45, 46 & 47---Appellate Tribunal---Adjudication of appeals before the Appellate Tribunal---Reference to High Court---Formulation of questions of law---Scope---Failure on part of Appellate Tribunal to advert to questions raised before it or to take relevant matters into consideration, which rendered findings of fact as perverse; or non-reading or misreading of evidence and material on record; raised questions of law in context of S.47 of the Sales Tax Act, 1990---Statutory duty existed on Appellate Tribunal to decide matters before it after taking into consideration all relevant facts; to weigh reasons for and against; and to pass a speaking order or judgment---Appellate Tribunal being the last statutory forum assumed great importance on questions of levy, charge and payment of tax.

Shaukat Ali Qureshi for Applicant.

Rizwan Akhtar Awan for Respondents.

Date of hearing: 10th November, 2014.

2019 P T D 878

[Islamabad High Court]

Before Shaukat Aziz Siddiqui and Athar Minallah, JJ

COMMISSIONER OF INCOME TAX/WEALTH TAX, IBD.

Versus

Messrs HI-TECH PLASTIC (PVT.) LTD.

I.T.A. No.262 of 2000, heard on 2nd November, 2015.

(a) Income Tax Ordinance (XXXI of 1979) [Since repealed]--

----Ss. 57, 55, 56 & 136---Revised return of total income---Question before the High Court related to the circumstances in which a revised return filed under S.57 of the Income Tax Ordinance, 1979, was to be treated at par with a return filed under S.55 of the same Ordinance---Held, that Legislature vide S.57 of the Income Tax Ordinance, 1979 had provided an opportunity to file a revised return of total income and thus correct any "omission or wrong statement" which may have been discovered after furnishing a return under S.55 of the Income Tax Ordinance, 1979 or if no return had been filed---Filing of a revised return had been circumscribed by exercising such right any time before an assessment was made on basis of return filed under S.55 or any other provision of Income Tax Ordinance, 1979---Sections 55 & 57 of the Income Tax Ordinance, 1979 were thus to be read together as the latter was in continuation of the former till such time an assessment order had been passed and after passing of an assessment order, resort could not be made to S.57 of the Income Tax Ordinance, 1979---Revised return, if competently filed, became return for purpose of making an assessment order while return already filed under S.55 of the Income Tax Ordinance, 1979 to the extent of the omission / wrong statement, looses its efficacy and becomes irrelevant---Revised return, before an assessment order was made, was to be treated as a return in circumstances---Reference was answered, accordingly.

(b) Words and phrases---

----"Omission", meaning explained.

Black's Law Dictionary Eighth Edition rel.

Ms. Shaheena Akbar for Appellant.

Ms. Ameena Sohail for Respondent.

Date of hearing: 2nd November, 2015.

2019 P T D 934

[Islamabad High Court]

Before Athar Minallah, J

Messrs The ATTOCK OIL CO. LTD.

Versus

FEDERATION OF PAKISTAN and other

Writ Petition No.4260 of 2017, decided on 16th November, 2018.

(a) Income Tax Ordinance (XLIX of 2001)---

----Ss. 4B & 2(63)---Constitution of Pakistan, Art. 73(3)---Super tax for rehabilitation of temporarily displaced persons---Tax to be levied by law only---Procedure with respect to Money Bill---Bill not deemed to be a money bill---Specific purpose of tax mentioned in the taxing provision---Petitioners impugned imposition of "super-tax" via S.4B of the Income Tax Ordinance, 2001 on the ground, inter alia, that the same was not a "money bill" in terms of Art. 73(3) of the Constitution and was in the nature of a "fee"---Expression "tax" had a wide scope in context of the Income Tax Ordinance, 2001 and mere incorporation of the said levy in the Income Tax Ordinance, 2001 left no doubt that the Legislature intended to treat the same as a "tax" and not as a "fee"---Definition of "tax" given in S.2(63) of the Income Tax Ordinance, 2001, inter alia, included "fee" and the levy imposed by S. 4B of Income Tax Ordinance, 2001 was therefore covered by said definition---Income Tax Ordinance, 2001 was a special law in context of tax on income and its provisions would have overriding effect on any general law and the mechanism for computing tax on companies was also provided for in the Income Tax Ordinance, 2001---Section 4B of the Income Tax Ordinance, 2001 was, therefore, validly inserted in the Act and did not suffer from any illegality---Constitutional petitions were dismissed in circumstances.

Worker's Welfare Funds v. East Pakistan Chrome Tannery (Pvt.) Ltd. PLD 2017 SC 28; Engro Fertilizers Ltd. v. Islamic Republic of Pakistan and Federation of Pakistan Islamabad 2012 CLD 50 and Federation of Pakistan through Secretary M/o Petroleum and Natural Resources and another v. Durrani Ceramics and others 2014 SCMR 1630 distinguished.

(b) Constitution of Pakistan---

----Art. 199---Constitutional jurisdiction of High Court---Scope---High Court while exercising jurisdiction under Art. 199 of the Constitution could not undertake an exercise for computing tax liabilities.

Ali Sibtain Fazli, Sardar Ahmed Jamal Sukhera, Hasham Khan and Ibad ur Rehman for Petitioners.

Hafiz Munawar Iqbal and Babar Bilal for Respondents.

Israr-ul-Haq Malik, Assistant Attorney General.

Shah Bahar, Deputy Commissioner, LTU.

2019 P T D 1187

[Islamabad High Court]

Before Athar Minallah and Noor ul Haq N. Qureshi, JJ

HUB POWER CO. LIMITED

Versus

COMMISSIONER INLAND REVENUE, ISLAMABAD

I.T.R.A. No. 46 of 2014, decided on 14th June, 2016.\

(a) Words and phrases---

----"Deposit", meaning of--- Features of various types of "deposits", explained.

Black's Law Dictionary Eighth Edition rel.

(b) Income Tax Ordinance (XXXI of 1979) [since repealed]---

----Ss. 14, 136 & Second Sched., Part I, Item 76-A---Exemption from total income---Special exemptions for Power Company---Interest or profit derived on deposits---Scope---Question before the High Court was whether "term deposits" held with Banks by Power Company fell within the purview of the exemption provided for in Item 76-A of Part-I of the Second Schedule to the Income Tax Ordinance, 1979---Contention of taxpayer, inter alia, was that the expression "Bank deposits or accounts with financial institutions directly connected with financial transactions relating to project operations" was to be read disjunctively, meaning thereby that the same included all Bank deposits including term deposits---Validity----"Term deposit" was money kept for a specified fixed term with the Bank and profit / interest was earned thereon, and it could not be construed as one of the categories of "Bank deposits" with a financial institution which was directly connected with financial transactions relating to project operations----Legislature did not intend that words "Bank deposits" and "accounts" to be read disjunctively since former did not relate to or identify any specific type of deposit---Legislative intent was to extend benefit of exemption to only such Bank deposits which were directly connected to "financial transactions in relation to project operations"---Reading the words "Bank deposits" and "accounts" disjunctively would render the portion after the word "or" as redundant and the same were to be read conjunctively, and thus "term deposits" would not fall within the ambit of the exemption provided for in Item 76-A of Part-I of the Second Schedule to the Income Tax Ordinance, 1979---Reference was answered, accordingly.

The Australian Alliance Assurance Company v. The Attorney General for Queensland" AIR 1918 Privy Council 352; Mt. Ramanandi Kuer v. Mt. Kalawati Kuer AIR 1928 Privy Council 2; Nagendra Nath Dey v. Suresh Chandra Dey AIR 1932 Privy Council 165; Pakala Narayana Swami v. Emperor AIR 1939 Privy Council 47; Excise and Taxation Officer v. Burmah Shell Storage and Distribution Company of Pakistan 1993 SCMR 338; Mian Muhammad Nawaz Sharif v. President of Pakistan PLD 1993 SC 473; Malik Asad Ali v. Federation of Pakistan PLD 1998 SC 161; 2010 PTD 1924 and 2013 PTD 969 ref.

Khadim Hussain and another v. The Additional District Judge, Faisalabad and others PLD 1990 SC 632; Saifi Development Corporation Ltd. v. Workers' Union PLD 1995 Kar. 347; Muhammad Hussain v. The Additional District judge, Lahore and others PLD 1966 Lah. 128; A and B Food Industries Limited v. Commissioner of Income Tax/Sales, Karachi 1992 SCMR 663; Messrs Mutual Funds's case 2010 PTD 1924; Messrs Shahbaz's case PLD 2013 Sindh 449 = 2013 PTD 969; Pakistan Chrome Tannery's case 2011 PTD 2643 and Messrs Azgard Nine Ltd. v. Pakistan through Secretary and others PLD 2013 Lah. 282 = 2013 PTD 1030 rel.

(c) Interpretation of statutes---

----Words "and" & "or"---Statutory construction---Words "and" & "or" were interchangeable and the word "and" could be construed as "or" and vice versa; if such change was necessary to effectuate obvious intention of Legislature or statutory rules framer

Khadim Hussain and another v. The Additional District Judge, Faisalabad and others PLD 1990 SC 632; Saifi Development Corporation Ltd. v. Workers' Union PLD 1995 Kar. 347 and Muhammad Hussain v. The Additional District judge, Lahore and others PLD 1966 Lah. 128 rel.

Makhdoom Ali Khan, Advocate Supreme Court, Barrister Saad M. Hashmi and Mohsin Nazir for Applicant.

Dr. Farhat Zafar and Sh. Anwar-ul-Haq for Respondent.

2019 P T D 1589

[Islamabad High Court]

Before Aamer Farooq and Mohsin Akhtar Kayani, JJ

ISLAMABAD CLUB, ISLAMABAD through Secretary

Versus

APPELLATE TRIBUNAL INLAND REVENUE, ISLAMABAD and 2 others

Sales Tax Reference No.7 of 2017, decided on 25th April, 2019.

(a) Federal Excise Act (VIII of 2005)---

----Ss. 42 & 34A---SRO No. 655(I)/2007, dated 29.06.2007----Levy, payment and collection of excise duty--- Exemption from payment of excise duty---Special Excise Duty (SED) imposed via SRO No. 655(I)/2007, dated 29.06.2007---Goods manufactured or produced in Pakistan---Restaurant, hotels and social clubs not amenable to pay Special Excise Duty (SED) under SRO No. 655(I)/2007, dated 29.06.2007---Question before the High Court was whether the taxpayer, which was a social club, was amenable to pay Special Excise Duty (SED) on supply of food and beverage---Held, that taxpayer club was not producing or manufacturing goods but rather offered services to its members hence was not liable to pay Special Excise Duty (SED) under SRO No.655(I)/2007, dated 29.06.2007---High Court observed that hotels and restaurants were not amenable to payment of such Special Excise Duty (SED) under S. 42 of the Federal Excise Act, 2005---Reference was answered, accordingly.

Administrator Islamabad Club, through Secretary Islamabad Club, Islamabad v. Mrs. B. Ayisha Mustafa and another Intra-Court Appeal No.49 of 2017); Ishaq Khakwani v. Islamabad Club 2016 CLC 504; Pakistan Services Private Limited v. Pakistan 1985 CLC 1757; Chairman Federal Board of Revenue v. Messrs Al-Technique Corporation of Pakistan Ltd. PLD 2017 SC 99; Defence Authority Club v. Federation of Pakistan 2007 PTD 398; The Indian Hotels Company Ltd. v. The Income Tax Officer, Mumbai (2000) 7 SCC 39; Union of India v. Delhi Cloth and General Mills AIR 1963 SC 791; State of India Himachal Pradesh v. Associated Hotels of India Ltd. AIR 1972 SC 1131; Joint Commercial Tax Officer v. Young Men's Indian Association AIR 1970 SC 1212; Great Bear International Services (Pvt) Ltd. v. Pakistan Telecommunication Authority 2015 CLD 1721; Director, Directorate General of Intelligence and Investigation and others Messrs Al-Faiz Industries (Pvt.), Limited and others 2006 SCMR 129 and Director General Intelligence and Investigation FBR, through Director v. Sher Andas and 20 others 2010 SCMR 1746 ref.

Defence Authority Club v. Federation of Pakistan 2007 PTD 398; Indian Hotels Company Ltd. v. The Income Tax Officer, Mumbai (2000) 7 SCC 39; Union of India v. Delhi Cloth and General Mills AIR 1963 SC 791 and State of Himachal Pradesh v. Associated Hotels of India Ltd. AIR 1972 SC 1131 rel.

(b) Interpretation of statues---

----Fiscal statute---Any doubt or ambiguity in construction/interpretation of fiscal statute had to be resolved in favour of taxpayer.

Chairman Federal Board of Revenue v. Messrs AI-Technique Corporation of Pakistan Ltd. PLD 2017 SC 99 and Messrs Sarwar & Co. (Pvt.) Ltd v. Customs, Central Excise and Sales Tax, Appellate Tribunal Lahore 2006 PTD 162 rel.

Wasim Abid for Applicant.

Adnan Haider Randhawa for Respondents.

2019 P T D 1668

[Islamabad High Court]

Before Athar Minallah, C J and Miangul Hassan Aurangzeb, JJ

COMMISSIONER INLAND REVENUE (LEGAL)

Versus

Messrs PAKISTAN TELECOMMUNICATION COMPANY LIMITED

S.T.R. No.28 of 2014, decided on 30th January, 2019.

Federal Excise Act (VII of 2005)---

----Ss. 3 & 7---Pakistan Telecommunication (Reorganization) Act (XVII of 1996), S. 5(2)(h)---Sales Tax Act (VII of 1990), S. 3---Interconnection Guidelines, 2004, Art. 3.1---Federal excise duty, charging of---Telecommunication services---Interconnection of systems---Order-in-original was passed by authorities for recovery of federal excise duty from taxpayers relating to interconnection of their systems but Appellate Tribunal Inland Revenue dismissed the same---Validity---Federal excise duty and charge thereof was attracted only when call was completed, i.e., when it was answered or received by subscriber of receiving network---On completion of call made by subscriber on one network of service provider to that of other, former was charged entire cost of rendering telecommunication service and same essentially included Federal excise duty, as such same included charges relating to providing facility of interconnection between two distinct networks---Merely agreeing to provide interconnection service to subscribers of two or more service providers did not constitute rendering of telecommunication service---Interconnection of two networks of distinct service providers was for purposes of rendering of telecommunication services to subscribers---On its own same could not be treated as rendering of such service---Authorities misinterpreted concept of interconnection and same was confused with 'rendering of telecommunication services'---Mere interconnection of networks by two service providers was not sufficient to attract Federal excise duty---Appellate Tribunal Inland Revenue had rightly set aside order-in-original---Reference was dismissed accordingly.

Hafiz Munawar Iqbal, Babar Bilal and Saeed Ahmed Zaidi for Applicants/Appellants.

Khalid Anwar, Iftikhar Ahmed Bashir and Ayyaz Shoukat for Respondents.

2019 P T D 1694

[Islamabad High Court]

Before Athar Minallah, C J and Miangul Hassan Aurangzeb, J

KISSAN SUPPORT SERVICES (PVT.) LTD.

Versus

COMMISSIONER INLAND REVENUE, ZONE-III, LTU, ISLAMABAD and another

I.T.R. No. 91 of 2016, decided on 3rd June, 2019.

(a) Income Tax Ordinance (XLIX of 2001)---

----Ss. 132(7), 133 & 221---Reference---Maintainability---Merger, doctrine of---Applicability---Scope---Taxpayer filed application for rectification of judgment before Appellate Tribunal Inland Revenue and same was partially allowed only to the extent of correction of some typographical errors---Validity---Appellate Tribunal Inland Revenue had merely rectified some typographical mistakes therefore, doctrine of merger was irrelevant---Doctrine of merger was based on principle that at one and the same time, not more than one order could be operative---Tax reference under S. 133(1) of Income Tax Ordinance, 2001 was competent within prescribed limitation if question of law had arisen out of an order communicated by Appellate Tribunal Inland Revenue under S. 132(7) of Income Tax Ordinance, 2001 and not an order passed under S. 221 of Income Tax Ordinance, 2001, notwithstanding doctrine of merger---High Court declined to interfere in matter as tax reference was filed under S. 133 of Income Tax Ordinance, 2001 and same was not competent---Reference was dismissed in circumstances.

Commissioner Inland Revenue v. Tariq Mehmood and others 2015 PTD 120; Messrs Hong Kong Chinese Restaurant, Main Boulevard Gulberg, Lahore v. Assistant Commissioner of Income Tax, Circle 6, Lahore and another 2002 PTD 1878; Messrs Pak Saudi Fertilizer Ltd. Karachi v. Commissioner of Income Tax, Karachi 2006 PTD 1343; Messrs Habib Credit and Exchange Bank Limited v. Deputy Commissioner of Income-Tax 2001 PTD 785; Mahmood Barni v. Inspecting Additional Commissioner of Income-Tax, Gujranwala and another 2005 PTD 165; Messrs Airport Support Services v. The Airport Manager, Quaid-e-Azam International Airport, Karachi and others 1998 SCMR 2268; Col. (Retd.) Ayub Ali Rana v. Dr. Carlite S. Pune and another PLD 2002 SC 630; Sahabzadi Maharunisa and another v. Mst. Ghulam Sughran and another PLD 2016 SC 358; Commissioner of Income Tax, Karachi v. Messrs Shadman Cotton Mills Ltd. Karachi through Director 2008 SCMR 204 and Commissioner of Income Tax Company's II, Karachi v. Messrs National Food Laboratories 1992 PTD 570 ref.

(b) Interpretation of statutes---

----Fiscal statute---Equity or presumption---Applicability---Provisions of a fiscal statute are required to be interpreted literally and equity or presumption are alien thereto---If a provision of taxing statute can have two reasonable explanations, then one which is favorable to taxpayer has to be accepted---Any ambiguity is required to be resolved in favour of taxpayer.

Mukhtar Ahmad Gondal for Applicant.

Saeed Ahmed Zaidi for Respondents

2019 P T D 1774

[Islamabad High Court]

Before Athar Minallah, C.J. and Miangul Hassan Aurangzeb, J

MARI PETROLEUM COMPANY LIMITED through General Manager Finance, Islamabad

Versus

FEDERATION OF PAKISTAN through Secretary Revenue, Islamabad and 3 others

I.C.As. Nos. 214 to 216 of 2019, decided on 27th May, 2019.

Income Tax Ordinance (XLIX of 2001)---

----Ss.43 read with S.122(5-A)---Constitution of Pakistan, Art.199---Constitutional jurisdiction of High Court---Scope---Show-cause notice---Maintainability of Constitutional petition against a show-cause notice issued by a Public Department/Functionary---Scope---Issuance of a show-cause notice did not amount to an adverse action---Constitutional petition against mere issuance of show-cause notice was not maintainable unless the same was wholly without jurisdiction and in violation of a statute---Where there existed no exceptional circumstances which would warrant interference in a show-cause notice, then such Constitutional petition was not maintainable---Contention that under garb of a show-cause notice coercive action would be taken against a petitioner was a mere apprehension and High Court in its constitutional jurisdiction could not act upon mere apprehensions.

2018 PTD 287; Mir Nabi Bakhsh Khan v. Branch Manager, National Bank of Pakistan Jhatpat and others 2000 SCMR 1017; Zaver Petroleum Corporation Limited v. Federal Board of Revenue 2016 PTD 2332; Al-Ahram Builders (Pvt.) Ltd. v. Income Tax Appellate Tribunal 1993 SCMR 29; Pakistan Tobacco Company Limited v. Government of Pakistan 1993 SCMR 493; Deputy Commissioner of Income Tax/Wealth Tax, Faisalabad v. Punjab Beverage Company (Pvt.) Ltd. 2007 PTD 1347; Irum Shah Shahadi v. Principal School of Nursing, Mayo Hospital, Lahore 2017 PLC (C.S.) 943; Apna T.V. Channel (Private) Limited v. Pakistan Electronic Media Regulatory Authority 2017 CLC 199 and Muhammad Aslam v. Federation of Pakistan and others 2017 PTD 803 ref.

Barrister Omer Azad Malik for Appellant.

Babar Bilal for Respondents.

2019 P T D 2082

[Islamabad High Court]

Before Athar Minallah, C J

SHALIMAR RECORDING AND BROADCASTING COMPANY through Managing Director, Islamabad

Versus

The COMMISSIONER INLAND REVENUE (APPEALS), LARGE TAX PAYERS UNIT (LTU), ISLAMABAD and 2 others

Writ Petition No. 3195 of 2018, heard on 8th March, 2019.

(a) Income Tax Ordinance (XLIX of 2001)---

----Ss. 131(5) second proviso [as inserted by Finance Act (XXX of 2018)] & S.132(2A) [as inserted by Finance Act (VII of 2005)]---Constitution of Pakistan, Art. 199---Constitutional petition---Statutory right of appeal, decision of---Time-frame---Mandatory or Directory nature of statute---Intention of Legislature---Taxpayers were proceeded against by authorities who challenged same before Appellate Tribunal Inland Revenue seeking extension of injunctive orders under S. 131(5) of Income Tax Ordinance, 2001---Appellate Tribunal Inland Revenue was unable to decide issue within statutory timeframe given under S. 132(2A) Income Tax Ordinance, 2001---Validity---Time prescribed for validity of an order passed regarding recovery of tax and deciding appeal is same and S. 131 of Income Tax Ordinance, 2001, therefore, could not be read in isolation---Provisions of S. 131 of Income Tax Ordinance, 2001 had to be examined and interpreted in context of other provisions related to Appellate Tribunal Inland Revenue so that legislative intent and scheme could be discovered---Both Ss. (131 & 132(2A)) prescribed time limitations and if time specified in second proviso of S. 131 of Income Tax Ordinance, 2001 was treated as mandatory and otherwise in case of 132(2A) of Income Tax Ordinance, 2001 then it would give rise to an anomalous and odd situation---Appeal might not have been decided within time prescribed under S. 132(2A) of Income Tax Ordinance, 2001 because of acts or omissions on part of department or Appellate Tribunal Inland Revenue and yet taxpayer would be exposed to hardship by depositing liability---If time prescribed under S. 132(2A) of Income Tax Ordinance, 2001 was treated as mandatory, it would lead to an even more preposterous consequence because in such an eventuality party that exercised statutory right of appeal would be left without a remedy because proceedings would have abated on lapse of time---Statutory right of appeal would become redundant and losing right of appeal before Appellate Tribunal Inland Revenue was of great significance having regard to scheme of Income Tax Ordinance, 2001---Legislature, therefore, could not have intended to deprive taxpayer from such an important appellate remedy by making time prescribed under S. 132(2A) of Income Tax Ordinance, 2001 as mandatory even when default was not on the part of taxpayer---Provisions of third proviso to S. 131(5) of Income Tax Ordinance, 2001 could not be interpreted in isolation and it had nexus with S. 132(2A) of Income Tax Ordinance, 2001---High Court declared that time prescribed under S. 132(2A) of Income Tax Ordinance, 2001 and second proviso to S. 131(5) of Income Tax Ordinance, 2001 were directory and not mandatory---If delay in deciding appeal beyond time prescribed under S. 132(2A) of Income Tax Ordinance, 2001 was attributed to person who preferred appeal and not department or tribunal then latter would be at liberty to vacate an order staying recovery after affording opportunity of hearing---High Court remanded case to the Appellate Tribunal Inland Revenue to afford an opportunity to determine whether delay in deciding appeal beyond prescribed time was attributed to taxpayers---Constitutional petition was allowed accordingly.

The Collector of Sales Tax, Gujranwala and others v. Messrs Super Asia Mohammad Din and Sons and others 2017 PTD 1756; Dowell Schlumberger (Western) S.A. v. Federation of Pakistan and others 2016 PTD 1702; Sun-Rise Bottling Company (Pvt.) Ltd. through Chief Executive v. Federation of Pakistan and 4 others 2006 PTD 535; Messrs Pearl Continental Hotel, Lahore through Director Finance and another v. Customs, Excise and Sales Tax Appellate Tribunal, Lahore and another 2005 PTD 1368; Pakistan Telecom Mobile Limited v. Federation of Pakistan through Chairman, Federal Board of Revenue and others W.P. No. 2567/2018; The State through Regional Director ANF v. Imam Bakhsh and others 2018 SCMR 2039; Malik Umar Aslam v. Mrs. Sumaira Malik and others 2014 SCMR 45; Maulana Nur-ul-Haq v. Ibrahim Khalil 2000 SCMR 1305; Ghulam Hussain v. Jamshaid Ali and others 2001 SCMR 1001 and In the matter of Human Rights Cases Nos.4668/2006, 1111/2007 and 15283-G/2010 PLD 2010 SC 759 ref.

(b) Interpretation of statutes---

----Taxation statute---Legislative intent---Principle---If a person sought to be taxed comes within letter of law then latter must be taxed no matter how great hardship appears to be---Conversely, if State is seeking to recover tax then it has to bring subject within letter of law otherwise no fiscal burden can be imposed---Interpretation of a taxation statute cannot be based on presumptions and court has to look at words of statute and accordingly interpret them---Interpretation ought to be in light of what has been expressed. Shahid Mehmood Khokhar, Saad M. Hashmi, Sardar Abdul Wahab Farid, Nauman Rafique, Sufyan Qayyum, Adnan Haider Randhawa and Riffat Hussain Malik for Petitioners.

Barrister Waqar Ahmed Butt, Saeed Ahmed Zaidi, Syed Ishfaq Hussain Naqvi, Sultan Mazhar Sher, Manzoor Hussain, Waris Khokhar, Riaz Hussain and Azam Bopera for Respondents.

Ch. Saifullah Gondal, A.A.G. for Respondents.

2019 P T D 2313

[Islamabad High Court]

Before Aamer Farooq and Mohsin Akhtar Kayani, JJ

COMMISSIONER INLAND REVENUE, ZONE-II, ISLAMABAD

Versus

Messrs WISE COMMUNICATION SYSTEM, ISLAMABAD

Sales Tax References Nos. 6 to 11 of 2012, decided on 7th March, 2019.

(a) Sales Tax Act (VII of 1990)---

----Ss. 7, 8(2) & 47---Sales Tax Rules, 2006, Rr. 24 & 25---Notification SRO No. 648(I)/2005 dated 01-07-2005---Apportioning of services---Refund of input tax---Amendment in law---Retrospective effect---Dispute between parties was with regard to apportioning of excisable service from non-excisable while claiming of refund of input tax---Validity---Any procedural amendment which affected vested rights was to operate prospectively---Amendments made in Sales Tax Rules, 2006 and S. 7 of Sales Tax Act, 1990 even if regarded as procedural, had adversely effected refund already taken by taxpayers and same could not be made applicable retrospectively and was to be applied prospectively---High Court answered questions formulated by department in negative---Reference was dismissed in circumstances.

Sardar Sher Bahadur Khan v. Election Commission of Pakistan PLD 2018 SC 97; WAPDA v. Irtiqa Rasool Hashmi 1987 SCMR 359; Fazal Din & Sons (Pvt.) Ltd. v. Federal Board of Revenue 2009 SCMR 978; Super Asia v. Federation of Pakistan 2017 PTD 1756 and Aftabuddin Qureshi and another v. Mst. Rachel Joseph and another PLD 2001 SC 482 ref.

Messrs Bestway Cement Limited v. Additional Commissioner Inland Revenue and others (Writ Petition No.67 of 2016) rel.

(b) Interpretation of statutes---

----Taxing statute---Procedural amendment in taxing statute was to operate prospectively.

Hafiz Munawar Iqbal for Applicant (in S.T.R. No.06 of 2012).

Barrister Ali Sibtain Fazli for Applicant (in S.T.Rs. Nos.7 to 11 of 2012).

Barrister Afzal Hussain and ArsIan Binyamin Bhatti for Respondents (in S.T.R. No.06 of 2012).

2019 P T D 301

[Sindh High Court]

Before Munib Akhtar and Yousaf Ali Sayeed, JJ

DIRECTOR GENERAL CUSTOMS VALUATION and another

Versus

Messrs AL-AMIN CERA

Special Customs Reference Application 744 of 2016, decided on 19th March, 2018.

(a) Customs Act (IV of 1969)---

----Ss. 25-A, 25-D & 194---Anti-Dumping Duties Act (XIV of 2015), Preamble---Reference---Customs value, determination of---Appellate and revisional jurisdiction---Distinction---Dispute was with regards to determination of value of goods in question among Customs Authorities, importers and local manufacturers---All the parties invoked jurisdiction of High Court against order passed by Customs Appellate Tribunal---Validity---Local manufacturers had no standing to ask for determination and/or enhancement of customs value of any goods under S. 25-A or S. 25-D of Customs Act, 1969; Said manufacturers for such purpose could not file an application or petition under either sections of the Customs Act, 1969 or intervene or be allowed to ask to participate in any pending proceedings or be made a party thereto whether as stakeholders or otherwise---Interest of local manufacturers was to have value set at as high a level as possible on ground that transaction value or value set in valuation ruling was otherwise too low and was causing them injury---Such matter was exclusively in domain of Anti-Dumping Duties Act, 2015---Neither Director Valuation nor Collector of Customs or Director-General had any jurisdiction in such regard---Local manufacturers could not be allowed to circumvent and evade requirements of Anti-Dumping Duties Act, 2015 by asking for a customs value under S. 25-A of Customs Act, 1969 or any enhancement therein---Provision of S. 25-D of Customs Act, 1969 could only apply if customs value was determined under S. 25-A of Customs Act, 1969 by Collector of Customs or by Director Valuation---No direct or original power was conferred under S. 25-D of Customs Act, 1969 on Director-General to himself determine customs value for goods for which no valuation ruling was issued---Under S. 25-A(3) of Customs Act, 1969 jurisdiction of Director-General was only to determine customs value if there was a conflict in value determined under S. 25-A(1) of Customs Act, 1969---Director-General had no power to determine customs value for any goods in addition to or other than those for which a valuation ruling had been issued under S. 25-A of Customs Act, 1969---Director-General, under S. 25-D of Customs Act, 1969 was to allow lower of two values to stand and set aside the other---Customs value was to be determined for a specific purpose, i.e., levy of customs duty and other taxes as same was part of charging scheme---If two conclusions were reasonably possible as regards a charging provision, of a fiscal statute, then one more favourable to taxpayer was to be applied, i.e., adopting lower of two values---High Court dismissed applications filed by local manufacturers and authorities whereas, those of importers were allowed---Reference was allowed accordingly.

Danish Jahangir v. Federation of Pakistan and others 2016 PTD 702 and Saadia Jabbar v. Federation of Pakistan and others 2018 PTD 1746 ref.

(b) Customs Act (IV of 1969)---

----Ss. 25-A & 25-D---Customs valuation, determination of---Jurisdiction---When Director Valuation or Collector of Customs or Director-General are acting in terms of S. 25-A or 25-D of Customs Act, 1969, they are only establishing value of imported goods for a specific purpose.

(c) Customs Act (IV of 1969)---

----S. 25-A(3)---Customs value, conflict in---Resolution---Scope---Jurisdiction conferred under S. 25-A(3) of Customs Act, 1969 is exercisable only if there are two customs values, one determined by Director Valuation and the other by Collector of Customs.

(d) Customs Act (IV of 1969)---

----S. 25-D---Regulation of customs value---Suo motu power---Scope---Director-General under S. 25-D of Customs Act, 1969 can only exercise jurisdiction if a revision petition is filed.

(e) Customs Act (IV of 1969)---

----Ss. 25-A & 25-D---Appeal and revision---Distinction---Whole of controversy, in entirety of factual and legal issues involved is open before appellate authority in first appeal---Appellate authority can, if so deems appropriate, substitute its own decision for that of forum whose decision is being appealed against---Revision does not operate in such broad terms and it is confined to considering decision under challenge within a more restricted scope.

(f) Interpretation of statutes---

----Fiscal enactment---If two conclusions were reasonably possible as regards a charging provision of a fiscal statute, then one more favourable to taxpayer was to be applied, i.e., adopting lower of two values. Ms. Masooda Siraj, Kashif Nazeer, Muhammad Khalil Dogar, Sohail Muzaffar, Zafar Hussain, Ms. Fozia Rasheed, Afsheen Aman and Rashid Arfi for Applicant.

Asim Mansoor Khan, DAG.

Ghulam Shabbir, AAG.

Syed Imran Sajad Bokhari, Additional Director Valuation, Abdul Qadoos Sheikh, Deputy Director Valuation, Iqbal Ali, Principal Appraiser Valuation and Ilyas Ahsan Khan, Departmental Representative

2019 P T D 347

[Sindh High Court]

Before Muhammad Shafi Siddiqui, J

UMER SPINNING MILLS (PVT.) LIMITED and others

Versus

FEDERATION OF PAKISTAN and others

Suits Nos.1763 and 1875 of 2016, decided on 5th September, 2016.

Customs Act (IV of 1969)---

----S. 217---Notification No. SRO 1125(I)/2011 dated 31-12-2011---Notification No. SRO 184(I)/2013 dated 28-02-2013---Notification No. SRO 491(I)/2016 dated 30-06-2016---Specific Relief Act (I of 1877), Ss. 42 & 54---Import of raw material for spinning---Plaintiffs/spinners claimed that they were entitled to benefits of Notification No. SRO 1125(I)/2011 dated 31-12-2011; Notification No. SRO 184(I)/2013 dated 28-02-2013 and Notification No. SRO 491(I)/2016 dated 30-06-2016---Suit for declaration and injunction---Maintainability---Bar contained in S. 217 Customs Act, 1969 was not absolute and suit for declaration and injunction under Ss.42 & 54 of Specific Relief Act, 1877, was maintainable---Stages between ginned cotton and spinning were Phutti, Ginning, Carding, Combing, Spinning and Weaving---Ginned cotton was available in form of bales---Ginning was a process which separated seeds and removed trash from fiber---Ginned cotton fiber which was a product of ginning was called 'Lint' and same was then compressed into bales which had particular measurement in terms of its length and weight---Two stages of carding and combing of bales as referred by authorities were not such which were essential to be performed so that it could form raw material for spinners---When cotton was ginned and converted into bales, whether or not it was carded and combed, it had become raw material for spinners---Plaintiffs were entitled for benefit of Notification No. SRO 1125(I)/2011 dated 31-12-2011 as amended from time to time---Suit for declaration was decreed in circumstances.

Khalid Jawed Khan for Plaintiffs (in Suit No.1763 of 2016).

Ameen M. Bandukda for Plaintiffs (in Suit No.1875 of 2016).

Abdul Qadir Leghari, Standing Counsel for Defendant No. 1

Kashif Nazeer along with Muhammad Ilyas for Defendant No.2.

2019 P T D 389

[Sindh High Court]

Before Aqeel Ahmed Abbasi and Nazar Akbar, JJ

YOUNG'S (PRIVATE) LIMITED and others

Versus

PROVINCE OF SINDH and others

Const. Petitions Nos. D-2421 of 2016 along with 4524 of 2015, 1070, 1585, 2247, 2687 and 3462 of 2016, 2167, 2532 and 2800 of 2017, decided on 18th August, 2017.

(a) Interpretation of statutes---

----Fiscal statutes---Principles of interpretation of taxing statutes are different from principles of interpretation of non-taxing statutes---If in a taxing statute a charge or burden is created, principle of restrictive interpretation is attracted---Tax can be levied by clear and unambiguous legislation and in case of any doubt or ambiguity in matter of levy of tax, the same is to be resolved against revenue and in favour of subject/taxpayer, upon whom burden of such tax is created through such enactment.

State of Haryana v. State of Punjab and another (2002) 2 Supreme Court Cases 507; Defence Authority Club, Karachi and 5 others v. Federation of Pakistan and 2 others 2007 PTD 398; Pakistan Television Corporation Limited v. Commissioner Inland Revenue (Legal), LTU, Islamabad 2017 SCMR 1136; 2017 PTD 1372; Chairman, Federal Board of Revenue, Islamabad v. Al-Technique Corporation of Pakistan Ltd. PLD 2017 SC 99; Commissioner of Income Tax v. Gilani Transport Company 2017 SCMR 197 and 2017 PTD 1540 rel.

(b) Sindh Sales Tax on Services Act (XII of 2011)---

----Ss. 2 (72B), 2 (72C), 2 (79), 3, 4, 5, 8, 9, First Schedule Tariff Heading 9806.3000 & Second Schedule Part-B---Constitution of Pakistan, Arts. 70, 73, 142 & Fourth Schedule [as amended by Constitution (Eighteenth Amendment) Act, 2010]---Provincial legislation---Renting of immovable property---Services---Economic activity---Petitioners were owners of immovable properties who were aggrieved of imposing of sales tax under the heading of services on rental income from said properties---Validity---Scope of Provincial Legislation was enhanced while abolishing Concurrent Legislative List from Fourth Schedule to the Constitution---Express restriction upon Provincial Legislation was imposed to the extent of Federal Legislative List in Fourth Schedule to the Constitution---Term 'economic activity' included supply of moveable property by way of lease, license or similar arrangement but supply of immovable property by way of lease, license or similar arrangement was excluded by legislature from the purview of definition of term 'economic activity'---Mere renting of immovable property by landlord to tenant for consideration (rent) did not involve any element of service or taxable service or economic activity as defined in Sindh Sales Tax on Services Act 2011---Notice of recovery of sales tax under Sindh Sales Tax on Services Act, 2011, issued by authorities was without lawful authority---Mere letting out of immovable property by landlord to a tenant on rent for consideration did not involve any element of providing any taxable services---Amount of rent received by landlord from tenant could not be subjected to tax while invoking provision of S.2(72C) of Sindh Sales Tax on Services Act, 2011 read with Tariff Heading 9806.3000 of First Schedule and Part-B of Second Schedule to Sindh Sales Tax on Services Act, 2011---Constitutional petition was allowed in circumstances.

Iftikhar Ahmed and others v. President, National Bank of Pakistan and others PLD 1988 SC 53; Collector Sales Tax and Federal Excise v. Messrs Abbot Laboratories (Pakistan) Ltd., Karachi 2010 PTD 592; Superintendent, Central Excise, Sheikhupura v. Fauji Sugar Mills, Sangla Hills, Sheikhupura and others 2016 SCMR 121 = 2016 PTD 564; Commissioner of Income Tax Legal Division, Lahore and others v. Khurshid Ahmed and others PLD 2016 SC 545 = 2016 PTD 1393; Messrs Pakistan Begverage Limited Karachi v. Large Taxpayer Unit (L.T.U.), Karachi 2010 PTD 2673; Agha Syed Mushtaque Ali Shah v. Mst. Bibi Gul Jan and others 2016 SCMR 910; Pakistan International Freight and Forwarders Association v. Province of Sindh and another 2017 PTD 1; Purshottam Das Malpani v. Union of India and others (2012) 52 VST 409, (Raj.); Messrs Colony Sugar Mills Ltd. through Deputy Manager v. Province of Punjab and 5 others 2017 PTD 406; Badshah Gul Wazir v. Government of Khyber Pakhtunkhwa and others PLD 2014 Pesh. 210; Muhammad Khalid Qureshi v. Province of Punjab and another 2017 PTD 805; Fecto Belarus Tractor Ltd. v. Government of Pakistan and others PLD 2005 SC 605 = 2005 PTD 2286; K. A. Abbas v. The Union of India and another AIR 1971 SC 485; Akhtar Ijaz Khan v. Station House Officer 2015 YLR 1919; Muhammad Ramzan v. The State PLD 2007 Sindh 1; Abdul Sattar Dadabhoy and 2 others v. Director General, National Accountability Bureau and 2 others PLD 2017 Sindh 331; Pakistan Peoples Party v. Government of Punjab and others PLD 2014 Lah. 330 and Lahore Development Authority through D.G. and others v. Imrana Tiwana 2015 SCMR 1739; Oxford English Dictionary, Revised Eleventh Edition; Judicial Dictionary Thirteenth Edition by K J Aiyar; Coal Mines Provident Fund Commissioner v. Ramesh Chander Jha AIR 1990 SC 648 and Dictionary i.e. Legal Terms and Phrases, 2006 Edition ref.

(c) Words and phrases---

----"Service"---Connotation---Term service refers and relates to performance of an act by any person for the benefit of another person either for consideration or otherwise.

Black's Law Dictionary, Sixth Edition and Chambers Twentieth Century Dictionary ??

Aminuddin Ansari and Khalid Javed Khan for Petitioners (in C.P. No.D-2167 of 2017).

Amjad Jawaid Hashmi for Petitioners (in C.P. No.D-3462 of 2016).

Muhammad Younus and Taimur Ali Mirza for Petitioners (in C.P. No.D-2800 of 2017).

Farooq H. Naek for Respondent No. 2 (in C.P.No.D-2167 of 2017).

Mohsin Qadir Shahwani for the Respondent (in C.Ps. Nos.4524 of 2015, 1070, 2687 and 3462 of 2016).

Muhammad Najeeb Jamali for the respondent (in C.Ps. Nos.1585 and 2421 of 2016).

Muhammad Sarfaraz Ali Metlo and Saifullah, A.A.-G. for Respondents.

Mir Hussain, Assistant Attorney General for Respondents.

2019 P T D 447

[Sindh High Court]

Before Aqeel Ahmed Abbasi and Nazar Akbar, JJ

COMMISSIONER INLAND REVENUE, ZONE-II, L.T.U., KARACHI

Versus

Messrs INDEPENDENT NEWSPAPER CORP. (PVT.) LTD., KARACHI

I.T.R.A. No.140 of 2012, decided on 6th November, 2017.

Income Tax Ordinance (XLIX of 2001)---

----Ss. 119, 133(1), 182 & 194---Reference---Penalty, imposition of---Fault of officials---Effect---Department was aggrieved of order passed by Appellate Tribunal Inland Revenue whereby application for extension of time for filing return by taxpayer was accepted and taxpayer was declared to be not liable to make payment towards penalty in terms of S. 182 of Income Tax Ordinance, 2001---Validity---When taxpayer sought further time, while filing application in writing under S. 119 of Income Tax Ordinance, 2001, on the same grounds, which were earlier found to be reasonable, the Taxation Officer failed to exercise authority vested in him in terms of Ss. 119(3) & (4) of Income Tax Ordinance, 2001, either to accept such request of taxpayer or to decline the same in writing---If such request of taxpayer seeking extension of time for filing return was declined by concerned Taxation Officer, the taxpayer would be entitled to approach Chief Commissioner Inland Revenue for seeking extension of time in terms of S. 119(4) of Income Tax Ordinance, 2001---Taxpayer was prevented from seeking statutory remedy on account of inaction on the part of concerned Taxation Officer---High Court declined to give the department benefit and advantage of their own wrong i.e. non-compliance of legal obligation---Taxpayer could not be held responsible or penalized for such default by Taxation Officer---Department could not impose penalty under S. 182 of Income Tax Ordinance, 2001, for the extended period---High Court declined to interfere in order passed by the Appellate Tribunal Inland Revenue as the same did not suffer from any factual or legal error---Reference was dismissed in circumstances.

S. Asif Ali for Applicant.

S. Riazuddin for Respondent.

2019 P T D 463

[Sindh High Court]

Before Aqeel Ahmed Abbasi and Mrs. Ashraf Jahan, JJ

Messrs AHMED CNG STATION

Versus

FEDERATION OF PAKISTAN through Secretary (Revenue Division) and 4 others

C.P. No.D-2099 of 2013, decided on 8th October, 2018.

(a) Constitution of Pakistan---

----Art. 199---Constitutional jurisdiction of High Court---Scope---Extraordinary jurisdiction of High Court under Art. 199 of the Constitution cannot be invoked in odd cases as a matter of right, course or routine unless there is violation of Fundamental Rights guaranteed under the Constitution or principles of natural justice or an aggrieved party can demonstrate that order in question, action or inaction of public functionary suffers from jurisdictional defect or same is totally illegal and there is no other adequate alternate remedy available in law---Conditions mentioned in Art. 199 of the Constitution are meant for purposes of regulation of jurisdiction of courts and availability of other remedy is one of such limitations---Where a statute creates right and also provides mechanism for its enforcement, including right of appeal, party complaining of breach of such statute must first avail remedy provided by statute for such breach before invoking Constitutional jurisdiction of High Court.

(b) Customs Act (IV of 1969)---

----Ss. 179 & 193---Constitution of Pakistan, Art. 199---Constitutional petition---Maintainability---Alternate efficacious remedy, availability of---Petitioner was importer of CNG cylinders who imported consignment of CNG cylinders and was aggrieved of order-in-original passed by adjudicating officer---Validity---Petitioner failed to challenge orders in question by filing appeal under the law---Petitioner also failed to give any reasonable justification nor could explain as to why he did not approach the court promptly and had chosen to challenge recovery notices issued pursuant to orders-in-original after expiry of period of limitation provided for filing an appeal---Petitioner approached High Court with unclean hands, bypassing statutory remedy of appeal after expiry of period of limitation provided for an appeal without any lawful justification---High Court declined to interfere in the matter---Constitutional petition was dismissed in circumstances.

Khalid Mehmood v. Colector of Customs House, Lahore 1999 SCMR 1881; Syed Match Company Limited v. Authority under Payment of Wages Act and others 2003 SCMR 1493 and Export Promotion Bureau v. Qaiser Shafiullah 1994 SCMR 859 rel.

Muhammad Afzal Awan for Petitioner.

Mir Hussain Abbasi, Asst. Attorney General for Respondents.

Iqbal Khurram for the State.

2019 P T D 582

[Sindh High Court]

Before Fahim Ahmed Siddiqui, J

MUHAMMAD BABAR KHAN

Versus

THE STATE

Criminal Miscellaneous Application No. 295 of 2013, decided on 22nd December, 2017.

Customs Act (IV of 1969)---

----S. 32---Criminal Procedure Code (V of 1898), S. 265-K---Mis-declaration---Fraud---Intention---No revenue loss---Power of court to acquit accused at any stage---Scope---Prosecution case against accused was that he filed duty drawback claims before Federal Tax Ombudsman although he had already got encashed said claims from the department---Plea of accused was that he was unaware about the claim being encashed---Validity---Report of Investigating Officer revealed that accused had furnished an old and inaccurate pendency list of rebate claims, it was not submitted before any Customs Officer but before Federal Tax Ombudsman and it was filed unintentionally, as such S.32, Customs Act, 1969 was not attracted---No penalty under S. 32, Customs Act, 1969 could be imposed unless it was shown that mis-declaration was made to a Customs Officer with intention to avoid payment of public revenue---No chance or likelihood of conviction existed, therefore, accused was acquitted of the charge.

2006 PTD 378 ref.

2003 PTD 552 and 2004 PTD 2977 rel.

Muhammad Rafi Kamboh for Applicant.

M. Taseer Khan, Special Prosecutor Customs.

2019 P T D 741

[Sindh High Court]

Before Aqeel Ahmed Abbasi and Zulfiqar Ahmed Khan, JJ

SULTAN AHMED through General Attorney

Versus

PROVINCE OF SINDH through Secretary Revenue, Karachi and 4 others

Constitutional Petition No.D-1691 of 2018, decided on 28th November, 2018.

(a) Registration Act (XVI of 1908)---

----Ss. 17 & 47---Registration of document---Time from which registered document operates---Scope---Registered document operates from time when it was presented and executed before concerned Sub-Registrar after completing all codal formalities and payments of required duties, taxes and fees etc., and not from date of registration of document.

Ghulam Rasool and others v. Akbar Ali and others 2011 SCMR 794 ref.

(b) Income Tax Ordinance (XLIX of 2001)---

----S. 236-W [as inserted by Income Tax (Fourth Amendment) Act (XLIX of 2016)]---Registration Act (XVI of 1908), S. 17---Registration of sublease---Withholding of deed by Registration authorities---Petitioner was aggrieved of withholding of sublease deed registered with Sub-Registrar for non-payment of income tax---Validity---Authorities were not justified to withhold documents of petitioner for a long period when all required duties and taxes, including CVT, income tax, registration fee and scanning fee etc., were paid either before presentation or at the time of execution of such documents before Sub-Registrar---Authorities could not require petitioner to make further payment of income tax under S.236-W of Income Tax Ordinance, 2001 which was inserted through amendment---After execution of sublease deeds, while applying provisions of S.236-W of Income Tax Ordinance, 2001 retrospectively, in respect of transactions which stood completed for practical and legal purposes prior to such amendment---Constitutional petition was allowed in circumstances.

Dy. District Officer (Revenue) Lahore and others v. Raja Muhammad Yousuf and others 2016 SCMR 203 and Abdul Sattar Noor Muhammad and Co. and others v. Federation of Pakistan and others 1999 SCMR 2345 ref.

Muhammad Suhail Hassan for Petitioner.

Zulfiqar Ali Khan for Respondents.

Saifullah, A.A.G. and Mir Hussain, Asstt. Attorney General for Respondents.

Date of hearing: 28th November, 2018.

2019 P T D 760

[Sindh High Court]

Before Muhammad Junaid Ghaffar, J

INDUS LYALLPUR LTD. and another

Versus

FEDERATION OF PAKISTAN and others

Suit No. 1979 and C.M.A. No. 12791 of 2016, decided on 30th November, 2018.

Sales tax---

----Civil Procedure Code (V of 1908), S. 114 & O. XLVII, R. 1---No. SRO 1125(I)/2011, dated 31.12.2011---Entitlement of zero rating of sales tax in terms of SRO No. 1125(I)/2011, dated 31.12.2011---Scope---Review---Mere filing of a review petition before the Supreme Court did not create any right in favour of department/party filing the same and could restrain the High Court from following its own earlier orders.

Searle IV Solution (Pvt.) Ltd. and others v. Federation of Pakistan and others 2018 SCMR 1444 and The Collector, Model Customs Collectorate and 2 others v. Messrs Naveena Industries Ltd. and others 2017 PTD 2123 ref.

Ameen M. Bandukda for Plaintiffs.

Umar Zad Gul Kakar, D.A.G. for Defendant No.1.

Ms. Masooda Siraj for Defendants Nos. 2 and 4.

Date of hearing: 25th October, 2018.

2019 P T D 787

[Sindh High Court]

Before Aqeel Ahmed Abbasi and Khadim Hussain M. Shaikh, JJ

Messrs APPLE PAPER PRODUCTS (PVT.) LTD. through Director Chief Executive Officer

Versus

FEDERATION OF PAKISTAN through Chairman and 2 others

Constitutional Petition No.D-6303 of 2016, decided on 29th November, 2016.

Sales Tax Act (VII of 1990)---

----Ss. 40 & 38---Access to premises of registered person---Search under warrant---Exercise of powers under Ss. 38 & 40 of the Sales Tax Act, 1990---Limits to jurisdiction of officers under S. 38 of the Sales Tax Act, 1990---Obtaining of custody of records / documents of registered persons by sales tax officers---Scope----Sections 38 & 40 of the Sales Tax Act, 1990 catered to different situations: Before invocation of provisions of S. 38 of the Sales Tax Act, 1990, sales tax officers must have reasonable cause to believe that visit to premises of registered person was warranted, which had to be more than mere hunch or suspicion, and such reason(s) must be recorded in writing---Such visit under S. 38 of the Sales Tax Act, 1990 must be confined to inspection of record and documents that were in plain sight or those which were voluntarily made available for inspection by person(s) present at the premises on request---Custody of record / documents within meaning of S. 38 of the Sales Tax Act, 1990 could only be taken of such items which were available in plain sight and those voluntarily made available and receipt had to be issued for such record---Department had no power under S. 38 of the Sales Tax Act, 1990 to compel production of any record or document that was not in plain sight or was not voluntarily made available and therefore record or documents taken into custody under compulsion in such a case could not be used for any purpose whatsoever---Search warrant may be obtained under S. 40 of the Sales Tax Act, 1990 however it was a necessary requirement under S. 40 of the Sales Tax Act, 1990 that it could only be invoked if a proceeding was pending against a registered person, and the same was not required under S. 38 of Sales Tax Act, 1990.

Aqeel Ahmed Khan for Petitioner.

Mir Hussain, Standing Counsel.

Muhammad Aqeel Qureshi along with Amjad Ali, Deputy Commissioner, Inland Revenue R.T.O., Karachi for Respondent.

Date of hearing: 29th November, 2016.

2019 P T D 903

[Sindh High Court]

Before Muhammad Junaid Ghaffar, J

AZEE SECURITIES (PVT.) LTD. through Authorized Officer

Versus

FEDERATION OF PAKISTAN through Secretary of Finance, Revenue Division and 3 others

Suit No.1277 and C.M.A. No.9428 of 2018, decided on 11th October, 2018.

(a) Income Tax Ordinance (XLIX of 2001)---

----Ss. 214C, 177 & 120---Civil Procedure Code (V of 1908) O. XXXIX Rr. 1 & 2---Federal Board of Revenue Audit Policy, 2017---Selection for audit---Disclosure of parameters for selection for audit---Application of S. 214C(1A) of the Income Tax Ordinance, 2001---Interim injunction against audit of taxpayer under Income Tax Ordinance, 2001---Scope---Plaintiff / taxpayers' sought interim injunction to restrain Department from proceeding any further on notices for audit issued to the plaintiffs under S. 214C of the Income Tax Ordinance, 2001 and in accordance with the Department's Audit Policy of 2017---Contention of plaintiffs / taxpayers, inter alia, was that the Department had not revealed the parameters for selection and that S. 214C(1A) was ultra vires the Constitution---Validity----Under S. 214C(1A), it was not mandatory for the Department to disclose and notify parameters for selection of cases for audit purposes---Plaintiffs were seeking interim injunction, however they were unable to make out prima facie case for the same as the contention of plaintiffs was a mere challenge to Constitutionally of a law validity enacted by the Legislature---Balance of convenience also did not lie in favour of the plaintiffs and irreparable loss/injury would be caused to the Department instead of the plaintiffs, as at the present moment, it was only the conduct of audit with which the plaintiffs were aggrieved of ---Any injunctive order in the nature of restraint and directing the defendant not to conduct audit, when the same is being done on the basis of a provision which for the time being is validly existing, would cause irreparable loss to the exchequer---Conduct of audit was not an adverse action or order, hence no irreparable loss would be caused to plaintiffs---No such relief could be granted at such stage of the proceedings whereby the law itself could be suspended by Court---Applications under O. XXXIX, Rr. 1 & 2, C.P.C. were dismissed, in circumstances.

Treet Corporation v. Federation of Pakistan Writ Petition No.11253 of 2017; Defence Housing Authority v. Commissioner Inland Revenue and others 2015 PTD 2538; Messrs Ittefaq Rice Mills v. Federation of Pakistan 2013 PTD 1274; Premier Industrial Chemical Manufacturing Co. v. Commissioner Inland Revenue 2013 PTD 398 and Defence Housing Authority v. Commissioner Inland Revenue 2015 PTD 2538 distinguished.

Messrs Premier Industries Chemical Manufacturing Co. v. Commissioner Inland Revenue and 3 others 2013 PTD 398; Messrs Motorcycle Zone Shop, Sargodha v. Commissioner Inland Revenue (Appeals), RTO, Faisalabad and another 2013 PTD (Trib.) 1283; Nestle Pakistan Ltd. and others v. Federal Board of Revenue and others 2017 PTD 686; Treet Corporation Limited v. Federation of Pakistan and others W.P. No. 11253 of 2017; Pakistan Petroleum Limited v. Pakistan through Secretary Finance and 4 others 2016 PTD 2664; Messrs Pfizer Pakistan Ltd. though Company Secretary and others v. Deputy Commissioner and others 2016 PTD 1429; Linkdotnet Telecom Limited v. Chief Commissioner Inland Revenue, Islamabad and 2 others 2016 PTD 1436; Norinpaco and others v. Federation of Pakistan and others 2016 PTD 1214; Yingquan Pang v. Collector of Customs and 2 others 2016 PTD (Trib.) 1222; Commissioner of Inland Revenue, Sialkot and others v. Messrs Allah Din Steel and Rolling Mills and others 2018 SCMR 1328 and Mujahid Oil Refinery (Pvt.) Limited v. Director I&I Inland Revenue and others 2015 PTD 2572 ref.

Federation of Pakistan v. Aitzaz Ahsan and others PLD 1989 SC 61; DHA's case 2015 PTD 2538; Pakistan Petroleum Ltd. v. Pakistan through Secretary Finance and others 2016 PTD 2664; Messrs Pfizer Pakistan Ltd. through Company Secretary and others v. Deputy Commissioner and others 2016 PTD 1429 and Pakistan Telecommunication Company Ltd. v. Federation of Pakistan 2016 PTD 1484 rel.

(b) Income Tax Ordinance (XLIX of 2001)---

----Ss. 214C, 122 & 177---Selection and conduct of audit by Department under Income Tax Ordinance, 2001---Nature and scope---Audit within itself is not an adverse action and or order, particularly in a system where tax return was to be filed by a taxpayer under self-assessment and was to be treated as an assessment under S.120 of the Income Tax Ordinance, 2001----Audit, if not permitted , would leave Department in no position to determine as to whether compliance as mandated in law had been made and whether there was any liability against a taxpayer---Conduct of an audit was not an inconvenience, if a taxpayer fulfilled its statutory duty by maintaining records under the Income Tax Ordinance, 2001---Mere issuance of audit notices was no adverse action within itself, as after conduct of audit it was not necessary that in each and every case a demand of extra tax would be raised---Income Tax Ordinance, 2001 provided a complete mechanism for taxpayer in situations including but not limited to proceedings of amendment of assessment of return under S. 122(9) of the Income Tax Ordinance, 2001.

Messrs Pfizer Pakistan Ltd. through Company Secretary and others v. Deputy Commissioner and others 2016 PTD 1429 rel.

(c) Interpretation of statutes---

----Until and unless a statute or a part thereof had been declared or held to be ultra vires the Constitution, the same remained operative for all intents and purposes.

Federation of Pakistan v. Aitzaz Ahsan and others PLD 1989 SC 61 rel.

Haider Waheed and Ahmed Masood for Plaintiff.

Umar Zad Gul Kakar DAG for Defendant No.1.

Muhammad Aqeel Qureshi and Shahid Ali for Defendants Nos. 2 to 4.

Date of hearing: 17th August, 2018.

2019 P T D 987

[Sindh High Court]

Before Muhammad Junaid Ghaffar, J

HUM NETWORK LTD. through constituted attorney

Versus

PAKISTAN through Secretary Revenue and 2 others

C.M.A. No.1828 in Suits No.330, C.M.A. No. 2030 in Suit No. 358 and C.M.A. No.2032 in Suit No. 359 of 2017, decided on 20th June, 2018.

Income Tax Ordinance (XLIX of 2001)---

----Ss. 233 & 21----Civil Procedure Code (V of 1908), O. XXXIX, Rr. 1 & 2---Collection of Advance Tax on Brokerage and Commission ---Deductions not allowed----Advertising agency commission ---Applicability of S. 233(2) of the Income Tax Ordinance, 2001---Application for interim injunction to stop operation of show-cause notice(s)---Scope---Taxpayer, which was a television channel, impugned show-cause notice whereby it was alleged that taxpayer had claimed expenses under the head of Advertising Agency Commission which was liable to withholding of tax under S. 233 of the Income Tax Ordinance, 2001 and upon failure of taxpayer to deduct said tax, Department could disallow such expenses under S. 21(c) of the Income Tax Ordinance, 2001----Validity---Perusal of financial statements of taxpayer reflected that nowhere in the same, advertising agency commission had been claimed as an expense, and it was only an accounting treatment which it had been given and same had been done to arrive at net revenue under the head of "Net Revenue" by first mentioning total advertainment revenue and thereafter deducting sales tax on advertisement, agency commission, discounts as well as returns and allowances---Nowhere the same had been treated in any manner as an expense falling within definition of S. 21(c) of the Income Tax Ordinance, 2001 so as to make it liable for deduction of advance tax or addition to income as a whole---Section 21(c) of the Income Tax Ordinance, 2001 could have only been applied in respect of expenses being claimed, including brokerage or commission, paid by a person from which tax was required to be deducted ---Department had therefore erred in plain reading of financial statements of taxpayer ---Liability under S. 233(2) of the Income Tax Ordinance, 2001 would only be applicable in a situation where advertiser/customer of the taxpayer first paid the entire 100% of the amount directly to the advertising agency which thereafter retained or deducted its commission from said amount and remitted the balance to the taxpayer---Department was restrained from passing any final orders in the matter till disposal of the suit ---Application under O. XXXIX Rr. 1 & 2, C.P.C. was allowed, accordingly.

Messrs Pakistan Television Corporation Limited v. Commissioner Inland Revenue (Legal) LTU, Islamabad and others 2017 SCMR 1136 distinguished.

Pakistan Insurance Corporation v. Messrs United Liner Agencies and another 1988 CLC 425; Messrs Mastersons through its Partner v. Messrs Ebrahim Enterprises and another 1988 CLC 1381 and Bolan Beverages (Pvt.) Limited v. Pepsico Inc. and 4 others PLD 2004 SC 869 ref.

The Collector, Model Customs Collectorate and 2 others v. Messrs Naveena Industries Ltd. and others 2017 PTD 2123; Premier Mercantile Services (Pvt.) Ltd. v. Commissioner of Income Tax 2007 PTD 2521; Pirani Engineering v. Federal Board of Revenue 2009 PTD 809 and Messrs Pakistan Television Corporation Limited v. Commissioner Inland Revenue (Legal) LTU, Islamabad and others 2017 SCMR 1136 rel.

Hyder Ali Khan for Plaintiff (in Suit No.330 of 2017).

Dr. Farogh Naseem for Plaintiffs (in Suits Nos.358 of 2017 and 359 of 2017).

Kafeel Ahmed Abbasi for Defendants/Commissioner LTU (in Suits Nos. 330 and 358 of 2017).

None for Defendant/Commissioner in LTU (in Suit No.359 of 2017).

Umar Zad Gul Kakar, D.A.G.

Dates of hearing: 4th, 11th, 30th May and 1st June, 2018.

2019 P T D 1030

[Sindh High Court]

Before Muhammad Junaid Ghaffar, J

WATEEN TELECOM LTD. through Authorized Attorney

Versus

SINDH through The Secretary of Ministry of Finance Government of Sindh, Karachi and 2 others

Suit No.1458 and C.M.A. No.10327 of 2018, decided on 9th November, 2018.

(a) Sindh Sales Tax on Services Act (XII of 2011)---

----S. 28---Civil Procedure Code (V of 1908) O. XXXIX Rr. 1 & 2---Conduct of Audit proceedings under S. 28 of the Sindh Sales Tax on Services Act, 2011---Application for grant of interim injunction---Scope---Exercise of discretion of Deputy Commissioner to make selection of taxpayer for audit---Reasons for such selection to be furnished---Mandatory---Scope----Taxpayer sought to restrain Department from proceeding on a notice for conduct of audit to taxpayer, inter alia, on the ground that the notice to the taxpayer did not contain any reasons for such selection---Validity----Conduct of audit under S. 28 Sindh Sales Tax on Services Act, 2011 must be on basis of return furnished by the taxpayer----Impugned notice did not disclose any reasons whatsoever and only stated that Deputy Commissioner was empowered under S. 28 Sindh Sales Tax on Services Act, 2011 to conduct audit of taxpayer, which observation did not amount to giving of reasons for selecting the taxpayer---Under Sindh Sales Tax on Services Act, 2011, Deputy Commissioner had to decide to conduct an audit, and said decision could not be made without forming an opinion as to what was to be seen and examined on the return furnished-----Law mandated that the Deputy Commissioner had to examine the tax return at least tentatively and then to make a decision based on certain reasons which pointed to some defect or lacuna in said returns or payment of tax by taxpayer, which accordingly required conduct of audit-----Decision to conduct audit, without furnishing reasons for the same, was in fact no decision in the eye of law---Discretion under S. 28 of the Sindh Sales Tax on Services Act, 2011 had to be exercised in a judicious manner and Deputy Commissioner while exercising powers under the same should not act arbitrarily, unreasonably and in complete disregard of the rules and regulations---High Court observed that an officer of the Department while exercising powers under S. 28 of the Sindh Sales Tax on Services Act, 2011 was mandatorily required to give reasons for selection for audit of a taxpayer after examining the tax returns---Department was restrained from proceeding on impugned notices---Application for interim injunction was allowed, accordingly.

Pakistan Telecommunication Company Limited v. Federation of Pakistan 2016 PTD 1484; Walayat Ali Amir v. Pakistan International Airlines Corporation 1995 SCMR 650; Assistant Director Intelligence and Investigation v. B.R. Harman PLD 1992 SC 485; Commissioner Inland Revenue v. Pakistan Beverages Ltd. 2018 SCMR 1544 and Pakistan Petroleum Limited v. Pakistan 2016 PTD 2664 rel.

Muneer Bhimjee v. Islam Republic of Pakistan 2005 PTD 1974; Kohinoor Sugar Mills v. Federation of Pakistan 2018 PTD 821; Commissioner of Inland Revenue v. Allah Din Steel and Rolling Mills 2018 SCMR 1328; Pakistan Petroleum Limited v. Pakistan 2016 PTD 2664 and Airport Support Services v. The Airport Manager, Quaid-e-Azam International Airport 1998 SCMR 2268 ref.

(b) Public Functionary---

----Exercise of statutory powers by public functionaries----Exercise of discretion by public functionaries/public bodies---Scope---Law recognized no such thing as unfettered discretion and all discretionary powers, especially those conferred by statute, must be exercised in terms of well-established principles of administrative law---Discretionary statutory power could only be exercised to achieve an object or purpose that was lawfully within contemplation of the statute---Discretion, where the law did not put any fetters on it, was not unbridled and without any limit or restriction---Exercise of discretion had to be reasonable and within certain restrictions or limits.

Walayat Ali Amir v. Pakistan International Airlines Corporation 1995 SCMR 650 and Commissioner Inland Revenue v. Pakistan Beverages Limited 2018 SCMR 1544 rel.

Hussain Ali Almani for Plaintiff.

Malik Naeem Iqbal along with Malik Altaf Javed, Shamshad Ahmed, Ayaz Sarwar Jamali and Syed Zain-ul-Abidin, Deputy Commissioner, S.R.B. for Respondents.

Ms. Rukshanda Waheed, State Counsel for Defendant No.1.

Dates of hearing: 7th August and 4th September,2018.

2019 P T D 1230

[Singh High Court]

Before Aqeel Ahmed Abbasi and Arshad Hussain Khan, JJ

Messrs BRONX INTERNATIONAL through Proprietor

versus

FEDERATION OF PAKISTAN through Secretary Revenue Division and 3 others

Constitutional Petition No. D-7112 of 2016, decided on 26th March, 2019.

Customs Act (IV of 1969)---

----S. 193---Appeal to Collector of Customs (Appeals)---Initiation of recovery proceedings pending appeal---Effect---Petitioner impugned notices which attached petitioner's movable property and Bank accounts---Contention of petitioner was that recovery was illegal and without lawful authority; that no reference was made to the order-in-original pursuant to which demand was created; that opportunity of being heard was not provided to the petitioner before issuance of notices; that petitioner had filed appeal against order-in-original before Collector of Customs (Appeals) and thereafter an urgent application along with stay application was filed, however, neither appeal was heard nor the application for stay was decided and that subject matter of appeal could not otherwise be recovered by adopting coercive measures---Collector of Customs (Appeals) commented that although an appeal was filed but it was returned to the petitioner through a letter, as during scrutiny, it was found that Fee Challan of Rs. 1000/- was not attached with the memo of appeal---Collector of Customs (Appeals) produced dispatch register and copy of outward register---Petitioner disputed the factual position and contended that aforesaid letter was never served; that there was no acknowledgement of service of such letter; that if appeal was not accompanied with requisite documents then it would not have been received; that had there been any deficiency it would have been pointed out on the day of presentation of appeal; that index of appeal referred to original paid challan and that petitioner should have been granted an opportunity to rectify the deficiency---Validity---Petitioner discharged his burden of proof by showing that an appeal was filed before Collector of Customs (Appeals) under acknowledgement---No objection was raised from the office of Collector of Customs (Appeals) regarding any deficiency---Collector of Customs (Appeals) could not produce any document to prove that letter through which appeal was returned, was ever served on the petitioner---Office copy of letter filed along with comments did not contain acknowledgement of receipt by the petitioner nor was there an endorsement on the dispatch register to that effect---High Court observed that in case of any deficiency of documents relating to appeal, it should have been pointed out at a subsequent stage with a reasonable time to remove the same and it was held that appeal of petitioner was still pending adjudication before Collector of Customs (Appeals)---Attachment proceedings having been initiated by Customs Authorities, without providing opportunity of hearing or without deciding the appeal of petitioner on merits were without lawful authority, therefore, notices issued to petitioner were set aside---Collector of Customs (Appeals) was directed to decide the appeal of petitioner on merits after providing an opportunity of being heard---Constitutional petition was disposed of, accordingly.

Abdul Ghaffar v. Customs Appellate Tribunals and 2 others 2017 PTD 446 fol.

Muhammad Adnan Moton for Petitioner along with Obaydullah Mirza.

Ms. Masooda Siraj for Respondents Nos. 3 and 4.

Sardar Muhammad Ishaque for Respondent No.2.

Ms. Lubna Pervaiz, D.A.G. for Respondent.

2019 P T D 1264

[Sindh High Court]

Before Aqeel Ahmed Abbasi and Arshad Hussain, JJ

Rana NADEEM AHMED

Versus

FEDERATION OF PAKISTAN through Secretary Ministry of Petroleum and Natural Resources, Islamabad and 3 others

Constitution Petition No.D-4685 and C.M.A.s Nos. 22674, 22675 of 2014, decided on 3rd February, 2017.

Income Tax Ordinance (XLIX of 2001)---

----Ss. 122C & 144---Return of income---Amendment of assessment for non-furnishing of return---Procedure and verification by department---Taxpayer impugned order passed by department under S. 122C of the Income Tax Ordinance, 2001 inter alia, on the ground, that the same had been passed without taking into consideration response of taxpayer to show-cause notice---Validity---Impugned order had been passed on misconceived facts and without taking into consideration response of the taxpayer pursuant to show-cause notices issued under Ss. 114 & 122C of the Income Tax Ordinance, 2001 and the return filed by taxpayer / petitioner for the relevant tax period---High Court observed that the Department, instead of passing impugned order, could have verified from its record whether the petitioner had actually filed returns or not, and said impugned order which was passed ex parte had no factual or legal justification---Impugned order was set aside---Constitutional petition was allowed, accordingly.

S. Irshadur Rehman for Petitioner.

2019 P T D 1296

[Sindh High Court]

Before Aqeel Ahmed Abbasi and Abdul Maalik Gaddi, JJ

Messrs DIAMOND METALS (AOP) through Attoney

Versus

FEDERATION OF PAKISTAN through Secretary Ministry of Finance and 3 others

C. P. No. D-5625 of 2016, decided on 14th December, 2016.

Income Tax Ordinance (XLIX of 2001)---

----S. 159(3) [omitted]---Exemption from Income Tax---Exemption or lower rate certificate---Certificates issued under subsection (3) (since omitted) of S.159 of the Income Tax Ordinance, 2001---Certificates to remain in force until rescinded by Federal Board of Revenue despite omission of subsection (3) of S.159 of the Income Tax Ordinance, 2001 by the Legislature---Scope---Question before High Court was whether "Exemption Certificate" issued to a taxpayer under subsection (3) of S.159 of the Income Tax Ordinance, 2001 remained in force after omission of said subsection (3) of S.159 by the Finance Act, 2015---Held, that per S.159(6) of the Income Tax Ordinance, 2001 Legislature had saved all notifications which were issued under S.159 of the Income Tax Ordinance, 2001 irrespective of the fact that S.159 subsection (3) of the Income Tax Ordinance was omitted---All such notifications would, therefore, continue to hold field unless rescinded by Federal Board of Revenue through a notification in the official gazette.

Syed Irshad-ur-Rehman for Petitioner.

Muhammad Aqeel Qureshi for Respondents Nos.2 and 3.

Mayhar Kazi for Respondent No.4.

2019 P T D 1308

[Sindh High Court]

Before Aqeel Ahmed Abbasi and Zulfiqar Ahmad Khan, JJ

Messrs GLOBAL TRADE LINK and others

Versus

FEDERATION OF PAKISTAN through Secretary Revenue Division Ministry of Finance and others

Constitution Petitions Nos.D-5410, D-5267, D-5268 and D-7015 of 2018, decided on 26th January, 2019.

(a) Customs Act (IV of 1969)---

----S. 25-C---Power to takeover imported goods--- Principle---Section 25-C of Customs Act, 1969 can not be used to takeover goods of an honest importer by accepting higher price of goods---Object of S. 25-C of Customs Act, 1969 is to curb tendency of under-invoicing by a dishonest importer.

(b) Customs Act (IV of 1969)---

----Ss. 25-A & 25-B---Constitution of Pakistan, Art. 18---Right to trade and business---Power to takeover imported goods---Scope---Provision of Art. 18 of the Constitution protects Fundamental Right of doing business---Importer is not to be penalized or deprived of his goods under S. 25-C of Customs Act, 1969 when he has not committed under-invoicing and is merely seeking clearance of his goods at actual transactional value as per law in particular at values so determined by customs authorities through valuation rulings under S. 25-A of Customs Act, 1969---Process of takeover of goods of importers under S. 25-C of Customs Act, 1969 can only set in motion after having first determined goods' actual transactional value and only where under-invoicing is found, such harsh act is permissible otherwise, it would lead to abuse of S. 25-C of Customs Act, 1969.

(c) Customs Act (IV of 1969)---

----Ss. 25-A, 25-C, 32 & 79---Takeover of Imported Goods Rules, 2002, R. 1(3)---Valuation Ruling No. 863 of 2016 dated 02-08-2016---Notification SRO No. 487(I)/2003 dated 07-06-2003---Bids for takeover imported goods---Customs authorities, duty of---Petitioners were private importers of products of a trading entity operating in Pakistan and were aggrieved of orders passed by customs authorities putting their imported products on hold---Customs authorities alleged that trading entity offered petitioners a buyout at lucrative price of said products as it claimed that said goods were undervalued---Validity---Valuation Ruling No. 863 of 2016 dated 02-08-2016 under S. 25-A of Customs Act, 1969 was already in field which only came into being after following methodology provided under S. 25 of Customs Act, 1969---When any importer had declared value of his consignments in accordance with Valuation Ruling No. 863 of 2016 dated 02-08-2016 then to allege that importer had committed under-invoicing was a self-contradictory argument vitiating sanctity of all valuation rulings---High Court declared that offer made by competitor to buy all consignments at a price thrice of what was declared by importer was nothing but an attempt of 'hostile takeover' of imported goods solely to defeat competition in market and to create his monopoly, constituting anti-competitive practice which Legislature and courts were bound to eradicate---If customs authorities had considered that a valuation ruling did not reflect current market or transactional values, options were always available to revise such valuation rulings rather than permitting such abhorring anti-competitive takeover practices---High Court set aside orders passed by customs authorities---Constitutional petition was allowed in accordingly.

Messrs Binaco Traders v. Federation of Pakistan and 3 others 2006 PTD 1491; Sadia Jabbar v. Federation of Pakistan and others 2018 PTD 1746; Kashif Naseem v. Federation of Pakistan and others 2007 PTD 2250 and 2008 PTD 1494 ref.

Kashif Nazeer and Obaidullah Nadeem for Petitioners.

Dr. Shah Nawaz along with Muhammad Asim Awan, Deputy Collector, MCC Appraisement (West) Karachi for Respondents.

Ms. Lubna Pervaiz, D.A.G. for Respondents.

Qazi Umair Ali for Proposed Intervenor (in C.P.No.D-5267 of 2018).

2019 P T D 1368

[Sindh High Court]

Before Aqeel Ahmed Abbasi and Zulfiqar Ahmad Khan, JJ

Messrs ASIO AFRICAN CO. (PVT.) LTD. and others

Versus

FEDERATION OF PAKISTAN and others

Constitution Petition Nos. D-4910, D-5115 and D-5337 of 214, decided on 4th January, 2019.

(a) Interpretation of statutes---

----Grandfather clause---Meaning and scope---Grandfather clause was a provision of a new law or regulation exempting those already part of the existing system which was regulated---Through such a clause, exemption to a restriction could be provided only those who already were doing same thing---Notwithstanding the same, such regulations may hurt interests of a new entrant however, Legislature never desired that such a clause impose any additional burden to a new entrant by raising the bar unjustly higher, as such an act, on the face of it, would seem to violate principles of equity, fair play and natural justice.

(b) Interpretation of statutes---

----Subordinate and delegated legislation---Construction---Invalidity of delegated legislation---Scope---No subordinate legislation could take away powers granted by a substantive legislation, or could impose conditions if the same were not envisaged by the latter.

(c) Income Tax Ordinance (XLIX of 2001)---

----S. 148 & Second Sched., Cl. 72B---Constitution of Pakistan, Arts. 4, 18 & 25---SRO No. 717(I)/2014 dated 07.08.2014----Import of goods---Collection of advance tax on import stage---Exemptions to industrial undertakings---Issuance of certificate of exemptions---Conditions imposed on issuance of certificate for exemptions---Reasonable basis and classification for such conditions---Constitutional test---Scope----Petitioners, who were importers of wheat, impugned SRO No. 717(I)/2014 dated 07.08.2014 whereby they were denied exemption from income tax in terms of Cl. 72B of the Second Schedule to the Income Tax Ordinance, 2001---Contention of petitioners, inter alia, was that said SRO discriminated against them by granting exemption to only those importers who could show that they had imported and consumed slightly over and above the same raw material's quantity in the preceding year, and therefore, petitioners being new entrants in the market, could not be given said benefit---Validity----Petitioners, despite being new entrants in the market, were similarly placed to other importers and were in the same class of persons who had been in the business for at least the last one year---No reasonable classification therefore existed as both types of importers where importing the same product intended for the same purpose, chargeable with equal excise duty and sales tax, but discriminatory treatment had been meted out to petitioners,---Petitioners had been placed in a disadvantageous position which was arbitrary and unreasonable---Impugned clause (v) of SRO No. 717(I)/2014 dated 07.08.2014 requiring grant of exemption to only those who had been in the business in the previous years, was therefore violative of principle of equal protection of law and Arts. 4, 18 & 25 of the Constitution and was declared to be illegal and ultra vires the law----Constitutional petition was allowed, accordingly.

Khalid Mahmood Siddiqui for Petitioners (in all Constitution Petitions).

Mir Hussain Abbasi, Assistant Attorney General for Respondent.

Amjad Javed Hashmi for Respondents Nos.2 and 3 along with Shahid Ali Qureshi for Respondents.

Kashif Nazeer for Respondent No.4.

2019 P T D 1387\

[Sindh High Court]

Before Muhammad Faisal Kamal Alam, J

DEWAN STEEL MILLS through Authorized Representative and others

Versus

FEDERATION OF PAKISTAN through Secretary, Ministry of Commerce, Islamabad and others

Suit No. 1661 of 2015, decided on 2nd June, 2017.

Anti-Dumping Duties Act (XIV of 2015)---

----Ss. 31, 33 & 70---Specific Relief Act (I of 1877), Ss.42 & 54---Civil Procedure Code (V of 1908), O.XXXIX, Rr.1 & 2---Suit for declaration and injunction---Interim injunction, grant of---Limitation period, extension of---Preliminary determination---Plaintiffs were importers of 'hot rolled steel billets' and complaint was filed against them before National Tariff Commission alleging that plaintiffs were dumping the goods in question---Plaintiffs assailed process of investigation against them on the ground that copy of complaint was not provided to them---Validity---Special statutory remedy under S.70 of Anti-Dumping Duties Act, 2015 was provided---Subject was of technical nature and that was why, quorum/composition of National Tariff Commission and academic qualification of its members were also mentioned---Plaintiffs could avail remedy of appeal before Appellate forum as mentioned in S. 70 of Anti-Dumping Duties Act, 2015---Limitation period in terms of S.70(2) of Anti-Dumping Duties Act, 2015, was 30 days' time prescribed for preferring appeal against preliminary determination, which time had already ended---Plaintiffs came to know about preliminary determination when they filed second application for grant of injunction before High Court and no appeal was preferred till then---High Court enlarged time to plaintiffs who could file appeal against preliminary determination before Appellate Tribunal under S.70 of Anti-Dumping Duties Act, 2015---High Court directed the authorities to ensure that local industry was not destroyed and import from China should not result in threat of material injury or causing material retardation of establishment of a domestic industry as envisaged in definition of "injury" contained in Anti-Dumping Duty Act, 2015---High Court directed the Federal Government to ensure by improving capacity of National Tariff Commission to meet impending challenges---High Court further directed that much acclaimed business opportunities in China Pakistan Economic Corridor (CEPC) must focus on the fact that it should also result in enhancing / boosting exports of Pakistan resulting in reduction of trade deficit---Suit was dismissed in circumstances.

Japan and China v. India, Korea, Russia, Saudi Arabia, Turkey and United States (WT/DS454/AB/R and WT/DS460/AB/R); Timex v. Council and Commission Case No. 264/82 at Luxembourg; Hamid Mir and another v. Federation of Pakistan and others 2013 SCMR 1880 ; International Business Management and others v. Federation of Pakistan and others W.P. No.4735 of 2016; Muhammad Abbas Raza v. Federation of Pakistan and others W.P. No.28351 of 2016; Messrs Waheed Sons, Lahore and others v. National Tariff Commission, Islamabad and others Civil Petitions Nos. 1608, 1654, 1686, 1687, 1706 to 1708 of 2009; Administrator, Thal Development through EACO Bhakkar and others v. Ali Muhammad 2012 SCMR 730; Abdul Aziz v. Syed Arif Ali and others PLD 1978 Lah. 441; Pakistan Transport Co. Ltd. Jhang v. Shorkot Transport Co. (Regd.) Shorkot and others PLD 1961 (W.P.) Lah. 326; Muhammad Saeed and others v. The Chairman Pakistan Railways Headquarters Lahore 1982 PLC 592; Mian Sultan Ali Nanghiana v. Mian Nur Hussain PLD 1949 Lah. 301; Channagiri Cements (Pvt.) Ltd. and another v. Karnataka Power Transmission and others R.S.A. No.1862 of 2007 (Dec - Inj); Devinder Singh and others v. State of Haryana and another Appeal (Civil) 4552 of 2000; Punjab State Electricity Board v. Ashwani Kumar Supreme Court of India on 14.03.1997; E.C. Anti-Dumping Law and Practice Edmin Vermulst and Paul Waer, Sweet and Maxwell, London 1996; Imran Traders v. Ministry of Commerce 2006 PTD 1446; Essar Steel Limited and another v. Union of India 2007 (122) ECC Page 121; Mahavir Mirror Industries v. The Designated Authority 2003 (2) CTC Page 333; Sree Karpagambal Mills Ltd. v. Directorate General of Anti-Dumping and Allied Duties and others Writ Petition No.3008 of 2002; Norwegian Nitrogen Products Company v. United States of America 288 U. S. Page-294-325; Chevron, U. S. A. Inc. v. Natural Resources Defence Council, Inc. (467 US Page-837); Daewoo Electronics Co. Ltd. and others v. The United States (F. 3d 1511 (Fed. Cir. 1993)); Oswal Woollen Mills Ltd. v. Designated Authority 2000 (118) E.L.T 275 (Tribunal) (Cegat, Court No.1, New Delhi [Anti-Dumping Bench]); Nippon Zeon Co. Ltd. v. Designated Authority (1997 (96) E.L.T. 126 (Tribunal). In the Cegat, Court No.1, (New Delhi) Timex v. Council and Commission Judgment of the Court (20 March, 1985) ref.

Securities and Exchange Commission of Pakistan v. Mian Nisarl Elahi and others 2009 SCMR 1392; Chairman, Regional Transport Authority, Rawalpindi v. Pakistan Mutual Insurance Company Limited, Rawalpindi PLD 1991 SC 14; Muhammad Mubeen-us-Salam and others v. Federation of Pakistan and others PLD 2006 SC 602 and Action against distribution of Development Funds by Ex-Prime Minister Raja Parvaiz Ashraf: In the matter of PLD 2014 SC 131 rel.

Haider Waheed and Basil Nabi Malik for Plaintiffs.

Ali Almani and Ahmed Shiraz for Defendants Nos. 1 and 2.

Khalid Jawed Khan for Defendant No.3.

2019 P T D 1463

[Sindh High Court]

Before Muhammad Ali Mazhar and Agha Faisal, JJ

PAKISTAN MERCANTILE EXCHANGE LIMITED

Versus

COMMISSIONER INLAND REVENUE, ZONE-I

I.T.R.A. No.198 of 2011, decided on 12th February, 2019.

(a) Income Tax Ordinance (XLIX of 2001)---

----S. 122(5A)---General Regulations of National Commodities Exchange Limited Regulations, 2007, Rglns. 12.6, 12.7, 12.12 & 12.15---Taxable income---Security deposit---Taxpayer was Pakistan Mercantile Exchange maintaining security deposit from its exchange brokers---Authorities issued notice on ground that security deposit lying with taxpayer was taxable income---Plea raised by taxpayer was that security deposit could not be treated as income as taxpayer had to refund security deposit to persons who cease to be brokers and if any broker had defaulted, security deposit of such broker was to be treated as a fund used to fulfill obligations of defaulted broker---Validity---Security deposit under General Regulations of National Commodities Exchange Limited Regulations, 2007 was treated as monies whereupon Exchange maintained a lien and in event that such lien crystallized and amount so maintained was forfeited then taxpayer declared same as income and same was subject to tax---No evidence of default amelioration was adduced before tax authorities on account of non-having taken place thus far, entire existence of such a fund could be denigrated---Existence of funds was apparent to relevant authority and it was its treatment, liability vis-à-vis income that was moot---In presence of an apparent accumulating fund, purpose whereof was clearly demarcated, purpose thereof could not be ignored simply on grounds that up till such time it had not been expended for such purpose, especially when it was clear that opportunity for such a fund to be utilized had not been occasioned yet---High Court answered question in the negative which was framed for determination and decided matter in favour of taxpayer---Reference was allowed accordingly.

Habib Bank Limited v. Liquidator National Construction Co. 2017 CLC 17; Umar v. S.A. Rana PLD 1957 Kar. 760; CIT v. Madurai Soft Drinks Ltd. (2005) 276 ITR 607; S. Sahakari Sakhar Karkhana Ltd v. CIT (2004) 270 ITR 1; CIT v. Madurai Soft Drinks Ltd. (2000) 241 ITR 229; CIT v. Trichur Kuri Syndicate (1995) 211 ITR 365; CIT v. Goyal Gases Ltd. (1991) 188 ITR 216; CIT v. Bijli Cotton (1979) 116 ITR 60; CIT v. Sanderson and Morgans (1970) 75 ITR 433; Upper India Sugar Exchange Ltd. v. CIT (1969) 72 ITR 331; Agra Bullion Exchange Ltd. v. CIT (1961) 41 ITR 472; Lakhsmanier and Sons v. CIT (1953) 23 ITR 202; Samina Shaukat v. CIT PLD 1981 SC 85 at 91A; Pakistan Industrial Development Bank v. Pakistan 1992 PTD 576; Elahi Cotton Mills v. FOP PLD 1997 SC 582 = 1997 PTD 1555; Punjab Small Industries v. CIT 2001 PTD 2282; Badri Narayan Balakishan v. Commissioner of Income Tax (1965) 57 ITR 752 AP; K.M.S Lakshmanier and Sons v. Commissioner of Income Tax AIR 1953 SC 145; Punjab Distilling Industries Limited v. The Commissioner of Income Tax 1959 AIR 346; Corpus Juris Secundum, Volume 89 at page 731 and United Breweries Limited v. State of A.P (1977) 3 Supreme Court Cases 530 ref.

(b) Income Tax Ordinance (XLIX of 2001)---

----S. 15(3)---Security deposit---Scope---Implication that in event that deposit remains un-forfeited same cannot be treated as income.

Page 294-A of Volume I of Law & Practice of Income Tax by Huzaima and Ikram rel.

(c) Income Tax Ordinance (XLIX of 2001)---

----S. 2(5)---Assessment---Scope---Assessment relating to each year is an absolutely independent proceeding---Facts and circumstances of particular year cannot be equated or made applicable to facts and circumstances of another assessment year.

Mehran Girls College v. Commissioner Income Tax reported as 2001 PTD 987 and Commissioner Income Tax Appeals v. Pakistan International Engineering Agencies Limited PLD 1992 SC 562 rel.

Barrister Hussain Ali Almani for Applicant.

2019 P T D 1599

[Sindh High Court]

Before Aqeel Ahmad Abbasi and Zulfiqar Ahmad Khan, JJ

The COLLECTOR OF CUSTOMS through Additional Collector of Customs (Law), Karachi

Versus

Messrs MUHAMMAD TAHIR CONSTRUCTION COMPANY, LORALAI

S.C.R.A. No.331 and C.M.A. No.2349 of 2017, decided on 8th April, 2019.

Customs Act (IV of 1969)---

----S. 196---Import Policy Order, 2016, Para 9(ii)(5)---Reference to High Court---Scope---Department being aggrieved of the order passed by Customs Appellate Tribunal had filed reference application before High Court---Department pressed two questions; "whether the local manufacturer's certification was not valid evidence to determine the age of the vehicle; and whether Appellate Tribunal had released the prohibited/banned vehicles in violation of para 5(A)(vii) read with Appendix-C and para 9(ii) of the Import Policy Order, 2016"---Held; importer had at the time of import of vehicles produced relevant documents including pre-shipment certificate by recognized company showing the year of manufacture as 2012 and also, Euro-II Compliant, not older than five years, which prima facie established that vehicles were imported in conformity with the requirements of paragraph 9(ii)(5) of Import Policy Order, 2016---Department, in addition to the above, had also conducted two physical inspections in order to further verify the year of manufacture of vehicles---Department could not assist the court as to how, on the basis of a purported certificate obtained from local manufacturer, the age of vehicles could be ascertained---Importer had discharged the initial burden to prove that subject vehicles were imported in conformity with paragraph 9(ii)(5) of Import Policy Order, 2016, whereas, department failed to produce any evidence or material which could otherwise support their allegations---Findings recorded by Appellate Tribunal were predominantly based on findings of facts which did not suffer from any factual error or legal infirmity---Proposed questions were answered in the negative against the department and in favour of the importer.

Messrs Khan Gul Government Contractor v. Federation of Pakistan 2018 PTD 415; Civil Petition No.657 of 2018 and Irum Ghee Mills v. Commissioner Income Tax 2000 SCMR 1871 ref.

Customs Reference Application No.08 of 2019 rel.

Dr. Shahnawaz Memon for Applicant.

Asad Raza for Respondent.

2019 P T D 1619

[Sindh High Court]

Before, Muhammad Junaid Ghaffar, J

SEASONS EDIBLE OIL LIMITED (Formerly Wali Oil Mills Limited) through Authorized Attorney

Versus

The FEDERAL BOARD OF REVENUE through Chairman, FBR, Islamabad and 3 others

Suit No. 1570 of 2016 and C.M.A. No.10196 of 2016, decided on 24th December, 2018.

Income Tax Ordinance (XLIX of 2001)---

----Ss. 120 & 122(4), (5A) & (9)---Suit for declaration and injunction---Show-cause notice---Limitation---Taxpayer was aggrieved of show-cause notice stating that amended assessment order was erroneous and prejudicial to interests of revenue---Plea raised by taxpayer was that show-cause notice was time-barred under S. 122(4) of Income Tax Ordinance, 2001---Validity---Taxpayer was required to maintain records of all sorts for a period of six years whereas intention for providing a maximum limitation of six years in aggregate in S. 122(4) of Income Tax Ordinance, 2001 was in line and consonance with such period---If plea of taxpayer was accepted same would amount to replacing period of limitation in carrying out an amendment in original assessment order---Amended assessment order of taxpayer for tax year 2010 was made immediately after end of financial year on 11-07-2011 and if period of one year was available to further amend assessment order then same would end on 10-07-2012 and therefore, period of limitation was curtailed, such could not be intention of Legislature, hence plea was misconceived---Section 122(4) of Income Tax Ordinance, 2001 clearly provided that period of limitation for further amendment was latter of two periods given in S.122(4)(a) & (b) of Income Tax Ordinance, 2001---Further amendment could always be carried out in amended assessment order as many times as could be necessary and a harmonious and purposive interpretation would be that it could be done up to a period of six years from end of financial year in which or for which assessment order had been passed or made---Show-cause notice was issued within limitation period as provided in S. 122(4)(a) of Income Tax Ordinance, 2001 as same pertained to tax year 2010 and period of five years was to start from end of financial year on 01-07-2011 and to end on 30.06.2016---Suit was dismissed in circumstances.

Commissioner Inland Revenue v. Ch. Muhammad Akram 2013 PTD 1578; Ms. Rafi Electronics Corporation (Pvt.) Ltd. Lahore v. C.I.T., R.T.O. Lahore 2011 PTD (Trib.) 936; PLD 2013 Lah. 627; Pakistan Television Corporation Ltd. v. Commissioner of Inland Revenue, Legal PLD 2017 SC 718 and Collector of Sales and Central Excise (Enforcement) v. Mega Tech (Pvt.) Limited 2005 SCMR 1166 ref.

Tasawar Ali Hashmi for Plaintiff.

Altamash Arab and Umar Zad Gul Kakar, D.A.G. for Defendants.

For hearing of CMA No. 10196/2016.

2019 P T D 1678

[Sindh High Court]

Before Muhammad Ali Mazhar and Agha Faisal, JJ

Dr. SEEMA IRFAN and 5 others

Versus

FEDERATION OF PAKISTAN through Secretary and 2 others

C.Ps. Nos.D-5956 to D-5964 of 2018, decided on 31st May, 2019.

(a) Income Tax Ordinance (XLIX of 2001)---

----S. 122--- Constitution of Pakistan, Arts. 199 & 10A---Constitutional jurisdiction of High Court---Scope---Show-cause notice issued by Department---Nature---Fundamental Right to fair trial and due process of law---Scope---Factual controversies or factual disputes raised in show-cause notice could not be decided in Constitutional jurisdiction but the same were dominion of a competent authority to decide the fate of a show cause notice after providing ample opportunity of hearing with right to fair trial and then pass orders in accordance with law---In matters of show-cause notice, High Court under Art.199 of the Constitution could not assume a supervisory role in every situation to pass an interim order with directions to an Authority to proceed but to not pass final order till decision of a Constitutional petition or to suspend the operation of show-cause notice for an unlimited period of time or to keep the matters pending for an indefinite period---Challenge to a show-cause notice under Art.199 of the Constitution must be sparing and cautious and High Court under its Constitutional jurisdiction may take up writs to challenge show-cause notice(s) if it found such show-cause notice to lack of jurisdiction, be barred by law or if the same were abuse of process of the court or coram non judice and in such situation, High Court may quash such show-cause notice(s).

Allied Engineering v. Commissioner of Income Tax 2015 PTD 2562; Messrs Kurdistan v. Commissioner Income Tax 2014 PTD 339; Commissioner of Income Tax v. Messrs Riverside Chemicals Pvt. Ltd. PLD 2008 SC 446; Commissioner of Income Tax v. Shahanawaz Ltd. 1993 SCMR 73; Commissioner of Income Tax Karachi v. Messrs B.R.R. Investment (Pvt.) Ltd., Karachi 2011 PTD 2148; Messrs Allied Engineering Services Ltd. v. Commissioner of Income Tax 2015 PTD 2562 and Commissioner of Income Tax v. Messrs Eli Lily Pakistan (Pvt.) Ltd. 2009 SCMR 1279 ref.

Messrs Ocean Pakistan Ltd. v. Federal Board of Revenue, Islamabad 2012 PTD 1374; Khalid Mahmood Ch. v. Government of the Punjab 2002 SCMR 805; Karachi Bulk Storage and Terminals (Pvt) Ltd. v. Collector of Central Excise and Land Customs 2001 PTD 2103; Union of India (UOI) and others v. Vicco Laboratories (Equivalent Citation 2008 (3) ALLMR (SC) 453, 2008(2) CTC 511, 2007 (123) ECC 278, 2007 (149) ECR 278 (SC), 2007 (218 ELT 647 (SC), 2008 4 MLJ 1272 (SC); (2007 13 SCC 270; [2007] 1 SCR 534; SBQ Steels Limited v. The Commissioner of Customs Central Excise and Service Tax, Guntur Commissionerate (Equivalent Citation: 2013(2) ALD 158, 2014 (300) ELT 185 (A.P); State of Uttar Pradesh v. Brahma Datt Sharma (Equivalent Citation" AIR 1987 SC 943; 1987 AWC 760 SC; [1987 (54) FLR 524], JT 1987 (1) SC 571; 1987 Lab. IC 689, 1987 (1) SC ALE 457; [1987) 2 SCC 179, [1987] 2 SCR 444, 1987(2) UJ 55; The Special Director and others v. Muhammad Ghulam Ghouse and others (Equivalent Citation: 2004(2) ACR 1844 (SC), AIR 2004 SC 1467; 2004 (55) ALR 95, 2004 (106 (2) BOMLR 569, (2004) 3 CALLT 8 (SC), [2004] 120 Comp. Cas 467 (SC), 2004 (91) ECC 299, 2004 (112) ECR 501 (SC), 2004 (164) ELT 141 (SC), JT 2004 (1) SC 206; 2004 (2) PLJR 237, 2004 (1) SCALE 330, (2004) 3 SCC 440; [2004] 50 SCL 93 (SC), [2004] 2 SCR 399; 2004(1) SCT 671 (SC), 2004(1) UJ 744; Union of India and others v. Kunistty Satyanarayana (Equivalent Citation: AIR 2007 SC 906; [2007 (112) FLR 325], 2007(1) PLJR 121; 2006 (12) SCALE 262; (2006) 12 SCC 28; (2007) 2 SCC (LS) 304; [2006] Supp. (10) SCR 257; 2007(1) SCT 452 (SC); 2007(3) SLJ 338 (SC); Messrs Kirloskar Computer Service Limited, Bangalore v. Union of India and others (Equivalent Citation: 1997 (73) ECR 651 (Karnataka) and 1998 (98) ELT. 355 (Kar.) rel.

(b) Jurisdiction---

----Lack of jurisdiction and abuse of process of law---Concept and scope---Lack of jurisdiction meant lack of power or authority to act in a particular manner or to give a particular kind of relief and it referred to a court's total lack of power or authority to entertain a case or to take cognizance---Lack of jurisdiction may arise from failure to comply with conditions essential for exercise of jurisdiction or in a matter that fell outside the territorial limits of a court---Abuse of process was the intentional use of legal process for an improper purpose incompatible with the lawful function of the process by one with an ulterior motive in doing so, and with resulting damages---Abuse of process may be defined as misuse or perversion of regularly issued legal process for a purpose not justified by the nature of the process and was a tort comprised of two elements, which were an ulterior purpose and a wilful act in the use of process not proper in the regular conduct of the proceeding---Abuse of process was the malicious misuse or misapplication of process in order to accomplish an ulterior purpose.

DeNardo v. Maassen, 200 P. 3d 305; McCornell v. City of Jackson, 489-F Supp. 2d 605; Montemayor v. Ortiz, 208 SW 3d 627; Reis v. Walker, 491 F. 3d 868 and Sipsas v. Vaz, 50 AD 3d 878 rel.

(c) Words and phrases---

----"Coram non judice"---Meaning, scope and illustration---Coram non judice was a Latin word meant for "not before a judge," and was a legal term typically used to indicate a legal proceeding that was outside the presence of a judge or with improper venue or without jurisdiction---Any indictment or sentence passed by a court which had no authority to try an accused for such offence was clearly in violation of the law and would be coram non judice and a nullity---When a lawsuit was brought and determined in a court which had no jurisdiction in a matter, then the same was said to be coram non judice, and such judgment was void.

Manufacturing Co. v. Holt 51 W. Va. 352, 41 S.E.351 rel.

(d) Constitution of Pakistan---

----Arts.10A & 199---Fundamental Right to fair trial---Show-cause notice---Obligation upon Public Authorities to provide right to fair trial to any person after issuing them a show-cause notice---Exercise of Constitutional jurisdiction of High Court---Scope---When a show cause notice was issued then a fair chance to contest the same must also be provided---Constitutional reassurance of right to fair trial was envisaged and envisioned both in procedural standards that courts must uphold in order to protect peoples' personal liberty and a range of liberty interests that statutes and regulations must not infringe---Courts ought to analyze and survey laws and rules/ regulations framed thereunder to determine whether said indispensable right to fair trial was accessible or not---In case of stringency and rigidity in affording said right, it was the function of a Court to protect said right so that no injustice and unfairness should be done to anybody.

Ovais Ali Shah and Aamir Khosa for Petitioners.

Kafeel Ahmed Abbasi for Respondents (FBR).

2019 P T D 1702

[Sindh High Court]

Before Muhammad Ali Mazhar and Agha Faisal, JJ

IKRAM ULLAH and 19 others

Versus

FEDERATION OF PAKISTAN through Secretary (Revenue Division)/Chairman, Islamabad and 2 others

C.Ps. Nos. D-3353, D-3354 and D-3355 of 2018, decided on 13th March, 2019.

Customs Act (IV of 1969)---

----Ss. 252 & 80---Import Policy Order, 2016---Public Notice No. 05/2014 (AW) dated 09.09.2014---Import of used vehicles---Classification of vehicles as "vans" and "cars"---Age of vehicle restriction at time of import, determination of---Scope---Petitioners impugned refusal of customs authorities to clear and release vehicles imported by petitioners, which had been deemed as too old to import under the applicable policy---Contention of customs authorities was that said vehicles fell under classification of "cars" and not "vans" , and since the same were more than three years old, therefore as per Import Policy Order, 2016, the same could not be imported---Contention of petitioners, inter alia, was that the Goods Declaration filed by them clearly stated that the said vehicles were "vans" upon which the age-restriction was five years instead of three years---Validity----Per Public Notice No. 05/2014 (AW) dated 09.09.2014, the barometer to be employed by Customs authorities to designate classification of imported vehicles was the export certificate with respect to particulars of such vehicles, wherein the only mandatory requirement prescribed with respect to particulars of a vehicle was the export certificate issued by the concerned authority of the exporting country---Record showed that said export certificates, in the present case, denoted the subject vehicles as "vans" and goods declaration also declared the same as "vans"---Such goods declarations had been accepted and processed by the customs authorities without any demure in the past and no case of mis-declaration had even been instituted---Detention of imported vehicles of the petitioners was not in consonance with law and High Court directed that same be release subject to payment of applicable taxes---Constitutional petitions were allowed, accordingly.

Radaka Corporation and others v. Collector of Customs and another 1989 SCMR 353 rel.

Kashif Nazeer for Petitioners.

Ishrat Zahid Alvi, Assistant Attorney General for Respondent No.1.

Kafeel Ahmed Abbasi for Respondents Nos. 2 and 3.

2019 P T D 1716

[Sindh High Court]

Before Aqeel Ahmed Abbasi and Abdul Maalik Gaddi, JJ

COLLECTOR, MODEL CUSTOMS COLLECTORATE, MULTAN

Versus

CUSTOMS APPELLATE TRIBUNAL, BENCH-I, KARACHI and 3 others

Special Customs Reference Applications Nos. 2502 and 2503 of 2015, decided on 12th March, 2019.

Customs Act (IV of 1969)---

----Ss. 2(s), 171, 187 & 196---Reference---Smuggled goods---Burden of proof---Respondents were alleged to have smuggled HSD Oil but appellate authority and Customs Appellate Tribunal decided matter in favour of respondents---Validity---Entire process of seizure and difference of quantity of HSD Oil as reflected in show-cause notice and seizure report had made proceedings dubious---Onus to prove allegations of smuggling HSD Oil against respondents could not be discharged by customs authorities---Customs department's own documents and evidences relating to auction and delivery letters produced by customs authorities could not be falsified or disproved---No substantial legal controversy was agitated and question proposed was answered in affirmative against the authorities and in favour of respondents---High Court directed the authorities to release seized HSD Oil to respondents---Reference was dismissed in circumstances.

Sardar Muhammad Ishaque for Applicant.

2019 P T D 1723

[Sindh High Court]

Before Munib Akhtar and Omar Sial, JJ

KARACHI TUBES MILLS (PVT.) LTD. through duly authorized officer, Lahore and 48 others

Versus

The FEDERATION OF PAKISTAN through Secretary, Revenue Division/Chairman, Islamabad and 3 others

C.Ps. Nos. D-6547 of 2016 and D-6367 of 2017, decided on 7th February, 2018.

Customs Act (IV of 1969)---

----Ss. 19-A & 33---Constitution of Pakistan, Art. 25---Incidence of customs duty---Refund, claim of---Limitation---Discrimination---Inquiry---Fishing and roving exercise---Scope---Importers submitted guarantee/pay orders in form of security to get their goods released without further demurrage to their consignments---After clearance of all duties importers sought refund of their guarantees/security pay orders---Authorities declined to refund the same on plea that it was barred by limitation---Validity---Provisions of S. 33 of Customs Act, 1969 was not applicable therefore, limitation of one year to seek refund would not come into play---Furnishing of guarantee/pay orders in compliance of court order by importers did not tantamount to customs duty being paid within meaning of Customs Act, 1969---Section 33 of Customs Act, 1969 being not applicable, refund had to be made notwithstanding the fact that incidence of customs duty was passed on to customer and therefore, S. 19-A of Customs Act, 1969 was not attracted---Power of authorities under S. 19-A of Customs Act, 1969 did not give authorities a license and unfettered discretion to go on fishing and roving exercise---Power was to be exercised fairly and reasonably by the authorities---Once importer had provided reasonable evidence to show that incidence of duty was not passed on to end user, importer had discharged its burden and it would be upon the authorities to then prove otherwise---Act of authorities to return some of importers guarantees/pay orders while declining to do the same for others who were sailing in the same boat was discriminatory, unfair and violated the Fundamental Rights of importers---High Court directed authorities to return guarantees/pay orders to importers---Constitutional petition was allowed accordingly.

Collector of Customs v. Gul Rehman 2017 SCMR 339; Fecto Belarus Tractor Ltd. v. Government of Pakistan 2005 PTD 2286 and Orient Color Lab. (Pvt.) Ltd. v. The Director General, Customs Valuation, Karachi 2011 PTD 1594 rel.

Ms. Naveen Merchant for the Petitioners.

Kashif Nazeer for the Pakistan Customs

Ms. Masooda Siraj along with Ms. Naheed Parveen, D.A.G. for the State.

2019 P T D 1765

[Sindh High Court]

Before Irfan Saadat Khan and Adnan-ul-Karim Memon, JJ

ALI ZAHIR JAFRI

Versus

CHAIRMAN FEDERAL BOARD OF REVENUE and another

Constitutional Petition No. D-544 of 2013, decided on 2nd April, 2018.

Reward Rules, 1973---

----Rr. 9(ii) & 13---Constitution of Pakistan, Art. 199---Special reward to the members of staff by the Federal Board of Revenue---Conditions---Question as to entitlement of petitioner for grant of award and rejection of claim of petitioner by the Authority---Constitutional jurisdiction of High Court---Scope---High Court in its constitutional jurisdiction could not interfere in the findings on facts by the competent forum until and unless there was mis-reading and non-reading of evidence or perversity, illegality or irregularity in the said proceedings.

Syed Jawad Hyder Rizvi for Petitioner.

Kafeel Ahmed Abbasi for Respondent No.1.

Sheikh Liaquat Hussain, Assistant Attorney-General.

Dates of hearing: 13th and 29th March, 2018.

2019 P T D 1858

[Sindh High Court]

Before Aqeel Ahmed Abbasi and Abdul Maalik Gaddi, JJ

Messrs ASHRAFI BREAD INDUSTRIES

Versus

FEDERATION OF PAKISTAN and others C.P. No. D-8024 of 2018, heard on 13th March, 2019.

Sales Tax Act (VII of 1990)---

----Ss. 13, 3, 2(41) & Sixth Sched.---S.R.O. No. 509(I)/2013 dated 12-06-2013---Exemption---Scope of sales tax---Taxable supply---Scope---Person who enjoys exemption in terms of S. 13 read with Sixth Schedule of Sales Tax Act, 1990 and does not make any taxable supply in terms of S. 2(41), Sales Tax Act, 1990 is not required to be charged further tax and extra sales tax in terms of S. 3(1A) and S.R.O. No. 509(I)/2013 dated 12-06-2013---Purpose of levying extra tax, in addition to the tax under subsection (1) of S. 3 of Sales Tax Act, 1990 is to charge the said tax from those persons who are liable to be registered under Sales Tax Act, 1990 but have chosen not to get themselves registered to avoid payment of sales tax in accordance with law---Legislature in its wisdom has chosen to exempt the supplies from payment of sales tax---Manufacturer cannot be made liable to pay any further tax or extra tax only on account of his non-registration under Sales Tax Act, 1990---Words used in S. 13(2)(a) of Sales Tax Act, 1990 are very specific and provide for exemption of any taxable import or supply of any goods from the whole or any part of the sales tax chargeable under the Sales Tax Act, 1990 and not merely under S. 3(1) of Sales Tax Act, 1990---Section 13 of Sales Tax Act, 1990 has an overriding effect on the chargeability of sales tax in terms of S. 3(1) as well as S. 3(1)(a) of Sales Tax Act, 1990---Section 3 of Sales Tax Act, 1990 can only be invoked in respect of goods which are being charged sales tax.

Messrs Al-Zarina Glass Industries v. Federation of Pakistan through Secretary Revenue Division and others 2018 PTD 1600 and Zia Brothers v. Federation of Pakistan and others Writ Petition No. 27097 of 2013 fol.

Arshad Hussain Shahzad for Petitioner.

Haider Naqvi for Respondent No.2.

Ms. Durdana Tanveer, Assistant Attorney General for Respondents.

Date of hearing: 13th March, 2019.

2019 P T D 1958

[Sindh High Court]

Before Aqeel Ahmed Abbasi and Abdul Maalik Gaddi, JJ

LAJPAL RICE MILLS

Versus

FEDERATION OF PAKISTAN and others

C.P. No. D-7005 of 2017, decided on 31st January, 2019.

Sales Tax Act (VII of 1990)---

----Ss. 2(41), 13 & Sixth Schedule, Item No. 19---Notification SRO No. 509(I)/2013 dated 12-06-2013---Taxpayer was not making taxable supplies---Extra tax, payment of---Exemption from sales tax---Taxpayer assailed further payment of sales tax on grounds that extra tax was paid by taxpayer---Validity---Provisions of Notification SRO No. 509(I)/2013 dated 12-06-2013 were not applicable to taxpayer who enjoyed exemptions in terms of S. 13 of Sales Tax Act, 1990 read with item 29-C of Sixth Schedule to Sales Tax Act, 1990 as petitioner was not making any taxable supplies in terms of S. 2(41) of Sales Tax Act, 1990---Petition was allowed accordingly.

Messrs AI-Zarina Glass Industries v. Federation of Pakistan through Secretary, Revenue Division and Ex-Officio Chairman, Federal Board of Revenue, Islamabad and 3 others 2018 PTD 1600 fol.

Ajeet Sundar for Petitioner.

Muhammad Aqeel Qureshi for Respondent.

Ms. Lubna Pervaiz, D.A.G. for Respondent.

2019 P T D 1964

[Sindh High Court]

Before Aqeel Ahmad Abbasi and Zulfiqar Ahmad Khan, JJ

Messrs SKY OVERSEAS through Authorized Attorney

Versus

FEDERATION OF PAKISTAN through Secretary, Revenue Division and 4 others

C.Ps. Nos. D-8281, 8134, 8249, 8260, 8338, 8410, 8471, 8475, 8590, 8595, 8662, 8677, 8709, 8730, 8749, 8850, 8949 of 2017, 06, 155, 217, 322, 619, 742, 917, 975, 1061, 1065, 1119, 1148, 1185, 1219, 1268, 1314, 1333, 1345, 1368, 1369, 1379, 1450, 1507, 1511, 1573, 1584, 1647, 1761, 1763, 1803, 1839, 2121, 2287, 2288, 2437, 2476, 2752, 3035, 3087, 3105, 3297, 3298, 3329, 3336, 3744, 3750, 3759, 3815, 3824, 3956, 3957, 3958, 4011, 4012, 4013, 4183, 4346, 4437, 4504, 4637, 4698, 4799, 4834, 4872, 4988, 4993, 5074, 5207, 5211, 5340, 5341, 5439, 5471, 5718, 5728, 5750, 5871, 5994, 6017, 6018, 6180, 6317, 6324, 6507, 6574, 6671, 6672, 6673, 6714, 6758, 6783, 6833, 6834, 6967, 6968, 6969, 6970, 6994, 6998, 7017, 7018, 7021, 5207, 7356, 7273, 6933, 7327, 7338 of 2018, 7371, 8377, 7372, 7393, 7411, 7412, 7463, 7555, 7564, 7626, 7627, 7693, 7771, 7795, 7740, 7890, 7891, 7845 and 7887 of 2018, decided on 28th May, 2019.

(a) Customs Rules, 2001---

----R. 107---Implementation Agreement, Arts.1, 2, 3, 5 & 7---General Agreement on Tariff and Trade, 1994, Art. VII---Phrase, 'at or about the same time'---Scope---Due to time difference between various countries, it would be impossible to find transactional value particularly when markets are closed in the exporting country; that is why the Legislature and the Agreement used phrase, 'at or about the same time'---By bringing the word 'about' in the phrase, such practical difficulty has been resolved.

(b) General Agreement on Tariff and Trade, 1994---

----Art. VII---Implementation Agreement, Arts.1, 2, 3, 5 & 7---Customs laws and valuation methods---Harmony among countries---Object, purpose and scope---Intent of hundreds of countries who entered General Agreement on Tariff and Trade (GATT) Agreement and its Article VII Implementation Agreement was to bring their national laws in conformity with GATT standards, including their customs laws and customs valuation methods were agreed to offer a level playing field for their respective citizens---Preamble of GATT rightly provided that the countries entering into the Agreement have recognized that their relations in the field of trade and economic endeavor should be conducted with a view to raising standards of living, ensuring full employment and a large and steadily growing volume of real income and effective demand, developing the full use of resources of the world and expanding the production and exchange of goods---Countries were desirous of contributing to such objectives by entering into reciprocal and mutually advantageous arrangements directed to the substantial reduction of tariffs and other barriers to trade and to elimination of discriminatory treatment in international commerce---Such objective cannot be met by unilaterally bringing any changes in national legislature tangently opposed to the intent of WTO agreements, which were agreed after hard negotiations.

(c) Customs Act (IV of 1969)---

----Ss. 25A, 25D, 79 & 81---Custom Rules, 2001, R. 107---Implementation Agreement, Arts.1, 2, 3, 5 & 7---General Agreement on Tariff and Trade, 1994, Art. VII---Notification S.R.O. No.564(I)/2017, dated 1-7-2017---Circular No. Sl/Misc/13/2014-CC (Appr)/375 dated 22-11-2017---Goods valuation---Procedure---Petitioners were importers who were aggrieved of Circular No. Sl/Misc/13/2014-CC (Appr)/375 dated 22-11-2017 whereby they were not allowed to get their goods provisionally released on the ground that they had challenged such Ruling---Validity---Chief Controller Customs and/or for such purpose the Federal Board of Revenue had no authority to issue any circular and administrative direction of the nature, which could interfere with the judicial or quasi-judicial function entrusted to the various functionaries under the statute---Any Circular or Instructions issued by Federal Board of Revenue or by any other officer performing functions under administrative control of Federal Board of Revenue relating to interpretation of any statutory provision, rule or regulation, could not be treated as judicial interpretation and was not binding on authorities performing judicial and/or quasi-judicial functions---High Court declared CBR Circular No. Sl/Misc/13/2014-CC (Appr)/375 dated 22.11.2017 to be illegal and without lawful authority---Constitutional petition was allowed accordingly.

Sadia Jabbar v. Federation of Pakistan 2018 PTD 1746; Danish Jahangir v. The Federation of Pakistan through Secretary/Chairman and 2 others 2016 PTD 702 and Central Insurance Company v. Central Board of Revenue 1993 SCMR 1232 ref.

Asad Raza, Salman Yousuf, Ms. Dilkhurram Shaheen, Imran Iqbal Khan, Ghulam Hyder Sheikh, Manzar Hussain, Darvesh K. Mandhan, Mukesh Kumar G. Karara, Nasrullah Korai, Salman Aziz, Adeel Awan, Ghulam Nabi Shar, Shayan Karimi and Muhammad Ishaq for Petitioners.

Mrs. Masooda Siraj, Muhammad Rashid Arfi, Iqbal Khurram, Khalid Rajpar, along with Abdul Rasheed Sheikh, Chief Collectorate (South), Saeed Ahmed Watto, ADC (West), Masood Ahmed, ADC (East) and Muhammad Qasim, DC, Law Port Qasim Rana Sakhawat Ali, Muhammad Khalil Dogar, Ms. Nuzhat Shah, Ghulam Murtaza, Mirza Nadeem Taqi, Dr. Shah Nawaz and Mir Hussain Abbasi, Assistant Attorney General for Respondents.

2019 P T D 2021

[Sindh High Court]

Before Aqeel Ahmed Abbasi and Zulfiqar Ahmad Khan, JJ

K-ELECTRIC LIMITED

Versus

FEDERATION OF PAKISTAN through Secretary to the Government of Pakistan and 4 others

Constitutional Petition No.D-6386 of 2018, decided on 12th April, 2019.

Customs Act (IV of 1969)---

----S.202---Duty and Tax liability before privatization of company---Recovery---Petitioner company was privatized by Government and was aggrieved of recovery proceedings by authorities for taxes and duties incurred prior to its privatization---Validity---Long outstanding liability towards duty and taxes against petitioner were acquired during privatization and its payment was deferred on one pretext or other---Petitioner could not obtain any waiver or relaxation of amount of admitted liability of customs duty from competent authority---Authorities lawfully created demand of customs duty and sales tax against predecessor of petitioner company in year 1998 and same could not be recovered from petitioner who acquired all assets and liabilities at time of privatization in year 2005---High Court declined to interfere in exercise of Constitutional jurisdiction as there was no justification for non-payment of long outstanding tax liability which could not be waived through decision of Economic Coordination Committee or any executive order---Constitutional petition was dismissed in circumstances.

Messrs Searle IV Solution (Pvt.) Ltd. and others v. Federation of Pakistan and others 2018 SCMR 1444; Salahuddin and 2 others v. Frontier Sugar Mills and Distillery Ltd. PLD 1975 SC 244; Syed Dost Ali v. Federation of Pakistan and 2 others 2016 CLC 367 and Messrs Food Axis (Pvt.) Ltd. v. Federation of Pakistan C.P. No.D-5986 of 2018 ref.

Amel Khan Kasi for Petitioner.

Khalid Rajpar for Respondents.

Ms. Lubna Pervaiz, D.A.G. for Respondents.

2019 P T D 2119

[Sindh High Court]

Before Muhammad Junaid Ghaffar, J

AGHA STEEL INDUSTRIES LTD. through Authorized Company Secretary and another

Versus

DIRECTORATE OF INTELLIGENCE AND INVESTIGATION through Director and 2 others

C.M.A. No.1668 of 2019 in Suit Nos. 200 of 2019 and C.M.A. No.1671 of 2019 in Suit No. 201 of 2019, decided on 15th June, 2019.

(a) Income Tax Ordinance (XLIX of 2001)---

----S. 175---Power to enter and search premises under S. 175 of the Income Tax Ordinance, 2001---Nature and scope of such powers---Power to enter and search premises under S. 175 of the Income Tax Ordinance, 2001 could only be exercised when there existed pending proceedings against taxpayer, and for one reason or the other, there existed obstruction in enforcement of such proceedings, and as a last measure, to enforce such proceedings; resort was to be made to enter and search the premises of taxpayer---Power under S. 175 of Income Tax Ordinance 2001 was ancillary in nature, and was not an independent function of itself; and such power was to be exercised by Commissioner, who was otherwise competent and had jurisdiction in respect of pending proceedings against a taxpayer---Such powers were only available for a Commissioner who was otherwise concerned or vested with powers of assessment, amendment in assessment, conduct of audit etc. and the same appeared to be a conscious act that Legislature had restricted such powers of access and raid with certain circumspection for enforcement of pending proceedings and not otherwise.

K.K. Oil and Ghee Mills (Pvt.) Ltd. v. Federation Board of Revenue and others 2016 PTD 2601 and Messrs Tri-Star Industries (Pvt.) Limited v. The Commissioner of Income Tax, Companies-I, Karachi 1998 PTD 3923 rel.

National Bank of Pakistan and 117 others v. SAF Textile Mills Ltd. and another PLD 2014 SC 283; A.M.Z. Spinning and Weaving Mills (Pvt.) Ltd. through Manager Finance v. Federation of Pakistan through Secretary, Revenue Division 2009 PTD 1083; N.P. Water Proof Textile Mills (Pvt.) Ltd. Through Director v. Federation of Pakistan through Secretary Revenue Division/Chairman, Central Board of Revenue, Islamabad and another 2004 PTD 2952; Shahzad Ahmed Corporation through Shahzad Ahmed v. Federation of Pakistan through Secretary, Ministry of Finance, Government of Pakistan, Islamabad and 2 others 2005 PTD 23; Collector of Sales Tax and Central Excise (Enforcement) and another v. Messrs Mega Tech (Pvt.) Ltd. 2005 SCMR 1166; Messrs Z&J Hygienic Products (Pvt.) Ltd. v. Commissioner Inland Revenue, Sales Tax Gujranwala and others 2014 SCMR 30; Collector of Sales Tax and others v. Messrs Food Consults (Pvt.) Ltd. and another 2007 PTD 2356; Messrs Munir Foundry v. C.I.R. (Appeals-II), Lahore and others 2016 PTD (Trib.) 485; Chairman, Regional Transport Authority, Rawalpindi v. Pakistan Mutual Insurance Company Limited, Rawalpindi PLD 1991 SC 14; Searle IV Solution (Pvt.) Ltd and others v. Federation of Pakistan and others 2018 SCMR 1444; Messrs Vincraft (Pvt.) Ltd. through Authorized Representative v. Federal Board of Revenue through Chairman and 4 others 2017 PTD 2114; Commissioner Inland Revenue Karachi v. Pakistan Beverages Limited Karachi 2018 PTD 1559; Messrs BILZ (Pvt.) Ltd. v. Deputy Commissioner of Income Tax, Multan and another 2002 PTD 1; Messrs Indus Basin and Co. v. Commissioner of Income Tax 2002 PTD 2169; Messrs Pirani Engineering through Chief Financial Officer v. Federation Board of Revenue and 2 others 2009 PTD 809; Messrs Imperial Builders through Manager v. Province of Punjab through Secretary Legal Government and another 2009 PTD 744; Kundan Bibi and others v. Walayat Hussain, Controller of Estate Duty, Government of Pakistan and another 1971 PTD 43; Commissioner Inland Revenue Zone-I, RTO, Hyderabad v. Messrs Hyderabad Electric Supply (HESCO) Hyderabad 2014 PTD 951 and Taj International (Pvt.) Ltd. and others v. Federation Board of Revenue and others 2014 PTD 1807 ref.

(b) Sales Tax Act (VII of 1990)---

----S. 38---Access to premises of registered persons---Authorized officers to have access to premises, stocks, accounts and records under S. 38 of the Sales Tax Act, 1990---Nature and scope of such access---Section 38 of the Sales Tax Act, 1990 was not a provision which permitted conducting a search or a raid and only gave access to an authorized officer for the purposes as mentioned in provision itself and its purpose was for having access to record in whatever manner it is being kept by the registered person---Department, if in need of any access to the record, had to furnish a prior notice first for providing of relevant record and if such request was refused by the taxpayer or not responded properly, then there could be a justification for department to have recourse to S. 38 of the Sales Tax Act 1990, and that too only for having access to the record and not otherwise---Until such time this exercise of requesting information or record and its refusal was carried out, there appeared to be no justifiable occasion for having access to record by invoking S. 38 of the Sales Tax Act, 1990.

A.M.Z. Spinning and Weaving Mills (Pvt.) Ltd. through Manager Finance v. Federation of Pakistan through Secretary, Revenue Division 2009 PTD 1083; Federation of Pakistan through Secretary, Ministry of Finance, and 4 others v. Master Enterprises (Pvt.) Limited 2003 PTD 1034; Collector of Sales Tax and Central Excise (Enforcement) and another v. Mega Tech (Pvt.) Limited 2005 SCMR 1166 and Messrs Iqbal and Sons through Authorized Representative v. Federation of Pakistan through Secretary and 3 others 2017 PTD 590 rel.

(c) Sales Tax Act (VII of 1990)---

----S. 40B---Posting of Officers of Inland Revenue / Federal Board of Revenue ("FBR") at manufacturing premises of taxpayer---Exercise of powers under S. 40B of the Sales Tax Act, 1990---Nature and scope of discretion under S. 40B of the Sales Tax Act, 1990---While exercising discretionary powers, an officer or even FBR was not conferred with unfettered discretion and said discretion had to be guided by objective and workable standards with level-headedness---In case of unfettered discretion, an Officer or the Department, as the case may be, would be permitted to pick and choose a taxpayer which resultantly could lead to harassment---Intent of the Legislature especially in tax matters could not be that a taxpayer was left to whims and desire of tax collecting authority and in such matters, no discretion was left with a tax collecting agency---Any officer without any basis, material and examination of record, if comes to a conclusion that some tax was short levied or not paid, he, without any recourse to assigning any justifiable reasons, could not be permitted to monitor the production and sales of a tax-payer which amounted to a fishing and roving expedition.

Walayat Ali Amir v. Pakistan International Airlines Corporation 1995 SCMR 650; Assistant Director Intelligence and Investigation v. B.R.Herman PLD 1992 SC 485 and Commissioner Inland Revenue v. Pakistan Beverages Limited 2018 SCMR 1544 rel.

(d) Public Functionary---

----Exercise of discretionary power by a public functionary---Statutory discretion, nature of---Scope---Exercise of discretionary power had to be guided by objective and workable standards with some level-headedness and must not be based on short-sightedness or carelessness---Statutory discretion had to be always exercised in a judicious manner and keeping in mind the attending circumstances thereto---While exercising discretion, an authority should not act arbitrarily, unreasonably

Khawaja Shamsul Islam, Imran Taj and Muhammad Mustafa Ali for Plaintiffs (in both Suits).

Syed Mohsin Imam along with Azam Nafees, Assistant Director on behalf of Defendant No. 1.

Muhammad Aqeel Qureshi for Defendant No.2.

Osman A. Hadi, Assistant Attorney General for Defendant No.3.

2019 P T D 2209

[Sindh High Court]

Before Muhammad Junaid Ghaffar, J

Messrs GETZ PHARMA (PVT.) LIMITED through Authorized Person and others

Versus

FEDERATION OF PAKISTAN through Secretary and others

Suits Nos. 2067, 2671, 1881, 1973, 2015, 2159, 1998, 2135, 2007, 1074, 2165 of 2016, 105, 130 of 2017 and 2331 of 2014, decided on 2nd August, 2019.

(a) Sales Tax Act (VII of 1990)---

----Ss. 3, 13 & Sixth Sched.---Levy of sales tax---Import of goods---Raw materials for basic manufacture of pharmaceutical materials---Exemption from levy of sales tax---Packaging material---Scope---Question before the High Court was whether pharmaceutical companies were entitled for exemption of sales tax on imports of packing materials in terms of Entry No. 105 of the Sixth Schedule to Sales Tax Act, 1990---Exemption under Entry No. 105 of the Sixth, Schedule to the Sales Tax Act, 1990 was available to "pharmaceutical active ingredient and "pharmaceutical product" as these two categories were to be read disjunctively as "or"---Entry No. 105 of the Sixth Schedule to the Sales Tax Act, 1990 was silent on whether exemption was available in respect of "packing material" as well as "raw materials for packaging" of pharmaceutical products, therefore Court was not permitted to add anything to the provision under the principle of "casus omissus" which provides that a matter which should have been, but had not been provided for in a statute, could not be supplied by the courts as to do so, would be Legislation and not construction---Taxpayer pharmaceutical companies were therefore not entitled to claim exemption in respect of import of packaging / packing material---Suit was dismissed, accordingly.

Shazeb Pharmaceutical Industries Ltd. v. Federation of Pakistan and others 2015 PTD 1532; Commissioner of Sales Tax v. Crescent Textile Mills Ltd. PLD 1975 Lah. 631; The Commissioner of Income Tax, East Pakistan v. Messrs Ayurvedic Pharmacy (Dacca) Ltd. PLD 1970 SC 93; The Commissioner of Sales Tax v. Messrs Shaiq Corporation Limited PLD 1986 SC 731; Chambers 21.4 Century Online Dictionary; Latif Bawany Jute Mills Limited v. The Sales Tax Officer Companies Circle I, Dacca 1971 PTD 26; Sindh Institute of Urology and Transplantation through Authorized Representative v. Federation of Pakistan through Secretary Revenue Division and 4 others 2017 PTD 603; Muhammad Fayyaz v. Central Excise Authorities 1989 CLC 1642; D.G. Khan Cement Company Limited through Deputy Manager Marketing v. Deputy Collector of Customs, Appraisement Group-VII, Custom House, Karachi and another 2003 PTD 986; Collector of Customs (Appraisement) Karachi and others v. Fauji Fertizer Co. Ltd. and others PLD 2005 SC 577; Glaxo Laboratories of Pakistan Ltd. v. Federation of Pakistan and others PLD 1992 SC 455; Chairman Federal Board of Revenue, Islamabad v. Messrs Al-Technique Corporation of Pakistan Ltd. and others PLD 2017 SC 99; Hashwani Hotels Limited v. Government of Pakistan 2007 SCMR 1131; Messrs Ramna Fittings and Pipe Industries (Pvt.) Ltd. through Director, Lahore v. Collector of Sales Tax Custom House, Lahore 2002 PTD 470; Fauji Cement Company Ltd. through Secretary v. Additional Collector, Customs, Central Excise and Sales Tax, Islamabad and another 2002 PTD 609; 2007 PTD (Trib.) 2325, Karachi Electric Supply Co. v. American Export PLJ 1975 Kar. 14; Commissioner Inland Revenue Zone-III v. IGI Insurance Company Limited 2018 PTD 114 and Searle IV Solution (Pvt.) Ltd and others v. Federation of Pakistan and others 2018 SCMR 1444 ref.

(b) Interpretation of statutes---

----Fiscal/taxation statutes---Construction---Exemption clauses---In case of a claim of exemption, it is for the taxpayer to show that taxpayer came within scope thereof and if two reasonable interpretations for the same were possible, the one against the claim of exemption by taxpayer would be adopted.

(c) Interpretation of statutes---

----Construction of statutes---Principles---While interpreting a specific provision of a statute, the language employed therein was determinative of legislative intent and the same had to be interpreted keeping such intent in mind. (d) Interpretation of statutes---

----"Casus omissus", principle of---Applicability---Scope---Per principle of casus omissus a matter which should have been, but had not been provided for in a statute could not be supplied by Courts, as to do so will be legislation and not construction---Casus Omissus can, in no case, be supplied by court of law as that would amount to altering a provision---While interpreting a penal or taxing statute, Courts must look to words of a statute and interpret them in light of what was clearly expressed and it could not imply anything which was not expressed and it could not import provisions in a statute so as to support an assumed deficiency--Statute was an edict of Legislature and the conventional way of interpreting or construing a statute was to seek "intention" of its maker---Statutory provision, if open to more than one interpretation, then the Court had to choose that interpretation which represented true intention of the Legislature as the function of the court was only to expound and not to legislate.

Hansraj Gupta v. Dehra Dun Mussoorie Electric Tramway Co. Ltd., AIR 1933 PC 63; Nadeem Ahmed Advocate v. Federation of Pakistan 2013 SCMR 1062; Collector of Customs (Appraisement) v. Abdul Majeed Khan and others 1977 SCMR 371; Seaford Court Estates Ltd. v. Asher [1949] 2 All E.R. 155; Magor and St. Mellons Rural District Council v. Newport Corporation [1951] 2 All E.R. 1226 and Magor and St. Mellons Rural District Council, [1951] 2 All E.R. 839 rel.

Mohammad Vawda for Plaintiff (in Suit No. 2067 of 2016).

Ammar Yasir, Advocate for Plaintiff (in Suit No.105 of 2017).

Abdul Ahad, for Plaintiffs (in Suits Nos. 2331/14, 2165/16, 1074/16, 2135/16, 1998/16, 2015/16,1073/16 and 1882 of 16).

Adnan Motan for Plaintiff (in Suit No.2159 of 2016).

Faiz Ahmed for Plaintiff (in Suit No.2671 of 2016).

Haroon Dugal for Plaintiff (in Suit No.130/2017).

Osman A. Hadi, Asstt. Attorney General for Fed. of Pakistan.

Ms. Fozia Rasheed for Defendant (PQA) (in Suits Nos.2067, 2159, 2165, 1998, 2015, 2007, 2135 of 2016 and 105 and 130 of 2017).

Dr. Shah Nawaz for Defendants (in Suits Nos.2331/14 and 2671 of 2016).

Kashif Nazeer for Defendants (in Suits Nos.1073, 1074, 2067, 2135, 2159, 2015, 2007, 1998 of 2016 and 130, 105 of 2017).

Ms. Masooda Siraj for Defendants (in Suits Nos.2067, 2165, 2007, 1998, 2159, 2015 1882 of 2016 and 130 of 17).

Mirza Nadeem Taqi for Defendant (in Suits Nos.1882 of 2016 and 2671 of 16).

Ghulam Hyder Shaikh for Defendants (Collectorate Preventive) (in Suits Nos.1073, 1074, 2015 of 2016 and 130 of 2017).

Muhammad Khalil Dogar for Defendants (in Suits Nos.1073 and 1074 of 2016).

Shahid Ali for Defendants/LTU (in Suit No.2165 of 16).

Iqbal M. Khurram for Defendants (Appraisement East) (in Suits Nos. 1074, 1073, 2135, 2165 and 2159 of 2016).

Khalid Mehmood Siddiqui for Defendant (in Suits Nos.2105, 1998 and 2165 of 2016).

Ms. Sadaf Noor Ellahi, AC (MCC AW).

2019 P T D 2251

[Sindh High Court]

Before Muhammad Junaid Ghaffar, J

Messrs MUSTAQIM DYEING AND PRINTING INDUSTRIES (PVT.) LIMITED and others

Versus

PROVINCE OF SINDH and another

Suits Nos. 942, 1976, 2068, 1154, 1877, 1135, 1123, 974, 993, 1213, 1184, 665 and 716 of 2016, heard on 22nd February, 2018.

Sindh Sales Tax on Services Act (XII of 2011)---

----Ss. 3 & 4---Suit for declaration---Sales tax on services---Taxable services/activities under the Sindh Sales Tax on Services Act, 2011---Economic activity---Renting out of immoveable property----Question before High Court was whether the renting of immoveable property fell within definition of "providing or rendering services or of economic activity" under Sindh Sales Tax on Services Act, 2011---Held, that mere letting out of an immoveable property by a landlord to a tenant on rent for consideration did not involve any element of providing any taxable services therefore amount of rent received by the landlord in such a case could not be subjected to tax under the Sindh Sales Tax on Services Act, 2011---Suit was decreed accordingly.

Young's (Private) Limited and others v. Province of Sindh and others Constitution Petition No.D-2421 of 2016 rel.

Naeem Suleman and Arshad Hussain for Plaintiffs (in Suits Nos. 942 and 974 of 2016).

Muhammad Mushtaq for Plaintiffs (in Suits Nos. 2068 and 1123 of 2016).

Agha Imtiaz Ahmed for Plaintiff (in Suit No.1135 of 2016).

Ali Asghar for Plaintiff (in Suit No. 1976 of 2016).

Abdul Raheem for Plaintiff (in Suit No.1877 of 2016).

Sunnel Kumar Tlareja, A.A.G. along with Ms. Nigar Afaq, State Counsel.

Ghulam Murtaza for SRB.

2019 P T D 2280

[Sindh High Court]

Before Justice (R) Nadeem Azhar Siddiqui, Chairman

Messrs AVICON AVIATION

Versus

ASSISTANT COMMISSIONER, SRB, KARACHI

Appeal No. AT-30 of 2014, decided on 13th August, 2018.

Sindh Sales Tax on Services Act (XII of 2011)---

----Ss.24B, 3, 4 & First Sched.---Sales Tax on services---Airport service---Compulsory registration---Appellant was compulsorily registered on ground that he was providing "airport services" which was a taxable service under Sindh Sales Tax on Services, 2011 - Contention of appellant, inter alia, was that it was not a service provider under tariff of "airport services" as for such service, a licence was required from Civil Aviation Authority, which he did not have---Validity---Perusal of record revealed that Department had failed to provide any document to establish that appellant was a provider of "airport services" and that appellant was in fact a service receipt for its foreign based client and therefore could not be compulsorily registered under the tariff heading of "airport service" per the Sindh Sales Tax on Services Act, 2011.

Messrs APM Terminals Pakistan (Pvt.) Ltd. v. The Assistant Commissioner-SRB-VI Appeal No. 17 of 2013 and Deputy Commissioner, SRB, Karachi v. Messrs Byco Terminal Pakistan Limited Appeal No. AT-14 of 2016 rel.

Muhammad Shafi Siddiqui for Appellant.

Syed Waqas Zaidi, AC-SRB for Respondent.

2019 P T D 2288

[Sindh High Court]

Before Irfan Saadat Khan and Faheem Ahmed Siddiqui, JJ

Messrs PFIZER LABORATORIES LTD.

Versus

The COMMISSIONER OF INCOME TAX, COS-II, KARACHI

I.T.R. No.67 of 1998, heard on 19th September, 2019.

Income Tax Ordinance (XXXI of 1979)---

----Ss. 79 & 136---Income from transactions with non- resident---Prerequisites for application of S. 79 of the Income Tax Ordinance, 1979---Transfer pricing---'Arms length transaction'---Scope----Question before High Court was whether additions made to income of taxpayer, which was a pharmaceutical company, under S. 79 of the Income Tax Ordinance, 1979 on basis of its import of raw materials from its parent company, were in accordance with law---Contention of Department inter alia, was that such practice tantamount to transfer pricing by way of which profits were transferred to parent company by taxpayer, therefore invocation of S. 79 of the Income Tax Ordinance, 1979 was justifiable---Validity--Assessing Officer, in the present case, compared price of imported raw materials of taxpayer, which taxpayer imported from its parent company, with raw materials imported by other companies from other sources and thereafter made additions in respect of imported price of raw materials---Difference between import prices was tabulated without any justification or details about other factors required for necessary comparison in order to justify additions under S. 79 of the Income Tax Ordinance ,1979---Onus lay on Department to prove an 'arms length transaction', and simply observing that some other companies imported a particular raw material was not sufficient to establish transfer pricing or to justify the invocation of S. 79 of the Income Tax Ordinance, 1979 --- Additions made to the income of the taxpayer were therefore not in accordance with law --Reference was answered accordingly.

Messrs Squibb Pakistan (Pvt.) Ltd. and another v. Commissioner of Income Tax and another 2017 SCMR 1006 rel.

Iqbal Salman Pasha for Applicant.

Ameer Bux Metlo for Respondent.

2019 P T D 1

[Lahore High Court]

Before Ayesha A. Malik, J

MUBASHAR IJAZ AWAN

Versus

FEDERATION OF PAKISTAN through President and 6 others

W.P. No.38145 of 2016, heard on 24th October, 2018.

Sales Tax Act (VII of 1990)---

----Ss. 45B & 48---Arrears of sales tax, recovery of---Attachment of Bank accounts---Remedy of appeal under S. 45B of the Sales Tax Act, 1990---Association of Persons (AOP) setup as special administrative arrangements---Scope---Petitioner impugned attachment of his Bank account by the Department, in pursuance of recovery of tax liability of an Association of Persons (AOP) , where petitioner was shown as partner, under S. 48 of the Sales Tax Act, 1990---Contention of petitioner, inter alia, was that he was merely an employee of the AOP and was made member of the AOP for administrative reasons as the AOP was made in pursuance of a special department of the Provincial Government ---Contention of Department, inter alia, was that remedy of appeal was available to petitioner under S. 45B of the Sales Tax Act, 1990---Validity----Department had not denied that the petitioner was in fact an employee of the AOP and the assessment order against said AOP had nothing to do with the petitioner---Remedy of appeal under S. 45B of the Sales Tax Act, 1990 was neither effective nor efficacious for the petitioner, and the matter was also argued before the Federal Tax Ombudsman where case of maladministration against Department was made out---High Court directed that Department refund amounts recovered from petitioner's Bank account within a period of two weeks---Constitutional petition was allowed, accordingly.

Waheed Shahzad Butt for Petitioner.

Nasar Ahmad, DAG for Respondents.

Ms. Foziya Bukhsh for Respondents Nos. 3 and 4.

Mansoor Beg for Respondent No.5.

2019 P T D 46

[Lahore High Court]

Before Shahid Jamil Khan and Asim Hafeez, JJ

COMMISSIONER INLAND REVENUE, ZONE-V

Versus

Messrs T.N.W. ENGINEERING WORKS

I.T.R. No.86725 of 2017, decided on 24th October, 2018.

Income Tax Ordinance (XLIX of 2001)---

----Ss. 133, 132 & 131---Jurisdiction of High Court under S. 133 of the Income Tax Ordinance, 2001---Scope---Reference under S. 133 of the Income Tax Ordinance, 2001---Competence---Reference against interlocutory order passed under Ss. 131 & 132 of the Income Tax Ordinance, 2001----Scope----Question before the High Court was whether an order under S. 131(5) of the Income Tax Ordinance, 2001 made by Appellate Tribunal, was amenable to jurisdiction of High Court under S. 133 of the Income Tax Ordinance, 2001----Held, that literal reading of S. 133 of the Income Tax Ordinance, 2001 suggested that jurisdiction under S.133 could only be invoked against an order of the Tribunal communicated under S. 132(7) of the Income Tax Ordinance, 2001 and none other---Only final order was amenable to jurisdiction under S.133 and an order interlocutory in nature could not be subjected to the same---Reference was answered, accordingly.

Dowell Schlumberger (Wastern) S.A. v. Federation of Pakistan and others 2016 PTD 1702 and Mst. Shagufta Abdullah v. Commissioner Inland Revenue and others 2015 PTD 1855 distinguished.

Messrs Squibb Pakistan (Pvt.) Ltd. and another v. Commissioner of Income Tax and another 2017 PTD 1303 and Pak Gulf Construction (Pvt.) Ltd. v. Commissioner Inland Revenue 2016 PTD 1061 rel.

2019 P T D 60

[Lahore High Court]

Before Shahid Karim, J

Messrs STARLET INNOVATIONS (PVT.) LTD.

Versus

FEDERATION OF PAKISTAN and others

W.P. No.202214 of 2018, heard on 15th October, 2018.

Income Tax Ordinance (XLIX of 2001)---

----Ss. 177, 169(3), 154,120, 115(4) & 114---Presumptive tax regime---Tax-payer filing statement in terms of S. 115(4) of the Income Tax Ordinance, 2001---Question as to whether accounts of such person could be audited---Petitioner/tax-payer contended that he had filed a statement under S. 115(4) of the Ordinance which would constitute "full and final discharge of its tax liability", therefore, he was neither required to file a return of income under S. 114 of the Income Tax Ordinance, 2001 nor its accounts could be audited under the provisions of S. 177 of the Ordinance---Validity---Petitioner had not referred to any provision, including S. 177 of the Ordinance, which prohibited the conduct of audit in the case of an tax-payer who had filed a statement under S. 115 and not a return of income under S. 114 of the Ordinance, therefore, any challenge on such basis was without any lawful justification and the impugned notices could not be struck down being invalid and illegal---Tax-payer was an exporter and tax required to be deducted was a final tax under S. 154 of the Ordinance on the income from which it was deductible---Section 169(3) of the Ordinance was triggered, in the case of tax-payer, and upon filing of the statement, assessment would be treated to have been made under S. 120 and would be taken to be an assessment order for the purposes of the Ordinance---Taxpayer could not consider itself immune from the applicability of S. 177 of the Ordinance and beyond its mischief merely on the hypotheses that the tax deductible under S. 154 was the final tax on the income---Final tax on the income of a person merely absolved that person of the obligation to file a return of income and no more ; the same did not follow that income tax affairs of such person were no more prone to audit proceedings---For purpose of conducting audit, any person was liable to be proceeded against, irrespective of whether he filed a return under S. 114 or a statement in terms of S. 115 of the Ordinance---Constitutional petition was dismissed accordingly.

Messrs Arshad Corporation (Pvt.) Ltd. through General Manager Finance Federal Board of Revenue, Islamabad and 2 others 2016 PTD 1168; Northern Bottling Company (Pvt.) Ltd. Industrial Estate, Peshawar v. Federation of Pakistan 2013 PTD 1552 and The Federal Board of Revenue and others v. Messrs Chenone Stores Ltd. 2018 PTD 208 distinguished.

Kh. Farooq Saeed, Abdullah Akhtar Butt and Shahid Sharif for Petitioners.

Abdul Waheed Khan for Respondents.

Tahir Mahmood Ahmad Khokhar, D.A.G. for Respondents.

2019 P T D 128

[Lahore High Court (Multan Bench)]

Before Shams Mehmood Mirza, J

Shahzada SOHAIL KAMRAN KHAN and 2 others

Versus

CHAIRMAN OF STATE LIFE INSURANCE CORPORATION, KARACHI and 8 others

Writ Petition No.7674 of 2012, decided on 3rd October, 2018.

Income Tax Ordinance (XLIX of 2001)---

----S. 233---State Life Employees (Service) Regulations, 1973, Regln. 2(c)---Advance tax on brokerage and commission---Deduction of advance tax from commissions earned by Commission Agents of the State Life Insurance Corporation of Pakistan---Nature of relationship between the State Life Insurance Corporation of Pakistan and its Commission Agents---Scope---Petitioners, who were Commission Agents at State Life Insurance Corporation, sought to restrain the deduction of advance tax on their commission under S.233 of the Income Tax Ordinance, 2001---Contention of the petitioners was, inter alia, that since they were employees of the Corporation, advance tax could not be deducted from their commission---Validity---Petitioners were in a contractual relationship with the State Life Insurance Corporation as was evident from their appointment letter, and were not regular employees within meaning of definition of "employees" given in Regln.2(c) of the State Life Employees (Service) Regulations, 1973---Advance tax, could therefore, be deducted from the commission earned by the petitioners---Constitutional petition was dismissed accordingly.

CPLA Nos.868-K of 2002 and 869-K of 2002 rel.

Mian Khalid Hussain Mitroo for Petitioners.

Malik Muhammad Tariq Rajwana for Respondents Nos.1 to 7.

2019 P T D 257

[Lahore High Court]

Before Abid Aziz Sheikh and Faisal Zaman Khan, JJ

COMMISSIONER INLAND REVENUE, FAISALABAD

Versus

Messrs NAGRA SPINNING MILLS (PVT.) LTD., FAISALABAD

Sales Tax Reference Application No.121 of 2016, heard on 26th September, 2018.

Sales Tax Act (VII of 1990)---

----Ss. 73, 3, 8A & 7---Sales tax liability, determination of---Input tax adjustment---Sales tax transactions not admissible---Blacklisted suppliers---Blacklisting of suppliers subsequent to transaction with taxpayer---Scope---Once blacklisting order was set aside by Appellate Tribunal, the same could not be pressed into service and subsequent blacklisting did not invalidate invoices issued at a time when a supplier was active and duly registered---Once it was established that a supplier was not blacklisted, then there existed no justification to deny input tax adjustment against invoices issued by such suppler.

Commissioner Inland Revenue v. Tariq Poly Pack (Pvt.) Ltd. 2015 PTD 2256; Commissioner Inland Revenue v. Messrs Amtex Ltd. 2016 PTD 467 and Commissioner Inland Revenue v. Rana Riasat Tufail and others 2014 PTD 1530 rel.

Mrs. Kausar Parveen for Applicant.

Khubaib Ahmad for Respondent.

2019 P T D 298

[Lahore High Court]

Before Abid Aziz Sheikh and Shams Mehmood Mirza, JJ

COMMISSIONER INLAND REVENUE, ZONE-II, REGIONAL TAX OFFICE, FAISALABAD

Versus

Messrs CHAWLA ENTERPRISES, FAISALABAD

S.T.R. No.207 of 2016, decided on 16th October, 2018.

(a) Sales Tax Act (VII of 1990)---

----Ss. 73, 3, 8A & 7----Sales tax liability, determination of---Input tax adjustment---Sales tax transactions not admissible---Blacklisted suppliers---Blacklisting of suppliers subsequent to transaction with taxpayer---Scope---Invoices which were issued when suppliers were not blacklisted or such invoices which had no nexus with a blacklisting order, could not be held inadmissible for input tax adjustment.

CIR v. Tariq Poly Pack (Pvt.) Ltd. 2015 PTD 2256 rel.

(b) Sales Tax Act (VII of 1990)---

----Ss. 73, 33(16) 3 & 7---Sales tax liability, determination of---Input tax adjustment---Sales tax transactions not admissible---Penalty for failure to make payment in the manner prescribed under S. 73 of Sales Tax Act, 1990---Scope---When payment was made through Banking channels as prescribed by S. 73(1) of the Sales Tax Act, 1990; and the only lapse was of a payment beyond the period of 180 days (in a credit transaction), even then an assessee could at best be liable for penalty under S. 33(16) of the Sales Tax Act, 1990 but such assesee could not be denied input tax adjustment.

Malik Abdullah Raza on behalf of Sarfraz Ahmed Cheema for Petitioners.

2019 P T D 332

[Lahore High Court]

Before Shams Mehmood Mirza, J

MUHAMMAD NADEEM SOHAIL

Versus

FEDERATION OF PAKISTAN and others

Writ Petition No.159322 of 2018, decided on 12th April, 2018.

Income Tax Ordinance (XLIX of 2001)---

----Ss. 214-C & 214-D---Sales Tax Special Procedures Rules, 2007, Rr. 4, 5 & proviso---Notification No. SRO 1125(I)/2011 dated 31.12.2011---Notification No. SRO 608(I)/2014 dated 02.07.2014---Selection of case for audit---Retailer, status of---Petitioner was taxpayer and was aggrieved of notice issued by authorities selecting his case for audit---Plea raised by taxpayer was that he was retailer and was not liable for audit in terms of S. 214-C of Income Tax Ordinance, 2001---Validity---Retailers falling in any category mentioned in R.4 of Sales Tax Special Procedures Rules, 2007 were required to be registered under Sales Tax Act, 1990 in terms of Chapter-I of Sales Tax Special Procedures Rules, 2007---Taxpayer Registration Profile showed that petitioner was retailer registered with sales tax department therefore, he fulfilled requirement prescribed by R. 4 of Sales Tax Special Procedures Rules, 2007---Return filed by petitioner was also appended with record and it showed that it enjoyed benefit of Notification No. S.R.O. 1125(I)/2011 dated 31.12.2011---Authorities could not have selected case of petitioner for audit in terms of Ss.214-C & 214-D of Income Tax Ordinance, 2001---High Court set aside notice issued by the authorities---Constitutional petition was allowed in circumstances.

Khawaja Farooq Saeed, Abdullah Akhtar Butt and Shahid Sharif for Petitioner.

2019 P T D 353

[Lahore High Court]

Before Shahid Karim, J

Messrs GULISTAN TEXTILE MILLS LIMITED

Versus

FEDERATION OF PAKISTAN and others

Writ Petitions Nos.67182, 95144 of 2017, 218646, 136806, 136736, 205774 and 227754 of 2018, decided on 30th November, 2018.

(a) Customs Act (IV of 1969)---

----Ss.32 & 179---Interpretation of Ss.32 & 179 of Customs Act, 1969---Recovery of Income Tax and Sales Tax by Customs officer(s)---Powers of adjudication under the Customs Act, 1969---Interpretation of Ss. 32 & 179 of the Customs Act, 1969---Expansion in powers of adjudication of Customs officer(s) in respect of Income Tax and Sales Tax liability of importers ----Scope--- Petitioners / importers impugned show-cause notice under S. 32 of the Customs Act, 1969 for recovery of Income Tax and Sales Tax---Contention of petitioners, inter alia, was that Collectorate of Customs (Adjudication) did not have the jurisdiction to decide liability of the petitioners in respect of payment of any amount of sales or income tax as said amounts could only be recovered by initiating proceedings under the respective laws under which they had been imposed---Validity---Statutory amendments whereby word "taxes" was inserted first in S. 179 and subsequently in S. 32 of the Customs Act, 1969 were to be taken as reasoned and deliberative policy making by the Legislature and could not be ignored---Said words had been woven in the fabric of the Customs Act, 1969 to achieve a purpose and Court must interpret same words in such a manner so as to give effect to the purpose and policy underlying such amendments----Under said amendments power of adjudication was materially expanded not only to include the power of recovery of customs duty but also other "taxes"---Said provisions were amended in such a way that the word "taxes" was added so as to confer jurisdiction on the officers of Customs for making adjudication in respect of taxes which had been levied or had been short-levied and officers of Customs, therefore, acted as the collecting agents for the income tax and sales tax authorities from every importer of goods on the value of goods at rate(s) specified---Constitutional petitions were dismissed, in circumstances.

PLD 1957 SC (Pak) 219 at 233 rel.

(b) Interpretation of statutes---

----Principles of construction---Additions, insertions through Legislative amendments--- Scope---Redundancy could not be attached to any words added by the Legislature in a statute and where Legislature has added certain words subsequently, intention could very well be gathered that such words had been added with a purpose and in order to achieve a goal---Textually permissible interpretation that furthers rather than obstructs the purpose of enactment should be favoured---Interpretation always depends on context, and context always included evident purpose, and evident purpose always included effectiveness---Every word had to be given effect and the courts cannot subtract or add any word in a statute.

Reading Law, The Interpretation of Legal Texts by Antonin Scalia and Bryan A. Garner; Surplusage Canon and United States v. Butler 297 US 1, 65 (1936) rel.

(c) Interpretation of statutes---

----Tax statute---Statutory powers of adjudication----Overlap of such powers---Scope---Mere fact that a power had been conferred on an officer to initiate an action in respect of recovery of tax did not, ipso facto, mean that such was the only power which could be exercised and no other power or jurisdiction could be exercised to effect recovery of such a tax---Powers which vested in different authorities were not mutually destructive but complementary to each other and unless the Legislature clearly provided to the contrary, such powers could be exercised without prejudice to any other power conferred under the law.

Mehmood Arif, M. Baqir Hussain, Mehmood Ahmad and Muhammad Naeem Munawar for Petitioners.

Ch. Muhammad Zafar Iqbal, Iftikhar Ahmad Mughal, Rana Muhammad Mehtab, Sh. Izhar ul Haq, Sarfraz Ahmad Cheema, Ch. Imtiaz Elahi and Nabeel Rafaqat Ch. for Respondents.

Nasar Ahmad, D.A.G. for Respondents.

2019 P T D 381

[Lahore High Court]

Before Shahid Karim and Tariq Saleem Sheikh, JJ

COMMISSIONER INLAND REVENUE

Versus

MUHAMMAD ASLAM

P.T.R. No.197 of 2010, heard on 11th May, 2017.

(a) Interpretation of statutes---

----Construction of statute---Beneficial legislation, curative statutes and remedial statutes---Retrospective effect of legislation---Principles---Scope---Beneficial legislation was a statute which purported to confer a benefit on individuals or a class of persons by relieving them of onerous obligations under contracts entered into by them or which tend to protect persons against oppressive acts from individuals with whom they stood in certain relations---Curative statutes were those which attempted to correct errors in proceedings particularly which sought to give effect to contracts and other transactions between private persons which otherwise would fail to produce their intended consequences on account of some statutory disability or a failure to comply with some technical requirements---Remedial statutes, on the other hand, were enacted to improve a prior enactment for some of its defects or to reform existing law to meet new situations covered by the enactment---Remedial legislation was made to supply such defects and abridge such superfluities in the Common Law as arose, either from the general imperfection of all human laws, from change of time and circumstances, from the mistake and unadvised determinations of unlearned (and even learned) Judges, or from any other cause whatever---While retroactive legislation is looked upon with disfavour, however, beneficial enactments were to be given liberal construction and retrospective effect if same were curative or remedial---In absence of express words to the contrary, remedial and curative enactments were not ordinarily construed to destroy vested rights, create new liabilities and obligations or disturb past and closed transaction.

N.S. Bindra, Interpretation of Statutes, Tenth Edition; Earl T. Crawford, The Construction of Statutes; S.M. Zafar, Understanding Statutes, Fourth Edition; S.M. Zafar, Understanding Statutes, Fourth Edition; Commissioner Inland Revenue Zone-II, Regional Tax Office, Multan v. Mrs. Ambreen Fawad Co. Pak Arab Fertilizers Limited, Multan 2014 PTD 320; Collector of Sales Tax and Central Excise, LTU, Karachi v. Messrs Pak Suzuki Co. Ltd., Karachi 2016 PTD 867 and Syed Wajid Ali and 4 others v. Globe Automobiles Ltd. and another 1993 SCMR 819 rel.

(b) Income Tax Ordinance (XXXI of 1979)---

----S. 56 & proviso---Reference to High Court---Scope---Notice for furnishing return of total income---Time limit prescribed by proviso to S. 56 of Income Tax Ordinance, 1979---Retrospective effect / benefit of proviso to S. 56 of the Income Tax Ordinance, 1979 to notice(s) issued prior to such enactment---Question before the High Court was whether insertion of proviso to S. 56 by legislative amendment, which restricted issuance of notice beyond a period of five years, was applicable to notices issued prior to its insertion vide Finance Ordinance ,2001---Held, that insertion of proviso to S. 56 was a beneficial and curative enactment as it restricted executive power to touch pocket of taxpayers thereby creating a certainty that after expiry of period of 5 years, a taxpayer would not be dragged in even if there was a good case of liability upon him and thereby said proviso would apply to notice(s) issued prior to its enactment---Reference was answered accordingly.

Commissioner of Income Tax v. Shahnawaz Ltd. and others 1993 SCMR 73; Messrs Super Asia Muhammad Din Sons (Pvt.) Ltd. through Chief Executive v. Collector of Sales Tax, Gujranwala and another 2008 PTD 60 and Messrs Gulistan Textile Mills Ltd., Karachi v. Collector (Appeals) Customs Sales Tax and Federal Excise, Karachi and another 2010 PTD 251 rel.

Liaquat Ali Chaudhary for Applicant.

Rasheed Ahmad Sheikh for Respondent.

2019 P T D 452

[Lahore High Court]

Before Ayesha A. Malik and Muzamil Akhtar Shabir, JJ

The COMMISSIONER OF INCOME TAX, LAHORE

Versus

Messrs CHAUDHARY DAIRIES LTD.

P.T.Rs. Nos.63, 64 and 65 of 2002, heard on 5th November, 2018.

(a) Income Tax Ordinance (XXXI of 1979)---

----S.50(4) & First Sched.----SRO No.586(I)/91 dated 30.6.1991---SRO No.593(I)/94 dated 12.6.1994---Assessee deriving income from dairy products---Advance tax, deduction of---Scope---Under S.50(4) of the Income Tax Ordinance, 1979 the recipient of goods, who was to make payment for the goods supplied to him, was required to deduct the amount of advance tax from the payment to be made by him to the supplier at the rate specified in the First Schedule of the Ordinance---Notification No. SRO No.586(I)/91 dated June 30, 1991 exempted the recipients of payment from the assessee against the supply of agricultural produce from the application of S.50(4) of the Ordinance---Words "including fresh milk" were added after the words "agricultural produce" mentioned in the previous Notification by amendment through SRO No.593(I)/94 dated 12.6.1994 issued by the Federal Board of Revenue---Amendment by way of Notification SRO No. 593(I)/94 dated 12.6.1994 was clarificatory in nature and had retrospective effect and provision of S.50(4) of the Ordinance was not applicable to the assessee.

1997 PTD (Trib.) 2145 ref.

(b) Interpretation of statutes---

----Departmental construction---Consistency---Scope---Department, if it placed a particular construction on a provision of an enactment for a considerable period of time and acted upon it and followed such practice consistently without any interruption; then such Department could not depart from such construction/ practice in absence of any new development in the form of clarification by Legislature or by framing of new rules or issuance of binding instructions by competent authorities.

1997 PTD (Trib.) 2145 ref.

Nazir Ahmad v. Pakistan and others PLD 1970 SC 453 rel.

(c) Interpretation of statutes---

----Insertion of explanation in statutory instrument / delegated Legislation---Function, scope and effect---Explanations function to explain meaning and effect of main provisions and to clear up any doubt or ambiguity in the same and such explanation generally had retrospective application inasmuch it sought to explain and remove doubt existing in the mind of public functionaries as well as citizens.

Collective of Customs, Sambrial v. Custom, Excise and Sales Tax Appellate Tribunal 2002 MLD 127 and Messrs Hunza Asian Textile and Woolen Mills Limited v. Commissioner Sales Tax Rawalpindi Zone, Rawalpindi 1973 PTD 544 rel.

Malik Abdullah Raza and Sarfraz Ahmad Cheema for Applicants.

Mian Ashiq Hussain for Respondent.

2019 P T D 535

[Lahore High Court]

Before Shahid Karim, J

MUHAMMAD MUJAHID QURESHI and 4 others

Versus

FEDERATION OF PAKISTAN and others

Writ Petitions Nos. 216521 and 210777 of 2018, heard on 31st October, 2018.

(a) Income Tax Ordinance (XLIX of 2001)---

----Ss. 119, 214D, 118 & 177---Audit---Automatic selection of audit under S.214D of the Income Tax Ordinance, 2001---Selection for audit after taxpayer applies for extension in time for filing of income tax return---Petitioners/ taxpayers impugned notice under S.214D(a) for selection for audit on basis of income tax return not filed within time---Contention of petitioners' inter alia was that they applied for an extension in time under S. 119 of the Income Tax Ordinance, 2001 and filed the returns within such extended time, and were therefore not liable to be selected for audit---Validity---Crucial concept underpinning S.119 of the Income Tax Ordinance, 2001 was that the Commissioner shall grant extension in time "by order in writing" and the same was crucial since the Commissioner had to form on an opinion on being satisfied that condition precedent existed and to specify a period for which such time was granted---Petitioners, in the present case, could not be given leeway of assuming both such aspects were in their favour and they were not conveyed in writing any extension in time and their implication that same was granted was misplaced and untenable---Failure of Commissioner to decide an application for extension of time by necessary inference would mean that the extension in time sought, was not granted---Constitutional petitions were dismissed, in circumstances.

(b) Interpretation of statutes---

----No presumption could be attached to a statute and much less in a fiscal statute as there was no room for intendment in such matters.

M. Ajmal Khan, Farhan Shahzad, Mustafa Kamal, Aamer Iqbal Basharat, Syed Zia Haider Rizvi, Khurram Awais Butt, M. Zafar Iqbal, Khalil ur Rehman, Hamza H. Rashid, Ch. Shahid Pervaiz, Fazal Elahi Khubaib Ahmad and Zahid Imran Gondal for Petitioners.

Ch. M. Zafar Iqbal, M. Shahid Usman, Ijaz Mahmood Ch., Liaqat Ali Ch., Raheel Ahmad Khan, Sarfraz Ahmad Cheema, Hafiz Shahzad Ahmad Cheema, Syed Zain ul Abedeen Bukhari, Abdul Waheed Khan, Shaigan Ijaz Chadhar, Sardar Kalim Ilyas, Anas Sheikh, M. Akram Saqi, Zafar Iqbal Bhatti, Saeed ur Rehman Dogar, Ahmad Wazir Warraich, Fozia Bukhsh, Omer Wahab, Azhar Khan Joiya, Mian Abdul Ghaffar and Rai Amir Ejaz Kharal for Respondents.

Tahir Mahmood Ahmad Khokhar, D.A.G. with Dr. Ishtiaq Ahmad Khan, Director Law, FBR for Respondents.

2019 P T D 575

[Lahore High Court]

Before Shahid Jamil Khan and Asim Hafeez, JJ

Messrs ROSHAN PACKAGES LIMITED, LAHORE through Chief Executive Officer

Versus

CUSTOMS APPELLATE TRIBUNAL, LAHORE and 3 others

Customs Reference No.244991 of 2018, decided on 4th December, 2018.

Customs Act (IV of 1969)---

----S. 196---Reference application---Factual controversy---Scope---Petitioner failed to satisfy the department that the items imported (paper) under DTRE regime were consumed for manufacturing purposes only---Plea of petitioner was that stocks were available but due verification was not carried out by the department---Validity---Precise allegation against petitioner, in the show-cause notice, was that he illegally sold different imported papers acquired under DTRE scheme and reference was made to physical verification/stock taking at factory premises---High Court while exercising jurisdiction under section 196, Customs Act, 1969 could not dwell into fact finding exercise---No question of law arose out of the order of Appellate Tribunal---Reference application, being without any merit, was dismissed.

Sumair Saeed Ahmad for Applicant.

2019 P T D 594

[Lahore High Court]

Before Shahid Jamil Khan and Asim Hafeez, JJ

COMMISSIONER INLAND REVENUE, ZONE-I, FAISALABAD

Versus

Messrs MAGNA TEXTILE INDUSTRIES PRIVATE LIMITED, FAISALABAD

S.T.R. No.106 of 2015, decided on 4th December, 2018.

(a) Sales Tax Act (VII of 1990)---

----S. 45A---Exercise of powers under S.45A(4) of the Sales Tax Act, 1990---Powers of the Commissioner to suo motu call for record of any legal proceedings under Sales Tax Act, 1990---Delegation of revisional jurisdiction by the Commissioner---Scope----Delegation of jurisdiction conferred under S.45A(4) of the Sales Tax Act, 1990---Scope---No power or authority under S.45A of the Sales Tax Act, 1990 existed whereby the Commissioner could further delegate revisional jurisdiction under S.45A of the Sales Tax Act, 1990 unto any person including to a subordinate officer----Any direction by the Commissioner to a subordinate officer to proceed to adjudicate under S.45A of the Sales Tax Act, 1990 would suffer from a jurisdictional defect.

(b) Maxim---

----"Delegatus non potest delegare"----Application----In absence of any power or authority to further delegate any revisional or supervisory jurisdiction, such jurisdiction had to be exclusively exercised while adhering to the principles encapsulated in the maxim delegatus non-potest delegare.

Saba Saeed Sheikh for Applicant.

2019 P T D 613

[Lahore High Court]

Before Shahid Jamil Khan and Asim Hafeez, JJ

KHALID MEHMOOD and another

Versus

CUSTOMS APPELLATE TRIBUNAL and 3 others

Customs Reference No.118360 of 2017, heard on 5th December, 2018.

Customs Act (IV of 1969)---

----Ss. 194A & 196---Reference application---Appeal to Appellate Tribunal---Limitation---Condonation of delay---Explanation of delay of each day---Scope---Petitioner was aggrieved of Appellate Tribunal's order whereby it dismissed his appeal being barred by time---Validity---No explanation was provided to explain the delay, except evasive submissions---No explanation was provided qua the time spent---Appellate Tribunal had rightly declined to condone the delay---Reference application, being without merits, was dismissed.

Baqir Hussain for Applicants.

Nadeem Mehmood Mian for Respondents

2019 P T D 764

[Lahore High Court]

Before Shahid Jamil Khan and Asim Hafeez, JJ

ABDUL GHANI

Versus

FEDERATION OF PAKISTAN and others

I.C.A. No. 98311 of 2017 in Writ Petition No. 13139 of 2016, decided on 6th February, 2019.

(a) Sales Tax Act (VII of 1990)---

----Ss. 74, 45-B & 46---Law Reforms Ordinance (XII of 1972) S. 3(2) & proviso---Sales tax---Intra-court appeal---Order passed under S. 74 of the Sales Tax Act, 1990 for condonation of time-limit---Maintainability of intra-court appeal against such order---Scope--- Question before the High Court was whether intra-court appeal against an order passed under S.74 of the Sales Tax Act, 1990 was maintainable---Held, in order to determine maintainability of intra-court appeal, it had to be examined whether any appeal, revision or review was available under the applicable law which was the Sales Tax Act, 1990---Perusal of the Sales Tax Act, 1990 revealed that no such right of appeal, revision or review was provided for in either S. 45-B or 46 of the Sales Tax Act ,1990 against order passed in exercise of powers under S. 74 of the Sales Tax Act, 1990---Intra-court appeal was therefore, in circumstances, maintainable.

Mst. Wazir Begum v. Member Board of Revenue/Chief Settlement Commissioner and others 2000 SCMR 989 and Secretary to the Government of Punjab, Revenue Department and others v. Sajjad Ahmad and others 2012 SCMR 114 ref.

(b) Sales Tax Act (VII of 1990)---

----Ss. 74 & 11(5)---Assessment of sales tax--- Assessment of Tax and Recovery of Tax not levied or short levied or erroneously refunded---Condonation of time-limit after expiry of limitation period for making assessment for recovery of tax short-levied---Nature of statutory limitation provided for in S. 11(5) of the Sales Tax Act, 1990---Exercise of powers under S. 74 of the Sales Tax Act, 1990 to condone delay / extend time---Past and closed transaction---Scope--- Question before High Court was whether Department could by condoning delay under S. 74 of the Sales Tax Act, 1990 seek recovery of sales tax under S. 11 of the Sales Tax Act, 1990 after the assessment had already been concluded and limitation for seeking recovery had expired---Held, that time limit prescribed in S. 11(5) of the Sales Tax Act, 1990 was a statutory time limit and must be treated as jurisdictional as any act beyond such time-limit would take a matter out of jurisdiction of an authority or court and such time-limit could not be treated as procedural---Once time began to run from a specified date, the same could not be interrupted or extended unless the Legislature intervened and made an express provision to the contrary---Lapse of limitation curtailed a remedy whereby past and closed transaction could not be revived and in the present case, the limitation was not revived through Legislative interference but through an executive order by garb of powers under S. 74 of the Sales Tax Act, 1990- -- High Court observed that the Department through purported exercise of powers under S. 74 of the Sales Tax Act, 1990 could not resurrect a matter already dead---Powers under S. 74 Sales Tax Act, 1990 could be resorted to seeking extension of time or condonation of delay in cases already initiated but those which could not be concluded within specified period of time---Section 74 Sales Tax Act, 1990 could not be applied for seeking extension or condonation or delay to revive a past and closed transaction wherein time limit had already lapsed---Impugned notices and order-in-original were set aside---Intra-court appeal was allowed, accordingly.

The Collector of Sales Tax, Gujranwala and others v. Messrs Super Asia Mohammad Din and Sons and others 2017 PTD 1756; Nagina Silk Mill, Lyallpur v. The Income Tax Officer, A-Ward Lyallpur and the Income-Tax Appellate Tribunal, Pakistan PLD 1963 SC 322; Additional Commissioner Inland Revenue, Audit Range, Zone-I and others v. Messrs Eden Builders Limited and others 2018 PTD 1474; Commissioner Inland Revenue FBR through Commissioner Inland Revenue v. Messrs ICI Pakistan 2017 PTD 1606; Commissioner Inland Revenue v. Messrs Lucky Plastic Industries (Pvt.) Ltd. and others 2017 PTD 2284; Messrs Paramount Spinning Mills Ltd. v. Customs, Sales Tax and Central Excise Appellate Tribunal and another 2012 SCMR 1860 and Syed Mehmood Ali Shah v. Zulfiqar Ali and 5 others PLD 2013 SC 364 ref.

Judicial Review of Public Actions by Justice Fazal Karim Volume-I page 601; Daniel Jay Schacht v. United States (44 U.S. Supreme Court Reports 26 L Ed 2d); Messrs Super Asia Mohammad Din and Sons's case 2017 PTD 1756; Additional Commissioner Inland Revenue, Audit Range, Zone-I and others v. Messrs Eden Builders Limites and others 2018 SCMR 991 = 2018 PTD 1474 and Waris Mean v. The State PLD 1957 SC 157 rel.

Commissioner Inland Revenue v. Messrs Lucky Plastic Industries (Pvt.) Ltd. and others 2017 PTD 2284 distinguished.

(c) Words and phrases---

----"Case", meaning of---Case can be defined as a civil or criminal proceeding, action, suit or controversy at law or in equity. [p. 775] G

Black's Law Dictionary Ninth Edition rel.

(d) Limitation---

----Principles of---Past and closed transactions---Once time began to run from a specified date, the same could not be interrupted or extended unless the Legislature intervened and make an express provision to the contrary---Lapse of limitation curtailed a remedy whereby past and closed transaction could not be revived.

Commissioner of Income Tax v. Messrs Eli Lilly Pakistan (Pvt.) Ltd. 2009 SCMR 1279; Judicial Review of Public Actions by Justice Fazal Karim Volume-I page 601; Daniel Jay Schacht v. United States" (44 U.S. Supreme Court Reports 26 L Ed 2d); Messrs Super Asia Mohammad Din and Sons's case 2017 PTD 1756 and Additional Commissioner Inland Revenue, Audit Range, Zone-I and others v. Messrs Eden Builders Limites and others 2018 SCMR 991 = 2018 PTD 1474 rel.

Muhammad Naeem Shah for Appellant.

Ch. Liaqat Ali and Foziya Bukhsh for Respondents.

Date of hearing: 5th November, 2018.

2019 P T D 884

[Lahore High Court]

Before Shahid Jamil Khan and Muzammil Akhtar Shabir, JJ

MUHAMMAD RAMZAN

Versus

COMMISSIONER INLAND REVENUE and others

S.T.R. No. 9296 of 2019, decided on 18th February, 2019.

Sales Tax Act (VII of 1990)---

----Ss. 47 & 46---Reference to High Court---Scope---Jurisdiction of High Court under S.47 of the Sales Tax Act, 1990---Notice---Question of law---Scope---Order for remand by Appellate Tribunal---Scope---Order by Appellate Tribunal remanding a matter by observing that certain facts had not been determined by the forum below, which order did not determine anything finally and conclusively, would not generally give rise to any question of law to be determined by the High Court under S.47 of the Sales Tax Act, 1990---Such a reference to High Court would be premature, misconceived and not maintainable.

Commissioner Inland Revenue, Multan v. Messrs Bank Al-Habib Ltd. 2016 PTD 2548 and Commissioner of Income Tax and Wealth Tax, Sialkot Zone v. Messrs Maqbool Ahmed Gill 2007 PTD 1757 ref.

Rana Mushtaq Ahmed Toor for Applicant.

2019 P T D 980

[Lahore High Court]

Before Shahid Jamil Khan and Muzamil Akhtar Shabir, JJ

Messrs BASHIR PIPE INDUSTRIES (PVT.) LTD.

Versus

FEDERATION OF PAKISTAN and another

I.C.A. No.107706 of 2017, decided on 12th February, 2019.

Customs Act (IV of 1969)---

----Preamble---Departmental testing of imported materials---Conflicting laboratory results---Multiple tests to resolve conflict---Scope---Any procedure not specifically prohibited by law was permitted and the Department in order to satisfy itself was fully justified to refer such a matter to another test in order to resolve conflicting opinion of previous tests.

Islamia University Bahawalpur v. Muhammad Hameed Bhatti and another 2004 SCMR 649; Additional Collector-II Sales Tax, Lahore v. Messrs Abdullah Sugar Mills Ltd. and others 2003 SCMR 1026; Muhammad Iiaz Ahmad Chaudhry v. Mumtaz Ahmed Tarar and others 2016 SCMR 1 and H.M. Saya and Co. v. Wazir Ali Industries Ltd. PLD 1969 SC 65 rel.

Zahid Imran for Appellant.

2019 P T D 1003

[Lahore High Court]

Before Shahid Jamil Khan and Muzamil Akhtar Shabir, JJ

IBRAHIM

Versus

CUSTOMS APPELLATE TRIBUNAL and 2 others

Customs Reference No.256450 of 2018, decided on 19th February, 2019.

Customs Act (IV of 1969)---

----Ss. 196, 156 & 157---Procedure of Customs Appellate Tribunal---Confiscation of goods---Confiscation of vehicle involved in smuggling of goods---Jurisdiction of High Court under S. 196 of the Customs Act, 1969---Nature---Question of law---Scope---Question before the High Court was whether Customs Appellate Tribunal did not exercise jurisdiction vested in it properly by not giving its findings on issue which was raised in show-cause notice to the person whose vehicle was confiscated---Held, that customs Appellate Tribunal in the impugned order, had not decided the issue of whether vehicle confiscated was involved "wholly and exclusively" for transportation of smuggled goods, which was a finding to be reached after determining facts of the case---Customs Appellate Tribunal, being the last fact-finding forum, had to exercise its jurisdiction diligently to decide an issue on basis of facts arrived before it after discussing the record related to the matter---Failure of Customs Appellate Tribunal, in the present case, to exercise its jurisdiction would be tantamount to a question of law---High Court remanded matter to Customs Appellate Tribunal for deciding the matter afresh---Reference was answered, accordingly.

Commissioner of Income Tax, Companies Zone-II, Karachi v. Messrs Sindh Engineering (Pvt.) Ltd., Karachi 2002 SCMR 527 = 2002 PTD 419 rel.

Mian Abdul Bari Rashid for Petitioner.

Izhar-ul-Haq Sheikh for Respondents.

2019 P T D 1022

[Lahore High Court]

Before Shahid Jamil Khan and Asim Hafeez, JJ

COMMISSIONER INLAND REVENUE

Versus

BANK OF PUNJAB

P.T.R. No. 132 of 2012, decided on 27th November, 2018.

Income Tax Ordinance (XLIX of 2001)---

----Ss.121(1)(d) & 177 (10) [as prior to amendment vide. Finance Act, (XVI of 2010] & 133---High Court Reference---Best judgment assessment under S. 121 read with S. 177(10) of the Income Tax Ordinance, 2001---Scope---Question before High Court was whether during audit proceedings, an order for "best judgment assessment" could have been passed under S. 121(1)(d) of the Income Tax Ordinance, 2001 prior to the amendment of S. 177(10) of the Income Tax vide Finance Act, 2010---Held, that prior to the amendment brought about in Ss. 121 & 177(10) through Finance Act, 2010; S. 121(1)(d) did not apply to cases where return of total income had already been filed and the same did not envisage a second assessment order to be passed in such circumstances---Reference was answered accordingly.

Commissioner Inland Revenue (Legal) v. Commissioner Inland Revenue (Appeals) and others 2013 PTD 837; The Commissioner of Income Tax v. Messrs Doaba Plastics Industries (Pvt.) Limited 2015 PTD 681 and Glaxo Laboratories Ltd., v. Inspecting Assistant Commissioner of Income Tax and others 1992 SCC 910 rel.

Raja Sikandar Khan for Applicant.

Dr. Ikram ul Haq for Respondent.

Date of hearing: 27th November, 2018.

2019 P T D 1077

[Lahore High Court]

Before Ayesha A. Malik and Muzamil Akhtar Shabir, JJ

WISAL KAMAL FABRICS (PVT.) LTD., LAHORE

Versus

COMMISSIONER INLAND REVENUE, LAHORE and another

I.T.R. No. 220282 of 2018, heard on 5th November, 2018.

Income Tax Ordinance (XLIX of 2001)---

----Ss. 18(1)(d), 122(5A) & 133---Reference---Tax liability, determina-tion of---Interest free loans by directors of company---Nature---Taxpayer was receiving interest free loans extended by its directors which was declared as taxpayer's benefits by tax authorities---Taxpayer's appeal before Appellate Tribunal Inland Revenue was dismissed ex-parte---Validity---No business relationship existed between taxpayer and its directors---Directors were managing taxpayers and had a fiduciary relationship with taxpayer, as such they were not engaged in business relationship with taxpayer hence, interest free loans given by directors given to taxpayer did not fall within meaning of "benefit derived during course of business relationship"---Provisions of S. 18(1)(d) of Income Tax Ordinance, 2011 were not applicable for the purposes of determining tax liability---High Court set aside order passed by Appellate Tribunal Inland Revenue---Reference was allowed in circumstances.

Commissioner Inland Revenue, Zone-II v. Lucky Cotton Mills (Pvt.) Ltd. 2017 PTD 864 and 2015 PTD (Trib.) 386 ref.

Mohammad Saqib Jillani for Appellant.

Javed Athar for Respondents.

Date of hearing: 5th November, 2018.

2019 P T D 1088

[Lahore High Court]

Before Shahid Jamil Khan and Muzamil Akhtar Shabir, JJ

Messrs AH TEXTILES

Versus

The DIRECTOR, DIRECTORATE OF INTELLIGENCE AND INVESTIGATION FBR and 4 others

Customs Reference No. 7863 of 2019, decided on 11th February, 2019.

Customs Act (IV of 1969)---

----Ss. 196 & 168---Reference to High Court---Confiscation of goods---Scope---Petitioner's trailer was seized by Directorate General of Intelligence and Investigation---Chemical examination of loaded goods revealed that they were not cleared under the goods declaration produced by petitioner---Customs authorities ordered for outright confiscation of goods---Appeal before Customs Appellate Tribunal was dismissed---Validity---Container from which the goods were seized was different one from which the goods relating to the "goods declaration" presented by the petitioner were imported---Seized goods were 100 percent "polyester" whereas documents produced by the appellant related to import clearance of "nylon", which was different material---Question whether the confiscated goods were actually the goods imported by the petitioner required determination of facts which could not be done in Reference while exercising advisory jurisdiction by the High Court---Reference was dismissed, accordingly.

Rana Muhammad Tayyab Nazir for Petitioner.

2019 P T D 1116

[Lahore High Court]

Before Shahid Jamil Khan and Muzamil Akhtar Shabir, JJ

Messrs LAHORE ELECTRIC SUPPLY COMPANY LTD.

Versus

FEDERATION OF PAKISTAN through Secretary Finance and 4 others

I.C.A. No. 255154 of 2018, decided on 17th January, 2019.

Income Tax Ordinance (XLIX of 2001)---

----Ss. 140 & 170---Constitution of Pakistan, Art.199---Constitutional petition---Notice of recovery of tax---Persons holding money on behalf of taxpayer---Refunds---Appellant assailed notice of recovery of tax issued by income tax authorities on the ground that its refund claim for larger amount was pending undetermined with the department and it was appropriate to adjust the said amount instead of raising demand ---Validity---Refund claim of appellant had not yet been determined, therefore, said amount could not be adjusted against the amount of demand notice---Ground raised by appellant required factual determination of its refund claim which was not permissible under constitutional jurisdiction---High Court directed appellant to raise the refund claim where his appeal was pending and appellate authority was directed to expeditiously decide the said appeal---Intra-court appeal was disposed of accordingly.

Shahbaz Butt for Appellant.

Zahid Sikandar Sheikh, Assistant Attorney General.

Ibrar Ahmad for Respondent No.5.

2019 P T D 1124

[Lahore High Court]

Before Ayesha A. Malik, J

KHURRAM SHAHZAD

Versus

FEDERATION OF PAKISTAN and others

Writ Petition No.14138 of 2019, heard on 23rd April,, 2019.

(a) Income Tax Ordinance (XLIX of 2001)---

----S. 175---Power to enter and search premises---Scope---Commissioner could authorize entry and search of the premises of a taxpayer in order to enforce any provision of the Income Tax Ordinance, 2001 ('the Ordinance') i.e. that there must be an infringement or non-compliance of some provision of the Ordinance which the tax department sought to enforce---Must be some default by the taxpayer under the Ordinance, or in audit proceeding or some inquiry or investigation for evasion of income tax which the taxpayer was avoiding on the basis of which the power under S.175 of the Ordinance was called into use---Purpose of S.175 of the Ordinance was to enable enforcement of any provision of the Ordinance, hence there must be a clear statement before the Commissioner of which provision of the Ordinance was to be enforced and the reasons for it---In order to exercise the power under S.175, the tax department must record the reasons for initiating action under said section---Commissioner had to justify with sufficient reasons for exercising such power and while prior notice was not required under S.175, the Commissioner could, if deemed necessary, issue notice to the taxpayer.

(b) Income Tax Ordinance (XLIX of 2001)---

----S. 175---Power to enter and search premises---Seizure of record, computer and accounts of a business---No compelling reasons provided for initiating seizure proceedings---Tax department on the basis of an authorization order issued under S.175 of the Income Tax Ordinance, 2001 ('the Ordinance') by the Commissioner entered into the business premises of the petitioner-restaurant and seized the accounts, documents, computer and related material available at the premises---Legality---Power under S.175 of the Ordinance could only be exercised if the Commissioner was satisfied and had justified in writing that it was necessary to enter and search the premises, place, accounts, documents or computer of the taxpayer---In the present case the tax department had not been able to justify actions under S.175 of the Ordinance---Authorization order did not provide for any reason and simply suggested that it was for carrying out the objects of S.175, which created suspicion not only about the intent but also the reasons for which entry and seizure had taken place---Tax department had repeatedly referred to default by petitioner in paying sales tax which for the purpose of S.175 of the Ordinance was irrelevant and it could not be used as a reason to enter into the premises of a taxpayer---Furthermore, the tax department's reliance on notices issued to the petitioner prior to the seizure proceedings was also misleading as the said notices did not explain the reason for carrying out entry and search of the petitioner's business premises as in both the notices the allegations were with respect to some property which was not disclosed in the wealth tax return for which the petitioner had provided relevant information and for which proceedings were dropped---Tax department had not been able to justify the action taken under S.175 of the Ordinance as it was unable to satisfy the Court as to the compelling reasons to initiate proceedings under the said section---Proceedings initiated by the tax department in terms of the authorization letter were set aside and the tax department was directed to hand over all the material seized from the business premises of the petitioner i.e. record, accounts, documents, computer etc to the petitioner immediately---Constitutional petition was allowed accordingly.

Muhammad Shahid Baig and Muhammad Bilal Pervaiz for Petitioners.

Ms. Ambreen Moeen, D.A.G. and Syed Zain-ul-Abadien Bokhari for Respondents.

2019 P T D 1213

[Lahore High Court]

Before Muhammad Sajid Mehmood Sethi and Muzamil Akhtar Shabir, JJ

COMMISSIONER INLAND REVENUE, LYALLPUR ZONE, FAISALABAD and 3 others

Versus

Messrs IMRAN ALI LUBRICANTS through Managing Partner

I.C.A. No. 255820 of 2018 in W.P. No.39468 of 2016, heard on 14th March, 2019.

(a) Sales Tax Act (VII of 1990)---

----S. 21---Sales Tax Rules, 2006, R.12---Constitution of Pakistan, Arts. 10A & 18---Blacklisting and suspension of registration of taxpayer---Exercise of discretion by Sales Tax Authorities---Vires of R. 12 of the Sales Tax Rules, 2006---Fundamental Rights to fair trial, due process of law and freedom of trade and business---Scope---Department impugned order passed by Single Judge of High Court in Constitutional petition whereby R. 12 of the Sales Tax Rules 2006 was declared to be ultra vires the Constitution to the extent of suspension of registration of taxpayer without prior notice---Validity---Rule 12 of the Sales Tax Rules, 2006 had been framed under authority of S. 21(2) of the Sales Tax, 1990 and said Rule conferred unbridled and unfettered powers to the concerned Commissioner to suspend registration of a taxpayer, without notice and without affording opportunity of hearing---Term "satisfaction" used in R. 12(a)(i) of the Sales Tax Rules, 2006 must be subject to preliminary inquiry and perusal of record so as to enable a person to upend the "satisfaction" already arrived by the Commissioner---Such suspension of registration offended principle of due process and Arts. 18 & 10A of the Constitution---No illegality therefore, existed in impugned order of Single Judge of the High Court---Intra-court appeal was dismissed, in circumstances.

The University of Dacca through its Vice-Chairman and another v. Zakir Ahmed PLD 1965 SC 90; Aftab Shahban Mirani v. President of Pakistan and others 1998 SCMR 1863; Babar Hussain Shah and another v. Mujeeb Ahmed Khan and another 2012 SCMR 1235; Shabbir Ahmed v. Kiran Khursheed and 8 others 2012 CLC 1236 and Messrs D.J. Builders and Developers through Partner and another v. Federation of Pakistan through Secretary, Ministry of Finance, Islamabad and 6 others 2016 PTD 1723 rel.

(b) Constitution of Pakistan---

----Art. 10A---Fundamental Right to fair trial---Article 10A of the Constitution ensured the right to fair trial and an Authority was under duty to confront any person against whom any adverse order was being passed, with proper notice detailing reasons for taking such action---No adverse order could be passed against a person without issuance of notice and confronting the said person before passing of such order.

Aftab Shahban Mirani v. President of Pakistan and others 1998 SCMR 1863 rel.

Sarfraz Ahmad Cheema for Appellants

Khubaib Ahmad for Respondents.

2019 P T D 1238

[Lahore High Court]

Before Asim Hafeez, J

MUHAMMAD TARIQ KOMBOH

Versus

The FEDERATION OF PAKISTAN, FINANCE DIVISION, ISLAMABAD and others

Writ Petition No. 17371 of 2015, decided on 28th March, 2019.

(a) Income Tax Ordinance (XLIX of 2001)---

----S. 114(5)---Expression 'completed tax year'---Scope---Expression 'completed tax year' cannot be construed to enlarge limitation period beyond twelve months ending on 30th day of June of relevant calendar year. [p. 1241] A

(b) Income Tax Ordinance (XLIX of 2001)---

----Ss. 114(5) & 122-C---Return of income---Show-cause notice, issuance of---Limitation---Completed tax year---Duration---Taxpayer assailed show-cause notice issued by authorities on grounds that it was time barred due to conclusion of tax year well before issuance of notice---Validity---Relevant tax year could not be considered complete, for purposes of S. 114(5) of Income Tax Ordinance, 2001 on last day of next financial year or on date prescribed in terms of S. 118(2)(b) of Income Tax Ordinance, 2001 as same was illegal---Time would not run from date of default when return of income had to be normally submitted but to be reckoned from 30th day of June, for which period return of income had to be submitted but was not done---Interpretation put forward by authorities was erroneous and based on misapplication of law---High Court declared notice issued under S. 114(4) of Income Tax Ordinance, 2001, show-cause notice under S. 122-C of Income Tax Ordinance, 2001 and consequent orders as issue/passed without lawful authority, beyond limitation and of no legal effect---Constitutional petition was allowed in circumstances. [pp. 1241, 1242] B & C

Muhammad Sohail v. Commissioner Inland Revenue and others (Writ Petition No.21489 of 2015 ref.

Faisal Rashid Ghouri for Petitioner.

2019 P T D 1278

[Lahore High Court]

Before Muhammad Sajid Mehmood Sethi and Muzamil Akhtar Shabir, JJ

COMMISSIONER INLAND REVENUE

Versus

AMEER ABDULLAH KHAN ROKHARI

P.T.R. No.83 of 2012, heard on 13th March, 2019.

(a) Income Tax Ordinance (XXXI of 1979) [since repealed]---

----S.9---Chargeability of tax---Principles---Adjudication to determine whether tax was chargeable on receipt of revenue / fee by taxpayer---Burden of proof---Scope---Anything which was not income could not be treated as income and receipt was not sole test of chargeability of tax---Initial burden to show that a receipt was income taxable under law, was on Department and said burden of proof could not be shifted on the taxpayer---Taxpayer could not be expected to quote any provision of law, which specifically declared that a sum received by taxpayer was exempt from tax instead of Department specifying the charging provision purportedly covering it---One must look at the substance of something and not at the manner in which the account was stated.

Guffic Chem (P) Ltd. v. C.I.T. Belgaum and another (2011) 4 SCC 254; Pakistan Industrial Development Corporation v. Pakistan through the Secretary, Ministry of Finance 1992 PTD 576; Commissioner of Income Tax v. Smith Kline and French of Pakistan Ltd. and 2 others 1991 PTD 999 = 1991 SCMR 2374; B.P. Biscuit Factory Ltd., Karachi v. Wealth Tax Officer and another 1996 SCMR 1470 and Messrs Habib Insurance Co. Ltd. v. Commissioner of Income Tax (Central), Karachi PLD 1985 SC 109 rel.

(b) Income Tax Ordinance (XXXI of 1979) [since repealed]---

----Ss.22 & 133---Chargeability of income tax---Income from business or profession---Non-competition fee---Nature of receipt of non-competition fee---"Revenue receipt" and "capital receipt"---Distinction---Onus on Department to establish chargeability of income tax on capital receipt---Scope---Question before the High Court was whether "non-competition fee" received by taxpayer, for not competing with another entity, was "revenue receipt" chargeable to income tax under S. 22 of the Income Tax Ordinance, 1979---Held, that non-competition fee was considered to be a "capital receipt" and in the present case, it was the sum taxpayer received by virtue of non-competition agreement whereby taxpayer had lost its source of income---Unlike a revenue receipt, which was a substitution of income and chargeable to tax; a capital receipt was received in exchange for source of income and was not chargeable to tax unless specifically made taxable by charging provision of a taxing law---Unless such capital receipt was hit by charging provision of the Income Tax Ordinance of 1979, it could not be subjected to tax---Contention of Department that said competition fee was benefit "arising out of business" under S.22(c) of the Income Tax Ordinance, 1979 was not tenable as Department had failed to show that compensation for non-competition received by taxpayer had any nexus with any source of income taxable under the law and the same was not covered by any charging provision of the Income Tax Ordinance, 1979 ---Reference was answered, accordingly.

Oberoi Hotel (Pvt.) Ltd. v. Commissioner of Income Tax 1999 PTD 3270; Commissioner of Income Tax (East) Karachi v. Forbes Campbell & Co. Ltd. PLD 1978 Kar. 1047 = 1978 PTD 328 and Maxwell on the Interpretation of Statutes, Twelfth Edn. p.256 rel.

(c) Interpretation of statues---

----Taxing statute---Charges upon subject of a taxation statute must be imposed by clear and unambiguous language, since in some degree the same operated as penalties ---Such subject was not to be taxed unless language of a statute clearly imposed such obligation and said language must not be strained in order to tax a transaction which, had the Legislature thought of it, would have been covered by appropriate words.

Maxwell on the Interpretation of Statutes, Twelfth Edition, p.256 rel.

Mubashir Ali (vice Mian Yousaf Umar), Ch. Shakeel Ahmad (vice Sarfraz Ahmad Cheema) and Muhammad Yasin Zahid for Applicant.

Mian Ashiq Hussain for Respondent.

2019 P T D 1414

[Lahore High Court]

Before Asim Hafeez, J

Syed TAYYAB HUSSAIN RIZVI

Versus

FEDERATION OF PAKISTAN and others

Writ Petition No.14506 of 2019, decided on 24th April, 2019.

(a) General Clauses Act (X of 1897) ---

----S. 6---Repeal of Act---Saving clause, absence of---Effect---Absence of saving clause in new enactment reserving rights and liabilities under repealed enactment is not detrimental to survival of such rights and liabilities under repealed act unless repealing Act indicates a contrary intention rendering S. 6 of General Clauses Act, 1897 ineffective and inoperative---In absence of any contrary intention in repealing Act, irrespective of saving clause, S. 6 of General Clauses Act, 1897 protects rights and liabilities accrued precisely in terms of S.6(c) of General Clauses Act, 1897.

Commissioner of Income Tax, Peshawar v. Messrs Islamic Investment Bank Ltd. 2016 PTD 1339; Taza Khan and others v. Ahmad Khan and others 1992 SCMR 1371 and Karam Singh Sobti and another v. Sri Pratap Chand and another AIR 1964 SC 1305 rel.

(b) Income Support Levy Act (XXII of 2013) ---

----Ss. 2(1)(c), 3 & 5---Finance Act (IX of 2014), S. 10---Income Support Levy Rules, 2013, Rr. 3, 4 & 6---Income Tax Ordinance (XLIX of 2001), Ss. 2(38-A), 209 & 210---Repeal of law---Absence of saving clause---Effect---Taxpayers were aggrieved of demand notices issued for recovery of Income Support Levy---Plea raised by taxpayers was that Finance Act, 2014 had repealed Income Support Levy Act, 2013 causing same to be ceased to be part of body of law, therefore, no demand of levy could be raised on basis of a dead statute---Validity---Any officer of Inland Revenue, to whom any power or function was delegated under S. 210 of Income Tax Ordinance, 2001 could also additionally exercise such powers and functions under provisions of Income Support Levy Act, 2013---Officer of Inland Revenue as defined in S. 2(1)(c) of Income Support Levy Act, 2013 read with S.2(38-A) of Income Tax Ordinance, 2001 could exercise powers under S. 5 of Income Support Levy Act, 2013, independently and without waiting specific delegation under S.210 of Income Tax Ordinance, 2001---Provisions of Income Support Levy Act, 2013 and Income Support Levy Rules, 2013 adequately catered for payment of levy, computation thereof, time and manner of payment---Taxpayers failed to make out any case of procedural impropriety, lack of unfairness or absence of opportunity of hearing---Objections were solicited from taxpayers who chose to challenge demand notices before High Court by invoking Constitutional jurisdiction---Taxpayers in cases where no orders were passed, could raise objections and same could be examined and decided by Officer of Inland Revenue except question of absence/want of jurisdiction---Irrespective of repeal of Income Support Levy Act, 2013, liability to pay levy subsisted with Officer of Inland Revenue who had rightly issued notices as he had jurisdiction to issue notices, assess payment of levy in accordance with rate prescribed and such officer could collect same accordingly---Constitutional petition was dismissed accordingly.

Sufi Muhammad Farrukh Amin v. Federation of Pakistan through Secretary of Finance and 4 others 2017 PTD 83; M.C.B. Bank Limited, Karach v. Abdul Waheed Abro and others 2016 SCMR 108; Idrees Ahmad and others v. Hafiz Fida Ahmad Khan and 4 others PLD 1985 SC 376; Allah Dewaya through Legal Heirs and others v. Ghulam Mustafa and others 1999 YLR 204; Mst. Siddiqan Afzal and 6 others v. Assist Collector of Central Excise and Land Customs, Faisalabad and 2 others PLD 2001 Lah. 78; Naveed Jan Baloch and 3 others v. Federation of Pakistan through Secretary, Ministry of Commerce and 4 others 2012 CLD 1339; Commissioner of Income Tax, Peshawar v. Messrs Islamic Investment Bank Ltd. 2016 PTD 1339; Mian Rafi-Ud-Din and 6 others v. The Chief Settlement and Rehabilitation Commissioner and 2 others PLD 1971 SC 252; Commissioner Inland Revenue v. Messrs Shafi Spinning Mills Ltd. 2015 PTD 2368; Messrs Al-Habib Flour Mills v. Commissioner of Income Tax, Medium Taxpayers Unit, Rawalpindi 2008 PTD 1715; Muhammad Arif and another v. The State and another 1993 SCMR 1589; Muhammad Tariq Badra and another v. National Bank of Pakistan and others 2013 SCMR 314; Messrs Paramount Spinning Mills Ltd. v. Customs, Sales Tax and Central Excise Appellate Tribunal and another 2012 SCMR 1860; Lt.-Col. Nawabzada Muhammad Amir Khan v. The Controller of Estate Duty, Government of Pakistan, Karachi and another PLD 1962 SC 335; Shagufta Begum v. The Income Tax Officer, Circle-XI, Zone-B, Lahore PLD 1989 SC 360; Income Tax Officer and another v. Messrs Chappal Builders 1993 SCMR 1108; Al-Ahram Builders (Pvt.) Ltd. v. Income Tax Appellate Tribunal 1993 SCMR 29; Messrs Amin Textile Mills (Pvt.) Ltd. v. Commissioner of Income Tax and 2 others 2000 SCMR 201; Deputy Commissioner of Income Tax/Wealth Tax, Faisalabad and others v. Messrs Punjab Beverage Company (Pvt.) Ltd. 2007 PTD 1347; Messrs Ocean Pakistan Ltd. v. Federal Board of Revenue, Islamabad and others 2012 PTD 1374; Zeal Pak Industries (Pvt.) Ltd., Karachi v. Regional Commissioner, Income Tax, Karachi and 2 others 2009 PTD 712; Mughal-e-Azam Banquet Complex through Managing Partner v. Federation of Pakistan through Secretary and 4 others 2011 PTD 2260; Syed Khalid Mehmood Bukhari v. G.M. (HRO) PTCL and others 2012 PLC (C.S.) 1366; Pakistan Tobacco Company Ltd., Islamabad v. Additional Commissioner (Unit-II), Taxation Officer, Large Taxpayers Unit, Islamabad 2013 PTD 747; Messrs Castrol Pakistan (Pvt.) Ltd. through Accountant v. Additional Commissioner Inland Revenue and others 2015 PTD 2467; Northern Power Generation Company Limited v. Federation of Pakistan and others 2015 PTD 2052; Messrs Kashmir Sugar Mills Ltd. v. Federation through Secretary Revenue and others 2016 PTD 1649; Iram Shahadi v. Principal School of Nursing Mayo Hospital, Lahore and others 2017 PLC (C.S.) 943 and Rafiq ur Rehman v. Federation of Pakistan through Secretary, Ministry of Finance and 4 others 2017 PTD 1178 distinguished.

Mian Rafi-ud-Din and 6 others v. The Chief Settlement and Rehabilitation Commissioner and 2 others PLD 1971 SC 252 and Akhtar Ali Pervez v. Altafur Rehman PLD 1963 Lah. 390 ref.

Naveed Amjad Andrabi, Mustafa Kamal, Sabeel Tariq Mann, Muhammd Hamza Sheikh, A.W. Chaddha, Usman Javed, Khurram Saleem, Barrister Haris Sohl, Monim Sultan, Hammad-ul-Hassan Hanjra, Mudassar Shujauddin, Barrister Ahmad Pervaiz, Zahid Imran Gondal, M. Amjad Khan, Rai Amer Ijaz Kharal, Ch. Rehmat Ali, M. Azhar Khan Joiya, Mian Abdul Ghaffar, Jan Muhammad Chaudhry, Shahid Abrar Basra, Syed Abbas ul Hassan Shah, M. Hamzah, H.M. Majid Siddiqui, Ghulam Ali, Adeel Shahid Karim, Khalil ur Rehman, Shahbaz Butt, M. Abu Bakar, Ch. M. Waseem, M.M. Akram, Usman Khalil, Mian Hamza Javed, Khurram Shahzad Gondal, Farooq Raza Rajpoot, Farhan Shahzad, Rana M. Afzal, Umair Anwar, Raza Imtiaz Siddiqui, Shaheryar Kasuri, Jamshed Alam and Qadeer Kalyar for Petitioners.

Liaqat Ali Chaudhry, assisted by Aamer Khan, Sahar Iqbal, Zafar Iqbal, Shahid Usman, Akhtar Ali Monga, Syed Tassaduq Mustafa Naqvi, Syed Tassaduq Murtaza Naqvi FBR for Respondents.

Azmat Hayat Khan Lodhi, Assistant Attorney-General for Pakistan.

Syed Zain-ul-Abideen for Commissioner Inland Revenue.

Sarfraz Ahmad Cheema and Falak Sher Khan, Ch. M. Shakeel, Barrister M. Saram Israr and Ijaz Mehmood Chaudhry for Respondents.

2019 P T D 1493

[Lahore High Court]

Before Muzamil Akhtar Shabir and Muhammad Sajid Mehmood Sethi, JJ

COMMISSIONER INLAND REVENUE, GUJRANWALA

Versus

S.K. STEEL CASTING, GUJRANWALA

S.T.R. No. 54 of 2016 and other connected cases, decided on 3rd April, 2019.

(a) Sales Tax Act (VII of 1990)---

----Ss. 2(25), 14, 25, 26, 38 & 47---Sales Tax Rules, 2006, R. 6---Recovery of sales tax before registration---"Liable to be registered"---Scope---Authorities from scrutiny of electricity bills issued demand notices to respondents and held them liable to be registered and required to pay sales tax along with default surcharge for previous years---Such order passed by authorities was set aside by Appellate Tribunal Inland Revenue---Validity---Notice could be issued to a person confronting material which, in opinion of the authorities, was sufficient to bring it within scope of 'liable to be registered'---After receipt of reply and providing sufficient opportunity of hearing, a speaking order could be passed holding person liable to be registered and after registration, demand could be raised by the authorities---Intention of lawmaker was that where a person was liable to be registered, department was first required to register that person compulsorily or otherwise in accordance with law and then charge sales tax under S. 3 of Sales Tax Act, 1990 and could proceed against that person regarding prior to the registration contravention of provisions of Sales Tax Act, 1990, if any---Such person in circumstances, was entitled to raise all factual and legal objections against proceedings so initiated or to be initiated by authorities---Reference was disposed of accordingly.

Messrs Mahalaxmi Cotton Ginning Pressing and Oil Industries, Kolhapur v. The State of Maharashtra and others [2012] 51 VST 1 (Bom.); Messrs Khan and Co. Manz Kali, Kowar Mang, Bisham v. Deputy Commissioner-IR (Audit-IX), Zone-III, R.T.O., Peshawar and another 2015 PTD 796; Messrs Amina Z. Beauty Salon through Managing Member v. Federation of Pakistan through Secretary General and 3 others 2016 PTD 654 and Syed Muhammad Haider Zaidi and others v. Abdul Hafeez and others 1991 SCMR 1699 ref.

(b) Interpretation of statutes---

----Definition clause---Object, scope and purpose---Definition clause in a statute is of declaratory nature---Normally definitions provided for in definition clauses are to be read into provisions of that act while interpreting defined terms/words---If contents of provision of an act indicate otherwise, definition clause cannot override a main provision of a statute---Definition clause is foundational when construing provisions of law---Definition given in an Act was to be construed in a way so that it is not repugnant to context and does not defeat or enable defeating of purpose of that act.

(c) Interpretation of statutes---

----Fiscal law---Charging of tax---Principle---Tax cannot be charged and levied unless it falls squarely within purview of charging provision---Taxing law cannot be extended by implication beyond clear import of language used.

Chiarman, Federal Board of Revenue, Islamabad v. Messrs Al-Technique Corporation of Pakistan Ltd. and others PLD 2017 SC 99 rel.

Sarfraz Ahmad Cheema, Rana Muhammad Mehtab, Ch. Imtiaz Elahi, Muhammad Akram Awan, Mrs. Kausar Parveen and Ch. Muhammad Hussain Zahid, Legal Advisors along with Dr. Ishtiaq Ahmad Khan, Commissioner Inland Revenue, Corporate Regional Tax Office, Lahore for Applicants/Department.

2019 P T D 1534

[Lahore High Court]

Before Shahid Karim, J

MUHAMMAD USMAN QAYYUM

Versus

FEDERATION OF PAKISTAN and others

Writ Petition No. 131594 of 2018, decided on 3rd April, 2018.

Sales Tax Act (VII of 1990)---

----Ss. 11 & 14---Punjab Sales Tax on Services Act (XLII of 2012), Second Sched., Serial 37---Recovery of sales tax---Federal Board of Revenue and Punjab Revenue Authority, jurisdictions of---Determination---Petitioner was manufacturer of copper wires who was paying provincial sales tax to Punjab Revenue Authority and Federal Board of Revenue had also issued notice for recovery of sales tax---Validity---After devolution of certain powers upon promulgation of Eighteenth Amendment of the Constitution, sales tax and services had become exclusive domain of Provinces---If the case petitioner was rendering services and was covered by provisions of Punjab Sales Tax on Services Act, 2012 it was not liable to have itself registered with Federal Board of Revenue---Petitioner could not be burdened with compulsory registration as well as an adjudicative process to which it could not be subjected without reasonable cause and without lawful basis---Matter was to be resolved and decided inter se Federal Board of Revenue and Punjab Revenue Authority---Similar other matters had arisen and given rise to issue of comparative jurisdiction of Federal Board of Revenue and Punjab Revenue Authority---Tax liability of registered person in all such cases could not be made a rolling stone and if a registered person like the petitioner was willing to pay tax then only one of the authorities could take cognizance of the matter and recover liability and imposition---Imposition in question could not be permitted to be recovered by both the authorities viz Federal Board of Revenue and Punjab Revenue Authority---High Court directed the Federal Board of Revenue to have matter resolved with Punjab Revenue Authority within a reasonable period of time---High Court further directed that relevant officer of Federal Board of Revenue should touch base with officer of Punjab Revenue Authority and any such proceedings against petitioner would only be continued after issue had been resolved between Federal Board of Revenue and Punjab Revenue Authority till then show-cause notice were held in abeyance---Constitutional petition was allowed accordingly.

Muhammad Mohsin Virk for Petitioner.

Tahir Mahmood Ahmad Khokhar, D.A.G. and Waqar Ahmad Mir for PRA for Respondents.

2019 P T D 1542

[Lahore High Court]

Before Shahid Karim, J

Messrs T.U. PLASTIC INDUSTRY CO. (PVT.) L TD.

Versus

FEDERATION OF PAKISTAN and others

Writ Petition No. 131564 of 2018, decided on 11th December, 2018.

(a) Sales Tax Act (VII of 1990)---

----Ss. 3, 3(1A), 74A & 4(c) [as amended by Finance Act (XXVII of 2017)]---SRO No. 1125(I)/2011 dated 31-12-2011---SRO No.584(I)/ 2017 dated 01-07-2017---Validation of a law---Sub-constitutional legislation---Scope---Dispute was with regards to including goods in list with approval of Federal Minister-in-Charge by notification in the Official Gazette---Validity---Section 74A, Sales Tax Act, 1990 could validate the acts of the Federal Government and not that of Federal Board of Revenue with the approval of the Federal Minister Incharge---Mere exercise of Constitutional jurisdiction did not mean that Legislature was divested of its powers to enact a validating law to stunt and nullify effect of judgment rendered by High Court---Attempt by Legislature to circumvent the constitutional mandate by enacting a sub-constitutional legislation could only be achieved by an amendment in the Constitution and not otherwise---If Constitution mandated that certain act had to be performed in a certain manner and construction of that mandate was made by Supreme Court then nothing short of Constitutional amendment would undo the effect of judgment of Supreme Court---High Court declared that amendment in S. 4(c) of Sales Tax Act, 1990 as enacted through Finance Act, 2017 was ultra vires the Constitution and of no legal effect---High Court further declared that notification issued in purported exercise of powers conferred by S. 4(c) of Sales Tax Act, 1990 was also ultra vires and of no legal effect and same was struck down---Constitutional petition was allowed in circumstances.

Messrs Mustafa Impex, Karachi and others v. Government of Pakistan through Secretary Finance, Islamabad and others PLD 2016 SC 808 = 2016 PTD 2269 ref.

Messrs Mamukanjan Cotton Factory v. The Province of Punjab and others PLD 1975 SC 50 distinguished.

(b) Customs Act (IV of 1969)---

----S.18---Sales Tax Act (VII of 1990), S.4(c)---Section 18(3) of Customs Act, 1969 is not pari materia with S.4(c) of the Sales Tax Act, 1990.

M.M. Akram, M. Mansha Sukhera, Mansoor Usman Awan, Naveed Zafar Khan, Hashim Aslam Butt, Khubaib Ahmad, Wasim Ahmad Malik, M. Ajmal Khan, M. Naeem Munawar, Qadeer Kalyar, Irfan Liaqat, Khalil ur Rehman, Mian Mahmood Rashid, Hafiz M. Azhar Ali, Syed Alamdar Hussain, M. Asif Butt, Farid Adil Ch., M. Tahir Amin, Waseem Ashiq Sufi, Sher Baz Ali, Waheed Habib, Mirza Aurangzeb Baig, Nabeel Rafaqat Ch., Asif Imran Awan, Ghulam Murtaza, Shahzeen Abdullah, Asghar Leghari, Mian Abdul Ghaffar, Muqaddam Sukhera, Rai Amir ljaz Kharal, Malik M. Ali Awan, Khalid Gulzar, M. Saqib Sheikh and M. Zafar Iqbal Mian for Petitioners.

Ch. M. Zafar Iqbal, Liaqat Ali Ch., Sarfraz Ahmad Cheema, Shahzad Ahmad Cheema, Aamer Khan, Sahar Iqbal, Shahid Sarwar Chahil, ljaz Makhdoom Ch., Kausar Perveen, Irshad Ahmad Chatha, Ibrar Ahmad, Imran Rasool, Syed Zain ul Abideen Bukhari, Shahid Usman, Umair Anwar, Zafar Iqbal Bhatti, M. Asif Hashmi, Qamar Farooq for Respondents.

2019 P T D 1559

[Lahore High Court]

Before Muhammad Sajid Mehmood Sethi and Muzamil Akhtar Shabir, JJ

Messrs GHANI GLASS LIMITED through Manager Legal, Lahore

Versus

COMMISSIONER INLAND REVENUE, ZONE-I, LARGE TAXPAYER UNIT, LAHORE and another

Income Tax Reference No. 164274 of 2018, decided on 2nd April, 2019.

Income Tax Ordinance (XLIX of 2001)---

----Ss. 132 & 133---General Clauses Act (X of 1897), S. 24-A---Reference to High Court---Disposal of appeals by the Appellate Tribunal---Jurisdiction of High Court under S. 133 of the Income Tax Ordinance, 2001---Scope---Order of Appellate Tribunal wherein the same had not given its findings on a core issue / submission of taxpayer, would not be in conformity with S.24-A of the General Clauses Act, 1897 and could be set aside and remanded to the Appellate Tribunal by the High Court under S. 133 of the Income Tax Ordinance, 2001.

Commissioner of Income Tax, Companies Zone-II, Karachi v. Messrs Sindh Engineering (Pvt.) Limited, Karachi 2002 SCMR 527 = 2002 PTD 419 rel.

Waheed Shahzad Butt for Applicant/Taxpayer.

2019 P T D 1565

[Lahore High Court]

Before Ayesha A. Malik, J

E-VISION MANUFACTURING LTD.

Versus

FEDERATION OF PAKISTAN and others

Writ Petition No. 233352 of 2018, decided on 7th November, 2018.

Income Tax Ordinance (XLIX of 2001)---

----S. 65-D---Tax credit, claim of---Taxpayer was income tax assessee who claimed tax credit under S. 65-D of Income Tax Ordinance, 2001 for tax period 01-09-2014 till 31-08-2019---Authorities denied such tax credit on grounds that there was no provision in Income Tax Ordinance, 2001 to grant exemption certificate for purposes of tax exemption---Validity---Such matter had already been settled by High Court and there was no merits in plea raised by authorities as taxpayer was entitled for tax exemption under S. 65-D of Income Tax Ordinance, 2001, it could be considered for such benefit at beginning of year rather than wait for adjustment at end of year---Commissioner had to convey entitlement for tax exemption under S. 65-D of Income Tax Ordinance, 2001 and to issue certificate accordingly---High Court directed the authorities to consider case of taxpayer for issuance of exemption certificate on merits and decide accordingly---Constitutional petition was allowed accordingly.

Messrs Nishat Diary (Pvt.) Ltd through Company Secretary v. Commissioner Inland Revenue and 4 others 2013 PTD 1883 and Commissioner Inland Revenue v. Nishat Dairy (Pvt.) Ltd. I.C.A. No.799 of 2013 rel.

Kh. Farooq Saeed for Petitioner.

Mustehsan Raza Awan for Respondents.

2019 P T D 1628

[Lahore High Court]

Before Ayesha A. Malik, J

QAISAR ABBAS

Versus

The MEMBER (TAXES), BOARD OF REVENUE, PUNJAB, LAHORE and 3 others

Writ Petition No. 25557 of 2019, decided on 12th July, 2019.

(a) Punjab Agricultural Income Tax Act (I of 1997)---

----Ss. 4(4) & 3---Charge of agricultural income tax on basis of income tax return---Assessment and collection of agricultural income tax---Limitation period for recovery of agricultural income tax---Question before the High Court was whether notice for recovery of agricultural tax under Punjab Agricultural Income Tax Act, 1997 pertaining to years 2012 and 2013, was recoverable under notice served upon taxpayers in the year 2019, which was identical to a notice served upon said taxpayers in the year 2014---Held, that data contained in impugned notice was identical to notice served upon taxpayers in the year 2014, and therefore it was not barred by limitation and agricultural income tax was recoverable under the impugned notice, however any such recovery would be subject to right to appeal for taxpayer under S. 7 of the Punjab Agricultural Income Tax Act, 1997.

Member (Taxes), Board of Revenue, Punjab, Lahore and others v. Qaisar Abbas and others 2019 SCMR 446 rel.

(b) Punjab Agricultural Income Tax Act (I of 1997)---

----Ss. 3B, 3, 4A & 7---Charge of agricultural income tax on the basis of income tax return---Application of S.3B of the Punjab Agricultural Income Tax Act, 1997---Computation of agricultural income---Right of appeal under S.7 of the Punjab Agricultural Income Tax Act, 1997---Determination of substantial issues before charging of agricultural income tax---Due process---Scope----Assessment order was not required under S. 3B of the Punjab Agricultural Income Tax Act, 1997 and recovery could be initiated on basis of declaration made in an income tax return---Such process did not however curtail right of appeal under S.7 of the Punjab Agricultural Income Tax Act, 1997 nor did it allow Department to ignore procedure prescribed under the Punjab Agricultural Income Tax Act, 1997 and Rules framed thereunder, especially with reference to computation of tax----Assessment order was not mandatory under S.3B of the Punjab Agricultural Income Tax Act, 1997 however any assessment order could be challenged under S.7 of the Punjab Agricultural Income Tax Act, 1997---Calculations must be provided of tax levied and Department was required to disclose information taken from Federal Board of Revenue, rate applied and tax sought to be recovered in recovery notices under Punjab Agricultural Income Tax Act, 1997 so that taxpayer was clear on what amount was due against agricultural income tax---Objections with regard to limitation; jurisdiction, amount sought to be recovered, ownership and exemptions offered by Government itself required due deliberation and entitled the taxpayer due process under the Punjab Agricultural Income Tax Act, 1997.

Member (Taxes), Board of Revenue, Punjab, Lahore and others v. Qaisar Abbas and others 2019 SCMR 446 rel.

(c) Interpretation of statutes---

----Taxing statutes---Nature of statutory appeal provided for in a taxing statute---Scope---In any taxing scheme, right of appeal was provided under law to resolve disputes of liability to pay tax and such right of appeal was a statutory right under a taxing statute, which meant that any recovery under such statute was subject to said right of appeal---Assessment order was necessary in a taxing statute in order to support demand raised and to ensure that taxing officer had taxed a person as per the confines of law----Such assessment order ensured uniformity and equality in demand raised in absence of which doubt was raised and arbitrary exercise of jurisdiction was possible, as there existed no check on a taxing officer, and a citizen was substantially without protection from unequal and unjust demands.

Rai Muhammad Yaseen, Ch. Muhammad Mohsin Virk, Mrs. Samia Khalid, Sayyid Ali Imran Rizvi, Masood Ahmad Wahla, Rana Sajid Rasool, Malik Muhammad Shahbaz Awan, Malik Rizwan Khalid Awan, Masood Ahmad Zafar, Sh. Muhammad Akram, Ch. Rehmat Ali, Muhammad Saleem Chaudhary, Touqeer Khalil, Muhammad Akram Awan, Ch. Imtiaz Ahmad Kamboh, Wajahat Abbas Khan, Imtiaz Hussain Khan Baloch, Shahjahan Khan, Salman Faisal, M.A. Ghaffar-ul-Haq, Shan Saeed Ghumman, Shamshad Ahmad Bajwa, Ms. Sufia Qazi, Hassan Majeed, Rana Salman Intizar, Imdad Ali Nekokara, Mian Subah Sadiq Klasoon, Ghulam Murtaza, Mughees Ahmad Khokhar, Mian Shahid Ali Shakir, Mian Faisal Naseer, Muhammad Ozair Chughtai, Ch. Shakeel Gondal, Rana Sarfraz Ahmad, Khalid Mehmood Khan, Rana Kashif Iqbal, Rana Muhammad Afzaal, Mian Nasir Mehmood Wattoo, Niaz Ahmad Phularwan, Mian Khuram Sadiq, Rana Mushtaq Ahmad Toor, Muhammad Anas Bin Ghazi, Muhammad Arif Malhi, Javed Iqbal Kahloon, Muhammad Ishnaq Saho, Zia Haider Rizvi, Sajjad Haider Rizvi, Syed Qasim Ali Kasuri, M. Aurangzeb Khan Daha, Farhan Shahzad, Ch. Shahid Hanif Jatt, Mian Shahzad Siraj Chabay, Waqar Mushtaq, Ch. Muhammad Imran Rafique, Ehsan Ullah Ranjha, Inaam ul Haq Faiz Bhatti, Hammad ul Hassan Hanjra, Nauman Aziz, Rana Sohail Ashraf, Muhammad Ajmal Khan, Babar Niaz Dhaddar, Muhammad Zafar Iqbal Mian, Waseem Ahmad Malik, Muhammad Ahmad Bhatti, Muhammad Naeem Munawar, Rana Tasgheer Ahmad Khan, Ch. Shoukat Ali, Muhammad Akram Sheikh, Muhammad Shabbir Sanpal, Rana Kashif Iqbal, Muhammad Waqar Akram, Ch. Qamar-uz-Zaman, Hashim Aslam Butt, Rasheed Ahmad Sheikh, Muhammad Rehan Sarwar, Muhammad Shabbir Sial, Muhammad Saqib Sheikh, M. Safdar Abbas Khan, Shakeel Ahmad Basra, Mian Mansoor Ahmad, Muhammad Ayyub Aheer, Rai Amer Ijaz Kharal, Pir Muhammad Asharf Chishti, Ch. Muhammad Jehangir Wahla, Abdul Khaliq Safrani, Touseef Riaz Ghumman, Ghulam Mustafa Khan, Abdul Waheed Habib, Abdul Rauf Chaudhary, Muhammad Farooq Sheikh, Sardar Muhammad Ramzan, Sardar Muhammad Sadiq Tahir, Sajid Hussain Chaudhary, Farid Adil Chaudhary, Abdul Razzaq, Saleem Raza Asim, Sagheer Ahmad, Muhammad Imran Khan, Rabeel Qader, Muhammad Naveed Shabbir Goraya, A.S. Arieen, Ijaz Ali Bhatti, Muhammad Waqas Latif, Javed Anwar Janjua, Hafiz Ansar ul Haq, Muhammad Younas Khalid, Ali Husnain Buttar, Hamza Shahid Buttar, Ch. Muhammad Shakeel, Rai Akhtar Suleman, Mian Haseeb ul Hassan, Ch. Shabbir Hussain, Rai Muhammad Shahbaz Bhatti, Aurangzeb Chaudhry, Shahid Mehmood Khan Khilji, Ch. Basharat Ali, Mian Mansoor Ahmad, Ms. Nargis Naheed, Mian Muhammad Javed, Nasir Ahmad Awan, Muhammad Ahmad Pansota, Syed Zeeshan Haider Zaidi, Azeem Hafeez, Muhammad Younas Khalid, Shahzad Mansoor Khan, Muhammad Aamir Qadeer, Mian Shahid Ali Shakir, Muhammad Imran, Ch. Muhammad Shakeel Gondal, Ch. Nayyar Jamal, Abdul Razzaq, Saad Rasool, Sh. Sakhawat Ali, Zahid Imran Gondal and Farrukh Ilyas Cheema, Malik Muhammad Azam Awan, Mian Muhammad Hussain Chotiya, Barrister Aon Abbas Khan Sial, Malik Muhammad Riaz Tabassum, Najam ul Hassan, M. Zafar Iqbal, Malik Muhammad Nadeem, Malik Bashir Ahmad Khalid, Ch. Khalid Masood, Muhammad Yousaf Lurka, Mehar Mohsin Ali, Fida Hussain Matta, Jamil Akhtar Baig, Malik Muhammad Arshad Kundi, Syed Waqar Hussain Naqvi, Pir Muhammad Asad Shah for Petitioners.

Akhtar Javed, Additional Advocate General, Punjab along with Nadeem Abbas Bhangu, Secretary (Taxes), Board of Revenue, Lahore, Ijaz Bhutta, Deputy Secretary (Recovery), Board of Revenue, Lahore, Muhammad Haroon Rasheed, Tehsildar, Kot Radha Kishan, District Kasur, Azam Shaigan, Tehsildar Cantt. Lahore, Ahmad Raza Sultan, Tehsildar, Renala, Mian Aslam, Tehsildar, Pir Mahal, Ghulam Abbas, Naib Tehsildar, Jhang, Muhammad Ashraf, Naib Tehsildar, Pakpattan, Rana Amjad Mehmood, Tehsildar Depalpur, Ghulam Rasool, Naib Tehsildar, Pindi Bhattian for Respondents

Sarfraz Ahmad Cheema for Respondent, FBR (in W.P. No.34464 of 2019).

Mrs. Kausar Parveen for Respondent FBR in (W.P. No.32452 of 2019 and 38264 of 2019).

Shahzad Ahmad Cheema for Respondent FBR (in W.P. No.38264 of 2019).

Muhammad Akram Awan for Respondent FBR (in W.P. No.31707 of 2019).

Javed Athar for Respondent Commissioner Inland Revenue, Lahore for Respondents (in W.P. No.30455 of 2019).

2019 P T D 1674

[Lahore High Court]

Before Ayesha A. Malik, J

TAYYAB PAPER MILLS

Versus

FEDERATION OF PAKISTAN through Secretary Finance, Division, Islamabad and others

Writ Petition No. 155515 of 2018, heard on 14th May, 2019.

(a) Sales Tax Act (VII of 1990)---

----Ss. 57 & 45-B---Constitution of Pakistan, Art. 199---Constitutional petition--- Maintainability--- Non-availability of alternate remedy---Effect---Appealable orders under the Sales Tax Act, 1990---Rectification of mistake---Appeal under S.45-B of the Sales Tax Act, 1990---Question before the High Court was whether Constitutional petition against an order for rectification made under S.57 of the Sales Tax Act, 1990 was maintainable---Held, that order under S.57 of the Sales Tax Act, 1990 was not an appealable order under S.45-B of the Sales Tax Act, 1990, therefore no alternate remedy against the same was available---Constitutional petition was maintainable, in circumstances.

(b) Sales Tax Act (VII of 1990)---

----S. 57---Rectification of mistake----Order for rectification under S.57 of Sales Tax Act, 1990; nature of---Clerical and arithmetical errors---Exercise of powers under S.57 of the Sales Tax Act, 1990---Application for rectification under S.57 Sales Tax Act, 1990 could only be made after issuing notice to the concerned party---Clerical errors and arithmetical errors were essentially typing errors which were apparent from face of record and the same did not mean errors of findings on facts or on law---Rectification application under S.57 of the Sales Tax Act, 1990 allowed a competent officer of the Department to correct a mistake which was apparent on face of the record but did not allow for re-assessment of a case or compilation of a different opinion from one that was taken earlier---Liability of an assessee could not be changed under S.57 of Sales Tax Act, 1990 and matters which were not part of the original adjudicatory process could not be introduced in the rectification process.

Commissioner of Income Tax, Karachi v. Messrs Shadman Cotton Mills Ltd., Karachi through Director 2008 PTD 253 rel.

(c) Administration of justice---

----"Clerical errors" and "arithmetical errors"---Meaning and concept of---Clerical errors and arithmetical errors were essentially typing errors which were apparent from face of record and the same did not mean errors of findings on facts or on the law.

(d) Administration of justice---

----"Rectification", concept and meaning of---Concept of rectification was simply to correct an error committed which was floating on record, being arithmetical or clerical in nature and rectification could not bring material change to an order or change its complexion.

Commissioner of Income Tax, Karachi v. Messrs Shadman Cotton Mills Ltd., Karachi through Director 2008 PTD 253 rel.

Muhammad Ajmal Khan for Petitioner.

Chaudhary Muhammad Yasin Zahid for Respondents.

2019 P T D 1734

[Lahore High Court (Rawalpindi Bench)]

Before Muhammad Farrukh Irfan Khan, J

RAWALPINDI DEVELOPMENT AUTHORITY ("RDA")

Versus

FEDERATION OF PAKISTAN through Chairman Federal Board of Revenue (FBR) and others

Writ Petition No.2008 of 2016, heard on 17th April, 2018.

Income Tax Ordinance (XLIX of 2001)---

----Ss. 49, 122, 4 & 80---Constitution of Pakistan, Arts. 165, 165-A & 199---Punjab Local Government Act (XVIII of 2013) S. 2(v)---Punjab Development of Cities Ordinance (XIX of 1976) S. 4---Exemption of certain public property from taxation under Art. 165 of the Constitution---Liability of income tax on statutory bodies/entities---Benefit of exemption of levy of income tax on income of Federal and Provincial Governments and local authorities under S. 49 of the Income Tax Ordinance, 2001---Development Authorities as body corporates could not obtain benefit of exemption from levy of income tax---Scope---Petitioner City Development Authority impugned assessment order passed against it under S. 122C of the Income Tax Ordinance, 2001 on the ground, inter alia, that it being an attached Department of the Province of Punjab, was exempted from levy of tax under S. 49 of the Income Tax Ordinance, 2001 read with Art. 165A of the Constitution ----Validity---Per definition of "local government" in S. 2(v) of the Punjab Local Government Act, 2013, petitioner did not fall within definition of "Local Government" and was instead a "Development Authority" created under S. 4 of the Punjab Development of Cities Act, 1976---Petitioner was therefore being a "body corporate" was a "company" as defined in S. 80(2)(b) of the Income Tax Ordinance, 2001, which per S. 49 of the Income Tax Ordinance, 2001 was not exempted from levy of income tax---Petitioner's contention that it was performing functions in connection with affairs of the Province and had a status of a Provincial Government Department could not be proved on record---High Court held that the Department may proceed in recovery of income tax from petitioner per the provisions of the Income Tax Ordinance, 2001---Constitutional petition was dismissed, in circumstances.

Defence Housing Authority through Secretary v. Deputy Commissioner Income Tax and 3 others 2010 PTD 2552; Federal Board of Intermediate and Secondary Education, Islamabad through Secretary v. Federation of Pakistan through Secretary, and 6 others 2005 PTD 2082; Commissioner of Income Tax v. U.P. Forest Corporation 1998 PTD 2716; Karachi Development Authority v. Province of Sindh through the Secretary, Excise and Taxation Department, Karachi and 4 others PLD 1977 Kar. 152; Chief Secretary, Government of the Punjab, Lahore v. Commissioner of Income Tax, Lahore Zone, Lahore 1976 PTD 56; Collector of Sales Tax and Central Excise, Lahore v. Water and Power Development Authority and others 2007 SCMR 1736; Punjab Small Industries v. The Deputy Commissioner of Income Tax, Circle 14, Companies Zone-I, Lahore 1995 PTD 431 and Karachi Development Authority v. Central Board of Revenue through Members Central Excise and Land Customs, Islamabad and others 2005 PTD 2131 ref.

Hafiz M. Idrees for Petitioner.

Umer Aslam for Respondents.

Date of hearing: 17th April, 2018.

2019 P T D 1780

[Lahore High Court]

Before Muhammad Sajid Mehmood Sethi, J

FAISALABAD ELECTRIC SUPPLY COMPANY LTD. (FESCO)

Versus

FEDERATION OF PAKISTAN through Secretary, Finance, Islamabad and others

Writ Petition No. 257828 of 2018, decided on 14th May, 2019.

(a) Sales Tax Act (VII of 1990)---

----S. 25 & proviso---Access to record, documents, etc.---Conduct of audit under S. 25 of the Sales Tax Act, 1990---Nature of proviso to S. 25 of the Sales Tax Act, 1990 whereby audit could only be conducted once in three years---Retrospective application of such proviso---Scope----Question before the High Court was whether proviso to S. 25 of the Sales Tax Act, 1990 which provided that audit under S. 25 of the Sales Tax Act, 1990, was to be conducted only once in three years, had retrospective application and whether it was available to a taxpayer already undergoing audit---Held, that proviso to S. 25 of the Sales Tax Act, 1990 was measure to curtail excessive exercise of power to conduct audit of a registered person and aimed at restraining repeated and protracted audit proceedings eroding Constitutional rights and safeguards available to taxpayers---Rationale behind such proviso was that a statutory power must be exercised justly and reasonably--- Where audit proceedings under S. 25 of the Act were pending at the time of insertion of proviso to S. 25 of the Sales Tax Act, 1990; benefits of rule of retrospective application was available to such a taxpayer--- Section 25 of Sales Tax Act, 1990 was neither a charging provision nor it created a liability and provided procedure for monitoring self-assessment procedure available to taxpayer---Said proviso functioned to exclude cases of excessive use of power while original design of law to conduct audit justly, fairly and reasonably was retained---High Court held that proviso added to S. 25(2) of the Sales Tax Act of 1990, being procedural, beneficial and curative in nature, would apply retrospectively---Constitutional petition was allowed, accordingly.

Independent Newspapers Corporation (Pvt.) Ltd. and another v. Chairman, Fourth Wage Board and Implementation Tribunal For Newspaper Employees, Government of Pakistan, Islamabad and 2 others 1993 SCMR 1533; Collector of Sales Tax and Central Excise, Lahore v. Baba Farid Sugar Mills Ltd., Okara 2004 PTD 823; Messrs Hamdard Dawakhana v. Commissioner of Income-Tax, Karachi PLD 1980 SC 84 and Syed Matloob Hassan v. Brooke Bond Pakistan Limited Lahore 1992 SCMR 227 rel.

(b) Interpretation of statutes---

----Procedural amendments--- Retrospective application of such amendments---Scope---Presumption of retrospective application existed with regard to amendments which were of procedural nature---Alterations in procedure were retrospective, unless there was good reason against such retrospective application.

Maxwell on The Interpretation of Statutes and Commissioner of Income Tax (Central-I) v. Vatika Township (P) Ltd. (2015) 1 SCC 1 rel.

(c) Constitution of Pakistan---

----Art. 199---Constitutional jurisdiction of High Court---Scope---Exercise of discretionary taxation powers not reasonably---Scope---Discretionary powers of taxing authorities were to be reasonably exercised and if there was some arbitrariness, High Court had ample jurisdiction to interfere in the matter. [p. 1785] G

Messrs Novitas International v. Income Tax Officer (Films Circle) and others 1991 PTD 968 and Commissioner of Inland Revenue, Sialkot and others v. Messrs Allah Din Steel and Rolling Mills and others 2018 SCMR 1328 rel.

Mian Ashiq Hussain and Mudassar Shuja-ud-Din for Petitioners.

Ch. Zafar Iqbal, Sarfraz Ahmad Cheema and Ch. Shakeel Ahmad for Respondents.

Date of hearing: 3rd April, 2019.

2019 P T D 1811

[Lahore High Court]

Before Muzamil Akhtar Shabir and Asim Hafeez, JJ

COMMISSIONER INLAND REVENUE, ZONE-II, LARGE TAXPAYERS UNIT, LAHORE

Versus

Messrs MONNOOWAL TEXTILE MILLS LIMITED, LAHORE

I.T.R. No.155206 of 2018, heard on 23rd May, 2019.

Income Tax Ordinance (XLIX of 2001)---

----Ss. 21(e), 34(3) & 67---Allowable deduction---Scope---Gratuity, payment of---Disallowance of deductions---Methods of accounting---Applicability---Expression 'subject to Ordinance' as appearing in S. 24(3) of Income Tax Ordinance, 2001---Taxpayer, a business entity, had created gratuity fund and was aggrieved of act of tax authorities for not recognizing the same as expenditure---Appellate Tribunal Inland Revenue allowed payment of gratuity as expenditure and deleted additions made to gratuity payment and disallowance of deductions---Validity---Mere adoption of mercantile method of accounting would neither dilute nor nullify effect and applicability of S. 21(e) of Income Tax Ordinance, 2001---No exception could be claimed regarding provision of gratuity under mercantile method of accounting alleged to have been adopted by taxpayer---Allowable deductions could be claimed against gratuity payments only when contribution were made towards an approved gratuity fund---No allowable deduction in lieu of gratuity payments could be claimed on pretext of adopting mercantile/accrual method of accounting under Income Tax Ordinance, 2001 which legislative intent was reaffirmed by use of expression 'subject to Ordinance' in S. 34(3) of Income Tax Ordinance, 2001---Mere provision of gratuity payments, payable in future subject to happening of contingency, under mercantile method of accounting did not constitute compliance of S. 21(e) of Income Tax Ordinance, 2001 and allowed deductions claimed in such behalf---Appellate Tribunal Inland Revenue, therefore, was not justified to hold that mere provisioning for gratuity payments constituted allowable/admissible deduction according to S. 21(e) of Income Tax Ordinance, 2001.

Messrs Nida-i-Millat (Pvt.) Ltd. Lahore v. Commissioner of Income Tax Zone-I, Lahore 2006 PTD 1085; Commissioner of Income Tax v. Oriental Dyes and Chemical Co. Ltd. 1992 PTD 763; Messrs Nida-i-Millat (Pvt.) Ltd. Lahore v. Commissioner of Income Tax Zone-I, Lahore 2001 PTD 443; Commissioner Legal Division v. Civil Aviation Authority 2008 PTD 647; Commissioner Income Tax, Karachi v. Messrs Pakistan Security Printing Corporation Ltd. 1985 PTD 413 and Commissioner of Income Tax, Companies-I, Karachi v. Messrs M.M. Silk Mills Limited, Karachi 2006 PTD 460 ref.

Liaquat Ali Chaudhry for Applicant.

Umer Iqbal Khawaja for Respondent.

Date of hearing: 23rd May, 2019.

2019 P T D 1828

[Lahore High Court]

Before Muhammad Sajid Mehmood Sethi and Muzamil Akhtar Shabir, JJ

COMMISSIONER INLAND REVENUE, T.R.O., FAISALABAD

Versus

FAQIR HUSSAIN and another

I.T.R. No .136801 of 2018, heard on 18th April, 2019.

Income Tax Ordinance (XLIX of 2001)---

----Ss. 111, 122 & 133---Amendment of assessment---Unexplained income or assets---Mandatory for Department to issue notice under S. 111 of the Income Tax Ordinance, 2001 before invoking its provisions---Interpretation of S. 111 of the Income Tax Ordinance, 2001---Scope---Question before the High Court was whether specific separate notice under S. 111(1) of the Income Tax Ordinance, 2001 was required when notice under S. 122 of the Income Tax Ordinance, 2001 had already been served upon the taxpayer, and unexplained income/assets in terms of S. 111 of the Income Tax Ordinance, 2001 had been added to income of the taxpayer---Held, that word "notice" was not specifically mentioned in S. 111 of the Income Tax Ordinance, 2001 but words used therein, that "the person offers no explanation" and "or the explanation offered by the person is not, in the Commissioner's opinion, satisfactory" clearly suggested that for an explanation to be offered by a taxpayer, he must have been issued a notice---After said notice and failure on the part of taxpayer to offer satisfactory explanation, such addition could be made in income of taxpayer and for an explanation to be offered by a registered person, he must have been issued notice without which no explanation could be offered, within the contemplation of S. 111 of the Income Tax Ordinance, 2001---Non-issuance of separate notice under S. 111 of the Income Tax Ordinance, 2001 caused prejudice to the taxpayer as substantial compliance of said provisions of law had not been made---High Court observed that non-issuance of proper notice in order to invoke provisions of S. 111 of the Income Tax Ordinance, 2001 could not be taken lightly and its non-compliance may render proceedings not in conformity with or according to the intent and purpose of law---In the present case, neither notice under S. 111 of the Income Tax Ordinance, 2001 had been issued to taxpayer nor was taxpayer specifically confronted with such proposed addition so that the taxpayer could have advanced some explanation in this regard---Law mandated the issuance of separate notice / explanation within the contemplation of S. 111, therefore, same could not be made redundant---Reference was answered, accordingly.

Commissioner Inland Revenue v. Muhammad Shafique 2015 PTD 1823 and Commissioner Inland Revenue, Zone-I, Regional Tax Office, Sukkur v. Messrs Ranipur CNG Station, Ranipur 2017 PTD 1839 rel.

Commissioner of Income Tax, Karachi v. Abdul Ghani 2007 PTD 967 and Collector of Sales Tax and Central Excise, Lahore v. Zamindara Paper and Board Mills and others 2008 SCMR 615 distinguished.

Commissioner of Income Tax v. Girdhari Lal (2002) 258 ITR 331 Raj. and Commissioner of Income Tax, Special Zone, Corporate Region, Karachi v. Messrs Shaista Estate (Pvt.) Ltd. 2010 PTD 704 ref.

Shahid Sarwar Chahil, Liaquat Ali Chaudhry, Rana Muhammad Mehtab, Ch. Imtiaz Elahi, Muhammd Asif Hashmi, Saeed ur Rehman Dogar, Imran Rasool, Syed Tasaduq Mustafa Naqvi and Syed Tasaduq Murtaza Naqvi for Applicants along with Legal Advisors Dr. Ishtiaq Ahmad Khan, Commissioner Inland Revenue, Lahore.

Sheikh Muhammad Anwar, Farid Adal, Nasir Hameed, Muhammad Naeem Munawar, Muhammad Aslam, Akram Qureshi, Muhammad Tahir Amin and Zain Rehmat Qureshi for Respondents.

Date of hearing: 18th April, 2019.

2019 P T D 1862

[Lahore High Court]

Before Shams Mehmood Mirza, J

ABDUL SALAM

Versus

FEDERATION OF PAKISTAN through Secretary and 3 others

Writ Petition No. 249168 of 2018, decided on 24th June, 2019.

(a) Interpretation of statutes---

----Retrospectivity of statute---Principle---Legislature can promulgate legislation with retrospective effect---Strong presumption of prospective application attached to legislation exists which can only be displaced if text expressly states that statute or a provision contained therein is intended to apply retrospectively or if necessary, implication to that effect is clearly spelt out from words of the statute---Such presumption can also be displaced or weakened to some extent if legislation can be characterized as declaratory, validating or procedural in its operation and effect---Court is to construe statutes with more attention and regard to language of text to ascertain statutory intent---Unless intention of Legislature is unambiguously brought out by a clear and strong text and such intention cannot otherwise be satisfied, a statute ought not to receive a retrospective construction; in case of ambiguity in text, provision ought to be construed as prospective only.

Zila Council Jehlum through District Coordination Officer v. Messrs Pakistan Tobacco Company Limited and another PLD 2016 SC 398; Commissioner of Income Tax-I, New Delhi v. Vatika Township Private Limited (2014) 367 ITR 466; Commissioner Inland Revenue Zone-II, Regional Tax Office, Multan v. Mrs. Ambreen Fawad 2014 PTD 320; Shahzad Mehmood Ahmad v. Federation of Pakistan and others (Writ Petition No. 11276 of 2016); Society for the Propagating of the Gospel v. Wheeler 22F. Cas. 756, 767 (C.C.D.N.H. 1814) (No. 13, 156); Professors Douglas Kmiec and John McGinnis The Contract Clause: A Return to the original Understanding 14 Hastings Const. L.Q. 525, 528 (1987)]; Lon L. Fuller in The Morality of Law 53 (1964) and Shyam Sunder and others v. Ram Kumar and another (2001) 8 SCC 24 rel.

(b) Income Tax Ordinance (XLIX of 2001)---

----Ss. 113, 177, 214-C & Second Sched., Part-IV, Clause 105 [as inserted through Finance Act (XXX of 2018)]---Retrospectivity of statute---Applicability---Taxpayer assailed audit selection by authorities on grounds that a previous audit of same tax year was already pending and provisions of Clause 105 of Part IV of Second Schedule to the Income Tax Ordinance, 2001 was retrospective in operation---Validity---Provisions of Clause 105 of Part-IV of Second Schedule of Income Tax Ordinance, 2001 did not amend or clarify any existing provision of Income Tax Ordinance, 2001 and merely regulated the selection process---Provisions of Clause 105 of Part-IV of Second Schedule of Income Tax Ordinance, 2001 did not remove any ambiguity or supplied any omission regarding legal position on selection of cases for audit---To construe Clause 105 of Part-IV of Second Schedule of Income Tax Ordinance, 2001 as curative, remedial or clarificatory in nature was contrary to established principle of construction of statutes---Clause 105 of Part-IV of Second Schedule of Income Tax Ordinance, 2001 was inserted in Income Tax Ordinance, 2001 through Finance Act, 2018 which was promulgated on 01-07-2018 and took effect on such date of promulgation of Finance Act, 2018---If Legislature had intended Clause 105 of Part-IV of Second Schedule of Income Tax Ordinance, 2001 to take effect from date prior to 01-07-2018 it would have said so explicitly---Provisions of Clause 105 of Part-IV of Second Schedule of Income Tax Ordinance, 2001 prescribed legal consequences only for future and selection of person for audit after 01.07.2018 could be effected if he had been selected for audit in preceding three years---Selection for audit in preceding three years which attached new consequences for future selection after 01-07-2018 did not make Clause 105 of Part-IV of Second Schedule of Income Tax Ordinance, 2001 per se retrospective in its operation---Clause 105 of Part-IV of Second Schedule of Income Tax Ordinance, 2001 not to have retrospective effect---Constitutional petition was dismissed in circumstances.

Maxwell on the Interpretation of Statutes (Twelfth Edition); Worrall v. Commercial Banking Co. of Sydney (1917) 24 CL R 28 (32); Commissioner of Income Tax-I, Ahmedabad v. Gold Coin Health Food Private Limited (2008) 9 SCC 622; Zile Singh v. State of Haryana and others AIR 2004 SC 5100; Statutory Construction by Crawford; Hitendra Vishnu Thakur v. State of Maharashtra AIR 1994 SC 2623; Commissioner of Income Tax v. Shahnawaz Limited and others 1993 SCMR 73 and Nestle Pakistan Limited v. Federal Board of Revenue 2017 PTD 686 ref.

Commissioner of Inland Revenue, Sialkot and others v. Messrs Allah Din Steel and Rolling Mills and others 2018 SCMR 1328 rel.

Raza Ahmad Cheema for Petitioner.

Malik Abdullah Raza vice Sarfraz Ahmad Cheema for Respondents.

2019 P T D 1882

[Lahore High Court]

Before Ayesha A. Malik, J

Rana FAHAD HUSSAIN

Versus

The FEDERATION OF PAKISTAN through Secretary, Revenue Division/Chairman Federal Board of Revenue, Islamabad and 2 others

Writ Petition No. 21099 of 2019, heard on 13th June, 2019.

Voluntary Declaration of Domestic Assets Act (XI of 2018)--

----Ss. 5 & 8---Declaration of domestic assets in Pakistan---Payment of tax---Finality of proceedings---Scope---Petitioner had sought benefit under S. 5 of Voluntary Declaration of Domestic Assets Act, 2018 and had filed declaration accordingly---Deputy Commissioner Inland Revenue rejected the declaration so filed on the ground that the recovery notice had been issued against the petitioner after passing of assessment order on the basis of which the petitioner was liable to pay certain amount---Validity---Explanation included in S. 8 of Voluntary Declaration of Domestic Assets Act, 2018 clarified that declaration could even be made in respect of undisclosed income or assets which were pending proceedings under Income Tax Ordinance, 2001 until same had attained finality---Basic purpose of the explanation was to clarify that even where proceedings pending under Income Tax Ordinance, 2001 related to assessment or otherwise, the taxpayer could make a declaration of undisclosed income or assets uptil the point when those proceedings had attained finality---Proceedings under Income Tax Ordinance, 2001 attained finality when the taxpayer exhausted the right of appeal and order was passed thereon by the appellate forum---Order of assessment was not a final order for the reasons that it could be challenged in an appeal or revision as the case might be and it only became final when it went through all the forums and remedies available under the law---Taxpayer was entitled to pursue the remedy of appeal or second appeal as such remedies reopened the assessment, meaning that it was not final unless it crossed all forums under that law in which it could be challenged and the order of the last forum would be final---High Court held that petitioner was entitled to file a declaration under

S. 5 of Voluntary Declaration of Domestic Assets Act, 2018---Constitutional petition was accepted

Central Board of Revenue and others v. Chanda Motors 1992 PTD 1681 ref.

Rana Zahid Atteq Chaudhry and Rashid Khan for Petitioner.

Ibrar Ahmad for Respondents.

Date of hearing: 13th June, 2019.

2019 P T D 1890

[Lahore High Court]

Before Muhammad Sajid Mehmood Sethi andMuzamil Akhtar Shabir, JJ

Messrs STRONGMAN IDEAL FURNITURE

Versus

The CHIEF COMMISSIONER INLAND REVENUE and others

S.T.R. No.136 of 2013, heard on 10th April, 2019.

(a) Sales Tax Act (VII of 1990)---

----Ss. 47 & 73---Payment through Banking channel---Mandatory effect---Taxpayer was aggrieved of order passed by Appellate Tribunal Inland Revenue declaring that provisions of S. 73 of Sales Act, 1990 were mandatory in nature---Validity---Consequence of non-compliance of payment through Banking channel was clearly given in S. 73 of Sales Tax Act, 1990 if such person was not entitled to claim input tax credit, adjustment or deduction or refund, etc.---High Court set aside plea of taxpayer as compliance of S. 73 of Sales Tax Act, 1990 to the extent of making payment through Banking channel was mandatory---Reference was dismissed in circumstances.

2010 PTD (Trib.) 1515; Messrs Noon Sugar Mills Limited v. The Commissioner of Income-Tax, Rawalpindi PLD 1990 SC 1156; Commissioner of Income-Tax Company's II, Karachi v. Messrs National Food Laboratories 1992 PTD 570; Allied Bank of Pakistan Ltd. v. Khalid Farooq 1991 SCMR 599; Messrs PFIZER Laboratories Limited v. Federation of Pakistan and others PLD 1998 SC 64; Ghulam Hassan v. Jamshaid Ali and others 2001 SCMR 1001; Malik Muhammad Inam and others v. Federation of Pakistan and others 2006 SCMR 1670 = 2006 PTD 2277; Hashwani Hotels Limited v. Government of Pakistan through Secretary Ministry of Finance and others 2007 SCMR 1131 = 2007 PTD 1473; The Collector of Sales Tax, Gujranwala and others v. Messrs Super Asia Mohammad Din and Sons and others 2017 SCMR 1427 = 2017 PTD 1756; Messrs Kaloodi International (Pvt.) Ltd. and another v. Federation of Pakistan and others PLD 2001 Kar. 311; Messrs Mayfair Spinning Mills Ltd., Lahore v. Customs, Excise and Sales Tax Appellate Tribunal, Lahore and 2 others PTCL 2002 CL. 115; Collector, Sales Tax and Center Excise (West), Karachi v. Messrs Al-Hadi Industries (Pvt.) Ltd. 2002 PTD 2457; Commissioner of Income Tax, Companies-I, Karachi v. Messrs ORIX Leasing Pakistan Ltd., Karachi 2007 PTD 1151; United Sugar Mills Ltd. through Executive Director Finance v. Federal Board of Revenue through Chairman and 5 others 2015 PTD 152; Messrs Mahalaxmi Cotton Ginning v. The State of Maharashtra and others (2012) 51 VST 1 (Bom.); The State through Regional Director ANF v. Imam Bakhsh and others 2018 SCMR 2039; Ansar Abbas v. Judge Family Court and others 2018 CLC 1761; Messrs Aimnaz (Pvt.) Limited v. Federation of Pakistan, through the Secretary, Ministry of Law, Federal Secretariat, Islamabad and 2 others 2018 PTD 1966 and Mafizullah v. Manai Ullah and others PLD 1963 Dacca 318 ref.

(b) Interpretation of statutes---

----"Mandatory" or "directory" nature of provisions---Scope---Provision in a statute is mandatory if omission to follow the same renders proceedings, to which it relates, illegal and void while a provision is directory if its observance is not necessary to validity of proceedings.

(c) Words and phrases---

----'Shall'---Connotation---When word 'shall' is used in a provision of law, it is to be construed in its ordinary grammatical meaning and normally use of word 'shall' by Legislature brands a provision as mandatory especially when an authority is required to do something in a particular manner.

Haji Abdul Karim and others v. Messrs Florida Builders (Pvt.) Limited PLD 2012 SC 247rel.

Asif Ali, M.M. Akram, Usman Khalil, H.M. Majid Siddiqui and Qamar-ud-Din Ahmad for Applicants.

Mian Yusuf Umar, Ch. Muhammad Zafar Iqbal, Javed Akhtar, Shahzad Ahmad Cheema, Fouziya Bakhsh, Shahid Sarwar Chahil and Ch. Muhammad Yasin Zahid, Legal Advisors for Respondents.

Date of hearing: 10th April, 2019.

2019 P T D 1922

[Lahore High Court]

Before Abid Aziz Sheikh, J

Messrs HAPPY MANUFACTURING CO. (PVT.) LTD. through Director

Versus

FEDERAL BOARD OF REVENUE through Chairman and 5 others

Writ Petition No. 10035 of 2017, decided on 27th June, 2019.

(a) Constitution of Pakistan---

----Arts. 19 & 19-A---Right to information---Scope---Right of information under Arts. 19 & 19-A of the Constitution is a well-entrenched fundamental right of every citizen---People of Pakistan have a right to know every public act and everything that is done in public way by public functionaries---Right of information under Arts. 19 & 19-A of the Constitution is fundamental right of every citizen but this right is not absolute---Such right is subject to regulation and reasonable restrictions imposed by law as specifically mentioned in Arts. 19 & 19-A of the Constitution.

Mian Muhammad Nawaz Sharif v. President of Pakistan and others PLD 1993 SC 473; Province of Punjab v. Qaisar Iqbal and others PLD 2018 Lah. 198; Hamid Mir and others v. Federation of Pakistan and others PLD 2013 SC 244; Indian Express Newspaper (Bombay) Private Ltd. and others v. Union of India and others 1985 (1) SCC 641; Secretary, Ministry of Information and Broadcasting v. Cricket Association of Bengal and others AIR 1995 SC 1236; State of U.P. v. Raj Narain and others AIR 1975 SC 865; S.P. Gupta and others v. Union of India and others AIR 1982 SC 149; Sheela Barse v. Union of India AIR 1986 SC 1773; Suri Dinesh Trivedi v. Union of India and others (1997) (4) SC 306; Peoples Union for Civil Liberties v. Union of India AIR 2003 SC 2363; Pakistan Broadcasters Association v. Pakistan Media Regulatory Authority PLD 2016 SC 692 and Abdul Hakim Quraishi and others v. State of Bihar AIR 1961 SC 448 rel.

(b) Interpretation of Constitution---

----Primary legislation---Principle of reasonableness---Scope---Validity of primary legislation such as Act of Parliament is not open to challenge on ground of reasonableness and such ground is normally available to challenge subordinate legislation such as rules, regulations or act of executive---Such general rule does not apply where under the Constitution, fundamental right conferred is subject to reasonable restriction imposed by law.

(c) Interpretation of Constitution---

----Non-obstante clause---Scope---Non-obstante clause is subject to the Constitution and High Court while applying test of reasonableness is required to find out whether by impugned provision, Legislature has transgressed or not reasonable limits. (d) Discretion---

----Precondition---Discretion to be structured and exercised justly, fairly and in transparent manner.

(e) Income Tax Ordinance (XLIX of 2001)---

----S. 214-C---Income Tax Rules, 2002, R. 231-F---Right of Access to Information Act (XXXIV of 2017), S. 16(1)(d)(i)---Constitution of Pakistan, Art. 19-A---Selection of taxpayer for audit---Parameters for audit, non-disclosing of--- Right to information---Scope---Term 'matter of public importance'---Applicability---Petitioners were income tax assessees who sought disclosure of parameters for audit by tax authorities as same was matter of public importance---Plea raised by authorities was that parameters for audit could not be disclosed due to confidentiality envisaged by provisions of S. 214-C of Income Tax Ordinance, 2001---Validity---Term 'matter of public importance' was a matter which effected and had its repercussions on public at large---Risk parameters for audit of persons or classes of persons under S. 214-C of Income Tax Ordinance, 2001 by Federal Board of Revenue were applicable to taxpayers throughout the country---Such was a matter of public importance and provisions of Art. 19-A of the Constitution were attracted in circumstances---Once persons or classes of persons were selected for audit under S. 214-C of Income Tax Ordinance, 2001 they were to be informed about particular risk parameters applied to them for selection of audit if demanded by them for their information---High Court declared that orders for not disclosing specific parameter applied to petitioners for selection of their cases for audit under S. 214-C of Income Tax Ordinance, 2001 as illegal, without lawful authority and set aside the same and directed the Federal Board of Revenue to inform petitioners forthwith if requested by them, specific parameters on basis of which their cases were selected for audit under S. 214-C of Income Tax Ordinance, 2001---Constitutional petition was allowed accordingly.

Messrs Premier Industrial Chemical Manufacturing Co. v. Commissioner Inland Revenue and others 2013 PTD 398; Messrs Ittefaq Rice Mills v. Federation of Pakistan and others 2013 PTD 1274; CIT v. Media Network and others 2006 PTD 2502; CIR v. Allah Din Steel 2018 SCMR 1328; DHA v. CIR 2015 PTD 2538; Fauji Foundation and another v. Shamimur Rehman PLD 1983 SC 457; Province of Sindh through Chief Secretary and others v. M.Q.M. through Deputy Convener and others PLD 2014 SC 531; Syed Mukhtar Hussain Shah v. Mst. Saba Imtiaz and others PLD 2011 SC 260' The Punjab Province v. Malik Khizar Hayat Khan Tiwana PLD 1956 FC 200; Lahore Development Authority through D.G and others v. Ms. Imrana Tiwana and others 2015 SCMR 1739; The Collector of Sales Tax, Gujranwala and others v. Messrs Super Asia Mohammad Din and Sons and others 2017 SCMR 1427; Khan Gul Khan and others v. Daraz Khan 2010 SCMR 539; Federation of Pakistan and others v. Ammar Textile Mills (Pvt.) Limited and others 2002 SCMR 510; Star Textile Ltd and 5 others v. Government of Sindh and others 2002 SCMR 356; Messrs MKB Spinning Mills (Pvt.) Ltd. v. Federation of Pakistan and others 2018 PTD 2364; Kohinoor Sugar Mills v. Federation of Pakistan and others 2018 PTD 821; Treet Corporation Limited v. Federation of Pakistan and others (Writ Petition No.11253 of 2017); Commissioner of Income Tax and others v. Fatima Sharif Textile and others 2009 PTD 37; Chairman FBR and others v. Idrees Traders and others 2012 PTD 693; Ch. Manzoor Elahi v. Federation of Pakistan and others PLD 1975 SC 66; Miss Benazir Bhutto v. Federation of Pakistan and others PLD 1988 SC 416; I.A. Sharwani and others v. Government of Pakistan and others 1991 SCMR 1041; Syed Zulfiqar Mehdi and others v. Pakistan International Airlines Corporation through M.D, Karachi and others 1998 SCMR 793; Mian Muhammad Shahbaz Sharif v. Federation of Pakistan and others PLD 2004 SC 583; Ch. Muhammad Siddique and 2 others v. Government of Pakistan and others PLD 2005 SC 1; Watan Party and others v. Federation of Pakistan and others PLD 2012 SC 292 and Dr. Muhammad Tahir-ul-Qadri v. Federation of Pakistan and others PLD 2013 SC 413 ref.

(f) Interpretation of statutes---

----Two constructions---Scope---When two constructions are reasonably possible then preference was to be given to one which helps to carry out beneficial purpose of the Act and ensure smooth and harmonious working of Constitution and eschew other which leads to absurdity and make fundamental right nugatory.

Province of Sindh through Chief Secretary and others v. M.Q.M. and others PLD 2014 SC 531; Messrs Elahi Cotton Mills Ltd and others v. FOP and others PLD 1997 SC 582; Haroon-ur-Rashid v. LDA and others PLD 2016 SCMR 931 and Syed Mukhtar Hussain Shah v. Mst. Saba Imtiaz PLD 2011 SC 260 rel.

(g) Interpretation of statutes---

----Court, duty of---Scope---Court is only to interpret law and not to legislate, nonetheless Legislation cannot be asked to resolve difficulties in implementation of its intention and spirit of law---In such an eventuality, it is duty of court to interpret statute liberally, to advance cause of statute and save it from being strike down, being unconstitutional.

Shahbaz Butt, Naveed A. Andrabi, Muhammad Ajmal Khan, Abad-ur-Rehman, Sayyid Ali Imran Rizvi, Naeem Sarwar, Khurram Shahbaz Butt, Kh. Abrar Majal, Abad ur Rehman, Shakeel Ahmad Basra, Muhammad Azhar Khan Joiya, Mustafa Kamal, Farhan Shahzad, M. Aamir Qadeer, Khurram Saleem, M. Iqbal Hashmi, M.M. Akram, Miss Ruhi Saleh, Mian Mahmood Rashid, Ch. Muhammad Mohsin Virk, Ali Sajid Mirza, Faisal Rasheed Ghouri, Kashif Ali, Javed Iqbal Qazi, Syed Naeem ud Din Shah, Jan Muhammad Ch., Habib-ur-Rehman Mian, Ghufran Wakeel, Farid Adil Ch., Muhammad Abubakar, Ch. Irshad Ullah Chatha, M. Kashif Delmyal, Raja Hassam Kayani, Rana Munir Hussain, Zafar Iqbal Mian, Iftikhar Ahmad Ansari, Mian Muhammad Arshad, Zohaib Ali Sidhu, Rehman Khan, M. Amir Wali, Abid Wali, Sajid Wali, Imran Sarwar, Almas Arif Sindhu, Zahid Ateeq Ch., Zahid Imran Gondal, Ch. Asif Shahdat, Usman Javid Qazi, Muhammad Nasir Khan, Muhammad Waseem Akram, Aqeel Shafique, Hussain Ahmed, Ms. Yasrab Gulzar, Khalil ur Rehman, Mian Abdul Ghaffar, Rai Amer Ijaz Kharal, Omer Wahab, Ch. Rehmat Ali, Monim Sultan, Umair Anwar, Hammad-ul-Hassan Hanjra, Zafar Iqbal Kamboh, Shahzad Hassan Pervaiz, Khawaja Riaz Hussain, Khawaja Mehmood Ayaz, Kashif Ali, Muhammad Saleem Ch. and Ms. Noreen Fouzia for Petitioners

Liaquat Ali Ch., Muhammad Asif, Ch. Muhammad Zafar Iqbal, Sarfraz Ahmad Cheema, Sardar Kaleem Ilyas, Anas Sheikh, Akhtar Ali Moanga, Syed Tassadaq Murtaza Naqvi, Shahzad Ahmad Cheema, Shahid Usman, Shahid Sarwar Chahil, Saeed ur Rehman Dogar, Malik Abdullah Raza, Muhammad Asif Hashmi, Raja Sikandar Khan, Faraz Arslan, Zafar Iqbal Bhatti, Sabar Iqbal, Aamer Khan, Mohsin Ali, Osmama Zafar, Ch. Muhammad Yaseen Zahid, Abdul Hassan, Sardar Masud Raza Qazilbash, Mrs. Kausar Parveen, Ms. Saba Saeed Sheikh, Miss Foziya Bukhsh, Imran Rasul, Syed Zain ul Abideen Bukhari, Sharjeel Tareef, Raheel Ahmad Khan for Respondents.

Azmat Hayat Khan Lodhi, Assistant Attorney General for Pakistan for Respondents.

2019 P T D 1994

[Lahore High Court]

Before Ayesha A. Malik and Shams Mehmood Mirza, JJ

COMMISSIONER INLAND REVENUE

Versus

Messrs EDUCATION EXCELLENCE LTD.

I.T.R. No.255 of 2016, decided on 18th October, 2016.

Income Tax Ordinance (XLIX of 2001)---

----Ss. 133 & 113---Reference to High Court---Minimum Tax---Adjustment of excess amount of tax paid---Scope---Taxpayer, while filing the return of income, had claimed adjustment of minimum tax brought from tax years 2011, 2012 and 2013---Additional Commissioner had observed that as the appellant had not paid any tax under normal tax regime, therefore, the credit under S. 113(2)(c), Income Tax Ordinance, 2001 was not available---Commissioner Inland Revenue (Appeals) had rejected the appeal of taxpayer---Appellate Tribunal accepted the appeal of taxpayer and held that S. 113(2)(c), Income Tax Ordinance, 2001 was applicable in loss cases or zero tax payable cases---Validity---Findings of Appellate Tribunal were rooted in law---Reference application was dismissed.

2019 P T D 2050

[Lahore High Court]

Before Shahid Jamil Khan, J

NISHAT HOTEL AND PROPERTIES LIMITED and others

Versus

The PROVINCE OF PUNJAB and others

Writ Petition No.23657 of 2016, decided on 19th July, 2019.

(a) Punjab Revenue Authority Act (XLIII of 2012)---

----Ss. 2(j), 3(1), 5(4), 8, 36(a), 36(b) & 36(c) [as amended by the Punjab Revenue Authority (Amendment) Act (III of 2016) and Punjab Revenue Authority (Second Amendment) Act (XL of 2016)]---Punjab Sales Tax on Services Act (XLII of 2012), Preamble---Punjab Revenue Authority ('Revenue Authority')---Absence of notification under S.3(1) of the Punjab Revenue Authority Act, 2012 ('the Act') for establishment of the Revenue Authority---Omissions, discrepancies and defects in the Punjab Revenue Authority Act, 2012 highlighted in the case reported as Institute of Architects, Pakistan (Lahore Chapter) v. Province of Punjab and others (PLD 2016 Lahore 321)---Validation of such omissions, discrepancies and defects through the Punjab Revenue Authority (Amendment) Act, 2016 (III of 2016) ['First Amendment Act'] and Punjab Revenue Authority (Second Amendment) Act, 2016 (XL of 2016) ['Second Amendment Act']---Vires of---Both the 'First Amendment Act' and 'Second Amendment Act' were made effective from 1st July 2012, however, retroactivity of the Revenue Authority was reiterated in S.36(c) of the Act to establish it by command of law, without issuance of notification under S. 3(1)---All actions taken by Chairperson, during the interregnum period were deemed, by fiction of law, to have been taken by the Revenue Authority and the sales tax and other amounts levied, charged, collected or realized were validated under the Act---Legislative competence to promulgate the impugned First and Second Amendment Acts was not in question---Since the Provincial Legislature was competent to enact the impugned First and Second Amendment Acts, therefore, S.36(c) of the Act had cured the lacuna of non-issuance of notification for establishment of the Revenue Authority---Absence of consequent amendment in S. 3(1) of the Act and other provisions, shall not affect the validation, which was to be treated as silenced or impliedly repealed---Protection in form of validity of proceedings under S. 8 of the Act was available for future, only in presence of a bona fide defect in constitution of the Revenue Authority or a vacancy---Such protection could not be allowed to be misused by the Executive by keeping the defect or not filling the vacancy without a justifiable excuse---After the judgment in Institute of Architects, Pakistan (Lahore Chapter) v. Province of Punjab and others (PLD 2016 Lahore 321), charging and collection of tax levied under the Punjab Sales Tax on Services Act 2012, from 1st July, 2012 till the date of judgment was required to be validated for public welfare and in the interest of society---Since composition and establishment of the charging and collecting Revenue Authority was declared illegal, therefore, to achieve the purpose of validation, all actions, including framing of rules, defective appointments and constitution of Revenue Authority was required to be validated as well---Single handed performance of functions by Chairperson on behalf of the Revenue Authority were validated, by invoking doctrine of fiction, under S.36(b) of the Act---Purpose in favour of society existed and there was no prohibition under the Constitution, to pass a retrospective law to validate such actions and decisions, hence the provisions of Ss.36(a) & 36(b) of the Act were held to have been enacted competently---Constitutional petitions challenging the vires of the impugned First and Second Amendments Acts were dismissed accordingly. Institute of Architects, Pakistan (Lahore Chapter) v. Province of Punjab and others PLD 2016 Lah.321 and Lt. Col. Nawabzada Muhammad Amir Khan v. The Controller of Estate Duty, Government of Pakistan, Karachi and others PLD 1962 SC 335 ref.

(b) Punjab Revenue Authority Act (XLIII of 2012)---

----Ss. 3(2), 3(4), 5(4), 36(a) & 36(b) [as amended by the Punjab Revenue Authority (Amendment) Act (III of 2016) and Punjab Revenue Authority (Second Amendment) Act (XL of 2016)]---Punjab Revenue Authority ('Revenue Authority')---Omissions, discrepancies and defects in the Punjab Revenue Authority Act, 2012 highlighted in the case reported as Institute of Architects, Pakistan (Lahore Chapter) v. Province of Punjab and others (PLD 2016 Lahore 321)---Validation of such omissions, discrepancies and defects through the Punjab Revenue Authority (Amendment) Act, 2016 (III of 2016) ['First Amendment Act'] and Punjab Revenue Authority (Second Amendment) Act, 2016 (XL of 2016) ['Second Amendment Act']---Vires of---Legislative judgment---Scope---Actions, including framing of rules, and appointments, subject matter of the judgment reported as Institute of Architects, Pakistan (Lahore Chapter) v. Province of Punjab and others (PLD 2016 Lahore 321) , had been validated by inserting subsection (4) in S.5 and through clauses (a) and (b) to S. 36 of the Act---Under S.36(b), actions taken by the Chairperson till establishment of the Revenue Authority were validated, by legislative fiat, as if these were taken by Revenue Authority---However, S.5(4) gave power to the Chairperson to perform functions and discharge duty of the Revenue Authority till the time it was constituted under the Act---Provisions under S.5(4) of the Act, were susceptible to misuse---Instead of rectifying the defect in constitution of Revenue Authority, the executive might prefer that its functions be performed and duties be discharged by the Chairperson; it could defeat the intent of the Legislature, reflected in the S.3(2) & (4) of the Act---Revenue Authority, being a body corporate, should mandatorily consist of the Chairperson and not less than four members---Method of validation by inserting subsection (4) to S. 5, without amending S.3(2) and (4) of the Act, amounted to legislative judgment, therefore, was violative of the doctrine of 'Separation of Powers' entrenched in the Constitution, hence was declared to be ultra vires---Legislature could not assume role of an Appellate court by merely pronouncing in the statute that the decision shall not be binding, as was done by inserting subsection (4) to S. 5 of the Act.

Molasses Trading and Export (Pvt.) Limited v. Federation of Pakistan and others 1993 SCMR 1905 ref.

(c) Legislation---

----'Retroactive law' or 'Ex post facto law'---Scope---To validate any action or omission, declared not in accordance with law, retroactive laws were enacted to supply validity through Legislative fiat---Ex post facto law was one which operated upon a subject not liable to it at time the law was made---Ex post facto law or retroactive law was which retroactively changed the legal consequences of acts committed or the legal status of facts and relationships that existed prior to enactment of the law. Calder v. Bull [3 U.S. (3 Dall.) 386 (1798) ref.

(d) Words and phrases---

----'Retroactive'---Definition.

Black's Law Dictinary 8th Edn. ref.

(e) Words and phrases---

----'Retroactivity'---Definition.

Black's Law Dictinary 8th Edn. ref.

(f) Words and phrases---

----'Retroactive law'---Definition.

Black's Law Dictinary 8th Edn. ref.

(g) Interpretation of statutes---

----Retrospective effect---Scope---General rule was that legislation shall be prospective, but there was no prohibition for the Legislature to change the consequences, under the law, of an act or omission, by giving it retrospective effect. (h) Legislation---

----Subordinate legislation, validation of---Legislative judgment---Scope---Subordinate legislation, which did not follow the relevant provisions and was so declared by a Court, could be validated by the same Legislature, which had delegated such powers, to be exercised in a particular manner under the relevant provisions---When a condition could be imposed by the Legislature for exercise of delegated power, it could also be waived by the same Legislature for a particular subordinate legislation, and such waiver could not said to be a Legislative judgment.

Wijay Mills Company Limited v. State of Gujarat [(1993) 1 SCC 345 and Mehreen Zaibun Nisa v. Land Commissioner, Multan and others PLD 1975 SC 397 ref.

For Petitioner(s) by:

Imtiaz Rashid Siddique and Barrister Shehryar Kasuri.

Petitioner(s) in other petitions by:

Uzair Karamat Bhandari, Mansoor Usman Awan, Shehzad Ata Elahi, Naved Amjad Andrabi, Khurram Saleem, Khalid Ishaq, Rana Muhammad Afzal, Muhammad Raza Qureshi, Rashid Anwar, Asad Hussain, Munawar-us-Salam, Shahid Hussain, Barrister Aiyan Tariq Bhutta, Mubashir Aslam Zar, Shahbaz Butt, Khurram Shahbaz Butt, Maria Farooq, Mian Tariq Hassan, Muhammad Humazah, Raza Imtiaz, Jamshaid Alam, Sabeel Tariq Mann, Qadeeer Kalyar, Barrister Ahmed Pervaiz, Shehzeen Abdullah, Hyder Ali Khan, Mohsin Mumtaz, Ali Almani, Asghar Leghari, Barrister Kashif Rafiq Rajwana, Muhammad Asif Butt, Mansoor Ali Ghanghro, Barrister Ameer Abbas Ali Khan, Barrister Haroon Dugal, Waqas Ajwad, Syed Zia Haider Rizvi, Sajjad Haider Rizvi, Gulraiz Asghar, Jahanzaib Awan, Khawar Bharwanah, Aamir Iqbal Basharat, Umair Yasin, Moeen Ahmed, Adnan Ahmad, Imran Muhammad Sarwar, Muhammad Ajmal Khan, Ch. Muhammad Saeed Zafar, Dr. Ilyas Zafar, Syed Nasir Ghillani, Iram Fatima, Mustafa Kamal, Muqaddas Zahra, Rabia Rehman, Rao Athar Akhlaq, Azmat Sidhu, Rana Munir Hussain, Mudassar Shujauddin, H.M. Azhar Ali, Muhammad Azhar Khan Joyia, Sikandar Javed, Sohail Anjum Virk, Ehsan-ur-Rehman, Muhammad Nasir Khan, Abdul Waheed Habib, Mian Muhammad Shafiq, Daud Aziz Khokhar, Shezada Mazhar, M. Jawwad Khan Lodhi Asad Raza, Ali Rana, Muhammad Younas Khalid, Bilal Bashir, Masood Ahmad Wahla, Ashan Masood, Miss Rohi Saleha, Sajjad Ali, Muhammad Yasir Randhwa, Syed Muhammad Ijaz, Mian Muhammad Usman, Muhammad Saad Khan, Haji Abdul Ghafoor, Muhammad Shahid Piracha, Muhammad Azam Zafar, Muhammad Mohsin Virk, Muhammad Ahsan Virk, Arsalan Chaudhry, Muhammad Shabbir Hussain, Malik Muhammad Ali Awan, Waheed Ashraf Bhatti, Salman Akram Raja, Malik Ahsan Mehmood, Umer Akram Chaudhry, Barrister Syed Reza Ali, Humzah Mehboob, Barrister Sardar Mohammad Ali, Mahr Bano Langrial, Iftikhar Ahmad Ansari, Khurram Hussain, Sheikh Aqeel Ahmad, Saqib Haroon Chishti, Hina Bandealy, Arslan Saleem Chaudhry, Imran Iqbal, Farhan Shahzad, Zohaib Ali Sidhu, Amir Wali, Moazam Ali Malhi, Ch. Waqas Ali Bhutta, Mian Mahmood Rashid, Faqir Hussain Rana, Sh. Muhammad Umar, Zeem-ul-Farooq Malik, Barrister Muhammad Ahmad Pansota, Zahid Ateeq Ch., Ahmad Uzair, Shahbaz Siddique, Sumair Saeed Ahmad, Raja Muhammad Ali, Ch. Bilal Butt, Hameed Ahmad Butt, Tariq Mahmood Ansari, Zahid Imran Gondal, Ayyaz Shaukat, Ahmad Uzair, Rana Bilal Ghaffar Khan, Uzair Khalid, Malik Faisal Khalid, Khalil-ur-Rehman, Minam Karim, Muhammad Rafique Chaudhry, Sayyed Alamdar Hussain, Barrister Hassan Nawaz Shaikh, Manzar Latif Mian, Arslan Riaz, Humza Humayun, Muhammad Ijaz Ali Bhatti, Khurram Saeed, Mirza Israr Baig, Mehdi Tirmzi, Rana Zain Tahir, Saadat Ali Saaed, M. Zohaib Shahid, Nawazish Ali, Kashif Hussain, H.M. Majid Siddiqi, Ch. Babar Ali, Muhammad Baqir Hussain, Khursheed Ahmed Irteza Ali Naqvi, Asif Afzal Bhatti, Muhammad Naeem Munawar, Riaz Ahmad Bajwa, Usman Ali Bhoon, Ajab Gul, Waseem Ahmad Malik Syed Muhammad Ijaz, Muhammad Taimoor Hassan, Mian Asif Arshad, Hashim Aslam Butt, Zain Sakandar, Abid Hussain Sial, Imran Anjam Alvi, Muhammad Faheem Bashir, Mirza Mubashar Baig, Bashart Ali Awan, Fazal Abbas, Manzoor Ahmad Khan, Hammad-ul-Hassan Hanjra, Ali Awais, Tahir Butt, Mohammad Raheel Kamran Sheikh, Khubaib Ahmad, Zulfiqar Ali Khan, M. Naveed Khan, Mudassar Ali Hussain, Sardar Balakh Sher Khosa, Shahzaib Masood, Ali Sibtain Fazli, Hasham Ahmad Khan, Umar Tariq Gill, Esa Ahmad Jalil, Abad-ur-Rehman, Rabeel Raza Bhatti, Sardar Kalim Ilyas, Salman Zaheer Khan, Ahmer Bilal Soofi, Ch. Muhammad Ali, Usman Virk, Farid Adil Ch., Sajid Wali, Abid Wali, Almas Arif, Majid Jehangir, Muhammad Bilal Ramzan, Khalid, Shoaib Rashid, Usman Nasir Awan, Shahzad Hassan Pervaiz, Habib-ur-Rehman, Faizan Shuja Butt, Tahir Bashir, M. Iqbal Hashmi, Saad Rasool, Hamza H. Rashid, Shabbir Ahmad Mughal, Muhammad Bilal Pervaiz, Syed Sajjad Hussain Zaidi, Ch. A. D. Kahlon, Fawad Malik Awan, Malik Muhammad Arif Bara, Malik Mubarak Ali, Rao Tasavvur Ali, Sayyed Ali Imran Rizvi, Ali Imran Rao, Zahid Saleem, Muhammad Salman Siddiqui, Rustam Nawab Luk, Naeem Anjum, Malik Muhammad Asghar Javed, Mirza Bilal Zafar, Tahir Mahmood Sundhu, Barrister Haris Ahmad, Malik Zahid Hussain, Babar Ilyas Chatha, Ch. Awais Ahmad Qazi, Zaki Rehman, Mubashar Hussain, Sheikh Khurram Abbas, Tanveer Ahmad, Khudad Chattha, Raza Kazim, Ali Abid Khagga, Muhammad Yousaf Ch., Faisal Hameed Butt, Muhammad Siddiq Mughal, Jabran Tariq Butt, Tanveer Aslam, Ubaid Ullah Kalyar, Muhammad Munsif Ali, Syed Raees-ud-Din Ahmad, Ashfaq Ahmad Malik, Ch. Qamar uz Zaman, Malik Kafeel Ahmad Khokhar, Waqar Ranjha, Muhammad Zubair, Muhammad Arif Goraya, Syed Iftikhar Hussain Shah, Malik Bashir Ahmad Khalid and Muhammad Asim Mumtaz for Petitioners.

Respondent(s) by:

Sajid Ijaz Hotiana, Tanzil-ur-Rehman Hotiana, Barrister Asfandyar Khan Tareen, Waqqas Ahmed Mir, Sarfraz Ahmad Cheema, Shahzad Ahmad Cheema, Barrister Bilal Ramzan, Ahmad Hassan, Muhammad Hassan Abdullah Niazi, Syed Moazzam Ali Shah, Adeel Shahid Karim, Foziya Bukhsh, Kausar Parveen, Sufian Ejaz, Mohammad Amir Malik, Mian Wajahat Ali, Malik Muhammad Awais Khalid, Muqtadir Akhtar Shabbir, Mian Osman A. Shaukat, Ijaz Mahmood Chaudhary, Ch. Muhammad Zafar Iqbal, Ch. Muhammad Jawad Zafar, Qamar Zaman Qureshi, Muhammad Awais Kamboh, Hassan Iqbal Warraich, Mian Yusuf Umar, Saleem Akhtar Sheikh, Malik Abdullah Raza, Shahid Sarwar Chahil, Ans Gull, Muhammad Umer Qureshi, Arslan Abbas, Rana Muhammad Mehtab, Muhammad Faisal Iqbal, Shahid Usman, Muhammad Hussain, Rai Muhammad Javed Iqbal Kharal, Umair Anwar, Abdul Waheed Khan Baloch, Falak Sher, Saba Saeed Sheikh, Zubair Siddique, Rana Irfan Shahid, Hassan Ali, Ali Usman, Syed Zail-ul-Abideen Bukhari, Afzal Hussain and Saad Amir for Respondents.

Monim Sultan, Assistant Attorney General for Pakistan.

Barrister Zargham Lukhesar and Ch. Muhammad Jawad Yaqoob, Assistant Advocates General, Punjab, Lahore.

Mrs. Naseem Mushtaq, Law Officer, Finance Deptt.

Muhammad Akmal, Section Officer (Tax).

Nadeem Saleh-ud-Din and Muhammad Afzal Bashir, Deputy Secretaries (Legal), Punjab Revenue Authority.

Mahmood Ali, Assistant Manager NLC, T.N.B., Lahore.

2019 P T D 2305

[Lahore High Court]

Before Ayesha A. Malik and Jawad Hassan, JJ

COMMISSIONER INCOME TAX

Versus

RIAZ BOTTLERS (PVT.) LTD.

P.T.R. No.142 of 2009, decided on 12th September, 2019.

Income Tax Ordinance (XXXI of 1979) [since repealed]---

----S. 25(c)---Companies Profits (Workers' Participation) Act (XII of 1968), Ss. 9 & 2---Investment of Workers' Profit Participation Fund---Tax treatment of the income of Workers' Profit Participation Fund---Amounts subsequently recovered in respect of deductions---Scope---Department assailed order of Appellate Tribunal and contended that it was justified to levy tax on an amount utilized by taxpayer in respect of Workers' Profit Participation Fund made upto the year 1998-1999, which amount remained payable till 2001 under S. 25(c), Income Tax Ordinance, 1979---Contention of taxpayer was that deduction made on account of Workers' Profit Participation Fund did not fall within the ambit of S. 25(c) Income Tax Ordinance, 1979 because the companies were allowed to use the fund for its business but the income arising out of the same was declared to be exempt under the Companies Profits (Workers' Participation) Act, 1968---Validity---Section 2 of Companies Profits (Workers' Participation) Act, 1968 dealt with investment of funds whereas S. 9 explicitly provided an exemption of income of the fund including capital gain---Taxpayer was granted an exemption by special law, therefore, the Appellate Tribunal had rightly observed that deduction made on account of Workers' Profit Participation Fund did not fall within the ambit of S. 25(c) of Income Tax Ordinance, 1979 and that the companies falling under the scheme of the Companies Profits (Workers' Participation) Act, 1968 were allowed to use the fund for their business operations, however, the companies were obliged to pay profit at the rate of 2.5 per cent above the Bank rate to compensate the use of the fund in the business operations---Reference application was dismissed.

Syed Mushahid Shah and others v. Federal Investment Agency and others 2017 SCMR 1218 ref.

Malik Abdullah Raza for Applicant.

2019 P T D 25

[Peshawar High Court]

Before Lal Jan Khattak and Syed Arshad Ali, JJ

Messrs GAS MASTERS CNG STATION

versus

FEDERATION OF PAKISTAN and others

W.P. No.110-A of 2017, decided on 22nd March, 2018.

(a) Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000)---

----Ss. 2(3) & 9---"Maladministration"---Scope---Federal Tax Ombudsman---Jurisdiction---Federal Tax Ombudsman has authority to investigate or inquire into matters in respect of any allegation of maladministration on part of Revenue Division or any tax employee---Condition precedent for invoking jurisdiction of Federal Tax Ombudsman is "maladministration" on part of official of revenue.

(b) Income Tax Ordinance (XLIX of 2001)---

----Ss. 116(4) & 234-A---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000, Ss. 2, 3 & 9---Federal Tax Ombudsman---Jurisdiction---Assessment order, setting aside of---Petitioners were Association of Persons and were not required to submit wealth statements along with reconciliation of wealth statement but authorities had imposed penalty upon them---Order of authorities was set aside by Federal Tax Ombudsman who made certain recommendations but in appeal---President of Pakistan restored order passed by the authorities---Validity---Only delay in process of assessment, etc., and settlement of claim of refund by revenue officials was amenable to inquiry and investigation of Federal Tax Ombudsman---Order relating to assessment or decision of refund etc., were not amenable to inquiry and investigation of Federal Tax Ombudsman---Once an order was passed by revenue hierarchy under Income Tax Ordinance, 2001, whether legally correct or otherwise, Federal Tax Ombudsman had no jurisdiction to declare such order as illegal---Federal Tax Ombudsman could only recommend for corrective measures to Revenue Division and same were binding on the Division---High Court declined to interfere in order passed by the President of Pakistan as same was legally and factually correct---Constitutional petition was dismissed in circumstances.

(c) Interpretation of statutes---

----Redundancy, principle of---Harmonious interpretation---Scope---Courts must avoid head on clash of seemingly contradicting provisions of law and must harmonize such provisions by interpreting not only provisions but also wisdom of Legislature in order to give effect to both provisions---In case of any conflict of any two provisions of law, courts must have to follow harmonious interpretation and not attribute redundancy to any provision of law rather both conflicting provisions of law are to be harmonized.

Collector of Customs, Customs House, Karachi v. Syed Rehan Ahmed 2017 SCMR 152; Accountant General Sindh and others v. Ahmed Ali U. Qureshi and others PLD 2008 SC 522 and Lucky Cement Ltd. v. Commissioner Income Tax, Zone Companies, Circle-5, Peshawar 2015 SCMR 1494 rel.

Sajid Rehman Malik, Mudassar Malik and Waheed Shahzad But for Petitioners.

Syed Hammad Hussain Shah, Assistant Attorney General for Respondent No.1.

2019 P T D 509

[Peshawar High Court (Abbattabad Bench)]

Before Syed Afsar Shah and Syed Arshad Ali, JJ

AHMED ALI

Versus

TEHSIL NAZIM, TEHSIL MUNICIPAL ADMINISTRATION, TEHSIL GHAZI, DISTRICT, HARIPUR and 7 others

W.P. No. 912-A of 2017, decided on 8th November, 2017.

(a) Constitution of Pakistan---

----Art. 199---Constitutional petition---Interpretation of law---Scope---Direct approach to High Court under Constitutional jurisdiction by avoiding vague, absurd and illusionary remedy is permissible---Interpretation of law under Constitution, rests with superior judiciary.

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 rel.

(b) Limitation Act (IX of 1908)---

----S. 3---Laches---Scope---Bar of laches is neither absolute nor is equal to bar of limitation under Limitation Act, 1908.

Barkat Ali v. President/Chief Executive, PTCL Islamabad 2014 PLC (C.S.) 352 and Muhammad Hussain Bhatti v. Province of Punjab 2014 PLC 297 ref.

Umer Baz Khan v. Syed Jehanzeb PLD 2013 SC 268 rel.

(c) Khyber Pakhtunkhwa Local Government Act (XXVIII of 2013)---

----Ss. 25, 42 & Third Schedule, Part-III---Imposition of taxes---Tehsil Municipal Administration, powers of---Petitioner was owner of stone crusher plant and was aggrieved of levy of tax/fee by Tehsil Municipal Administration on transportation of sand and crushed stone---Validity---Business of petitioner was not regulated by any of the local government either under provisions of erstwhile North Western Frontier Province Local Government Ordinance, 2001 or Khyber Pakhtunkhwa Local Government Act, 2013---Petitioner placed on file, decision taken by Local Government Council regarding imposing of tax by Tehsil Municipal Officer on mineral products which tax was declared to be not in accordance with Third Schedule, Part-III of Khyber Pakhtunkhwa Local Government Act, 2013---When decision was taken regarding one district, then same was equally applicable to similar activities being carried out in another district---Activities being carried out by petitioner were at par regarding which decision had been taken earlier---High Court declared that Tehsil Council had no authority to levy any tax/fee on production of stone, sand/bajri---High Court declared notification in question as without lawful authority---Constitutional Petition was allowed in circumstances.

Government of Punjab v. Messrs Crescent Textile Mills Limited PLD 2004 SC 108; Israr Ahmed v. Tehsil Naib Nazi, Tehsil Lahore District Swabi 2007 YLR 2623 and Shafi Ullah Khan, Vice-President v. Zarai Taraqiati Bank Ltd. 2014 PTD 1345 ref.

Muhammad Shafiq Tanoli for Petitioner.

Abdur Rehman Qadir for Respondents Nos. 1, 2 and 4.

2019 P T D 1219

[Peshawar High Court]

Before Qaiser Rashid Khan and Syed Arshad Ali, JJ

COMMISSIONER INLAND REVENUE, ZONE-II, PESHAWAR

Versus

Messrs PAKISTAN MINERAL WATER BOTTLING (PVT.) LIMITED, SWABI

Tax Reference No. 09-P of 2016, decided on 5th April, 2018.

(a) Income Tax Ordinance (XLIX of 2001)---

----Ss. 133, 122 & 120---Amendment of assessment---Show-cause notice to taxpayer---Reference to High Court---Jurisdiction of High Court under S. 133 of the Income Tax Ordinance, 2001---Scope---Grounds for amendment of assessment of taxpayer ---Addition of new ground / allegation for amendment of assessment at belated stage---Question before the High Court was whether an issue / ground for amendment of assessment of taxpayer, which had not been raised either in the show-cause notice, or before the assessing officer or Appellate Tribunal; could be referred to the High Court under S. 133 of the Income Tax Ordinance, 2001 as a question of law---Held, that once show-cause notice was issued to taxpayer, and matter was decided on basis of ground(s) raised therein and subsequently if the said ground(s) fail before the Appellate Tribunal, then no new ground could be agitated / raised by Department to be a valid reason for amendment in assessment order, despite of the fact that same could be a ground for a show-cause notice---Department however, under S. 122 of the Income Tax Ordinance, 2001, was at liberty to issue a fresh show-cause notice on said ground but within prescribed period of limitation under S. 122 of the Income Tax Ordinance, 2001---Reference was answered, accordingly.

Income Tax Officer and another v. Messers Chappal Builders 1993 SCMR 1108; Collector Central Excise and Land Customs and another v. Rahm Din 1987 SCMR 1840 and New Jubilee Insurance Company Ltd., Karachi v. National Bank of Pakistan, Karachi PLD 1999 SC 1126 rel.

(b) Income Tax Ordinance (XLIX of 2001)---

----Ss. 133 & 132---Reference to High Court---Jurisdiction of High Court under S. 133 of the Income Tax Ordinance, 2001---Questions of law-----Scope---Under S. 133 of the Income Tax Ordinance, 2001 High Court had jurisdiction to decide any question of law arising out of an order of the Appellate Tribunal even if such matter had not been argued or raised before the Appellate Tribunal ; provided that such question of law must be arising out of the order of the Appellate Tribunal.

Messrs Squibb Pakistan (Pvt.) Ltd. and another v. Commissioner Income Tax and another 2017 PTD 1303 rel.

Mukhtar Ahmad Munir along with M. Hamayun, I.R.O. for Petitioner.

Isaaq Ali Qazi for Respondent.

2019 P T D 1595

[Peshawar High Court]

Before Abdul Shakoor and Shakeel Ahmad, JJ

MUHAMMAD SALAM

Versus

The STATE and another

Quashment Petition No. 49-B of 2016, decided on 12th April, 2018.

Customs Act (IV of 1969)---

----S. 19---Criminal Procedure Code (V of 1898), S. 516A---Government of Khyber Pakhtunkhwa Home and Tribunal Affairs Department, Circular No. SO(AR)HD1-8/NCP/2014/KC dated 3.10.2014---General power of exemption from customs duty---Non-customs paid vehicle---Release of such vehicle on superdari---Scope---Petitioners sought release of their vehicles on superdari which were seized by police, being non-customs paid---Petitioners contended that Provincial Government had approved a policy for use of non-customs paid vehicles in order to facilitate temporary dislocated persons of North Waziristan---Validity---Notification regarding exemption of any goods imported into Pakistan could only be issued by Federal Government under S. 19, Customs Act, 1969---Admittedly, vehicles in question were neither brought into settled area in accordance with the provisions contained in the Customs Act, 1969, nor customs duty or taxes leviable thereon were paid by its importers---No Court including the High Court had the power to release such vehicles on superdari---Vehicles were subject to departmental adjudication as envisaged under the Customs Act, 1969---Quashment Petitions were dismissed, in circumstances.

Criminal Petitions Nos.802 of 2015 and 22 of 2016 ref.

Noor Zada Khan Ahmadzai for Appellant.

Shahid Hameed Quershi, Addl. A.G. for Respondents.

2019 P T D 1652

[Peshawar High Court]

Before Rooh-ul-Amin Khan and Muhammad Nasir Mehfooz, JJ

Messrs ABID FOUNDRY through authorized representative and another

Versus

PAKISTAN through Federal Secretary, Finance and Revenue Division, Islamabad and 5 others

Writ Petition No. 1881-P of 2019, decided on 3rd April, 2019.

(a) Income Tax Ordinance (XLIX of 2001)---

----Ss. 53, 159 & Second Sched.---Constitution of Pakistan, Art. 246---S.R.O. No. 1213(I)/2018 dated 05.10.2018---SRO No. 887(I)/2018, 23.07.2018---Merger of Federally Administered Tribal Areas ("FATA") into Province of Khyber Pakhtunkhwa (KPK)---Tax exemption provided to residents of said area by Federal Government for a period of five years---Exemption from payment of tax "and "exemption from applicability of tax"---Distinction---Deduction of withholding taxes and advance tax on utility bills for residents of former FATA---Requirement of "Tax Exemption Certificate"---Scope---Petitioners, which were industrial units operating in erstwhile FATA impugned demands for payment of sales tax and income tax as well as deduction of withholding and advance tax on electricity bills and other utilities---Question before High Court was related to interpretation "exemption from payment of tax and exemption from certain provisions of tax", provided to individuals, association of persons and companies, located in erstwhile FATA as defined by Art. 246 of the Constitution and such exemptions, inter alia, were provided by S.R.O. No. 1213(I)/2018 dated 05.10.2018 and S.R.O. No. 887(I)/2018, 23.07.2018---Held, that after amendment in the Constitution immunity from taxes allowed to inhabitants of erstwhile FATA no longer existed, however Federal Government decided to continue concession to resident of said area in shape of exemption from "all taxes" for period of five years which were granted by issuing SROs---Such exemptions was not simple exemptions regulated under S. 53(1) of Income Tax Ordinance, 2001, rather Federal Government intended to keep the situation as it existed prior to the Constitutional amendment---Section 53(2) of Income Tax Ordinance, 2001 not only empowered Federal Board of Revenue to exempt any class or classes of persons from payment of tax, but also empowered Federal Government to exempt any person from the operation of any provision of Income Tax Ordinance, 2001---Petitioners, in the present case, had not been exempted from tax payable under but rather been exempted from applicability of such provisions---"Exemption from payment of tax" was a concession while "exemption from applicability of provision of Income Tax Ordinance, 2001" was absolute immunity---Taxpayer, in case of exemption, required an "Exemption Certificate" under S.159 Income Tax Ordinance, 2001 while in case of immunity from provision of Income Tax Ordinance, 2001, it shall be deemed that Income Tax Ordinance, 2001 was not applicable to taxpayer---Deduction or collection of withholding tax, which were not applicable prior to Constitutional amendment would therefore not apply to residents of former FATA under the said SROs---High Court held that petitioners were not liable to pay any tax which was not applicable prior to Constitutional amendment and collection of advance tax on the amount of electricity bills of industrial units of petitioners was declared illegal---High Court further held that petitioners were not required to obtain any "Exemption Certificate" as contemplated under S. 159 of the Income Tax Ordinance, 2001---Constitutional petitions were disposed of accordingly.

(b) Interpretation of statutes---

----Principles---Statutes and enactments were intentions of Legislature, which enacted them after having regard to various facts and circumstances prevailing at the time of such Legislation.---Interpretation of statutes by Courts shall be done in such a way that intention of Legislature shall prevail and no injustice was accrued to a party and such interpretation which made an enactment a consistent whole should be the aim of a Court.

Shumail Ahmad Butt for Petitioners

Rehman Ullah and Ishtiaq Ahmad for Respondents.

2019 P T D 2228

[Peshawar High Court]

Before Ikramullah Khan and Ishtiaq Ibrahim, JJ

COMMISSIONER INLAND REVENUE

Versus

Messrs PESHAWAR ELECTRICITY SUPPLY COMPANY LTD. (PESCO) and another

S.T.R. No.11-P of 2019, decided on 25th July, 2019.

Sales Tax Act (VII of 1990)---

----Ss. 47 & 46---Constitution of Pakistan, Art. 199---Jurisdiction of High Court under S. 47 of the Sales Tax Act, 1990---Nature---Question of law---Interim/interlocutory orders of the Appellate Tribunal---Constitutional jurisdiction of High Court---Scope---Department impugned order of Appellate Tribunal where interim relief was allowed to taxpayer and claimed that the same constituted a question of law for the purpose of adjudication under S.47 of Sales Tax Act, 1990---Validity---Appellate Tribunal, in the present case, had not decided any legal issue which would invoke jurisdiction under S.47 of the Sales Tax Act, 1990---High Court converted present reference under S.47 of the Sales Tax Act, 1990 into a Constitutional petition and held that Appellate Tribunal could not grant an indefinite stay in a sales tax matter---High Court directed the Appellate Tribunal to decide the matter within 30 days---Constitutional petition was allowed, accordingly.

Mukhtar Ahmad Maneri for Petitioner.

Abdul Rauf Rohaila for Respondents.

2019 P T D 110

[Balochistan High Court]

Before Jamal Khan Mandokhail and Zaheer-ud-Din Kakar, JJ

COLLECTOR OF CUSTOMS through Additional Collector Custom, MCC Gwadar, Gaddani

Versus

Messrs BYCO PETROLEUM PAKISTAN LTD. and others

Custom Reference Applications Nos. 16, 17 and 18 of 2017, decided on 2nd August, 2018.

(a) Administration of justice---

----"Doing of a thing"---Principle---When an act requires a thing to be done in a specific manner; it must be done in same manner or not at all.

(b) Customs Act (IV of 1969)---

----S. 32(3)---Show-cause notice---Preconditions---If notices issued by authorities do not contain specific allegations of false statement, such notices do not fulfill criteria of violation of S.32(3) of Customs Act, 1969---Such show-cause notices are defective and no adjudication can be initiated upon same.

Assistant Collector Customs (ACC) v. Khyber Eclectic Lamps 2001 SCMR 838 rel.

(c) Customs Act (IV of 1969)---

----Ss.19, 32(3), 79, 179 & 196---Sales Tax Act (VII of 1990), S.3(2)---Notification SRO No. 678(I)/2004 dated 07-08-2004---Import Policy Order, 2013, Para. 12(a)---Reference---Show-cause notice, issuance of---Temporary import for re-export---Submission of Bank guarantee---Scope---Tug boats were imported for offloading oil tankers and importer companies submitted corporate guarantees as same were to be re-exported---Customs authorities issued show-cause notices claiming that importer companies had violated provisions of Ss.32(3) & 79(1) of Customs Act, 1969---Appellate authority directed customs authorities to withdraw show cause notices and orders passed by Appellate authority was maintained by Customs Appellate Tribunal---Validity---Provisions of Import Policy Order, 2013 allowed temporary import-cum-re-export of goods mentioned therein---Goods Declaration clearly showed that tugs were imported temporarily with intention to re-export them---Importer company had submitted Bank guarantee to satisfaction of customs authorities in such behalf, therefore, it was not an import simplicitor---Tax and duties applicable on permanent import of goods could not be imposed on temporary-cum-re-export of goods---If customs authorities disputed exemption of duties upon tugs in question imported by company, remedy provided by Notification SRO No.678(I)/2004 dated 07-08-2004 was to be adopted but instead, show-cause notice were issued which was violation of Notification SRO No.678(I)/2004 dated 07-08-2004---Importer company intended to import tugs temporarily, therefore, Federal Board of Revenue permitted them to do so---Once competent authority had allowed respondents to import tugs temporarily with an undertaking to re-export them, then there was no occasion for customs authorities to issue show-cause notices---High Court declined to interfere in the matter as authorities had failed to point out any illegality or irregularity or jurisdictional defect in concurrent findings of law and fact of two forums below---Reference was dismissed in circumstances.

Iklaq Shah, Assistant Attorney General for Petitioner.

Zafar Iqbal and Mazhar Ali Khan for Respondents.

2019 P T D 1712

[Balochistan High Court]

Before Naeem Akhtar Afghan and Zaheer-ud-Din Kakar, JJ

The COLLECTOR OF CUSTOMS, MODEL CUSTOMS COLLECTORATE, QUETTA

Versus

Messrs AL-HABIB ENTERPRISES AND ENGINEERING and others

Customs Reference Applications Nos. 43 to 48 of 2018, decided on 31st January, 2019.

Customs Act (IV of 1969)---

----Ss. 196, 193, 80 & 83---Reference to High Court---Appeal to Collector (Appeals)---Assessment and clearance of goods---Scope---Respondent had imported concrete transit mixer trucks which were cleared after submission of relevant documents---Customs authorities, on inquiry, came to know that years of manufacture of trucks were mis-declared---Additional Collector of Customs (Adjudication) issued show-cause notice and imposed penalty---Appellate Tribunal, on appeal, set aside the order passed by Additional Collector of Customs (Adjudication)---Validity---Held; after assessment of leviable duty and taxes under S. 80, Customs Act, 1969 and payment thereof and after clearing the vehicles under S. 83, Customs Act, 1969, the available remedy of filing appeal under S. 193, Customs Act, 1969 was not availed by the concerned officials of the Collectorate of Customs---Additional Collector of Customs (Adjudication) had no jurisdiction under the provisions of the Customs Act, 1969 to issue show-cause notice and to pass order-in-original---No question of law having arisen out of the impugned judgments passed by Appellate Tribunal warranting interference by High Court under S. 196, Customs Act, 1969---References were dismissed, in circumstances.

Syed Ikhlaq Shah, Assistant Attorney General along with Aminullah Representative of Customs Department for Applicants.

Abdul Sami Babar for Respondent No.1.

2019 P T D 156

[Supreme Court of Pakistan]

Present: Mian Saqib Nisar, C.J., Umar Ata Bandial and Ijaz ul Ahsan, JJ

AGRO TRACTORS (PRIVATE) LIMITED

Versus

FECTO BELARUS TRACTORS LIMITED, KARACHI and others

Civil Appeal No. 2755 of 2006, decided on 25th September, 2018.

(Against the judgment dated 4.5.2006 of the High Court of Sindh at Karachi passed in Constitutional Petition No. D-304 of 2006)

Customs Act (IV of 1969)---

----S.19---General Clauses Act (X of 1897), S.21---Government scheme for zero rated duty on import---Scheme subsequently withdrawn when importer had already placed order for import under the scheme---Promissory estoppel---Scope---When in exercise of administrative power conferred under a statute, a concession was granted as regards customs duty and other Government dues for a fixed period and afterwards it was sought to be withdrawn in exercise of a similar power, the said concession or benefit could not be withdrawn by virtue of S. 21 of the General Clauses Act, 1897, unless the statute itself had conferred such a power on the executive authority, otherwise, the same shall be protected under the principle of promissory estoppel---However, in order to bring the case within the four corners of the principle of promissory estoppel, it was mandatory upon the person claiming the benefit under it, to show that the offer was validly made by the competent authority and thereafter permission/approval was granted/made in a rightful, judicious and transparent manner, without there being any hint of mala fide, arbitrariness, excessive jurisdiction, favoritism or non-transparency therein---In the present case, after thorough examination of the record the High Court rightly held that the procedure of the grant of permission to import tractors at zero rated duty suffered from arbitrariness, excessive jurisdiction, favoritism, lack of transparency, subjectivity and was also not in accordance with the decision of Economic Coordination Committee; therefore, the principles of promissory estoppel were not attracted in the facts and circumstances of the present case---Appeal was dismissed accordingly.

Collector of Central Excise and Land Customs and 3 others v. Azizuddin Industries Ltd. Chittagong PLD 1970 SC 439; Al-Samrez Enterprise v. The Federation of Pakistan 1986 SCMR 1917 and Messrs Friendship Textile Mills and others v. Government of Balochistan and others 2004 SCMR 346 ref.

Mehmood A. Sheikh, Senior Advocate Supreme Court for Appellant.

Nemo for Respondent No.1.

Tariq Mehmood Khokhar, Additional A.G.P. and M.S. Khattak, Advocate-on-Record for Respondents Nos. 2 to 4.

Ex parte for Respondents Nos. 5 to 8.

M. Habib Qureshi, Advocate Supreme Court, Raja Abdul Ghafoor, Advocate-on-Record and Fazal Samad, Secretary, Legal, FBR for Respondent No.9.

2019 P T D 291

[Supreme Court of Pakistan]

Present: Umar Ata Bandial, Sajjad Ali Shah and Munib Akhtar, JJ

DEWAN KHALID TEXTILE MILLS LTD.

Versus

COMMISSIONER OF INCOME TAX (LEGAL DIVISION), LARGE TAXPAYERS UNIT, KARACHI

Civil Appeals Nos. 457 and 458 of 2010, decided on 7th December, 2018.

(On appeal from the order dated 9.3.2010 passed by the High Court of Sindh, Karachi in ITC Nos. 200 and 201 of 2003)

(a) Income Tax Ordinance (XXXI of 1979) [since repealed]---

----S. 65(2)---Additional assessment---"Definite information"---Scope---Judgment of a Superior Court (available at the relevant time) could, in appropriate circumstances, constitute "definite information" in relation to the facts of a case.

(b) Income Tax Ordinance (XXXI of 1979) [since repealed]---

----S. 65(2)---Additional assessment---"Definite information"---Scope---Mere change of opinion by the tax authorities did not constitute "definite information"---If the concerned authority such as an Income Tax Officer, acting on his own or under instructions from superior officers, subsequently came to a different conclusion with regard to the proper applicability or interpretation of a statutory provision that was a mere change of opinion and not "definite information".

EFU General Insurance Company v. Federation of Pakistan and others PLD 1997 SC 700 ref.

(c) Income Tax Ordinance (XXXI of 1979) [since repealed]---

----Ss. 65(2) & 80B---Additional assessment---"Definite information"---Scope---Judgment of the Supreme Court as 'definite information'---Appellant-company filed its return for the relevant assessment year but thereafter (before the assessment was framed) filed a revised return---Reason for the revised return was that the appellant claimed that in respect of "interest or profit on which the tax deductible under subsection (2-A) of S. 50 of the Income Tax Ordinance, 1979 ("Ordinance"), it was liable to be taxed in terms of S. 80B of the said Ordinance---Income Tax Officer accepted said claim of appellant, and the said amounts were taxed accordingly---However, subsequently, by a notice issued under S. 65 of the Ordinance, Income Tax Officer sought to reopen the assessment on the ground that the appellant was not so entitled--- Revised assessment order, adverse to the appellant, was made---Appellant contended that action under S. 65 of the Ordinance could only be taken if there existed any "definite information" for reopening the assessment, and that no such information existed in the facts and circumstances of the case---Appellate Tribunal accepted such contention of the appellant, however, the High Court found that the "definite information" was available with the Income Tax Officer in the form of a judgment of the Supreme Court and hence found against the appellant---Legality---High Court erroneously relied on a judgment of the Supreme Court, without appreciating that the said judgment was rendered many years after the initiation of action under S. 65 of the Ordinance against the appellant---Since the judgment did not exist at the relevant time it could not ipso facto constitute "definite information" within the meaning of law that would have made it permissible for the Income Tax Officer to reopen the assessment---Judgment of the High Court was set aside in circumstances and that of the Appellate Tribunal was restored---Appeal was allowed accordingly.

(d) Income Tax Ordinance (XXXI of 1979) [since repealed]---

----Ss. 2(32) & 80B(1)---Tax on income of certain persons from dividends and bank profits, etc.---Concession under S. 80B of the Income Tax Ordinance, 1979 was available to a company as well---High Court observed that all material statutory provisions were not brought to the notice of the Supreme Court in the case of Genertech Pakistan Ltd. and others v. Income Tax Appellate Tribunal of Pakistan and others 2004 SCMR 1319, therefore the observations made in (paragraph 13) of the said judgment with respect to S. 80B of the Ordinance may be open to doubt.

Genertech Pakistan Ltd. and others v. Income Tax Appellate Tribunal of Pakistan and others 2004 SCMR 1319 held to be open to doubt.

Salman Pasha, Advocate Supreme Court and K.A. Wahab, Advocate-on-Record (Absent) for Appellant (in both cases).

Dr. Farhat Zafar, Advocate Supreme Court, Raja Abdul Ghafoor, Advocate-on-Record and Abdul Hameed, Secretary Legal, FBR for Respondent.

2019 P T D 484

[Supreme Court of Pakistan]

Present: Mian Saqib Nisar, C.J., Mushir Alam and Ijaz ul Ahsan, JJ

Messrs PAKISTAN TELEVISION CORPORATION LIMITED

Versus

COMMISSIONER INLAND REVENUE (LEGAL) LTU, ISLAMABAD and others

Civil Appeal No. 1509 of 2016, decided on 23rd October, 2018.

(Against the judgment dated 29.3.2016 of the Islamabad High Court Islamabad passed in S.T.R. No. 27 of 2012)

(a) Federal Excise Act (VII of 2005)---

----S. 3 & First Sched.---Customs Act (IV of 1969), First Sched.---Fiscal statute---Statutory provisions, amendment of---Section 3 and the First Schedule to the Federal Excise Act, 2005 as well as the First Schedule to the Customs Act, 1969 were statutory provisions---Such provisions could only be amended by an Act of Parliament---Delegated legislation such as a Statutory Regulatory Order (SRO) could not amend the same.

(b) Interpretation of statutes---

----Fiscal/taxation statute---Charging provision---Scope---Provision providing for a mode of collection was not a charging provision; it could neither abridge nor expand the scope of a charging provision in an Act.

(c) Federal Excise Act (VII of 2005)---

----Ss. 2(23), 3 & 16 & First Sched., Table II---Customs Act (IV of 1969), First Sched. [Pakistan Customs Tariff (PCT), Chapt. 98]---Services---Federal excise duty, payment of---Exemption---Scope---All services provided in Pakistan were exempt from Federal Excise Duty unless specified in the First Schedule to the Federal Excise Act, 2005 read with Chapter 98 of the Pakistan Customs Tariff (PCT)---First Schedule to the Federal Excise Act, 2005 was not to be read in isolation, rather had to be read with Chapter 98 of the PCT---Even an activity within the definition of "services" under S. 2(23) of the Act was exempt from Federal Excise Duty unless specified in the First Schedule---Assessee, therefore, did not have to apply under S. 16 of the Act for exemption---Services provided by the assessee were exempt if not specified in the First Schedule to the Federal Excise Act, 2005.

(d) Federal Excise Act (VII of 2005)---

----Ss. 2(23), 3 & First Sched., Table II---Customs Act (IV of 1969), First Sched. [Pakistan Customs Tariff (PCT), Heading 98.12]---Wireless Telegraphy Act (XVII of 1933), S. 3---Television Receiving Apparatus (Possession and Licensing) Rules, 1970, Rr. 2(e) & 3(3)---TV license fee recovered by Pakistan Television Corporation Ltd. (PTV)---Federal excise duty, payment of---Exemption---Telecasts, TV sets and TV license fee were not covered by the definition of "services" in S. 2(23) of the Federal Excise Act, 2005 and Item 6 of Table II of the First Schedule to the said Act read with Chapter 98 of the Pakistan Customs Tariff (PCT)---TV license fee, telecasts and TV sets not being covered by any of the subheadings of PCT Heading 98.12 were not subject to Federal Excise Duty on a reasonable interpretation of the law---Pakistan Television Corporation Ltd. (PTV) was exempt from payment of Federal Excise Duty on TV license fee---Moreover the Wireless Telegraphy Act, 1933 and the Television Receiving Apparatus (Possession and Licensing) Rules, 1970, made the Parliamentary intention clear, i.e. the license fee was paid not for any service provided by PTV but by the holder of the TV set for its possession---Taxable event was not the provision of any service by PTV; it was the possession of a television set by the holder---TV license fee not being the product of any service provided by PTV, Federal Excise Duty could not be levied on it---Appeal was allowed accordingly.

(e) Interpretation of statutes---

----Fiscal statute---Principles of interpretation stated.

Following are the principles with regard to interpretation of a fiscal statute:

(i) There was no intendment or equity about tax and the provisions of a taxing statute must be applied as they stood;

(ii) The provision creating a tax liability must be interpreted strictly in favour of the taxpayer and against the revenue authorities;

(iii) Any doubts arising from the interpretation of a fiscal provision must be resolved in favour of the taxpayer;

(iv) If two reasonable interpretations were possible, the one favoring the taxpayer must be adopted;

(v) When a tax was clearly imposed by a statutory provision any exemption from it must be clearly expressed in the statute or clearly implied from it;

(vi) Where the taxpayer claimed the benefit of an express or implied exemption, the burden was on him to establish that his case was covered by the exemption;

(vii) The terms of the exemption ought to be reasonably construed; and

(viii) If a taxpayer was entitled to an exemption on a reasonable construction of the law it ought not to be denied to him by a strained, strict or convoluted interpretation of the law. [p. 499] F

M. Makhdoom Ali Khan, Senior Advocate Supreme Court and Syed Rifaqat Hussain Shah, Advocate-on-Record for Appellant.

Dr. Farhat Zafar, Advocate Supreme Court and Raja Abdul Ghafoor, Advocate-on-Record for Respondents.

2019 P T D 523

[Supreme Court of Pakistan]

Present: Umar Ata Bandial, Munib Akhtar and Yahya Afridi, JJ

OXFORD UNIVERSITY PRESS

Versus

COMMISSIONER OF INCOME TAX, COMPANIES ZONE-I, KARACHI and others

Civil Appeals Nos.308 to 326, 572 of 2008 and C.Ps. Nos. 1681 to 1683 of 2012, decided on 17th October, 2018.

(On appeal from the orders dated 19.4.2007, 5.6.2008 and 18.9.2017 passed by the High Court of Sindh, Karachi in ITRs Nos.228/88, 453, 472, 534/90, 04, 46/96, 241 and 398/97, ITAs Nos.248 to 253/99, ITCs Nos.280, 281, 282/2003, 496, 487 of 2004, C.P. 655 of 2008 and ITRs. Nos.181-182 of 2017)

(a) Interpretation of statutes---

----Fiscal statute---Exemption clause---Application and interpretation---Firstly, onus laid on the taxpayer to show that his case came within the exemption; secondly, if two reasonable interpretations were possible the one against the taxpayer would be adopted; thirdly, if the taxpayer's case came fairly within the scope of the exemption then he could not be denied the benefit of the same on the basis of any supposed intention to the contrary of the legislature or authority granting it.

(b) Income Tax Ordinance (XLIX of 2001)---

----Second Sched., Pt. 1, Cl. 92 [since omitted]---Income Tax Ordinance (XXXI of 1979) [since repealed], Second Sched, Pt. 1, Cl. 86---Exemption from tax---Scope---University or other educational institution established solely for educational purposes and not for purposes of profit---Publishing press of a foreign university (Oxford University Press) operating in Pakistan---High Court found that the publishing press/assessee was not entitled to exemption from tax under Cl. 86, Part 1 of Second Schedule to the Income Tax Ordinance, 1979 ("Clause 86") for the reasons that "in Pakistan", it was not engaged solely in imparting education, which was one of the primary requirement for availing the benefit of Cl. 86, and further it had failed to prove that the income earned by it through its business of printing, publication and sale of books or otherwise, was solely used for educational purposes "in Pakistan"---Held, that the High Court had laid a great deal of emphasis on the fact that for claiming exemption the university must be carrying out educational activities "in Pakistan"---Perusal of the Cl. 86 showed that the words "in Pakistan" were not to be found therein---High Court erred materially in introducing an element or requirement for claiming exemption that found no mention in Cl. 86---Publishing press/assessee in question was a branch/department of a foreign university, and hence came within the meaning of "university"---Furthermore there was no distribution or disbursement of profits made by the assessee---Even if during some of the income years the profits (or part thereof) were remitted abroad to the foreign university, there was no distribution or disbursement thereof---Purpose therefore throughout remained solely educational and not profit, thus the publishing press/assessee was entitled to the benefit of Cl. 86 for all of the assessment years concerned---Impugned judgment of High Court was set aside in circumstances.

Oxford University Press v. Commissioner of Income Tax 2007 PTD 1533 not approved.

Oxford University Press v. Commissioner of Income Tax (2001) 247 ITR 658 not to be followed.

(c) Income Tax Ordinance (XXXI of 1979) [since repealed]---

----Second Sched., Pt. 1, Cl. 86---Exemption from tax---Essential elements/components of Clause 86, Part 1 of Second Schedule to the Income Tax Ordinance, 1979 ("Clause 86")---Clause 86 comprised of three components (i) any income; (ii) of any university or other educational institution; (iii) established solely for educational purposes and not for purposes of profit---First component meant precisely what it said i.e. "any income" from whatsoever source derived---Any distinction between income derived from "educational" activities on the one hand and other sources, including what in other contexts could be regarded as commercial, on the other would be artificial, contrived and contrary to the express and natural language of the exemption---For instance, it was quite common for a university to derive rental income from properties owned by it, or to have an endowment fund which was suitably invested to earn profits---Second component was self-explanatory and included a branch/department of a university, such as its publication press---Third component had to be read and applied as a whole---Use of the word "solely", and the negation of profit as a purpose in the third component, meant simply that there could be no distribution or disbursement of any profits made---If the purpose of the university or educational institution was to "earn" a profit for its owners or stakeholders (howsoever described) in the sense of there being an intention or expectation that there would be such a disbursement, then exemption from tax under Cl. 86 would not apply---Such an institution could not be said to be established "solely" for educational purposes---On the other hand, the institution could make profits, but as long as those profits remained with the institution itself and there was no intention to disburse or distribute the same to its owners or stakeholders, profits would not be its purpose, which would remain "solely" educational.

Muhammad Mukhdoom Ali Khan, Senior Advocate Supreme Court for Petitioner/Appellant (in all cases).

Syed Mohsin Imam, Advocate Supreme Court along with Dr. Tariq Masood, Member Legal (FBR) for Respondents (in all cases).

Aamir Rehman, Assistant Attorney General for Pakistan for the Federation.

2019 P T D 718

[Supreme Court of Pakistan]

Present: Mushir Alam, Faisal Arab and Munib Akhtar, JJ

SAMI PHARMACEUTICALS (PVT.) LTD.

Versus

FEDERATION OF PAKISTAN and others

Civil Petition No. 458-K of 2015, decided on 7th February, 2019.

(On appeal against the judgment dated 09.05.2015 passed by the High Court of Sindh, Karachi in C.P. No. D-2271 of 2011)

Per Faisal Arab, J; Mushir Alam, J, agreeing; Munib Akhtar, J dissenting.

(a) Customs Act (IV of 1969)---

----Ss. 19 & 31A---Sales Tax Act (VII of 1990) S. 13(2)(a)---Exemption from customs duty and sales tax under SRO No.575(I)/2006 dated 5.6.2006---Import of "Air Handling Units"---Certification by Engineering Development Board of Pakistan (EDB)---Procedure---Petitioner-company imported 'Air Handling Units' and sought concession on customs duty and exemption from sales tax under SRO No.575(I) 2006 dated 05.06.2006 on the ground that the 'Air Handling Units' imported were of such specification that were not manufactured locally---[Per Faisal Arab, J (Majority view): Exemption from customs duty and sales tax could not be claimed under SRO No.575(I)/2006 in case the item was either listed in the locally manufactured items notified through a Customs General Order (CGO) issued by the Federal Board of Revenue or certified by the Engineering Development Board of Pakistan (EDB) that the item in question was locally manufactured---In order to confirm whether exemption granted under SRO No.575(I)/2006 on an item was available or not one could take recourse to CGOs issued from time to time or seek certification from the EDB---Apart from seeking recourse to CGO, the need to seek certification from EDB seemed to have arisen as there was a strong possibility that a name of local manufacturer of a particular item may not have been updated in the CGO hence not reflecting the latest position of the local industry---Under SRO No.575(I)/2006, EDB had been entrusted with the function to certify whether an item was also locally manufactured which was done by gathering information from the local industry---Any person including the Customs Authorities could seek such certification---EDB's certification only confirmed a pre-existing position i.e. an item was or was not locally manufactured---In case EDB certified that imported item was also locally manufactured, exemption under SRO No.575(I)/2006 would be denied---After such certification the fact that a particular item may not have been listed in the CGO as a locally manufactured item would be of no legal consequence---Date on which certificate was issued by the EDB could not be taken as the date on which an item had become a locally manufactured item---Where a letter of credit was opened for import of an item which was already being locally manufactured and such pre-existing factual position was later certified by the EDB, it was good enough to disentitle an importer to claim exemption under SRO No.575(I)/2006---Timing of seeking certification from EDB would be immaterial in such circumstances---Only exception to this could be that the local manufacture of an item was so recent that it could not have been ordered from the local market when the letter of credit for its import was established---In such exceptional situation benefit granted under SRO No.575(I)/2006 could be availed---In absence of such an exception, the effect of certification in the affirmative by EDB would be that it confirmed that at the time when the importer opened the letter of credit in favour of a foreign supplier it was already one of the locally manufactured items and thus not entitling an importer to claim concession under SRO No.575(I)/2006---Where an item was required to be custom-built e.g. an item with the same technical specifications was required to be supplied with different dimensions not readily available in the local market even then exemption on such item could not be claimed where a local manufacturer was fully capable to supply it had an order been placed with him---In the present case, the Engineering Development Board of Pakistan (EDB) certified that the 'Air Handling Units' imported by the petitioner were also being manufactured by four local manufacturers with the same technical specifications---Moreover the petitioner sought certification from EDB on 14.3.2011 i.e. at the time when the consignment was in the process of being shipped to Pakistan, much after the letter of credit dated 9.9.2009 was opened---Petitioner was rightly denied the exemption from customs duty and sales tax under SRO No.575(I)/2006]---[Per Munib Akhtar, J (Minority view): Language used in the SRO No.575(I)/2006 in specific context of "Air Handling Units" provided that the exemption was available only to units of "specifications which were not manufactured locally"---Such condition clearly recognized that Air Handling Units came in more than one type of specifications, of which some sorts only were being locally manufactured, thus, it required that the CGO to be issued by Federal Board of Revenue, or the certificate that could be issued by the EDB, had to list (or at any rate clearly relate to) the specifications of the "Air Handling Units" that were to be regarded as being locally manufactured---Only listing without more, "Air Handling Units" (with or without their PCT heading) in the CGO or the EDB certificate would be insufficient---For purposes of exemption/ concessionary notifications, the Customs General Order 11 of 2007 dated 28.8.2007 ('CGO 11') was the relevant CGO for the present case---Entry No. 504 of the CGO 11 listed two companies that locally manufactured Air Handling Units---For CGO 11 to apply the question was not whether either of the two companies manufactured "Air Handling Units" with the same specifications as those imported by the petitioner, rather, the true and correct question was whether the petitioner's "Air Handling Units" were of the specifications as listed in CGO 11, and manufactured by the two companies---Record showed that this was not the case---Furthermore the Al-Samrez' principle enunciated by the Supreme Court in the case of Al-Samrez Corporation v. Federation of Pakistan (1986 SCMR 1917) would apply to the present case---Certificate, issued by EDB on 1.4.2011, could not, as a matter of law and for purposes of SRO No.575(I)/2006 have any retrospective effect---As a certification that "Air Handling Units" of the sort imported by the petitioner were being locally manufactured, it could only apply prospectively from the date of its issuance---In considering whether the issuance of the EDB Certificate amounted to a "withdrawal" of the exemption under SRO No.575(I)/2006 within the meaning of S. 31A of the Customs Act, 1969, a restrictive view would have to be taken---When so considered there was no withdrawal of the exemption---Exemption ceased to apply in relation to the petitioner's goods when the certificate was issued by EDB on 1.4.2011, however, that was not, in the context of S. 31A, a withdrawal of the exemption; that could take place only as a result of an act of the authority issuing the same, which would have to be the Federal Government---Petitioner was entitled to the benefit of SRO No.575(I)/2006 in respect of the "Air Handling Units" for which the goods declaration was filed on 22.7.2011; this was so by an application of the Al-Samrez principle, which was not ousted or negated by reason of S. 31A of the Customs Act, 1969]---Petition for leave to appeal was dismissed in circumstances.

Per Munib Akhtar, J

(b) Customs Act (IV of 1969)---

----S. 19---Sales Tax Act (VII of 1990) S. 13(2)(a)---Principle enunciated by the Supreme Court in the case of Al-Samrez Corporation v. Federation of Pakistan (1986 SCMR 1917)---Scope---Effective rate of duty---Scope---Principle enunciated in Al-Samrez case provided that if an importer altered his position in reliance on an exemption notification (e.g., by entering into a contract or opening a letter of credit), he then acquired a vested right in the exemption to which he remained entitled even if the exemption itself stood withdrawn by the time the goods arrived in Pakistan.

Al-Samrez Corporation v. Federation of Pakistan 1986 SCMR 1917 ref.

Khalid Javed Khan, Advocate Supreme Court for Petitioner.

Muhammad Siddiq Mirza, Advocate Supreme Court for Respondent No.1.

Vijil Ahmed Abbasi, Advocate Supreme Court and M. Iqbal Ch. Advocate-on-Record for Respondent No.2.

Muhammad Khalil Dogar, Advocate Supreme Court for Respondent No.3.

Date of hearing: 19th December, 2018.

2019 P T D 826

[Supreme Court of Pakistan]

Present: Mian Saqib Nisar, C.J., Faisal Arab and Ijaz ul Ahsan, JJ

MEMBER (TAXES) BOARD OF REVENUE PUNJAB, LAHORE and others

Versus

QAISAR ABBAS and others

Civil Appeals Nos. 815 to 855, 860 to 974, 1476 to 1487, 1601 to 1743, 1883 to 2015, 2089 to 2105 and 2204 to 2287 of 2016, Civil Petitions Nos. 2991-L, 2992-L, 2996-L, 3013-L to 3016-L, 2997-L, 3017-L, 3018-L, 3020-L, 3026-L to 3029-L, 3041-L to 3049-L, 3112-L, 3171-L to 3179-L of 2016, 823-L to 827-L, 918-L, 956-L to 958-L, 991-L to 994-L and 1032-L to 1034-L of 2017, Civil Misc. Applications Nos.382-L to 537-L, 1067-L to 1077-L and 1079-L of 2016, decided on 8th January, 2019.

(Against the judgments dated 26.12.2015, 27.10.2015, 3.11.2015, 11.11.2015, 16.11.2015, 19.11.2015, 20.11.2015, 22.10.2015, 14.1.2016, 3.2.2016, 9.2.2016, 16.3.2016, 5.5.2016, 18.5.2016, 19.5.2016, 11.5.2016, 13.5.2016, 16.5.2016, 17.5.2016, 20.5.2016, 10.5.2016, 31.1.2017, 30.1.2017, 6.2.2017, 8.2.2017, 1.2.2017 of the Lahore High Court, Lahore)

(a) Interpretation of statutes---

----Fiscal/tax statute---Retrospective effect---Scope---Tax/fiscal statutes operated prospectively and not retrospectively unless clearly indicated by the legislature---Retrospectivity could only be attributed to a statute where it was made explicit or could be inferred by necessary implication; it could not be presumed.

Zila Council Jhelum through District Coordination Officer v. Messrs Pakistan Tobacco Company Ltd. and others PLD 2016 SC 398 and Commissioner of Income Tax v. Messrs Eli Lilly Pakistan (Pvt.) Ltd. 2009 SCMR 1279 ref.

(b) Punjab Agricultural Income Tax Act (I of 1997)---

----Ss.3B & 4(4)---Punjab Agricultural Income Tax Rules, 2001, R. 14(3)---Agricultural income tax---Section 3B of the Punjab Agricultural Income Tax Act, 1997 ("the Act") came into force on 01-07-2013---Question as to whether the tax authority could recover agricultural income tax for the assessment years prior to such date---Held, that since S. 3B of the Act was effective from 01-07-2013, it was applicable to the assessment year beginning on 01-07-2014 as it was the assessment year following the income year which commenced on 01-07-2013---While undoubtedly S. 3B inserted in the Act was to apply prospectively, however, S. 4(4) of the Act read with R. 14(3) of the Punjab Agricultural Income Rules, 2001, clearly allowed for the recovery of agricultural income tax for the two years (i.e. 2012 and 2013) prior to the assessment year in which the total agricultural income was first assessable, i.e. the assessment year beginning on 01-07-2014---Tax authority, therefore, could recover all amounts due within a period of two years from which the total agricultural income was first assessable, i.e. the assessment years of 2012 and 2013.

(c) Punjab Agricultural Income Tax Act (I of 1997)---

----Ss. 3(1), 3B & 4(1)---Punjab Agricultural Income Tax Rules, 2001, R. 14(1)---Agricultural income tax---Recovery of agricultural income tax on basis of agricultural income declared in tax returns---Scope---Application of S. 3B of the Punjab Agricultural Income Tax Act, 1997 ("the Act") was predicated upon the agricultural income as declared by the assessee himself in his income tax return, therefore in cases where the assessee had himself filed his income tax return in which he had declared his agricultural income, by virtue of S. 3B of the Act, the tax department was not required to levy and assess agricultural income tax in terms of S. 3 and could recover the same by issuing recovery notices directly---However where an assessee had not filed his income tax return or had done so without disclosing his agricultural income, then the tax authorities were obliged to levy, assess and collect agricultural income tax (in spite of the presence of S. 3B) in terms of Ss. 3 & 4 of the Act and R. 14(1) of the Punjab Agricultural Income Rules, 2001.

Rana Shamshad Khan, Additional A.-G., Faisal Fareed Hussain, Additional A.-G. and M. Adnan Khan, Law Officer, BOR for Appellants/Petitioners (in all cases except C.A. No. 2204 of 2016).

Nemo for Appellants/Petitioners (in C.A. No. 2204 of 2016).

M. Arshad Majeed Malik, Advocate Supreme Court and M.S. Khattak, Advocate-on-Record for Respondents (in C.As. Nos. 821, 836, 843, 881 and 895 of 2016).

Ch. Akhtar Ali for Respondents (in C.A. No. 826 of 2016).

Shakeel-ur-Rehman, Advocate Supreme Court and Raja Abdul Ghafoor, Advocate-on-Record for Respondents (in C.A. No. 831 of 2016).

Sh. Muhammad Akram, Advocate Supreme Court for Respondents (in C.As. Nos. 834, 835, 879, 880, 939, 1967, 1999, 2000, 2001, 1968, 887, 1957, 1958, 1959 and 1690 of 2016).

Nemo for Respondents (in C.As. Nos. 860, 1884, 1886, 1889, 1890, 1893, 1894, 1896, 1898, 1899, 1900, 1902, 1903, 1905, 1908, 1910, 1914, 1917, 1918, 1924, 1927, 1931, 1932, 1995, 2009, 2010 and 2012 of 2016).

Syed Ali Imran, Advocate Supreme Court for Respondents (in C.As. Nos. 955 to 963 and 970 to 974 of 2016).

Abdul Razzaq, Advocate Supreme Court and Syed Rifaqat Hussain Shah, Advocate-on-Record for Respondents (in C.As. Nos. 888, 889 and 893 of 2016).

Rana Zahid Khan, Advocate Supreme Court along with Rai Akhtar Saleem for Respondents (in C.A. No. 920 of 2016).

Mian Muhammad Ashfaq, Advocate Supreme Court for Respondents.

Respondent in person (in C.As. Nos. 923, 1926, 1962 and 1985 of 2016).

Rana Munir Hussain, Advocate Supreme Court for Respondents (in C.As. Nos. 967 and 968 of 2016).

Babar Bilal, Advocate Supreme Court for Respondents (in C.A. No.1729 of 2016).

Amjad Iqbal, Advocate Supreme Court for Respondents (in C.A. No. 1883 of 2016).

Hasan Raza Pasha, Advocate Supreme Court for Respondents (in C.As. Nos. 1721 to 1724 of 2016).

Respondent in person (in C.As. Nos. 2223 to 2229 of 2016).

Date of hearing: 8th January, 2019.

2019 P T D 928

[Supreme Court of Pakistan]

Present: Umar Ata Bandial, Munib Akhtar and Yahya Afridi, JJ

COMMISSIONER OF INCOME TAX, PESHAWAR

Versus

DIRECTOR GENERAL, NWFP EMPLOYEES' SOCIAL SECURITY INSTITUTION, PESHAWAR and another

Civil Appeal No. 545-K of 2010, decided on 9th January, 2019.

(On appeal from the order dated 7.4.2009 passed by the Peshawar High Court, Peshawar in T.R. No. 43 of 2008)

(a) Income Tax Ordinance (XXXI of 1979) [since repealed]---

----Ss. 2(24) & 20---"Taxable income"---Scope---Contributions made by employers to Khyber Pakhtunkhwa Employees Social Security Institution ("the Institution")---Term 'income' used in S. 2(24) of the Income Tax Ordinance, 1979 was of the widest connotation, amplitude and application---Contributions received by the Institution under S.20 of the Ordinance were "income".

Kamakshya Narain Singh v. Commissioner of Income Tax (1943) 11 ITR 513; Gopal Saran Narain Singh v. Commissioner of Income Tax (1935) 3 ITR 237 and Kanga and Palkhivala's The Law and Practice of Income Tax, 8th ed. (1990), pg. 119 ref.

(b) Income Tax Ordinance (XXXI of 1979) [since repealed]---

----Ss. 20, 23 & Second Sched., Pt. I, Cl. 62(1)---Taxable income---Exemption---Contributions made by employers to Khyber Pakhtunkhwa Employees Social Security Institution ("the Institution")---Whether income received by the Institution in the form of contributions was exempt from tax in terms of Cl. 62 of Part I of Second Schedule to the Income Tax Ordinance, 1979 ("the Ordinance")---Clause 62 applied in case of "voluntary" contributions---Contributions to be made by employers under S. 20 of the Ordinance were "mandatory"---Failure to make timely payment exposed the delinquent employer to the consequences laid down in S. 23, which provided that if there was non-payment of any amount due under S. 20, then what was payable stood increased by such percentage or amount as may be prescribed---Section 23 further provided that any unpaid amount could be recovered as arrears of land revenue---Contributions under S. 20 were, thus, not voluntary and therefore did not come within the scope of Cl. 62 of Part I of Second Schedule to the Ordinance.

(c) Income Tax Ordinance (XLIX of 2001)---

----Second Sched., Pt. I, Cl. 142---Income Tax Ordinance (XXXI of 1979) [since repealed], S. 20 & Second Sched., Pt. I, Cl. 62(1)---Taxable income--- Exemption--- Retrospective effect--- Scope---Contributions made by employers to Khyber Pakhtunkhwa Employees Social Security Institution---Tax assessment years falling under the Income Tax Ordinance, 1979 ("the 1979 Ordinance")---Plea that benefit of exemption from tax provided under Cl. 142 of Part I of Second Schedule to the Income Tax Ordinance 2001 ("the 2001 Ordinance') should be given retrospective effect to apply to assessment years falling under the 1979 Ordinance---Held, that to give retrospective effect to Cl. 142 of the 2001 Ordinance would be not merely to extend its reach over a huge period of time but also to cut across two different statutes---Clause 142 found place in the 2001 Ordinance whereas the issue, in the present case, arose under the 1979 Ordinance, which was repealed by the former---Clause 142 had no retrospective effect as contended for---Appeal was allowed accordingly.

Rehmanullah, Advocate Supreme Court, Farhat Nawaz Lodhi, Advocate Supreme Court and Syed Rifaqat Shah, Advocate-on-Record for Appellant.

Malik Akhtar Hussain Awan, Advocate Supreme Court for Respondents.

Waqar Ahmad, Additional A.-G., Khyber Pakhtunkhwa on Court's Notice.

Date of hearing: 9th January, 2019.

2019 P T D 1000

[Supreme Court of Pakistan]

Present: Umar Ata Bandial, Munib Akhtar and Yahya Afridi, JJ

COLLECTOR OF CUSTOMS, LAHORE

Versus

UMAR KHAN

Civil Appeal No. 663 of 2013, decided on 11th January, 2019.

(On appeal from the order dated 28.1.2013 passed by Lahore High Court, Lahore in C.R. 67 of 2010)

Customs Act (IV of 1969)---

----Ss. 196(1) & 196(10)---Reference to High Court by Customs department under S. 196 of the Customs Act, 1969---Authorization of relevant customs officer---Question in issue in the present case was whether the Reference filed under S. 196 of the Customs Act, 1969 ("the Act") by the customs department bore authorization of the Collector of Customs in the terms required by subsection (1) of S. 196 of the Act---High Court by way of impugned judgment came to the conclusion that although the note sheet for the case contained a request for authorization of the Additional Collector for filing a Customs Reference before the High Court, the Collector did not as such sign the document in order to comply the statutory requirement that such authorization must be in writing---Accordingly, for the said omission the Reference was dismissed as having been filed incompetently by its signatory, the Additional Collector---Held, that one of the paragraphs of the office note sheet of the case contained the signature of the Collector of Customs and the stamp of his office---Thereafter, again while approving authorization of the Additional Collector of Customs (HQ) for filing the Customs Reference, signing the power of attorney and letter of authority to the counsel, the Collector signed in approval of the relevant paragraph under his office stamp---Supreme Court in such circumstances directed that Customs Reference shall be deemed to be pending before the High Court and be heard and decided on merits---Appeal was allowed with the observations that the matter in issue came before the High Court in the year 2010, the impugned decision involving a minor technical issue was taken in 2013 and now the matter was being decided by the Supreme Court (in the year 2019); that subsection (10) of S. 196 of the Act took care of such objections, and the clear purpose and the effect of the said provision was that such technical and superfluous objections were put to rest at the outset so that the matter may be decided on merits.

Muhammad Khalid Chaudhry, Advocate Supreme Court for Appellant.

Ex parte for Respondent.

2019 P T D 1299

[Supreme Court of Pakistan]

Present: Umar Ata Bandial, Munib Akhtar and Yahya Afridi, JJ

PAKISTAN MATCH INDUSTRIES (PVT.) LTD. and others

Versus

ASSISTANT COLLECTOR, SALES TAX AND CENTRAL EXCISE MARDAN and others

Civil Appeals Nos. 94 of 2012 and 243 of 2013, decided on 11th February, 2019.

(On appeal from the order dated 29.9.2011 passed by the Peshawar High Court, Peshawar in W.P. No. 412 of 2001 and T.R. No.2 of 2006)

(a) Interpretation of statutes---

----'Proviso'---Meaning and scope---Provisos were intended to qualify the main part of the provision and carve out an exception from the same, taking out (as it were) something that but for the proviso would be included therein---Such provisos were generally referred to as "true" provisos---Sometimes a proviso was construed to be a substantive clause that operated in its own right, however, such instances were rare, and for a proviso to be so construed the language of the provision must be clear.

(b) Sales Tax Act (VII of 1990)---

----S. 13(1)---S.R.O. 77(I)/95 dated 19-01-1995 ("SRO 77"), as amended by S.R.O. 87(I)/96 dated 30-01-1996---Exemption from sales tax---'Proviso', interpretation of---First proviso to 'SRO 77' provided that exemption (from sales tax) shall be available to only such industrial units which had opened letters of credit for the import of plant and machinery upto the 31st January, 1996---Question was whether the exemption was limited only to those industrial units that were set up with imported plant and machinery, or was it also available to those set up with plant and machinery that was locally manufactured---Held, that a reading of SRO 77 made it clear that the main paragraph thereof, when read on its own and without taking the first proviso into account, would apply to all industrial units otherwise within the scope thereof, i.e., without any reference to whether the plant and machinery were locally manufactured or imported---First proviso to SRO 77 was only a "true" proviso and not a substantive clause operating in its own right; it carved out an exception, and nothing more---First proviso was not intended to operate, as affecting the whole of the field covered by the main paragraph, and altering and limiting it (to only those industrial units that were set up with imported plant and machinery)---Appeal was disposed of accordingly.

(c) Interpretation of statutes---

----Fiscal statute---Exemption from tax---Where two reasonable interpretations of an exemption were possible, the one against the taxpayer and in favour of the revenue would be adopted.

(d) Interpretation of statutes---

----Fiscal statute---Exemption from tax---Where a taxpayer fairly came within the scope of an exemption, then the same could not be denied on the basis of some supposed intention of the law-maker.

(e) Sales Tax Act (VII of 1990)---

----S. 47---Reference to High Court---Scope---'Questions of law'---In case of a tax reference before the High Court, all factual aspects of the case were closed by, and at the level of, the Appellate Tribunal; and it was only questions of law that could travel to the High Court---Factual points could not be allowed to be opened or (re-)agitated, unless there had been a material misreading or non-reading of the evidence, which was itself a question of law that could be taken to the High Court.

Imtiaz Ali, Advocate Supreme Court and Mahmood A. Shaikh, Advocate-on-Record for Appellants (in C.A. No.94 of 2012).

Isaac Ali Qazi, Advocate Supreme Court and Syed Rifaqat Hussain Shah, Advocate-on-Record for Appellants (in C.A. No.243 of 2013).

Dr. Farhat Zafar, Advocate Supreme Court for Respondents (in both cases).

2019 P T D 1342

[Supreme Court of Pakistan]

Present: Maqbool Baqar and Sajjad Ali Shah, JJ

COMMISSIONER INLAND REVENUE, ZONE-I, LARGE TAXPAYER UNIT-II, KARACHI

Versus

Messrs ORI TECH OIL (PVT.) LTD.

Civil Petition No. 407-K of 2017, decided on 5th April, 2019.

(On appeal against the judgment dated 05.7.2017 of the High Court of Sindh, Karachi passed in C.P. No. D-2358 of 2015)

Sales Tax Special Procedures Rules, 2007---

----R. 58B, proviso (i)---Sales Tax Act (VII of 1990), S. 2(17)---Value Addition Tax (VAT), levy of---'Manufacturer', definition of---Scope---Raw material imported by a "manufacturer" for his own consumption---Respondent-company, imported certain base oil and additives for use as raw material, which raw material they got blended into lubricants under their brand name by a vendor under a Toll Blending Agreement---Respondent (importer) supplied the imported raw material along with their packaging material to the vendor and received back the raw material in the form of lubricants, duly packed in their packaging, for them to sale the same in the market---Processing/blending by the vendor was done under the Toll Blending Agreement with the formulation/specification of the respondent, and was paid by the respondent, the blending/conversion charges @ Rs.7 per litre---Contention of the tax department was that since the respondent (importer) neither had any manufacturing facility, nor had they undertaken any manufacturing themselves, and were also not registered as a 'manufacturer' with the sales tax authority, thus, they could not claim themselves to be a 'manufacturer', to enable them to avail the exemption extended through proviso (I) to R. 58B of the Sales Tax Special Procedures Rules, 2007 '(the Rules of 2007')---Held, that reading of proviso (I) to R. 58B of the Rules of 2007 showed that the VAT levied through said rule, was not chargeable in respect of the goods imported by a "manufacturer" for his own consumption---For availing the said exemption, the importer had to show that in the first place, he was a "manufacturer" and, secondly, that the said goods had been so imported by him for his own consumption i.e. for manufacturing/producing of his own product---Although the respondent did not have any manufacturing facility, however, the same did not denude it of the status of a "manufacturer" in the context of the Sales Tax Act, 1990 ('the Act') , and as defined by S. 2(17) thereof---Section 2(17) of the Act gave much broader meaning to the word "manufacturer" by including those who owned, held, claimed, or used any patent, proprietary or other rights to the goods being manufactured whether in their name or on their behalf---Admittedly imported raw material was delivered to the vendor in his capacity as a bailee only, for it to blend it for the respondent, whereafter it returned the same to the respondent blended into lubricants at a cost paid by the respondent---Such process of delivery of the subject goods to the vendor could not by any stretch of imagination be termed as a taxable supply---At no point in time, during the entire process any dispossession of the imported goods was affected from the respondent to, or in favour of the vendor and at no time during the course of such transaction the respondent lost ownership of the imported goods, or the product made thereof, nor did the vendor acquire any proprietary rights therein as such---Manufacturing/blending, of the subject imported material into lubricants was carried out under the orders of, for and on behalf of the respondent, and in their name---Brand name appended to the packaging and attributed to the lubricants under which name the lubricants were sold, and marketed, was registered in the name of, and was owned by the respondent---Respondent thus possessed all the attributes of a 'manufacturer' as prescribed through sub-clause (c) of clause 17 of S. 2 of the Act, and, therefore, was fully entitled to the exemption from payment of VAT provided for under R. 58B of the Rules of 2007---Petition for leave to appeal was dismissed in circumstances.

Syed Mohsin Imam, Advocate Supreme Court and Mazhar Ali B. Chohan, Advocate-on-Record for Petitioner.

Syed Naveed Amjad Andrabi, Advocate Supreme Court and K.A. Wahab, Advocate-on-Record for Respondent.

2019 P T D 1377

[Supreme Court of Pakistan]

Present: Umar Ata Bandial, Munib Akhtar and Yahya Afridi, JJ

DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE C-4, KARACHI

Versus

NATIONAL BANK OF PAKISTAN, KARACHI

Civil Appeals Nos. 441-442 of 2010, decided on 15th May, 2019.

(On appeal from the order dated 9.3.2010 passed by the High Court of Sindh, Karachi in I.T.As. Nos. 533 and 534 of 2000)

Income Tax Ordinance (XXXI of 1979) [since repealed]---

----Ss. 17 & 32(1)---Interest earned by financial institutions on Government securities---Whether the same was liable to be taxed on accrual or on receipt basis---'Hybrid' system of accounting---Scope---Bank/assessee in the present case maintained its accounts on the accrual system but accounted for interest on Government securities on receipt basis, also known as the "hybrid" system---As a matter of law, an assessee was not limited to using either the accrual or the receipt basis of accounting---In law it was permissible to use the "hybrid" system of accounting by mixing and merging elements from the two systems, which was a question of law, and must be regarded as having been answered and settled accordingly---Secondly, if such question arose, then it had to be shown as a matter of fact in respect of the income year corresponding to the given assessment year that the assessee had, in fact, regularly employed the "hybrid" system of accounting (requirement under S. 32 of the Income Tax Ordinance, 1979), which was a question of fact, and therefore had to be dealt with and answered accordingly---Department was wrong in refusing to accept interest income offered on receipt basis in respect of the assessment years at hand, and the Appellate Tribunal erred materially in dismissing the bank's appeals in such regard---High Court reached the correct conclusion in law by finding that the interest earned by the Bank on Government securities was liable to be taxed on receipt basis---Appeals were dismissed accordingly.

Pakistan Industrial Credit and Investment Corporation Ltd. v. Commissioner of Income Tax and others 2006 PTD 1400; State Bank of Travancore v. Commissioner of Income tax (1986) 158 ITR 102; UCO Bank v. Commissioner of Income 1999 PTD 3752 and Commissioner of Income Tax v. Askari Commercial Bank Ltd. 2018 PTD 1089 ref.

Muslim Commercial Bank Ltd. v. Deputy Commissioner of Income Tax and others 2004 PTD 1901 approved.

Habib Bank Ltd. v. Commissioner of Income Tax 2009 PTD 443 distinguished.

Dr. Farhat Zafar, Advocate Supreme Court and Abdul Hameed Anjum, Secretary (Law) FBR for Appellant.

Salman Pasha, Advocate Supreme Court for Respondent.

2019 P T D 1438

[Supreme Court of Pakistan]

Present: Gulzar Ahmed, Qazi Faez Isa and Yahya Afridi, JJ

Messrs INDEPENDENT MEDIA CORPORATION (PVT.) LIMITED

Versus

PROVINCE OF SINDH through Chief Secretary and others

Civil Petitions Nos. 1069-K to 1071-K of 2018, decided on 22nd May, 2019.

(Against the judgment dated 30.05.2018 of the High Court of Sindh at Karachi passed in C.P. No.D-2798/09, C.P. No. D-614/10, C.P. No.D-783/10 and Spl. STRA Nos. 195 and 196/09)

(a) Sindh Sales Tax on Services Act (XII of 2011)---

----Ss. 2(92), 45, 66 & 83---Sindh Sales Tax Ordinance (VIII of 2000) [since repealed], Ss. 3 & Sched. Item II---Sindh Revenue Board Act (XI of 2010), S. 3---Sales tax---Accrued penalties and default surcharge, payment of---Amnesty scheme issued by Provincial Government [Notification No. SRB-3-416/2014 dated 17-04-2014 ('the Amnesty notification')] with respect to payment of accrued penalties and default surcharge---Vires of---Whether Sindh Revenue Board could grant an amnesty for penalties and default surcharge accumulated under the repealed Sindh Sales Tax Ordinance, 2000---Held, that the Amnesty notification provided that the Sindh Revenue Board would exempt the whole of the amount of penalty and 95 per cent of the amount of default surcharge, payable on the principal amount of arrears of the [sales] tax as were outstanding on the date of present notification, if the said principal amount of tax and the 5 per cent of the amount of default surcharge were paid in the prescribed manner---With the promulgation of the Sindh Sales Tax on Services Act, 2011, the Sindh Revenue Board Act, 2010 and the establishment of the Sindh Revenue Board the province's dependency on the Federation and on the Federal Board of Revenue (FBR) to administer and collect on its behalf sales tax on services, including penalty and default surcharge thereon, came to an end---Sindh Sales Tax on Services Act, 2011, had repealed the Sindh Sales Tax Ordinance, 2000 but S. 83 of the Act of 2011 had saved certain matters accrued thereunder which henceforth had to be administered by the Sindh Revenue Board, including the power to issue notifications exempting the collection of sales tax on service, accrued penalties and default charges---Provincial Government had not withdrawn, supplanted or varied the Amnesty notification---Nor was the said notification assailed before a competent court of law---Amnesty notification encouraged those who had not paid the penalty and default surcharge to get exemption from payment, provided they came forward and paid five per cent of the default surcharge amount---Once the requisite amount was paid pursuant to the said notification, the Provincial Government, which had itself approved the issuance of the said notification, could not seek to restrict the scope of the said notification and contend that under the Sindh Sales Tax on Services Act, 2011 the said exemptions could not be given---Joint reading of Ss. 2(92), 45, 66 & 83 of the Sindh Sales Tax on Services Act, 2011 left no doubt that the Sindh Revenue Board, with the prior approval of the Provincial Government, could issue the Amnesty notification---Petitions for leave to appeal were converted into appeals and allowed accordingly.

(b) Sales tax---

----Exemption---Taxing instruments and exemptions issued thereunder must contain clarity and certainty.

Khalid Javed Khan, Advocate Supreme Court and Abdul Saeed Khan Ghori, Advocate-on-Record (absent) for Petitioner (in all cases).

Barrister Shabbir Shah, Additional Advocate General, Sindh along with Malik Naeem Iqbal, Advocate Supreme Court for Respondent No.1.

Muhammad Waqar Rana, Advocate Supreme Court and M. S. Khattak, Advocate-on-Record for Respondent No.2 (FBR).

Nemo for Respondent No.3.

2019 P T D 1479

[Supreme Court of Pakistan]

Present: Umar Ata Bandial, Munib Akhtar and Yahya Afridi, JJ

H.M. EXTRACTION GHEE AND OIL INDUSTRIES (PVT.) LTD. and another

Versus

FEDERAL BOARD OF REVENUE and another

Civil Appeals Nos. 1262 of 2018 and 507 of 2017, decided on 15th May, 2019.

(On appeal from the order dated 10.8.2018 and 25.3.2013 passed by the Islamabad High Court, Islamabad in W.P. No.2372 of 2018 and Lahore High Court, Lahore in W.P. No. 31925 of 2012)

(a) Income tax---

----'Tax credit' and 'exemption'---Conceptual distinction---Three stages in the imposition of a tax were; first, leviable (declaration of liability); second, payable (assessment); and third, recoverable---Exemption inserted itself between the first two stages, i.e., between what was leviable and what was payable---Tax credit inserted itself between the second and the third stages, i.e., between what was payable and what was recoverable---Conceptual difference existed between tax credit and an exemption---If there was an exemption in the field then the second stage may not be reached at all (i.e., the tax may not be payable) if the exemption was whole---Of course, it may be reached partially if that be the nature of the exemption---On the other hand, in the case of a tax credit the second stage must necessarily always be reached, and that too in full; it was only then that the credit manifested itself by interposing between what was payable (i.e., the assessment) and what was recoverable---Such interposition may be complete (if the tax credit was 100%) or partial---In a fiscal statute there must always be the first stage, that could be affected by neither an exemption nor a tax credit---Exemption operated on, and in relation to, the second stage: that stage may not be reached at all, or only partially---Tax credit did not bear on the second stage---Once that stage was reached, and crossed, then the tax credit was manifested, thereby blocking (as the case may be, either in whole or in part) the third stage---Exemption may eliminate the need for an assessment altogether (if it was whole) or reduce it by the relevant amount if it was partial---Tax credit on the other hand had no bearing on the assessment; it came into operation after assessment and when the question of recovery arose.

Pfizer Laboratories Ltd. v. Federation of Pakistan and others PLD 1998 SC 64 ref.

(b) Income Tax Ordinance (XLIX of 2001)---

----S. 159(1)(a) [after amendment by the Finance Act, 2012 and before the changes made by the Finance Act, 2016]---Exemption certificate, issuance of---Tax credit---Clause (a) of subsection (1) of S. 159 of the Income Tax Ordinance, 2001 did not apply to a tax credit, therefore, no exemption certificate could be issued under S. 159 in respect of the same.

Ch. Aitzaz Ahsan, Senior Advocate Supreme Court and Gohar Ali Khan, Advocate Supreme Court for Appellants (in C.A. No. 1262 of 2018).

Riaz Hussain Azam, Advocate Supreme Court for Respondents (in C.A. No. 1262 of 2018).

Sarfraz Ahmed Cheema, Advocate Supreme Court and Dr. Tariq Masood, Member Legal for Appellants (in C.A. No. 507 of 2017).

Shehryar Kasuri, Advocate Supreme Court for Respondents (in C.A. No. 507 of 2017).

2019 P T D 1776

[Supreme Court of Pakistan]

Present: Umar Ata Bandial, Faisal Arab and Munib Akhtar, JJ

COLLECTOR OF CUSTOMS

Versus

Messrs FAISAL ENTERPRISES

Civil Appeal No. 251 of 2015, decided on 14th May, 2019.

(On appeal against the judgment dated 03.01.2014 of the High Court of Sindh, Karachi in Special Customs Reference Application No.69 of 2010)

Customs Act (IV of 1969)---

----S. 25(5)---Value of imported goods---Actual transaction value as reflected in the invoices, Letter of Credit and Goods Declaration---Actual transaction value of each of the two imported consignments was USD 175 and USD 180 per metric ton respectively, which was duly reflected in the Letter of Credit and the Goods Declaration filed at the time of in-bonding of goods---Importer contended that the goods at the time of in-bonding upon inspection were found to be of secondary quality instead of prime quality and as similar goods of secondary quality imported from the same country of origin and shipped on the same ship were assessed at USD 157 per metric ton, hence the goods were to be assessed under S. 25(5) of the Customs Act, 1969 ('the Act') at USD 157 per metric ton---Held, that when the goods without any difficulty could be assessed on the basis of the transaction value under subsection (1) of S. 25 of the Act i.e. the price actually paid or payable for the goods sold for export to Pakistan, then the question of invoking subsection (5) of S. 25 did not arise at all---Only in circumstances when the goods could not be assessed on transaction value then they were to be assessed on the basis of the value of identical goods sold for export to Pakistan at about the same time at which the goods were being valued under subsection (5) of S. 25---In the present case it was not the case of the importer that the goods were not the same as were originally ordered, which resulted in raising a claim with foreign supplier for refund of the differential amount---Hence, the two consignments imported by the importer were liable to be assessed at the undisputed transaction value reflected in the invoices, the Letter of Credits and the Goods Declarations that were filed at the time of arrival of goods, which was admittedly USD 175 and USD 180 per metric ton respectively.

Raja M. Iqbal, Advocate Supreme Court for Appellant.

Raja Zafar Khaliq Khan, Advocate Supreme Court for Respondent.

Date of hearing: 14th May, 2019.

2019 P T D 1912

[Supreme Court of Pakistan]

Present: Umar Ata Bandial, Ijaz ul Ahsan and Yahya Afridi, JJ

Messrs SUPER ENGINEERING and another

Versus

COMMISSIONER INLAND REVENUE, KARACHI

Civil Appeals Nos. 481 and 482 of 2d015, decided on 24th April, 2019.

(On appeal against Order dated 14.04.2015 of the High Court of Sindh, Karachi passed in I.T.R.As. Nos. 189 and 190 of 2010)

(a) Income Tax Ordinance (XLIX of 2001)---

----S. 153(6A) [as amended by the Finance Act (I of 2008)]---Payment for goods and services---Association of Persons (AOPs)---Declaration of income under the normal or presumptive tax regime---In terms of S.153 of the Income Tax Ordinance, 2001, as it existed prior to the amendments made by the Finance Act, 2008, the appellant-companies were "prescribed person" registered as AOPs with the revenue authorities, engaged in the manufacturing of auto parts, and their income generated from the supply made thereof would bring their cases within the scope of subsection (6A) and thus entitle them to submit their returns under the normal tax regime, and not the presumptive tax regime provided under sub­section (6) of S. 153 of the Ordinance---Amendments made in S. 153(6A) by the Finance Act 2008 had substituted the words "any person" with that of "a company", and thereby restricted the scope of "prescribed person", who could be excluded from declaring their return under the presumptive tax regime mandated in subsection (6A) of S. 153 of the Ordinance---With the said amendment, only a company that was manufacturing the goods generating the income would be excluded from the purview of the presumptive tax regime---In the circumstances, even if we regard the said amendment to be procedural in nature, it would not have retrospective effect, as valuable rights had already accrued and matured in favour of the appellants at the culmination of the tax year 2008 i.e. on 30-06-2008---Income of the appellants for the tax year 2008 was to be assessed under the normal tax regime and not the presumptive tax regime---Appeals were allowed accordingly.

(b) Interpretation of statutes---

----Applicability of an enactment could best be adjudged from its expressed content and implied intent.

(c) Interpretation of statutes---

----When the enactment itself provided for the same to have effect from a particular point in time, the express command of the legislature was to be abided, interpreted and applied accordingly.

(d) Interpretation of statutes---

----Fiscal statute---Amendments, applicability of---Scope---Charging provisions were to be applied prospectively, unless the statute expressly provided otherwise---Secondly, the assessment and recovery provisions were to be considered retrospectively unless the enactment expressly or impliedly provided otherwise.

The Colonial Sugar Refining Company v. Irving 1905 AC 369; Muhammad Ishaq v. State PLD 1956 SC 256; Nagina Silk Mill, Lyallpur v. Income Tax Officer, A-Ward, Lyallpur PLD 1963 SC 322; The State v. Muhammad Jamel PLD 1965 SC 681; Abdul Rehman v. Settlement Commissioner PLD 1966 SC 362; Adnan Afzal v. Capt. Sher Afzal PLD 1969 SC 187; Ch. Safdar Ali v. Malik Ikram Elahi and another 1969 SCMR 166; Muhammad Abdullah v. Imdad Ali 1972 SCMR 173; Bashir v. Wazir Ali 1987 SCMR 978; Mst. Nighat Yasmin v. National Bank of Pakistan PLD 1988 SC 391; Yusuf Ali Khan v. Hongkong and Shanghai Banking Corporation, Karachi 1994 SCMR 1007; Malik Gul Hasan and Co. and 5 others v. Allied Bank of Pakistan 1996 SCMR 237; Commissioner of Income Tax, Peshawar v. Islamic Investment Bank Ltd. 2016 SCMR 816 and Additional Commissioner Inland Revenue, Audit Range, Zone-I v. Eden Builders Limited 2018 SCMR 991 ref.

Syed Naveed Amjad Andrabi, Advocate Supreme Court for Appellants.

Ms. Misbah Gulnar Sharif, Advocate Supreme Court and Abdul Hameed Anjum, Chief (Legal) FBR for Respondent.

Date of hearing: 24th April, 2019.

2019 P T D 1956

[Supreme Court of Pakistan]

Present: Umar Ata Bandial, Munib Akhtar and Yahya Afridi, JJ

PAKISTAN STATE OIL CO. LTD., KARACHI

Versus

COLLECTOR CUSTOMS CENTRAL EXCISE AND SALES TAX and another

Civil Appeals Nos. 911 to 915 of 2009, decided on 18th October, 2018.

(On appeal from the judgment/order dated 29.1.2009 of the High Court of Sindh, Karachi passed in R.As. Nos. 77, 78, 79, 80, 81 of 2009)

(a) Central Excises and Salt Act (I of 1944)---

----S. 3-B---Sales Tax Act (VII of 1990), S. 34---Consignments meant for export sold locally within Pakistan---Tax fraud---Imposition of additional tax and duty under S. 3-B of Central Excise Act, 1944 and S. 34 of the Sales Tax Act, 1990---Clear factual finding by the Tribunal provided a sound basis for the imposition of such additional tax and duty, which finding could not be assailed before the Supreme Court---Appeals were dismissed accordingly.

(b) Constitution of Pakistan---

----Art. 185---Finding of fact---Such finding could not be assailed before the Supreme Court.

Isaac Ali Qazi, Advocate Supreme Court for Appellant (in all cases).

Raja Muhammad Iqbal, Advocate Supreme Court and Dr. Tariq Masood, Member Legal (FBR) for Respondents (in all cases).

2019 P T D 1961

[Supreme Court of Pakistan]

Present: Umar Ata Bandial, Ijaz ul Ahsan and Yahya Afridi, JJ

Messrs MUJAHID SOAP AND CHEMICAL INDUSTRIES (PVT.) LTD.

Versus

CUSTOMS APPELLATE TRIBUNAL, BENCH-I, ISLAMABAD and others

Civil Appeal No. 1029 of 2019, decided on 25th April, 2019.

(On appeal from the judgment/order dated 29.03.2016 of the Islamabad High Court, Islamabad passed in C.R. No. 4 of 2015)

Customs Act (IV of 1969)---

----S. 179(3)---Adjudication---Period of 120 days for rendition of judgment after issuance of show cause notice---Scope---Judgment reserved---Order-in-original was issued by the Collector (Adjudication) after a lapse of 157 days from the date of show cause notice, however, customs authorities contended that the judgment was reserved on the 116th day after the date of the show cause notice, thus, it was within the time period of 120 days---Question as to whether the customs authorities were justified in treating the date of conclusion of hearing and for judgment to be reserved as the date of disposal of the show cause notice---Held, that on the 116th day after issuance of show-cause notice no decision was verbally announced by the adjudicating officer nor was any decision communicated to the parties prior to the subsequent issuance of the order-in-original---Adjudicatory decision could not be said to have been recorded/taken without announcement or communication thereof to the parties---Law was quite accommodating for the taxing authority as an extension was available beyond the originally prescribed period of 120 days for rendition of a decision---Even though no decision was communicated within the said period, such an extension could be sought and granted subsequently but in such an event it was mandatory that the decision came within 180 days after the date of show cause notice---In the present case, however, the Collector did not even apply for an extension but consumed 157 days to record the reasons for his judgment and to communicate the same to the parties---Resultantly the impugned decision was beyond time prescribed in S. 179(3) of the Customs Act, 1969, and was therefore, held to be invalid---Appeal was allowed accordingly.

Collector of Sales Tax v. Super Asia Mohammad Din and Sons 2017 SCMR 1427 ref.

Nemo for Appellant.

M.D. Shahzad, Advocate Supreme Court for Respondent No.2.

Ms. Misbah Gulnar Sharif, Advocate Supreme Court for Respondents Nos. 4 - 5.

2019 P T D 2001

[Supreme Court of Pakistan]

Present: Umar Ata Bandial, Maqbool Baqar and Munib Akhtar, JJ

CHIEF COMMISSIONER INLAND REVENUE, RTO, PESHAWAR

Versus

Messrs SABRINA TENT SERVICES

Civil Appeals Nos. 433-435 of 2015, decided on 9th May, 2019.

(On appeal from the judgment/order dated 15.7.2014 passed by Peshawar High Court, Peshawar in Tax References Nos. 86-88 of 2007).

Income Tax Ordinance (XLIX of 2001)---

----Ss. 122(8) & 122(1)---Amended assessment---'Definite information'---Scope---Definite information did not mean a re-analysis of existing information or an analysis of further information that was previously accessible but had not been taken into account (by the tax authorities).

Central Insurance Co. v. Central Board of Revenue 1993 SCMR 1232; Inspecting Assistant Commissioner v. Pakistan Herald Ltd. 1997 SCMR 1256 and Income Tax Officer v. Chappal Builders 1993 PTD 1108 ref.

Rehmatullah, Advocate Supreme Court and Syed Rifaqat Hussain Shah, Advocate-on-Record for Appellant.

Ghulam Shoaib Jally, Advocate Supreme Court for Respondent.

2019 P T D 2072

[Supreme Court of Pakistan]

Present: Umar Ata Bandial, Munib Akhtar and Yahya Afridi, JJ

COMMISSIONER INLAND REVENUE,RTO, RAWALPINDI---Appellant

Versus

Messrs TRILLIUM PAKISTAN (PVT.) LTD., RAWALPINDI and others---Respondents

Civil Appeals Nos. 1269 to 1273 of 2013, decided on 31st January, 2019.

(On appeal from the judgment/order dated 13.02.2013 of the Lahore High Court, Rawalpindi Bench passed in I.T.Rs. Nos. 35, 38, 16, 17 and 42 of 2012)

(a) Interpretation of statutes---

----Fiscal statute---Explanation provided in a statute---Scope---Such explanation ordinarily operated to clarify the law prospectively---Retrospective liability was, however, imposed when an explanation attributed a meaning to a substantive provision or expression whereby the burden, obligation or liability of a person was increased for a past period---Such retrospective impact was to be avoided unless the express language of the explanation warranted such an interpretation.

(b) Income Tax Ordinance (XLIX of 2001)---

----S. 182(1) [as it stood during the tax years 2008 and 2009]---Default by tax payer to file income tax returns within the prescribed period---Penalty calculated as a percentage of the 'tax payable'---'Tax payable'---Meaning---Whether the term 'tax payable' pertained to amount of tax that remained to be deposited with the return or it referred to the total tax liability of the assessee for the income year---Held, that expression "tax payable" originally used in Column 3 of the Table appended to S. 182(1) of the Income Tax Ordinance, 2001 quantified the amount of penalty payable by an assessee in the event of the specified default by him---Being penal in nature, such expression was subject to a narrow interpretation---However, in the year 2011 the said expression 'tax payable' was clarified to have a wider meaning which increased the leviable amount of penalty---At the relevant time in the present case, namely, tax years 2008 and 2009, a plain interpretation of the expression meant that the amount of tax payable with the return formed the base figure for calculating the penalty amount---Prior to the Explanation inserted in column 3 of the Table appended to S. 182(1), the expression "tax payable" could not be read to impose a larger penalty based on the amount of tax that was chargeable on the taxable income of the assessee for that assessment year---In the present case, due to deductions of withholding tax at source no amount of tax was payable with the return by the assessee---Enhanced liability sought to be enforced by the tax authorities under the expanded meaning given by the Explanation in the year 2011 became effective from the time of its promulgation and not prior thereto---Appeals were dismissed accordingly.

Dr. Farhat Zafar, Advocate Supreme Court for Appellant (in all cases).

Malik Javed Khalid, Advocate Supreme Court for Respondents (in C.A. No.1273 of 2013).

Respondents Ex parte (in C.As. Nos. 1269 to 1272 of 2013).

2019 P T D 376

[Supreme Court (AJ&K)]

Present: Ch. Muhammad Ibrahim Zia, C.J., Raja Saeed Akram Khan and Ghulam Mustafa Mughal, JJ

COMMISSIONER AZAD JAMMU AND KASHMIR INLAND REVENUE DEPARTMENT, MIRPUR and others---Appellants

Versus

ZAKIR HUSSAIN and others---Respondents

Civil Appeals Nos.129 to 133, 135 to 142 of 2018, decided on 29th November, 2018.

(On appeal from the judgment of the High Court dated 22.05.2018 in Appeals Nos.26 to 38 of 2001).

Sales Tax Act (VII of 1990)---

----S. 46---Azad Jammu And Kashmir Interim Constitution Act (VIII of 1974), S. 42---Appeal to Supreme Court---Pre-conditions for maintainability of appeal against any judgment, decree , final order or sentence of the High Court ---Appeal against order of Sales Tax Appellate Tribunal---Appellants impugned order of High Court whereby their appeals against order of Sales Tax Appellate Tribunal were dismissed---Question before the Supreme Court was whether the present appeals were maintainable---Held, that under S. 42(11) of the Azad Jammu and Kashmir Interim Constitution Act, 1974; pre-condition for filing direct appeal before Supreme Court of Azad Jammu and Kashmir was that the matter before the High Court should have been one which had arisen from a "court" and not a "tribunal" such as the Sales Tax Appellate Tribunal---In the present case, appellants had, before the High Court, challenged judgment/order of a "tribunal" which did not fall within definition of "court" hence present appeals were not maintainable---Appeals were dismissed, in circumstances.

Army Welfare Trust v. Collector of Sales Tax, Peshawar and others 2017 SCMR 9 rel.

Babar Ali Khan for Appellants (in All Appeals).

Haji Muhammad Afzal for Respondents (in All Appeals).

2019 P T D 606

[Supreme Court (AJ&K)]

Present: Ch. Muhammad Ibrahim Zia, C.J., Raja Saeed Akram Khan and Ghulam Mustafa Mughal, JJ

Messrs WAPDA MANGLA through General Manager Finance (Power)/Chief Engineer

Versus

The COMMISSIONER INLAND REVENUE (PT) AZAD JAMMU AND KASHMIR COUNCIL, MIRPUR

Civil Appeal No.34 of 2018, decided on 22nd November, 2018.

(On appeal from the judgment of the High Court dated 25.10.2017 in Reference No.29 of 2012).

Sales Tax Act (VII of 1990)---

----S. 47---Reference to the High Court---Jurisdiction of High Court under S.47 of the Sales Tax Act, 1990----Nature and scope---High Court, under S.47 of the Sales Tax Act, 1990, was under obligation to answer questions of law raised in a reference before it and to deliver judgment while specifying the grounds upon which such judgment was based.

Mian Sultan Mehmood, Javaid Najam-us-Saqib, Advocates assisted by Mian Ashiq Hussain, Advocate along with Shehzad Asif, Director Legal WAPDA, Muhammad Adnan, Deputy Director WAPDA and Kamran Khurshid, Assistant Director (Legal) WAPDA in Person for Appellant.

Haji Ch. Muhammad Afzal, Advocate for Respondent.