PTD 2021 Judgments

2021 P T D (Trib.) 329

[Punjab Revenue Appellate Tribunal]]

Before Haroon Latif Khan, District and Sessions Judge, Chairperson and Imran Hayee Khan, Accountant Member

Messrs MILLENIUM FRANCHISES

Versus

COMMISSIONER (APPEALS) PRA, LHR

Appeal No.67 of 2019, decided on 10th February, 2020.

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

----Ss.24 & 2(43)---Assessment of tax---Tax fraud---Scope---Show-cause notice issued to the appellant alleged that it being franchisee was required to declare its true sales but such information was concealed which act was "tax fraud"---Additional Commissioner held the appellant liable for evasion of sales tax---Appeal against said order was dismissed---Validity---After issuance of the show-cause notice, total 5 dates of hearing were fixed by the Additional Commissioner---Except on two dates of hearing, no one appeared before the Additional Commissioner on behalf of the appellant and on all the said five dates of hearing, request for adjournments were made---Such conduct was more than enough to prove the lethargic and evasive attitude of the appellant---Additional Commissioner had rightly observed that the continuous absence and requests for adjournments had proved that the appellant had nothing to say in its defence---Record on the basis of which show-cause notice was issued was the sales tax returns of the franchiser, therefore, it could not be considered as controversial---No benefit could be extended to the appellant for its lethargic, evasive and contumacious attitude and conduct before the lower forums---No illegality or irregularity was found in the impugned orders---Appeal was dismissed.

2001 SCMR 838; 2003 PTD 1797 and 2003 PTD 1593 ref.

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

----Ss. 24, 2(43), 3, 10, 11, 18 & 35---Assessment of tax, tax fraud, taxable service, scope of tax and allied matters, time, manner and mode of payment, return---Non-mentioning of relevant provisions of law (subsections) in the show-cause notice---Effect---Show-cause notice issued to the appellant alleged that it being franchisee was required to declare its true sales but such information was concealed which act was "tax fraud"---Additional Commissioner held the appellant liable for evasion of sales tax---Appeal against said order was dismissed---Contention of appellant was that the show-cause notice was vague because no subsection or clause of main provision of relevant law was mentioned---Validity---Bare reading of S.24, Punjab Sales Tax on Services Act, 2012, clarified that the Additional Commissioner had rightly mentioned it without mentioning its subsections as it had nothing to do with the controversy---Additional Commissioner had also referred the violation of Ss. 3, 10, 11, 18 & 35 of Punjab Sales Tax on Services Act, 2012, in the show-cause notice---Said sections were self-explanatory and had sufficiently encompassed the issue---Contention of the appellant was turned down.

Rana M. Afzal for Appellant.

2021 P T D (Trib.) 443

[Punjab Revenue Appellate Tribunal]

Before Haroon Latif Khan, District and Sessions Judge, Chairperson and Imran Hayee Khan, Accountant Member

Messrs FRIGZ FOODS SIALKOT CANTT

Versus

COMMISSIONER (APPEALS) PRA, LAHORE

Appeal No.01 of 2015, decided on 22nd January, 2020.

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

----Ss. 24, 63 & 65---Punjab Sales Tax on Services (Adjudication and Appeals) Rules, 2012, Rr. 9 & 16---Assessment of tax---Appeal to Commissioner (Appeals)---Decision in appeal---Examination of records, evidences---Duty of Commissioner (Appeals)---Scope---Show-cause notice issued to the appellant alleged that it being franchisee had deposited certain amounts in the Bank account of the franchiser on account of royalty and advertisement, etc---Additional Commissioner, on failure of appellant to file any reply, passed the assessment order---Appeal filed against said order was dismissed---Validity---Appellant had failed to file any reply or submit any documents before the Additional Commissioner, but in total contrast to the admitted fact, the Commissioner (Appeals) in his order had stated that impugned order was passed after taking into account the contentions and documents produced by the appellant before the Additional Commissioner---Observation of the Commissioner (Appeals) was sufficient to hold that the Commissioner (Appeals) did not look into the record rather the order was passed merely on the basis of his imagination---Commissioner (Appeals) had mentioned the arguments of the appellant in the opening paragraph of his order but had failed to dilate upon the grounds of the appellant i.e. double taxation, wrong calculation of tax liability and paying of tax by the appellant throughout the period of alleged default---Order passed by Commissioner (Appeals) did not fulfill the requirements of the adjudication rules---Case was remanded to the Commissioner (Appeals) for decision afresh.

(b) Punjab Revenue Authority Act (XLIII of 2012)---

----Ss.3, 5 & 36---Punjab Revenue Authority, powers and functions of---Validation---Scope---Show-cause notice issued to the appellant alleged that it being franchisee had deposited certain amounts in the Bank account of the franchiser on account of royalty and advertisement, etc---Additional Commissioner, on failure of appellant to file any reply, passed the assessment order---Appeal filed against said order was dismissed---Contention of appellant was that vide judgment of High Court reported as "The Institute of Architects, Pakistan v. Province of Punjab and others [2016 PTD 1103] all the actions taken and notices issued by the Chairperson of Punjab Revenue Authority, acting as Authority were declared illegal and without lawful authority, therefore, the show-cause notice issued to the appellant was also unlawful and without lawful authority---Validity---Contention of appellant was a misconceived notion of law because after passing of said judgment on 25-01-2016, Legislature had inserted section 36 in the Punjab Revenue Authority Act, 2012 on 05-02-2016; on the same date sub-clause (4) of S.5 of Punjab Revenue Authority Act, 2012, was also inserted and thereafter, on 05-09-2016 sub-clause (c) of S.36 of Punjab Revenue Authority Act, 2012, was also inserted---Cumulative effect of the said provisions was that the Authority stood established under S.3 of Punjab Revenue Authority Act, 2012, with effect from 01-07-2012 and that all actions taken by the Chairperson on behalf of the Authority were deemed to be the actions validly taken by the Authority---Objection/contention of the appellant, being not well-founded, was turned down.

The Institute of Architects, Pakistan v. Province of Punjab and others 2016 PTD 1130 rel.

Nishat Hotel and Properties Limited and others v. The Province of Punjab and others PLD 2019 Lah. 729 = 2019 PTD 2050 ref.

Muhammad Naeem Munawar for Appellant.

2021 P T D (Trib.) 641

[Punjab Revenue Appellate Tribunal]

Before Haroon Latif Khan, Chairperson and Imran Hayee Khan, Accountant Member

PUNJAB BEVERAGE CO. LTD.

Versus

COMMISSIONER (PRA), FAISALABAD

Appeal No.125 of 2019, decided on 17th December, 2019.

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

----Ss.52 & 60---Recovery of tax not levied or short-levied---Powers of adjudication---Scope---Appellant assailed order passed by Commissioner whereby it was taxed---Validity---Commissioner (Appeals), in the first round of litigation, had remanded the matter to the assessing officer but the Commissioner, without any reason, had taken up and decided the matter---If Additional Commissioner was not available at the relevant time, Commissioner could have mentioned such fact in the impugned order or before passing the order while issuing notice to the tax-payer---Subsection (2) of S.60 of Punjab Sales Tax on Services Act, 2012, empowered the Commissioner to adjudicate any case falling in the jurisdiction of any officer subordinate to him but it did not mean that a case initiated by the subordinate officer would be taken up by the Commissioner without mentioning the reasons for the same because such act amounted to curtailment of a forum for the taxpayer---Appellate Tribunal remanded the case to the competent authority with direction to decide the case afresh.

1999 PTD 1358 and 2012 PTD 964 ref.

Messrs Citi Bank N.A. v Commissioner HQ's Enforcement-IV PRA, Lahore 2020 PTD (Trib.) 1911 fol.

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

----S.52---Punjab Sales Tax on Services (Adjudication and Appeals) Rules, 2012, Rr.6 & 13---Recovery of tax not levied or short-levied---Adjudication orders---Principles of natural justice---Scope---Tax-payer assailed order passed by Commissioner whereby it was taxed---Validity---Tax-payer was provided only two opportunities which could not be termed as sufficient and reasonable opportunities provided to defend the cause---Rule 6 of Punjab Sales Tax on Services (Adjudication and Appeals) Rules, 2012, provided that principles of natural justice, fairness, reasonableness and neutrality had to be strictly observed during the proceedings---Assessing officer had not adhered to any of the sub-rules of R.13 of Punjab Sales Tax on Services (Adjudication and Appeals) Rules, 2012, in letter and spirit except sub-rules (iv), (v) and (vi), as there was no defence side/evidence, etc. present before the assessing officer---Impugned order consisted of hardly four lines---Appellate Tribunal observed that tax-payer should have avoided evasive approach to reap the fruits of Rr. 6 & 13 of Punjab Sales Tax on Services (Adjudication and Appeals) Rules, 2012---Case was remanded to the competent authority with a direction to decide the case afresh.

1999 PTD 1358 and 2012 PTD 964 ref.

Mudassar Shujauddin for Appellant.

2021 P T D (Trib) 703

[Punjab Revenue Appellate Tribunal]

Before Haroon Latif Khan, Chairperson and Imran Hayee Khan, Accountant Member

TELENOR LDI COMMUNICATION (PVT.) LTD.

Versus

COMMISSIONER (APPEALS) PRA LAHORE

Appeal No.57 of 2019, decided on 7th January, 2020.

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

---Ss. 3, 24 & Sr. 6, 2nd Sched.---Punjab Sales Tax on Services (Definition) Rules, 2012, R. 106---Punjab Sales Tax on Services (Specific Provisions) Rules, 2012, Rr. 25 & 26---Taxable service---Assessment of tax---Telecommunication services---Tax coverage---Scope---Appellant was taxed for his failure to pay output tax against amounts received/revenue earned on international incoming calls, being taxable activity under entry No. 6 of the 2nd Schedule to the Punjab Sales Tax on Services Act, 2012---Validity---Activity of long distance international calls fell under telecommunication services being an integral part of the same---Appellant itself had admitted to be engaged into various telecommunication services agreements with foreign LDI (Long-Distance and International) companies---Appellant was found to be engaged in providing LDI calls and allied telecommunication services---International incoming calls had been notified by PTA on agreed settlement rate and such services constituted value of taxable service and the Punjab was entitled to collect tax to the extent of international incoming calls terminating in Punjab---Activity of appellant being telecommunication services squarely fell under serial No. 6 of the 2nd schedule to the Punjab Sales Tax on Services Act, 2012, hence taxable---Appeal was party allowed.

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

----Ss. 3, 24 & Sr. 6, 2nd Sched.---Punjab Sales Tax on Services (Adjustment of Tax) Rules, 2012, R. 12---Taxable service---Assessment of tax---Telecommunication services---Export of service---Scope---Appellant was taxed for his failure to pay output tax against amounts received/revenue earned on international incoming calls, being taxable activity under entry No. 6 of 2nd Schedule to the Punjab Sales Tax on Services Act, 2012---Contention of appellant was that its activity being export of services was exempt from payment of tax in Punjab under R.12 of Punjab Sales Tax on Services (Adjustment of tax) Rules, 2012---Validity---Rule 12 of Punjab Sales Tax on Services (Adjustment of Tax) Rules, 2012, was a conjunctive provision which had to satisfy all the conditions mentioned therein, since the said services had been used in Pakistan therefore, no relief could be pleaded under said rule---Contention of appellant was rejected---Appeal was party allowed.

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

----Ss.3, 24 & Sr. 6, 2nd Sched.---Punjab Sales Tax on Services (Specific Provisions) Rules, 2012, R.26---Taxable service---Assessment of tax---Telecommunication services---Tax coverage---Scope---Appellant was taxed for his failure to pay output tax against amounts received/revenue earned on international incoming calls, being taxable activity under entry No. 6 of the 2nd Schedule to the Punjab Sales Tax on Services Act, 2012---Contention of appellant was that it had already paid sales tax on certain amount but it was not excluded from the total value while calculating the sales tax liability---Validity---Appellate Tribunal directed the officer exercising jurisdiction over the case to seek the proofs of sales tax paid by the appellant and accordingly exclude the corresponding revenue from the taxable value of service---Adjudicating officer was required to have calculated the amount by applying Tax Fraction Formula---Adjudicating officer was further directed to afford reasonable opportunity to the appellant for furnishing the proof of tax paid to tax authorities other than Punjab with a view to ascertaining the actual quantum of liability payable to Punjab Revenue Authority---Appeal was party allowed.

Messrs Mujahid Soap and Chemical Industries (Pvt.) Ltd. v. Customs Appellate Tribunal, Bench-I, Islamabad and others Civil Appeal No.1029 of 2019 ref.

Mansoor Saeed, CA for Appellant.

2021 P T D (Trib.) 986

[Punjab Revenue Appellate Tribunal]

Before Haroon Latif Khan, Judicial Member and Imran Hayee Khan, Accountant Member

Messrs ZARAI TARAQIATI BANK LIMITED (ZTBL)

Versus

COMMISSIONER HQ's (PRA) LAHORE

Appeal No.81 of 2019, decided on 29th November, 2019.

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

----Ss.14 & 19---Special procedure and tax withholding provisions---Joint and several liabilities of registered persons where tax unpaid---Scope---Appellant assailed the order passed by Commissioner whereby it was taxed---Validity---Commissioner was bound to have passed a good speaking order based on exactness of the figures and if there was no evidence/documents before him, he was bound to ask the appellant to provide the documents by specifying their nature and type, particularly when the appellant itself had stated in the reply that it could be confronted specifically about the requirement of any other documents/information---Commissioner did not ask the appellant for the documents/evidence necessary for the effective calculation of the tax demand rather preferred the order on the basis of presumptions and guess work by applying the formula of percentage---Case was remanded back to the competent officer for decision afresh---Appeal was accepted.

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

----S.66---Appeal to the Appellate Tribunal---Limitation---Condonation of delay---Scope---Appellant sought condonation of delay in filing appeal---Validity---Nowhere in the impugned order it was mentioned or directed that the copy of the said order be transmitted to the appellant---Neither the copy of the impugned order was dispatched to the appellant nor any intimation of passing of the final order was given---Contention of appellant was that the final order came into its knowledge when recovery notice was received---Contention of appellant appeared to be correct coupled with the fact that the whole argument on the point of limitation was not controverted by the departmental representative---Appeal was considered and entertained as filed within limitation.

(c) Taxation---

----Tax demand should always be based on exact figures and there is no room for presumptions and guess work.

Muhammad Abu Bakar for Appellant.

2021 P T D (Trib.) 1003

[Punjab Revenue Appellate Tribunal]

Before Haroon Latif Khan, Judicial Member and Imran Hayee Khan, Accountant Member

Messrs GUJRANWALA FOOD INDUSTRY (PVT.) LTD.

Versus

COMMISSIONER (APPEALS) PRA, LAHORE

Appeal No.104 of 2017, decided on 1st October, 2019.

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

----S.65---Decision in appeal---Directions for issuance of fresh show-cause notice---Scope---Appellant assailed order passed by Commissioner (Appeals) whereby he had held that 'assessing officer may issue a fresh show-cause notice'---Validity---Commissioner (Appeals) had not given directions but had made observations as the word 'may' had been used which according to rules of interpretation could at best have persuasive and not mandatory connotations---Order of Commissioner (Appeals) had not caused prejudice to the appellant as the department could proceed with fresh show-cause notice with or without such observations provided the original limitation as contained in S.52(1) of Punjab Sales Tax on Services Act, 2012 had not lapsed---Commissioner (Appeals) had instead suggested the assessing officer to pass a speaking order strictly in accordance with the mandatory provisions of Punjab Sales Tax on Services (Adjudication and Appeals) Rules, 2012, to protect the rights of the appellant---Appeal was dismissed.

Muhammad Naeem Munawar for Appellant.

2021 P T D (Trib.) 270

[Punjab Revenue Appellate Tribunal]

Before Haroon Latif Khan, District and Sessions Judge, Chairperson and Imran Hayee Khan, Accountant Member

Messrs IZHAR CONSTRUCTION (PVT.) LIMITED

Versus

COMMISSIONER (APPEALS) PRA, LAHORE

Appeal No.51 of 2019, decided on 14th January, 2020.

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

----Ss.24 & 57---Assessment of tax---Obligation to produce documents and provide information---Non-production of documents---Effect---Show-cause notice was issued to the appellant for providing construction services to Civil Aviation Authority under a contract---Despite providing taxable services the appellant neither declared the same in sales tax returns nor paid the tax under Punjab Sales Tax on Services Act, 2012---Additional Commissioner passed the order wherein the appellant was held liable to pay sales tax on services---Appeal filed against said order was dismissed, however, the tax payable by appellant was reduced---Contention of appellant was that Civil Aviation Authority could not be taxed by any Provincial Authority directly or indirectly and that since appellant was an agent of Civil Aviation Authority therefore, taxing the appellant would amount to taxing Civil Aviation Authority---Validity---Appellant tried its utmost to make it a case against the Civil Aviation Authority whereas Civil Aviation Authority never felt aggrieved of the impugned orders and never made any effort to become party to the proceedings---Contract between appellant and Civil Aviation Authority was admitted but despite demand copy of the contract was not provided by the appellant---Contract was an important document and the appellant was required to produce it before the concerned officer but he failed to do so which showed that the appellant had tried to conceal something from the Punjab Revenue Authority---Impugned orders were well-reasoned and speaking ones wherein all the aspects of the case were attended and discussed---Appeal was dismissed.

PLD 1972 SC 271; 1990 PTD 389; 2004 PTD 1388; 1990 PTD 903; 2011 PTD (Trib.) 1399; PLD 1968 SC 313; 2016 PTD 2685; 1997 PTD 1872; 2015 PTD 619; 2017 PTD 1257; 2009 PTD 722; PLD 2005 SC 605 = 2005 PTD 2286; 2002 PTCL 115; 2010 PTD 967; 2010 PTD (Trib.) 2144 and 2013 PTD (Trib.) 1402 ref.

Sindh Revenue Board v. Civil Aviation Authority of Pakistan 2017 SCMR 1344 distinguished.

Viqar A. Khan (FCA) as AR for Appellant.

Muhammad Afzal DR for Respondents.

2021 P T D (Trib.) 19

[Customs Appellate Tribunal]

Before Jahanzaib Wahlah, Member Judicial-III

Messrs M.I. TRADERS, LAHORE

Versus

The PRINCIPAL APPRAISER, GROUP-I, MCC OF APPRAISEMENT-EAST, KARACHI and 2 others

Custom Appeal No.K-637 of 2019, decided on 11th December, 2019.

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

----Ss. 2(a), 80, 83, 186, 193-A& 202--- Customs Rules, 2001, Rr.438 & 442---Notification SRO No.371(I)/2002, dated 15-6-2002---Clearance of goods---Mis-declaration---Adjudication proceedings--- Despite payment of all duties and taxes levied by authorities, goods in question were not released by Customs Authorities---Validity---Authorities were only authorized to take action for issuance of detention notice in terms of S.202 of Customs Act, 1969, once amount alleged to have been evaded was finally adjudicated and deiced against the person--- Procedure and mechanism provided in S.202 Customs Act, 1969, was entirely independent of any action taken in terms of S.186 of Customs Act, 1969---Adjudication was not done either in respect of goods allegedly cleared against fake Goods Declaration---Putting a hold on Goods Declaration / detaining of consignment of importer by Principal Appraiser was not only without lawful authority and jurisdiction and in derogation of S.186 of Customs Act, 1969, and law laid down by superior Courts---Consignment which had undergone process of passing assessment order under the provision of S.80 of Customs Act, 1969 and R.438 of Customs Rules, 2001, for levy of duty and taxes, which were paid and thereafter valid clearance order as contemplated in S.83 of Customs Act, 1969 and R.442 of Customs Rules, 2001, was passed by competent authority in exercise of powers vested upon him through SRO No.371(I)/2002, dated 15-6-2002, such order was appealable order and could not be disturbed by any other authority including Principal Appraiser and Deputy Collector, with the exception of preferring an appeal under the provision of S.193 of Customs Act, 1969---In passing of order of rejection within the stipulated period of 120 days as contemplated in S.193-A(3) of Customs Act, 1969, which he failed as the same was evident from the date when appeal was filed---Order was to be passed by Appellate Authority within 120 days but no extension was either given by him or obtained by Federal Board of Revenue and the order by the Appellate authority was silent in such regard---Order passed by Appellate authority was barred by 70 days---Customs Appellate Tribunal set aside the order passed by Authorities as ab-initio, null and void and maintained the assessment order as the same was correct in fact and law---Appeal was allowed in circumstances.

Muhammad Ali v. FOP 2013 PTD 628; Amir Siddiqui v. Federation of Pakistan and 03 others 2014 PTD 582; Messrs O.S. Corporation v. FOP and others 2015 PTD 560; Messrs Paramount International (Pvt.) Ltd. v. FOP and others 2014 PTD 1256; Collector of Customs, MCC, Quetta v. Al-Habib Enterprises and Engineering and others 2019 PTD 1712; Forte Pakistan (Pvt.) Ltd., Karachi v. The Director General of Intelligence and Investigation (Customs and Excise), Karachi and another 2006 PTD 978; Assistant Collector of Customs, Dry Port Peshawar v. Messrs Khyber Electric Lamp MFG Co., Ltd. Peshawar 2001 SCMR 838; 2018 PTD 2270; 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.

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

----S.80(3)---Re-assessment---Principle---Re-assessment under S.80(3) of Customs Act, 1969, after release of goods is permitted only after calling for the documents as expressed in S.80(2) of Customs Act, 1969.

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

----S.24A---Speaking order---Scope---Every judicial and quasi-judicial finding should be based on reasons containing 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; 2003 PTD 2369; PLD 1995 SC (Pak) 272; PLD 1970 SC 158; PLD 1970 SC 173; 1984 SCMR 1014; 2012 PTD (Trib.) 619 and 2016 PTD 589 rel.

Nadeem Ahmed Mirza, Consultant for Appellant.

Muhammad Akram Basra, A.O. for Respondents.

2021 P T D (Trib.) 51

[Customs Appellate Tribunal]

Before Jahanzaib Wahlah, Member Judicial-III

Messrs BRONX INTERNATIONAL, KARACHI

Versus

The DEPUTY DIRECTOR, DIRECTORATE GENERAL OF PCA, CUSTOM HOUSE, KARACHI and 3 others

Customs Appeal No.K-713 of 2019, decided on 28th November, 2019.

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

----S.194-A(4)---Appeal---Cross objections, non-filing of---Effect---When no cross objection under S.194-A(4) of Customs Act, 1969, is filed within stipulated period of 30 days by respondent, the same is tantamount to admission and deposition made by and on behalf of appellant in memo of appeal and affidavit deems to be true and correct.

2019 PTD (Trib.) 615; (1974) 94 ITR-I; 1980 PLC (C.S.) 350; 1982 PLC (C.S.) 757; 1986 CLC 745; (1984) 146 ITR 140; (1985) 53 Taxation-I (Trib.); 1986 CLC 1119; 1986 CLC 1408; 1991 MLD 1243; PLD 1992 SC 317; 1993 SCMR 662; PLD 1996 Kar. 68; 1986 PLC (C.S.) 560 and 2003 PTD 2118 rel.

(b) Administration of justice---

----Thing has to be done as it has been prescribed to be done--- Doing an act in any other manner renders it illegal and void ab initio.

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 and PLD 1971 SC 184 rel.

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

----Ss.18, 26, 26A, 32(2)(3) & 202---Federal Excise Act (VII of 2005), Ss. 3, 29 (2) & 42B---Income Tax Ordinance (XLIX of 2001), Ss. 148 & 228---Sales Tax Act (VII of 1990), Ss.6 30, 31 & 32---Constitution of Pakistan, Arts. 4 & 25---Notification SRO No.371 (I)/2002, dated 15-6-2002, Sr.3(ii)---Customs Authorities---Audit---Other taxes, collection of---Discrimination---Importer was aggrieved of show cause notice issued by authorities to recover Federal Excise Duty, Sales Tax and Income Tax---Validity---No official of Directorate of PCA was empowered to conduct audit in the matter of Federal Excise and Income Tax without powers / justification---Any such audit was void ab-initio and coram non judice---Clearance Collectorates did not have authority to collect Federal Excise Tax, Sales Tax and Income Tax at import stage in the capacity of collecting agent in terms of S.3 of Federal Excise Act, 2005, S.6 of Sales Tax Act, 1990 and S.148 of Income Tax Ordinance, 2001, sans recovery proceedings---Clearance Collectorates were empowered to recover escaped / short paid customs duty and regulatory duty levied on imported goods under S.18 of Customs Act, 1969, in exercise of powers conferred under S.202 of Customs Act, 1969, after due process of law but had no powers in any case to adjudicate cases of short recovery of Federal Excise Duty, Sales Tax and Income Tax under S.14 of Federal Excise Act, 2005, S.36 of Sales Tax Act, 1990 and S.162 of Income Tax Ordinance, 2001--- No charges were levelled under S.32(2) of Customs Act, 1969, against those officials confirming the case in question was of inadvertence, error, omission or misconstruction falling within the ambit of S.32(3) of Customs Act, 1969--- Appropriate authority to adjudicate such type of cases rested with Principal Appraiser in terms of Sr. 3(ii) of SRO No.371(I)/2002, dated 15-6-2002 and not Additional Collector Adjudication---Such show cause notices and order-in-original was without power / jurisdiction and the same was ab initio void and coram non judice---Importer was met out with partial treatment which was tantamount to discrimination not permitted under Arts. 4 & 25 of the Constitution---Customs Appellate Tribunal set aside the show-cause notice issued to importer as the orders passed by authorities were ab initio, null and void---Appeal was allowed, in circumstances.

Superior Textile Mills Ltd. v. FOP 2000 PTD 399; Collector of Sales Tax and others v. Superior Textile Mills Ltd. and others PLD 2001 SC 600; Saleem Raza v. FOP and others 2012 PTD 302; Waseem Ahmed and others v. FOP and another 2014 PTD 1733; 2002 SCMR 312; 2009 PTD 1507; 2005 SCMR 492; 2010 SCMR 431; 2008 PTD 60; 2008 PTD 578; 2009 PTD 762; 2009 PTD (Trib.) 1263; 2009 PTD 1978; 2010 PTD (Trib.) 1010; 2011 PTD (Trib.) 79; 2011 PTD (Trib.) 987; 2011 PTD (Trib.) 1146 and 2012 PTD (Trib.) 1650 rel.

(d) Words and phrases---

----Powers---Defined.

(e) Words and phrases---

----Function--- Defined.

C.J.S. Officers and Public Employees 234 -- 245 rel.

(f) Words and phrases---

----Jurisdiction--- Defined.

State 1. C.J.S. States 2, 16 and Court 3; Federal Courts 31, 161, C.X.J.S. Courts 9, 18 rel.

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

----Ss.179 & 180---Fresh order against appealable order---Principle---In presence of appealable order, fresh order cannot be passed even through issuance of show cause notice under S.180 of Customs Act, 1969, while exercising powers under the provisions of S.179 of Customs Act, 1969.

Khyber Tractors (Pvt.) Ltd. v. Government of Pakistan PLD 2005 SC 482; Messrs Paramount International (Pvt.) Ltd., Karachi v. Secretary Revenue Division 2014 PTD 1256; Collector of Customs, MCC, Quetta v. Al-Habib Enterprises and Engineering and others 2019 PTD 1712; Messrs Smith Kline French v. Pakistan 2004 PTD 3020 and Messrs World Trade Corporation v. Central Board of Revenue 1989 MLD 4310 rel.

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

----Ss.19A & 33---Refund of duty---Principle---No person can claim refund of any duty or other levies which he paid on goods imported and deemed to have been passed in full incidence of paid duty/levies to the end buyer as a part of price of such goods unless contrary is proved by him through documentary evidence that he had not passed on the duty and levies paid at the time of clearance of imported goods to end consumer---If such person successfully proves that he did not pass on such duties, his claim of refund is admissible and had to be sanctioned---Provision of S.19A of Customs Act, 1969, has to be read in conjunction of S.33 of Customs Act, 1969.

(i) Jurisdiction---

----Any forum cannot take cognizance of a matter beyond its jurisdiction, prescribed in relevant law.

Azhar Alam Farooqi Advocate v. Sheikh Abdul Sattar Lasi and others 2008 SCMR 240; Mst. Fateh Bivi and others v. Additional District Judge, Khushab and others 2008 SCMR 1262; Muhammad Anwer and others v. Mst. Ilyas Begum and others PLD 2013 SC 255; OMV Energy v. Ocean Pakistan and others 2015 CLC 1504; Muhammad Hussain and another v. Muhammad Shafi and another 2004 SCMR 1947 and Munawar Hussain and 2 others v. Sultan Ahmed 2005 SCMR 1388 rel.

Nadeem Ahmed Mirza, Consultant for Appellant.

Arif Maqbool, AD and Farhan Mehdi, AO for Respondent No.1.

Ishaq Sheikh, AO for Respondent No.2.

2021 P T D (Trib.) 99

[Customs Appellate Tribunal]

Before Syed Sardar Hussain Shah, Chairman/Member (Judicial) and Dr. Zulfiqar A. Malik, Member (Technical-I)

The COLLECTOR OF CUSTOMS, through the Assistant Collector of Customs (Group-VII)

Versus

Messrs F.F.K., CONSTRUCTION COMPANY and others

Customs Appeals Nos.K-380 and K-381 of 2018, decided on 23rd April, 2019.

Customs Act (IV of 1969)---

----S.32---Import Policy Order, 2016, Para. 9---Mis-declaration---Import of used plant, machinery and equipment---Scope---Department alleged that vehicles imported were older than five years, therefore, same could not have been imported---Collector of Customs (Adjudication) vacated the show-cause notice---Validity---Examination of vehicles by Pre-shipment Inspection Company identified the manufacturing year of vehicles as within five years---Department sought information from local agent of vehicle manufacturer, who on behalf of its principal identified the vehicles to be of older models---Department did not produce correspondence exchanged between the local agent and the manufacturer, which could show the information sought from the manufacturer---Local agent might have had vested interest in the matter for being not able to earn commission in case of direct import---Department had failed to bring on record an authentic examination report which could identify the year of manufacturing of the vehicles---Judgment passed by Collector of Customs (Adjudication) was upheld---Appeals were dismissed.

Civil Petition No.657 of 2018, dated 26-4-2018 and K-518 of 2017 dated 31-5-2017 ref.

Hamza, A.O. for Appellants.

Barrister Asad Khan for Respondents.

2021 P T D (Trib.) 118

[Customs Appellate Tribunal]

Before Syed Sardar Hussain Shah, Chairman/Member Judicial and Muhammad Sadiq, Member Technical-I

Messrs MUHAMMAD ALI CHANDNA

Versus

The COLLECTOR OF CUSTOMS, ADJUDICATION-I CUSTOMS HOUSE, KARACHI and another

Customs Appeal No.K-1497 of 2016, decided on 25th June, 2019.

Customs Act (IV of 1969)---

----Ss.168, 16, 32, 32A, 192, 80, 83, 156(1)(9), 156(1)(14), 156(1)(14A), 156(1)(86) & 156(1)(90)---Imports and Exports (Control) Act (XXXIX of 1950), S.3---Import Policy Order, 2013, Srl. 7, Part-II, Appendix-B---Seizure of things liable to confiscation---Restriction on importation or exportation of goods---False statement, error, etc---Fiscal fraud---Duty of certain persons to give information---Checking of goods declaration by the customs---Clearance for home consumption---Pharmaceutical raw material only to be imported by pharmaceutical industries holding manufacturing licence---Burden of proof------Scope---Department received credible information to the effect that the appellant was regularly importing pharmaceutical raw material with vague description at a lower value while according to the informer, the pharmaceutical raw material was in fact paracetamol, which was a costly item---Import of paracetamol was also restricted to be importable by pharmaceutical industries---Appellant thereafter imported two consignments of similar nature which, on chemical analysis, were found to contain paracetamol---Customs Agent filed an online application under S.79, Customs Act, 1969, showing the importer as a pharmaceutical company whereas Import General Manifest (IGM) belonged to the appellant---Customs Agent, on enquiry, informed that such request was moved on the directive of appellant---Goods in question were seized and show-cause notice was issued---Collector vide order-in-original confiscated the consignments and held that the two consignments earlier imported by appellant were also paracetamol and accordingly assessed duty and taxes---Validity---Goods earlier imported by appellant were released after physical examination and assessment, therefore the transactions were past and closed transactions---Department had presumed that the consignments already released were similar goods when the goods were not present before them---Department did not record any evidence to prove that the consignments released earlier were mis-declared---None could be penalized only on presumptions and assumptions without any material evidence available on record---Appellant had disowned the later consignments therefore, liability or penalty could not be imposed on the appellant, in the absence of proof that he had imported the consignments---Appellate Tribunal allowed the appeal and modified the impugned order by setting aside the demand of duty and taxes to the extent of earlier consignments.

Iftikhar Ahmed for Appellant.

Malik Naeem, A.O., for Respondents.

2021 P T D (Trib.) 138

[Customs Appellate Tribunal]

Before Jahanzaib Wahlah, Member Judicial-III

Messrs ORIENT PAK INTERNATIONAL, LAHORE

Versus

The DEPUTY COLLECTOR, GROUP-VI, MCC, (APPRAISEMENT-EAST), KARACHI and 2 others

Customs Appeal No.K-1179 of 2016, decided on 7th October, 2019.

Customs Act (IV of 1969)---

----Ss.18, 18A, 18C, 32, 198 & 202---Income Tax Ordinance (XLIX of 2001), S.162---Sales Tax Act (VII of 1990), S.11---Mis-declaration---Income tax and Sales tax, recovery of---Show-cause notice---Jurisdiction---Valuation Ruling (VR)---Object, purpose and scope---Importer was aggrieved of show-cause notice issued by Deputy Collector for recovery of taxes including sales tax and income tax, on the plea of mis-declaration---Validity---Clearance Collectorates did not have authority to collect Sales Tax and Income Tax at import stage in the capacity of collecting agent and could recover escaped / short payment paid Customs Duty and Regulatory Duty levied on imported goods under Ss.18, 18A, 18C & 202 of Customs Act, 1969, after due process of law--- Customs authorities had no powers to adjudicate the cases of short recovery / evaded amount of Sales Tax and Income Tax falling within the ambit of S.11 of Sales Tax Act, 1990 and S.162(1) of Income Tax Ordinance, 2001---Show-cause notice and order in original were issued by Deputy Collector by encroaching powers of Assistant Collector---Nobody was allowed to usurp powers as defined of Adjudicating Authority---Rendering act of issuance of show-cause notice and passing of order in original without power / jurisdiction was ab initio null and void and coram non judice---No charge of mis-declaration on the basis of Valuation Ruling (VR) could be levelled as that least qualified to definition of 'direct evidence' warranted under law---Valuation Ruling (VR) was only for the purpose of assessment not for levelling charge of mis-declaration of value---Customs Appellate Tribunal set aside show-cause notice issued to importer as of no legal effect and based on no evidence---Appeal was allowed accordingly.

Central Insurance Company v. CBR 1996 SCMR 1232; Messrs lever Brothers Pakistan Ltd. v. Customs, Sales Tax and Central Excise Appellate Tribunal 2005 PTD 2462; 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; Rose Color v. Chairman, CBR 2013 PTD 813; Qazi CNG Station, Gujrat and another Directorate General of Intelligence and Investigation FBR, Karachi and 2 others 2016 PTD (Trib.) 107; 2011 PTD (Trib.) 110; 2010 PTD (Trib.) 2086; 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; 2017 PTD (Trib.) 481; 1994 CLC 1612; 1990 PTD 29; 2005 PTD 23; Collector of Sales Tax and Federal Excise v. M/s. 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; DGI&I and others v. Al-Faiz Industries (Pvt.) Ltd. and others 2006 SCMR 129; 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; 2014 SC 514; Messrs Shoaib Tayyab International v. Additional Collector of Customs, Karachi 2014 PTD (Trib.) 190; 1991 PTD 551 and 2006 PTD 2190 rel.

Nadeem Ahmed Mirza, Consultant for Appellants.

Ilyas Gichki, A.O. for Respondents.

2021 P T D (Trib.) 175

[Customs Appellate Tribunal]

Before Syed Sardar Hussain Shah, Chairman Member Judicial and Muhammad Sadiq Member, Technical

Messrs SILICON TECHNOLOGIES

Versus

The COLLECTOR OF CUSTOMS (APPEALS) and 2 others

Customs Appeals Nos.K-544 to K-588 of 2016, decided on 25th June, 2019.

Customs Act (IV of 1969)---

----Ss.81, 80 & 83---Provisional determination of liability---Checking of goods declaration by the Customs---Clearance for home consumption---Scope---Appellant imported consignments of USB Flash Drive and MCC Card; goods were assessed in terms of S.80 of Customs Act, 1969 and released under PCT heading 8523.5120 whereunder customs duty @ 5% was chargeable---Amount of customs duty was not charged on the ground that the appellant would obtain an exemption notification from the Federal Board of Revenue and submit the same to the Department---Appellant had submitted undertakings along with post dated cheques to the effect that if he failed to submit the requisite exemption notification he would make the payment to the government---Appellant was thereafter asked to make payment of the deferred amount of duty and taxes but he refused to do so and the cheques submitted by appellant at the time of clearance of goods were dishonoured---Validity---Department had allowed clearance of goods in pursuance to Board's Letter No. C.No.6(1)/2007/CB, dated: 15-6-2009 addressed to the Department---Board had allowed provisional release with exemption cover in line with the policy of encouraging computer literacy by keeping computer gadgets at low taxation---Had the goods been assessed to duty/taxes under S.80 of Customs Act, 1969, release of the same would have been allowed under S.83 of Customs Act, 1969 after payment of such assessment---Assessment ought to have been finalized under S.81(2) of Customs Act, 1969---Alternative course would have been finalization through default under S.81(4), Customs Act, 1969---Had the department taken action within the stipulated period of 6 months under S.81(2), Customs Act, 1969, the matter would have attained finality---Provisional assessment was not finalized, hence, under subsection (4) of S.81, of the Customs Act, 1969 the assessment made provisionally was deemed final---Lapse of over three years when normal period of finalization under S.81(4) stood finalized being "deemed finalization"---Demand raised by the Department was unlawful---Appellate Tribunal allowed the appeals.

Parwaiz Iqbal Kansi, Consultant for Appellant.

Saboor Kakar, A.O. for Respondents.

2021 P T D (Trib.) 384

[Customs Appellate Tribunal]

Before Jahanzaib Wahlah, Member, Judicial-III

Messrs M.I. TRADERS, LAHORE and another

Versus

The PRINCIPAL APPRAISER (R&D) and 4 others

Custom Appeal No.K-1164 of 2018, decided on 16th December, 2019.

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

----Ss.80, 186 & 202---Customs Rules, 2001, R.438---Cleared goods---Detention---Lawful imported / cleared consignments after payment of leviable duty and taxes on the strength of assessment order passed by authorities under S.80 of Customs Act, 1969 and R.438 of Customs Rules, 2001, cannot be detained under any pretext by any officer of customs---Customs authorities are only authorized to take action for issuance of detention notice in terms of S.202 of Customs Act, 1969, once amount alleged to have been evaded has been finally adjudicated and decided against the person---Procedure and mechanism provided in S.202 of Customs Act, 1969, is entirely independent of any action taken in terms of S.186 of Customs Act, 1969.

Muhammad Ali v. FOP 2013 PTD 628; 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.2(a), 80, 83, 155Q, 186, 193-A, 195 & 215---Customs Rules, 2001, Rr.438 & 442---Notification SRO No.371(I)/2002, dated 15-6-2002---Clearance of goods---Show-cause notice---No space for reply---Mis-declaration---Adjudication proceedings---Despite payment of all duties and taxes levied by authorities, goods in question were not released by Customs Authorities---Validity---No appeals were filed and customs authorities despite mandated under law instead assumed the powers under S.195 of Customs Act, 1969, and reopened valid assessment/clearance orders passed under the provisions of Ss.80 & 83 of Customs Act, 1969 & Rr. 438 & 442 of Customs Rules, 2001---Customs Authorities were not empowered to reopen valid assessment order passed by the authority defined in S.2(a) of Customs Act, 1969, in exercise of powers vested upon him through SRO 371(I)/2002, dated 15-6-2002--- All officials acted without power/jurisdiction hence their actions were deemed to be without any lawful authority and as such ab-initio null and void--- Importer was called upon to show cause notice for submitting reply online, for which no space was available in the developed software of CCS as was provided to importer in the module reading as ' Traders Reply'--- Such show cause notice was transmitted on home page of importer and was only for information, not for submitting reply, if reply was warranted to be submitted, space would have provided which was not available--- Such show cause notice was not served on importer as per the contemplation of Ss.155Q & 215 of Customs Act, 1969, rendering the order passed by authorities of no legal effect and void and ab-initio--- Customs Appellate Tribunal set aside show cause notice and all reassessment orders passed by Authorities as ab-initio, null and void and maintained the assessment order as the same was correct in fact and law--- Appeal was allowed in circumstances.

(1974) 94 ITR-1; 1980 PLC (C.S.) 350; 1982 PLC (C.S.) 757; 1986 CLC 745; (1984) 146 ITR 140; (1985) 53 Taxation-I (Trib.); 1986 CLC 1119; 1986 CLC 1408; 1991 MLD 1243; PLD 1992 SC 317; 1993 SCMR 662; PLD 1996 Kar. 68; 1986 PLC (C.S.) 560; 2003 PTD 2118; Messrs Paramount International (Pvt.) Ltd. v. FOP and others 2014 PTD 1256; CPLA No.105-K of 2014 Collector of Customs and other's case; Collector of Customs, MCC, Quetta v. Al-Habib Enterprises and Engineering and others 2019 PTD 1712; Pakistan Television Corporation, Ltd. v. Commissioner Inland Revenue (Legal), LTU, Islamabad and others 2019 SCMR 282; 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; Rose Color v. Chairman, CBR and Sarwar International v. Addl. Collector of Customs 2013 PTD 813; Major Syed Walayat Shah v. Muzaffar Khan and 2 others PLD 1971 SC 184; Omer and Company v. Controller of Customs, (Valuation): (1992) ALD 449 (1); Karachi AAA Steel Mills Ltd. v. Collector of Sales Tax and Central Excise Collectorate of Sales Tax 2004 PTD 624; PLD 1976 SC 514 Ali Muhammad v. Hussain Buksh and others PLD 2001 SC 514; Land Acquisition Collector, Noshehra and others v. Sarfraz Khan and others, STA 444/03; STA 465/07; 2010 PTD (Trib) 1636; 2010 PTD 465; 2010 PTD (Trib) 2158; 2011 PTD. (Trib) 1010; 2011 PTD (Trib) 1680; 2011 PTD (Trib) 2086; M/s. P.M. International. Karachi Federation of Pakistan and 3 others 2010 PTD 1293; The State v. Zia-ur-Rehman and others PLD 1973 SC 49; 2009 PTD 1083; PLD 1963 SC 663; PLD 1971 SC 184; 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 (Trib.) 1636; 2011 PTD (Trib) 2114; 2011 PTD (Trib) 2557; PLD 2014 SC 514; 2002 SCMR 312; 2009 PTD 1507; 2005 SCMR 492; Abbasi Steel Industries Ltd. v. Collector of Customs 1989 CLC 1463; Messrs Fazal Ellahi v. Additional Collector a Customs 2011 PTD (Trib.) 79; 1993 SCMR 274; 2005 SCMR 728; 2007 PTD 1656; 2008 PTD 1227 and 2004 PTD 901 rel.

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

----Ss.25 & 25-A---Valuation ruling---Determination methods---Valuation ruling must be determined using one of the methods of S.25 of Customs Act, 1969 / valuation agreement---Three of the modes; the identical goods method; the similar goods method; and the deductive value method, require the value to be determined 'at or about the same time' as the goods being valued.

Messrs Shoaib Tayyab International, Karachi v. Additional Collector of Customs, MCC of Appraisement-East 2014 PTD (Trib.) 190; Sadia Jabbar v. FOP 2018 PTD 1746 and Danish Jehangir v. FOP and 2 others 2016 PTD 702 rel.

Nadeem Ahmed Mirza, Consultant for Appellant.

Nemo. for Respondent No. 1 and Asif, A.O. for Respondents Nos.2 to 5.

2021 P T D (Trib) 412

[Customs Appellate Tribunal]

Before Syed Sardar Hussain Shah, Chairman/Member (Judicial) and Muhammad Sadiq, Member (Technical-I)

COLLECTOR OF CUSTOMS, MODEL CUSTOMS COLLECTORATE, KARACHI

Versus

Messrs BALOCHISTAN ENTERPRISES and others

Customs Appeals Nos.K-290 to K-295 of 2019, decided on 11th July, 2019.

Customs Act (IV of 1969)---

----Ss.32 & 121---Mis-declaration---Transshipment of goods without payment of duty---Scope---Respondent imported Wax Granules and filed transshipment goods declaration for transportation of the consignment---Examination of the consignment, carried out after obtaining necessary approval, revealed that the goods were betel nuts---Clearing Agent was also the bonded carrier for transportation of the consignment---Department alleged deliberate mis-declaration for replacement of goods en route to the final destination---Validity---Betel nuts were recovered from the consignment of the importer---Consignment was transshipment consignment for which proper goods declaration was to be filed at actual port---Appellate Tribunal ordered for outright confiscation of betel nuts and held that since proper goods declaration was not filed by importer, therefore, no penal action was required to be taken in respect of importer, bonded carrier and Clearing Agent.

Manzoor Ali Rajpar, A.O., present for Appellants.

Ghulam Yaseen, Consultant, present for Respondents.

2021 P T D (Trib.) 418

[Customs Appellate Tribunal]

Before Jahanzaib Wahlah, Member Judicial III

Messrs DJN CORPORATION, KARACHI

Versus

The DIRECTORATE GENERAL OF INTELLIGENCE AND INVESTIGATION-FBR KARACHI

Customs Appeal No.K-1532 and Contempt Application No.635 of 2019, decided on 16th December, 2019.

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

----Ss.162 & 163---Search---Scope---Search carried out in terms of S.163 of Customs Act, 1969, without recourse to mandatory provision of S.162 of Customs Act, 1969 is illegal--- Any case made out on the basis of goods/documents seized on the basis of such search cannot be used against the person from whose premises the same have been obtained.

Messrs Ihsan Yousaf Textile Mills v. FOP 2003 PTD 2037; Messrs N.P. Water Proof Textile Mills (Pvt.) Ltd., v. FOP 2004 PTD 2952; The Collector of Sales Tax and Central Excise v. Messrs Mega Tech (Pvt.) Ltd., 2005 PTD 1933; Federation of Pakistan v. Messrs Master Enterprises (Pvt.) Ltd. 2003 PTD 1034; Collector of Customs v. Muhammad Mehfooz PLD 1991 SC 630 and Messrs A.M.Z. Spinning and Weaving Mills (Pvt.) Ltd. v FOP 2009 PTD 1083 rel.

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

----Ss. 26(2), 32A, 79(1), 168, 171, 186 & 209---Income Tax Ordinance (XLIX of 2001), Ss.177 & 228---Sales Tax Act (VII of 1990), Ss. 25 & 30 --- Notification SRO No. 371(I)/2002, dated 15-6-2002---Mis-declaration---Contravention report---Seizing of consignment---Notice, non-issuance of---Importer after payment of all duty and taxes got his consignment cleared from Customs Warehouse but the same was seized by Customs Intelligence officials at the Railway Station---Authorities prepared contravention report on the allegation that it was case of mis-declaration and evasion of taxes and duties---Validity---Customs officials were not empowered to conduct audit in the matter of sales / income tax under the provisions of S.25 of Sales Tax Act, 1990 and S.177 of Income Tax Ordinance, 2001---Officials from Intelligence Directorate acted without power/jurisdiction, in conducting of audit of sales tax and income as was evident from the contents of contravention reports and show-cause notice---Conducting of such audit and passing re-assessment order was ab-initio, null and void---Carrying out such type of exercise was not permitted under the law by any authority or alleged department of Federal Board of Revenue to encroach powers / jurisdiction of each other, despite having no lawful authority / jurisdiction--- Such type of intention / act could not be validated under any circumstances and was to be crushed in the initial stages for maintain integrity and sanctity of different sovereign organs of the Federal Board of Revenue--- Conducting audit post clearance of Goods Declarations of importers under S.26(2) of Customs Act, 1969, S.25 of Sales Tax Act, 1990 and S.177 of Income Tax Ordinance, 2001 by officials of Intelligence Directorate for determination of short levied / collected amount of customs duty, sales tax, additional sales tax and income tax on imported goods was without lawful authority /jurisdiction and the same was ab-inito, null and void and was coram non judice---No notice under provision of Ss.186, 168(1) & 171 of Customs Act, 1969, was either served on importer or transporter--- Such lapse was fatal as non-serving the notice rendered the whole proceeding infested from legal infirmity--- Official of Intelligence Directorate could not issue show cause notice under the provisions of Sales Tax Act, 1990 and Income Tax Ordinance, 2001, when he was not designated an 'officer of Inland Revenue' under the provision of S.30 of Sales Tax Act, 1990 and Ss.207 & 230 of Income Tax Ordinance, 2001---Such officer of Intelligence Directorate was not empowered to issue show-cause notice under S.11 of Sales Tax Act, 1990 and S. 162(1) not 148 of Income Tax Ordinance, 2001---Authority usurped power not vested with him rendering the show-cause notice and order in original without power / jurisdiction---Goods were not lying in port / terminal, instead were released after passing of valid assessment / clearance order under the provision of Ss.80 & 83 of Customs Act, 1969 and Rr. 438 & 442 of Customs Rules, 2001--- Such goods could not be ordered to be confiscated nor fine could be imposed for redeeming those as were not in control of customs, nor imported in violation of section 15 of Customs Act, 1969 or a notification issued under S.16 of Customs Act, 1969, if confiscated or fine was imposed i.e. in nullity / derogation of the provision of section 181 of Customs Act, 1969---Confiscation of the goods in question and imposing of fine had no warrant of law--- Customs Appellate Tribunal set aside the show-cause notice issued to importer as the orders passed by authorities were ab initio, null and void---Appeal was allowed in circumstances.

(1974) 94 ITR -- 1; 1980 PLC (C.S.) 350; 1982 PLC (C.S.) 757; 1986 CLC 745; (1984) 146 ITR 140; (1985) 53 Taxation-I (Trib.); 1986 CLC 1119; 1986 CLC 1408; 1991 MLD 1243; 1992 SC 317; 1993 SCMR 662; PLD 1996 Kar. 68; 1986 PLC (C.S.) 560; 2003 PTD 2118; CBR v. Chanda Motors 1993 SCMR 39; Ghulam Nabi v. FOP 2013 PTD 581; PLD 1966 SC 1983; PTCL 1994 CL 22; 1983 PCr.LJ 620; 1983 PCr.LJ 623; 1983 CLC 786; PTCL 1983 CL 47; 1987 PCr.LJ 1413; 1987 PCr.LJ 1091; 2004 PCr.LJ 1958; Major Syed Walayat Shah v. Muzaffar Khan and 2 others PLD 1971 SC 184; Omer & Company v. Controller of Customs, (Valuation): (1992 ALD 449 (1) Kar. 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 514; Land Acquisition Collector, Noshehra and others v. Sarfraz Khan and others PLD 2001 SC 514; Pak Suzuki Motor Company Ltd., Karachi v. Collector of Customs Karachi 2006 PTD 2237; 2009 PTD (Trib.) 1996; 2010 PTD (Trib.) 832; Waseem Ahmed and others v. FOP and another 2014 PTD 1733; 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 1992 MLD 180; State Cement v. Collector PTCL 2001 CL 558; Kashmir Sugar v. Collector 1992 SCMR 1898; Sarwar International v. Addl. Collector of Customs 2013 PTD 813; Messrs Paramount International (Pvt.) Ltd., Karachi v. Secretary Revenue Division 2014 PTD 1256; Collector of Customs, MCC, Quetta v. Al-Habib Enterprises and Engineering and others 2019 PTD 1712; Messrs Smith Kline French v. Pakistan 2004 PTD 3020; Messrs World Trade Corporation v. Central Board of Revenue 1989 MLD 4310; 2002 SCMR 312; 2009 PTD 1507; 2005 SCMR 492; 2010 SCMR 431; 1991 PTD 551; 2006 PTD 2190; (1957) 32 ITR 89; (1967) 64 ITR 516; I.T.As. 2400/2401/KB/91-92; (1995) PTD (Trib.) 580; (1995) PTD (Trib.) 1152; (1982) 1381 ITR 742; 1993 PTD 206; 1997 PTD (Trib.) 2209 and 2013 PTD (Trib.) 353 rel.

(c) Jurisdiction---

----No Authority is allowed to act beyond its jurisdiction and all acts or deeds beyond scope of jurisdiction are null and void in the eyes of law.

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 rel.

Nadeem Ahmed Mirza, Consultant for Appellant.

Ayaz Khan, SIO for Respondents.

2021 P T D (Trib.) 449

[Customs Appellate Tribunal]

Before Jehanzaib Wahlah, Member Judicial-III

Messrs H.S. ENTERPRISES and others

Versus

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

Customs Appeals Nos.K-346 to K-744 to K-757, K-758 to K-759, K-760 K-775 of 2019, decided on 15th October, 2019.

Customs Act (IV of 1969)---

----Ss.80, 179 & 206---Correction of errors---Principle---Adjudication order---Revising of findings---Importer was aggrieved of 'Audit Observation / Contravention' report made by authorities regarding goods in question after the same had been cleared under S.80 of Customs Act, 1969---Plea raised by importer was that the authorities adding a new para in Original Adjudicating order and reversed original findings on the plea of 'clerical mistake'--- Validity--- Authorities were only empowered under S.206 of Customs Act, 1969, to correct any 'clerical or arithmetical error' but Additional Collector reversed the conclusion and findings of original Adjudication Order and added a fresh new para into operative part under the garb of S.206 of Customs Act, 1969, as 'clerical omission'--- Such action of authorities did not fall under umbrella of bona fide error for issuance of 'corrigendum' of S.206 of Customs Act, 1969--- Second Order-in-Original passed by authorities was illegal, without lawful authority and jurisdiction--- Adjudicating Officer, under S.179 of Customs Act, 1969, became 'functus officio' once he / she had passed any order, therefore, could not change verdict / conclusion of his / her own order--- Mere naked eye inspection of photo images after clearance of goods, could not be made basis to determine PCT Heading of goods imported, which were made of different design / different material / yarn--- In presence of SAFTA Certificate and assessment finalized by appropriate Assessing Officer under S.80 of Customs Act, 1969, and also keeping in view the practice of assessment of goods in question, there was no substance in 'Audit Observation / Contravention' report of authorities, as the same was based on presumption after clearance of goods--- Customs Appellate Tribunal set aside revised assessment orders passed by authorities after clearance of goods, as the same were passed in arbitrary and capricious manner---Appeal was allowed, in circumstances.

Special Customs Reference Application No.157/2008, S.M. Naqi son of Syed Muhammad Hussain, Karachi v. Collector of Customs (Adjudication-I) and others 2016 PTD 1096; 2018 SCMR 359 and 2018 CLC 1505 and Paramount International's case 2015 PTD 1469 ref.

Ilyas Ahsan, Consultant for Appellant.

Arif Maqbool, AD present for Respondent.

2021 P T D (Trib.) 478

[Customs Appellate Tribunal]

Before Syed Sardar Hussain Shah, Chiarman/Member (Judicial) and Sadiq Member (Technical-I)

SHUMAIL SIKANDER and others

Versus

COLLECTOR OF CUSTOMS and others

Customs Appeal No.K-183 of 2018, decided on 9th July, 2019.

Customs Act (IV of 1969)---

----Ss.2(s) & 16---Import Policy Order, 2016, Para. 5, Appendix A, Regln. 43---Smuggling---Prohibitions and restrictions on importation---Stolen goods---Scope---Appellant was alleged to have imported a stolen vehicle---Validity---Vehicle was originally registered in a foreign country in the name of previous owner---One Pakistani national (subsequent owner), purchased the vehicle from previous owner, shipped the same and sold it to the appellant---Particulars of the vehicle were endorsed by Pakistan Embassy on the passport of subsequent owner and was shipped to Pakistan---Dispute between previous owner or any other person was of civil nature which had no concern with the appellant---Record of prosecution showed that report of vehicle being stolen was made before its shipment and it was not understandable as to how the shipment was allowed when a report was registered---Case of prosecution was doubtful and no one could be penalized on the basis of doubtful evidence---Show cause notice was vacated---Order-in-original was set aside.

Malik Safdar, PO, present for Appellants.

Farukh Saleem, Consultant, Present for Respondents.

2021 P T D (Trib.) 595

[Customs Appellate Tribunal]

Before Syed Sardar Hussain Shah, Member (Judicial)

ZAIN UL RAHMAN and another

Versus

COLLECTOR OF CUSTOMS, MCC, CUSTOM HOUSE, PESHAWAR and 3 others

Customs Appeal No.Cus.94/PB of 2019, decided on 1st July, 2019.

Customs Act (IV of 1969)---

---S.168---Import Policy Order, 2016, Appendix C, Sr. 10 & Appendix E, Para. 2---Seizure of goods liable to confiscation---Items not importable in used/second hand condition---Import of vehicles by overseas Pakistanis---Scope---Department seized the caravan imported by appellant for being imported in violation of Serial No. 10 of Appendix C of Import Policy Order, 2016 i.e. being used/second hand---Validity---Appellant being an overseas Pakistani was entitled to import a vehicle not more than 5 years old in terms of Para 2 of Appendix E of Import Policy Order, 2016---Embargo provided under Appendix C could not be implemented in case of overseas Pakistanis---Importability of vehicles by overseas Pakistanis fell under Appendix E of the Import Policy Order, 2016---Appeal was allowed and the order-in-original was set aside.

Amir Bilal for Appellant.

Mir Zaman, Superintendent Customs for Respondents.

2021 P T D (Trib.) 616

[Customs Appellate Tribunal]

Before Jahanzaib Wahlah, Member Judicial-III

Messrs M.I. TRADERS, LAHORE

Versus

The APPRAISER, GROUP-I, MCC OF APPRAISEMENT-EAST, CUSTOM HOUSE, KARACHI and 2 others

Customs Appeal No.K-1505 of 2018, decided on 12th December, 2019.

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

----S.80---Customs Rules, 2001, R.438---Clearance of goods---Effect---Lawful imported / cleared consignments after payment of leviable duty and taxes on the strength of assessment order passed by authority under S.80 of Customs Act, 1969, cannot be detained under any pretext by any officer of customs.

Muhammad Ali v FOP 2013 PTD 628 and Amir Siddiqui v. Federation of Pakistan and 3 others 2014 PTD 582 rel.

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

----Ss.2(a), 26(2), 80, 83 & 193---Customs Rules, 2001, Rr. 438 & 442---Sales Tax Act (VII of 1990), S. 25--- Income Tax Ordinance (XLIX of 2001), S.177---Notification SRO No.371(I)/2002, dated 15-6-2002--- Clearance of goods--- Sales tax and income tax, recovery of--- Despite payment of all duties and taxes levied by authorities, goods in question were not released by Customs Authorities---Validity--- Condition of audit post clearance of Goods Declaration of importer under S.26(2) of Customs Act, 1969, S.25 of Sales Tax Act, 1990 and S.177 of Income Tax Ordinance, 2001, by Assessing authorities for determination of short levied / collected amount of Sales Tax, Additional Sales and Income Tax on imported goods was without lawful authority / jurisdiction--- Such act of authorities was ab-initio null and void and was coarm non judice--- Superstructure built upon such order had to crumble down no matter how strong it was--- Consignment in question had undergone process of passing assessment order under the provision of S.80 of Customs Act, 1969 and R.438 of Customs Rules, 2001, for levy of duty and taxes, which were paid and thereafter valid clearance order as contemplated in S.83 of Customs Act, 1969 and R.442 of Customs Rules, 2001, was passed by competent authority in exercise of powers vested upon him through SRO No.371(I)/2002, dated 15-6-2002--- Such order was appealable order and could not be disturbed by any other authority including Principal Appraiser, with the exception of preferring an appeal under the provision of S.193 of Customs Act, 1969--- No appeal was field either by authorities despite mandated under law, instead the Assessing authorities assumed powers under S.195 and reopened valid assessment / clearance order passed under the provisions of Ss.80 & 83 of Customs Act, 1969, and Rr.438 & 442 of Customs Rules, 2001--- Assessing authorities were not empowered to reopen valid assessment order passed by authority defined in S.2(a) of Customs Act, 1969, in exercise of powers vested upon him through S.R.O. No.371(I)/2002, dated 15-6-2002--- Assessing authorities acted without power/jurisdiction and their action was without any lawful authority and as such ab initio, null and void--- Customs Appellate Tribunal set aside reassessment order passed by authorities which was ab initio null and void and order of initial assessment was maintained---Appeal was allowed, in circumstances.

(1974) 94 ITR-1; 1980 PLC (C.S.) 350; 1982 PLC (C.S.) 757; 1986 CLC 745; (1984) 146 ITR 140; (1985) 53 Taxation-1 (Trib.); 1986 CLC 1119; 1986 CLC 1408; 1991 MLD 1243; PLD 1992 SC 317; 1993 SCMR 662; PLD 1996 Kar. 68; 1986 PLC (C.S.) 560; 2003 PTD 2118; Messrs Paramount International (Pvt.) Ltd. v. FOP and others 2014 PTD 1256; 2002 SCMR 312; 2009 PTD 1507; 2005 SCMR 492; 2010 SCMR 431; Messrs Radhika Corporation and others v. Collector of Customs and others 1989 SCMR 353; 2002 PTD 2457; PLD 1971 SC 61; PLD 1973 SC 236; E.A. Avan's 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)---

----S.205---Declared value of goods--- Amendment--- Principle--- No amendment under S.205 of Customs Act, 1969, is allowed in the columns of declared value, quantity or description after removal of the goods from customs area for home consumption.

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

----S.32(3)---Re-assessment---Procedure---Re-assessment order in any shape / manner by all means falls within the definition of demand notice for recovery of short paid amount of duty and taxes due to commission of inadvertence by officials of Clearance Collectorate--- Such type of recovery can only be created upon passing an order after issuance of show-cause notice under S.32(3) of Customs Act, 1969.

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.

Nadeem Ahmed Mirza, Consultant for Appellant.

Asif, A.O. for Respondent No.1 and Nemo. for Respondent No.2.

2021 P T D (Trib.) 673

[Customs Appellate Tribunal]

Before Jahanzaib Wahlah, Member Judicial-III

Messrs IMPORIANT TRADER, LAHORE

Versus

AUDITOR, DIRECTORATE GENERAL OF PCA, KARACHI and 3 others

Custom Appeal No.K-607 of 2019, decided on 17th December, 2019.

(a) Limitation---

----Void order---Scope---Statute of limitation does not run against void judgments and orders.

Rehmat Bibi and others v. Punno Khan and others 1986 SCMR 962; Syed Haji Abdul Wahid and another v. Syed Sirajuddin 1996 SCMR 2296 and Ali Muhammad v. Hussain Bux and another PLD 1976 SC 37 rel.

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

----Ss. 2(a), 26(2), 26A, 83, 179,193, 193A & 205---Customs Rules, 2001, Rr.438 & 442---Notification SRO No.371(I)/2002, dated 15-6-2002---Clearance of goods---Audit, conducting of---Re-assessment---Non-issuance of notice---Despite payment of all duties and taxes levied by authorities, goods in question were not released by Customs Authorities---Validity---Auditor was empowered to conduct audit of record under the provision of S.26(2) of Customs Act, 1969, but after serving notice or summons as contemplated in S.26A (a) of Customs Act, 1969--- No mandated notice or summons was served upon importer rendering purported audit and observation so conducted in derogation of law--- Re-assessment / adjudication order under S.80 of Customs Act, 1969 and R. 438 of Customs Rules, 2001, rested with Principal Appraiser under SRO No.371(I)/2002, dated 15-6-2002 and Auditor figured nowhere in the provision of S.179 of Customs Act, 1969---No appeal was filed either by authorities despite mandated under law, instead the Assessing authorities assumed powers under S.195 and reopened valid assessment / clearance order passed under the provisions of Ss. 80 & 83 of Customs Act, 1969, and Rr. 438 & 442 of Customs Rules, 2001---Assessing authorities were not empowered to reopen valid assessment order passed by authority defined in S.2(a) of Customs Act, 1969, in exercise of powers vested upon him through S.R.O. No.371(I)/2002, dated 15-6-2002---Assessing authorities acted without power/jurisdiction and their action was without any lawful authority and as such ab initio, null and void---No amendment under S.205 of Customs Act, 1969, was allowed in the column of declared value, quantity or description after removal of goods from Customs area or Customs Reference number was allotted to goods declared electronically---Customs Appellate Tribunal set aside re-assessment order passed by Auditor as well as Appellate Authority as the same suffered from grave legal infirmities and were null and void---Appeal was allowed in circumstances.

(1974) 94 ITR 1; 1980 PLC (C.S.) 350; 1982 PLC (C.S.) 757; 1986 CLC 745; (1984) 146 ITR 140; (1985) 53 Taxation-1 (Trib.); 1986 CLC 1119; 1986 CLC 1408; 1991 MLD 1243; PLD 1992 SC 317; 1993 SCMR 662; PLD 1996 Kar. 68; 1986 PLC (C.S.) 560; 2003 PTD 2118; FOP v. Metropolitan Steel Corporation 2002 PTD 87; 2010 PTD (Trib.) 1636; 2002 PTD 2457; PLD 1971 SC 61; PLD 1973 SC 236; E.A. Avan's case 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; Major Syed Walayat Shah v. Muzaffar Khan and 2 others PLD 1971 SC 184; Omer & Company v. Controller of Customs, (Valuation): 1992 ALD 449(1); 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 514; Land Acquisition Collector, Noshehra and others v. Sarfraz Khan and others PLD 2001 SC 514; Pak Suzuki Motors Company Ltd., Karachi v. Collector of Customs, Karachi 2006 PTD 2237; 2009 PTD (Trib) 1996; 2010 PTD (Trib.) 832; Messrs Paramount International (Pvt.) Ltd. v. FOP and others 2014 PTD 1256; Collector of Customs and other's case CPLA No.105-K of 2014; Collector of Customs MCC, Quetta v. Al-Habib Enterprises and Engineering and others 2019 PTD 1712; Forte Pakistan (Pvt.) Ltd. Karachi v. The Director General of Intelligence and Investigation (Customs and Excise), Karachi and another 2006 PTD 978; The State v. Zia-ur-Rehman and others PLD 1973 SC 49; 2009 PTD 1083; PLD 1963 SC 663; 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 1112; 2010 PTD 465; 2011 PTD (Trib.) 2114; 2011 PTD (Trib.) 2557; 1991 PTD 551; 2006 PTD 2190; The Assistant Director Intelligence and Investigation v. B.R Herman Mohattas (Pvt.) Ltd., Karachi PLD 1992 SC 485; (1957) 32 ITR 89; (1967) 64 ITR 516; I.T.As. 2400/2401/KB/91-92; (1995) RID (Trib.) 580; 1995 PTD (Trib.) 1152; (1982) 1381 ITR 742; 1993 PTD 206; 1997 PTD (Trib.) 2209 and 2013 PTD (Trib.) 353 ref.

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

----S.80(3)---Re-assessment---Principle---Re-assessment under S.80(3) of Customs Act, 1969, can be made after release of goods if declaration or documents or any information or statement so furnished is found to be incorrect in respect of earlier assessment---In absence of availability of any mis-declaration, mis-statement, false documents /statement, re-assessment is not permitted.

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

----Ss.179 & 180---Appealable order---Reassessment---Principle---In presence of an appealable order, fresh order cannot be passed even through issuance of show-cause notice under S.180 of Customs Act, 1969.

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

Nadeem Ahmed Mirza, Consultant for Appellant.

Muhammad Ali, AO for Respondent No.1.

Maqsood Ahmed, Appraiser for Respondent No.2.

2021 P T D (Trib.) 777

[Customs Appellate Tribunal]

Before Jahanzaib Wahlah, Member Judicial-III

COLLECTOR OF CUSTOMS MCC OF PMBQ, KARACHI

Versus

M.M. TRADERS, KARACHI and another

Customs Appeal No.K-785 of 2015, decided on 10th October, 2019.

Customs Act (IV of 1969)---

----Ss. 25 & 25A--- Customs Rules, 2001, R.433---Qanun-e-Shahadat (10 of 1984), Arts.117 & 121---Constitution of Pakistan, Art. 13---Packing material---Valuation of goods and category of goods---Charging of customs duty---Onus to prove---Assessing Authority also levied duty upon the importer for the weight of packing material of goods imported---Order passed by Assessing Authority was set aside by Appellate Authority---Validity---No provision of Customs Act, 1969, empowered Collector Customs and subordinates to include weight of essential / non-essential packing, as the vital element as its cost and not weight and the same was validated from the provision of S.25 of Customs Act, 1969, which spoke about determination of 'value of goods' and 'category of goods'---While provision of S.25A of Customs Act, 1969, spoke about 'goods' and 'class of goods' which meant the goods so imported and its quantity excluding weight of essential / non-essential packing, which was not for use instead 'trash' and the same could not be used as goods so imported---Cost of packing whether for labour or essential / non-essential packing material was not included by exporter, rested on the shoulders of Collector of Customs and subordinates in terms of Arts.117 & 121 of Qanun-e-Shahadat, 1984, unless it was not proved through tangible evidence, the cost whether for labour or essential / non-essential packing material was not permitted to be added under law---In terms of respective PCT Heading of First Schedule to Customs Act, 1969, duty and taxes could only be recovered on the net contents of imported goods---Essential / non-essential packing could not be construed as goods by any mean and as defined in S.25 and First Schedule to Customs Act, 1969, without supplying the goods equivalent to included weight, in addition to imported goods declared in Goods Declaration transmitted under the provision of S.79(1) of Customs Act, 1969, and R.433 of Customs Rules, 2001--- Collector Customs and his subordinates desired to collect duty and taxes on the weight of essential / non-essential packing without supplying of actual goods imported, such type of generation of revenue was in derogation of the provision of S.25 of Customs Act, 1969 and Art.13 of the Constitution and without any exception was 'extortion' and to be construed as double taxation not permitted under Customs Act, 1969 and the Constitution---Customs Appellate Tribunal declined to interfere in order passed by Appellate Authority---Appeal was dismissed, in circumstances.

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

Iqbal Kalyer, A.O. for Appellant.

Nadeem Ahmed Mirza, Consultant for Respondent No.1.

2021 P T D (Trib.) 863

[Customs Appellate Tribunal]

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

ZARI GUL and another

Versus

COLLECTOR CUSTOMS, M.C.C., PESHAWAR and 2 others

Customs Appeal No.223/PB of 2017, decided on 11th March, 2019.

Customs Act (IV of 1969)---

----Ss.2(s), 16, 156(1)(8)(89) & 168---Imports and Exports (Control) Act (XXXIX of 1950), S. 3---Smuggling---Seizure of things liable to confiscation---Burden of proof---Prohibition or restriction on importation and exportation of goods---Scope---Frontier Corps authorities recovered Pakistan and Afghan currency from the possession of appellants when they were coming from Afghanistan to Pakistan---Collector of Customs (Adjudication), after issuance of show-cause notice, confiscated the recovered currency and vehicle used in its transportation---Validity---Seizing agency did not produce Passport, Visa or itinerary to show that appellants were travelling from Afghanistan to Pakistan or otherwise---Appellants produced proper sale agreements in which they sold two vehicles, one for Rs. 5.2 million and the other for Rs.5.1 million---Appellants produced another document prepared by Union Council Nazim to the effect that the forefathers of appellants were engaged in transportation business such as transportation of goods, selling and purchasing of vehicles and managing various bus stops in different parts of the province---"Smuggling" meant to bring in or take out of Pakistan, but in the present case there was nothing to suggest that the appellants were bringing in Pakistan Afghan currency---Amount and vehicles were seized inside Pakistan territory on a busy road which was more than 80 km away from international border---Frontier Constabulary authorities were not authorized to seize or search on the said road---No person could be deprived of his property without due course of law---Mere possession of said foreign currency or Pakistan currency within the jurisdiction of Pakistan was no offence---Appellate Tribunal set aside the order passed by Collector of Customs (Adjudication); directed the authorities to release the amount of seized currency and the vehicles unconditionally to the appellants on production of proper documents---Appeal was disposed of, accordingly.

Gulab Shah Afridi for Appellant.

Alhaj Gul, Superintendent/D.R. for Respondents.

2021 P T D (Trib.) 1020

[Customs Appellate Tribunal]

Before Syed Sardar Hussain Shah, Chairman/Member (Judicial) and Dr. Zulfiqar A. Malik, Member (Technical-I)

Messrs STANDARD ENTERPRISES (PRIVATE) LIMITED and others

Versus

The COLLECTOR OF CUSTOMS and 4 others

Customs Appeals Nos.K-07 to K-09, K-19, K-584 of 2017, K-2278, K-2238, K-2203, K-837, K-2148, K-2309 and K-2189 of 2016, decided on 22nd May, 2019.

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

----Ss.25, 25A & 26---Value of imported and exported goods---Determination of customs value---Transaction value---Conduct of audit---Scope---Directorate General of Post Clearance Audit in pursuance of an information that group under invoicing was being carried out by the importers, investigated the matter and while taking into consideration the information available on the official website of exporter's country, concluded that the export price of the goods were much higher than those declared to the department---Validity---Goods of appellants were not self-assessed goods under S.79 of Customs Act, 1969 but were released after passing of assessment orders on the basis of valuation ruling determined by the Directorate General of Valuation under S. 25A, Customs Act, 1969 as the goods on which valuation ruling was applicable could never be auto-cleared by Web Based One Customs (WeBOC) module by virtue of having no programming---No legal sanctity was attached to the information available on the official website of the exporter's country---Section 25A, Customs Act, 1969 opened with non-obstante clause which meant that it overrode the provisions of S.25, Customs Act, 1969---Charge of mis-declaration could only be levelled on the basis of direct evidence, namely evidential invoice of the same country---Appellate Tribunal allowed the appeals and set aside the orders passed by the department.

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

----Ss.25 & 25A---Value of imported and exported goods---Determination of customs value---Transaction value---Scope---Transaction value is the value which has actually been paid or is payable in terms of S.25 of Customs Act, 1969, required for computation of Customs Duty and other taxes.

Abdul Latif Chandio for Appellants (in C.As. Nos.2309/2016, 2148/2016, 2189/2016, 2238/2016, 2203/2016, 07/2017 to 09/2017, 19/2017 and 584 of 2017) and Fawad Haider Janjua for Respondent (in C.A. No.2278/2016) present for Appellants.

Arif Maqbool, A.D, Farhan Mehdi and Bilal, A.O. present for Respondents.

2021 P T D (Trib.) 1062

[Customs Appellate Tribunal]

Before Jahanzaib Wahlah, Member Judicial-III

Messrs ZAHID MAJEED CORPORATION, KARACHI and another

Versus

The DEPUTY COLLECTOR, GROUP-VI, MCC OF APPRAISEMENT-EAST CUSTOMS HOUSE, KARACHI and another

Custom Appeals Nos.K-77, K-78 and K-79 of 2019, decided on 23rd November, 2019.

(a) Appeal---

----Merger---When an order is challenged before higher forum, the order becomes wide open and least remain in field for any purpose, application of that is no exception as per theory of merger.

CBR v. Chanda Motors 1993 SCMR 39 and Ghulam Nabi v. FOP 2013 PTD 581 rel.

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

----Ss.80 & 81(5)---General Clauses Act (X of 1897), S.24A---Declared value, acceptance of---Provisional assessment---Limitation---Speaking order---Goods were released on the basis of provisional assessment made on declared value---Subsequently on the basis of final assessment, the authorities asked the importer to deposit extra duties---Validity---Assessment order under S.81(2) of Customs Act, 1969, was to be passed prior to expiry of period 6 months from the date of provisional assessment---Assessment order passed was barred by limitation by 62 days and was without power / jurisdiction and not enforceable under law---Declared value of importer stood final under S.81(4) of Customs Act, 1969--- Principle that every judicial or quasi-judicial finding should be based on reasons containing justification for finding in order itself was an established principle of dispensation of justice---Order in appeal was in violation of basic principle of good governance and mandatory requirement of S.24A of General Clauses Act, 1897---Customs Appellate Tribunal set aside the order as the same was not only illegal and void but also not sustainable under law--- Appeal was allowed in circumstances.

Sadia Jabbar v. Federation of Pakistan and others 2018 PTD 1746; 2016 PTD 702; 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 & 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 and 2 others 2009 PTD (Trib.) 1263; Leo Enterprises v. President of Pakistan and others 2009 PTD 1978; Innovative Impex v. Collector of Customs, Sales Tax and Federal Excise (Appeal) 2010 PTD (Trib.) 1010; Fazal Ellahi v Additional Collector of Customs, MCC of PaCCS 2011 PTD (Trib.) 79; Unique Wire Industries v. Additional Collector of Customs, MCC of PaCCS 2011 PTD (Trib.) 987; Kaka Traders v. Additional Collector of Post Clearance Audit 2011 PTD (Trib.) 1146; Pak Electron Ltd. v. Collector of Customs, Lahore and others 2012 PTD (Trib.) 1650; Messrs AFU International v. The Director General Valuation and another 2016 PTD (Trib.) 1305; Central Insurance Co. v. Central Board of Revenue 1993 SCMR 1232; Government of Khyber Pakhtunkhwa and others v. Lucky Cement 2019 SCMR 46; Superior Textile Mills Ltd. v. Federation of Pakistan 2000 PTD 399; Messrs Arjun Salt Chemical v. UC Gharo 1982 SCMR 522 and Messrs Sky Overseas v. Federation of Pakistan 2019 PTD 1964 ref.

Trade International v. Deputy Collector of Customs 2005 PTD 1968; S. Fazal Ellahi & Sons v. Deputy Collector of Customs and others 2007 PTD 2119; Clover Pakistan Ltd. v. FOP and others 2008 PTD 1587; Collector of Customs, MCC of Appraisement v. Pak Arab Refinery 2010 PTD 900; Sus Motors (Pvt.) Ltd. v. FOP 2011 PTD 235; Messrs Crescent Art Fabric v. Assistant Collector and Customs and 4 others 2011 PTD 2851; Dewaan Farooq Motors Ltd., Karachi v. Customs Excise and Sales Tax Appellate Tribunal 2006 PTD 1276; Collector of Customs (Appraisement) v. Auto Mobile Corporation of Pakistan 2005 PTD 2116; Messrs Farooq Woolen Mills, Gujranwala v. Collector of Customs, Dry Port, Sambrial and others 2004 PTD 795; Dawlance Electronic (Pvt.) Ltd. v. Collector of Customs, Karachi 2012 PTD 980; Salman Tin Merchant v. Collector of Customs, Karachi 2014 PTD 438; 2005 YLR 1019; 2007 PTD 2500; 2004 PTD 1973; 2005 YLR 1719; 2003 PTD 777; 2003 PTD (Trib) 2369; 2002 MLD 357; 1983 CLC 2882; 2005 PTD 2519; 2005 PTD 1189; 2003 PTD 2369; PLD 1995 SC (Pak) 272; PLD 1970 SC 158; PLD 1970 SC 173; 1984 SCMR 1014; 2012 PTD (Trib.) 619 and 2016 PTD 589 rel.

Nadeem Ahmed Mirza, Consultant for Appellants.

Ilyas Gichki, A.O. for Respondents.

2021 P T D (Trib.) 1105

[Customs Appellate Tribunal]

Before Jahanzaib Wahlah, Member Judicial-III

Messrs NAFEES TRADERS, PESHAWAR

Versus

The ADDITIONAL COLLECTOR-II, MCC APPRAISEMENT WEST, KARACHI and another

Custom Appeal No. K-1144 of 2019, decided on 27th January, 2020.

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

----S.15---Trade Marks Ordinance (XIX of 2001), S.5---Intellectual Property Organization of Pakistan Act (XXII of 2012), S.13---Prohibition on importation and exportation of goods having counterfeit trade mark---Decision by tribunal regarding use of a trade mark---Powers and functions of the Intellectual Property Organization of Pakistan---Scope---Department, while acting under S.15(c) of Customs Act, 1969, confiscated the "TONOSHEBA" battery cells imported by appellant being deceptively similar to "TOSHIBA"---Validity---Both the brands were different visually as well as phonetically as such did not fall under S.5 of the Trade Marks Ordinance, 2001---Goods were detained without getting any clarification about the infringement from the competent authority which was in violation of S.13 of Intellectual Property Organization of Pakistan Act, 2012---Impugned orders were set aside and the appeal was allowed.

(b) Administration of justice---

----If a particular thing is required to be done in a particular manner, it must be done in that manner, otherwise it should not be done at all.

Ghulam Yasin, Consultant for Appellant.

Sajjad Ali, AO for Respondents.

2021 P T D (Trib.) 1162

[Customs Appellate Tribunal]

Before Jahanzaib Wahlah, Member Judicial III

Messrs IHSAN & SONS, KARACHI

Versus

The PRINCIPAL APPRAISER (R&D) MCC, APPRAISEMENT (EAST) CUSTOM HOUSE, KARACHI and 2 others

Custom Appeals Nos.K-1533 and K-1534 of 2018, decided on 5th October, 2019.

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

----S.179---Power of adjudication--- Exercise of power---Principle---Authority defined in S.179 of Customs Act, 1969, has to exercise the powers---Neither superior nor subordinate is empowered to assume powers of his superior or subordinates, unless Federal Board of Revenue is desirous of fixing or varying jurisdiction and powers of any officer of customs or a class of officers through a notification in official gazette as per expression of S.179(2) of Customs Act, 1969, assign or transfer any case to any officer of customs, irrespective of designation or territorial jurisdiction.

Dr. Seema Irfan and 5 others v. Federation of Pakistan through Secretary and 2 others 2009 PTD 1678 rel.

(b) Tort---

----Abuse of process---Scope---Abuse of process is a tort comprised of two elements: (i) an ulterior purpose and (ii) a wilful act in the use of process not proper in regular conduct of proceeding---Abuse of process is malicious misuse or misapplication of process in order to accomplish an ulterior purpose---Such tort remains improper use of process after it was issued.

DeNardo v. Maassen 200 P.3D 305 (Supreme Court of Alaska, 2009); Mc Cornell v. City of Jackson 489 F.Supp.2D 605 (United States District Court, Mississippi, 2006); Montemayor v. Ortiz 208 SW 3d 627 Court of Appeal of Taxes at Corpus Christi- Edenburg. 2006; Reiz v. Walker, 491 F.3d 868 (United States Courts of Appeals 2007); Sipcas v. Vaz, 50AD 3d 878 (Appellate Division of the Supreme Court of the State of New York 2008) and Manufacturing Co., v. Holt, 51W.Va.352,41 S.E.351. rel.

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

----Ss.32(2)(3), 79, 80, 83, 179 & 193---Customs Rules, 2001, Rr. 433, 438 & 442---Constitution of Pakistan, Arts.4, 18 & 25---Notification No.SRO 371(I)/2002 dated 15-6-2002, Serial No.3 (ii)---Re-assessment---Mis-declaration---Proof---Assessing Officer instead of accepting Goods Declaration preferred to inspect the goods and found them as per Declaration---Principal Appraiser re-examined the goods and imposed additional duty and taxes on the plea of mis-declaration---Additional Collector Customs (Adjudication) passed an order to confiscate the goods subject to redemption on payment of 20% fine---Validity---Consignment which had undergone process of passing assessment order under the provision of S.80 of Customs Act, 1969, and R.438 of Customs Rules, 2001 for levy of duty and taxes by competent authority in exercise of powers vested upon him through notification SRO No.371(I)/2002, dated 15-6-2002---Such order was appealable order and could not be disturbed by any other authority including Principal Appraiser of the Group and Additional Collector Customs (Adjudication), with the exception of preferring an appeal under the provision of S.193 of Customs Act, 1969---No mis-declaration in material particular existed in regard to description, quantity, origin and weight of goods in question---Provisions of S.32(2) nor (3) of Customs Act, 1969, were not applicable---Case at the most could be termed as error, omission or misconstruction, committed / done by customs officers falling under the provision of S.32(3) of Customs Act, 1969---Show-cause notice could be issued by Principal Appraiser only as notified in Serial No.3 (ii) of notification S.R.O. No.371(I)/2002, dated 15-6-2002 and none else---Assessing Officer wrongly created recovery / demand through re-assessment order on the direction of Principal Appraiser and Additional Collector Customs (Adjudication) passed order by usurping powers of his subordinate which was not permitted under the law---Goods of same description and under the same PTC heading and value were cleared even after framing contravention report as against the consignment in question--- By giving differential treatment to importer the authorities acted in derogation of Arts. 4, 18 & 25 of the Constitution---Customs Appellate Tribunal did not endorse the earlier assessment order and set aside the orders passed by Principal Appraiser and Additional Collector Customs (Adjudication)---Description of any goods could not be stretched other actual description, only for the purpose of squeezing duty and taxes despite not leviable---Appeal was allowed in circumstances.

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

The State v. Zia-ur-Rehman and others PLD 1973 SC 49; 2009 PTD 1083; PLD 1963 SC 663; 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; PLD 2014 SC 514; Edulji Dinshaw Ltd. v. Income Tax Officer PLD 1990 399; Abbasi Steel Industries Ltd. v. Collector of Customs 1989 CLC 1463; Messrs Fazal Ellahi v. Additional Collector of Customs 2011 PTD (Trib.) 79; 1993 SCMR 274; 2005 SCMR 728; 2007 PTD 1656; 2008 PTD 1227 and 2004 PTD 901 rel.

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

----Ss.80(2)(3) & 83---Re-assessment---Principle---Re-assessment under S.80(3) of Customs Act, 1969, is permitted only after calling for documents as contemplated in S.80 (2) of Customs Act, 1969, after clearance of goods in terms of S.83 of Customs Act, 1969, and R.442 of Customs Rules, 2001---After examination, if declaration transmitted and uploaded documents at the time of transmitting Goods Declaration under S.79(1) and R.433 of Customs Rules, 2001 or any information or statement so furnished by importer is found to be incorrect in respect of earlier assessment---In absence of availability of such ingredients, reassessment is not permitted.

Nadeem Ahmed Mirza, Consultant for Appellant.

Waqas Ishtiaq, A.O. for Respondents.

2021 P T D (Trib.) 1259

[Customs Appellate Tribunal]

Before Jahanzaib Wahlah, Member Judicial-III

Messrs AHMED ENTERPRISES and others

Versus

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

Customs Appeals Nos.K-925, K-1040 to K-1046, K-1049, K-1050, K-1057, K-1059 to K-1061, K-1047, K-1048 and K-1058 of 2019, decided on 18th December, 2019.

­­­­Customs Act (IV of 1969)---

----S.32---SRO No.1274(I)/2006, dated, 29-12-2006---Mis-declaration---Scope---Directorate General of Post Clearance Audit alleged that the goods imported by the appellants were classifiable under PCT Heading 5804.2100 instead of PCT Heading 5804.2900 and that according to examination report and images the imported "Laces" looked to be "man-made fibre" instead of declared "Assorted Design Multicolour Laces", hence, the benefit of SRO No.1274(I)/2006 was incorrectly obtained by the appellants---Department accordingly raised a demand of evaded amount of duty---Crux of appellants' arguments was that the constituent material of the imported "Laces" could not be ascertained just on the basis of naked-eye inspection unless the samples were thoroughly inspected/checked and such checking included Laboratory test---Validity---Mere naked-eye inspection of the photo images after clearance of the goods could not be made basis to determine the PCT Heading of the "Laces" in the presence of certificate as required by the Customs authorities while allowing concession/exemption in terms of the said SRO and the assessments finalized by the assessing officers---Audit observation was declared to have been based on presumption---Appeals were allowed.

Ilyas Ahsan Khan, Consultant for Appellants.

Arif Maqbool, AD for Respondents.

2021 P T D (Trib.) 1289

[Customs Appellate Tribunal]

Before Syed Sardar Hussain Shah, Member (Judicial)

Messrs MEDILINE TECHNOLOGY, PESHAWAR

Versus

DEPUTY DIRECTOR OF CUSTOMS (INTELLIGENCE AND INVESTIGATION), FBR, PESHAWAR and 2 others

Customs Appeal No.05/PB of 2018, decided on 15th March, 2019.

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

----Ss.32, 79, 83, 168, 171 & 156(1)(14)---Qanun-e-Shahadat (10 of 1984), Art. 78-A---Customs Rules, 2001, R. 108---SRO No.450(I)/2001 dated: 18.06.2001---SRO No.499(I)/2009 dated 13.06.2009---Mis-declaration---Clearance of goods---Seizure liable to confiscation---Reasons to be given in writing in case of seizure---Proof of electronic document---Scope---Appellant imported Hair Reduction Laser Machine and filed goods declaration---Customs authorities examined, assessed, cleared and released the consignment of importer---Directorate General of Intelligence and Investigation intercepted the consignment at the out gate and seized it for further scrutiny and examination---Importer was charged for mis-declaration and using fake invoice for clearance of consignment---Previous consignments imported by the importer were also re-assessed at enhanced rate---Directorate General of Intelligence and Investigation contended that it had forwarded an email to the exporter of consignment to verify the genuineness of invoice---Exporter informed that invoice furnished to Customs was not authentic---Collector of Customs ordered for recovery of short paid duty/taxes and imposed personal penalty on appellant---Validity---Customs authorities had assumed higher rate on the basis of an electronic mail wherein the goods were shown on higher rate---Said electronic letter had not been signed by any person neither was same attested as a true copy of the original as per Art. 78-A of Qanun-e-Shahadat, 1984---Appellate Tribunal set aside the order passed by Collector of Customs and allowed the appeal.

The Collector of Customs of Central Excise and Land Customs, West Zone, Chittagong v. Imdad Ali 1969 SCMR 708; Collector of Customs v. Messrs China National Water Resources and Hydropower Engineering, Karachi 2010 PTD 343 and Messrs Shahzad Ahmad v. Federation of Pakistan 2005 PTD 23 rel.

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

----Ss.3-E, 4 & 168---S.R.O. No. 486(I)/2007, dated 9-6-2007---Jurisdiction of Directorate General of Intelligence and Investigation to seize any consignment---Scope---Federal Board of Revenue (Board) has the power to specify the functions, jurisdiction and powers of Directorate---Board while exercising its power under Ss. 3E & 4, Customs Act, 1969 can empower/authorize the officer of Directorate General of Intelligence and Investigation to exercise powers and discharge duties of the officers of Customs and to invoke all the relevant provisions of Customs Act, 1969 and rules made thereunder.

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

----Ss. 2(b), 32, 79, 83, 168, 171 & 156(1)(14)---Customs Rules, 2001, R. 108---SRO No.450(I)/2001 dated 18.06.2001---SRO No.499(I)/2009 dated 13.06.2009---SRO No.371(I)/2002 dated 15.06.2002---Mis-declaration---Clearance of goods---Seizure liable to confiscation---Reasons to be given in writing in case of seizure---Jurisdiction of Directorate General of Intelligence and Investigation to seize any consignment---Scope---Appellant imported Hair Reduction Laser Machine and filed goods declaration---Customs authorities examined, assessed, cleared and released the consignment of appellant---Directorate General of Intelligence and Investigation intercepted the consignment at the out gate and seized it for further scrutiny and examination---Validity---Contravention report against appellant was prepared under Ss. 32(1)(2) & 79(1) of Customs Act, 1969 read with R.108 of Customs Rules, 2001, punishable under Cl. (14) of subsection (1) of S.156, Customs Act, 1969 read with SRO No.499(I)/2009 dated: 13.06.2009---Directorate General of Intelligence and Investigation after processing and clearance of goods from customs authorities had seized and E-blocked the goods---Seizure report was registered under S.168 of Customs Act, 1969---Section 168, Customs Act, 1969 authorized the appropriate officer to seize any goods liable to confiscation---Section 2(b) of Customs Act, 1969 defined the appropriate officer to whom such functions had been assigned---SRO No. 371(I)/2002 dated 15.06.2002 assigned the functions of the appropriate officer, referred to in various provisions of Customs Act, 1969---Serial No. 88 of SRO No.371(I)/2002 dated 15-6-2002 showed that appropriate officer under S.168 of Customs Act, 1969 was an Inspector/Preventive Officer/Examiner---Directorate General of Intelligence and Investigation, therefore, had acted in gross violation of the law and seized the goods which were out of charge after due examination by appraisement staff, who were appropriate officers under Customs Act, 1969---Directorate General of Intelligence and Investigation overstepped the jurisdiction vested in an "appropriate officer" as it was not an "appropriate officer" for the purpose of Ss. 168 & 32 of Customs Act, 1969---Appellate Tribunal set aside the order passed by customs authorities and allowed the appeal.

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

----Ss.168, 171, 26A, 32, 32A, 32B, 80 & 83---SRO No. 500(I)/2009 dated 13.06.2009---Post-clearance audit---Mis-declaration--- Seizure liable to confiscation---Reasons to be given in writing in case of seizure---Jurisdiction of Directorate General of Intelligence and Investigation to seize any consignment---Scope--- Appellant imported Hair Reduction Laser Machine and filed goods declaration---Customs authorities examined, assessed, cleared and released the consignment of importer---Directorate General of Intelligence and Investigation intercepted the consignment at the out gate and seized same for further scrutiny and examination---Validity---Section 168 of Customs Act, 1969 authorized the "appropriate officer" to seize any goods liable to confiscation without determining the fact that whether goods were liable to confiscation or otherwise---Directorate General of Intelligence and Investigation, after seizure, inquired, investigated and thereafter reassessed the goods---Relevant provision of law for re-investigation and inquiry was S. 26A, Customs Act, 1969 and "Appropriate officer" for conducting an inquiry of post clearance audit under the provisions of Ss.32, 32A & 32B was Director General as per SRO No. 500(I)/2009 dated: 13.06.2009---Sections 168 & 171 provided protection to the citizens against high-handedness and any arbitrary act on the part of tax officials---Condition precedent for seizure of goods under S.168 read with S.171 was that before seizure of goods the appropriate officer should record reasons in writing as to why the goods were liable to confiscation---Use of the expression that the officer or other person making such seizure was required to inform in writing the grounds of seizure was indicative of the fact that the opinion should not be generalized and vague---Specified grounds must be available before forming an opinion that the goods were liable to confiscation, failing which the initiation of proceedings would be violative of the statutory provisions and liable to be struck off---Law had not empowered the customs officials to seize the goods without reasonable grounds and without their communication to the person concerned and thereafter hold a roving and fishing inquiry for the purpose of creating grounds for the seizure of goods---Reasons/grounds for seizure of goods should precede or at least coincide with the seizure of goods and should not be a result of fishing and roving inquiry after the seizure---If the seizure was made under S.168, the grounds recorded in writing must contain the reasons as to why the goods were liable to confiscation which, in the present case, lacked---Appellate Tribunal set aside the order passed by Customs authorities and allowed the appeal.

Shaukat Ali Qureshi for Appellant.

Abbas Bakhtiar along with Mussawir Ali Shah, I.O./D.R. for Respondents.

2021 P T D (Trib.) 1401

[Customs Appellate Tribunal]

Before Jahanzaib Wahlah, Member Judicial-III

Messrs IHSAN & SONS, KARACHI

Versus

The PRINCIPAL APPRAISER (R&D) MCC, (APPRAISEMENT-EAST), CUSTOMS HOUSE, KARACHI and 2 others

Customs Appeal No.K-1512 of 2018, decided on 5th October, 2019.

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

----S.179---Power of adjudication---Exercise of power---Principle---Authority defined in S.179 of Customs Act, 1969, has to exercise the powers---Neither superior nor subordinate is empowered to assume powers of his superior or subordinates, unless Federal Board of Revenue is desirous of fixing or varying jurisdiction and powers of any officer of customs or a class of officers through a notification in official gazette as per expression of S.179(2) of Customs Act, 1969, assign or transfer any case to any officer of customs, irrespective designation or territorial jurisdiction.

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

----Ss.32(2)(3), 79, 80, 83, 179 & 193--- Customs Rules, 2001, Rr. 433, 438 & 442---Constitution of Pakistan, Art.4, 18 & 25---Notification SRO No.371(I)2002 dated 15-6-2002, serial No.3 (ii)---Re-assessment---Mis-declaration---Proof---Assessing Officer instead of accepting Goods Declaration preferred to inspect the goods and found them as per Declaration---Principal Appraiser re-examined the goods and imposed additional duty and taxes on the plea of mis-declaration---Additional Collector Customs (Adjudication) passed an order to confiscate the goods subject to redemption on payment of 20% fine---Validity---Consignment which had undergone process of passing assessment order under the provision of S.80 of Customs Act, 1969, and R.438 of Customs Rules, 2001 for levy of duty and taxes, which were paid and thereafter valid clearance order as contemplated in S.83 of Customs Act, 1969, and R.442 of Customs Rules, 2001, was passed by competent authority in exercise of powers vested upon him through notification SRO No.371(I)/2002, dated 15-6-2002---Such order was appealable order and could not be disturbed by any other authority including Principal Appraiser, Assessing Officer and Additional Collector Customs (Adjudication), with the exception of preferring an appeal under the provision of S.193 of Customs Act, 1969---No mis-declaration in material particular in regard to description, quantity, weight and value of goods in question was on record---Neither provision of S.32(2) nor (3) of Customs Act, 1969, were applicable---Without any exception, there was error, omission or misconstruction, made/done by custom officers attracting under the provision of S.32(3) of Customs Act, 1969--- Show cause notice could be issued by Principal Appraiser only as notified in serial No.3 (ii) of notification S.R.O. No.371(I)/2002, dated 15-6-2002 and none else---Assessing Officer wrongly created recovery / demand through re-assessment order on the direction of Principal Appraiser and Additional Collector Customs (Adjudication) passed order by usurping powers of his subordinate which was not permitted under law---Goods of same description and under the same PTC Heading and value were cleared even after framing contravention report as against the consignment in question---By giving differential treatment to importer the authorities acted in derogation of Arts. 4, 18 & 25 of the Constitution---Customs Appellate Tribunal endorsed the earlier assessment order and set aside the orders passed by Principal Appraiser and Additional Collector Customs (Adjudication), as no illegality was committed by appropriate authority---Description of any goods could not be stretched other actual description, only for the purpose of squeezing duty and taxes despite not leviable---Appeal was allowed in circumstances.

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

Messrs Paramount International (Pvt.) Ltd. v. FOP and others 2014 PTD 1256; Collector of Customs and others CPLA No.105-K of 2014; Collector of Customs, MCC, Quetta v. Al-Habib Enterprises and Engineering and others 2019 PTD 1712; Messrs Smith Kline French v. Pakistan 2004 PTD 3020; The State v. Zia-ur-Rehman and others PLD 1973 SC 49; 2009 PTD 1083; 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 CLC 373; PLD 2004 SC 600; PLD 2005 SC 842; 2009 PTD (Trib.) 1996; 2009 PTD 1112; 2010 PTD (Trib.) 832; 2010 PTD (Trib.) 1636; 2011 PTD (Trib.) 2114; 2011 PTD (Trib.) 2557; 2010 PTD 465 and PLD 2014 SC 514 rel.

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

----Ss.80(2)(3) & 83---Re-assessment--- Principle--- Re-assessment under S.80(3) of Customs Act, 1969, is permitted only after calling for documents as contemplated in S.80(2) of Customs Act, 1969, after clearance of goods in terms of S.83 of Customs Act, 1969, & R.442 of Customs Rules, 2001---After examination, if declaration transmitted and uploaded documents at the time of transmitting Goods Declaration under S.79(1) and R.433 of Customs Rules, 2001 or any information or statement so furnished by importer is found to be incorrect in respect of earlier assessment---In absence of availability of such ingredients, reassessment is not permitted

Nadeem Ahmed Mirza, Consultant for Appellant.

Waqas Ishtiaq, A.O. for Respondents.

2021 P T D (Trib.) 1504

[Customs Appellate Tribunal]

Before Jahanzaib Wahlah, Member Judicial-III

Messrs SHAHNAWAZ A. SATTAR, KARACHI and another

Versus

DIRECTOR, DIRECTORATE GENERAL I&I-FBR and 2 others

Customs Appeals Nos.K-314 and K-364 of 2017, decided on 26th February, 2020.

Customs Act (IV of 1969)---

----Ss.32 & 209---Mis-declaration---Liability of principal and agent---Scope---Appellant, being Clearing Agent, was arrayed as a respondent in the show-cause notice sent to the importer---Allegation against importer was that he misused the facility of export oriented unit, instead of manufacturing fabric/goods from imported fabric and yarn sold those in the local market and exported the goods manufactured from fabric/yarn procured from local market---Order-in-original was accordingly passed and a penalty was imposed---Validity---No role was specified alleging that the appellant, Clearing Agent was involved in tampering or filling incorrect documents before the department---Imposition of penalty in the absence of connivance with the importer was not sustainable---Appeal was allowed, in circumstances.

Ubaid Mirza for Appellants.

Zeeshan, I.O. for Respondents.

2021 P T D (Trib.) 1522

[Customs Appellate Tribunal]

Before Jahanzaib Wahlah, Member Judicial-III

The ASSISTANT DIRECTOR, POST CLEARANCE AUDIT, KARACHI

Versus

Messrs SHAFIQ LEATHER ENTERPRISES, KARACHI and another

Custom Appeal No.K-199 of 2018, decided on 28th November, 2019.

(a) Administration of justice---

----Thing has to be done as it has been prescribed to be done--- Doing an act in any other manner renders it illegal and void ab initio.

2002 PTD 2457; PLD 1971 SC 61; PLD 1973 SC 236; E.A. Avan's case 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 Waseem Ahmed and others v. FOP and another 2014 PTD 1733 rel.

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

----Ss.2(a), 26(2), 32, 80, 83, 156(1), (9) & (14), 193A & 195---Customs Rules, 2001, Rr.438 & 442---Sales Tax Act (VII of 1990), Ss.3A & 7A---Income Tax Ordinance (XLIX of 2001), S.148---Notification SRO.No.371(I)/2002, dated 15-6-2002---SRO No.500(I)/2009, dated 13-6-2009 --- SRO No.1125(I)/2011, dated 31-11-2011---Appeal, adjudication of---Procedure---Reopening of assessment---Assessment of goods was finalized but Assessing authorities reopened the same without filing any appeal--- Appellate Authority set aside the order passed by Assessing Authorities with regard to reopening of assessment---Validity---Consignment which had undergone process of passing assessment / clearance order under the provision of S.80 Customs Act, 1969 and R.438 of Customs Rules, 2001, was deem to be 'past and closed transaction'---Such transaction could not be disturbed by any authority and proper course of action for reopening was to file appeal before Appellate Authority, under the provision of S.193 of Customs Act, 1969, power of the same was deposed through SRO No.500(I)/2009 dated 13-6-2009--- Upon receipt of appeal so filed, it was mandated for Appellate Authority to go through the facts and grounds incorporated therein---If Appellate Authority thought fit that in matter under adjudication correct duty and taxes were not either levied or short paid on the basis of found goods, the Appellate Authority was empowered to issue a notice under S.32 of Customs Act, 1969, as enunciated in 3rd proviso to S.193A of Customs Act, 1969, to importer and after receipt of reply to the notice, the Appellate Authority was to decide the appeal in the light of issued show-cause notice and reply---No appeal was filed by authorities despite mandated under law, instead assumed powers under S.195 Customs Act, 1969 and reopened valid assessment / clearance order passed under Ss.80 & 83 of Customs Act, 1969 and Rr.438 & 442 of Customs Rules, 2001, which they were not empowered to reopen valid assessment order passed by the authority defined in S.2(a) of Customs Act, 1969, in exercise of powers vested upon them through SRO No.371(I)/2002 dated 15-6-2002--- Such orders passed by the authorities were without power / jurisdiction and were without any lawful authority and as such ab initio null and void---Customs Appellate Tribunal maintained the order passed by Appellate Authority--- Appeal was dismissed, in circumstances.

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 SBLR 2002 Kar. 5; Messrs Silver Corporation v. The Additional Collector of Sales Tax (Adjudication), Karachi III K-106/03; Major Syed Walayat Shah v. Muzaffar Khan and 2 others PLD 1971 SC 184; Omer & 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; Land Acquisition Collector, Nashehra and others v. Sarfraz Khan and others PLD 2001 SC 514; Messrs Paramount International (Pvt.) Ltd. v. FOP and others 2014 PTD 1256; Collector of Customs, MCC, Quetta v. Al-Habib Enterprises and Engineering and others 2019 PTD 1712; Messrs World Trade Corporation v. Central Board of Revenue 1989 MLD 4310; Glaxo Smith Kline Pakistan Ltd., Karachi v. Collector of Customs, Sales Tax Central Excise, Karachi 2004 PTD 3020; Fazal Kader Chowdri v. Crown PLD 1952 FC 19; 2011 PTD (Trib.) 2220; and Collector of Sales Tax v. Messrs Khurshid Spinning Mills Ltd. and another 2017 PTD 196 ref.

(c) Constitution of Pakistan---

----Arts.4 & 25--- Equal treatment of law--- Discrimination---Scope---Person placed at same pedestal cannot be treated differently as it constitutes a negation of Arts.4 & 25 of the Constitution.

2002 PTD 976; 2002 SCMR 312; 2009 PTD 1507; 2005 SCMR 492 and 2010 SCMR 431 ref.

Arif Maqbool, Assistant Director and Farhan Mehdi, Appraiser for Appellant.

Nadeem Ahmed Mirza, Consultant for Respondents.

2021 P T D (Trib.) 1522

[Customs Appellate Tribunal]

Before Jahanzaib Wahlah, Member Judicial-III

The ASSISTANT DIRECTOR, POST CLEARANCE AUDIT, KARACHI

Versus

Messrs SHAFIQ LEATHER ENTERPRISES, KARACHI and another

Custom Appeal No.K-199 of 2018, decided on 28th November, 2019.

(a) Administration of justice---

----Thing has to be done as it has been prescribed to be done--- Doing an act in any other manner renders it illegal and void ab initio.

2002 PTD 2457; PLD 1971 SC 61; PLD 1973 SC 236; E.A. Avan's case 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 Waseem Ahmed and others v. FOP and another 2014 PTD 1733 rel.

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

----Ss.2(a), 26(2), 32, 80, 83, 156(1), (9) & (14), 193A & 195---Customs Rules, 2001, Rr.438 & 442---Sales Tax Act (VII of 1990), Ss.3A & 7A---Income Tax Ordinance (XLIX of 2001), S.148---Notification SRO.No.371(I)/2002, dated 15-6-2002---SRO No.500(I)/2009, dated 13-6-2009 --- SRO No.1125(I)/2011, dated 31-11-2011---Appeal, adjudication of---Procedure---Reopening of assessment---Assessment of goods was finalized but Assessing authorities reopened the same without filing any appeal--- Appellate Authority set aside the order passed by Assessing Authorities with regard to reopening of assessment---Validity---Consignment which had undergone process of passing assessment / clearance order under the provision of S.80 Customs Act, 1969 and R.438 of Customs Rules, 2001, was deem to be 'past and closed transaction'---Such transaction could not be disturbed by any authority and proper course of action for reopening was to file appeal before Appellate Authority, under the provision of S.193 of Customs Act, 1969, power of the same was deposed through SRO No.500(I)/2009 dated 13-6-2009--- Upon receipt of appeal so filed, it was mandated for Appellate Authority to go through the facts and grounds incorporated therein---If Appellate Authority thought fit that in matter under adjudication correct duty and taxes were not either levied or short paid on the basis of found goods, the Appellate Authority was empowered to issue a notice under S.32 of Customs Act, 1969, as enunciated in 3rd proviso to S.193A of Customs Act, 1969, to importer and after receipt of reply to the notice, the Appellate Authority was to decide the appeal in the light of issued show-cause notice and reply---No appeal was filed by authorities despite mandated under law, instead assumed powers under S.195 Customs Act, 1969 and reopened valid assessment / clearance order passed under Ss.80 & 83 of Customs Act, 1969 and Rr.438 & 442 of Customs Rules, 2001, which they were not empowered to reopen valid assessment order passed by the authority defined in S.2(a) of Customs Act, 1969, in exercise of powers vested upon them through SRO No.371(I)/2002 dated 15-6-2002--- Such orders passed by the authorities were without power / jurisdiction and were without any lawful authority and as such ab initio null and void---Customs Appellate Tribunal maintained the order passed by Appellate Authority--- Appeal was dismissed, in circumstances.

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 SBLR 2002 Kar. 5; Messrs Silver Corporation v. The Additional Collector of Sales Tax (Adjudication), Karachi III K-106/03; Major Syed Walayat Shah v. Muzaffar Khan and 2 others PLD 1971 SC 184; Omer & 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; Land Acquisition Collector, Nashehra and others v. Sarfraz Khan and others PLD 2001 SC 514; Messrs Paramount International (Pvt.) Ltd. v. FOP and others 2014 PTD 1256; Collector of Customs, MCC, Quetta v. Al-Habib Enterprises and Engineering and others 2019 PTD 1712; Messrs World Trade Corporation v. Central Board of Revenue 1989 MLD 4310; Glaxo Smith Kline Pakistan Ltd., Karachi v. Collector of Customs, Sales Tax Central Excise, Karachi 2004 PTD 3020; Fazal Kader Chowdri v. Crown PLD 1952 FC 19; 2011 PTD (Trib.) 2220; and Collector of Sales Tax v. Messrs Khurshid Spinning Mills Ltd. and another 2017 PTD 196 ref.

(c) Constitution of Pakistan---

----Arts.4 & 25--- Equal treatment of law--- Discrimination---Scope---Person placed at same pedestal cannot be treated differently as it constitutes a negation of Arts.4 & 25 of the Constitution.

2002 PTD 976; 2002 SCMR 312; 2009 PTD 1507; 2005 SCMR 492 and 2010 SCMR 431 ref.

Arif Maqbool, Assistant Director and Farhan Mehdi, Appraiser for Appellant.

Nadeem Ahmed Mirza, Consultant for Respondents.

2021 P T D (Trib.) 1747

[Customs Appellate Tribunal]

Before Jahanzaib Wahlah, Member Judicial-III

ABDUL WAHEED

Versus

The COLLECTOR OF CUSTOMS, MCC OF PREVENTIVE, HYDERABAD and 2 others

Custom Appeal No.H-16 of 2018, decided on 9th October, 2019.

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

----Ss.2(s), 163, 165, 168, 193-A (3) & 194-A---Qanun-e-Shahadat (10 of 1984), Arts. 117 & 120---Smuggling---Proof---Onus---Transportation within country---Appellant purchased old and used goods from various shops through proper receipts and invoices---During transporting the goods, Customs Authorities seized the goods on failure of driver to produce import documents---Validity---Order on appeal before Appellate Authority was to be passed within 120 days from the date of filing of appeal, which was 12-6-2017 and order should have been passed on or before 10-10-2017---Appellate Authority failed to pass any order and no further extension of 60 days was given by him and the same was due to the fact that no 'exceptional circumstances' were available--- Appellate Authority passed order on 22-11-2017 i.e. after expiry of 43 days of the initial currency period of 120 days---No provision existed in Customs Act, 1969, nor any notification was in filed, wherein either transporter or owner of transported goods were directed to supply Goods Declaration / Bills to transporter and he was to keep those during the course of transportation within the country---Authorities were not well within their right to demand furnishing of Goods Declaration / Bills of transported goods in absence of availability of warrant of law--- Appellant submitted purchase bill/bilty of transported goods, hence he discharged burden upon him and burden had shifted on the shoulders of authorities as per contemplation of Arts.117 & 120 of Qanun-e-Shahadat, 1984, which they failed to prove---Authorities failed to obtain verification of bills from seller nor brought into motion the provision of S.165 Customs Act, 1969, despite mandated prior to leveling the charge of smuggling or transportation of smuggled goods---Customs Appellate Tribunal declared detention, seizure of goods of appellant, preparation of contravention report, issuance of show cause notice and passing of order in original / appeal were ab-initio illegal and void and of no legal effect, resultantly the same were set aside and goods were restored to appellant---Appeal was allowed in circumstances.

K-719/02; H-720/02; H-686/03; Q-776/04; 2005 PTD (Trib.) 135; PLD 1991 SC 630; Kamran Industries v. Collector of Customs (Export) PLD 1996 Kar. 68; Collector, Model Customs Collectorate, Multan, v. Customs Appellate Tribunal, Bench-I, Karachi and 3 others 2019 PTD 1716; Sikandar A. Karim v. The State 1995 SCMR 387 and Collector of Custom, Lahore v. S.M. Saleem (C.A. No. 68 of 2002) rel.

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

----S.24-A---Speaking order---Principle---If any authority, Court or Tribunal gives a finding of fact which is not based on material available on record, such is illegal, arbitrary, without discussing and considering material available on record, becomes perverse---Perverse finding of fact which is violative of established principle of appreciation of evidence on record is not sustainable in law---Principle that every judicial or quasi-judicial finding should be based on reasons containing justification for the finding in the order itself is an established principle of dispensation of justice.

2005 YLR 1019; 2007 PTD 2500; 2004 PTD 1973; 2005 YLR 1719; 2003 PTD 777; 2003 PTD (Trib.) 2369; 2002 MLD 357; 1983 CLC 2882; 2005 PTD 2519; 2005 PTD 1189; 2003 PTD 2369; PLD 1995 SC (Pak) 272; PLD 1970 SC 158; PLD 1970 SC 173; 1984 SCMR 1014 and 2012 PTD (Trib.) 619. rel.

Nadeem Ahmed Mirza for Appellant.

Ayaz Hussain, Inspector for Respondents.

2021 P T D (Trib.) 1771

[Customs Appellate Tribunal]

Before Jahanzaib Wahlah, Member Judicial-III

Messrs PARI CORPORATION, KARACHI

Versus

The PRINCIPAL APPRAISER, GROUP-II, MCC OF APPRAISEMENT-WEST, CUSTOMS HOUSE, KARACHI and another

Customs Appeal No.K-1160 of 2018, decided on 27th November, 2019.

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

----Ss.79(1), 80, 156 (1)(i) & 179---Customs Rules, 2001, Rr.433, 435 & 438---Notification SRO No.371(I)/2002, dated 15-6-2002, serial No.30---Appeal---Contravention report---Clearing Agent, non-filing of Goods Declaration---Effect---Assessing Officer inspected goods and passed assessment order under S.80 of Customs Act, 1969 and R.438 of Customs Rules, 2001 and forwarded the same to Principal Appraiser---Instead of assessing the same, Principal Appraiser framed contravention report and Collector of Customs (Adjudication) issued show-caused notice---Validity---When no duty and taxes were involved or case not pertaining to export, Collector of Customs (Adjudication) was barred by law to assume power / jurisdiction for the purpose of adjudication under S.179 of Customs Act, 1969---There existed no involvement of duty and taxes, such was to be construed as a case of technical violation---To adjudicate such matter the same fell under the powers of Principal Appraiser under the provision of S.80 of Customs Act, 1969 and serial No.30 of Notification SRO No.371(I)/2002, dated 15-6-2002---Collector of Customs (Adjudication) issued show-cause notice in absence of availability of powers under the provision of S.179(1) of Customs Act, 1969--- Customs Appellate Tribunal declared proviso to R.433 of Customs Rules, 2001, ultra vires to S.79(1) of Customs Act, 1969, annulled public notice No.01/2017 dated 5-10-2017, show-cause notice and order passed by Collector of Customs (Adjudication) were set aside---Appeal was allowed, in circumstances.

The State v. Zia-ur-Rehman and others PLD 1973 SC 49; 2009 PTD 1083; 2011 PTD (Trib.) 2557; 2010 PTD 465 and PLD 2014 SC 514 ref.

(b) Jurisdiction---

----Exercise of---Principle---Exercise of jurisdiction by an authority is mandatory requirement and its non-fulfillment entails 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 and 2011 PTD (Trib.) 2114 rel.

(c) Interpretation of statutes---

----Fiscal statutes---Rules, status of---Rules cannot substitute parent statute nor can amend the same---Statutory Rules cannot enlarge scope of section under which they are framed---Rules framed under any statute are in the nature of subordinate legislation and are meant for providing procedure to act upon the provision of the statute and those are to be used as 'stepping stones' and not to be applied as 'stumbling blocks'--- Rules may not be employed to harass taxpayer on the basis of technicalities instead of advancing purpose for which they were framed.

2003 SCMR 370; 2001 SCMR 1806; PLD 1990 SC 1034; PLD 2001 Kar. 52; PLD 1999 Lah. 109; PLD 1985 Kar. 201; 2000 PTD 399; 1982 SCMR 522; Messrs Nishat Mills Ltd. v. Superintendent of Central Excise Circle-II PLD 1989 SC 222; Syed Muhammad Razi v. Collector of Customs, (Appraisement), Karachi and 2 others 2003 PTD 2821 and Muhammad Waheed v. Customs Appellate Tribunal 2016 PTD 35 rel.

Nadeem Ahmed Mirza for Appellant.

Khizero, A.O. for Respondent.

2021 P T D (Trib.) 1879

[Customs Appellate Tribunal]

Before Jahanzaib Wahlah, Member Judicial-III

Messrs ZAHID MAJEED CORPORATION, KARACHI

Versus

The DEPUTY COLLECTOR, GROUP-VIII, MCC APPRAISEMENT-EAST, KARACHI and another

Custom Appeal No.K-1251 of 2017, decided on 7th July, 2019.

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

----S.32---Mis-declaration---Weight of essential/non-essential packing---Country of origin---No loss of revenue---Scope---Appellant imported spare parts of auto rickshaw and motorcycle from Vietnam but declared the country of origin to be China---Department levelled allegations of mis-declaration and also found the weight of consignment to be in excess of the declared weight---Contention of appellant was that although country of origin was mis-declared but it did not make any difference as valuation criterion for both Vietnam and China was the same and that no variation existed in the declared weight and weight of the goods after deduction of essential/non-essential packing---Validity---No duty and taxes could be levied on the weight of the essential/non-essential packing, unless same were imported as separate goods---Department had leveled the charge of mis-declaration of origin on the basis of port of shipment available on the Bill of Lading which alone could not be construed as the criteria for determination of origin of imported goods---Department termed China, Laos, Cambodia, Vietnam and Taiwan as one and the same region for the purpose of assessment of goods---Department had assessed the goods with the application of Valuation Ruling of motorcycle parts issued by Director, Directorate General of Valuation, for China origin goods despite of the fact that the goods were alleged to be of Taiwan origin, meaning thereby that determination of origin declared by the appellant was immaterial as in any case the leviable duty and taxes were the same---Leveling charges of mis-declaration of origin was not warranted under law within the meaning of S.32 of Customs Act, 1969, which could only be invoked on an importer in case of loss of revenue, which was non-existent in the case---Impugned order was set aside and the appeal was allowed, in circumstances.

Messrs Al-Hamd Edible Oil Ltd. and others v. Collector of Customs and others 2003 PTD 552; Messrs Kamran Industry v. The Collector of Customs (Export) and 4 others PLD 1996 Kar. 68; Collector of Customs Exports and another v. R.A Hosiery Works 2007 PTD 2215; Messrs Shoaib Tayyab International v. Additional Collector of Customs of Customs, Karachi 2014 PTD (Trib.) 190; Customs Appeal No.K-249/2000/13372; Customs Appeal No. K-35/2002; Customs Appeal No. K-1670/2001; 2005 PTD (Trib.) 617; 1668/LB, 1669/LB of 2002; Customs Appeal No. K-1281/05; 1986 MLD 790; PLD 1996 Kar. 68; 2006 PTD 909; 2002 PTD 2957; 2007 SCMR 1357 = 2007 PTD 1858; 2008 SCMR 438; 1992 SCMR 1083; 2008 PTD 1250 and 2008 SCMR 438 ref.

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

----S.180---Sales Tax Act (VII of 1990), S.33---Income Tax Ordinance (XLIX of 2001), S. 148---Show-cause notice---Offences and penalties---Scope---Section 33 of Sales Tax Act, 1990, contains penal clauses synonymous to S.156(1) of Customs Act, 1969 and can only be invoked for the contravention of the respective provisions of Sales Tax Act, 1990 and not the Customs Act, 1969---Section 148 of Income Tax Ordinance, 2001, prescribes the procedure for collection of income tax at import stage by the authorities referred therein, meaning thereby that the said sections are independent under which no charge can be invoked---Provisions of Sales Tax Act, 1990 and Income Tax Ordinance, 2001, can only be invoked for the contravention of the respective provisions of Sales Tax Act, 1990 and Income Tax Ordinance, 2001 and not for the Customs Act, 1969---Referred sections of Sales Tax Act, 1990 and Income Tax Ordinance, 2001, are independent and have no nexus whatsoever with any provision of the Customs Act, 1969---Issuance of show-cause notice by invoking irrelevant/erroneous sections of independent statute by unauthorized authority rendered the same void 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 Sarwar International v. Additional Collector of Customs 2013 PTD 813 ref.

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

----Ss. 32 & 179---Sales Tax Act (VII of 1990), Ss. 11, 30 & 48---Income Tax Ordinance (XLIX of 2001), Ss. 162, 228 & 140---Mis-declaration---Assessment of sales tax---Recovery of sales tax and income tax---Procedure---Scope---Availability of word "tax" in S.32, Customs Act, 1969, does not empower customs authorities to assume powers under the provisions of Ss.11(2) & (3) of Sales Tax Act, 1990 and S.162(1) of Income Tax Ordinance, 2001, unless Legislature appoints them as "Officer of Inland Revenue/Commissioner of Income Tax", who have powers under the provisions to take cognizance in the matter relating to Sales Tax and Income Tax---Word "tax" inserted in S.179 of the Customs Act, 1969 is only for assuming of powers on the basis of involved duty and taxes by the appropriate adjudicating authority, likewise insertion of word "tax" in S.32, empowers the adjudicating authority to issue show cause notice for penalizing the importer under the provisions of S.156(1) of Customs Act, 1969---Mention of word tax in both sections does not automatically empower an officer of Customs appointed under S.3 to wield powers under the charging/respective provisions of Sales Tax Act, 1990 and Income Tax Ordinance, 2001, unless, they are appointed as officer of Inland Revenue by the Legislature under the existing provision of S.30 of Sales Tax Act, 1990 and S.228 of Income Tax Ordinance, 2001, or by carving a new subsection of S.30 of Sales Tax Act, 1990 and S.228 of the Income Tax Ordinance, 2001, or all together by inserting new sections through money bill, therefore, despite insertion of the word "tax" in Ss. 179 & 32 of the Customs Act, 1969, the adjudicating authority can only issue show-cause notice within the respective provisions of the Customs Act, 1969 and not under any charging sections or S.11 of the Sales Tax Act, 1990 and S.162 of the Income Tax Ordinance, 2001.

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

----S.202---Sales Tax Act (VII of 1990), Ss. 11 & 48---Income Tax Ordinance (XLIX of 2001), Ss. 162 & 140---Recovery of Government dues---Recovery of arrears of sales tax---Recovery of tax from persons holding money on behalf of a taxpayer---Scope---Customs Collectorates have powers to collect sales tax and income tax as duty at import stage---Argument that Customs is empowered to recover the short paid amount of sales tax and income tax at import stage under S. 202 of the Customs Act, 1969, is based on mistaken belief---Customs Collectorates can only recover the amounts 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 and S.140 of Income Tax Ordinance, 2001, for recovery of 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, after due process of law, but have no powers to adjudicate the cases of recovery of sales/income tax falling within the ambit of S.11 of Sales Tax Act, 1990 and S.162(1) of Income Tax Ordinance, 2001.

2011 PTD (Trib.) 110; 2010 PTD (Trib.) 2086; SCRA No. 01/2010 2004 PTD 801; C.P. No. D-216/2013; 2014 PTD 1963; 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; 2016 PTD (Trib.) 2463 and 2017 PTD (Trib.) 481 ref.

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

----Ss.25 & 25A---Value of imported and exported goods---Power to determine the customs value---Scope---When any order is challenged through an appeal/revision, it stands merged in that and the case stands wide open by virtue of the fact that the order/valuation ruling stand abated---No action whatsoever can be initiated on the strength of such an order, likewise, no assessment of goods of the person who has challenged the vires can be made with the application of the value available in valuation ruling, unless same has attained finality after crossing all the forum earmarked in the Customs Act, 1969.

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

----Ss. 25 & 25A---Customs Rules, 2001, R.107(a)---Value of imported and exported goods---Power to determine the customs value---Scope---Validity of ruling is only 90 days, no assessment under the stale ruling is permitted under the law.

Sadia Jabbar v. FOP 2018 PTD 1746 and Danish Jehangir v. FOP and 2 others 2016 PTD 702 rel.

Nadeem Ahmed Mirza, Consultant for Appellant.

Zeeshan Wazir, A.O. for Respondent.

2021 P T D (Trib.) 1908

[Customs Appellate Tribunal]

Before Jahanzaib Wahlah, Member Judicial-III

Messrs CHOCO TRADERS, KARACHI

Versus

The PRINCIPAL APPRAISER (R&D), MCC OF APPRAISEMENT-EAST, CUSTOM HOUSE, KARACHI and 3 others

Custom Appeal No.K-888 of 2019, decided on 3rd March, 2020.

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

----Ss. 80, 83, 32 & 180---Checking of goods declaration by Customs---Clearance for home consumption---Mis-declaration---Re-assessment after clearance of goods---Non-issuance of show cause notice---Scope---Appellant imported Tea Rose Chocolate from China, duty and taxes were paid, additional duty and taxes were sought, which the appellant paid accordingly---Clearance order was passed under S.83 of Customs Act, 1969---Principal Appraiser, prior to delivery of goods, detained the consignment under S.186 of Customs Act, 1969 and passed yet another assessment order thereby enhancing the duty and taxes---Collector of Customs (Appeals) on being appealed referred the matter to Director, Directorate General of Valuation, for determination of value of the imported goods---Validity---No occasion was available with the Principal Appraiser to put a hold on the consignment under S.186 of Customs Act, 1969---No re-assessment was permitted under S.80(3) of Customs Act, 1969, once the goods were cleared for home consumption or shipped on board for export---Re-assessment was permitted prior to passing of order of clearance/shipment---Re-assessment order fell within the definition of demand notice for recovery of short paid amount of duty and taxes---Such type of recovery could only be created upon passing of an order after issuance of show-cause notice under S.32(3) of Customs Act, 1969---Impugned orders were set aside and the appeal was allowed, in circumstances.

Messrs Paramount International (Pvt.) Ltd. v. FOP and others 2014 PTD 1256; Collector of Customs and others' case CPLA No.105-K of 2014; Collector of Customs, MCC, Quetta v. Al-Habib Enterprises and Engineering and others 2019 PTD 1712; 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.

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

----S.186---Detention of goods pending payment of fine or penalty---Scope---Section 186 of Customs Act, 1969, comes into play during the course of imports, i.e. if any case has been adjudicated by the competent authority against an importer and through which he holds the charges established as levelled in the show cause notice and imposes fine and penalty, which importer has not paid or any inquiry or investigation in respect of any goods is underway for imposition of fine and penalty---Empowered officer can detain forthcoming consignment of the same owner/importer till the time fine and penalty are paid.

Muhammad Ali v. FOP 2013 PTD 628 ref.

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

----Ss.186 & 202---Detention of goods pending payment of fine or penalty---Recovery of Government dues---Scope---Subsequent imported goods belonging to a same owner can only be detained once a fine or penalty has been imposed in respect of any other goods and the same remained un-paid---By no stretch of imagination all subsequent import can be detained and withheld clearance on the premise that some inquiry or investigation is pending in respect of some other goods---Department is only authorized to take action for issuance of detention notice in terms of S.202 of the Customs Act, 1969, once the amount alleged to have been evaded has been finally adjudicated and decided against the person---Procedure and mechanism provided in S.202 of Customs Act, 1969, is entirely independent of any action taken in terms of S.186 of Customs Act, 1969.

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

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

----Ss.26A & 3DD---Directorate General of Post Clearance Audit---Conduct of audit---Scope---Legislature has established Directorate General of Post Clearance Audit (DGPCA) by inserting S.3DD in the Customs Act, 1969 and their officers have been delegated powers by the Board through SRO No.500(I)/2009 dated: 13-06-2009 for conducting audit under S.26(2) of the Customs Act, 1969---Officers of DGPCA are empowered to look into every aspect of the declaration made by the importer and assessment order passed by the competent authority of the Clearance Collectorate under S.80 of Customs Act, 1969 and R.438 of Customs Rules, 2001, by preparing and issuing an audit observation to the importer for clarification---If the reply to the audit observation fails to settle the issue, the DGPCA frames contravention report and forwards it to the Clearance Collectorate, which forwards it to the respective Collectorate of Customs Adjudication for issuance of show-cause notice under S.180 of the Customs Act, 1969, and thereafter passing of order-in-original by the authority defined in S.179, Customs Act, 1969.

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

----Ss.83 & 193---Clearance for home consumption---Appeals to Collector (Appeals)---Scope---Consignment which has undergone the process of assessment and thereafter a valid clearance order has been passed, such an order is an appealable order and cannot be disturbed by any authority, with the exception of preferring an appeal under S.193 of Customs Act, 1969, as is invariably done by the importers, in case they feel the assessment order so passed nullity to the fact/law---If the department is of the view that proper assessment is not carried out, the only option left with them is to adopt the mechanism available in the Customs Act, 1969, for the reopening of the assessment order by filing an appeal before the Collector of Customs (Appeals) under S.193 of the Customs Act, 1969, in which they could incorporate all of their apprehensions, opinions, findings, including contravening provisions of the Customs Act, 1969.

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

----S.80---Checking of goods declaration by the Customs---Scope---Subsection (3) of S.80 of Customs Act, 1969 is dependent on subsection (2), hence, unless subsection (2) is not complied with in letter and spirit no action can be taken under S.80(3) of the Customs Act, 1969---Meaning thereby that re-assessment under S.80(3) after release of the goods is permitted only after calling for the documents as expressed in S.80(2).

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

----Ss.83, 29 & 205---Clearance for home consumption---Restriction on amendment of bill of entry or bill of export or goods declaration---Amendment of documents---Expression "assessed for duty"---Scope---No amendment under S.205 of the Customs Act, 1969 is allowed in the columns of the declared value, quantity or description after removal of the goods from the customs area for home consumption after passing of valid assessment/clearance order or after shipment of the exported goods through goods declaration for export---Cap has been laid on the importer/exporter for obtaining amendment after out of charge of the goods declaration---Phrase "assessed for duty" used in expression lays restriction on the Customs not to amend itself the contents of goods declaration after clearance.

Ubaid Mirza for Appellant.

Muhammad Rizwan, A.O. for Respondents.

2021 P T D (Trib.) 1969

[Customs Appellate Tribunal]

Before Jahanzaib Wahlah, Member Judicial-III

Messrs PREMIUM ENTERPRISES and another

Versus

The AUDITOR, DIRECTORATE GENERAL OF POST CLEARANCE AUDIT and 2 others

Customs Appeals Nos.K-1311 to 1319 of 2019, decided on 25th February, 2020.

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

----Ss. 26A, 32, 80 & 83---Conducting of audit---Mis-declaration---Checking of goods declaration by the Customs---Clearance for home consumption---Failure to issue show-cause notice---Scope---Appellant imported a consignment of electrical accessories which was duly cleared after payment of duty and taxes---Auditor, Directorate General of Post Clearance Audit, after seven months of the clearance of goods passed re-assessment order through which he changed quantity, description and value of electrical accessories---Validity---Appropriate officer under S.26A of Customs Act, 1969, was required to serve a notice in writing to the person specifying clearly the record required and purpose for which it was required in connection with the audit---No provision in the Customs Act, 1969, permitted conducting the audit on the basis of goods declaration and its corresponding data available in the Customs Data Reservoir---No re-assessment was permitted under S.80(3) of the Customs Act, 1969, once the goods were cleared for home consumption or shipped on board for export---Re-assessment order in any shape/manner by all means fell within the definition of demand notice for recovery of short paid amount of duty and taxes due to commission of inadvertence by the officials of Clearance Collectorate---Such type of recovery could only be created upon passing of an order after issuance of show cause notice under S.32(3) of Customs Act, 1969---No show-cause notice was issued despite mandated under law---Impugned orders were set aside and the appeals were allowed, in circumstances.

2019 PTD 1786; 2019 PTD 1567 and 2018 PTD 2132 ref.

2018 PTD 1273; Assistant Collector of Customs, Dry Port Peshawar v. Messrs Khyber Electric Lamp MFG Co., Ltd., Peshawar 2001 SCMR 838 and Forte Pakistan (Pvt.) Ltd., Karachi v. The Director General of Intelligence and Investigation (Customs and Excise), Karachi and another 2006 PTD 978 rel.

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

----Ss.26A & 155M---Conducting of audit---Requisition of documents---Scope---Legislature through money bill has formed/established the Directorate General of Post Clearance Audit (DGPCA) by inserting S.3DD in the Customs Act, 1969 and their officers have been delegated powers by the Board through SRO No.500(I)/2009, dated: 13-06-2009 for conducting audit under S.26(2), Customs Act, 1969---Officer conducting an audit is required to serve a notice in writing to the person specifying clearly in notice the record required in connection with the audit---No provision of the Customs Act, 1969, permits conducting of audit on the basis of goods declaration and its corresponding data available in the Customs Data Reservoir and in electronic format i.e. using electronic modes of communication.

2019 PTD 1786; 2019 PTD 1567; 2018 PTD 2132 and 2018 PTD 1273 ref.

(c) Words and phrases---

---"Writing"---Meaning.

Collins Dictionary; Cambridge Dictionary; Macmillan Dictionary; Free Law Dictionary.com and Clason v. Bailey, 14 Johns. (N.Y.) 491 ref.

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

----Ss. 155M & 26A---Conducting the audit---Requisition of documents---Scope---Legislature has inserted the phrase "in writing" in the Customs Act, 1969, the intent was to constrain the officials of Directorate General of Post Clearance Audit to issue a written/printed notice to a person whether to ensure mandatory serving through registered post or to circumvent the hardship of substantiating serving of notice on a person through any electronic medium---Said phrase has been used in connection with conduction of an audit to determine whether or not the person being investigated has contravened the provisions of the Customs Act, 1969 requiring further action by the respective empowered authorities, the gravity of the entire exercise was intended to be conducted with a written/printed notice served upon the person being investigated affording him ample time to gather and submit the required record and his contention.

(e) Administration of justice---

----Thing has to be done as it has been prescribed to be done, in case of doing the same in any other manner render it illegal and as such void.

Clason v. Bailey, 14 Johns. (N.Y.) 491; 2002 PTD 2457; PLD 1971 SC 61; PLD 1973 SC 236; E.A. Avan's case PLD 1964 SC 536; Assistant Collector of Customs, Dry Port Peshawar v. Messrs Khyber Electric Lamp MFG Co., Ltd., Peshawar 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; Forte Pakistan (Pvt.) Ltd., Karachi v. the Director General of Intelligence and Investigation (Customs and Excise), Karachi and another 2006 PTD 978 and PLD 1971 SC 184 ref.

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

----S.80---Customs Rules, 2001, R. 441---Checking of goods declaration by the customs---Review of assessment---Scope---Re-assessment can only be done within the process of assessment only and that also upon filing a review by an importer in terms of R. 441 of Customs Rules, 2001 wherein no suo motu powers are available with any authority.

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

----S.26A---Conducting of audit---Scope---Officials of Directorate General of Post Clearance Audit (DGPCA) are empowered to look into every aspect of the declaration made by the importer and assessment order passed by the competent authority of the Clearance Collectorate by preparing and issuing an audit observation to the importer for clarification---If the reply to the audit observation fails to settle the issue the DGPCA frames contravention report and forwards it to the Clearance Collectorate, which forwards it to the respective Collectorate of Customs Adjudication for issuance of show-cause notice under S.180 of the Customs Act, 1969.

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

----Ss.83 & 193---Clearance for home consumption---Appeal to Collector (Appeals)---Scope---Consignment which has undergone the process of assessment and thereafter a valid clearance order has been passed, such an order is an appealable order and cannot be disturbed by any authority, with the exception of preferring an appeal under S.193 of Customs Act, 1969 as is invariably done by the importers, in case they feel the assessment order so passed is nullity to the fact/law---If the department was of the view that proper assessment was not carried out, the only option left with them was to adopt the mechanism available in the Customs Act, 1969, for the re-opening of the assessment order by filing an appeal before the Collector of Customs (Appeals) under S.193 of the Customs Act, 1969, in which they could incorporate all of their apprehensions, opinions, findings, including contravening provisions of the Customs Act, 1969.

Messrs Paramount International (Pvt.) Ltd. v. FOP and others 2014 PTD 1256; Collector of Customs and others' case CPLA No.105-K of 2014 and Collector of Customs, MCC, Quetta v. Al-Habib Enterprises and Engineering and others 2019 PTD 1712 rel.

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

----S.80---Checking of goods declaration by the customs---Scope---Subsection (3) of S.80 of Customs Act, 1969 is dependent on subsection (2), hence, unless subsection (2) is not complied with in letter and spirit no action can be taken under S.80(3) of the Customs Act, 1969, meaning thereby that re-assessment under S.80(3) after release of the goods is permitted only after calling for the documents as expressed in S.80(2).

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

----Ss.83, 29 & 205---Clearance for home consumption---Restriction on amendment of bill of entry or bill of export or goods declaration---Amendment of documents---Expression "assessed for duty"---Scope---No amendment under S.205 of the Customs Act, 1969, is allowed in the columns of the declared value, quantity or description after removal of the goods from the customs area for home consumption after passing of valid assessment/clearance order or after shipment of the exported goods through goods declaration for export---Cap has been laid on the importer/exporter for obtaining amendment after out of charge of the goods declaration---Phrase "assessed for duty" used in expression lays restriction on the Customs not to amend itself the contents of goods declaration after clearance.

Ubaid Mirza for Appellants.

Muhammad Ali, AO for Respondents.

2021 P T D (Trib.) 2113

[Customs Appellate Tribunal]

Before Jahanzaib Wahlah, Member Judicial-III

Messrs M.I. TRADERS, LAHORE

Versus

PRINCIPAL APPRAISER, GROUP-I, MCC OF APPRAISEMENT-EAST, CUSTOMS HOUSE, KARACHI and 3 others

Custom Appeal No.K-711 of 2019, decided on 7th January, 2020.

Customs Act (IV of 1969)---

----Ss.80 & 25A---Checking of goods declaration by the Customs---Power to determine the customs value---Scope---Appellant was aggrieved of issuance of "Assessment Alert" by the Assistant Collector of Customs whereby assessing officers were directed not to assess certain goods below the value mentioned therein---Validity---Assistant Collector of Customs was not empowered to determine the value of goods/class of goods---Assistant Collector of Customs by issuing/circulating the assessment alert, said to be issued with the approval of Collector of Customs, had committed a grave illegality as he was least empowered to either determine value of any imported goods and circulate the same in the shape of either assessment alert of guideline in substitution of valuation ruling---Assistant Collector of Customs had encroached upon the sovereign powers/jurisdiction of Director, Directorate General of Valuation in circumstances---Assessment alert was set aside and the re-assessment orders passed against appellant on the basis the alert were also set aside.

Nadeem Ahmed Mirza, Consultant for Appellant.

Ghulam Asghar, A.O. for Respondents.

2021 P T D (Trib.) 2151

[Customs Appellate Tribunal]

Before Jehanzaib Wahlah, Member Judicial-III

Messrs SSJ BROTHERS (SMC-PVT.) LTD., KARACHI

Versus

The DEPUTY COLLECTOR (R&D) MCC OF APPRAISEMENT-EAST, CUSTOM HOUSE, KARACHI and 2 others

Custom Appeals Nos.K-1503 and 1504 of 2018, decided on 26th July, 2019.

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

----Ss.32, 25 & 25A---Mis-declaration---Value of imported and exported goods---Power to determine the customs value---Scope---Appellant imported a consignment of Viscose Bleach Fabric---Department detained the consignment on the premise that the appellant had mis-declared the value as evident from comparison of shipping bill presented by the exporter with the Customs at the time of exporting the consignment---Validity---Goods imported by appellant were subject to levy of duty and taxes with the application of value determined by Director, Directorate General of Valuation under S.25A of Customs Act, 1969, which in the present case was Valuation Ruling No.776/2015, dated: 04-12-2015 for the fabric falling under PCT Heading 5408.2100---Any alien value obtained by the customs akin to the value declared by exporter in the shipping bill for the purpose of assessment by the Customs Officials of that country was of no significance/legal effect as that could never overrule the transaction value defined in S.25(1) of the Customs Act, 1969---Department was directed to assess the goods in accordance with the valuation ruling---Impugned orders were set aside and the appeals were allowed, in circumstances.

Messrs E.F.U. General Insurance Company Limited v. The Federation of Pakistan PLD 1997 SC 700 = 1997 PTD 1693 and Chandavarkar S.R. Rao v. Asha Lata S. Guram 1986 4 SCC 447 rel.

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

----S.194A---Appeals to the Appellate Tribunal---Non-submission of counter affidavit---Scope---Non-submission of counter affidavit whether by will or default forfeits the department's right to deny assertion made in the affidavit.

(1974) 94 ITR-I; 1986 CLC 745; (1984) 146 ITR 140; 1986 PTD (Trib.) 119; 1986 CLC 1119; 1986 CLC 1408; 1991 MLD 1243; PLD 1992 SC 317; 1993 SCMR 662; PLD 1996 Kar. 68; PLJ 1997 Quetta 66 and 2003 PTD 2118 ref.

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

----S. 186---Detention of goods pending payment of fine or penalty---Scope---Section 186 of Customs Act, 1969, comes into play during the course of imports, meaning thereby, if any case has been adjudicated by the competent authority against an importer and through which it had held the charges established as levelled in the show cause notice and imposed fine and penalty, and the importer has not paid that or any inquiry or investigation in respect of any goods is underway and imposition of penalty is under consideration, the appropriate officer is empowered to detain the forthcoming goods of the same importer till the time fine and penalty are paid.

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.

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

----S.168---Seizure of things liable to confiscation---Scope---Non-serving of notice under S.168(1) of Customs Act, 1969, renders the notice and subsequent proceeding infested from legal infirmity and as such of no legal effect.

PTCL 1994 CL 22; 1983 PCr.LJ 620; 1983 PCr.LJ 623; 1983 CLC 786; PTCL 1983 CL 47; 1987 PCr.LJ 1413; 1987 PCr.LJ 1091; 2004 PCr.LJ 1958; 1998 MLD 650; 2005 PTD 23; 2003 PTD 2821 and 2007 PTD 2092 ref.

Khalid Mahmood v. Collector of Customs, Custom House, Lahore 1999 SCMR 1881 rel.

(e) Administration of justice---

----Person who is performing the role of a judge, no matter even in quasi-judicial proceeding, must wear all laws of the country on the sleeves of his robes and failure to do so by any reasons is not an excuse.

Section Officer Government of Punjab Finance Department and other v. Ghulam Shabbir 2010 SCMR 1425 fol.

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

----S.180---Sales Tax Act (VII of 1990), Ss. 3, 6, 7, 26, 33 & 34---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 imports---Scope---Section 3 of Sales Tax Act, 1990, is indeed a charging section but under the said section if the appointing authority is officer of Inland Revenue---Section 6 of Sales Tax Act, 1990, defines mode and manners of collection of sales tax at import stage by the Customs Authorities and on supply by the manufacturer/seller, resultant it is not charging section instead a machinery section---Section 7 of Sales Tax Act, 1990, speaks about determination of tax liability at the time of filing of sales tax return under S.26 of Sales Tax Act, 1990, this is a machinery section as well---Section 33 of Sales Tax Act, 1990, contains penal clauses synonymous to S.156(1) of the Customs Act, 1969---Section 34 of Sales Tax Act, 1990, speaks about default surcharge to be paid upon establishing the charges under the charging sections---Likewise, S.148 of Income Tax Ordinance, 2001, prescribes the procedure for collection of Income Tax at import stage by the authorities referred therein---Meaning thereby that the said sections are independent under which no charge can be invoked.

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

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

----S.32---Income Tax Ordinance (XLIX of 2001), Ss.161 & 148---Mis-declaration---Failure to pay tax collected or deducted---Scope---Section 161 of Income Tax Ordinance, 2001, is for the person who collects or deducts the income tax---Power to collect or deduct income tax at import stage from the importer rests upon the official of Customs not on the importer as he neither collects nor deducts rather pays leviable tax---In case of non-collection or deduction, consequences have to be borne by the collecting/deducting authority referred/incorporated in S.148(9) of Income Tax Ordinance, 2001.

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

----S.180---Show-cause notice---Scope---One has to remain within the charter of show-cause notice, failure to do so renders the order so passed palpably illegal.

Collector Excise and Land Customs and others v. Rahm 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 Collector of Customs (Adjudication-III), Karachi 2004 PTD 1449 ref.

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

----Ss. 32 & 179---Sales Tax Act (VII of 1990), Ss. 11, 30 & 48---Income Tax Ordinance (XLIX of 2001), Ss. 162, 228 & 140---Mis-declaration---Assessment of sales tax---Recovery of sales tax and income tax---Procedure---Scope---Availability of word "tax" in S.32, Customs Act, 1969, does not empower Customs Authorities to assume powers under the provisions of Ss.11(2) & (3) of Sales Tax Act, 1990 & S.162(1) of Income Tax Ordinance, 2001, unless Legislature appoints them as "Officer of Inland Revenue/Commissioner of Income Tax", who have powers under the sections to take cognizance in the matter relating to Sales Tax and Income Tax---Word "tax" inserted in Ss. 179 & 32 of the Customs Act, 1969, is only for assuming of powers on the basis of involved duty and taxes by the appropriate adjudicating authority for empowering the Officer of Customs to charge the taxpayer under the said provisions on the basis of duty and taxes, punishable under the provision of S.156(1) of Customs Act, 1969.

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

----S.202---Sales Tax Act (VII of 1990), S. 48---Income Tax Ordinance (XLIX of 2001), S. 140---Recovery of Government dues---Recovery of arrears of sales tax---Recovery of tax from persons holding money on behalf of a taxpayer---Scope---Customs Collectorates have powers to collect sales tax and income tax as duty at import stage---Argument that Customs is empowered to recover the short paid amount of Sales Tax and Income Tax at import stage under S.202 of Customs Act, 1969, is based on mistaken belief---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 under S.48 of Sales Tax Act, 1990 and S.140 of Income Tax Ordinance, 2001, for recovery of the adjudged amount of sales tax and income tax after due process of law.

Messrs AGP (Pvt.) Ltd. v. Additional Collector of Customs, Karachi 2011 PTD (Trib.) 110; Messrs Global Marking 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 03 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 02 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.

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

----Ss.180 & 79---Show cause notice---Declaration and assessment for home consumption or warehousing---Scope---No charge under S.79(1) of the Customs Act, 1969, can be invoked in the show cause notice even in general not particularly, when the goods were selected for examination on the strength of which the competent authority had passed the assessment order for levy of duty and taxes.

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

----S.25A---Power to determine the customs value---Scope---Section 25-A of Customs Act, 1969, is a non-obstante clause and the prices determined through Valuation Ruling in exercise of the powers vested under the Director, Directorate General of Valuation, prevails on the values declared/assessed by the importer/appropriate officer and even any value which officials of Clearance Collectorate consider to be actual transaction value within the meaning of S.25(1) of the Customs Act, 1969, like the value available in the shipping bill filed by the exporter with the Customs of the exporting country---Value determined under S.25A of Customs Act, 1969, cannot be overruled for assessing the goods for which same was issued for levy of duty and taxes through a proper legal appealable assessment order passed by the authority.

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

----Ss. 25 & 25A---Value of imported and exported goods---Power to determine the customs value---Scope---Conjoint reading of Ss.25 & 25-A of Customs Act, 1969, show that the former provision in fact compliments the provisions of section 25A of Customs Act, 1969, as it has been mandated for the Director, Directorate General of Valuation, to determine the value of the goods and class of goods or category of the goods with the application of different subsections of S. 25 in sequential manner without any exception---Section 25A(2) makes application of the valuation ruling on the goods or category of the goods mandatory for levy of duty and taxes being customs value for the purpose of assessment, wherein S.25A(4) provides legality to the Valuation Ruling for application as evident from its contents---Legislature has consciously framed the S.25A(4) through which Director has been empowered to determine the customs value of certain goods or class of goods and thereafter issue valuation rulings for application across the board for levy of duty and taxes on the imported/exported goods.

2018 PTD 1746 rel.

Nadeem Ahmed Mirza (Consultant) for Appellant.

Amir Hussain A.O. for Respondents.

2021 P T D 344

[Federal Tax Ombudsman]

Before Mushtaq Ahmad Sukhera, Federal Tax Ombudsman

Messrs M. SHAH MUHAMMAD & SONS (PVT.) LTD.

Versus

The SECRETARY, REVENUE DIVISION, ISLAMABAD

Complaint No.2399/MLN/IT of 2020, decided on 30th November, 2020.

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

----Ss.10, 2(3) & 9---Income Tax Ordinance (XLIX of 2001) Ss. 170, 171 & 120----Federal Tax Ombudsman, jurisdiction of----Maladministration---Disposal of complaints---Issuance of income tax refunds -----Complaint against failure to provide taxpayer opportunity of hearing and unilateral reduction of refund amount with no compensation for delayed refund---Contention of Department was that said complaint was that not maintainable under S.9(2)(b) of Establishment of Office of Federal Tax Ombudsman Ordinance, 2000---Validity--- Objection against maintainability of complaint was not valid as complainant was aggrieved at passing of order without providing opportunity of hearing, which was a clear violation of S.170(4) of Income Tax Ordinance, 2001 --- Federal Tax Ombudsman observed that failure to provide complainant / taxpayer opportunity of hearing before passing of order under S.170(4) of Income Tax Ordinance, 2001 was tantamount to maladministration, and recommended Department to direct concerned commissioner to pass fresh order after providing opportunity of hearing to complainant---Complaint was disposed of, accordingly.

Messrs Shehzadi Polypropylene Industries through Proprietor v. Federation of Pakistan through President and others 2017 PTD 2019 distinguished.

Saleem Raza Asif, Advisor, Dealing Officer.

Manzoor Hussain Kureshi, Advisor, Appraisal Officer.

Riaz Ahmad Raja, ITP, Authorized Representative.

2021 P T D (Trib.) 416

[Federal Tax Ombudsman]

Before Mushtaq Ahmad Sukhera, Federal Tax Ombudsman

Messrs SHAH SONS PAKISTAN (PVT.) LTD., MULTAN

Versus

The SECRETARY REVENUE DIVISION, ISLAMABAD

Complaint No.2401/MLN/IT of 2020, decided on 30th November, 2020.

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

----Ss.10, 2(3) & 9----Income Tax Ordinance (XLIX of 2001) Ss.124 & 170---Federal Tax Ombudsman, jurisdiction of---Maladministration---Disposal of complaints---Issuance of income tax refunds---Assessment giving effect to an order---Complaint against failure of Department in giving effect to order of Appellate Tribunal whereby complainant / taxpayer was held entitled to tax refund---Validity---Department stated that after order of Appellate Tribunal, complainant had not yet filed e-application for refund, and assured that after filing of such application, Department would issue refund as per law within 30 days---Federal Tax Ombudsman observed that upon such assurance of Department, complaint could be disposed of, and recommended that Department issue refund as per law and report compliance of same to Federal Tax Ombudsman---Complaint was disposed of, accordingly.

Messrs Shehzadi Polypropylene Industries through Proprietor v. Federation of Pakistan and 4 others 2017 PTD 2019 ref.

Saleem Raza Asif, Advisor Dealing Officer.

Manzoor Hussain Kureshi, Advisor Appraisal Officer.

Riaz Ahmad Raja, ITP, Authorized Representative.

2021 P T D 984

[Federal Tax Ombudsman]

Before Mushtaq Ahmad Sukhera, Federal Tax Ombudsman

Mian KALEEM AKHTAR

Versus

The SECRETARY, REVENUE DIVISION, ISLAMABAD

Complaints Nos.2286 to 2289/MLN/IT of 2020, decided on 23rd September, 2020.

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

----Ss.10, 2(3) & 9---Income Tax Ordinance (XLIX of 2001) Ss. 170, 171 & 120---Federal Tax Ombudsman, jurisdiction of---Maladministration---Disposal of complaints---Delay in issuance of refunds---Scope---Complaint against non-issuance of refund / compensation under S.170(4) of the Income Tax Ordinance, 2001---Contention of complainant, inter alia, was that Department had failed to pass orders for refund under S.170(4) of Income Tax Ordinance, 2001 within 60 days of filing of return, therefore maladministration stood established----Validity---Admitted position that before filing of present compliant, Department had already disposed of complainant's application for refund under S.170(4) of Income Tax Ordinance, 2001, therefore, grievance of complainant had been redressed already --- Complaint being bereft of any merit, was dismissed, accordingly.

Mst. Kaniz Fatima's case 2001 SCMR 1493 and Shehzadi Polypropylene Industries v. Federation of Pakistan and others W.P. No.599 of 2017 ref.

Saleem Raza Asif, Dealing Officer.

Manzoor Hussain Kureshi, Advisor Appraisal Officer.

Riaz Ahmad Raja, ITP Authorized Representative.

2021 P T D (Trib.) 2045

[Federal Tax Ombudsman]

Before Mushtaq Ahmad Sukhera, Federal Tax Ombudsman

SECRETARY, REVENUE DIVISION, ISLAMABAD and others

Versus

DEALING OFFICER APPRAISAL OFFICER

Complaint No.0032/OM of 2021, decided on 22nd September, 2021.

Income Tax Ordinance (XLIX of 2001)---

----Ss. 172,173, 170 & 218---Establishment of the Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), Ss.9, 2(3) & 10---Maladministration---Jurisdiction, functions and powers of the Federal Tax Ombudsman---Own Motion complaint against systemic maladministration by Department due to problems in service of notice(s) to residents / non-residents and in appointment of Authorized Representative(s) for non-residents---Federal Tax Ombudsman observed that comprehensive legal mechanism was in place for service of notice or orders under S.218 of Income Tax Ordinance, 2001 and for appointment of Authorized Representative of a non-resident in terms S.172(3) of said Ordinance, however when it came to ground reality, situation was quite different --- Failure of Department to properly serve notices and orders in terms of S.218 and problems in appointments of Authorized Representatives tantamount to maladministration---Federal Tax Ombudsman recommended Department to devise system / mechanism to ensure that notices were served well within time in accordance with spirit of S.218 of the Ordinance and that timely declaration of appointment of Authorized Representatives be made and furthermore Department was to dispose of all pending cases of non-residents in terms of S.170(3)(f) of income Tax Ordinance, 2001---Complaint was disposed of , accordingly.

Dr. Sarfraz Ahmad Warraich, Advisor for Dealing Officer.

Manzoor Hussain Kureshi, Advisor for Appraisal Officer.

Waheed Shahzad Butt for Authorized Representative.

Kamran Ullah Khan, ACIR, LTO, Islamabad, Muhammad Ayaz Warraich, DCIR RTO, Sialkot and Mrs. Faiza Bashir, DCIR RTO, Gujranwala for Departmental Representatives.

FINDING/RECOMMENDATIONS

MUSHTAQ AHMAD SUKHERA, FEDERAL TAX OMBUDSMAN.-----This is an Own Motion (OM) investigation, initiated through exercise of jurisdiction, conferred under Section 9(1) of the Federal Tax Ombudsman Ordinance, 2000 (FTO Ordinance) against failure of the Department (Deptt) to adhere to the provisions of Sections 172(3), 173 and 218 of Income Tax Ordinance, 2001 (the Ordinance) relating to service of notices/orders on the Residents/Non-residents (NRs) and appointment of Authorized Representative in the case of NRs, which resulted in multiple difficulties faced by the resident tax payers generally and particularly. As a result of adjudication of quasi juridical matters without adhering to the above provisions of law, in letter and spirit vitiate the entire proceedings and become cause of multiple grievances of maladministration against the Deptt.

1. Comments on the issue were requisitioned in terms of Section 10(4) of the FTO Ordinance read with Section 9(1) of Federal Ombudsman Institutional Reforms Act 2013.

The Chief Commissioners-IR (CCs-IR) LTO's/MTO's/RTO's and CTO's filed comments related to their regions. It was contended that after introduction of IRIS System, it was mandatory to make every correspondence through the system w.e.f Tax Year 2014. Through Finance Act (FA), 2018 clause (d) was inserted in subsection (1) of Section 218 of the Ordinance, which provided that any notice, order or requisition served on a resident individual electronically, shall be treated as properly served on the individual. Similarly, clause (d) was inserted in subsection (2) of Section 218 of the Ordinance, which also provided that any notice, order or requisition served electronically shall be treated as proper service. Thus, notices sent through IRIS got properly served upon the taxpayer through given mailing address/ message at cell numbers, hence is presumed a valid service in terms of Section 218 of the Ordinance. However, for facilitation purposes, despite the above provisions, manual mode for service was also used. Precisely, the following service modes were used:

(i) online via IRIS;

(ii) Courier Service (GPO); and

(iii) Notice Server (NS) of Deptt.

1. Furthermore, NADRA Verisys System was available to track such cases where persons were not traceable on their declared registered addresses so as to ensure proper service of notices and judicious disposal of tax proceedings. However, in the light of i nstant OM, instructions were once again issued to all the field formations to ensure strict adherence to the provisions of Section 218 of the Ordinance, in letter and spirit.

2. As regards cases of the NRs and declaration of their AR's in terms of Section 172(3) of the Ordinance, it was averred that the notices/orders, issued to NRs were served in the same manner as to a resident person through given e-mail address /cell phones. The matter regarding appointment of AR did not arise in normal routine until a NR made such request or the Deptt deem it necessary to do the same before proceeding ex-parte for assessment or recovery. In case a NR authorizes a person as AR, it is the Zonal CIR who had to declare the AR to be his representative in terms of Section 172(3) (f) of the Ordinance. The Zonal CIR, declares AR strictly in accordance with Section 172(3) read with Section 172 of the Ordinance. The Region wise position of ARs declared in terms of Section 172(3) of the Ordinance, is as under:

| | | | | | | --- | --- | --- | --- | --- | | Sr. No. | Name of the field formation | Number of NRs | Number of NR's where ARs declared appointed | Number of NR's where ARs not declared appointed | | 1 | RTO Islamabad | 02 | Nil | 02 | | 2 | CTO Karachi | 4,473 | 3,200 | 1,273 | | 3 | LTO Karachi | 74 | 55 | 19 | | 4 | RTO-I Karachi | Nil | Nil | Nil | | 5 | RTO-II Karachi | Nil | Nil | Nil | | 6 | MTO Karachi | 10 | 10 | Nil | | 7 | RTO Hyderabad | 128 | 30 | 98 | | 8 | RTO Faisalabad | 2171 | 310 | 1,861 | | 9 | RTO Abbottabad | 311 | 12 | 299 | | 10 | RTO Bahawalpur | 682 | 286 | 396 | | 11 | RTO Peshawar | 139 | 13 | 126 | | 12 | RTO Quetta | 306 | 162 | 144 | | 13 | RTO Rawalpindi | 1034 | 304 | 730 | | 14 | RTO Sahiwal | 268 | 71 | 197 | | 15 | TRO Sargodha | 823 | 79 | 744 | | 16 | RTO Sukkur | Nil | Nil | Nil | | 17 | RTO Sialkot | 982 | Nil | 982 | | 18 | RTO Gujranwala | 964 | 04 | 960 | | 19 | RTO Islamabad | 34 | Nil | 34 | | 20 | RTO Multan | Nil | Nil | Nil | | 21 | RTO-Lahore | Nil | Nil | Nil | | 22 | RTO-ll Lahore | 03 | 03 | Nil | | 23 | CTO Lahore | Nil | Nil | Nil | | | Grand Total: | 12,404 | 4,539 | 7,865 |

1. The case was discussed in the light of comments/contentions threadbare and record made available perused.

2. From perusal of the record, it is apparent that following comprehensive mechanism has been put in place by the Legislature for service of notices/orders on the resident/non-resident taxpayers:-

(i) online IRIS Bar Code generated notices, sent through taxpayer's inbox as well as through email and cell number

(ii) courier service, (iii) through notice server, and

(iv) use of NADRA Verisys System for exact identification of address of resident/non-resident declarant.

1. However, practically the things are not as encouraging as appear from the feedback received from the trade bodies, Chambers of Commerce and Industry, representative associations, individual tax payers who frequently appear before this forum. The main cause of grievance was always the Dept'l failure rearing to service of notices/orders, on the proper addresses. In majority of such cases where the Complainants are redressed, it is the State revenue which is the ultimate looser. Such environment obviously impacts not only the dynamics of business and investment in the country in most adverse manner but above all the State exchequer.

2. In the case of NRs, the issue is further aggravated as a person who lives abroad buys some property in the country and shows his local address where such property is located. It is seen that in most of the cases came up before this forum, the Deptt after sending notices/orders on the address given on the property documents simply go ahead with making ex parte orders. In such cases it incumbent on the Deptt to conduct proper inquiry and ensure that AR's are declared in accordance with Section 172(3) (f) of the Ordinance, which elucidates- .

"(3) Subject to subsections (4) and (5), where a person is a non-resident person, the representative of the person for the purposes of this Ordinance for tax year shall be any person in Pakistan-

(a) who is employed by, or on behalf of, the non-resident person;

(b) who has any business connection with the non-resident person;

[Explanation- In this clause the expression "business connection" includes transfer of an asset or business in Pakistan by a non-resident;

(c) from or trough whom the non-resident person is in receipt of any income, whether directly or indirectly;

(d) who hold, or controls the receipt or disposal of nay money belonging to the non-resident person;

(e) who is the trustee of the non-resident person; or

(f) who is declared by the Commissioner by an order in writing to be the representative of he non-resident persons."

1. From the legal position explained supra, it is evident that in case, a representative of the NR person do not fall within sub-clauses (a) to (e), then the Zonal CIR had to declare the same as AR in writing in terms of Clause (f) of Section 172(3) of the Ordinance. From the above data provided by the Regions in this respect, it appears that out of 12.404 NR's in cases of only 4,539, ARs had been declared under Section 172(3)(f) of the Ordinance. It is however, observed that in 7,865 cases of NRs apparently no such clear distinction had been pointed out by the Deptt thus the cases are apparently pending.

2. It is evident from the facts discussed supra that a comprehensive legal mechanism is in place for service of notices/orders under Section 218 and declaring an AR of a NR, in terms of Section 172(3) (f) Ordinance. However, when it comes to ground reality, the position is otherwise as appear from most of the complaints adjudicated upon by this forum.

Findings:

1. Failure of the Deptt to properly serve notices/orders in terms of Section 218 of the Ordinance, and appointment of the AR's in non-resident cases, under Section 172(3)(f) of the Ordinance, is tantamount to mal-administration, in terms of Section 2(3)(i)(a) & (ii) of the FTO Ordinance.

Recommendations:

1. FBR to-

2021 P T D 2098

[Federal Tax Ombudsman]

Before Dr. Asif Mahmood Jah, Federal Tax Ombudsman

MUHAMMAD AZHAR SIDDIQUE

Versus

The SECRETARY, REVENUE DIVISION, ISLAMABAD

Complaint No.1362/LHR/ST of 2021, decided on 8th October, 2021.

Sales Tax Act (VII of 1990)---

----S.45A---Sales Tax Rules, 2006, R. 6(4) & proviso.---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), Ss.10, 9(1) & 2(3)---Jurisdiction, functions and powers of the Federal Tax Ombudsman---Maladministration---Complaint against misuse of statutory powers to compulsorily registered taxpayer under Sales Tax Act, 1990 and for imposition of penalty for non-filing of sales tax returns---Validity---Federal Tax Ombudsman observed that Department in the present case, based its actions on declared turnover of complainant as being above threshold for compulsory registration, but failed to notice that complainant's tax profile mention that his principal activity as service provider / lawyer / advocate and no transaction was declared under column of opening stock, net purchases etc., which established that no activity with respect to sale or supply of goods was involved and therefore action of compulsory registration was not justified---Compulsory registration of a professional lawyer under Sales Tax Act, 1990 was based on wrong application of law and actions of the Department tantamount to "maladministration"---Federal Tax Ombudsman recommended Department to call for record of proceedings under S.45A of Sales Tax Act, 1990 and examine legality and propriety of order for compulsory registration and pass speaking order in terms of proviso to R.6(4) of Sales Tax Rules, 2006 with opportunity of hearing to complainant---Complaint was disposed of, accordingly.

Fazal Yazdani Khan, Advisor Dealing Officer

Shahid Ahmad, Advisor Appraisal Officer.

Waheed Shahzad Butt for Authorized Representative.

2021 P T D 758

[Gilgit-Baltistan Chief Court]

Before Malik Haq Nawaz, C.J. and Ali Beg, J

SKARDU LUBE LINE, through Hiader Aman and others

Versus

MINISTRY OF DEFENCE through Secretary Defense Federal Secretariat Islamabad and others

Writ Petition No.85 of 2020 along with Civil Miscellaneous No.170 of 2020, Writ Petition No.121 of 2019 along with Civil Miscellaneous No.221 of 2019, Writ Petition No.93 of 2020 along with Civil Miscellaneous No.181 of 2020, Writ Petition No.213 of 2019 along with Civil Miscellaneous No.435 of 2019, Writ Petition No.188 of 2019 along with Civil Miscellaneous No.372 of 2019, Writ Petition No.76 of 2020 along with Civil Miscellaneous No.155 of 2020, Writ Petition No.266 of 2019 along with Civil Miscellaneous No.542 of 2019 and Writ Petition No.71 of 2019 along with Civil Miscellaneous Nos.141 and 456 of 2019, decided on 29th June, 2020.

Government of Gilgit-Baltistan Order, 2018---

----Art.86(2)---Gilgit-Baltistan Council Income Tax (Adaptation) Act (IX of 2012), S.1(2) & Preamble---Gilgit-Baltistan Council Secretariat Islamabad Notification No. F. No. 3(5)/2014/F.II-GBC dated 04.01.2018---Writ petition---Applicability of provisions of Income Tax Ordinance, 2001 and other taxation laws of Pakistan on Gilgit-Baltistan---Scope---Petitioners, who were contractors and suppliers to Pakistan Army, impugned deduction of income tax on payments made to them by Ministry of Defence, inter alia, on ground that vide Notification No. F. No. 3(5)/2014/F.II-GBC dated 04.01.2018, the Gilgit-Baltistan Council Income Tax (Adaptation) Act, 2012, had been held in abeyance and there existed no justification for respondents to deduct tax on payments made to them---Validity---Region of Gilgit-Baltistan was a tax-free zone in terms of all taxes and no law regarding imposition of taxes was in field and those engaged in contracts or any fiscal activity, whether local or non-local, within territory of Gilgit-Baltistan, enjoyed exemption from all taxes---Contention that taxes were deducted under provisions of Income Tax Ordinance, 2001, was not tenable as Gilgit-Baltistan was entirely different from other parts of the country and Gilgit-Baltistan Council Income Tax (Adaptation) Act, 2012, being dormant, no justification existed to deduct tax on payments made to the petitioners---Authorities were restrained from deduction / collection of any tax from pending or running bills of the petitioners till enforcement of Gilgit-Baltistan Council Income Tax (Adaptation) Act, 2012 with necessary amendments----Writ petitions were allowed, accordingly.

Saadat Ullah for Petitioners (in Writ Petition No.85 of 2019 along with Civil Miscellaneous No.171 of 2019).

Departmental reps. and Legal Advisor for Respondents (in Writ Petition No.85 of 2019 along with Civil Miscellaneous No.171 of 2019).

Abdul Karim for Petitioners (in Writ Petition No.121 of 2019 along with Civil Miscellaneous No.221 of 2019).

Departmental reps. and Legal Advisor for Respondents (in Writ Petition No.121 of 2019 along with Civil Miscellaneous No.221 of 2019).

Amjad Hussain and Israr Hussain for Petitioners (in Writ Petition No.93 of 2020 along with Civil Miscellaneous No.181 of 2020).

Departmental reps. and legal advisor for Respondents (in Writ Petition No.93 of 2020 along with Civil Miscellaneous No.181 of 2020).

Abdul Karim for Petitioner (in Writ Petition No. 213 of 2019 along with Civil Miscellaneous No.435 of 2019).

Deputy Attorney General assisted by Syed Riaz Kazmi for Respondents (in Writ Petition No. 213 of 2019 along with Civil Miscellaneous No.435 of 2019).

Abdul Karim for Petitioner (in Writ Petition No.188 of 2019 along with Civil Miscellaneous No.372 of 2019).

Deputy Attorney General assisted by departmental rep. for Respondents (in Writ Petition No.188 of 2019 along with Civil Miscellaneous No.372 of 2019).

Saadatullah for Petitioners (in Writ Petition No.76 of 2020 along with Civil Miscellaneous No.155 of 2020).

Deputy Attorney General assisted by departmental rep. for Respondents (in Writ Petition No.76 of 2020 along with Civil Miscellaneous No.155 of 2020).

Abdul Karim for Petitioners (in Writ Petition No.266 of 2019 along with Civil Miscellaneous No.542 of 2019).

Deputy Attorney General assisted by departmental rep. and L.A. Syed Riaz Kazmi for Respondents (in Writ Petition No.266 of 2019 along with Civil Miscellaneous No.542 of 2019).

Abdul Karim for Petitioner (in Writ Petition No.71 of 2019 along with Civil Miscellaneous Nos.141 and 456 of 2019).

Deputy Attorney General assisted by departmental rep. and L.A. Ghulam Haider for Respondents (in Writ Petition No.71 of 2019 along with Civil Miscellaneous Nos.141 and 456 of 2019).

2021 P T D 1757

[Gilgit-Baltistan Chief Court]

Before Ali Baig,J

FBISE through Chairperson FBISE and another

Versus

DILDAR HUSSAIN

Civil Revision No.165 of 2019, decided on 7th October, 2020.

Limitation Act (IX of 1908)---

----S.15---Exclusion of time during which proceedings are suspended---Scope---Petitioners assailed order passed by Executing Court whereby their objection petition was dismissed---Executing Court had passed the initial decree in favour of the respondent on 29-08-2013 and final appeal of the petitioners was dismissed by the Supreme Appellate Court on 19-10-2016---Respondent had filed the execution petition on 10-10-2017 well within the passing of the order of Supreme Appellate Court---Held, the execution petition was well within time as operation of the impugned judgment/decree passed by the Trial Court was suspended by the High Court as well as Supreme Appellate Court---Since the appeal of the petitioners was dismissed by maintaining the judgment of the Trial Court, the order of the Supreme Court merged into the order of lower courts as such period of limitation for filing of execution petition started from the order of final appellate forum---Revision petition was dismissed.

Manzoor Hussain for Petitioners.

Imtiaz Hussain for Respondent.

2021 P T D (Trib.) 35

[Inland Revenue Appellate Tribunal]

Before Mrs. Ambreen Aslam, Judicial Member and Saifullah Khan, Accountant Member

Messrs HUSSAIN MILLS LIMITED, KARACHI

Versus

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

I.T.As. Nos.856/KB to 876/KB of 2019, decided on 11th December, 2019.

Income Tax Ordinance (XLIX of 2001)---

----Ss.182 & 165---Offences and penalties---Statements---Scope---Appellant was imposed upon penalties for its failure to furnish monthly statements in term of S.165 of Income Tax Ordinance, 2001---Validity---Appellant had reasonably explained the cause of its failure to file the statements by stating that it was facing problems in electronically filing them because in some cases IRIS portal was not importing CPRs while uploading the CPRs from the payment tab of IRIS---Appellant had shifted the burden of proof upon the department and the department had a very good chance to controvert the alleged ineffectiveness of IRIS but nothing was available on the record which could suggest that the department had tried to controvert such assertion---Department could not be permitted to generate new income under the grab of penalty---Impugned order was set aside---Appeals were accepted.

Ameer Ali Akbar, ACA and Muhammad Siddiq ITP for Appellant.

Asif Jamali, DR for Respondent.

2021 P T D (Trib.) 47

[Inland Revenue Appellate Tribunal]

Before Shahid Masood Manzar, Chairman and Nadir Mumtaz Warraich Accountant Member

Messrs SEFAM (PVT.) LTD. LAHORE

Versus

The COMMISSIONER INLAND REVENUE, RTO, PESHAWAR

I.T.A. No.52/PB of 2019, decided on 22nd May, 2019.

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

----Ss.127, 128 & 129---Appeal to Commissioner (Appeals)---Procedure in appeal---Decision in appeal---Scope---Appellant assailed order passed by Commissioner (Appeals) whereby he had decided the appeal without hearing the appellant---Validity---Commissioner had not treated the appellant fairly and justly because he had passed a non-speaking order in a casual manner by himself admitting that the appellant had not attended the hearing nor submitted any supporting documents---Impugned order was vacated and the case was remanded to the Assessing Officer for providing proper opportunity of hearing to the appellant---Appeal was disposed of, accordingly.

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

----Ss.127, 128 & 129---Appeal to commissioner---Opportunity of hearing---Maxim: audi alteram partem---Applicability---Scope---Nobody can be condemned unheard and no act or action which is detrimental, against the right and interest of a person can be passed without giving him prior notice and opportunity of hearing---Issuance of a proper show cause notice to a person was an essential ingredient of the legal maxim audi alterm partem---Right of getting a show-cause notice and the right of being personally heard are inseparable and inalienable rights of the taxpayer and cannot be denied under any circumstances.

Munir Ahmed, CFO for Appellant.

Ms. Fozia Iqbal, DR for Respondent.

2021 P T D (Trib.) 89

[Inland Revenue Appellate Tribunal]

Before Shahid Masood Manzar, Chairmanand Nadir Mumtaz Warraich, Accountant Member

Messrs SAMAMA STAR CONSTRUCTION CO., ISLAMABAD

Versus

The COMMISSIONER INLAND REVENUE, RTO, ISLAMABAD

S.T.A. No.92/IB of 2019, decided on 10th June, 2019.

Islamabad Capital Territory (Tax on Services) Ordinance (XLII of 2001)---

----S.3---Sales Tax Act (VII of 1990), Ss. 2(35) & 14---Sales Tax Rules, 2006, R.6---Scope of tax---Taxable activity---Compulsory Registration---Scope---Appellant assailed order passed by Commissioner Inland Revenue whereby it was compulsorily registered---Validity---Appellant had purchased land/immovable property in the name of the registered partnership firm for use as a commercial project and for subsequently selling the constructed units (shops and apartments) to various buyers---Construction being carried on by the appellant had to involve or intended to involve the provision of services to the person who had booked the unit---Person who had booked the unit had no interest in the said property therefore, it could not be said that he was being provided with any service---Appellate Tribunal observed that it would be illogical to state that the construction and development carried out by the appellant for a "booked" unit or only on the basis of an "agreement to sell" to be a taxable service---Appellant's registration was cancelled. [pp. 90, 97, 98] A, B, C, D & E

2018 PTD 1487 fol.

Fareed Hussain Siddiqui, ITP and Muhammad Kamal Gohar, FCA for Applicant.

Shamshad Gull, DR for Respondent.

2021 P T D (Trib.) 125

[Inland Revenue Appellate Tribunal]

Before Mrs. Ambreen Aslam, Judicial Member and Saifullah Khan, Accountant Member

Messrs AL-AMEEN DENIM MILLS (PVT.) LTD.

Versus

The COMMISSIONER INLAND REVENUE, ZONE-I, RTO, KARACHI

S.T.A. No.460/KB of 2016, decided on 17th October, 2019.

Sales Tax Act (VII of 1990)---

----Ss.4 & 11---Zero rating---Assessment of tax and recovery of tax not levied or short levied or erroneously refunded---Scope---Department conducted physical verification of the appellant's declared premises to ascertain the admissibility of zero rating facility on consumption of utilities and found that the appellant had rented out the said premises to someone who was unauthorizedly availing zero rating facility on gas/electricity---Validity---Appellant had already informed the department regarding its business position by stating that it had given out the textile plant on fixed income basis---Mens rea as alleged by the department was not established---Commissioner (Appeals) had not appraised the facts in true sense---Appeal was allowed.

S.T.A No.355/KB of 2016, dated 10-10-2016 ref.

Vishwa Mittar Sahitya for Appellant.

Nemo. for Respondent.

2021 P T D (Trib.) 150

[Inland Revenue Appellate Tribunal]

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

Messrs UNITED INDUSTRIES LTD. LAHORE

Versus

The COMMISSIONER INLAND REVENUE, LTU, LAHORE

S.T.A. No.219/LB of 2018, decided on 8th January, 2019.

Federal Excise Act (VII of 2005)---

----Ss.7 & 44---Sales Tax Act (VII of 1990), S.66---Excise duty---Provisions of the Sales Tax Act, 1990---Applicability---Refund of excise duty to be claimed within one year---Scope---Appellant paid Federal Excise Duty on its supplies of locally purchased raw material for production of cooking oil under S.7 of Federal Excise Act, 2005, under sales tax mode---Appellant claimed refund of excise duty but the refund of the appellant was considered as inadmissible with the observation that it was claimed under S.66 of the Sales Tax Act, 1990, whereas the provisions of Federal Excise Act, 2005 were applicable---Validity---Federal Tax Ombudsman had directed the department to proceed the matter in the light of factual position instead of proceeding under pre-conceived notion---Appellate Tribunal annulled the impugned order with the direction to the appellant to claim refund under S.44(3) of Federal Excise Act, 2005, and the concerned processing officer was also directed to process/allow the same in accordance with law---Appeal of the taxpayer succeeded accordingly.

Salman Ali Bhatti along with Shoaib Ahmed for Appellant.

Shahid Sattar, DR for Respondent.

2021 P T D (Trib.) 157

[Inland Revenue Appellate Tribunal]

Before Shahid Masood Manzar, Chairman and Nadir Mumtaz Warraich, Accountant Member

Dr. Syed FARHAT ABBAS, ISLAMABAD

Versus

The COMMISSIONER INLAND REVENUE, RTO, ISLAMABAD

I.T.As. Nos.852/IB, 853/IB and 854/IB of 2018, decided on 14th February, 2019.

Income Tax Ordinance (XLIX of 2001)---

----S.114---Return of income---Deduction of expenses---Scope---Question before Appellate Tribunal was whether the appellant was entitled to get set off/deduction of any expenses from his professional services receipts---Validity---Appellant had rightly claimed expenses---Tax returns were lawfully filed under normal tax regime which had to be assessed under normal tax by allowing expenses to the extent as were admissible and verifiable on the basis of details and documents filed during the course of assessment proceedings---Appellant had placed the details/documents before the Appellate Tribunal and after going through the headwise claim of expenses supported by valid and lawful documentary evidences, Appellate Tribunal held that both the officers below had wrongly rejected the claim of expenses---Appellant was required to be allowed profit and loss expenses at forty percent of the claimed expenses for all three years under review---Appeals succeeded accordingly.

2016 PTD 100 rel.

Saleem Rathore and Zulfiqar Haider, ITP for Appellant.

Tariq Iqbal, DR for Respondent.

2021 P T D (Trib.) 166

[Inland Revenue Appellate Tribunal]

Before Shahid Masood Manzar, Chairman and Nadir Mumtaz Warraich, Accountant Member

Messrs WAULAR ENGINEERING, ISLAMABAD

Versus

The COMMISSIONER INLAND REVENUE, RTO, ISLAMABAD

M.A. (R) No.51/IB of 2017 in I.T.A. No.798/IB of 2016, decided on 10th January, 2019.

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

----S.221---Rectification of mistake---Scope---Applicant sought rectification of the order passed by Appellate Tribunal on the ground that the details of payments on account of local purchases were over-sighted during the course of hearing of main appeal---Validity---Once the appellant had submitted the details of local purchases, the assessing officer had no authority to reject them without confronting them, which fact was not inadvertently considered by the Commissioner (Appeals) as well as by the Appellate Tribunal---Appellate Tribunal had upheld the impugned order of the officers below on the issue of the local purchases without considering the fact that the detail submitted in that regard was available on record hence, it was a mistake apparent from the record liable to be rectified---Case was remanded to the assessing officer with direction to pass a fresh order on the issue of local purchases---Application was allowed, accordingly.

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

----S.221---Rectification of mistake---Scope---Mistake of fact as well as law can be rectified to resolve the disputed issue, provided the said rectification is within the period of limitation. [p. 171] A

1998 PTD (Trib.) 3866; 1998 PTD 3488; 1971 PTD 411; 1983 PTD 246; 1988 PTD (Trib.) 3748 and 1983 PTD 221 ref.

Uzair Sultan, Ms. Sumaira Khurshid and M. Riaz for Applicant.

Tariq Iqbal, DR for Respondent.

2021 P T D (Trib.) 184

[Inland Revenue Appellate Tribunal]

Before Shahid Masood Manzar, Chairman and Nadir Mumtaz Warraich, Accountant Member

AZHAR SADIQ CH. ISLAMABAD

Versus

The COMMISSIONER INLAND REVENUE, RTO, ISLAMABAD

I.T.A. No.851/IB of 2018, decided on 10th April, 2019.

Income Tax Ordinance (XLIX of 2001)---

----Ss.111(1), 122(1) & 214-C---Audit---Selection of case---Unexplained gross inflow---Proof---Taxpayer was aggrieved of selection of his case for audit as his declared income was not accepted by authorities---Validity---Deposits in question were explained but on the other hand were not subtracted from the total amount confronted and added under S.111 of Income Tax Ordinance, 2001---Authorities admitted inflow of amount in question but the amount was added without any rhyme or reason unlawfully and illegally---When inflow was explained, admitted and notice on that point was withdrawn by the authorities then neither gross inflow or accretion in asset could be added as unexplained as the same was outcome of the inflow which had been accepted by authorities--- Nature and source of all credit entries were explained by taxpayer and no addition was warranted under S.111 of Income Tax Ordinance, 2001---Authorities proceeded unlawfully and made all addition illegally under S.111 of Income Tax Ordinance, 2001, even when nature and source of deposits was explained---Appellate Tribunal Inland Revenue directed the authorities to accept the declared version of taxpayer and had set aside the orders passed by two forums below--- Appeal was allowed, in circumstances.

Syed Ali Husnain, ITP for Appellant.

Tariq Iqbal, DR for Respondent.

2021 P T D (Trib.) 202

[Inland Revenue Appellate Tribunal]

Before Ch. Shahid Iqbal Dhillon, Judicial Member and Wajid Akram, Accountant Member

Messrs EJAZ BROTHERS STEEL FURNACE, GUJRANWALA

Versus

The COMMISSIONER INLAND REVENUE, ZONE-I, RTO, GUJRANWALA

S.T.A. No.1152/LB of 2018, decided on 11th October, 2019.

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

----Ss.3 & 6---Customs Act (IV of 1969), S.32---Sales Tax Special Procedures Rules, 2007, Rr.58H & 58MA---Sales tax---Time and manner of payment of sales tax---Recovery of sales tax non-levied or short-levied at import stage---Payment of sales tax by Steel Melters, Re-rollers and Ship Breakers---Option to pay sales tax on ad valorem basis---No loss of revenue---Scope---Appellant imported re-meltable iron and steel scrap and paid sales tax at the rate of Rs.5,600 per metric ton as envisaged in R.58H of Sales Tax Special Procedures Rules, 2007---Department issued show cause notice on the ground that the appellant had opted to pay sales tax under R. 58MA of Sales Tax Special Procedures Rules, 2007 and that R.58H(2A) was only applicable to those registered persons who were paying sales tax under fixed regime as ascribed in R. 58H(1) of Sales Tax Special Procedures Rules, 2007---Commissioner Inland Revenue accordingly adjudged the sales tax liability---Validity---Officers of Customs was vested with powers to adjudicate upon cases of sales tax non-levied or short-levied at import stage and the Commissioner Inland Revenue was not an Officer of Customs---No loss of revenue was caused in the case because appellant had paid input tax at the rate of Rs.5,600 at import stage and had accordingly adjusted the same---Impugned show cause notice and consequent order were declared to be illegal, void ab initio and were cancelled accordingly.

STA No.1108/LB/14, dated 20th November, 2014. ref.

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

----Ss.3 & 6---Customs Act (IV of 1969), S.32---Sales tax---Time and manner of payment of sales tax---Recovery of sales tax non-levied or short-levied at import stage---Scope---Collection, payment and enforcement of sales tax on imported goods is governed under Customs Act, 1969, as envisaged in S.6 of Sales Tax Act, 1990---Cases of recovery of sales tax non-levied or short-levied at import stage should all the more be adjudicated in terms of S.32 of Customs Act, 1969, by an appropriate Officer of Customs and instead of an Officer of Inland Revenue having no powers to enforce its recovery under Sales Tax Act, 1990.

Messrs Shahzad Gee Mills Ltd., v. Gadoon Amazai 2012 PTD (Trib.) 1697 ref.

(c) Administration of justice---

----When an order is passed without jurisdiction it is coram non judice, it does not exist in the eyes of law and every person and authority has to ignore it. [p. 206] E

Messrs Frontier Ceramics v. Government of Pakistan and others 1999 PTD 4126 ref.

(d) Administration of justice---

----Where basic order is coram non judice whole superstructure built thereon by way of any show cause notice or any order or even recovery notice shall also become invalid and inoperative.

2002 SCMR 122 ref.

Abuzar Hussain for Appellant.

Ms. Uzma Waqar, D.R. for Respondent.

2021 P T D (Trib.) 598

[Inland Revenue Appellate Tribunal]

Before Muhammad Waseem Ch., Judicial Member and Raza Munawar, Accountant Member

The BANK OF PUNJAB, LAHORE and others

Versus

THE COMMISSIONER INLAND REVENUE LTU, LAHORE and others

F.E.A. Nos.26/LB to 28/LB and S.T.A. No.698/LB of 2013, decided on 10th August, 2020.

(a) Federal Excise Act (VII of 2005)---

----Ss.3, 2(23), 16 & Sr. 8, Table II, First Sched.---Services provided by banking companies or non-banking financial companies---Scope---Deputy Commissioner Inland Revenue (DCIR) vide assessment orders charged the appellant with FED (Federal Excise Duty) @ 16% on the strength of Serial No. 8 of Table II of the First Schedule to Federal Excise Act, 2005, on receipts from activities namely, dealing in foreign currency, home remittances, bills purchased, rebate from international businesses, rebate on investment in mutual fund, loan processing charges, godown charges and wheat finance for Provincial Government---Commissioner Inland Revenue (Appeals), on being appealed, held that all activities except income from foreign currency revaluation, rebate on investment in mutual funds and reimbursement of godown expenses fell under the ambit of 'services' and that the appellant had failed to establish exemption from levy of Federal Excise Duty (FED)---Validity---All services provided in Pakistan were exempt from FED unless specifically provided in the First Schedule to the Federal Excise Act, 2005---Serial No. 8 of the Table II listed PCT Heading 98.13 was a broad general category---Deputy Commissioner Inland Revenue and CIR (Appeals) had not discussed the sub-heading which covered the said activities---Commissioner Inland Revenue (Appeals), in a place, had specified PCT Heading 9813.8000 which read as 'others'---Sub-heading 'others' had to be read with the preceding entries in the group; it applied to and covered only such services which were similar to the ones specifically described over it---PCT 9813.8000 could not include every conceivable banking service---Impugned orders were vacated and the matter was remanded to the assessing authority with direction to re-adjudicate the issue by specifying the services liable to be taxed under the relevant PCT Heading headings---Appeals were disposed of accordingly.

Messrs Pakistan Television Corporation Ltd. v. Commissioner Inland Revenue 2019 SCMR 282 = 2019 PTD 484 rel.

(b) Federal Excise Act (VII of 2005)---

----S.3---Duties specified in the First Schedule to the Federal Excise Act, 2005 to be levied---Scope---All services provided in Pakistan are exempt from Federal Excise Duty unless specified in the First Schedule to the Federal Excise Act, 2005.

Messrs Pakistan Television Corporation Ltd. v. Commissioner Inland Revenue 2019 SCMR 282 = 2019 PTD 484 rel.

Mansoor Beg for Appellant/Respondent.

Waqas Aslam, DR for Respondent/Appellant.

2021 P T D (Trib.) 630

[Inland Revenue Appellate Tribunal]

Before Sardar Liaqat Hussain, Chairperson and Shakil Ahmad, Accountant Member

The BANK OF PUNJAB MIRPUR (A.K)

Versus

COMMISSIONER INLAND REVENUE, AZAD JAMMU AND KASHMIR MIRPUR (A.K.)

Appeal No.31 of 2014, decided on 3rd September, 2020.

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

----S.122---Amendment of assessment---Limitation---Scope---Taxpayer assailed the amended assessment order on the ground that it was hit by the time limitation as provided in subsection (2) of S.122 of Income Tax Ordinance, 2001---Validity---Commissioner was empowered to amend the deemed assessment within five years after the Commissioner had issued or had treated it as an assessment order on the taxpayer---Show-cause notice was issued when the deemed assessment order had attained finality and the valuable rights of the taxpayer had accrued---Vested right could not be snatched through procedural law---Assessing officer had amended the deemed assessment order after 9 months beyond the time limitation---Amended assessment order was adversely hit by the doctrine of limitation---Impugned orders were quashed and the appeal was allowed accordingly.

2018 SCMR 991 and Civil Petition No.1306 of 2014 ref.

(b) Vested right---

----Vested right cannot be snatched through procedural law.

(c) Limitation---

----Issue of limitation is legal and can be contested at any fora.

Mansoor Beg for Appellant.

Basil Siddique, Additional Commissioner Inland Revenue for Respondent Department.

2021 P T D (Trib.) 747

[Inland Revenue Appellate Tribunal]

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

M.A. INDUSTRIES, MULTAN

Versus

COMMISSIONER INLAND REVENUE, RTO, MULTAN

S.T.A. No.364/LB of 2019, decided on 8th October, 2019.

Sales Tax Act (VII of 1990)---

----Ss. 7 (2)(1), 23 & 46---Qanun-e-Shahadat (10 of 1984), Arts. 117 & 120---Tax evasion---Proof---Onus---Blacklisting---Principle---Taxpayer was aggrieved of initiation of proceedings by authorities to blacklist it on the allegation of fake invoices of supplies---Validity---Party making an allegation was to bring material evidences to prove the same but no evidence of tax evasion, issuing fake invoices or any other commission of tax fraud was put forth on record to substantiate allegations against taxpayer, in absence of which show-cause notice as well as consequent orders were illegal and void ab initio---For claiming adjustment of input tax by a taxpayer under S.7(2)(1) of Sales Tax Act, 1990, he was supposed to hold a taxable invoice duly issued by his supplier under S.23 of Sales Tax Act, 1990 and the claimant should have paid amount of goods including tax shown in such invoice--- If blacklisting or suspension of registration of a supplier was effected subsequent to a period in which purchases and Bank payments were transacted could not be made a tool to deprive a buyer of a valuable right accrued in his favour prior to such blacklisting or suspension of registration of any supplier due to subsequent default whatsoever on his part---Appellate Tribunal Inland Revenue set aside show-cause notice issued by authorities as the same was void ab initio---Appeal was allowed in circumstances.

2019 PTD 257; 2014 PTD (Trib.) 558 and 2018 PTD 986 ref.

Riaz Ahmad Raja, ITP for Applicant.

Muhammad Sultan, D.R. for Respondent.

2021 P T D (Trib.) 831

[Inland Revenue Appellate Tribunal]

Before Dr. Muhammad Naeem, Accountant Member and Muhammad Waseem Chaudhary, Judicial Member

BASHIR PRINTING INDUSTRIES (PVT.) LTD., FAISALABAD

Versus

COMMISSIONER INLAND REVENUE, RTO, FAISALABAD

S.T.A. No.1429/LB of 2019, decided on 6th February, 2020.

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

----Ss. 3(1A) & 71---SRO No.1125(I)/2011, dated: 31-12-2011---SRO No.491(I)/2016, dated: 30-06-2016---Further tax---Special procedure---Supplies to un-registered persons---Scope---Appellant was imposed upon further tax for its failure to pay further tax @ 2% of the value of supplies made to un-registered persons in terms of S.3(1A) of Sales Tax Act, 1990---Adjudication proceedings culminated in passing of an order adjudging recovery of further tax which was challenged before Commissioner Inland Revenue (Appeals) CIR (Appeals) who rejected the same---Contention of appellant was that ACIR had erred in law while charging further tax inspite of the fact that its supplies fell under five zero-rated sectors which were governed by SRO No.1125(I)/2011, dated: 31-12-2011---Validity---Supplies made to un-registered persons could not be subjected to levy of further tax in view of clause (iii) of Sr. No. 1 of Table-II given under SRO No.491(I)/2016, dated: 30-06-2016, which provided that supplies to registered or un-registered persons of the said five sectors shall be charged at the rate of zero percent---Further tax was a specie of sales tax, therefore, if sales tax was zero as per zero rating facility granted through special notification for five export oriented sectors then further tax was also zero even in the case where supply of zero-rated goods was made to un-registered persons---No further tax could be imposed---Appeal was accepted and the impugned show-cause notice as well as consequent orders of both the authorities were set aside.

S.T.A. No. 280/LB/2019 and 2018 PTD 2364 ref.

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

----Ss. 3(1A) & 71---SRO No.1125(I)/2011, dated: 31-12-2011---SRO No.491(I)/2016, dated: 30-06-2016---Further tax---Special procedure---Scope---Section 71 of the Sales Tax Act, 1990 overrides all other provisions of the Sales Tax Act, 1990, including S.3 thereof, therefore, further tax cannot be imposed on the five sectors zero-rated goods.

(c) Interpretation of statutes---

----Non-obstante clause---Scope---Non-obstante clause is a legislative tool employed to give overriding effect to certain provisions over some contrary provisions that are to be found in the same enactment or in a different enactment in order to avoid the operation and effect of all contrary provisions.

Khubaib Ahmad for Appellant.

2021 P T D (Trib.) 1223

[Inland Revenue Appellate Tribunal]

Before Shahid Masood Manzar, Chairman and Imtiaz Ahmed, Accountant Member

MUHAMMAD YOUNAS

Versus

The COMMISSIONER INLAND REVENUE, SIALKOT

I.T.As.Nos.55/IB and 56/IB of 2019, decided on 21st April, 2020.

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

----Ss.111 & 122---Unexplained income or assets---Amendment of assessments---Mandatory show-cause notice and opportunity for taxpayer to file reply to same---Credit entries in Bank account(s) of taxpayer---Computation of "net income' / "total income" chargeable to tax---Obligation of Departmental officer to issue notice to taxpayer under S.122(5) of Income Tax Ordinance, 2001 specifying relevant clause of S.122(5) sought to be invoked with clarity---Scope---Section 111(1)(d) of Income Tax Ordinance, 2001 did not warrant taxation of whole of the credit entries/ deposits in a Bank account maintained by taxpayer by treating same to be "net income" chargeable to taxpayer; and only such part of total Bank deposits was chargeable to tax which could be termed as "total income"----Such credit entries represented "sales" which after defraying "cost of sales" gave rise to "gross profit" which after deductions of profit and loss account expenses, yielded "net profit", which was the item of receipt liable to tax wholly or in part---When Departmental officer came across such undisclosed credit entries deposits in a Bank account, only course available to him was to confront taxpayer under S.122(9) of the Ordinance, after ensuring that notice under same was duly served upon taxpayer---Said S.122(9) made it obligatory upon tax officer to confront in sufficient detail all material facts which led him to take action thereunder---Non-issuance of such notice rendered whole superstructure of amended assessment as void ab initio and illegal and same also applied to mandatory notice to be issued under S.122(5) the Ordinance---Departmental officer, after receiving reply under said S.122(9) was duty bound to issue notice under S.122(5) of the Ordinance, specifying the specific clause of S.122(5) which he sought to invoke---Non-specification of relevant clause in notice under S.122(5) of Income Tax Ordinance, 2001 was fatal for any amended assessment and any action to be taken under said S.122(5) had be specified with clarity and such mistake by Departmental officer of non-issuance of notice under S.122(5) without precisely specifying relevant clause thereof was incurable.

2011 PTD (Trib.) 321; 2006 PTD (Trib.) 661; 2006 PTD (Trib.) 673; 2006 PTD (Trib.) 429; 1997 PTD (Trib.) 1994; 2001 PTD 1633; 2009 PTD (Trib.) 1067; 2013 PTD (Trib.) 10; 2011 PTD 2435; 1997 PTD 47; 2009 PTD (Trib.) 1963; 2009 PTD (Trib.) 1919; 2004 PTD (Trib.) 1784; 2000 PTD (Trib.) 2531; 1988 PTD (Trib.) 117 and 2007 PTD (Trib.) 2601 rel.

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

----Ss.111 & 39---Income Tax Ordinance (XXXI of 1979), Ss.13 & 30---Unexplained income and assets---Nature of S.111 of Income Tax Ordinance, 2001---Charging to tax of unexplained income or assets under head of "income from other sources"---Legislative lapse in non-inclusion of "unexplained income or assets etc" in S.39 of Income Tax Ordinance, 2001---Scope---Section 111 of Income Tax Ordinance, 2001 was successor to S.13 of Income Tax Ordinance, 1979 and both sections were not by themselves "charging sections" and only defined and explained that unexplained investments etc were deemed to be income but for purpose of charging such income to tax, same had been referred to head of "income from other sources"---Section 30(e) of the Income Tax Ordinances, 1979 did contain provision for charging to tax such unexplained income, assets or investments, etc.; however S.39 of Income Tax Ordinance, 2001 titled "income from other sources"; did not have any clause akin to S.30(e) of Income Tax Ordinance, 1979---Appellate Tribunal observed that had it not been necessary to mention charging section, there would not have been S.30(e) of Income Tax Ordinance, 1979---Appellate Tribunal further observed that without mentioning S.111 in charging section of S.39 of Income Tax Ordinance, 2001; no unexplained income, investments or assets could be brought to tax as "income from other sources"; which appeared to be a Legislative lapse, that needed to be addressed by Legislature.

Sayyid Ali Imran Rizvi, Advocate Supreme Court, Naeem Sarwar, A.H.C. and Imran Altaf, I.T.P. for Appellant.

Mrs. Naheed Akhtar Durrani, D.R. for Respondent.

2021 P T D (Trib.) 1249

[Inland Revenue Appellate Tribunal]

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

Messrs HILAL DYES (PVT.) LTD., FAISALABAD

Versus

The COMMISSIONER INLAND REVENUE, ZONE-I, RTO, FAISALABAD

S.T.A. No.125/LB of 2015, decided on 28th August, 2019.

Sales Tax Act (VII of 1990)---

----S.45A---Power of the Federal Board of Revenue and Commissioner (Inland Revenue) to call for record---Expression "satisfying himself"---Scope---Appellant assailed the order passed by Commissioner Inland Revenue (CIR) whereby he, while exercising power under S.45A(4) of Sales Tax Act, 1990, re-opened the order-in-original passed by Deputy Commissioner Inland Revenue (DCIR), which was earlier decided in favour of appellant and directed the DCIR to pass a speaking order afresh---Validity---Commissioner Inland Revenue had ample powers to call for and examine the record but for that purpose he was legally required to pass a fresh order by himself and he could not delegate his powers to any subordinate officer for the purpose of recording a fresh order after re-opening of an earlier order---Expression "satisfying himself" was crucial and reinforced the spirit of exclusivity of the jurisdiction conferred---Appeal was accepted and the impugned order was set aside. [pp. 1250, 1251, 1252] A, B, C, D & E

2017 PTD 1010 and 1997 SCMR 641 ref.

2019 PTD (Trib.) 594 foll.

Khubaib Ahmad for Appellant.

Tanveer Hussain Bhatti, D.R. for Respondent.

2021 P T D (Trib.) 1266

[Inland Revenue Appellate Tribunal]

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

Messrs NIMSAY REDEFINING STYLE (PVT.) LTD

Versus

The COMMISSIONER INLAND REVENUE, RTO, FAISALABAD

S.T.A. No.1211/LB of 2019, decided on 7th May, 2020.

Sales Tax Act (VII of 1990)---

----Ss.11 & 3(1A)---SRO No.1125(I)/2011, dated: 31-12-2011---SRO No.648(I)/2013, dated: 09-07-2013---Assessment of tax and recovery of tax not levied or short levied or erroneously refunded---Further tax---Supply to End Consumer---Scope---Appellant was imposed upon a liability for its failure to pay full amount of further tax @ 2% in respect of supplies made to un-registered persons---Commissioner Inland Revenue (A) remanded the case back to the Assessing Officer for de novo consideration through order-in-appeal---Validity---Appellant had already charged and paid sales tax @ 6% on its supplies made to End-Consumers in terms of SRO No.1125(I)/2011, dated: 31-12-2011, therefore, Department had created undue sales tax liability on account of short payment of 'further tax' as adjudged in the impugned adjudication order---Sales made to End-Consumers were excluded for the purpose of levy of further tax in terms of SRO No.648(I)/2013, dated: 09-07-2013 under the first proviso to subsection (1A) of S.3 of the Sales Tax Act, 1990---Appeal was accepted and the impugned show-cause notice and consequent orders of both the authorities below were set aside.

2016 PTD (Trib.) 2675 rel.

Khubaib Ahmad for Appellant.

Muhammad Asad Tahir, DR for Respondent.

2021 P T D (Trib.) 1456

[Inland Revenue Appellate Tribunal]

Before Muhammad Jawed Zakaria, Judicial Member and Saifullah Khan, Accountant Member

Messrs MAHVASH AND JAHANGIR SIDDIQUI FOUNDATION, KARACHI

Versus

The COMMISSIONER INLAND REVENUE, ZONE-I, CORPORATE RTO, KARACHI

I.T.A. No.142/KB and M.A. (Addl.Gr) No.480/KB of 2019, decided on 30th October, 2019.

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

----Ss.122(1)(5)(9) & 177---Audit, selection of case---Mala fide---Proof---"Definite information"---Scope---Taxpayer was aggrieved of issuance of show-cause notice for recovery of tax and selection of its case for audit---Validity---Compliance to Information Document Request (IDR) and alleged Show-Cause Notice (SCN) issued were set for the same date and the same had shown mala fide intention of tax authorities---Show-cause notice was not issued as due process of law was not followed in letter and spirit which was suffice to annul whole proceedings enunciated by tax authorities---Scope for audit was extensive and involved grave verification before reaching a conclusion---Such verification was not conducted and ex-parte order was passed in haste, without any "definite information" in hand, which was a pre-requisite for amendment of an assessment order under S.122(1) of Income Tax Ordinance, 2001---Audit proceeding under S.177 of Income Tax Ordinance, 2001, was only a procedure / mode and method to find out defect in accounts and in business affairs of taxpayer and to obtain "definite information" and objection of taxpayer on audit report after confrontation to taxpayer to further enter into jurisdiction under S.122(1) of Income Tax Ordinance, 2001, for making an amended assessment after acquiring authority under S.122(5) of Income Tax Ordinance, 2001---Appellate Tribunal Inland Revenue set aside orders passed by tax authorities---Appeal was allowed, in circumstances.

2015 PTD 2538; 1971 SCMR 681; PLD 1965 SC 90; Dr. Azeem Alamani's case 2015 PTD 1242 (Trib.); 2015 PTD (Trib.) 804; 2016 PTD 2422; 2017 PTD 686; CIR v. Dewan Steel Mills Karachi ITA No.51/KB/2014; ITA No.2505/LB/2015; ITA No.373/KB/2012; CIR v. Jawad Metal ITA No.64/KB/2015; The CIR, Karachi v. Messrs A.O. Clinic, Karachi ITA No.867/KB/2017; 1992 SCMR 1652; 2005 SCMR 492; 2017 PTD (Trib.) 506; 2019 PTD 1347; 2016 PTD 270; 2011 PTD 2161; 2012 PTD 964; 5 Tax 20 (Trib.); United Kashmir Flour Mills (Private) Limited PLD 2004 SC (AJ&K) 1; CIT v. Miss Aasia Film Artist 2001 PTD 678; Circular C.No.1(23)IT-I/77; M. Appakutty v. STO (1966) STC 380 (Ker); Union of India's case (1981) 51 Com Cas 210; Messrs Elahi Cotton Mills Ltd. and others v. Federation of Pakistan, through Secretary Ministry of Finance, Islamabad and 6 others PLD 1997 SC 582; Messrs Humayun Ltd. v. Pakistan and others PLD 1991 SC 963; Bank of Commerce v. Tennesse 161 US 134; Karachi Development Authority v. Central Board of Revenue through Members Central Excise and Land Customs, Islamabad and others 2005 PTD 2131 and 2016 PTD 2004 ref.

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

----Ss.122(1)(5)(9) & 177---Audit, selection of case---Amendment of assessment---Procedure---Selection of audit or even conducting / doing of audit does not mean or include an assessment or amended assessment / alteration or modification of assessment---Selection of audit and thereafter conducting of audit proceedings is just process and audit authority before invoking provision of S.122 of Income Tax Ordinance, 2001, for amendment have to frame charge sheet / audit observation / audit qualification / audit report and the same has to be communicated to taxpayer for rebuttal---Explanation / reply / assertion / contention / objections of taxpayer must be obtained and considered before proceedings for invoking S.122 of Income Tax Ordinance, 2001---After acquiring jurisdiction and fulfilling all requirements of S.122(1) & (5) of Income Tax Ordinance, 2001, only thereafter assessment may be amended under S.122 of Income Tax Ordinance, 2001---Mere issuance of notice under S.122(1) & (9) of Income Tax Ordinance, 2001, after selection but before conducting audit of taxpayer is not complete requirement of law---Tax authorities first have to reject objection / rebuttal of taxpayer on audit report then require to acquire jurisdiction under S.122(1) of Income Tax Ordinance, 2001 and then S.122(5) of Income Tax Ordinance, 2001.

(c) Administration of justice---

----Where law requires a thing to be done in a particular manner unless the same is done in the prescribed manner the same is illegal.

Khald Saeed v. Shamin Rizvi 2003 SCMR 1505 rel.

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

----S.122(5)---Term 'definite information'---Connotation---"Definite information" does not require any further probe or processing--- Conjecture, guess work, hypotheses and assumptions cannot be termed as 'definite information' which does not require any further analysis.

1993 SCMR 1108 = 1993 PTD 1108 and 2018 PTD 749 rel.

(e) Interpretation of statutes---

----Fiscal statute---Scope---Taxing statute is to be construed strictly in the sense that one has to look merely at what is clearly said, there is no room for any intendment---Fair and reasonable construction must be given to the language without leaning to one side or the other---In a taxing statute analogies play no part---Whether it is a charge, allowance of a deduction or exemption from a charge, in every one of such cases, the revenue has to follow direct terms of statutory provisions.

Khaliq-ur-Rehman, FCA for Appellant.

Waqas Malik, D.R. for Respondent.

2021 P T D (Trib.) 1501

[Inland Revenue Appellate Tribunal]

Before Muhammad Waseem Ch. Judicial Member and Dr. Muhammad Naeem Accountant Member

Messrs AMTEX LTD. FAISALABAD

Versus

The CIR, RTO, FAISALABAD

S.T.A. No.1430/LB of 2019, decided on 6th February, 2020.

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

----S.3---SRO No.1125(I)/2011, dated, 31-12-2011---Scope of tax---Further tax---Scope---Appellant was ordered to pay evaded amount of sales tax on account of its failure to pay further tax of the supplies made to un-registered persons in terms of S.3(1A) of Sales Tax Act, 1990---Validity---Supplies made by registered person covered by SRO No.1125(I)/2011, whether to registered or un-registered persons, was subject to zero rate of tax---Further tax was a species of sales tax, therefore, if sales tax was zero as per zero-rating facility granted through special notification then further tax was also zero even in the case where supply of zero-rated goods was made to un-registered persons, no further tax was to be imposed---Impugned orders were set aside and the appeal was accepted.

STA No.280/LB/2019 and 2018 PTD 2364 ref.

(b) Interpretation of statutes---

----Non-obstante clause---Scope---Non-obstante clause is a legislative tool employed to give overriding effect to certain provisions over some contrary provisions that are to be found in the same enactment or in a different enactment in order to avoid the operation and effect of all contrary provisions.

Khubaib Ahmad for Appellant.

Mrs. Sehar Aftab, DR for Respondent.

2021 P T D (Trib.) 1508

[Inland Revenue Appellate Tribunal]

Before Muhammad Waseem Ch., Judicial Member and Dr. Muhammad Naeem, Accountant Member

Messrs WAQAS ENTERPRISES, FAISALABAD

Versus

The COMMISSIONER INLAND REVENUE (APPEAL), RTO, FAISALABAD

S.T.A. No.1155/LB of 2019, decided on 29th January, 2020.

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

----S.11---Assessment of tax and recovery of tax not levied or short levied or erroneously refunded---Limitation---Scope---Appellant was imposed upon sales tax liability for adjusting input tax against invoices of a blacklisted and non-filer supplier who had not shown any sales to him---Validity---Show cause notice was barred by time as it was issued after expiry of statutory limitation of five years---Section 11(5) of Sales Tax Act, 1990, provided that no order shall be made by an Officer of Inland Revenue after expiry of five years and no liability as to sales tax could be adjudged under S.11(3) of Sales Tax Act, 1990, unless a show-cause notice to the person in default was given within five years of the relevant date---Orders passed by authorities below were set aside---Appeal was disposed of accordingly.

2006 PTD 537 and 2008 PTD 1973 ref.

Federation of Pakistan through Secretary, Finance, Islamabad and 4 others v. Messrs Ibrahim Textile Mills Ltd. and others 1992 SCMR 1898 and Messrs Joyla Sadat Cotton Industries v. Collector of Customs 2008 PTD 981 rel.

(b) Taxation---

----Limitation---Scope---Once limitation starts to run and comes to an end, the taxpayer acquires vested right of escapement of assessment by lapse of time.

Federation of Pakistan through Secretary, Finance, Islamabad and 4 others v. Messrs Ibrahim Textile Mills Ltd. and others 1992 SCMR 1898 and Messrs Joyla Sadat Cotton Industries v. Collector of Customs 2008 PTD 981 rel.

Khubaib Ahmad for Appellant.

Faisal Asghar, DR for Respondent.

2021 P T D (Trib.) 1534

[Inland Revenue Appellate Tribunal]

Before Muhammad Jawed Zakaria, Judicial Member and Saif Ullah Khan Accountant Member

MUHAMMAD FAROOQ PROPRIETOR, AL-NOOR FOOD INDUSTRIES, KARACHI

Versus

The COMMISSIONER INLAND REVENUE, ZONE-III, LTU-II, KARACHI and others

I.T.A. No.1228/KB of 2017, decided on 7th October, 2019.

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

----Ss.122 & 177---Audit---Assessment order, modification of---Procedure---Provision of S.177 of Income Tax Ordinance, 2001, does not provide any power or absolute empowerment to modify assessment or re-determine income of taxpayer---Key point which has to be kept in mind is not a return of income which is being processed by Commissioner Inland Revenue / Deputy Commissioner Inland Revenue/Officer Inland Revenue, selecting and thereafter conducting / doing audit---By process of law, assessment order acquires a sanctity---Finalized assessment cannot just be modified or disturbed in continuation of proceedings of audit under S.177 of Income Tax Ordinance 2001---Authorities after selection and conducting audit have to give in every case, the taxpayer all charges / objection / issues raised in audit against taxpayer such as to enable him to answer / explain them before invoking provision of S.122 of Income Tax Ordinance, 2001 and after obtaining and considering explanation of taxpayer on audit objections, only thereafter, if authorities may consider necessary---Commissioner Inland Revenue / Deputy Commissioner Inland Revenue /Officer Inland Revenue may amend assessment under S.122(1) (4) & (5) of Income Tax Ordinance, 2001, after fulfillment of further conditions of S.122 (5)(i),(ii) or (iii) of Income Tax Ordinance, 2001.

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

----Ss.111, 122(5),(9) & 177---Audit---Assessment order, modification of---"Definite information"---Scope---Taxpayer was aggrieved of modifying assessment order passed during audit proceedings---Validity---Amendment of any assessment under S.122(5) of Income Tax Ordinance, 2001, was allowed only when authorities were in possession of "definite information" and not otherwise---Deputy Commissioner Inland Revenue was under legal obligation to specifically identify the nature of suppressed income and was to issue notice in terms of S.122(5)(i)(ii) & (iii) of Income Tax Ordinance, 2001, highlighting the fact 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"---Reason assigned for additions / disallowances while passing amended assessment order were not termed as "definite information"---Audit under S.177(6) of Income Tax Ordinance, 2001, was void ab-initio and was not in accordance with law having no legal effect--- Amendment under S.122(1) of Income Tax Ordinance, 2001, without fulfilling legal requirement of S.177(6) of Income Tax Ordinance, 2001, was without jurisdiction or in excess of jurisdiction--- Amendment proceedings initiated and notice under S.122(9) of Income Tax Ordinance, 2001, issued prior to conduct of audit was ab initio void---No proper and valid notice was issued under S.122(5) of Income Tax Ordinance, 2001, and no notice issued under which clause Deputy Commissioner Inland Revenue had amended the order under S.122(5) of Income Tax Ordinance, 2001 and what was the specific 'definite information'---No specific, separate and independent valid notice under S.111 of Income Tax Ordinance, 2001, was issued for additions under S.111(1)(a) & (c) of Income Tax Ordinance, 2001---No unexplained income or expenditure was proved by Deputy Commissioner Inland Revenue without any shadow of doubt---Appeal was allowed, in circumstances.

2017 PTD 1839; CIR v. Dewan Steel Mills Karachi ITA No. 51/KB/2014 dated 3.10.2014; ITA No. 2505/LB/2015 dated 28.4.2016 and ITA No. 373/KB-2012 dated 5.4.2017; CIR, RTO Hyderabad v. Dr. Muhammad Azeem Almani 2015 PTD (Trib.) 1242; CIR v. Jawed Metal ITA No. 64/KB/2015 dated 6.6.2018; 2017 PTD 686; (2013) 107 Tax 41 = 2013 PTD 884; 2017 PTD (Trib.) 2601; 2013 PTD 1083; 2012 PTD (Trib.) 312; 2012 PTD (Trib.) 790; 2006 SCMR 129; Supreme Court of Pakistan Collector, Sahiwal v. Muhammad Akhtar 1971 SCMR 681; 1993 PTD 392; 2005 MLD 1329; CIR v. Pharmaceutical, Karachi ITA No.65/KB/2018, dated 24-9-2018; 2007 PTD (Trib.) 181; 1990 PTD (Trib.) 524; 2011 PTD (Trib.) 187; 1993 PTD 84; 2010 PTD (Trib.) 1221; 2012 PTD (Trib.) 312; 2019 PTD 179; 2015 PTD (Trib.) 2042; 2007 PTD 2601; 2019 PTD 903; Pakistan Telecommunication Company Ltd. v. Federation of Pakistan 2016 PTD 1484; 2008 PTD 1162 and Khalid Saeed v. Shamin Rizvi 2003 SCMR 1505 ref.

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

----S.122---Condition 'subject to this section'---Scope---Words 'subject to this section' used in S.122 of Income Tax Ordinance, 2001, restrict all further proceedings for amendment of an assessment which means that it can only be amended if those were covered by the provision of S.122 of Income Tax Ordinance, 2001--- Amendment of assessment for which S.122 of Income Tax Ordinance, 2001 has been prescribed cannot be made if requirement and qualifications prescribed were not completed before making such amendment of assessment.

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

----Ss.122 (1) & 177---Selection for audit---"Definite information"---Scope---If deemed assessment selected for audit and audit was conducted under S.177 of Income Tax Ordinance, 2001, such deemed assessment may be amended by invoking jurisdiction of S.122 (1) of Income Tax Ordinance, 2001, as envisaged under S.177 (6) of Income Tax Ordinance, 2001---Assessment can be amended after fulfilling pre-requisite requirement of 'definite information' under S.122 (5) of Income Tax Ordinance, 2001, subject to execution of conditions of S.122 (5)(i)(ii) & (iii) of Income Tax Ordinance, 2001.

(e) Taxation---

----Validity---Principle---No tax can be levied or collected except by authority of law--- Tax can only be imposed by a legislative act and not on executive order, it embodies democratic principle 'No taxation without representation'--- Law imposing a tax must be a valid law, it should not violate any provision of the Constitution and should be within legislative competence of the legislature--- Tax is valid only if it is made in accordance with the proceedings prescribed by statute--- Revenue departments are not constitutionally free to ignore all procedures of law--- Power to charge tax is not power to destroy--- No one can sympathize with Revenue Officers for impatient commitment to their cause for achieving budgetary target who should not culled out budgetary targets of revenue from arteries of taxpayer but must respect to judicial process which rightly termed a small price to pay for civilizing hand of law, which alone can be given abiding meaning to Constitutional freedom---Law makes no difference between great and petty officer, who are all amenable to justice.

Syed Muhammad Imran Salim and M. Waleed Siddiqui, ARs for Appellant.

Naveed Dost Chandio, D.R. for Respondent.

2021 P T D (Trib.) 1624

[Inland Revenue Appellate Tribunal]

Before Muhammad Waseem Ch., Judicial Member and Wajid Akram, Accountant Member

Messrs K.B. ENTERPRISE, MONTGOMERY BAZAR, FAISALABAD

Versus

COMMISSIONER INLAND REVENUE, RTO, FAISALABAD

S.T.A. No.469/LB of 2019, decided on 27th April, 2020.

Sales Tax Act (VII of 1990)---

----S.11---Assessment of tax and recovery of tax not levied or short levied or erroneously refunded---Scope---Appellant was charged for violation of the provisions of Sales Tax Act, 1990 and was imposed upon sales tax liability---Contention of appellant was that the ACIR had passed the order under S.11(2) of Sales Tax Act, 1990, without having jurisdiction as the Commissioner Inland Revenue alone was vested with power and jurisdiction under S.11, Sales Tax Act, 1990---Validity---Impugned assessment order was passed by the assessing officer without any lawful jurisdiction---Orders passed by authorities below were annulled and the appeal was accepted.

Messrs Hamza Nasir Wire v. Federation of Pakistan and others (Writ Petition No.37295 of 2016) and Zaver Petroleum Corporation Ltd. v. Federal Board of Revenue 2016 PTD 2332 ref.

Oil and Gas Development Company Ltd. v. Federal Board of Revenue 2016 PTD 1675 and Re: Messrs Mari Petroleum Company, Ltd., Islamabad S.T.A. No.2/IB/2017 rel.

Khubaib Ahmad for Appellant.

Kashif Azhar, DR for Respondent.

2021 P T D (Trib.) 1673

[Inland Revenue Appellate Tribunal]

Before Zahid Sikandar, Judicial Member and Muhammad Tahir, Accountant Member

COMMISSIONER INLAND REVENUE, ZONE-I, RTO, FAISALABAD

Versus

Messrs FIRDOUS CLOTH MILLS (PVT.) LTD., FARIDABAD

I.T.A. No.468/LB of 2014, decided on 2nd August, 2021.

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

----S.122---Amendment of assessment---Limitation---Scope---Department appealed against the order passed by Commissioner (Appeals) wherein he had deleted the disallowance of expense under S.21(c) of the Income Tax Ordinance, 2001---Taxpayer had filed its return for the year 2007 on 14-01-2008 but had later on revised its return on 16-07-2009---In the year 2008 before promulgation of Finance Act, 2009, the limitation to amend the assessment by Commissioner under S.122(2) was five years from the date of assessment---Section 122(2) was amended in the year 2009 by virtue of which the Commissioner could amend the assessment order till the end of the fifth financial year---Taxpayer had throughout the proceedings agitated the issue of limitation---Contention of department was that since the assessment was revised by the taxpayer after the promulgation of Finance Act, 2009, on 16-07-2009, therefore, the time limitation was to be taken from the present section which was till the ending of the financial year and the assessment order under S. 122(5A) dated 30-06-2013 was within time---Validity---Limitation in the case had started from the date of filing of initial return i.e. 14-01-2008 under the then provisions of S. 122(2) which was to expire on 13-01-2013---By just filing a revised return on 16-07-2009 after the Finance Act, 2009, the limitation to amend the assessment order by Commissioner did not stand extended by virtue of that amendment and that too without any express provision in that regard---Once the assessment had attained finality at the expiry of the limitation, vested rights had accrued in favour of the taxpayer which could not be snatched away through procedural law---Assessing officer had amended the assessment order after five months beyond the time limitation---Appeal was dismissed.

Additional Commissioner (IR) v. Eden Builders 2018 SCMR 991 rel.

(b) Limitation---

----Once time begins to run from a specified date it cannot be interrupted or extended unless the legislature intervenes and makes express provisions to the contrary.

PLD 1963 SC 322 ref.

(c) Limitation---

----Object of the law of limitation is not to give a right where there is not, one but to interpose a bar after a certain period to a suit to enforce an existing right.

Khushi Muhammad v. Fazal Bibi PLD 2016 SC 872 rel.

Rao Shehzad Akhtar Ali Khan, DR for Appellant.

Zain Anwar, ITP for Respondent.

2021 P T D (Trib.) 1718

[Inland Revenue Appellate Tribunal]

Before Mrs. Ambreen Aslam, Judicial Member and Saifullah Khan Accountant Member

Messrs MUSTAQIM DYEING AND PRINTING INDUSTRIES (PVT.) LTD. KARACHI

Versus

COMMISSIONER INLAND REVENUE, ZONE-VI, CRTO, KARACHI

I.T.A. No.350/KB of 2019, decided on 13th November, 2019.

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

----S.108---Transactions between associates---Scope---Appellant advanced a loan to its subsidiary company without charging interest---ACIR (Audit) spotted said transaction of interest free loan and considered it to be non-arm's length transaction between associates and adjusted incomes and deductions under S.108 of the Income Tax Ordinance, 2001, read with Transfer Pricing Rules and more specifically Comparable Uncontrolled Price (CUP) method---Validity---Section 108 of the Income Tax Ordinance, 2001, empowered the Commissioner Inland Revenue in respect of any transaction between persons who were associates, distribute, apportion or allocate income, deductions or tax credits, between the persons as was necessary to reflect the income that the person would have realized in an arm's length transaction---Under S.108 the exercise had to be done by distributing, apportioning or allocating income, deductions or tax credits between the persons as was necessary to reflect the income that the person (associate) would have realized in his arm's length transaction---No new source of income could be created under said section---Assessing officer had created interest income which option was not provided in the section---Impugned order was set aside and the appeal was accepted.

1986 SCMR 968; 1992 PTD 954 and I.T.As. Nos.981/KB and 982/KB of 2013, dated 14-3-2016 ref.

The Commissioner Inland Revenue Zone-I, LTU, Karachi v. Messrs Al-Karam Textile Mills Ltd, Karachi (I.T.A. No.387/KB of 2014) dated 5-5-2016 foll.

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

----S.108---Transactions between associates---Scope---An arm's length transaction is a business deal in which buyers and sellers act independently without influencing each other and both parties act on their own interest so far non arm's length transaction is concerned, it is also known as an arm in arm transaction, this term refers to a business deal in which buyers and sellers have an existing relationship, whether business related or personal.

Abid H.Shaban for Appellant.

None for Respondent.

2021 P T D (Trib.) 1737

[Inland Revenue Appellate Tribunal]

Before Zahid Sikandar, Judicial Member and Muhammad Tahir, Accountant Member

The COMMISSIONER INLAND REVENUE, RTO-II, LAHORE

Versus

Messrs SAJID FLOUR MILLS (PVT.) LTD., LAHORE

I.T.A. No.573/LB of 2014, decided on 26th July, 2021.

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

----Ss.122 & 68---Amendment of assessment---Fair market value, determination of---Scope---Commissioner Inland Revenue assailed order passed by Commissioner (Appeals) whereby he had declared the applied sale rate of wheat of Rs.12.25 per kg as unwarranted and had directed the taxation officer to accept the declared version of the taxpayer---Validity---Taxation officer had not conducted any sort of inquiry or investigation nor any effort was made to determine a fair market value of wheat stock---Taxation officer had not clarified that on the basis of which information he had determined the sale rate at Rs.12.25 per kg, rather valuation appeared to be hypothetical and without any basis---Burden of assigning reason for determining the fair market value was on the assessing authority---Fair market value was determined on the basis of surmises and conjectures---Commissioner (Appeals) had rightly decided the issue---Appeal was disposed of accordingly.

Magna Industries v. CIT 1980 PTD 35 rel.

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

----Ss.122 & 174---Amendment of assessments---Claim for deduction---Failure to produce record---Scope---Commissioner Inland Revenue assailed order passed by Commissioner (Appeals) whereby he had disagreed with the additions made by taxation officer under S.174(2) of Income Tax Ordinance, 2001, for the taxpayer's failure to submit any evidence with regard to the expenses claimed under the heads of accounts 'commission paid on wheat purchase', 'mobil oil consumed' and 'market fee'---Validity---Taxpayer had not submitted any evidence with regards to the expenses claimed---Taxation officer had went on to observe that the taxpayer had not even bothered to offer any explanation with regard to the expenses---Taxation officer was justified in disallowing the expenses claimed by the taxpayer as the expenses claimed were not verified---Commissioner (Appeals) was not justified in deleting the additions made by the taxation officer---Appeal was disposed of accordingly.

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

----S.122---Amendment of assessments---Burden of proof---Scope---Assessing authority has to establish that the declared version of the taxpayer is not correct and that too based on substance and material satisfying the judicial conscience.

2002 PTD 700 ref.

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

----S.68---Fair market value---Scope---Sections 68(1) & (3) of Income Tax Ordinance, 2001, provide two shades of the fair market value---First is the price which the capital asset would ordinarily fetch on sale or supply in the open market at that time---Other being where the price is not ordinarily ascertainable such price may be determined by the Commissioner---Two such stages in-built in the definition are distinguishable---Second stage comes in operation only when first method does not work---In other words, the discretion available to Commissioner to determine the fair market value can only be exercised when price fetchable in the open market is not ascertainable.

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

----S.68---Fair market value---Scope---Assessing officer has wide powers to make an assessment---However, the estimate of an assessing officer must be based upon facts and circumstances as borne out from record and not on the basis of whims and desires.

Daud Corporation v. CIT 1989 PTD 177 rel.

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

----S.174---Claim for deduction---Failure to produce record---Effect---Income Tax Ordinance, 2001, empowers the Commissioner to disallow any claim of the taxpayer if the taxpayer does not provide receipt, record or evidence with regard to such deduction without any reasonable cause---Spirit of this section is that the taxpayer under the law is required to corroborate his expenses/deductions claimed in the return with some sort of evidence and in the absence of such provision of evidence without any justified reason the deductions claimed by the taxpayer cannot be allowed.

Rao Shehzad Akhtar Ali Khan D.R. for Appellant.

Aurangzeb Tahir for Respondent.

2021 P T D (Trib.) 1760

[Inland Revenue Appellate Tribunal]

Before M.M. Akram, Judicial Member and Nadir Mumtaz Warraich, Accountant Member

MUHAMMAD ALAM

Versus

COMMISSIONER INLAND REVENUE, RTO, RAWALPINDI

S.T.A. No.157/IB of 2019, decided on 13th May, 2019.

Sales Tax Rules, 2006---

----R.12---Blacklisting and suspension of registration---Scope---Natural justice, principles of---Applicability---Scope---Question before Appellate Tribunal was whether R.12(i)(a) of Sales Tax Rules, 2006, offended the provisions of Arts. 10-A & 18 of the Constitution---Validity---Principles of natural justice in all proceedings whether judicial or administrative had to be observed if the proceedings might result in consequences affecting the person or property or other right of the parties concerned---Where a person was empowered to take decisions after factual investigation into the facts which would result in consequences affecting the person, property or other right of any other person, then the Court was inclined generally to imply that the power so given was coupled with a duty to act in accordance with the principles of natural justice and fairness---Power of suspension of registration without prior notice was unlawful and impinged upon the rights of the subjects to be treated in accordance with law and to be afforded due process of law---Appeal was disposed of accordingly.

Sarfraz Saleem v. Federation of Pakistan and others PLD 2014 SC 232; Babar Hussain Shah and another v. Mujeeb Ahmed Khan and another 2012 SCMR 1235 and 2019 PTD 1213 ref.

Messrs Imran Ali Lubricants v. Federation of Pakistan and others 2018 PTD 1042 fol.

Muhammad Khurshid, ACMA for Appellant.

Muhammad Akram, DR for Respondent.

2021 P T D (Trib.) 1924

[Inland Revenue Appellate Tribunal]

Before Mian Abdul Basit, Judicial Member and Mir Badshah Khan Wazir, Accountant Member

ASAD ALI

Versus

The COMMISSIONER INLAND REVENUE, RTO, PESHAWAR

I.T.A. No.13(PB) of 2015, decided on 18th June, 2020.

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

----Ss. 221, 129 & 37---Rectification of mistake---Decision in appeal---Capital gains---Scope---Appellant derived his income from sale of cloth and business of property dealing---Taxation officer passed amended assessment order for the tax year 2007 whereby certain additions were made---Appellant filed appeal before the Commissioner Inland Revenue (Appeals), whereby it was held that gain on sale of a plot was taxable under S.37(3) of the Income Tax Ordinance, 2001 and the same was to be treated as 'capital gains' on disposal of immovable assets---Commissioner Inland Revenue filed an application under S.221, Income Tax Ordinance, 2001, for rectification of the order by contending that the profit accrued to the appellant on account of sale of plot were taxed by him as income from business under S.18 of Income Tax Ordinance, 2001, which were incorrectly treated as capital gain---Commissioner Inland Revenue (Appeals) rectified the order accordingly---Validity---No debate or argument was required to the extent that the Commissioner Inland Revenue (Appeals) had applied a wrong provision of law while passing the order under S.129 of the Income Tax Ordinance, 2001, because immovable property was not qualified as "capital asset" under S.37(5) of the Ordinance in the year 2007---Appeal was dismissed.

Commissioner Inland Revenue v. Rashid and Saqib Trading Company 2020 PTD 782; Commissioner Inland Revenue, Zone-I v. Messrs Siemens Pakistan Engg. Company Limited 2017 PTD 903; Commissioner Income Tax / Wealth Tax v. Muhammad Naseem Khan 2013 PTD 2005; Commissioner of Income Tax Karachi v. Messrs Shadman Cotton Mills Limited, Karachi 2008 PTD 204; Commissioner of Income Tax Company's II, Karachi v. Messrs National Food Laboratories 1992 SCMR 687; Khalid Adamjee v. Commissioner of Income Tax (West) Karachi 1983 PTD 246; Vithaldas v. Income Tax Officer District II, Kanpur 1971 PTD 411; 1998 PTD (Trib.) 3866 and 1998 PTD(Trib) 3488 ref.

Commissioner Income Tax Company Karachi v. National Food Laboratory 1992 PTD 570 and Commissioner of Income Tax and others v. Messrs Pakistan Petroleum Limited and 2 others 2012 SCMR 371 rel.

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

----S.221---Rectification of mistake---Scope---Language of S.221 of the Income Tax Ordinance, 2001, is not restricted in any way to the extent of rectification of factual, arithmetical and clerical error but it also empowers the Authority, who has passed the order to rectify the mistake of law, obviously, if it is apparent on the face of record i.e. strikes immediately on reading the order without an inquiry and further investigation/deliberation---Mistakes are of four types which may be corrected under S.221 of the Income Tax Ordinance, 2001 (firstly) observations of the adjudicating authority based on totally and absolutely wrong fact and record, (secondly) any arithmetical or clerical error, (thirdly) misreading of any provision of law and (lastly) application of wrong provision of law.

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

----S.221---Rectification of mistake---Scope---Any error in the order for which no argument and further investigation is required to discover the same will be treated as mistake apparent on record---If there is no need to debate and no two opinions can be framed in respect of factual controversy or as the case may be legal dispute exists in an order then such type of mistake will be termed as "mistake apparent from record".

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

----S.221---Rectification of mistake---Scope---No new ground or as the case may be new evidence can be discussed in rectification pleadings, which is restricted to error/mistake apparent on the face of the record i.e. the order to be rectified.

Rahim Khan for Applicant.

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

2021 P T D (Trib.) 1959

[Inland Revenue Appellate Tribunal]

Before Mian Abdul Basit, Judicial Member and Imtiaz Ahmed, Accountant Member

Messrs CAPITAL DEVELOPMENT AUTHORITY, ISLAMABAD

Versus

The COMMISSIONER INLAND REVENUE, LTU, ISLAMABAD

I.T.As. Nos.771/IB and 772/IB of 2013, decided on 19th August, 2020.

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

----S. 236A---Collection of advance tax at the time of sale by auction---Scope---Question before Appellate Tribunal was whether the total amount of advance tax as per S.236A, Income Tax Ordinance, 2001, in case of auction on installment of goods/property, was required to be collected at the time of auction or with each installment---Validity---Perusal of S.236A of Income Tax Ordinance, 2001, revealed that it was not mentioned in the said section that the advance tax was to be collected with each installment to be paid but at the same time, it was also not mentioned in the said section that the advance tax was to be collected and paid at the time, on the day of auction---Legal development made in S. 236A of the Income Tax Ordinance, 2001 through Finance Act, 2020, by inserting an explanation to subsection (1) of S.236A, clarified the position that if the payment of auction money was received in installment the advance tax would be collected with each installment---Explanation clarificatory and directory in nature could be given retrospective effect not only that but such explanation shall be deemed to have always been a part of the section to which it was added since the time of insertion of the section---Appeal was disposed of with the clarification that where the payments were received in installment against the auctioned good/properties the advance tax was to be collected with each installment at the applicable rate of tax at the time of payment of installment.

(b) Interpretation of statutes---

----Insertion of Explanation to section---Retrospective effect---Scope---Any Explanation clarificatory and directory in nature can be given retrospective effect not only that but such explanation shall be deemed to have always been a part of the section to which it is added since the time of insertion of the section.

(c) Interpretation of statutes---

----Insertion of Explanation to a section---Retrospective effect---Scope---Where there is doubt about the interpretation of a provision, the same may be clarified by introducing amendments in the law which may also be undertaken by adding an explanation---Such explanation is for all intents and purposes clarificatory and directory in nature and such clarificatory/declaratory explanation lawfully inserted into a statute may operate retrospectively.

Messrs Dreamland Cinema, Multan v. Commissioner of Income Tax, Lahore PLD 1977 Lah. 292; Commissioner of Income Tax Zone-B, Lahore v. Sardar Muhammad 2001 PTD 2877; Mamukanjan Cotton Factory v. The Punjab Province and others PLD 1975 SC 50; Muhammad Yusuf v. Chief Settlement and Rehabilitation Commissioner, Pakistan Lahore and another PLD 1968 SC 101; Yar Muhammad and 4 others v. Secretary Finance Deportment, Government of Punjab and others 2011 SCMR 1537; Kohinoor Sugar Mills v. Federation of Pakistan and others 2018 PTD 821; The Commissioner Income Tax Lahore v. Messrs Chaudhary Dairies Limited 2019 PTD 452; Collective of Customs, Sambrial v. Custom, Excise and Sales Tax Appellate Tribunal 2002 MLD 127 and Imtiaz Ahmed Lali v. Ghulam Muhammad Lali PLD 2007 SC 369 ref.

(d) Interpretation of statutes---

---Taxing statute---Scope---Where there is a doubt in interpretation of any statutory provision the same may be resolved in favour of taxpayer.

2006 PTD 1428; AIR 1963 AU 153; PLD 1972 Kar. 210; PLD 1975 Lah. 158; PLD 1976 Kar. 673; PLD 1979 Kar. 545; 1990 PTD 62; 1990 PTD 385 and 1990 PTD 886 ref.

Messrs Rijaz (Pvt.) Limited v. The Wealth Tax Officer Circle-III, Lahore 1996 PTD 489 and Messrs Mehran Associates Limited v. The Commissioner of Income-Tax, Karachi 1993 SCMR 274 rel.

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

----S.236A---Advance tax at the time of sale by auction---Scope---Explanation (b) added to subsection (1) of S.236A, Income Tax Ordinance, 2001 is not only explanatory and clarificatory/directory in nature but is also remedial/beneficial amendment because before the insertion of explanation there was no clarity regarding how to collect advance tax for the goods/properties auctioned in installment and through explanation taxpayer has been facilitated to collect advance tax with installment, therefore, there is no legal hindrance in giving retrospective effect to said beneficial and curative explanation.

Anoud Power Generation Limited and others v. Federation of Pakistan and others PLD 2001 SC 340 and Messrs Army Welfare Sugar Mills Limited and others v. Federation of Pakistan 1992 SCMR 1652 ref.

Commissioner of Income Tax v. Shahnawaz Ltd. and others 1993 SCMR 73 rel.

Zahid Hussain, ACMA for Appellant.

Ms. Naheed Akhtar Durrani, DR for Respondent.

2021 P T D (Trib.) 2050

[Inland Revenue Appellate Tribunal]

Before Shahid Masood Manzar, Chairman and Imtiaz Ahmed, Accountant Member

Messrs PESHAWAR ELECTRIC SUPPLY COMPANY (PESCO), WAPDA HOUSE, PESHAWAR

Versus

COMMISSIONER INLAND REVENUE, RTO, PESHAWAR

S.T.A. No.149/PB of 2019, decided on 25th June, 2021.

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

----Ss.3, 2(33) & 2(41)---Constitution of Pakistan, Art. 70, Fourth Sched. Entry No. 49---National Electric Power Regulatory Authority (Wheeling of Electric Power) Regulations, 2015, Regln. 2(xix) & 2(xxi)---Sales tax---Supply---Taxable supply---Federal Legislative List---Sales tax on services---Wheeling services---Scope---Question before Appellate Tribunal was whether the "wheeling charges" fell under the definition of "services" as explicated in Sales Tax Act, 1990---Validity---Appellant had only provided services of transmission lines to another Electric Supply Company and had not made any taxable supply of goods---Tax on services was not within the domain of the Federal Government---Goods i.e. the electricity remained the property of the National Transmission and Dispatch Company (NTDC) and its ownership was never transferred to appellant---Sales tax could not be levied on the services rendered by the registered person---"Supply" of goods in the background of facts of the case could only have taken place if it was sale or other transfer of the right to dispose of goods as owner---NTDC had never sold or allowed sale of such electricity by appellant, rather it was given to appellant for transportation to Electric Supply Company---Appellant was under no obligation to charge sales tax on wheeling charges---Impugned orders were set aside---Appeal was disposed of accordingly.

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

----Ss.25 & 72B---Audit---Selection of audit by the Board---Jurisdiction---Scope---Directorate General of Revenue Receipt Audit cannot conduct audit of a person registered under the Sales Tax Act, 1990 and superstructure built on such audit is coram non judice.

Collector of Sales Tax and Central Excise, Peshawar v. Messrs Makk Beverages (Pvt.) Ltd., Peshawar 2010 PTD 1355; Yousaf Sugar Mills v. Collector of Sales Tax 2012 PTD (Trib.) 759; 2010 PTD (Trib.) 1759; 2008 PTD (Trib.) 261; Messrs Flying Cement Company v. Collector Sales Tax and Federal Excise LTU, Lahore 2011 PTD (Trib.) 2459; Messrs PESCO v. Commissioner IR, RTO, Peshawar PTCL 2020 CL. 324 and Messrs Huma Textiles, Faisalabad v. The CIR (A), RTO, Faisalabad 2020 PTD (Trib.) 328 ref.

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

----Ss.25 & 72B---Audit---Selection of audit by the Board---Jurisdiction---Scope---Tax regulators monitor self-assessment system through neutral and impartial tool of audit under Ss. 25 & 72B of the Sales Tax Act, 1990 and there is no other mechanism under the Sales Tax Act, 1990 to lift the veil of self-assessment, protecting the monthly tax return filed by the taxpayer.

Prime Traders, Islamabad v. The CIR, RTO, Islamabad 2019 PTD (Trib.) 1108; Karsaz (Pvt.) Ltd., Karachi v. Additional Commissioner Inland Revenue, Karachi 2019 PTD (Trib.) 939; Indus Motors Company v. Pakistan through Secretary Finance and another 2020 PTD 297; Wateen Telecom Ltd. v. Sindh through the Secretary 2019 PTD 1030; Messrs Diamond Fabrics, Faisalabad v. The CIR, RTO, Faisalabad STA No.833/LB/2018; Messrs Bata Pakistan Ltd., Batapur, Lahore v. The CIR, Zone-I, LTU, Lahore STA No.1506/LB/2014 and Messrs Eastern Spinning Mills Ltd., Lahore v. The CIR RTO-II, Lahore STA Nos.489 and 490/LB/2017 ref.

Messrs Islam Soap Industries (Pvt.) v. The CIR, LTU, Lahore 2020 PTD (Trib.) 666; Messrs Islam Soap Industries (Pvt.) v. The CIR, Zone-IV LTU, Lahore 2020 PTD (Trib.) 585; Taj International (Pvt.) Ltd. v. The Federal Board of Revenue 2014 PTD 1807; Messrs LESCO v. The Federal Board of Revenue and others 2015 PTD 1; Messrs Arif Ehsan Printers v. Commissioner Inland Revenue Appeals RTO Faisalabad 2015 PTD (Trib.) 1777; Messrs Flame Trend v. Commissioner Inland Revenue (Appeal-III), RTO, Lahore 2015 PTD (Trib.) 1050 and Messrs Decent Textiles, Faisalabad v. Commissioner (Appeals) Inland Revenue (RTO) Faisalabad 2013 PTD (Trib.) 954 rel.

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

----S.3---Sales tax---Scope---Two conditions of making taxable supplies and taxable activity must exist simultaneously to charge sales tax on supplies---Section 3 of Sales Tax Act, 1990 levies sales tax on the taxable supplies made by a registered person in the course of furtherance of any taxable activity carried on by him and upon goods imported into Pakistan.

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

----Ss.3 & 2(45)---Sales tax---Taxable activity---Scope---Only such taxable activity is liable to sales tax which is undertaken during the course of taxable supply.

Hussain Ahmed Sherazi for Appellant.

Imran Shah, DR for Respondent.

2021 P T D (Trib.) 2078

[Inland Revenue Appellate Tribunal]

Before Dr. Farrukh Ansari, Accountant Member

COMMISSIONER INLAND REVENUE, ZONE-II, RTO, HYDERABAD

Versus

Messrs SHAHEEN ENTERPRISES

I.T.As. Nos.1086/KB, 1087/KB, 1088/KB, 1089/KB, 1090/KB and 1091/KB of 2018, decided on 9th March, 2020.

(a) Contract Act (IX of 1872)---

----Ss.182, 186 & 188---Sales of Goods Act (III of 1930), Ss.2 (9) & 4---Agent and his authority---Scope--- Agent has an authority to act on behalf of his principal and has an authority to create contractual relationships between principal and third parties--- Agent generally receives commission on the basis of the work done by him and is not subject to direct control and supervision of principal and can often act on his discretion but is bound to follow lawful instructions of the principal---"Mercantile agent" is the agent who has authority to sell goods or to raise security of goods on behalf of his principal---"Commission agent" is a mercantile agent who buys or sells goods on behalf of his principal and receives commission for the purpose--- Duties of agent include duty to follow instructions of principal, duty to carry out work with skill and care and duty to render accounts to principal.

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

----Ss.113(1), 133(3) & 236G---Commission agent---Distribution agreement, non-considering of--- Taxpayer was distributor of two companies and claimed to receive only commission against the sale--- Authorities were aggrieved of order passed by Appellate Authority wherein it was held that taxpayer produced sales tax/commercial invoice showing 'distribution margin' allowed to distributor/taxpayer on sale of their products by the company---Validity---Taxpayer, in orders of assessment, was shown as distributor of products of one company but he was also distributor of the products of another company--- Authorities failed to explain as to whether the issue was common to the products of both principals / suppliers alone as the order did not give any such indication about the same--- Appellate Tribunal Inland Revenue directed the Appellate Authority to look at entire facts and circumstances of the case, go through the stipulations of the agreement actually entered into between two parties and remanded the matter for decision of appeal afresh--- Appeal was allowed accordingly.

2003 PTD (Trib) 869; 2009 PTD (Trib) 1004; 2015 PTD (Trib) 1926; (2015) 111 Tax 270 (Trib); ITA No.4469/LB/2002; ITA No.4470/LB/2002 and 2017 PTD (Trib.) 2234 ref.

Rizwan Ali Memon, D.R. for Appellant.

Aleem Khan for Respondent.

2021 P T D (Trib.) 2184

[Inland Revenue Punjab Tribunal ]

Before Imran Hayee Khan, Accountant Member and Haroon Latif Khan Judicial Member

Messrs OMER ATAULLAH KHAN

Versus

COMMISSIONER (APPEALS) PRA, LAHORE

Appeal No.55 of 2019, decided on 4th December, 2019.

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

----Ss.27, 29, 60 & 63---Punjab Sales Tax on Services (Registration and De-registration) Rules, 2012, R.13---Compulsory registration---De-registration---Wrong compulsory registration---Remedy---Appeal---Maintainability---Scope---Appellant was compulsorily registered under S.27 of Punjab Sales Tax on Services Act, 2012---Appeal filed by appellant before Commissioner (Appeals) was dismissed on the ground that the order was not appealable---Validity---Impugned order did not deal with any question relating to the tax assessment and did not impose any type of financial penalty upon the appellant---Section 60 of Punjab Sales Tax on Services Act, 2012, provided the hierarchy of the officers of "The Authority" having different pecuniary jurisdictions to decide the matters involving determination of tax liability, assessment of the tax, charging of default surcharge, imposition of penalty and recovery of amount erroneously refunded or any other contravention or violation including tax fraud---Words 'any other contravention or violation' had to be read and understood in the same sequence as it also related to the matters involving the determination of tax assessment or any other financial liability or claim of the taxpayer---Grievance of appellant could easily be redressed under S.29(2) of Punjab Sales Tax on Services Act, 2012, and R. 13 of Punjab Sales Tax on Services (Registration and De-registration) Rules, 2012---Authority was bound to de-register the appellant if he satisfied the Authority by producing the evidence that he did not qualify to be treated as taxable service provider---Order for compulsory registration of appellant was well-reasoned as the appellant himself had pleaded that he was constructing a commercial building---Appeal was dismissed.

Assistant Commissioner, SRB, Karachi v. Messrs Mohsin Mehmood (Manzoor Ahmad") Appeal No.AT-113/2018 distinguished.

Messrs Expo Lahore (Pvt.) Ltd. v. Commissioner (Appeals) PRA, Lahore Order No.34 of 2016 dated 31-5-2016 rel.

Attaullah Khan and Asmar Tariq for Appellant.

2021 P T D (Trib.) 2192

[Inland Revenue Appellate Tribunal]

Before Mian Abdul Basit, Judicial Member and Imtiaz Ahmed, Accountant Member

Messrs WATEEN SOLUTION (PVT.) LTD and 2 others

Versus

COMMISSIONER INLAND REVENUE, LTU, ISLAMABAD

S.T.A. No.516(IB) of 2017, decided on 29th September, 2020.

Sales Tax Act (VII of 1990)---

----Ss.11 & 3---Assessment and recovery of tax not levied or short levied or erroneously refunded---Taxable activity---Issuance of show cause notice---Limitation---Scope---Department created a sales tax demand on the ground that the appellant transferred fixed assets without payment of sales tax---Validity---Show cause notice was issued on 13-06-2017 for the period from July 2011 to June 2012---Perusal of show-cause notice depicted that no date of disposal of the goods was mentioned in the notice and even the value of the disposed goods and assets was not mentioned, which was a mandatory condition under S.11 of the Sales Tax Act, 1990---Show-cause notice was required to be issued within a period of 5 years of the relevant date and where the notice did not specify the date of transfer of goods, such notice had to be deemed as defective---Case of department was based on financial statement of the appellant wherein the appellant had written off the assets on the ground that they were burnt in fire---Burning of assets did not constitute any taxable activity under S.3 of Sales Tax Act, 1990---Department could not have touched the pocket of taxpayer on the basis of time barred show cause notice and no recovery could be enforced for the period beyond five years---Appeal was accepted.

2001 SCMR 838; 2014 PTD 76; 2013 PTD 228; 2209 PTD 1263; 2014 PTD 52; 2010 PTD 251; 2013 PTD 1536 and 2001 YLR 339 ref.

Messrs Inam Packages, Lahore v. Appellate Tribunal Customs, C.E. and Sales Custom House, Lahore and 2 others 2007 PTD 2265 rel.

Aqeel Ahmed, ACA for Applicants.

Imran Shah, DR for Respondent.

2021 P T D 359

[Islamabad High Court]

Before Aamer Farooq and Mohsin Akhtar Kayani, JJ

COMMISSIONER OF INCOME TAX/WEALTH TAX, COMPANIES ZONE, ISLAMABAD

Versus

Messrs COMMUNICATION CITY (PVT.) LIMITED, ISLAMABAD

Tax Reference No.08 of 2005, decided on 30th October, 2019.

Income Tax Ordinance (XLIX of 2001)---

----S.133---Income Tax Ordinance (XXXI of 1979), S. 50---Reference to High Court---Deduction of tax at source---Scope---Assessee entered into different agreements with certain companies based in United Kingdom and United States and in that behalf made payments to them but no withholding tax was deducted under S.50(3) of the Income Tax Ordinance, 1979---Stance of assessee was that the payments were covered by "Avoidance of Double Taxation Treaties executed between Pakistan, USA and UK"---Validity---All the fora below except the Taxation Officer had concluded that the entities with which the respondent had been dealing did not have permanent establishment in Pakistan, hence payments made were covered under the Treaty---High Court could not enter into the facts finding mission regarding the place of establishment of the parties with whom the respondent had been dealing---No question of law had arisen in the facts and circumstances of the case to be framed and answered by the High Court---Reference application by the department was dismissed.

M.D. Shahzad and Ch. Talib Hussain for Applicant.

2021 P T D 407

[Islamabad High Court]

Before Miangul Hassan Aurangzeb, J

MEENA MUNAWAR KHAN

Versus

FEDERATION OF PAKISTAN and others

Writ Petition No.4024 of 2019, decided on 17th August, 2020.

Customs Act (IV of 1969)---

----S.19---Import Policy Order, 2016---SRO No.833(I)/2018 dated 03.07.2018---Import of vehicles ---General power to exempt from customs-duties---Exemption on import of vintage vehicles---Scope---Petitioner claimed benefit of SRO No.833(I)/2018 dated 03.07.2018 whereby customs duty and other regulatory duties and taxes in excess of US Dollars 5000 were exempt on import of vintage vehicles----Contention of Department, inter alia, was that said SRO did not specify any importability criteria and under Import Policy Order, 2016, vehicles older than three years were not allowed to be imported---Validity---Bill of lading of petitioner's vehicle mentions that said import was made pursuant to SRO No.833(I)/2018 dated 03.07.2018, and petitioner could not be deprived of benefit under same by Department simply by ignoring said SRO ---High Court directed that vehicle be released to petitioner after payment of US Dollars 5000 in terms of SRO No.833(I)/2018 dated 03.07.2018---Constitutional petition was allowed, accordingly.

C.P. No.D-4214/2019, Moin Jamal Abbasi v. The Federation of Pakistan and others rel.

Rashid Hanif for Petitioner.

Ms. Huma Noreen Hassan for Respondents Nos.3 and 4.

Muhammad Nadeem Khan Khakwani, Assistant Attorney-General.

2021 P T D 501

[Islamabad High Court]

Before Athar Minallah, CJ and Babar Sattar, J

COLLECTOR OF CUSTOMS, MCC, ISLAMABAD and 3 others

Versus

ISRAR and 6 others

Customs Reference No.48 of 2018, heard on 12th January, 2021.

(a) Maxim---

----Ignorantia Juris Neminem Excusat (ignorance of law is no excuse)--Scope---Criminal law as general matter is not forgiving of those who act in ignorance of law---Exclusions to this general rule exist, especially when there is ignorance or mistake as to civil law---If purpose of law is to punish individuals for culpability, it would be unfair to punish a person who acts under the belief that conduct is not criminal or without the knowledge it is criminal.

(b) Jurisprudence---

----Criminal act---Mistake of law or fact---Attempt---Scope---Question of mistake of law or mistake of fact is more germane when it comes to specific intent offences or inchoate offences, such as 'attempts', where there is no actual damage inflicted on another individual or society and punishment is meted out for possessing a guilty mind and for taking actions inspired by such mind, in the interest of public policy motivated by deterrence theory of punishment and recidivism theory of punishment: to deter legally reprehensible conduct and protect society against a possible recurrence of defendant's harmful conduct---Deterrence is ineffective if act projected as an attempt to commit a crime is for want of knowledge regarding wrongfulness of the act---Ignorance of law not being an excuse is based on the logic that individuals are aware of natural consequences of their actions and if their actions would lead to an injury to another, they ought to be able to foresee such injury---In a case involving accusation of an attempt to smuggle, State seeks to enforce a civil right against citizen and not acting to protect other members of society from a direct injury---Object of deterring attempt is inspired not by interests of other members of society from being protected against violence or harm but by collective interest of society in enforcement of law.

(c) Administration of justice---

----Compliance of law---Duty of State---Where object of State is to encourage compliance with law as opposed to letting citizens commit actions that attract punitive measures due to lack of knowledge or negligence, it must educate citizens instead of seeking enrich itself by collecting fines or confiscating citizens' property resulting from their mistakes or ignorance.

(d) Criminal trial---

----Attempt---Scope---When a person is charged with 'attempt', the attempt becomes principal ingredient of crime---With regard to the conduct element in relation to 'attempt' offences there exist two approaches: a fault-centered approach and an act-centered approach---From the stand point of fault-centered approach, an individual is guilty if he possesses a guilty mind and when he takes steps in pursuance of such criminal intent, he is liable to be punished---From the standpoint of act-centered approach, law should require an unambiguous act close to commission of crime to attract penalty, in order to protect individual liberty and agency and to give individual the benefit of doubt if he recedes prior to the penultimate act and resiles from the criminal intent.

Lord Goddard CJ, in Whybrow (1951) 35 Cr. App R 141 and Principles of Criminal Law (3rd Edition) rel.

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

----Ss.2(s), 16, 139, 156(1)(8), 178 & 196---Imports and Exports (Control) Act (XXXIX of 1950), Ss.3(1) & 3(3)---Reference---Smuggling of currency---Attempt---Unjust enrichment, principle of---Applicability---Foreign currency was recovered from the possession of applicants at the time of their departure abroad---Authorities charged applicants of an attempt to smuggle foreign currency and the same was confiscated---Appellate Authority and Customs Appellate Tribunal maintained Order-in-Original, passed against applicants---Validity---Held, it was unreasonable to assume that a traveller especially an infrequent or uninformed one, might not be aware of the limit prescribed by State Bank of Pakistan at a given time---Even a frequent traveller might suffer from a mistake of fact regarding quantum of foreign currency he was carrying---Such was a matter of State enforcing a civil right against citizen, which had placed a higher burden on the State to disclose limit of permissible foreign currency that could be carried, so that neither any citizen fell within the shackles of law inadvertently nor the State was to unjustly enriched itself due to a mistake committed by a citizen---It was not erroneous for the State to require every international traveller to make a mandatory disclosure of foreign currency on a form stating maximum permitted quantum of currency that could be carried for purposes of S.139 of Customs Act, 1969, at the time of check-in or at immigration counter etc.---False declaration was then automatically infer guilty intent---Order-in-Original was of not legal effect as the same was issued beyond mandatory adjudication period prescribed under S.179(3) of Customs Act, 1969---High Court directed the authorities to release currency seized from applicant---Reference was allowed, in circumstances.

Javed Iqbal v. Director General of Intelligence and Investigation, FBR, Karachi 2017 PTD (Trib) 2357; Central Board of Revenue v. Khan Muhammad PLD 1986 SC 192; Collector of Customs v. Khud-e-Noor 2006 SCMR 1609; Asghar Ali v. State PLD 2003 SC 250; Ehsan Elahi Malik v. State 1980 PCr.LJ 186; Black's Law Dictionary; Law Lexicon, Reprint 2009; State of Maharashthra v. Mohd. Yakub AIR 1980 SC 1111, 1115, 1114, 1117 and Abdul Salam v. State 1984 PCr.LJ 1133 ref.

Central Board of Revenue v. Khan Muhammad PLD 1986 SC 192 and The Collector of Sales Tax, Gujranwala and others v. Messrs Super Asia Mohammad Din & Sons and others 2017 SCMR 1427 = 2017 PTD 1756 rel.

M.D. Shahzad and Ch. Talib Hussain for Applicants.

Barrister Ahsan Jamal Pirzada and Muhammad Amin Feroz for Respondents.

2021 P T D 647

[Islamabad High Court]

Before Miangul Hassan Aurangzeb, J

Messrs SPIRIT INDUSTRIES (PRIVATE) LIMITED through authorized representative

Versus

NATIONAL TARRIF COMMISSION, ISLAMABAD and 2 others

F.A.O. No.86 of 2019, decided on 3rd December, 2019.\

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

----Ss.70 & 29(2)---Limitation Act (IX of 1908) S.5---Appellate Procedures under the Anti-Dumping Duties Act, 2015---Limitation prescribed for filing of appeals---Condonation of delay---Applicability of the Limitation Act, 1908 to such appellate procedures---Scope---Legislature had not made S.5 of Limitation Act, 1908 specifically applicable to appeals filed under S.70 of Anti-Dumping Duties Act, 2015 and mere fact that said Act did not exclude application of S.5 of Limitation Act, 1908, did not by itself extend application of said S.5 to proceedings under Anti-Dumping Duties Act, 2015---Application of S.5 of Limitation Act, 1908 also stood excluded by S.29(2) of Anti-Dumping Duties Act, 2015---Anti-Dumping Duties Act, 2015, was a special law which prescribed limitation period to which Limitation Act, 1908 would not be applicable.

2018 PTD 668 ref.

Mahmud Alam v. Mehdi Hussain PLD 1970 Lah. 6; Government of Balochistan v. Abdul Rashid Langove 2007 SCMR 510; Haji Hussain Haji Dawood v. M.Y. Kherati 2002 SCMR 343; Rahim Jan v. Securities and Exchange Commission of Pakistan 2002 SCMR 1303; Muhammad Nazir v. Saeed Subhani 2002 SCMR 1540; Allah Dino v. Muhammad Shah 2001 SCMR 286; Riaz Hussain v. Board of Revenue 1991 SCMR 2307 and Ali Muhammad v. Fazal Hussain 1983 SCMR 1239 rel.

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

----S.27---Notice for decision to initiate investigation by National Tarrif Commission---Publication of notice---Validity of preliminary or final determination in an investigation---Scope---Requirement to publish notice for initiation of investigation in official Gazette and in newspapers under S.27(1)(b) of Anti-Dumping Duties Act, 2015, could not be termed as substituted service which was resorted to in substitution of ordinary mode for service of such notice where notice could not be served on party though ordinary mode, or where party was evading service of notice---Where notices of initiation of investigation were published in official Gazette as well as newspapers in accordance with said S.27(1)(b), preliminary determination or final determinations made could not be declared invalid if notices under S.27(1)(a) of said Act were not sent to the concerned person / entity.

Bahria Town (Pvt.) Limited v. Government of Punjab 2017 CLC 1793; Bashir Ahmad v. Faisalabad Development Authority 2015 YLR 1484 and Makhdoom Ahmad Ghauns v. Chairman, Town/Municipal Committee 1994 CLC 430 rel.

Hassan Khan Durrani for Appellant.

Ahmed Sheraz for Respondent No.1.

Saifullah Khan for Respondents Nos.2 and 3.

2021 P T D 725

[Islamabad High Court]

Before Miangul Hassan Aurangzeb, J

SKP FOOD AND TRADING through Director

Versus

FEDERAL BOARD OF REVENUE through Chief (Exports), Islamabad and others

Writ Petition No.193 of 2017, decided on 22nd February, 2018.\

(a) Customs Rules, 2001---

----Rr. 228 & 229---Export Processing Zones Authority Ordinance (IV of 1980), Ss.3 & 11---Zone to be bonded area---Sanctioning of export---Scope---Petitioner impugned letter from Collector of Customs to Chief (Export), Federal Board of Revenue, wherein Collector had expressed the view that export of 'same state goods' in their original and unprocessed form from Export Processing Zone could not be allowed for further export---Collector had also required the Chief (Export) to confirm such view---Validity---Goods that were imported and taken to Export Processing Zone (EPZ), but not subjected to any manufacturing process or value addition, could not be exported to other countries---Such goods could also not be taken from the Export Processing Zone (E.P.Z.) to the tariff area without the payment of taxes and duties in accordance with the law---If any person was allowed to export imported goods without any value addition or without subjecting such goods to a manufacturing process, the very purpose of establishing E.P.Z. would be defeated---Petitioner's grievance against the department for not permitting the 'same state goods' to be removed from the E.P.Z. for export was unjustified---Constitutional petition was dismissed.

(b) Constitution of Pakistan---

----Art.199---Constitutional petition---Maintainability---Internal communication in the department---Scope---Writ petition against a letter, which is an internal communication and not addressed to the petitioner, is premature and liable to be dismissed. [p. 730] D

Messrs Gul Industrial Concern v. Collector of Customs Collectorate 2008 PTD 337 ref.

(c) Constitution of Pakistan---

----Art.199---Constitutional jurisdiction---Scope---Only a natural person or juristic person can sue or to be sued in its own name.

Syed Tanseer Bukhari for Petitioner.

Dr. Farhat Zafar and Sheikh Anwar-ul Haq for Respondents Nos.1 to 3.

Hafiz Arfat Ahmed Chaudhary, Amicus Curiae.

Ms. Sitwat Jehangir, Assistant Attorney-General.

2021 P T D 812

[Islamabad High Court]

Before Aamer Farooq, J

HUMAK ENGINEERING (PVT.) LTD. through Director

Versus

FEDERATION OF PAKISTAN through Secretary, Revenue Division, Islamabad and 5 others

Writ Petitions Nos.2352, 2803, 2920 and 3654 of 2015, decided on 28th May, 2019.

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

----Ss.25 & 25-A---Imported and exported goods---Power to determine customs value---Territorial jurisdiction---Scope---Petitioner assailed the validity of valuation ruling by contending that the department was adamant to calculate the customs duty on petitioner's consignment on the basis of a ruling which was later on revised---Validity---Petitioner was bound to pay the customs duty on the value determined under the valuation ruling---Revised ruling was not applicable in the case of the petitioner---Impugned valuation ruling was issued, were beyond the territorial jurisdiction of High Court---High Court could issue appropriate direction to any person carrying on the affairs of Federation within its territorial jurisdiction---Constitutional petition, being not maintainable, was dismissed.

PLD 1997 SC 334 and Collector of Customs through Additional Collector of Customs v. Messrs Khas Trading Co. 2015 PTD 22 distinguished.

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

----Ss.25-A & 25---Imported and exported goods---Power to determine customs value---Scope---Customs value of imported goods, under S.25 of the Customs Act, 1969, shall be the transaction value, that is the price actually paid or payable for the goods when sold for export to Pakistan---Collector of Customs, on his own motion, or the Director of Customs Valuation on his own motion or on a reference made to him by any person or an officer of Customs, may determine the customs value of any goods or category of goods imported into or exported out of Pakistan, after following the methods laid down in S.25, Customs Act, 1969, whichever is applicable---Section 25-A of the said Act starts with a non-obstante clause, as it provides notwithstanding the provisions contained in S.25---Subsection (2) of S.25-A provides that the Customs value determined under subsection (1) shall be the applicable customs value for assessment of the relevant imported or exported goods.

Farhat Nawaz Lodhi for Petitioners.

2021 P T D 853

[Islamabad High Court]

Before Lubna Saleem Pervez, J

Messrs AZ BUSINESS LINKERS

Versus

The COLLECTOR, MODEL CUSTOMS COLLECTORATE and others

Writ Petition No.3315 of 2020, decided on 31st December, 2020.

Customs Act (IV of 1969)---

----S.202(b)---Recovery of dues---Blocking of consignment---Petitioner-importer was aggrieved of blocking his consignment by authorities on the basis of a pending FIR---Validity---Authorities acted in expectation of levy of tax and duty consequent upon proceedings in FIR in question and had directly invoked recovery provision of S.202(b) of Customs Act, 1969---Provisions for recovery of government dues could not be used as precautionary measures to be adopted on speculations and expectations of creating of government dues as a result of any proceedings under Customs Act, 1969, as such proceedings could also conclude in favour of taxpayer--- Such action of authorities not only caused harassment to taxpayer/business concern, also created unnecessary hurdles in running business but also burdened Courts with undue litigation---High Court directed the authorities to release consignment of petitioner-importer as the same was unlawfully detained by misinterpreting provisions of S.202(b) of Customs Act, 1969---Constitutional petition was allowed, in circumstances.

Messrs Noon Sugar Mills Limited v. The Commissioner of Income Tax, Rawalpindi PLD 1991 SC 1156; Muhammad Amir Khan v. The Controller Estate Duty and another PLD 1962 SC 335 and Assistant Collector Customs v. Messrs Khyber Electric Lamps 2001 SCMR 838 rel.

Tofeeq ul Irfan for Petitioner.

Misbah Gulnar Sharif for Respondent.

Muhammad Tahir Khan, Principal Appraiser, MCC, Islamabad.

2021 P T D 879

[Islamabad High Court]

Before Miangul Hassan Aurangzeb and Lubna Saleem Pervez, JJ

Messrs KHYBER TEA AND FOOD COMPANY, PESHAWAR

Versus

COLLECTOR CUSTOMS, MODEL CUSTOMS COLLECTORATE, ISLAMABAD and others

Customs References Nos.17 and 18 of 2011, heard on 28th January, 2021.

Customs Act (IV of 1969)---

----Ss.179(3) & 194-B---Appeal---Limitation---Customs Authorities initiated proceedings against petitioner for transporting smuggled goods---Order-in-Original was maintained by Appellate Authority as well as Customs Appellate Tribunal---Plea raised by petitioner was that adjudicating order was passed beyond statutory period of limitation---Validity---Automatic extension of 60 days after expiry of 120 days was not provided under proviso to S.179(3) of Customs Act, 1969---Intent of proviso to S.179(3) of Customs Act, 1969, was not to grant automatic extension to finalize order in every case and the same was not applicable as neither there was stay of proceedings in operation nor any dispute resolution proceedings were going on---Order-in-Original was not passed within statutory period of 120 days and no extension of time for further 60 days was granted by Collector---High Court set aside Order-in-Original as the same was time barred having been invalidly passed after expiry of statutory limitation under S.179(3) of Customs Act, 1969---Reference was allowed, in circumstances.

The Collector of Sales Tax Gujranwala and others v. Super Asia Mohammad Din & Sons 2017 SCMR 1427; Messrs Mujahid Soap and Chemical Industries (Pvt.) Ltd. v. Customs Appellate Tribunal, Bench-I, Islamabad 2019 PTD 1961 and Messrs Lunar Technologies (Pvt.) Ltd. v. Appellate Tribunal of Customs (Customs Reference No.33/2017) ref.

Zahid Idris Mufti for Applicant.

Ch. Mohammad Nawaz, Ch. M. Nawaz Gondal on behalf of Mrs. Naziran Malik for Respondents.

2021 P T D 991

[Islamabad High Court]

Before Athar Minallah, CJ and Babar Sattar, J

SAHIBZADA FAZAL WAHID

Versus

CUSTOMS APPELLATE TRIBUNAL and 3 others

Custom Reference No.14 of 2018, heard on 14th January, 2021.

Customs Act (IV of 1969)---

----Ss. 2(s) & 17---SRO 568(I)/2008, dated 11-06-2008---Confiscation of vehicle---Smuggling---Scope---Applicant assailed the confiscation of his vehicle by the customs department---Validity---Chassis plate of the vehicle was cut and welded---Stance taken by applicant at a belated stage was that the vehicle was cleared under SRO 568(I)/2008, dated 11-06-2008, which amounted to admitting that it was smuggled---No document was placed on record to establish clearance of the vehicle under the said SRO---Said notification/SRO explicitly excluded vehicles having tampered engines or chassis numbers---Concurrent findings did not suffer from any illegality---Reference application was disposed of accordingly.

Ashfaq Ahmad Khan for Applicant.

Muhammad Amin Feroz Khan for Respondents.

2021 P T D 1047

[Islamabad High Court]

Before Mohsin Akhtar Kayani, J

DIRECTOR (I&I) (INLAND REVENUE), ISLAMABAD and others

Versus

NAEEM SIDDIQUE

Criminal Appeal No.134 of 2017, decided on 11th December, 2018.

Sales Tax Act (VII of 1990)---

----Ss.2(37), 33(13), 33(7), 11 & 74A---Tax fraud---Failure to apply for registration, assessment of tax and recovery of tax not levied or short levied or erroneously refunded---Validation---Scope---Appellants assailed order passed by Judge Special Court (Customs, Taxation and Anti-Smuggling), whereby the respondent was discharged from an FIR lodged under Ss.2(37), 33(13) & 33(7) of Sales Tax Act, 1990---Validity---Pre-trial steps including arrest and detention could not be given effect to, unless the tax liability of the taxpayer was determined in accordance with S.11 of Sales Tax Act, 1990---Entire question raised in the criminal case by the appellants could not be resolved in a proper manner unless the liability and the question of jurisdiction was settled on the departmental side through an order-in-original, order-in-appeal or the judgment of the Tribunal, and it was improper to prosecute the respondent for the liabilities which were not yet settled by the competent sales tax authorities---Registration of a criminal case, which was not validly authorized, could not be given retrospective effect in a criminal case as it was against the Fundamental Rights of the individual who was facing the trial---Order passed by Judge Special Court (Customs, Taxation and Anti-Smuggling) was in accordance with law and no illegality was observed, however, the appellants could agitate the matter afresh after conclusion of the liability of sales tax by the department in hierarchy provided under the Sales Tax Act, 1990.

FM Textile Mills v. Federal Board of Revenue 2017 PTD 1875 rel.

Taj International (Pvt.) Ltd. and others v. FBR 2015 PTD 1807 foll.

Adnan Haider Randhawa and Ms. Saima Naqvi for Appellants.

Syed Tanseer Bukhari for Respondent.

2021 P T D 1088

[Islamabad High Court]

Before Mohsin Akhtar Kayani and Ghulam Azam Qambrani, JJ

Messrs ATTOCK GEN LTD. REFINERY, P.O. MORGAH, RAWALPINDI through Chief Executive

Versus

CHIEF COMMISSIONER INLAND REVENUE, REGIONAL TAX OFFICE, RAWALPINDI and 2 others

Income Tax Reference No.376 of 2010, decided on 6th August, 2020.

Income Tax Ordinance (XLIX of 2001)---

----Ss.120 & 177---Audit, selection for---Opportunity before selection---Principle---Taxpayer assailed selection of its case for audit under S.177 of Income Tax Ordinance, 2001---Plea raised by taxpayer was that no opportunity was afforded before selecting its case for audit---Validity---Taxpayer was communicated by Commissioner Audit, therefore, selection itself by authorities was not unlawful---Such selection was based on certain factors and reasons which persuaded Commissioner Audit to select the taxpayer for the purpose of audit in terms of S.177 of Income Tax Ordinance, 2001---Taxpayer filed its return of income on 31-12-2008 as nil and such return was treated as to be assessment order under S.120 of Income Tax Ordinance, 2001, which was made basis of selection for the purpose of audit---High Court declined to interfere in the selection of case of taxpayer for audit as there was no illegality in the scheme of law adopted by authorities---High Court maintained the order passed by Income Tax Appellate Tribunal as it had considered all aspects of the matter---Reference was dismissed in circumstances.

CIT v. Fatima Sharif Textile, Kasur 1994 SC 317 Tax ref.

Shaukat Ali Qureshi for Applicant.

Babar Bilal for Respondents.

2021 P T D 1124

[Islamabad High Court]

Before Aamer Farooq and Ghulam Azam Qambrani, JJ

OIL AND GAS DEVELOPMENT COMPANY LIMITED, OGDCL, ISLAMABAD

Versus

Messrs SPRINT OIL AND GAS SERVICES PAKISTAN FZC, ISLAMABAD

Intra Court Appeal No.115 of 2019 in Writ Petition No.2349 of 2017, decided on 21st January, 2021.

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

----Ss.11 & 3---Sindh Sales Tax on Services Act (XII of 2011) Ss.9 & 3---Khyber Pakhtunkhwa Finance Act (XXI of 2013) Ss. 27 & 19---Balochistan Sales Tax on Services Act (VI of 2015) Ss. 9 & 3---Commercial Contracts---Liability to pay Provincial sales tax on services---Determination as to whether provider of services or recipient of services was liable to pay sales tax on services---Scope---Appellant Oil and Gas Development Company, Limited (OGDCL) impugned order of High Court whereby Constitutional petition of respondent contractor was allowed, inasmuch, that OGDCL was held liable to pay sales tax on services rendered by contractor, levied after all Provinces enacted Provincial laws levying sales tax on services---Validity---Per all Provincial statutes which levied sales tax on services, liability to pay sales tax on services fell upon provider of such services and if services were rendered by a "person" who was not based in a Province or was a non-resident, only then liability to pay such tax was on recipient of services---In the present case, respondent OGDCL produced registration certificates of respondent contractor with all Provincial Revenue Authorities---Such documents, indicating registration of respondent with Provincial Revenue Authorities, could not be ignored while determining liability to pay sales tax and said documents were not denied by respondent contractor---Impugned order, to the extent of declaration that OGDCL was liable to pay sales tax, was set aside---Intra-court appeal was allowed, accordingly.

Petrosin Corporation (Pvt.) Ltd and 2 others v. Oil and Gas Development Company Limited through Managing Director 2007 CLD 578; Nasiruddin Ghor v. Federation of Pakistan through Secretary and 4 others 2010 PLC 323; Federal Government Employees Housing Foundation through Director General, Islamabad and another v. Muhammad Akram Alizai, Deputy Controller, PBC, Islamabad PLD 2002 SC 1079; Muhammad Maqsood Sabir v. District Returning Officer PLD 2009 SC 28 and Mrs. Zakia Hussain v. Syed Farooq Hussain PLD 2020 SC 401 rel.

Mst. Mukhtaran Bibi v. DPO and others 2005 MLD 232; Punjab Workers' Welfare Board, Government of Punjab and Human Resources Department, Lahore v. Mehr Din 2007 SCMR 13; Haji Muhammad Afzal v. Government of Punjab through Chief Administrator, Auqaf, Lahore and 4 others 2004 CLC 1723; Hakim Ali v. Member Power, WAPDA and others PLD 2002 Lah. 28; Mst. Rubina alias Rubi and 6 others v. Additional District Judge and 3 others 2018 CLC Note 27 and Aziz Uddin Industries Limited v. Collector of Central Excise and Land Customs, East Zone, Chittagong and others PLD 1967 Dacca 58 ref.

Nasim Sikandar, Advocate Supreme Court and Nudrat Sultana Alvi for Appellants.

Malik Muhammad Qayyum and Shahid Hussain Qaiser for Respondents.

2021 P T D 1203

[Islamabad High Court]

Before Athar Minallah, CJ and Babar Sattar, J

Messrs FEDERAL BANK FOR COOPERATIVES, ISLAMABAD

Versus

COMMISSIONER OF INCOME TAX, COMPANIES ZONE, ISLAMABAD

Tax Reference No.7 in C.M. No. 01 of 2007, decided on 5th April, 2021.

(a) Interpretation of statutes---

----Conflict between law---Contradiction between two special laws or statutory provisions---Principles of construction---Scope---Implied repeal, doctrine of---Applicability---While applying seemingly conflicting provisions of two statutes, court must seek to interpret them in a manner that afforded harmonious construction and prevented emergence of conflict---Assumption was to be made that if Legislature wished to override an existing law, it would do so explicitly and thus doctrine of implied repeal was not to be readily or mechanically invoked---For resolution of conflict between two special laws, one later in time would ordinarily prevail for being an embodiment of latest expression of Legislature's intent, however, such principle was not to be mechanically applied as being aware of an earlier special law, Legislature could override same through explicit language in a subsequent special law if it is so wished---In event that there was contradiction between provisions of two statutes, it was to be presumed that statute within the provision of which the Legislature has included a non-obstante clause was to be given overriding effect over provisions of other statute that it was in conflict with, in order to give effect to expressed Legislative intent----Both statutes, if they contained non-obstante clauses, then special law would prevail over general law, and law later in time would ordinarily prevail in case of conflict between two special laws---However, a non-obstante clause was also not to be given overriding effect in a mechanical fashion as underlying object of interpretive project undertaken by court was to discover meaning of words used by Legislature and a non-obstante clause was usually employed to suggest that a provision referred to in such clause was to prevail over other provisions of a statute, but repugnancy between non-obstante clause and other clauses was not to be presumed and overriding effect was to be accorded only in case of irreconcilable conflict---Harmonious construction, if same could not be accorded to provisions of two special statues without giving tortured meaning to words used; then object, purpose and policy of such statutes was to be borne in mind in order to discover Legislative intent regarding which statute was to be given overriding effect and to be treated as special law with overriding effect over another special law---Possibility also existed that a law was to be treated as a special law vis-a-vis one enactment and general law vis-a-vis another enactment.

Syed Mushahid Shah and others v. FIA and others 2017 SCMR 1218; Maruti Udyog Ltd. v. Ram Lal (2005) 2 SCC 638; Maharashtra Tubes Ltd. v. State Industrial and Investment Corporation of Maharashtra Ltd. and another 1993(2) SCC 144; Solidaire India Ltd v. Fairgrowth Financial Services Ltd. and others (2001) 3 SCC 71; ShriRam Narain v. Simla Banking and Industrial Co. Ltd. AIR 1956 SC 614; Ashoka Marketing Ltd. and another v. Punjab National Bank and others AIR 1991 SC 855 and Allahabad Bank v. Canara Bank and another (2000) 4 SCC 406 rel.

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

----Ss.8 & 6---Effect of repeal---Construction of references to repealed enactments---Scope---Statute, if it excluded provisions of another statute explicitly, then even subsequent changes in the excluded statute would remain excluded and doctrine of implied repeal would not be mechanically invoked to override exclusion clause in the statue excluding the applicability of another statute, unless contrary intent could be deciphered from language used by Legislature in amended provisions of excluded statute.

Zarai Taraqiati Bank Limited v. Said Rehman 2013 SCMR 642 and Rajya v. Gopikabai AIR 1979 SC 79 rel.

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

----Ss.80D & 136---Establishment of the Federal Bank for Cooperatives and Regulation of Cooperative Banking Act, (IX of 1977) Ss.39, 3, 4 & 38---Statutory exemption from Income Tax provided to Federal Bank for Cooperatives---Minimum Tax under S.80D of Income Tax Ordinance, 1979---Scope---Question before High Court was whether S.80D of Income Tax Ordinance, 1979 would prevail over S.38 of Establishment of the Federal Bank for Cooperatives and Regulation of Cooperative Banking Act, 1977, whereby Federal Bank for Cooperatives was declared exempt from payment of income tax---Held, that language used in Establishment of the Federal Bank for Cooperatives and Regulation of Cooperative Banking Act, 1977 suggested that Legislature enacted standalone law for regulation of all affairs of the Bank and deliberately excluded application of all other laws, including special laws on subject of taxation, or winding up etc.---Legislature, if it wanted to subject income of the bank to federal income tax, it would do so using explicit language to amend or override section 38 of Establishment of the Federal Bank for Cooperatives and Regulation of Cooperative Banking Act, 1977----Section 80D of the Income Tax Ordinance, 1979 therefore could not be treated as a special law ousting the carveout created by S.38 of Establishment of the Federal Bank for Cooperatives and Regulation of Cooperative Banking Act, 1977 for taxation purposes---Establishment of the Federal Bank for Cooperatives and Regulation of Cooperative Banking Act, 1977, for present purposes, was the special law and its provision were to be given overriding effect in the relevant tax year in the case---Reference was answered, accordingly.

Muhammad Mohsin Ghuman and others v. Government of Punjab through Home Secretary and others 2013 SCMR 85; Commissioner of Income Tax, Companies Zone, Islamabad v. Messrs Geofizyka Krakow Pakistan Ltd. 2015 PTD 1169 and Sui Northern Gas Pipeline Limited through General Manager v. Director (Legal) President Secretariat (Public) and 2 others PLD 2018 SC 51 ref.

Hafiz Muhammad Idrees and Syed Farid Ahmed Bukhari for Applicant.

2021 P T D 1257

[Islamabad High Court]

Before Lubna Saleem Pervez, J

The ASSISTANT COLLECTOR CUSTOMS (PREVENTIVE DIVISION), ISLAMABAD

Versus

Lt. Col. ALI ABDEL HAFIZ MUFLEH AWAWDEH, ISLAMABAD and 2 others

Writ Petition No.3975 of 2020, decided on 23rd December, 2020.

Customs Act (IV of 1969)---

----S.194A---Constitution of Pakistan, Art.199---Constitutional petition---Appeals to Appellate Tribunal---Non-availability of Chairman---Maintainability---Scope---Department seized a vehicle and worked out a liability---Respondent assailed the order-in-original and directions for unconditional release of his vehicle were given---Department filed constitutional petition seeking suspension of the order till such time the Customs Appellate Tribunal resumed its functions as the tribunal was not functional due to non-availability of its Chairman---Validity---Considerable amount of government revenue was calculated as a result of investigation proceeding which did not find favour with the adjudicating authority, who had decided the unconditional release of the subject vehicle---Appeal was filed by the department before the Customs Appellate Tribunal and since the relevant forum was not available to the petitioner thus, the constitutional petition was maintainable---Subject vehicle was disputed before the Customs Appellate Tribunal, therefore, the same was not to be released till such time the Customs Appellate Tribunal resumed its functions---Constitutional petition was disposed of accordingly.

2021 P T D 1275

[Islamabad High Court]

Before Miangul Hassan Aurangzeb, J

ABDULLAH KHAN

Versus

COMMISSIONER INLAND REVENUE (APPEALS-II) REGIONAL TAX OFFICE and 2 others

Writ Petition 1341 of 2021, decided on 9th April, 2021.

Income Tax Ordinance (XLIX of 2001)---

----Ss.161 & 127---Constitution of Pakistan, Art.199---Constitutional jurisdiction of High Court---Scope---Recovery of income tax liability---Adjudication under Income Tax Ordinance, 2001---Limitation for filing of appeals---Scope---Petitioner/taxpayer impugned assessment order whereby he was held liable to pay a certain amount on account of failure to pay tax collected and deducted and sought to restrain Department from initiating recovery proceedings on basis of said assessment order---Contention of petitioner, inter alia, was that he had filed appeal against said assessment order in terms of S.127 of Income Tax Ordinance, 2001, which could not be filed within time, however, his application for condonation of delay was pending and such delay be condoned---Validity---Petitioner's request to direct Department to condone delay in filing of appeal was not tenable as same could not be done in Constitutional jurisdiction of High Court---High Court observed that in interest of justice, it would be proper for Department to be restrained from effecting recovery of disputed tax liability until decision on petitioner's application for condonation of delay---Constitutional petition was disposed of, accordingly.

2021 P T D 1585

[Islamabad High Court]

Before Babar Sattar, J

The DIRECTOR GENERAL (INTELLIGENCE AND INVESTIGATION INLAND REVENUE), ISLAMABAD and 2 others

Versus

The ADDITIONAL SESSIONS JUDGE-IV, WEST ISLAMABAD and 4 others

Writ Petition No.3857 of 2015, decided on 23rd April, 2021.

(a) Good Governance---

----Official duties, exercise of---Immunity against personal liability---Principle---In a Constitutional democracy wherein rule of law prevails, all public officials exercise delegated authority flowing from citizens to the State and are exercised by public officials in the name of State for the benefit of citizens within the limits prescribed by law---Question of actions of public officials protected against enforcement of provisions of law cannot even arise; it is only that when law vests authority in public official along with discretion, the exercise of such authority and discretion can result in wrong decisions as well--- So long as actions and decisions are reached by public officials within the four corners of law, no personal liability for incorrect or wrong decision attaches for such incorrect acts, omissions or decisions---Law recognizes that when someone is vested with authority to act or make a decision on behalf of State, he/she can get decision wrong as well---Various statutes protect bona fide actions of public officials and shield them from personal liability in order not to debilitate discharge of public functions out of fear of attracting personal liability---Immunity against personal liability for bona fide actions does not translate into a right to act in disregard of law with impunity---Any police officer who abuses state authority vested in him to inflict harm on a citizen enjoys no immunity for exercise of authority is such manner.

Yousaf Ali v. Muhammad Aslam Zia PLD 1958 SC 104; Dr. Omar Masood v. Syed Amir Hussain Naqvi 2019 CLD 931; Arshad Mahmood v. The State PLD 2008 SC 376; 2012 PTD (Trib.) 1416; Rookes v. Barnard (1964) 1 All ER 367; Federation of Pakistan through Secretary Establishment Division v. Saeed Ahmed Khan PLD 1974 SC 151; Muhammad Sharif v. Federation of Pakistan PLD 1988 Lah. 725; Pakistan v. Umar Khan 1992 SCMR 2450; Independent Newspapers Corporation (Pvt.) Ltd. and another v. Chairman, Fourth Wage Board and Implementation Tribunal and 2 others 1993 SCMR 1533; Zahid Akhtar v. Government of Punjab and others PLD 1995 SC 530; Sherin and 4 others v. Fazal Muhammad and 4 others PLD 1995 SC 584; Aftab Ahmed Khan Sherpao v. Farooq Ahmed Leghari PLD 1997 Pesh. 93; Masroor Ahsan v. Ardeshir Cowasjee PLD 1998 SC 823; Messrs Airport Support Services v. The Airport Manager, Quaid-e-Azam International Airport, Karachi 1998 SCMR 2268; Samiullah Khan Marwat v. Government of Pakistan 2003 SCMR 1140; Dr. Imtiaz Ellahi Piracha v. Government of Punjab and others 2004 PLC (C.S) 705; Muhammad Yasin v. Secretary, Government of Punjab and others 2007 SCMR 1769; Iqbal Hussain v. Province of Sindh 2008 SCMR 105; Mrs. Abida Parveen Channar v. High Court of Sindh at Karachi 2009 SCMR 605; Human Rights Cases Nos. 4668 of 2006, 111 of 2007 and 15283-G of 2010 PLD 2010 SC 759; Air Marshal (Retd.) Muhammad Asghar Khan v. General (Retd.) Mirza Aslam Baig and others PLD 2013 SC 1; Ali Azhar Khan Baloch and others v. Province of Sindh and others 2015 SCMR 456; Province of Sindh through its Chief Secretary v. Syed Kabir Bokhari (2016 SCMR 101; Abdul Rehman Malik v. Synthia D. Ritchie, American National and others 2020 SCMR 2037 and Justice Qazi Faez Isa v. The President of Pakistan PLD 2021 SC 1 rel.

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

----S.51---Electronics Transactions Ordinance (LI of 2002), Ss.36 & 37---Criminal Procedure Code (V of 1898), Ss.22-A & 22-B---Constitution of Pakistan, Arts.10-A, & 248---Official proceedings---Immunity---Scope---Ex-Officio Justice of Peace allowed application filed by respondents/taxpayers for breach of provisions of Ss.36 & 37 of Electronic Transactions Ordinance, 2002, by petitioners/authorities and directed to register F.I.R.---Petitioners/authorities claimed protection of S.51 of Sales Tax Act, 1990, for acts done in official capacity---Validity---No protection from investigation or prosecution could be afforded to any public official for an alleged act---Whether or not a public official was liable for an illegal act, could only be determined after a fair investigation and trial--- Every citizen had a right to due process and fair trial, when a claim was made by a citizen that a public official was involved in an offence causing legal injury to such citizen---Both citizens and public officials have a right to due process and fair trial and to have their rights and liabilities determined in accordance with law---No public official could claim protection against investigation or prosecution---In view of Art.10-A of the Constitution, it was only the procedure to be followed in conducting investigation and prosecution of public officials that could be regulated by statutory provisions---Allegations regarding any fraud that were or were not committed by respondents/taxpayers were to be determined in accordance with the provisions of Sales Tax Act, 1990---Severity of such allegations had no bearing on obligation of petitioners/authorities to exercise any authority vested in them such that it was in accordance with the law---Complaint was filed by respondents/taxpayers alleging that actions of petitioners/authorities constituted an offence under provisions of Electronic Transactions Ordinance, 2002---Neither immunity afforded by law to petitioners/authorities against investigation and prosecution in relation to such offence, nor order passed by Ex-Officio Justice of Peace suffered from legal infirmity for allowing registration of F.I.R. and initiation of investigation---Constitutional petition was dismissed in circumstances.

Shahnaz Begum v. The Hon'ble Judges of the High Court of Sindh and Baluchistan and another PLD 1971 SC 677; Emperor v. Khawaja Nazir Ahmed AIR (32) 1945 Privy Council 18; Miraj Khan v. Gul Ahmed and 3 others 2000 SCMR 122; Col. Shah Sadiq v. Muhammad Ashiq and others 2006 SCMR 276; Muhammad Mansha v. Station House Officer, Police Station City, Chiniot, District Jhang and others PLD 2006 SC 598 and Muhammad Rizwan v. The State and others 2016 PCr.LJ 998 rel.

Hafiz Ahsaan Ahmed Khokhar for Petitioner.

Ghulam Qasim Bhatti for Respondents.

2021 P T D 1644

[Islamabad High Court]

Before Babar Sattar, J

PKP EXPLORATION LIMITED and others

Versus

FEDERAL BOARD OF REVENUE through Chairman and others

Writ Petitions Nos.886 and 1077 of 2015, decided on 18th June, 2021.

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

----S.132---Decision of Appellate Tribunal---Authority of Income Tax Appellate Tribunal---Scope---Decision of Tribunal is limited to the case that it decides and do not travel beyond four corners of subject matter before the Tribunal in appeal---Neither Constitution nor any statute envisages a law-declaring function of the Tribunal---Reasoning of Tribunal in one case can be treated by tax authorities as a persuasive precedent in a subsequent case where subject matter is same or similar---Persuasive quality or cogent reasoning of a decision of Tribunal does not transform it into a legally binding precedent for officials exercising executive or adjudicatory authority under tax statutes, just as the most compelling and potent decisions of District Courts do not make such decision binding precedents.

National Security Company (Pvt.) Ltd. v. Income Tax Appellate Tribunal, Lahore and 2 others 2005 PTD 2340 and Messrs Oxford University Press v. Commissioner of Income Tax 2007 PTD 1533 rel.

(b) Words and phrases---

----"Palpable"---Meaning.

The Chambers Dictionary and Burton's Legal Thesurus rel.

(c) Words and phrases---

----"Illusory"--- Meaning.

Advance Law Lexicon and Burton's Legal Thesaurus rel.

(d) Constitution of Pakistan---

----Art.199---Constitutional petition---Show-cause notice---Statutory remedies, non-availing of---Exercise of jurisdiction by High Court---Principles.

Following are the principles for non-exercising of jurisdiction by High Court when Art.199 of the Constitution. When statutory remedies had not been availed by the petitioner in case of show-cause notice:

1. Where notice in question is without jurisdiction, for it is coram non judice or is issued by a person not vested with authority under law to issue such notice;

2. Where notice in question is non-est for purporting to exercise power and jurisdiction for purposes alien to empowering statutes, thereby rendering it palpably or wholly without jurisdiction;

3. Where notice in question suffers from mala fide for having been issued (i) for a collateral purpose that can be easily inferred from facts and circumstances of the matter or (ii) in clear breach of procedural preconditions and pre-requisites prescribed by statute, that is tantamount to colorable exercise of jurisdiction or abuse of authority;

4. Where alternative remedy is inadequate and illusory because it lies before an adjudicatory forum that is conflicted or otherwise incapable of deciding the matter with an open mind in accordance with law as the authority or discretion vested in it stand fettered;

5. Where order in question violates fundamental rights of aggrieved person to due process guaranteed by the Constitution; and

6. Where controversy involves interpretation of a statutory instrument, which makes it a case of first impression, provided that High Court is not repository of ultimate appellate, revisional or reference powers within the adjudicatory scheme prescribed by statute for remedying such grievance.

Khalid Mehmood v. Collector of Customs 1999 SCMR 1881 and Next Capital Limited v. Assistant Commissioner 2020 PTD 808 rel.

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

----S.132---Constitution of Pakistan, Arts.175(2) & 199---Constitutional petition---Income Tax Appellate Tribunal---Binding effect of decisions---Principle---Show-cause notice, assailing of---Statutory remedy---Scope---Petitioners were income tax assessees who were aggrieved of show-cause notices issued by Inland Revenue Authorities---Plea raised by petitioners was that official of Inland Revenue was bound by decision of Income Tax Appellate Tribunal rendered in an earlier case and statutory remedies were illusory---Validity---Decision of Income Tax Appellate Tribunal was only binding upon parties in appeal decided by the Tribunal and was not a binding precedent for subsequent cases for the purpose of any question of law that it decided while deciding such appeal---Statutory remedies were not illusory as under Sales Tax Act, 1990, a remedy against decisions by statutory adjudicatory forms was before Division Bench of High Court in its reference jurisdiction---High Court was loathed to exercise its discretionary Constitutional jurisdiction to decide a question of law involving interpretation of language used in SRO having effect of usurping reference jurisdiction of High Court---High Court declined to interfere in the matter as show-cause notices were not palpably without jurisdiction nor suffered from mala fide---Constitutional petition was dismissed in circumstances.

National Security Company (Pvt.) Ltd. v. Income Tax Appellate Tribunal, Lahore and 2 others 2005 PTD 2340; Messrs Oxford University Press v. Commissioner of Income Tax 2007 PTD 1533; S.A Haroon and others v. Collector of Customs Karachi and the Federation of Pakistan PLD 1959 SC 177; Lt. Col. Nawabzada Muhammad Amir Khan v. The Controller of Estate Duty PLD 1961 SC 119; Nagina Silk Mill, Layallpur v. The Income Tax Officer PLD 1963 SC 322; Anjuman-e-Ahmadiya Sargodha v. The Deputy Commissioner, Sargodha PLD 1966 SC 639; Watan Party through President v. Federation of Pakistan and others PLD 2006 SC 697; Commissioner Income Tax v. Messrs Eli Lilly Pakistan (Pvt.) Ltd. through Director 2009 SCMR 1279; Pakistan Tobacco Co. Ltd. v. Pakistan through the Secretary, Ministry of Finance, Islamabad and 4 others 1991 PTD 359; Shahnawaz (Pvt.) Ltd. v. Pakistan through the Secretary, Ministry of Finance, Islamabad and others 2011 PTD 1558; Messrs Julian Hoshang Dinshaw Trust and others v. Income Tax officer, Circle XVIII, South Zone, Karachi and others PTCL 1992 CL 181; Attock Cement Pakistan Ltd. v. Collector of Customs and others 1999 PTD 1892; Collector of Customs and others v. Messrs Ahmad & Company 1999 SCMR 138; Oxford University Press v. Commissioner of Income Tax 2019 PTD 523; Sky Rooms Ltd. v. Assistant Collector of Central Excise and Land Customs, Karachi PLD 1982 Kar. 244; Balochistan Textile Mills Ltd. v. Central Excise Board of Revenue and others 1984 CLC 2192; Pakistan Metal Industries v. Assistant Collector, Central Excise and Land Customs and another 1990 CLC 1022; Messrs S.A Abdullah & Co. v. Collector of Customs (Appraisement) Karachi PLD 1992 Kar. 258; Messrs Khyber Electric Lamps v. Assistant Collector Customs and others 1996 CLC 1365 and Pirani Engineering v. Federal Board of Revenue 2009 PTD 809 ref.

The Murree Brewery Co. Ltd. v. Pakistan, through the Secretary to Pakistan, Works Division and others PLD 1972 SC 279; Messrs Usmania Glass Sheet Factory v. Sales Tax Officer PLD 1971 SC 205; EFU General Insurance Ltd. v. Federation of Pakistan 2010 PTD 1159; Messrs Zorlu Enerji Pakistan Limited v. Sindh Revenue Board and others 2020 PTD 1288; Northern Power Generation Company Limited v. Federation of Pakistan and others 2015 PTD 2052; Villanoa Law Review, 2 Vill.L.Rev. 367, 1957; John W. Salmond in Jurisprudecne (4th Edition); Multiline Associates v. Ardeshir Cowasjee and 2 others PLD 1995 SC 423; 1996 PTD (Trib.) 388; Al Ahram Builders (Pvt.) Ltd. v. Income Tax Appellate Tribunal 1993 SCMR 29; H.M Abdullah v. The Income Tax Officer 1993 SCMR 1195; Roche Pakistan Ltd. v. Deputy Commissioner of Income Tax 2001 PTD 3090; Sitara Chemical Industries Ltd. and another v. Deputy Commissioner of Income Tax 2003 PTD 1285; Mughal-E-Azam Banquet Complex v. Federation of Pakistan 2011 PTD 2260; Messrs Pakistan Mobile Communications Ltd. v. Sindh Revenue Board and others 2014 PTD 2048; Omer Flour Mills v. Government of Punjab and others 2021 PTD 275; Chairman Central Board of Revenue, Islamabad v. Pak-Saudi Fertilizer Limited and another 2001 SCMR 777; J.K Brothers Pakistan (Pvt.) Ltd. v. Additional Commissioner Inland Revenue 2016 PTD 461; Pepsi-Cola International (Pvt.) Ltd. v. Federation of Pakistan and others 2017 PTD 636; Reliance Commodities (Pvt.) Ltd. v. Federation of Pakistan and another PLD 2020 Lah. 632; Eastern Testing Service (Pvt.) Limited v. Securities and Exchange Commission of Pakistan and others 2016 CLD 581; Pakistan Oil Field Limited v. Federation of Pakistan 2020 PTD 110; Ch. Muhammad Ismail v. Fazal Zada PLD 1996 SC 246; Messrs Phoenix Mills Ltd., Karachi v. City District Government Karachi and others PLD 2003 Kar. 83 and Abdul Salam Qaureshi v. Judge, Special Court of Banking PLD 1984 Kar. 462 rel.

Raheel Kamran Sheikh, Advocate Supreme Court for Petitioners (in Writ Petition No.886 of 2015).

Saad M. Hashmi for Petitioners (in Writ Petition No.1077 of 2015).

Syed Ishfaq Hussain Naqvi for Respondent.

Raja Saad Sultan, Assistant Attorney General.

Kashif Ali Malik, Qaiser Abbas Gondal and Sardar M. Yaqoob Mastoie for Respondent No.6 (in Writ Petition No.886 of 2015).

2021 P T D 1680

[Islamabad High Court]

Before Athar Minallah CJ and Babar Sattar, J

Messrs ATTOCK REFINERY LIMITED and others

Versus

The COLLECTOR OF SALES TAX and others

Sales Tax Reference No.20 of 2008, decided on 1st February, 2021.

(a) Show-cause notice---

---Legality of show-cause notice(s)---Nature of defects in show-cause notice---Scope---Jurisprudence on legality of show-cause notices was guided by principles of fairness and a person being put to notice ought to know allegation or charge against such person together with identification of consequences of infraction if sound true, along with being provided opportunity of answer such allegation / charge therein---Misstatement of provision of law within a show-cause notice or omission of provision of statute under which such show-cause notice was issued, in absence of additional circumstances / factors, rendering such show-cause notice incomplete or unfair for not clearly stating allegation, did not invalidate such show-cause notice.

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

----Ss.34, 46 & 47---Payment of sales tax liability---Default Surcharge---Automatic application of default surcharge on tax not paid either willfully or inadvertently---Sales Tax Appellate Tribunal, powers of---Scope---Legislature under S.34 of Sales Tax Act, 1990 did not provide Appellate Tribunal with any authority to create a window-period for taxpayer to pay any tax that had not been paid willfully or inadvertently without attracting default surcharge---Once Appellate Tribunal determined that payment of tax was due, it could not have carved out a period of sixty days for payment of principal amount with no default surcharge---Application of default surcharge under S.34 of Sales Tax Act, 1990 was automatic and triggered even in cases where non-payment of tax due was not deliberate but inadvertent---Reference was answered accordingly.

Syed Tauqeer Bukhari and Syed Ali Murtaza Abbas Applicants.

2021 P T D 1710

[Islamabad High Court]

Before Lubna Saleem Pervez, J

Raja FIDA HUSSAIN HAFEEZ

Versus

DEPUTY DIRECTOR-I, ESTATE MANAGEMENT DIRECTORATE-II, CAPITAL DEVELOPMENT AUTHORITY, ISLAMABAD and 6 others

Writ Petition No.3630 of 2020, decided on 3rd May, 2021.

(a) Constitution of Pakistan---

----Art.199---Constitutional petition---Tax notice---Legality---Petitioner purchased a commercial plot from Capital Development Authority (CDA) through open auction and as per terms and conditions paid all the installments in time according to schedule and also paid advance income tax under S.236-A of Income Tax Ordinance, 2001, to the CDA at the time of auction---CDA was requested to transfer the plot in the name of petitioner and in response thereof a notice was received from the Estate Management Officer, CDA, requiring the petitioner to pay the full tax of FBR (Federal Board of Revenue) and submit original receipt to proceed further in the case---Validity---Impugned notice was an unclear, defective and flawed notice which did not fulfill the requirements of communicating the unpaid government tax demand to the petitioner---Notice was issued by the officer who was not conversant with the case of the petitioner and was uncertain about the taxes and duties levied under the statutory provision in respect of transaction of immovable property purchased by the petitioner and as to what tax was already paid by him and how much amount was payable under any particular law---Taxpayer had the right to know the unpaid/arrear tax demand or government dues levied under the law, which should have been communicated to him by disclosing all the particulars of the alleged outstanding amounts and the provisions of law in clear and unambiguous terms---Notice was declared to be patently arbitrary, void ab initio, without jurisdiction and was set aside---Constitutional petition was allowed, in circumstances.

(b) Taxation---

----Tax shall be imposed on the subject with unambiguousness and in clear terms.

Messrs Mehran Associates Limited v. The Commissioner of Income Tax, Karachi 1993 SCMR 274 and Sheikh Muhammad Ilyas and others v. Federation of Pakistan through Ministry of Petroleum and Natural Resources and others PLD 2020 SC 641 rel.

Ch. Naeem-ul-Haq for Petitioner.

Respondents Nos.1 to 5: ex parte.

Ajmal Raza Bhatti for Respondent No.6.

2021 P T D 1827

[Islamabad High Court]

Before Mohsin Akhtar Kayani and Babar Sattar, JJ

COMMISSIONER INLAND REVENUE, LEGAL ZONE, LARGE TAXPAYERS OFFICE

Versus

Messrs WATEEN TELECOM LIMITED and others

Income Tax Reference No.48 of 2021, heard on 12th July, 2021.

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

----S.133---Jurisdiction of High Court---Scope---Jurisdiction of High Court under S.133 of Income Tax Ordinance, 2001, is appellate in nature but as a third appellate forum, High Court cannot reappraise facts to second guess factual determinations rendered by Income Tax Appellate Tribunal even if it agrees with them---Income Tax Appellate Tribunal is the final adjudicator of facts and unless misreading or non-reading of evidence results in its failure to determine a material issue of law that then comes to High Court for adjudication---High Court is loathed to engage in reappraisal of facts even for purposes of adjudicating a question of law.

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

----S.122(2)---Re-assessment---Limitation---Extension in time---No power to condone any delay in passing a re-assessing order beyond the period of limitation prescribed under S.122(2) of Income Tax Ordinance, 2001---Expiry of limitation period creates a vested right in taxpayer to treat tax affairs for any year predating limitation period under S.122(2) of Income Tax Ordinance, 2001, as past and closed transaction---Such vested right cannot be usurped by tax authorities directly or indirectly.

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

----Ss.122 (2) & 133---Reference to High Court---Re-assessment beyond period of limitation---Jurisdiction of Appellate Authority---Dispute was with regard to order passed by Commissioner (Appeals) for re-assessment under S.122(2) of Income Tax Ordinance, 2001---Income Tax Appellate Tribunal set aside order passed by Commissioner (Appeals), as re-assessment was beyond limitation---Validity---Commissioner (Appeals) had no power or jurisdiction to indirectly extend statutory prescribed period of limitation provided under S.122(2) of Income Tax Ordinance, 2001, by remanding the issue of re-assessment of tax returns filed by a taxpayer (as deemed assessment) to the Commissioner beyond limitation period--- Where an order was to sustainable in the eyes of law and flaw inflicting it was that it defeated rights under Art.10-A of the Constitution, of a taxpayer having been passed in perfunctory or mechanical fashion to meet statutory limitation deadline, remanding case back to Commissioner to defeat limitation period, tantamount to wanton abuse and disregard of Income Tax Ordinance, 2001---Such order of Commissioner (Appeals) suffered from mala fide in law and was liable to be set aside for being a fraud on the statute---Tax authorities failed to point out a question of law that High Court could adjudicate in exercise of its appellate jurisdiction under S.133 of Income Tax Ordinance, 2001---Reference was dismissed in circumstances.

Messrs Squibb Pakistan (Pvt.) Ltd. v. Commissioner of Income Tax 2017 SCMR 1006; Commissioner of Inland Revenue, Legal Division, Lahore and others v. Messrs Rafeh Limited 2020 PTD 1657; Abbas Ali Shah and 5 others v. Ghulam Ali and another 2004 SCMR 1342; Abdul Khameed v. Muhammad Shabbir and others (R.S.A. No.11 of 2017); Khushi Muhammad v. Mst. Fazal Bibi PLD 2016 SC 872; Additional Commissioner Inland Revenue v. Eden Builders Limited 2018 SCMR 991; Dr. Muhammad Javaid Shafi v. Syed Rashid Arshad PLD 2015 SC 212; Said Zaman Khan v. Federation of Pakistan 2017 SCMR 1249 and Justice Qazi Faez Isa v. The President of Pakistan PLD 2021 SC 1 ref.

Syed Ishfaq Hussain Naqvi for Applicant.

Hafiz Muhammad Idrees and Syed Fareed Bukhari for Respondents.

2021 P T D 1951

[Islamabad High Court]

Before Athar Minallah, CJ and Babar Sattar, J

The COMMISSIONER OF INCOME TAX

Versus

Messrs FAUJI FOUNDATION

Tax Reference No.06 of 2003, decided on 18th January, 2021.

Income Tax Ordinance (XXXI of 1979)

----Ss. 30(2)(b), 15(d), (f), 22 & 30--- Public limited company---'Income from business' or 'income from other sources', determination of---Question before High Court, was whether income of taxpayer company generated as interest on bank deposits amounted to "income from business" or "income from other sources"---Held, that in previous round of litigation between taxpayer and Department, Appellate Tribunal had held that income of taxpayer would be charged as "income from business" and not as "income from other sources", which order was not challenged by Department, and had attained finality and therefore no question of law was left to adjudicate in the present case---Reference was disposed of, accordingly.

Lucky Cement Ltd. v. Commissioner Income Tax, Zone Companies, Circle-5, Peshawar 2015 SCMR 1494 distinguished.

Saeed Ahmed Zaidi for Applicant.

Syed Ali Zafar and Raja Zafar Khaliq for Respondent.

2021 P T D 2074

[Islamabad High Court]

Before Mohsin Akhtar Kayani and Fiaz Ahmad Anjum Jandran, JJ

PAKISTAN TELECOMMUNICATION COMPANY LIMITED through Authorized Person and others

Versus

CUSTOMS APPELLATE TRIBUNAL, ISLAMABAD and 2 others

Customs References Nos.08, 07, 09, 10 and 11 of 2015, decided on 11th March, 2021.

Customs Act (IV of 1969)---

----Ss.25 & 25-A---Value of imported and exported goods---Power to determine the customs value---Scope---Applicant entered into contract with an offshore supplier and a local company (contractor) having similar name, for installation, upgradation, testing, integration and commissioning of 100 LTE (Long Term Evolution) BTSs (Base transceiver stations) on turnkey basis---Applicant imported goods and equipment, filed goods declaration and declared the value of the subject imported goods in accordance with the contract price---Principal appraiser instead of accepting the declared value of imported goods as the transaction value rejected the declared value on the ground that the applicant, offshore supplier and the contractor were related parties---Validity---Customs Appellate Tribunal had technically agreed to the contention raised by the applicant on the basis of consent recorded before the Collector of Customs (Appeals) to the extent that matter of valuation could only be settled by the Director General Valuation---References were disposed of with direction to the respondents authority to place the mater before the Director General Valuation for making assessment/determination of value of goods and determine whether the applicant and contracting parties had settled the valuation of goods in their own interest---References were disposed of accordingly.

Sherdil Khan, Manager (Legal), PTCL.

2021 P T D 104

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

GAS AND OIL PAKISTAN LTD. through Authorised Representative

Versus

FEDERATION OF PAKISTAN through Secretary, Revenue Division and 4 others

C.P. No.D-1650 of 2020, decided on 29th October, 2020.

Petroleum Products (Development Surcharge) Ordinance (XXV of 1961)---

----S.3-A (2)(3)---Customs Act (IV of 1969), Ss.30 & 104---Petroleum development surcharge---Rate applicable---Principle---Petitioner imported motor spirit and was aggrieved of rate of petroleum development surcharge applied by authorities---Validity---Applicable rate of petroleum levy pursuant to Petroleum Products (Development Surcharge) Ordinance, 1961, was to be notified by government at the time of making payment of customs duty with department and not otherwise---To apply rate prevalent in market at relevant time, amendment was to be carried out in Petroleum Products (Development Surcharge) Ordinance, 1961---Under S.3A(2) of Petroleum Products (Development Surcharge) Ordinance, 1961, petroleum levy was to be collected in respect of imports in the same manner a customs duty was collected--- No vested right accrued to petitioner or for that matter rate of petroleum levy was crystalized and remained valid for 7 days as was the case of customs duty for a goods declaration filed under S.104 of Customs Act, 1969---Petroleum levy was to be charged and paid on the basis of notification issued by Ministry of Petroleum, Government of Pakistan from time to time and its applicability and determination had no nexus with filing of goods declaration (except the mode and manner of its collection and payment) if any or for that matter with fixation of rate of customs duty pursuant to filing of goods declaration under S.30 Customs Act, 1969--- Petroleum levy was to be charged / levied and paid at the rates as notified under Petroleum Products (Development Surcharge) Ordinance, 1961, and as prevalent at the time of actual payment of the same along with customs duty---Constitutional petition was dismissed, in circumstances.

Crescent Pak. Industries (Pvt.) Limited v. Government of Pakistan and others 1990 PTD 29; Al-Samrez Enterprise v. The Federation of Pakistan 1986 SCMR 1917; Punjab Steel Ltd. v. Deputy Collector of Customs PLD 1989 Lah. 237; Yasin Sons's case PLD 1989 Kar. 361; Kohinoor Textile v. Federation of Pakistan 2002 PTD 121; M.Y. Electronic Industries (Pvt.) Ltd. v. Government of Pakistan 1998 SCMR 1404; Al Haj Industrial Corporation (Pvt.) Limited v. Collector of Customs (Appraisement) 2004 PTD 801; Messrs Hashwani Hotels Limited v. Government of Pakistan and 5 others 2004 PTD 901; 2007 SCMR 1131; Pak-Arab Refinery Ltd. v. Superintendent, Customs and Central Excise 2005 PTD 2392; Saira Industries v Collector of Customs 2002 CLC 616 and National Construction Company Ltd. v. Government of Pakistan PLD 1989 Kar. 174 ref.

Abdul Moiz Jafferi for Petitioner.

Khalid Rajpar for Respondents Nos.3 to 5.

Muhammad Ahmar, Assistant Attorney General for Federation of Pakistan.

2021 P T D 195

[Sindh High Court]

Before Fahim Ahmed Siddiqui, J

The DIRECTOR, DIRECTORATE GENERAL OF INTELLIGENCE AND INVESTIGATION CUSTOMS, KARACHI

Versus

The SPECIAL JUDGE (CUSTOMS, TAXATION AND ANTI-SMUGGLING) KARACHI and 20 others

Special Criminal Revision Application No.170 of 2019 along with Special Criminal Applications Nos.178, 185, 186, 187, 188, 190, 207 and 208 of 2019, decided on 30th December, 2019.

(a) Interpretation of statutes---

----Literal rule and grammatical construction--- Applicability---Judge, according to literal rule, must rely on exact wording of statute while describing the law--- Judge can deviate from such rule only when grammatical construction of statute gives some absurd meaning and it is necessary to trace intention of legislature--- When language of law is plain and simple and convey meaning without any doubt and ambiguity, there is no need to avoid literal or textual meaning of law--- Words of law cannot be read in isolation and entire statute is to be read to give a proper comprehension.

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

----Ss.2(s)(iii), 15 & 185-F---Smuggling---Special Criminal Revision Application---Trial Court declared proceedings of trial of smuggling against respondents as coram non judice and were returned to authorities for adjudication--- Validity--- Act of smuggling of lawful items, by intentionally evading customs duty, was done either deceiving or coupling customs authorities or by utilizing routes that were not specified as declared routes and / or where customs stations were not available---Goods brought into or taken out of the country in both the cases, were considered as "smuggled" goods irrespective of the fact that the same were either specified or notified goods or not---Criminal case and civil liability were two different and distinguished proceedings and both could be carried out simultaneously---In the present case, huge quantities of betel nuts were recovered and at the time of recovery respondents could not satisfy about lawful import, as such there was no other option with prosecution but to consider availability of such huge quantities in violation of restrictions mentioned as well as willfully evasion of customs duty and taxes, therefore, case was rightly initiated--- If respondents considered that they were not involved in case and they had been falsely implicated then they could agitate their pleas of innocence before Trial Court and could seek their pre-trial or pending trial acquittal as provided under S.249-A or S.265-K, Cr.P.C. as the case was--- High Court in exercise of revisional jurisdiction set aside the order passed by Trial Court as there was material impropriety in that order regarding definition of "smuggling" of betel nuts and case was remanded to Trial Court for decision afresh---Revision was allowed, in circumstances.

Salooka Steels Ltd. v. Director General, Coast Guard Pakistan PLD 1981 Quetta 1; Collector of Customs v. Minhaj-ud-Din and another 2010 PTD (Trib.) 160; Zafar Ahmed Phul v. The State 1981 PCr.LJ 66; Amanullah Khan v. Shabbir Hussain, SHO and another 1984 Cr.LJ 3096(1); Mrs. Haim Tabbara v. Director General, Pakistan Coast Guard PLD 1980 Kar. 44; Shabbir Ahmed Shah v. Pakistan PLD 1979 Kar. 68 and The State v. Muhammad Irfan and others 1987 PCr.LJ 325 ref.

Zain A. Jatoi for Applicant (in R.A. No.170 of 2019).

Ashiq Ali Anwer Rana for Applicant (in connected R.As).

Aqil Ahmed for Respondents (in R.As. except R.As. Nos.207 and 208 of 2019).

Muhammad Riaz for Respondents (in R.As. Nos. 207 and 208 of 2019).

2021 P T D 207

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, J

COLLECTOR OF CUSTOMS through Additional Collector of Customs

Versus

YAMAHA MOTORS PAKISTAN (PVT.) LTD.

Special Customs Reference No.2187 of 2015, decided on 29th October, 2020.

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

----S.32---"Mis-declaration"---Scope---Department assailed order passed by Appellate Tribunal whereby it was held that a mere difference of opinion between the declared PCT Heading and the ascertained PCT Heading did not automatically constitute the offence of mis-declaration entailing penal consequences---Validity---Misconstruction or erroneous interpretation in respect of a relevant notification did not per se amount to a false declaration in terms of the Customs Act, 1969---Comparison of the two PCT Headings in the present case demonstrated that they were fairly akin and it appeared that the claimed PCT Heading had admittedly been accepted/allowed by the department for treatment of similar goods in the past---Decision arrived at on the question under scrutiny was unexceptionable and required no interference by the High Court---Reference application was decided against the department.

2011 PTD 1460; 2011 PTD 476; 2013 PTD 1420; State Cement Corporation v. Collector of Customs and another 2002 MLD 180; Collector of Customs v. Shaikh Shakeel Ahmed 2011 PTD 495 and Collector of Customs Karachi v. Messrs Power Electronics Pakistan (Pvt.) Ltd. Lahore 2011 PTD 2837 ref.

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

----S.32---"Mis-declaration"---Scope---Where wrong interpretation of a section is made and duty is paid predicted upon such erroneous interpretation in good faith, the same may not be deemed to be a "mis-declaration".

Collector of Customs v. Shaikh Shakeel Ahmed 2011 PTD 495 ref.

Muhammad Bilal Bhatti for Applicant.

Khawaja Shams-ul-Islam for Respondent.

2021 P T D 232

[Sindh High Court]

Before Aqeel Ahmed Abbasi and Abdul Maalik Gaddi, JJ

DEWAN MOTORS (PVT.) LTD through Authorized Officer and others

Versus

FEDERATION OF PAKISTAN through Secretary Ministry of Finance and 3 others

Constitution Petitions Nos.D-4658 of 2018 and other connected petitions, decided on 6th August, 2020.

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

----Ss.18(3) [as inserted by Finance Act (XXVII of 2017)] & 221-A (2) [as inserted by Finance Act (XXVII of 2018)]---Notification SRO No.1035(I)/2017 dated 16-10-2017---Constitution of Pakistan, Art.98---Delegated legislation---Powers of Parliament, extent of---Vires of amendment---Past and closed transaction---Petitioners were importers who were aggrieved of imposing and collection of Regulatory Duty through Notification SRO No.1035(I)/2017 dated 16-10-2017---Division Bench of High Court had earlier declared the amendment made in S.18(3) of Customs Act, 1969, ultra vires the Constitution--- Appeal filed before Supreme Court was withdrawn by the authorities on the basis of new amendment inserted in S.221-A(2) of Customs Act 1969, vide Finance Act, 2018---Plea raised by petitioners was that regulatory duty imposed pursuant to notification SRO No.1035(I)/2017, dated 16-10-2017 could not be validated through subsequent amendment---Validity---Through amendment in question while inserting subsection (2) of S.221-A of Customs Act, 1969, an attempt was made to render judgment of Division Bench of High Court in earlier case as well as earlier judgment passed of Supreme Court as redundant and of no legal effect--- Amendment in question also intended to validate amendment in S.18 (3) of Customs Act, 1969, vide Finance Act, 2017 and imposing of Regulatory Duty through notification SRO No.1035(I)/2017, dated 16-10-2017, by giving retrospective effect i.e. from the date of commencement of Finance Act, 2017 till the date of commencement of Finance Act, 2018---Unfettered powers were not delegated under Art.98 of the Constitution to Parliament to delegate taxing powers to any person or authority other than Federal Government, however only to the extent of permissible delegated legislation---Imposing of Regulatory Duty was a species of delegated legislation, therefore, it could only be a function of Federal Government i.e. Federal Cabinet comprising of Prime Minister and other Federal Ministers---High Court declared that S.221-A(2) of Customs Act, 1969, as added vide Finance Act, 2018 was ultra vires the Constitution, as through amendment in question Legislature attempted to validate Constitutional defect while making amendment in S.18(3) of Customs Act, 1969 and issuance of notification SRO No.1035(I)/2017, dated 16-10-2017, through Finance Act, 2017, without making required Constitutional amendment---High Court directed that Regulatory Duty charged and collected pursuant to amendment in S.18(3) of Customs Act, 1969, and issuance of notification SRO No.1035(I)/2017, dated 16-10-2017, through Finance Act, 2017 had already been declared by Division Bench of High Court in an earlier judgment as illegal and unconstitutional in the light of judgment of Supreme Court, therefore, in absence of any Constitutional amendment, the same could not be validated through subsequent amendment in law, while giving retrospective effect in respect of past and closed transaction, therefore, no Regulatory Duty could be charged, collected or recovered for the period starting from the date of commencement of Finance Act, 2017 till the date of commencement of Finance Act, 2018--- Constitutional petition was allowed accordingly.

Premier Systems v. Federation of Pakistan and others 2018 PTD 861 and Mustafa Impex, Karachi and others v. The Government of Pakistan and others PLD 2016 SC 808 fol.

Molasses Trading and Export (Pvt.) Ltd. v. Federation of Pakistan 1993 SCMR 1905; Shri Prithvi Cotton Mills Ltd. and others v. Broach Borough Municipality and others AIR 1970 SC 192; Dehli Cloth and General Mills Co. Ltd. and others v. State Rajasthan and others AIR 1996 SC 2930; The Province of East Pakistan and others v. MD Mehdi Ali Khan and others PLD 1959 SC (Pak) 387; Commissioner of Sales Tax (West), Karachi v. Kruddsons Ltd. PLD 1974 SC 180; Sales Tax and Central Excise v. Pak Suzuki Co. Ltd. 2016 SCMR 646; Income Tax Officer v. Sulaiman Bhai Jiwa PLD 1970 SC 80; Wajid Ali v. Globe Automobiles 1993 SCMR 819; Mamukanjan Cotton Factory v. Punjab Province PLD 1975 SC 50; Haji Dossa Limited v. Province of Punjab 1973 SCMR 2; Indian Aluminum C. v. State of Kerala AIR 1996 SC 1431 ; Shahmurad Sugar Mills v. Union Council 1990 MLD 305; Misrilal Jain v. State of Orissa AIR 1977 SC 1686; State of Maharashtra v. Central Provinces Managanese Ore Co. AIR 1977 SC 879; Koteswar Vittal Kamath v. K. Rangappa Baliqa AIR 1974 SC 1480; Mohd. Shaukat Hussain Khan v State of Andhra Pradesh AIR 1974 SC 1480; Army Welfare Sugar Mills v. Federation of Pakistan 1992 SCMR 1652; Fecto Belarus Tractor v. Government of Pakistan PLD 2005 SC 605; Mirpurkhas Sugar Mills Limited v. District Council, Tharparkar through Chairman and 3 others 1991 MLD 715; The Province of East Pakistan and another v. MD Mehdi Ali Khan and others PLD 1959 SC 387; Shukar Din (Naik No. 411) and others v. Major Abaidur Rehman and others PLD 1965 Lah. 522 and B. Krishna Bhat v. State of Karnataka and another AIR 2001 SC 1885 rel.

(b) Interpretation of statutes---

----Enactment ultra vires the law--- Effect--- Any legislation or enactment declared to be ultra vires the law and Constitution by Court of competent jurisdiction, seizes to have its effect from the date of its commencement.

Khalid Jawaid Khan, Ms. Amber Lakhani, Abdul Moiz Jafery, Haider Waheed, Navin Merchant, Salman Yousuf, Hyder Ali Khan, Ali Aziz along with Sami-ur-Rehman, Kashif Nazeer, Haroon Dugal, Muhammad Adnan Moton, Dil Khurram Shaheen, Zain-ul-Abdin Jatoi along with Kelash, Ghulam Haider Shaikh along with Manzar Hussain, Imran Iqbal Khan, Mansoor Usman Awan, M. Zaheer-ul-Hassan, Talha Makhdoom, Hanif F. Ahmed, Kashif Nazeer, Irfan Ali, Asad Raza Khan, Taimoor Ahmed, Rana Sakhawat Ali, Darvesh K. Mandhan and Muhammad Adeel Awan for Petitioners.

Muhammad Anas Makhdoom, Dr. Shahnawaz Memon, Khalid Mehmood Rajpar, Masooda Siraj, S. Asif Ali, Muhammad Khalil Dogar, Muhammad Aqeel Qureshi, S. Mohsin Imam, Nuzhat Shah, Sohail Muzaffar along with Maimoona Nasreen for Respondents.

Muhammad Ameenullah Siddiqui, Assistant Attorney General for Federation.

2021 P T D 281

[Sindh High Court]

Before Adnan Iqbal Chaudhry, J

Messrs ADAMJEE INSURANCE COMPANY LIMITED through Deputy General Manager and 5 others

Versus

The ASSISTANT COLLECTOR (P&A) GOVERNMENT OF PAKISTAN and 2 others

Suits Nos.1479 and 1494 of 2008, decided on 30th November, 2020.

(a) Federal Excise Act (VII of 2005)---

----Ss.41 & 14---Civil Procedure Code (V of 1908), S.9---Specific Relief Act (I of 1877), Ss.42 & 12---Suit filed in the (Sindh) High Court in its original civil jurisdiction against an Order, Notification relating to a taxing statute---Bar to jurisdiction of "civil courts" under ouster clause in S.41 of Federal Excise Act, 2005---Implied bar to jurisdiction by virtue of a statute being a "special law"---Scope---Plaintiffs impugned show-cause notice for recovery of Federal Excise Duty, inter alia, on ground that same were issued without lawful authority---Question before High Court was whether original civil jurisdiction of High Court was barred under S.41 of Federal Excise Act, 2005 and whether High Court could be equated with term "Civil Court" as used in said section---Held, that ouster clause in S.41 of Federal Excise Act, 2005 did not apply to (Sindh) High Court in its Original Civil Jurisdiction however, the question of implied bar within meaning of S.9, C.P.C. had to be determined when the Federal Excise Act, 2005 provided for a special mechanism and fora for matters arising under said Act---Where impugned show-cause notice was without jurisdiction, then a suit on such matter was an exception to implied ouster of jurisdiction implied by Federal Excise Act, 2005---High Court observed that, in the present case, impugned notices had frustrated the very principle of issuing a show-cause notice, and thus matter could not remanded back to the Department---Suits, were therefore, maintainable.

Pakistan International Freight Forwarders Association v. Province of Sindh 2017 PTD 1 ref.

Searle IV Solution (Pvt.) Ltd. v. Federation of Pakistan 2018 SCMR 1444; Bahadur v. Umar Hayat PLD 1993 Lah 390; Begum Syeda Azra Masood v. Begum Noshaba Moeen 2007 SCMR 914 and Punjab Province v. Federation of Pakistan PLD 1956 FC 72 rel.

Van Oord Dredging and Marine Contractors B.V. v. Federation of Pakistan (unreported judgment dated 13-10-2020 passed by a Division Bench of this Court in C.P. No. D-2867/2018) and Kirthar Pakistan B.V. v. Federation of Pakistan 2020 PTD 1927 distinguished.

(b) Federal Excise Act (VII of 2005)---

----Ss.10, 14, 3 & Sched.---Federal Excise Rules, 2005, R.40---Levy of Federal Excise Duty---Applicable value and rate of excise duty---Insurance contracts, nature of---Date of services provided or rendered, determination of---Enhancement of Federal Excise Duty to not apply on premiums paid to insurance companies for contracts concluded before such enhancement was made effective---Scope---Plaintiffs, which were insurance companies, impugned show-cause notices seeking recovery of short-paid Federal Excise Duty on insurance contracts entered into before 01.07.2006 at the enhanced rate of five percent which became effective on 01.07.2006, on ground that such enhanced rate of excise duty was only payable on contracts entered into on or after 01.07.2006---Contention of Department, inter alia, was that insurance contracts were not concluded until all premium was received, therefore date of "services provided or rendered" under S.10 of Federal Excise Act, 2006 would be the date on which premium was paid by customers to plaintiffs and not the date on which such contracts were entered into---Validity---Contention that there was no concluded contract until consideration was received by service provider ran amok the scheme of Federal Excise Act, 2005 and in fact prejudiced collection of excise duty as service provider could evade the same on ground that such service provider was not liable to deposit excise duty until agreed consideration was received from customer(s)---Rule 40 of Federal Excise Rules, 2005 which provided special procedure for insurance companies did not have any bearing on rate of duty applicable as same was a "collection provision" and rate of duty was governed by applicable charging provision which was S.10 of Federal Excise Act, 2005---High Court held that even though premium was not received in part by plaintiffs on date of insurance contract, however there existed a concluded insurance contract nonetheless, and services provided or rendered by plaintiffs fell within meaning of S.10 of Federal Excise Act, 2005 on date of said insurance contracts, and thus applicable rate of excise duty would be rate prevailing on date of said contracts, which was three percent ---- Impugned notices were set aside, and suits were decreed, accordingly.

H.M. Extraction Ghee and Oil Industries (Pvt.) Ltd. v. Federal Board of Revenue 2019 SCMR 1081 and Super Engineering v. Commissioner Inland Revenue 2019 SCMR 1111 ref.

Tyeb v. Alpha Insurance Co. Ltd. 1990 CLC 428; S.M. Abdullah & Sons v. Crescent Star Insurance Co. Ltd. 1993 MLD 1239; Friends Sons and Partnership Concern v. The Deputy Collector Central Excise and Sales Tax PLD 1989 Lah. 337; H.M. Extraction Ghee and Oil Industries (Pvt.) Ltd. v. Federal Board of Revenue 2019 SCMR 1081; Pakistan Television Corporation Ltd. v. Commissioner Inland Revenue 2019 SCMR 282 and Commissioner of Income Tax v. Eli Lilly Pakistan (Pvt.) Ltd. 2009 SCMR 1279 rel.

Hyder Ali Khan for Plaintiffs (in Suit No.1479 of 2008).

Ameer Bakhsh Metlo for Defendant No.1 (in Suit No.1479 of 2008).

Nemo for Defendants Nos.2 and 3 (in Suit No.1479 of 2008).

Hyder Ali Khan for Plaintiff (in Suit No.1494 of 2008).

Nemo for Defendants (in Suit No.1494 of 2008).

2021 P T D 318

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

SAWERA INDUSTRIES COTTON GINNING PRESSING FACTORY AND OIL MILLS and others

Versus

FEDERATION OF PAKISTAN through Secretary Revenue Division and Ex-Officio Chairman FBR and others

Constitutional Petitions Nos.D-6071, D-3073 to D-3076, D-6349, D-6072, D-6073, D-6074, D-6520, D-6521, D-6522, D-6539, D-6741, D-6742 of 2019 and D-197 of 2020, decided on 23rd November, 2020.

Sales Tax Act (VII of 1990)---

----Ss.3, 13 & Sixth Sched.---Sales Tax (Special Procedures) Rules, 2007, Chap. XV---SRO No.253(I)/2019 dated 26.02.2019---Vires---Levy of sales tax---Cotton Seed---Exemption from sales tax---Statutory exemption from sales tax could not be overridden by notification / SRO issued under Sales Tax Act, 1990----Scope---Petitioners impugned SRO No.253(I)/2019 dated 26.02.2019 which sought to recover sales tax on supply of cotton seed, inter alia, on ground that such supply enjoyed statutory exemption under S.13 read with Sixth Sched. to Sales Tax Act, 1990----Validity----Statutory exemption could not be overridden by a notification, and Sixth Sched. to Sales Tax Act, 1990 clearly placed supply of cotton seed within statutory exemption from sales tax and nothing existed which could suggest that such exemption could be taken away by resort to an insertion carried out vide impugned notification---High Court held that Chap. XV of Sales Tax (Special Procedures) Rules, 2007 as inserted by impugned SRO No.253(I)/2019 dated 26.02.2019 was illegal and ultra vires the Sales Tax Act, 1990 and any sales tax collected or paid on supply of cotton seed had been unlawfully demanded / collected, and the petitioners / taxpayers would be entitled to refund of same --- Constitutional petition was allowed, accordingly.

Insaf Cotton Ginning and Pressing Factory and Oil Mills v. Federation of Pakistan and others 2016 PTD 2585; Dawn Ginning Industries and Oil Mills v. Federation of Pakistan and others [W.P. 5571 of 2015 Multan "Dawn Ginning 1"]; Mustafa Impex and others v. Pakistan and others PLD 2016 SC 808; FBR v. Dawn Ginning Industries and Oil Mills [C.P. 1028 of 2017] ("Dawn Ginning 2"); PMDC v. Malik Muhammad Fahad and others 2018 SCMR 1956 and Multiline Associates v. Ardeshir Cowasjee and others 1995 SCMR 362 rel.

Muhammad Faheem Bhayo and Muhammad Din Qazi for Petitioners.

Kafil Ahmed Abbasi, Deputy Attorney General and Shakeel Ahmed for Respondents.

2021 P T D 335

[Sindh High Court]

Before Aqeel Ahmed Abbasi and Mrs. Rashida Asad, JJ

AAMEER MUSTAALY KARACHIWALA

Versus

DEPUTY COMMISSIONER INLAND REVENUE and 3 others

Constitutional Petitions Nos.D-5025, 5126 to 5129, 5208 to 5212, 5218, 5219, 5235, 5236, 5242, 5306, 5307, 5314, 5315, 5327, 5328, 5333, 5403, 5425, 5489, 5526, 5756, 5894, 5895, 5924 and 6216 and C.M.A No.21388 of 2020, decided on 22nd December, 2020.

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

----Ss.182 & 116A---Constitution of Pakistan, Art.199----Constitutional jurisdiction of High Court----Show-cause notice under S.182 of Income Tax Ordinance, 2001 for imposition of penalty for not furnishing return of Foreign Assets and Liabilities under S.116A of Income Tax Ordinance, 2001---Maintainability of Constitutional petition impugning issuance of such show-cause notice---Alternate remedy---Scope---After issuance of such show-cause notice, normal course available to aggrieved parry would be to submit response to show-cause notice, and avail statutory remedy against any adverse order, however, an exception could be made in cases where show-cause notice may not suffer from jurisdictional defect but led to patently illegal order based upon misinterpretation of legal provisions which may affect large number of taxpayers and lead to multiplicity of litigation---High Court, in such a case, may examine legality of such show-cause notices while interpretating legal provisions to provide substantial justice to large number of petitioners / taxpayers and prevent abuse of process of law, and therefore Constitutional petition in such matter will be maintainable.

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

----Ss.182, 116A, 2(44) & 116---Constitution of Pakistan, Art.199---Constitutional petition---Wealth statement---Foreign income and assets statement---Penalty for failure to furnish foreign income and assets statement under S.116A of Income Tax Ordinance, 2001---Absence of prescribed format, effect of---Scope---Petitioners / taxpayers impugned show-cause notice seeking to impose penalty on petitioners for not furnishing foreign income and assets statement under S.116A of income Tax Ordinance, 2001 with their income tax return---Contention of petitioners, inter alia, was that they had duly declared their foreign income and liabilities in their income tax returns, but due to non-availability of prescribed form on Department website, statement under S.116A could not be filed, and same did not cause any revenue loss to Department---Validity---No prescribed form in terms of definition of "prescribed" under S.2(44) of Income Tax Ordinance, 2001 had been notified for statement under S.116A of said Ordinance and therefore, non-filing of said statement by petitioners did not fall within ambit of "offence" under S.182(1) of said Ordinance---Non-availability of such prescribed format offended concept of "due process" which was authenticated by procedures by which laws were applied imperatively on visibly evenhanded patterns and regulations ought to be codified so parties were on notice regarding what was lawful----Mere non-filing of statement under S.116A of Income Tax Ordinance, 2001 did not automatically attract imposition of penalty without establishing wilful default or mens rea on part of petitioners---Impugned notices were therefore, issued without lawful authority and set aside---Constitutional petitions were allowed, accordingly.

D.G. Khan Cement Company Limited and others v. Federation of Pakistan and others 2004 SCMR 456; Commissioner Inland Revenue, Zone-III, Karachi v. General Tyre and Rubber Co. of Pakistan Ltd. Karachi 2013 PTD 387 and Commissioner Inland Revenue v. Messrs Adeel Brothers 2017 PTD 1579 rel.

Anwar Kashif Mumtaz, Abid H. Shaban, Taimoor Ahmed Qureshi, Muhammad Aleem, Nida Zafar Khokhar, Ammar Athar Saeed, Ahmed Saeed Siddiqui, Iftikhar Ahmed Shamsi, Imtiaz Ali, Arshad Shahzad, Sahib Khan Kalhoro, Abdul Jabbar Malah, Muhammad Mustafa Hussain, Syed Wasi Haider Jaferi, and Ajeet Kumar for Petitioner.

Ameer Bakhsh Metlo for Respondents.

M. Ameenullah Siddiqui, Asstt. Attorney General, Pakistan.

2021 P T D 347

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

Messrs LIBERTY MILLS LIMITED through Authorised Director and 8 others

Versus

FEDERATION OF PAKISTAN through Secretary, Ministry of Finance and 5 others

C.P. No.D-6211 of 2016 with (connected petitions), decided on 24th December, 2020.

Sales Tax Act (VII of 1990)---

----Ss. 8, 7, 4 & 3---Constitution of Pakistan, Art.199--- SRO No.1125(I)2011 dated 21.12.2011---SRO No.491(I) / 2016 dated 30.06.2016----Constitutional petition---Determination of sales tax liability---Zero-rating---Tax credit not allowed---Input tax adjustment---Scope---Petitioner taxpayers impugned insertion of proviso in SRO No.1125(I)2011 dated 21.12.2011 via SRO No.491(I)/2016 dated 30.06.2016; whereby claim of input tax and / or refund on all sorts of packing materials had been disallowed on supply and export of zero-rated goods--- Contention of petitioners, inter alia, was that such insertion of such proviso was ultra vires the Sales Tax Act, 1990 --- Validity---- By virtue of non-obstante clause in S.8 of Sales Tax Act, 1990; same shall override and prevail over provisions of S.7 of said Act, and disentitlement to seek input tax adjustment was based upon S.8(1)(b) of Sales Tax Act, 1990 itself ---- Very purpose of said S.8(1)(b) was to deny adjustment of input tax on such items, which though were used in manufacture and production of taxable goods, but Federal Government in its direction denied to extend such benefit to taxpayer --- High Court observed that in terms of S.8(1)(b) of Sales Tax Act, 1990, input tax adjustment on packaging material could be denied, and such tax adjustment or refund would be governed by and in terms of S.8(1)(b) of Sales Tax Act, 1990---Constitutional petitions were dismissed, in circumstances.

China Harbour Engineering Company Limited v. Federation of Pakistan 2016 PTD 427; Attock Cement Pakistan Ltd. v. Collector of Customs and 4 others 1999 PTD 1892; Collector of Sales Tax v. Dhan Fibre Limited 2005 PTD 2012; Collector of Customs and others v. Sheikh Spinning Mills 1999 SCMR 1402; D.G. Khan Cement Company Limited v. The Federation of Pakistan and others PLD 2013 Lah. 693; Coca-Cola Beverages Pakistan Ltd. v. Customs, Excise and Sales Tax Appellate Tribunal and others 2017 PTD 2380; National Electric Power Regulatory Authority v. Faisalabad Electric Supply Company Limited 2016 SCMR 550; Muhammad Amin Muhammad Bashir Limited v. Government of Pakistan through Secretary Ministry of Finance, Central Secretariat, Islamabad and others 2015 PTD 1100; Getz Pharma (Pvt.) Ltd. v. Federation of Pakistan 2019 PTD 2209; Humayun Ltd. v. Pakistan PLD 1991 SC 963; Government of Pakistan v. Hashwani Hotels Limited PLD 1990 SC 68; Messrs Dewan Cement v. Pakistan through Secretary Ministry of Finance 2010 PTD 1717 and Commissioner of Income Tax v. National Agriculture Ltd. Karachi 2000 PTD 254 ref.

2006 PTD 2821 and Messs Dewan Cement v. Pakistan through Secretary Ministry of Finance 2010 PTD 1717 rel.

Arshad Hussain Shahzad, Naeem Suleman, Ameen M. Bandukda, Naeem Suleman, Shafqat Zaman, Syed Danish Ghazi, Faisal Shahzad, Aijaz Ahmed, Saman Rafat Imtiaz, Nadir Hussain Abro, Sehrish Wasif, Faiz Khalil, S. Muhammad Ali Mehdi, Imran Ali and Ajeet Kumar for Petitioners.

Muhammad Ahmer Assistant Attorney General for Federation.

Ameer Bakhsh Metlo, Pervaiz Ahmed Memon, Dr. Raana Khan, Masooda Siraj, Pervaiz Ahmed Memon, Muhammad Taseer Khan, Shakeel Ahmed holding brief for Muhammad Aqeel Qureshi, Kafeel Ahmed Abbasi (DAG), Muhammad Khalil Dogar, Kashif Nazeer and Irfan Ali for Respondents.

2021 P T D 362

[Sindh High Court]

Before Muhammad Junaid Ghaffar, J

Messrs HAIDRI BEVERAGES (PVT.) LIMITED through Finance Manager and others

Versus

FEDERATION OF PAKISTAN through Secretary Ministry of National Food Security and Research and others

Suits Nos.92, 47 and 276 of 2014, decided on 16th April, 2020.

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

----S.19---Sales Tax Act (VII of 1990), S.13---Notification SRO No.575(I)/2006, dated 5-6-2006---Exemption from customs duty--- Plaintiffs were manufacturers of beverages and claimed exemption from customs duty on the plea of their industry as 'agro-based industry'---Validity---Mere use of word 'like' could not be stretched so as to include any industry which was using sugar and could not be called as an agro-based industry---Such industry had to have some nexus or like nature with that of industries mentioned against serial No.1 (i) of the Table given in Notification SRO No.575(I)/2006, dated 5-6-2006---Legislature had no intention to grant any exemption to beverage industry as was claimed by plaintiffs--- Plaintiffs' industry did not fall within the definition of "agro-based industry" and was not qualified or entitled for any such exemption--- Beverage industry could not be classified as an 'agro-based industry' for the purposes of exemption under Notification SRO No.575(I)/2006, dated 5-6-2006---Suit was dismissed, in circumstances.

R. B. Avari & Co. (Pvt.) Ltd. v. Federation of Pakistan and 2 others 2006 PTD 1609; M/s. Ihsan Sons (Pvt.) Ltd., Karachi v. Federation of Pakistan and 2 others 2006 PTD 2209; M/s. Central Insurance Co. and thers v. The Central Board of Revenue Islamabad and others 1993 SCMR 1232; Javed Akhtar v. Punjab Provincial Transport Authority 1997 CLC 1168; Commissioner of Income Tax v. Miss Aasia Film Artist 2001 PTD 678; Taj Muhammad v. Town Committee, Fateh Jhang 1994 CLC 2214; Chief Commissioner, Karachi and another v. Mrs. Dina Sohrab Katrak PLD 1959 (Pak) 45; Gouranga Mohan Sikdar v. The Controller of Import and Export and 2 others PLD 1970 SC 158; Mollah Ejahar Ali v. Government of East Pakistan PLD 1970 SC 173; Chairman, Federal Board of Revenue, Islamabad and another v. Mrs. Naureen Ahmed Tarar and others 2020 SCMR 90; M/s. Radaka Corporation and others v. Collector of Customs and another 1989 SCMR 353; Nazir Ahmed v. Pakistan and 11 others PLD 1970 SC 453; Commissioner of Income Tax v. Shiva Shanker Bore Wells 1999 PTD 498; Searle IV Solution (Pvt.) Ltd. and others v. Federation of Pakistan and others 2018 SCMR 1444; Commissioner Inland Revenue, Zone-II, Karachi v. Messrs Kassim Textile Mills (Pvt.) Limited, Karachi 2013 PTD 1420; Oxford University Press v. Commissioner of Income Tax, Companies Zone-I, Karachi and others (2019 SCMR 235; Messrs Premier Mercantile Services (Pvt.) Ltd. v. Commissioner of Income Tax, Karachi 2007 PTD 2521; Kohinoor Chemical Co. LTD. and another v. Sindh Employees' Social Security Institution and another PLD 1977 SC 197; The United Netherlands Navigation Co. Ltd. v. The Commissioner of Income Tax South Zone PLD 1965 SC 412; Muhammad Nadeem Arif and others v. Inspector-General of Police, Punjab, Lahore and others (2011 SCMR 408; Noor Muhammad Butt and others v. The Chief Settlement and Rehabilitation Commissioner, Lahore and others PLD 1968 SC 336; Collector of Customs v. Shaikh Shakeel Ahmed 2011 PTD 495 and Johnson and Johnson Pak (Pvt.) Ltd. v. Pakistan and others 2008 PTD 345 ref.

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

----S.19---Sales Tax Act (VII of 1990), S.13--- Notification SRO No.575(I)/2006, dated 5-6-2006---Exemption from customs duty--- Classification by United Nations---Effect---Any classification by United Nations or any other authority has no nexus with notification of exemption SRO No.575(I)/2006, dated 5-6-2006---Such classification at the most has persuasive consideration or value but cannot be relied upon while interpreting an exemption notification.

Malik Ahsan Mehmood along with Akhtar Ali Memon for Plaintiffs (in Suit No. 92 of 2014).

Ishrat Zahid Ali, Assistant Attorney General for Defendants Nos.1, 2 and 3 (in Suit No. 92 of 2014).

Kashif Nazeer and Irfan Ali for Defendant No.4 (in Suit No. 92 of 2014).

Amin M. Bandukda for Plaintiff (in Suit No.47 of 2014).

Ishrat Zahid Ali, Assistant Attorney General for Defendants Nos.1, 2 and 3 (in Suit No. 47 of 2014).

Kashif Nazeer and Irfan Ali for Defendant No.4 (in Suit No. 47 of 2014).

Saeed Ahmed Awan for Plaintiffs (in Suit No.276 of 2014).

Ishrat Zahid Ali Assistant Attorney General for Defendants Nos.1, 2 and 3 (in Suit No. 276 of 2014).

Kashif Nazeer and Irfan Ali for Defendant No.4 (in Suit No. 276 of 2014).

2021 P T D 460

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

INDUS MOTOR COMPANY LIMITED through Duly Authorized Officer

Versus

FEDERATION OF PAKISTAN through Secretary Ministry of Finance and 2 others

C.Ps. Nos. 4245 of 2017, 2403 of 2018 and 1579 of 2020, decided on 22nd December, 2020.

(a) Constitution of Pakistan---

----Art.199---Constitutional jurisdiction of High Court---Tax matters---Show-cause notice(s) seeking recovery of tax---- Alternate remedy--- Scope--- When revenue authority had already interpretated relevant provisions making statutory remedies illusory; and where petitioners sought interpretation of law requiring no factual determination, then Constitutional petition may be maintainable----Embargo on entertaining challenge to a show-cause notice was therefore qualified and a Constitutional petition may qualify as being within exception to said embargo / bar.

Dr. Seema Irfan and others v. Federation of Pakistan and others PLD 2019 Sindh 516; Deputy Commissioner Income Tax / Wealth Tax Faisalabad v. Punjab Beverage Company (Private) Limited 2007 PTD 1347; Usmani Glass v. STO PLD 1971 SC 205; Dewan Cement v. Pakistan 2010 PTD 1717; Filters Pakistan v. FBR 2010 PTD 2036; Shahnawaz Ltd. v. Pakistan 2011 PTD 1558; Engro Vopak v. Pakistan 2012 PTD 130; Association of Builders v. Sindh 2018 PTD 1487; Julian Hoshang Dinshaw Trust v. ITO 1992 SCMR 250; Khyber Electronic Lamps v. Collector 1996 CLC 1365; Collector v. SH Ahmed 1999 SCMR 138; Attock Cement v. Collector 1999 PTD 1892; Pak Land Cement v. CBR 2007 PTD 1524; Iqbal Hussain v. Pakistan 2010 PTD 2338; Standard Chartered Bank v. Pakistan 2017 PTD 1585 and Asia Petroleum v. Pakistan, Unreported (C.P. D-2559 of 2009 and others) ref.

Julian Hoshang Dinshaw Trust v. ITO 1992 SCMR 250; Khyber Electronic Lamps v. Collector 1996 CLC 1365; Collector v. SH Ahmed 1999 SCMR 138; Attock Cement v. Collector 1999 PTD 1892; Pak Land Cement v. CBR 2007 PTD 1524; Iqbal Hussain v. Pakistan 2010 PTD 2338; Usmani Glass v. STO PLD 1971 SC 205; Dewan Cement v. Pakistan 2010 PTD 1717; Filters Pakistan v. FBR 2010 PTD 2036; Shahnawaz Ltd. v. Pakistan 2011 PTD 1558; Engro Vopak v. Pakistan 2012 PTD 130; Association of Builders v. Sindh 2018 PTD 1487; Standard Chartered Bank v. Pakistan 2017 PTD 1585 and Asia Petroleum v. Pakistan, Unreported (C.P. D-2559 of 2009 and others) rel.

(b) Interpretation of statutes ---

----Fiscal statute---Construction of---Scope---Fiscal statute is to be strictly construed.

Pakistan Television v. CIR 2019 PTD 484 rel.

(c) Interpretation of statutes---

----Amendment in statutory provisions----Use and effect of word "substitute" ---Scope---Term substitute may be defined as "taking place of another" and it may be employed to signify replacement or cancellation of a previous provision---When Legislature employed word "substitute"; plain meaning thereof appeared to be replacement of entire provision as it had effect of deleting old provision and making a new provision operative.

Black's Law Dictionary, page 1567 of the Ninth Edition; N.N. Chakravarty v. State of Assam AIR 1960 Assam 11; I.C. Sharma v. Union of India (1992) 21 ATC 63 at 64; Vijaylakshmi Rice Mills New Contractors Company v. State of Andhra Pradesh reported as 1976 UJ (SC) 367; Judicial Dictionary, 13th Edition, K J Aiyar at page 935 and Gottumkkala Venkata Krishnaamraju v. Union of India and others (Writ Petition (Civil) 732 of 2018 rel.

(d) Interpretation of statutes ---

----Fiscal statute---Interpretation of--- Distinction to be made between charging provisions and provision for collection mechanism for tax ---Scope--- Where there was prima facie inconsistency between the charging provision and collection provision of a fiscal statute, then primacy was to be accorded to statute itself and since provision for providing a mode of collection could not be equated with charging section, thereover collection mechanism could neither abridge nor expand scope of charging provision of a statute

Pakistan Television v. CIR 2019 PTD 484 and Pakistan Television v. Commissioner Inland Revenue 2017 SCMR 1145 rel.

(e) Income Tax Ordinance (XLIX of 2001)

----S.37A & Division VII of Part I of First Sched.----Finance Act (XXIX of 2016) S.5---Capital gains on disposal of securities ---Amendment in rates of tax on capital gains on disposal of securities vide Finance Act, 2016 ---Scope--- Petitioners impugned show-cause notices issued to them regarding payment of tax on capital gains, inter alia, on ground that while verbiage of Division VII of Part I of First Schedule to Income Tax Ordinance, 2001 contained certain provisos in respect of debt securities / mutual funds, however, same stood deleted via Finance Act, 2016 as the substituted text did not contain said provisos---Contention of Department was that vide said amendment, only table containing rates of tax had been replaced, and provisos thereto remained in force---Held, that any doubts arising from interpretation of fiscal provisions must be resolved in favour of taxpayer, and verbiage employed in Finance Act, 2016 did not indicate that only table contained in Division VII of Part I of First Schedule to Income Tax Ordinance, 2001 was to be replaced---Substitution carried out vide Finance Act, 2016 replaced entire constituent thereof, including provisos relied on by Department in show-cause notices and not merely the table therein---Department's reliance on such provisos was therefore an abuse of process of law and unjust, and impugned show-cause notices were set aside---Constitutional petitions were allowed, accordingly.

Pakistan Television v. CIR 2019 SCMR 282; Pakistan Television v. CIR 2017 SCMR 1136; Citibank NA v. Commissioner Inland Revenue 2014 PTD 284; Oxford University Press v. Commissioner of Income Tax and others 2019 SCMR 235 rel.

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

----S.37A & Division VII of Part I of First Sched. ---- Finance Act (XXIX of 2016) S.5---Capital gains on disposal of securities ---Amendment in rates of tax on capital gains on disposal of securities vide Finance Act, 2016 --- Retrospective effect of such amendment---Scope---Question before High Court was whether benefit of amendment in rates of tax on disposal of securities could be availed retrospectively by taxpayer---Held, that retrospective impact of amendment, as general rule, was to be avoided unless express language of enactment warranted such interpretation---In the present case, primacy had to be given to charging provision over recovery provisions and no retrospective benefit was available in the same --- Retrospective effect in context of beneficial legislation had to be given to soften an injury occasioned through no fault of a taxpayer, and no injury was demonstrated in the present case by variation of rates of taxation and therefore said amendment was to have prospective effect only--- Constitutional petition was dismissed, in circumstances.

CIT v. Shahnawaz 1993 SCMR 73; Gulistan Textile Mills v. Collector (Appeals) 2010 PTD 2148; CIT v. BRR Investments 2011 PTD 2148; Kurdistan Trading Company v. C.I.R. 2014 PTD 339; China Harbor Engineering Company v. FoP 2016 PTD 427; Super Engineering and another v. CIR 2019 SCMR 1111; Member BOR Punjab and others v. Qaisar Abbas and others 2019 SCMR 446; Zila Council Sialkot v. Abdul Ghani and others PLD 2004 SC 425; CIR v. Trillium Pakistan (Private) Limited 2019 SCMR 1643 and Government of Sindh v. Khan Ginners (Private) Limited and others PLD 2011 SC 347 rel.

Hussain Ali Almani for Petitioner.

Kafil Ahmed Abbasi, Deputy Attorney General for Respondent.

Dr. Shahnawaz Memon for Respondent No.3 (C.P. No.D-1579 2020).

Ameer Bakhsh Metlo for Respondent No.3 (C.P. No.D-4245 of 2017 and C.P. No.D-2403 of 2018).

2021 P T D 484

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

FATIMA FERTILIZER COMPANY LIMITED through Duly authorized Officer

Versus

COMMISSIONER-II, SINDH REVENUE BOARD

Special Sales Tax Reference Application No.30 of 2020, decided on 22nd December, 2020.

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

----Ss.9, 13(3), 2(63) & 63----Sindh Finance Act (XII of 2019), S.6(j)(ii)---Sales tax on services ---Person liable to pay tax --- Special provisions and tax withholding provisions --- Person withholding tax to be considered "person liable to pay tax" ---- Retrospective effect of S.13(3) of Sindh Sales Tax on Services Act, 2011 --- Scope--- Question before High Court was whether taxpayer as a withholding agent could be considered "person liable to pay tax" for time period before S.13(3) of Sindh Sales Tax on Services Act, 2011 was inserted, vide which a person withholding tax was deemed to be "person liable to pay tax" ---- Held, that generic meaning of term "person" as contained in S.(2)(63) of Sindh Sales Tax on Services Act, 2011 could not be applied to impose liability upon a person who otherwise did not qualify as "person liable to tax" within ambit of said Act, for period prior to when such liability was imposed --- Liability upon withholding agent to pay tax was not imposed until Finance Act, 2019 came into force, and hence any apportionment thereof prior thereto, appeared to be devoid of statutory sanction --- Imposition of such liability on withholding agent could not be construed to have retrospective effect---Reference was answered, accordingly.

Squibb Pakistan (Pvt.) Ltd. v. Commissioner 2017 PTD 1303; F.M.Y. Industries v. Deputy Commissioner 2014 SCMR 907; Hashwani Hotels Limited v. Federation of Pakistan PLD 1997 SC 315; Zila Council Jehlum v. Messrs Pakistan Tobacco Company PLD 2016 SC 398; Member (Taxes) Board of Revenue Punjab v. Qaiser Abbas 2019 SCMR 446; Super Engineering v. Commissioner Inland Revenue 2019 SCMR 1111; Kurdistan Trading Company v. Commissioner Inland Revenue 2014 PTD 339; Allied Engineering Services Ltd. Commissioner of Income Tax 2015 PTD 2562; Galaxy International Karachi v. Commissioner Inland Revenue 2019 PTD 561; Pakistan Tobacco v. Karachi Municipal Corporation PLD 1967 SC 241; Chairman District Council v. Ali Akbar 1970 SCMR 105; State Life Insurance Corporation v. Mercantile Mutual Insurance 1993 SCMR 1394; S. Zafar Ejaz v. Chairman, Steel Mills Corporation 1998 PLC (C.S.) 777; Kolhapur Canesugar Works Ltd. v. Union of India AIR 2000 SC 811; Pakistan Post Offices v. Nadeem Ahmed Khan 1995 PLC (Labour) 205; Assistant Collector Customs v. Messrs Khyber Electric Lamps 2001 SCMR 838; Messrs PSIC Cutlery Wazirabad v. Collector of Sales Tax 2005 PTD 2453; D.G. Khan Cement Company v. Collector of Customs 2003 PTD 1797; Al-Khair Gadoon Ltd. v. Appellate Tribunal 2019 SCMR 2018; D.G. Khan Cement v. Federation of Pakistan 2004 PTD 1179; Deputy Collector Central Excise v. Messrs ICI Pakistan 2006 SCMR 626; Commissioner Inland Revenue v. Messrs Tianshi International Pakistan 2018 PTD 900; Coca Cola Beverages Pakistan v. Customs and Sales Tax Tribunal 2017 PTD 2380; Messrs Pfizer Laboratories v. Federation of Pakistan PLD 1998 SC 64; H.M. Extraction Ghee and Oil Industries v. FBR 2019 SCMR 1081; Collector of Sales Tax v. Messrs Mega Tech (Pvt.) Ltd. 2005 SCMR 1166; Iqbal Hussain v. Pakistan 2010 PTD 2338; R.C.D. Ball Bearing Limited v. Sindh Employees Social Security Institution, Karachi PLD 1991 SC 308; Masood Textile Mills Ltd. v. Ihsan-ul-Haq 2003 PTD 2653 and Resource Marketing Consultants v. Assistant Commissioner 2017 PTD (Trib.) 2280 ref.

A.P. Moller Maersk and others v. Commissioner Inland Revenue and Others 2020 PTD 1614; Commissioner (Legal) Inland Revenue v. E.N.I. Pakistan (M) Limited, Karachi 2011 PTD 476 and Commissioner Inland Revenue, Zone-II, Karachi v. Kassim Textile Mills (Private) Limited, Karachi 2013 PTD 1420 rel.

(b) Interpretation of statutes ---

----Fiscal statutes---Construction of --- Effect of amendment in fiscal statute----Principles ---- Interpretation of fiscal statute had to be made strictly and any doubts arising therefrom must be resolved in favour of taxpayer and even if two reasonable interpretations were possible, one favouring taxpayer had to be adopted ---- Amendments introduced in fiscal statute, generally, were prospective in nature and charging provisions were to be applied prospectively unless retrospective effect had been accorded thereto by Legislature itself; however assessment or recovery provisions could be considered retrospective unless an enactment expressed or implied otherwise --- Law envisaged protection of taxpayers vested rights so that their position was not altered to their detriment by any subsequent amendment.

Squibb Pakistan (Pvt.) Ltd. v. Commissioner 2017 PTD 1303; F.M.Y. Industries v. Deputy Commissioner 2014 SCMR 907; Pakistan Television v. CIR 2019 SCMR 282; Pakistan Television v. CIR 2017 SCMR 1136.; Citibank NA v. Commissioner Inland Revenue 2014 PTD 284; Oxford University Press v. Commissioner of Income Tax and others 2019 SCMR 235; Super Engineering and another v. CIR 2019 SCMR 1111; Member BOR Punjab and others v. Qaisar Abbas and others 2019 SCMR 446; Zila Council Sialkot v. Abdul Ghani and others PLD 2004 SC 425; CIR v. Trillium Pakistan (Private) Limited 2019 SCMR 1643 and Government of Sindh v. Khan Ginners (Private) Limited and others PLD 2011 SC 347 rel.

(c) Interpretation of statutes---

----Amendments---Nature of statutory amendments --- Legislature remained aware of statutory position and undertook an amendment to alter such status existing prior to amendment having been incorporated.

Collector of Sales Tax v. Messrs Mega Tech (Pvt.) Ltd. 2005 SCMR 1166; Iqbal Hussain v. Pakistan 2010 PTD 2338; Pakistan Tobacco v. Karachi Municipal Corporation PLD 1967 SC 241; Chairman District Council v. Ali Akbar 1970 SCMR 105; State Life Insurance Corporation v. Mercantile Mutual Insurance 1993 SCMR 1394 and S. Zafar Ejaz v. Chairman, Steel Mills Corporation 1998 PLC (C.S.) 777 rel.

Hyder Ali Khan for Applicant.

Shamshad Narejo for Respondent.

2021 P T D 542

[Sindh High Court]

Before Aqeel Ahmed Abbasi and Zulfiqar Ahmed Khan, JJ

AL RAZZAQ FIBRES (PVT.) LTD. through authorized representative and others

Versus

FEDERATION OF PAKISTAN through Secretary, Ministry of Finance and others

Constitutional Petition No.D-1704 of 2018 (and others connected petitions), decided on 18th January, 2021.

Sales Tax Act (VII of 1990)---

----Ss.3(2)(b), 4(c) & 74-A--- Notifications SRO No.1125(I)/2011 dated 31-12-2011---SRO No.584(I)/2017 dated 1-7-2017---Notification, vires of--- Increase in tax--- Phrase 'Board with the approval of Federal Minister-in-Charge'--- Scope--- Petitioners were tax-payers and their grievance was that power of Federal Government could not be substituted to Federal Minister-in-Charge for the purposes of tax collection--- Validity--- Amendment in S.3(2)(b) read with S.4(c) of Sales Tax Act, 1990, through Finance Act, 2017 to the extent of substituting the words "Board with the approval of Federal Minister-in-Charge" was ultra vires the Constitution, contrary to law and of no legal effect---Notification SRO No.584(I)/2017, dated 1-7-2017 issued in terms of and in purported exercise of powers conferred by amendment in S.3(2)(b) & S.4(c) of Sales Tax Act, 1990, particularly adding of a new condition xiv to notification SRO No.1125(I)/2011 dated 31-12-2011, was ultra vires the Constitution and was of no legal effect--- High Court restrained the authorities from demanding any duty in terms of notification SRO No.584(I)/2017 dated 1-7-2017 from petitioners--- Provision of S.74-A of Sales Tax Act, 1990, had no relevancy to the matter as it was to seek validation of acts of 'Federal Government' and not that of "Board with the approval of Federal Minister-in-Charge"--- Constitutional petition was allowed accordingly.

Mustafa Impex, Karachi and others v. The Government of Pakistan and others PLD 2016 SC 808; Premier Systems (Pvt.) Ltd. v. Federation of Pakistan and others 2018 PTD 861; PMDC v. Federation of Pakistan and others 2018 SCMR 1956 and Messrs TU Plastic Industries Company (Pvt.) Ltd. v. Federation of Pakistan and others 2019 PTD 1542 rel.

Messrs Elahi Cotton Mills Ltd. and others v. Federation of Pakistan and others PLD 1997 SC 582; Ali Haider Khan v. Province of Punjab through Chief Secretary and 7 others 2016 PTD 2525; Muhammad Khalid Qureshi 2017 PTD 805 and Tandliwala Sugar Mills Ltd.'s case 2001 SCMR 1398 ref.

Abdul Moiz Jaferi, Sofia Saeed, Amjad Javaid Hashmi, Arshad Shahzad, Qazi Umair Ali, Waseem Shaikh, Syed Mohsin Ali, Asad Raza, Syed Irshad-ur-Rehman and Umerzad Gul for Petitioners.

Muhammad Aqeel Qureshi, Khalid Rajpar, Ameer Bukhsh Metlo, Pervaiz Ahmed Memon and Irfan Mir Halepoto for Respondents.

Shakeel Ahmed along with Ms. Durdana Tanvir for the Respondents (in C.Ps.Nos.D-8855 and D-8856 of 2018).

Muhammad Aminullah Siddiqui, Asst. Attorney General for Respondents.

2021 P T D 558

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

Messrs KARACHI GOLF CLUB (PRIVATE) LIMITED through Manager Accounts and Finance and others

Versus

PROVINCE OF SINDH through Director Sindh Revenue Board and others

C.Ps. Nos. D-7042, D-7409 of 2018 and D-8302 of 2019, decided on 10th March, 2021.

(a) Constitution of Pakistan---

----Art.199---Constitutional jurisdiction of High Court---Question regarding interpretation of law---Scope---Constitutional petition was maintainable where important questions regarding interpretation of law were raised, and more so when the highest authority / statutory forum, had already expressed its opinion regarding such interpretation, making statutory remedies illusory for petitioner(s).

Filters Pakistan v. FBR 2010 PTD 2036; Shahnawaz Ltd. v. Pakistan 2011 PTD 1558; Engro Vopak v. Pakistan 2012 PTD 130; Association of Builders v. Sindh 2018 PTD 1487; Julian Hoshang Dinshaw Trust v. ITO 1992 SCMR 250; Khyber Electronic Lamps v. Collector 1996 CLC 1365; Collector v. SH Ahmed 1999 SCMR 138; Attock Cement v. Collector 1999 PTD 1892; Pak Land Cement v. CBR 2007 PTD 1524; Iqbal Hussain v. Pakistan 2010 PTD 2338; Circular No. 1 of 2012 dated 14.02.2012, issued by the Sindh Revenue Board and referenced SRB.COM-II/Clubs/1/3033/2012 and Daly's Club Law by J. N. Martin, O.B.E; Seventh Edition rel.

(b) Social club----

----"Members club" and "Proprietary Club"---Distinction---Basic difference between a 'members club' and 'proprietary club' was that the former was characterized by contractual relationship between members inter se, whereas the latter was characterized by contractual relationship between each member and the proprietor.

D.M. Malik v. Jockey Club of Pakistan and others PLD 1960 (West Pakistan) 325; Jahangir Moghul and others v. Karachi Gymkhana 2012 CLC 1829; Baker v. Jones [1954] 2 All ER 533 and Lee v. Showmen's Guild of Britain (2) [1952] 1 All ER 1181 rel.

(c) Mutuality, doctrine of---

----Concept, scope and application of the "doctrine of mutuality"---Judicial recognition of "doctrine of mutuality" in various jurisdictions ---Application of doctrine of mutuality---Nexus of "doctrine of mutuality" with taxation, explained.

Commissioner of Income-Tax Punjab and N.-W.F. Provinces v. Messrs The Lyallpur Central Co-Operative Bank Ltd. PLD 1959 (W. P.) 627; Glasgow Corporation Waterworks Acts v. IRC (1875) ITC 28; Dr Ikramul Haq | Huzaima Bukhari, Taxation: Doctrine of mutuality, 27 Nov 2020, available at: https://www.brecorder.com/news/40035720; Love, Natalie. (in press) The Relevance of the Mutuality Principle within the Non-profit Sector, Third Sector Review, Vol. 13(1)2007; accessed from http://eprints.qut.edu.au and also available at https://eprints.qut.edu.au/6114/1/6114.pdf accessed on 22-02-2021; Abhirup Ghosh, Principle of Mutuality - A Study, KIIT University - KIIT School Of Law, April 26, 2011, available at: https://papers. ssrn.com/sol3/papers.cfm?abstract_id=1823644; Commissioner of Income-tax v. Bankipur Club Ltd reported as [1997] 092 TAXMAN 278 (SC); Commissioner of Income-Tax, Delhi and Rajasthan v. Delhi Race Club (1940) LTD. 1973 PTD 11; Commissioner of Income-tax v. J.K. Organization [2005] 144 TAXMAN 560 (ALL.); Commissioner of Income Tax A.P. v. Merchant Navy Club (1974) 96 ITR 261; The Presidency Club Limited v. Commissioner of Income Tax Madras (1981) 127 ITR 264; Sindh Club v. CIT South Zone Karachi ITR 455 of 1990 and Chelmsford Club v. Commissioner of Income-tax [2000] 109 TAXMAN 215 (SC) rel.

(d) Interpretation of statutes ---

----Fiscal statute---Construction of fiscal / taxation statutes --- Scope--- Definition given in a statute was to be so construed as not to be repugnant to its context and any definition given in a statute, by itself, did not create a charge or liability.

Chairman Federal Board of Revenue v. Al Technique Corporation of Pakistan Limited PLD 2017 SC 99 and Suresh Kumar v. Federation of Pakistan PLD 2020 Sindh 62 rel.

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

----Ss.3 & 4---Constitution of Pakistan, Art.199---Constitutional petition---Taxable services and economic activity under Sindh Sales Tax on Services Act, 2011---Members' club (social clubs)---Levy of sales tax on services on entrance fee and subscription charges received by members' clubs----Doctrine of mutuality, application of---Scope---Question before High Court was whether monthly and annual subscription charges and entrance fees received by members' club (social clubs) fell within purview of sales tax under Sindh Sales Tax on Services Act, 2011 read with "doctrine of mutuality"---Held, that structure of "doctrine of mutuality" rested upon on absence of commerciality; presence of complete identity between contributor and participant; impossibility for contributors to derive profit from activity, and where contributors of the funds were also recipients of same---Satisfaction of such criteria led to exclusion of treatment of such income for purpose of income tax and said application would extend to very services rendered in generating such income----"Doctrine of mutuality" squarely precluded services provided by members' club to its members from ambit of economic activity and consequently also from taxable services as envisaged by Sindh Sales Tax on Services Act, 2011---Very nature of entrance fee, which were treated as equity and not as revenue by member's clubs, by its very nature, prima face, excluded such fee from services as far as members' club was concerned, and such fee could not have been said to be received out of any profit motive, and hence "doctrine of mutuality" was attracted and same would be not considered "taxable service" under Sindh Sales Tax on Services Act, 2011---Said principle also applied to monthly or annual subscription fee for members' club, which was charged in respect of entitlement of members to benefits envisaged to be rendered to oneself, and with confluence of identity between provider and receipt of such funds, such charges were also not subject to sales tax on services---High Court held that demand of sales tax on monthly subscription charges as well as entrance fees from members' club by Department was therefore illegal and notices in respect thereof were set aside---Constitutional petitions were allowed, accordingly.

Defence Authority Club Karachi and others v. Federation of Pakistan and others 2007 PTD 398; Bangalore Club v. Commissioner Income Tax and another (2013) 5 Supreme Court Cases 509; The Joint Commercial Tax Officer Harbour Division-II Madras v. The Young Men's Indian Association Madras and others ("YMCA"); PLD 1961 SC 119; 2010 PTD 2018; 2018 PTD 1869; Trewby v. Customs and Excise Commissioners [1976] 2 All ER 199; Customs and Excise Commissioners v. British Field Sports Society [1998] 2 All ER 1003; Eastborne Town Radio Cars Association v. Customs and Excise Commissioners [2001] 2 All ER 597 (HL); Kennemer Golf and Country Club v. Staatssecretaris van Financiein [2002] 2 All ER (EC) 480; V. Tumble Tots (UK) Limited v. Revenue Commissioners [2007] 2 EWHC 103 (Ch); Revenue and Customs Commissioners v. Esporta Limited [2007] EWCA Civ 155; Halle Concert Society v. Revenue and Customs Commissioners [2016] UKFTT 294 (TC); Shanklin Conservative and Unionist Club v. Revenue and Customs Commissioners [2016] UKFTT 135 (TC); LDA and others v. Imrana Tiwana and others 2015 SCMR 1739; Usmani Glass v. STO PLD 1971 SC 205 and Dewan Cement v. Pakistan 2010 PTD 1717 ref.

Commissioner of Income-Tax, Delhi And Rajasthan v. Delhi Race Club (1940) LTD.1973 PTD 11; Usmani Glass v. STO PLD 1971 SC 205; Dewan Cement v. Pakistan 2010 PTD 1717; Filters Pakistan v. FBR 2010 PTD 2036; Shahnawaz Ltd. v. Pakistan 2011 PTD 1558; Engro Vopak v. Pakistan 2012 PTD 130; Association of Builders v. Sindh 2018 PTD 1487; Engro Vopak v. Pakistan 2012 PTD 130; Standard Chartered Bank v. Pakistan 2017 PTD 1585 and Asia Petroleum v. Pakistan, Unreported (C.P. D-2559 of 2009 and others). rel.

Jawaid Farooqui, Omer Akhund and Uzair Shoro for Petitioners.

Sault Rizvi, Assistant Advocate General.

Uzair Karamat Bhandari and Ghulam Murtaza Korai for Respondents.

Zamir Khalid, Commissioner S. Zain-ul-Abidin, Deputy Commissioner Sindh Revenue Board.

2021 P T D 609

[Sindh High Court]

Before Irfan Saadat Khan and Yousaf Ali Sayeed, JJ

COMMISSIONER OF INLAND REVENUE, ZONE-1, LTU, KARACHI

Versus

Messrs INDUSTRIAL DEVELOPMENT BANK OF PAKISTAN (IDBP), KARACHI

Special Federal Excise Reference Application No.159 of 2012, decided on 2nd November, 2020.

Central Excise Act (I of 1944)----

----Ss. 33, 34 & 35----Federal Excise Act (VII of 2005) S.34---Offences, penalties and confiscation under the Central Excise Act, 1944---Determination of pecuniary jurisdiction of Assistant Collector---Adjudication under Central Excise Act, 1944---Scope---Question before High Court was whether question of pecuniary jurisdiction of Assistant Collector could be raised before Appellate Tribunal when the same was not raised in proceedings before subordinate forums --- Held, that question of law could be raised at any stage of the proceedings if not raised before subordinate authorities---Reference was answered, accordingly.

Collector of Customs, E. & S.T. and Sales Tax v. Pakistan State Oil Company Ltd. 2005 PTD 2446; Muhammad Hussain and another v. Muhammad Shafi and others 2004 SCMR 1947; Malik Khan Muhammad Tareeen v. Messrs Nasir and Brother Coal Company through Proprietor and others 2018 SCMR 2121 and Messrs Dewan Cement Ltd. v. Collector of Customs and Sales Tax and another 2009 PTD 1247 rel.

Ameer Bux Metlo for Applicant.

Atif Aqeel Ansari for Respondent.

2021 P T D 658

[Sindh High Court]

Before Irfan Saadat Khan and Zafar Ahmed Rajput, JJ

SINDH CLUB KARACHI

Versus

COMMISSIONER OF INCOME TAX SOUTH ZONE, KARACHI

I.T.R. No.455 of 1990, decided on 2nd March, 2016.\

Income Tax Act (XI of 1922)---

----Ss.9 & 10---Members' club (social club)---Tax payable---Levy of income tax on income generated from accommodation services provided by a members' club---Doctrine of mutuality, application of---Question before High Court was whether receipts of a Member's Club, for provision of temporary accommodation and various amenities to its members, would come within ambit of "doctrine of mutuality" and therefore exempt from incidence of income tax under Income Tax Act, 1922---Held, that surplus accruing to a members' club from amounts received form its members in respect of activities / services provided to them could not be considered to be income or profit of said club as due to "doctrine of mutuality", no one could make a profit out of oneself, and neither members could trade with themselves---Amounts received by the members' club by providing temporary accommodation was therefore exempt from ambit of income tax under S.10 of Income Tax Act, 1922 on basis of "doctrine of mutuality"---Reference was answered, accordingly.

Chelmsford Club v. Commissioner of Income Tax (2000) 243 ITR 89; Commissioner of Income Tax v. Wheeler Club Limited (1963) 49 ITR 52; Commissioner of Income Tax, A.P. v. Merchant Navy Club (1974) 96 ITR 261; Commissioner of Income Tax, Delhi II. v. Dehli Gymkhana Club (1985) 155 ITR 373; Commissioner of Income Tax v. Trivandrum Club (1989) 177 ITR 550; Cawnpore Club Ltd. v. Commissioner of Income Tax (1990) 183 ITR 620 and Messrs Petroleum Institute of Pakistan (Pvt.) Ltd.'s case (Income Tax Appeal No.241 of 2000) rel.

Commissioner of Income Tax v. Sindh Club Karachi 1987 PTD 503; The Commissioner of Income Tax v. Messrs Lyloyd's Register of Shipping's case Income Tax Appeal No.850 of 2000 and Messrs Harmone Laboratories Pakistan (Pvt.) Ltd. Karachi v. The Commissioner of Income Tax, Central Zone-B, Karachi ITR No.423 of 1997 distinguished.

Commissioner of Income Tax v. Wheeler Club Limited (1963) 49 ITR 52; Commissioner of Income Tax Punjab and N.W.F.P. v. The Lyallpur Central Co-operative Bank Ltd. PLD 1959 (W.P) Lah. 627; Commissioner of Income Tax v. National Sports Club of India (1995) 230 ITR 777; Commissioner of Income Tax v. Bankipur Club Ltd. (1997) 226 ITR 97; Commissioner of Income Tax v. Ranchi Club Ltd. (1992) 196 ITR 137; The Presidency Club Ltd. v. Commissioner of Income Tax, Madras (1981) 127 ITR 264; Messrs Harmone Laboratories Pakistan (Pvt.) Ltd. Karachi v. The Commissioner of Income Tax, Central Zone-B, Karachi ITR No.423 of 1997; The Commissioner of Income Tax v. Messrs Lyloyd's Register of Shipping Income Tax Appeal No.850 of 2000; Commissioner of Income Tax, Companies-III, Karachi v. Messrs Petroleum Institute of Pakistan (Pvt.) Limited Income Tax Appeal No.241 of 2000 along with ITAs Nos.240 and 242 of 2000; Karachi Gymkhana v. Commissioner of Income Tax 1986 PTD 43; Commissioner of Income Tax v. Mushtaq Ahmed 1989 PTD 1 and Commissioner of Income Tax, Delhi and Rajasthan v. Delhi Race Club (1970) 75 ITR 111 ref.

Iqbal Salman Pasha for Applicant.

Jawaid Farooqui for Respondent.

2021 P T D 713

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

SINDH PETROLEUM AND CNG DEALERS ASSOCIATION and others

Versus

FEDERATION OF PAKISTAN and others

C.Ps. Nos.D-183, D-236, D-257, D-262, D-270, D-291, D-311, D-360, D-432, D-447, D-654, D-949, D-1101 and D-1742 of 2019, decided on 11th February, 2021.

Sales Tax Act (VII of 1990)---

----S.34---Payment of sales tax liability---Default Surcharge---Recovery of default surcharge---Show-cause notice and adjudication process to be followed for such recovery---Abdication of statutory duty by Department---Scope---Petitioners impugned notices for payment of sales tax default surcharge issued by Gas Utility Company on behalf of Department---Question before High Court was whether Gas Utility Company could be delegated right and responsibility to adjudicate, impose and recover default surcharge from its subscribers under S.34 of Sales Tax Act, 1990---Held, that while Department did initiate proceedings against Gas Utility Company for recovery of such default surcharge however, no proceedings were initiated against its subscribers / petitioners---Issuance of impugned notices by company, prima facie, had not been preceded by requisite adjudication process by relevant authority---Impugned notices being devoid of any show-cause notice, and adjudication process, were therefore illegal and void ab initio, and set aside---Constitutional petitions were allowed, accordingly.

Sohail Jute Mills Limited v. Federation of Pakistan PLD 1991 SC 329; S. Sana Enterprises v. Federation of Pakistan 2013 PTD 438; GMH Traders and Manufacturers v. Deputy Director Investigation Officers 2009 PTD 1894; Exide Pakistan Limited v. Deputy Collector 2004 PTD 1449; Assistant Collector Customs v. Khyber Electric Lamps 2001 SCMR 838; Moon Elite Enterprises v. M.C. Lyallpur 1991 CLC 796; Muhammad Waheed v. Customs Appellate Tribunal 2016 PTD 35; NICON (Private) Limited v. CIR RTO 2016 PTD 2748; Commissioner of Income Tax v. Habib Bank Limited 2007 PTD 901; DG Khan Cement Company Limited v. Federation of Pakistan 2004 PTD 1179; Commissioner Inland Revenue Zone III RTO II Lahore v. Hamza Nasir Wire and others 2020 SCMR 1822 rel.

Barrister Mohsin Kadir Shahwani, Karim Abbasi and Abdur Rahman for Petitioners.

Kafeel Ahmed Abbasi, Deputy Attorney General for Federation of Pakistan.

Asim Iqbal, Akbar Sohail, Muhammad Aqeel Qureshi and Muhammad Bilal Bhatti for Respondents.

2021 P T D 731

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

SAMI PHARMACEUTICAL (PVT.) LTD. and others

Versus

PROVINCE OF SINDH through Chief Secretary and others

Constitution Petition No.D-5220 of 2017 and other connected petitions, decided on 17th November, 2020.

(a) Taxation---

----Tax, imposition of---Powers---By a rule making power no tax can be imposed or levied as it is only the charging provision of the Statute concerned which can do so.

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

----S.4(3)(a)---Sindh Sales Tax on Services Rules, 2011, R.42(e) & Proviso---Charging of tax--- Salaries and wages---Question was with regard to amounts paid as salaries/wages to employees/workers---Validity---What S.4(3)(a) of Sindh Sales Tax on Services Act, 2011, by itself had excluded, the same could not then be included by way of Rules or clarification so as to create a charging provision---Amount or payment in question was in respect of salary and wages of employee paid by service provider or recipient---If by S. 4(3)(a) of Sindh Sales Tax on Services Act, 2011, such amount was out of the ambit of an economic activity, then in no manner it could be brought into a taxable service---Any clarification or rule could not require payment of sales tax on such payments---Salary and wages in question was paid by service provider to employee and then was reimbursed and that was so---By implication the amount was paid to service provider on issuance of an invoice or for the reason that by such methodology applicability of some other laws was being avoided, did not make it a taxable service or to be included in value of taxable service---Action and interpretation of Sindh Revenue Board was contrary to Sindh Sales Tax on Services Act, 2011, itself---Even if proviso to R.42(e) of Sindh Sales Tax on Services Rules, 2011, stood omitted, it was only the quantum and value of service which was taxable in such cases and not the amount reimbursed by the service recipient---Constitutional petition was allowed in circumstances.

Cyanamid Pakistan Ltd. v. Collector of Customs (Appraisement) and others PLD 2005 SC 495; Engineer Iqbal Zafar Jhagra and another v. Federation of Pakistan and another 2013 SCMR 1337; Zulfiqar Ahmed Bhuta and 15 others v. Federation of Pakistan and others PLD 2018 SC 370; Hirjina Salty Chemicals (Pak) Ltd. v. Union Council Gharo and others 1982 SCMR 522; All-India Federation of Tax Practitioners and others v. Union of India and others (2007) 7 SCC 527; Muhammad Amin Muhammad Bashir Limited v. Government of Pakistan 2015 PTD 1100; Messrs Flying Cement Company Limited v. The Appellate Tribunal Inland Revenue 2017 PTD 627; National Electric Power Regulatory Authority v. Faisalabad Electric Supply Company Limited 2016 SCMR 550; Intercontinental Consultants v. Union of India 196 (2013) DLT 17 and Union of India v. Messrs Inter-Continental Consultants and Technocrafts (Pvt.) Ltd. AIR 2018 SC 3754 ref.

(c) Interpretation of statutes---

----Delegated legislation---Scope---Delegated legislation is intended to enforce law and not to override it---Such legislation entitles delegatee to carry out mandate of legislation, either by framing rules or regulations, which translates and applies substantive principles of law set out in parent legislation or by recourse to detailed administrative direction and instructions for implementation of law---Rules which are merely subordinate legislation, cannot override or prevail upon the provisions of parent statute---If there is any conflict between a statute and subordinate legislation, it does not require elaborate reasoning to firmly state that the statute prevails over subordinate legislation and bye-law, if not in conformity with the statute in order to give effect to the statutory provision the Rule or bye-law has to be ignored---Statutory provision has precedence and must be complied with---Rule which comes in conflict with main enactment has to give way to the provisions of the Act---Rules are meant only for the purpose of carrying out the provisions of the Act and they cannot take away what was confirmed by the Act or whittle down its effect.

Muhammad Amin Muhammad Bashir Limited v. Government of Pakistan and others 2015 SCMR 630; Babaji Kondaji Garad v. Nasik Merchants Co-operative Bank Ltd., (1984) 2 SCC 50; CIT v. S. Chenniappa Mudaliar, (1969) 74 ITR 41 and Andhra Pradesh v. Taj Mahal Hotel (1971) 82 ITR 44 rel.

Hyder Ali Khan, Ovais Ali Shah, Qazi Umair Ali, Anwar Kashif Mumtaz, Ammar Athar Saeed, Usman Alam, Ghazanfar Ali Jatoi, Khalid Mehmood Siddiqui, Ghulam Rasool Korai, Zaheer ul Hassan, Imran Ali Abro, Nadir Hussain Abro, Syed Hamza Hashmi, Jamshed Abbasi, Ajeet Kumar, Muhammad Altaf, S. Sultan Ahmed and Taimur Ahmed Qureshi for Petitioners.

Malik Naeem Iqbal, Rashid Anwar, Ghulam Murtaza Korai, Dr. Shah Nawaz, Irfan Mir Halepota, Shamshad Ahmed Narejo for Respondents.

Zamir Khalid, Commissioner Legal SRB.

Syed Zainul Abidin Shah, Deputy Commissioner, SRB

Naeemullah Bhutto, Assistant Commissioner.

Rashid Ali Shaikh, Assistant Commissioner.

2021 P T D 754

[Sindh High Court]

Before Fahim Ahmed Siddiqui, J

DIRECTOR, DIRECTORATE GENERAL INTELLIGENCE AND INVESTIGATION FBR

Versus

SHAUKAT ALI NADEEM and another

Special Criminal Miscellaneous Applications Nos.140 and 145 of 2017, decided on 11th September, 2019.

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

----Ss.156(1)(14) & 156(1)(14-A)---Criminal Procedure Code (V of 1898), S.497(5)---Mis-declaration---Cancellation of bail---Scope---Accused persons were alleged to have evaded huge amount of duty and taxes through submission of fabricated invoices, however, they were enlarged on bail by the Trial Court---Remote possibilities, as contended by the prosecution, came under deeper appreciation of evidence as such the same could not be considered either at the time of granting bail or otherwise---Exoneration after adjudication in respect of alleged tax evasion had created a doubt regarding the prosecution case and the benefit of doubt went in favour of the accused even at the bail stage---Case against accused persons was based on documentary evidence and/or the deposition of official witnesses, therefore, there was no chance of tampering with the prosecution evidence---Applications for cancellation of bail were dismissed, in circumstances.

(b) Criminal Procedure Code (V of 1898)---

----S.497(5)---Bail, cancellation of---Scope---Where bail has been granted to the accused and he has not misused the same then ordinarily bail may not be cancelled unless the clear cut violation of law is observed---Prosecution is duty bound to establish with concrete reasons that any of the grounds for recalling of bail order are in existence.

Abdul Ghani v. The State 2000 PCr.LJ 1574 rel.

Ashique Ali Rana, Special Prosecutor Customs for Applicant.

Zain A. Jatoi for Respondents (in Spl. Crl. Applications Nos.140 and 145 of 2017).

2021 P T D 764

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

MUHAMMAD HASAN NADEEM and 2 others

Versus

MODEL CUSTOMS COLLECTORATE (ENFORCEMENT AND COMPLIANCE)

through Collector and 4 others

Constitution Petition No.D-4965 of 2020, decided on 22nd December, 2020.

Customs Act (IV of 1969)---

----Ss.162, 163 & 187---Prevention of smuggling---Power to issue search warrant---Power to search and arrest without warrant---Detention of seized goods where search and seizure were legally defective---Scope---Question before High Court was whether power to search and arrest without warrant under S.163 of Customs Act, 1969 was an exception to S.162 of the Act, or was an alternative thereof---Held, that S.163 of Customs Act, 1969 was not an alternative to S.162 of Customs Act, 1969 and S.163 was to be read in conjunction with S.162---Section 162 of Customs Act, 1969 may only be dispensed with in the statutorily stipulated circumstances---While law placed initial evidential and tactical burden on person in possession of goods, however, such person only needed to show evidence to prima facie discharge his burden to demonstrate legality of such goods and thereafter burden shifted to customs authorities---Where search and seizure was defective and improper on account of non-conformity with Ss.163 & 162 of Customs Act, 1969; then same could not be sustained; and in such a case, continued detention of seized goods could not be allowed---Constitutional petition was allowed, accordingly.

Taj International (Pvt.) Ltd. and others v. The FBR and others PTCL 2014 CL 726; Muhammad Measum and others v. Federation of Pakistan and others 2015 PTD 702; Zaheer Ahmed v. Directorate General of Intelligence and others 2016 PTD 365; Agha Steel Industries Ltd. v. Directorate of Intelligence and Investigation and others 2019 PTD 2119; Chief Commissioner Inland Revenue v. Paper World (Pvt.) Ltd. 2020 SCMR 105; Muhammad Hanif v. The State 2019 SCMR 2029; Abdul Hameed and another v. Province of Sindh and others PLD 2019 Sindh 168; Brig. (Retd.) Imtiaz Ahmad v. Government of Pakistan and others 1994 SCMR 2142; Collector of Customs Lahore v. Universal Gateway Trading Corporation and another 2005 SCMR 37; Assistant Collector and another v. Shafqat Shah and others 1991 SCMR 2525; Muhammad Farooq v. Ahmed Nawaz Jagirani and others PLD 2016 SC 55; Col. Shah Sadiq v. Muhammad Ashiq and others 2006 SCMR 276; Muhammad Saleem Bhatti v. Syed Safdar Ali Rizvi and others 2006 SCMR 1957; Muhammad Mansha v. SHO PS City, Chiniot and others PLD 2006 SC 598; Abdul Aleem v. Special Judge (Customs) Lahore and others 1982 SCMR 73; Khushi Muhammad and others v. The State 1979 SCMR 94; Noman Junejo v. FIA and others PLD 2018 Kar. 1; Muhammad Hanif v. The State 2019 SCMR 2029; A. Habib Ahmed v. M.K.G. Scott Christian and others PLD 1992 SC 353 and LDA and others v. Imrana Tiwana and others 2015 SCMR 1739 ref.

Collector of Customs and others v. Muhammad Mahfooz PLD 1991 SC 630; Collector of Customs and others v. Universal Gateway Trading Corporation and another 2005 SCMR 37; Abdul Razzak v. DG I&I and others 2016 PTD 1861; AC Central Excise v. Qazi Ziauddin PLD 1962 SC 440, Sikander A. Karim v. The State 1995 SCMR 387; Muhammad Gul v. Member Judicial Customs Appellate Tribunal and others 2013 PTD 765; Taj International and others v. FBR and others 2014 PTD 1807 and Shahid Gul and Partners v. DCIT Peshawar (Civil Appeals 2444-9 of 2016) rel.

Khawaja Shams-ul-Islam for Petitioners.

Muhammad Ahmer Assistant Attorney General for Respondents.

Khalid Rajpar for Respondent No.1.

Amir Mansoob Qureshi and Iftikhar Ahmed Shah for Respondents Nos.2, 3 and 4.

2021 P T D 788

[Sindh High Court]

Before Nazar Akbar, J

AHMED NAWAZ and others

Versus

STATE

Special Criminal Appeals Nos.20, 21 and 22 of 2009, decided on 3rd November, 2020.

Customs Act (IV of 1969)---

----Ss.32, 156(1)(14)(77) & 185-F---Criminal Procedure Code (V of 1898), S.410---Forged documents---Appreciation of evidence---Sentence, "imprisonment or fine"---Scope---Accused persons were alleged to have filed forged and manipulated documents showing less value of machine imported---Trial Court convicted accused persons and sentenced them to imprisonment for 11 months with payment of fine---Validity---Held, repeated use of word "or" in penalties, to which accused persons could be liable, empowered Court to convict accused persons by imposing only fine and it could still be enough conviction without sending them to jail---By sending accused to jail for 11 months would not be even partial recovery of revenue--- Accused persons faced 25 years of prosecution during which period they were on bail--- Accused persons did not have any criminal record--- High Court maintained conviction awarded to accused persons by Trial Court but modified sentence of imprisonment to payment of fine only--- High Court directed the accused persons to pay an additional sum of Rs.500,000/- as fine in addition to that imposed by the Trial Court---Appeal was dismissed accordingly.

Ghulam Ali v. The State 1997 SCMR 1411; Munawar Ali v. The State 2020 PCr.LJ 1465; Criminal Appeal No.151 of 2015 and Muhammad Munshi v. The State 1976 SCMR 354 ref.

Muhammad Faisal Khan for Appellant (in Special Criminal Appeal No.20 of 2009).

Muhammad Ashraf Kazi for Appellant (in Special Criminal Appeal No.21 of 2009).

Syed Khurram Nizam for Appellant (in Special Criminal Appeal No.22 of 2009).

Ashiq Ali Anwar Rana for Respondents.

2021 P T D 804

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

DEPUTY COLLECTOR OF CUSTOMS

Versus

MARSONS USA CORPORATION

Special Customs Reference Applications Nos.176 to 199 of 2013, decided on 1st February, 2021.

Customs Act (IV of 1969)---

----Ss.80,81 & 196---Import of goods---Provisional determination of customs duty---Furnishing of post-dated cheques/bank guarantee by importer---Deferred payment of liability---Scope---Question before High Court was whether assessment made in a case of import of goods was provisional in nature, or whether the same was made finally under S.80 of Customs Act, 1969 upon which Department could issue notice under S.32 of Customs Act, 1969 to importer---Held, that Department had obtained post-dated cheques and undertakings from importer for securing differential amount of duties /taxes and the same made such assessment provisional under S.81 of Customs Act, 1969---Present matter was therefore not covered under Ss. 32(2) & 32(3) of Customs Act, 1969---Contention of Department that such cheques, etc. were obtained as deferred payment of final duties / taxes was fallacious as there was no concept of such "deferred payment" recognized in law---Since no final assessment was made in the present case, therefore per S.81 of Customs Act, 1969 the provisional assessment made therein attained finality and ad hoc amount to meet deferential amounts, in case of a final assessment, thus became refundable to importer---Reference was answered, accordingly.

Abdul Aziz Ayob v. Assistant Collector of Customs PLD 1990 Kar. 378; Hassan Trading Company v. Central Board of Revenue 2004 PTD 1979; Collector of Customs (Appraisement) v. Auto Mobile Corporation of Pakistan, Karachi 2005 PTD 2116; Messrs Wall Master v. Collector of Customs and others 2005 PTD 2573 and Dewan Farooq Motors Ltd. v. Customs Tribunal 2006 PTD 1276 rel.

Muhabbat Hussain Awan for Applicant.

Pervez Iqbal Kasi for Respondents.

2021 P T D 815

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

COLLECTOR OF CUSTOMS through Additional Collector of Customs

Versus

SG ENTERPRISES

Special Customs Reference Application No.796 of 2019, decided on 26th January, 2021.

Customs Act (IV of 1969)---

----Ss.194-A(1), 194-B, 196 & First Sched.---Reference---Classification of goods--- Pakistan Customs Tariff Heading---Public notice--- Respondents-importers assailed assessment of goods before Appellate Authority on the ground that the same was due to a mistake, as in the year 2018 tariff headings were rationalized and amended---Appellate Authority and Customs Appellate Tribunal decided the matter in favour of respondents-importers---Validity---Internationally TV sets were not specified in two (2) dash (--) heading of 8528.72 (other, colour); in Pakistan the same was bifurcated into a (3) dash (---) heading of television set with a further bifurcation into three new and local (4) dash (----) sub-headings---LED or LCD panels imported with or without parts was to be classified as a complete set---Merely by placing reliance on a public notice which had no relevance with tariff heading in question did not suffice---Authorities had themselves created new sub-headings for LCD/LED in CKD and SKD conditions---LCD and LED panels did not fall in a residuary heading of Others (8528.7219)---Authorities by themselves decided the issue in favour of respondents-importers by creating a new (4) dash (----) sub-heading, rendering public notice of no relevance, rather making it infructuous post 2018---High Court rephrased questions of law framed by authorities and decided the matter in favour of respondents-importers---Reference was dismissed, in circumstances.

M. Khalil Dogar for Applicant.

Ghulam Hyder Shaikh along with Aamir Ali for Respondents.

Kafeel Ahmed Abbasi D.A.G.

2021 P T D 835

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

LUCKY CEMENT LTD. through Authorized attorney

Versus

FEDERATION OF PAKISTAN through Secretary, Revenue Division and 3 others

Constitutional Petition No.D-2933 of 2014, decided on 16th November, 2020.

(a) Taxation---

----Recovery notice---Election, doctrine of---Applicability---Scope---Petitioner impugned a notice for recovery of duties and taxes issued in pursuance of an order of the Supreme Court---Petitioner, being a cement manufacturer, had imported its plant and machinery in the year 1995---Import was stated to have been covered by tax/duty concessions, the benefit whereof was denied---Constitutional petition challenging the denial of concession was filed before the High Court and vide interim order the imported plant and machinery was directed to be released on furnishing of indemnity bonds---Final judgment in the proceedings was rendered in favour of the petitioner, however, the same was set aside by the Supreme Court---Petitioner's case was predicated on the premise that before initiating any recovery proceedings adjudication by the department was necessary; that a recovery notice without issuing a show-cause and adjudication was illegal; that provision of notice to a person, who was being proceeded against had to be read into every statute; that in the absence of an adjudication, no surcharge could be imposed; that noting on a goods declaration was not a speaking order and that the High Court could convert one type of proceedings into another---Validity---Petitioner had elected to avoid the departmental hierarchy of dispute resolution from the very onset of its grievance---Doctrine of election denoted that the election to commence and follow an available course, from concurrent avenues, vested with a suitor, however, once an option was exercised then the suitor was precluded from re-agitating the same lis in other realms of competent jurisdiction---Petitioner's plea for invocation of the department adjudication process, albeit twenty five years belated and post exhaustion of the remedial course elected to have been pursued, appeared to be impeded by the doctrine of election---Supreme Court while allowing the appeal had not issued any directions for a departmental adjudication, commencing vide a show-cause notice or otherwise---Constitutional petition, being devoid of merit, was dismissed.

Sohail Jute Mills Limited v. Federation of Pakistan PLD 1991 SC 329; S. Sana Enterprises v. Federation of Pakistan 2013 PTD 438; GMH Traders and Manufacturers v. Deputy Director Investigation Officers 2009 PTD 1894; Exide Pakistan Limited v. Deputy Collector 2004 PTD 1449; Assistant Collector Customs v. Khyber Electric Lamps 2001 SCMR 838; Moon Elite Enterprises v. M C Lyallpur 1991 CLC 796; Commissioner Inland Revenue v. Ranipur CNG Station 2017 PTD 1839; Combine Products v. SME Leasing Limited 2015 CLD 1188; Ashfaq Ahmed Khan v. Deputy Commissioner of Income Tax 2012 PTD 35; Muhammad Waheed v. Customs Appellate Tribunal 2016 PTD 35; NICON (Private) Limited v. CIR RTO 2016 PTD 2748; Commissioner of Income Tax v. Habib Bank Limited 2007 PTD 901; DG Khan Cement Company Limited v. Federation of Pakistan 2004 PTD 1179; Collector of Customs, Central Excise and Sales Tax v. Novartis 2002 PTD 976; Engro Elengy Terminal (Private) Limited v. Federation of Pakistan 2017 PTD 959; Muhammad Anis and others v. Abdul Haseeb PLD 1994 SC 539; Ikramullah v. District Officer Revenue 2007 PLC (C.S.) 1091; Muhammad Akram v. DCO Rahim Yar Khan 2017 SCMR 56; Fauji Cement Company Limited v. Government of Pakistan and others 2014 SCMR 994; Collector of Customs v. D G Khan Cement Company Limited 2016 SCMR 1448 and Collector of Customs v. Bestway Cement Limited and other 2012 SCMR 409 ref.

Trading Corporation of Pakistan v. Dewan Sugar Mills Limited and others PLD 2018 SC 828 rel.

(b) Constitution of Pakistan---

----Art. 199---Constitutional jurisdiction---Scope---Scope of writ jurisdiction, in fiscal matters, is settled law and interference may only be warranted in cases of manifest want of jurisdiction; abuse of process; and/or demonstrable mala fide and/or injustice.

(c) Doctrine of election---

----Doctrine of election denotes that the election to commence and follow an available course, from concurrent avenues, vests with a suitor, however, once an option is exercised then the suitor is precluded from re-agitating the same lis in other realms of competent jurisdiction---Provision of an option to elect a remedial recourse does not frustrate or deny the right to choose any remedy, which best suits under the given circumstances---Doctrine of election has been evolved by courts to curb successive/multiple adjudication processes in respect of a singular impugned action---As long as a party does not avail of a remedy before a forum of competent jurisdiction all such remedies remain open to be invoked, however, once the election is made then the party may not be allowed to hop over and shop for one after another coexistent adjudication process.

(d) Doctrine of election---

----Suitor, after exhausting a remedial course, may not be allowed to venture upon another remedial avenue for the same malady, which though available was not invoked, as permitting the same would be an abuse of the process of law, which cannot be approved.

Fehmida Begum v. Muhammad Khalid and others 1992 SCMR 1908 and Behar State Co-operative Marketing Union Limited v. Uma Shankar Sharan and another (1992) 4 SC Cases 196 rel.

Hussain Ali Almani for Petitioner.

Kafil Ahmed Abbasi (Deputy Attorney General) and Ms. Masooda Siraj for Respondents Nos.3 and 4.

2021 P T D 849

[Sindh High Court]

Before Irfan Saadat Khan and Yousuf Ali Sayeed, JJ

The COMMISSIONER OF WEALTH TAX COMPANIES-IV, KARACHI

Versus

KAUSAR SULTANA C/O ASIAN FOOD INDUSTRIES LTD. and others

Wealth Tax Appeals Nos.445 to 450, 453 and 454 of 2004, decided on 11th November, 2020.

Wealth Tax Act (XV of 1963)---

----S.27(1)---Valuation of shares---Authorities were aggrieved of order passed by Appellate Tribunal Inland Revenue on the plea that it was passed without considering reversal of valuation of shares by Supreme Court---Validity---There was no mistake apparent or floating on the surface of orders of Appellate Authority---Authorities failed to rebut and explain before Appellate Tribunal Inland Revenue as to what mistake was apparent in the orders passed by Appellate Authority to justify rectification of the orders, as order of Supreme Court was passed subsequently---No illegality or infirmity committed by Appellate Authority in following judgment of High Court, as the same was prevalent on the date when Appellate Authority had passed order---High Court declined to answer questions of law raised by authorities as the questions did not arise out of the order passed by Appellate Tribunal Inland Revenue--- Appeal was dismissed in circumstances.

Munir Ahmed and others v. Federation of Pakistan (1993) 78 Tax 217 ref.

Kafeel Ahmed Abbasi for Appellant.

Nemo. for Respondent.

2021 P T D 858

[Sindh High Court]

Before Aqeel Ahmed Abbasi and Zulfiqar Ahmed Khan, JJ

SUN TUBE (PVT.) LTD.

Versus

FEDERATION OF PAKISTAN and others

Constitutional Petition No.D-1161 of 2018, decided on 14th November, 2018.\

Customs Act (IV of 1969)----

----Ss.33, 19A & 30A---Provisional release of goods---Refunds of amount deposited in lieu of disputed amount of duties and taxes---Date of determination of rate of duty for clearance through the Customs Computerized System---Presumption that incidence of duty has been passed on to buyer ---Scope---Petitioner sought refund of disputed amount of duties and taxes, which were secured through pay orders at time of provisional release of goods; and contended that neither limitation period of one-year under S.33 of Customs Act, 1969 was attracted nor petitioner had to discharge burden under S.19A of Customs Act, 1969---Validity----In the present case, amount of duty payable was not under dispute and claim of the petitioner was secured after adjudication from Collector and dispute was decided in favour of petitioner, therefore limitation period of 1 year provided in S.33 of Customs Act, 1969 was not applicable ----Furthermore, petitioner was not liable to discharge burden under S.19A of Customs Act, 1969 regarding incidence of duty passed to customer, as said section was not attracted under facts and circumstances of the case---Constitutional petition was allowed, accordingly.

Messrs Akbat Tube Industries and another v. The Federation of Pakistan and others C.P.No.D-6367/2017 rel.

Muhammad Adeel Awan for Petitioner.

Ms. Afsheen Amaan and Mir Hussain Assistant Attorney General for Respondents.

2021 P T D 867

[Sindh High Court]

Before Muhammad Faisal Kamal Alam and Agha Faisal, JJ

KASHIF FEROZ

Versus

FEDERATION OF PAKISTAN through Secretary Revenue Division/Chairman Ministry of Finance and another

Constitution Petition No.D-4793 of 2020, decided on 10th December, 2020.

Constitution of Pakistan----

----Art.199---Constitutional jurisdiction of High Court---Implementation / execution of orders of Forums in Tax Departmental hierarchy of adjudication---Departmental abdication of responsibility in non-implementation of such orders---Scope---Petitioner sought implementation of order of Customs Appellate Tribunal, which per petitioner, had not been implemented despite passage of over six months---Validity---Constitutional responsibility existed upon High Court to take notice where persons mandated to perform functions in connection with affairs of state were abdicating their statutory duties---High Court directed that unless said order in case of petitioner had been suspended, the same shall be implemented in letter and spirit within two weeks and further directed Chairman Federal Board of Revenue to scrutinize all pending cases where implementation of orders had been sought, and initiate proceedings against those found in dereliction of duty for non-implementation of such orders---Constitutional petition was disposed of, accordingly.

Arain Filling Station v. Collector of Customs and another (C.P. D-2274-5 of 2016); Nadeem Khan v. Federation of Pakistan and others (C.P. D 6913 of 2016) and Muhammad Akram Chohan v. Federation of Pakistan and others (W.P. 57542 of 2017) rel.

Sardar M. Ishaque for Petitioner.

Muhammad Ahmer (Assistant Attorney General) for Respondents.

2021 P T D 875

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, J

SHOE PLANET (PVT.) LIMITED

Versus

The COLLECTOR OF CUSTOMS MCC - APPRAISEMENT (EAST), CUSTOMS HOUSE, KARACHI and 2 others

Constitution Petition No.3240 of 2020, decided on 16th October, 2020.

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

----Ss.32 & 80---Mis-declaration---Checking of goods declaration by customs---Issuance of demand notice without show-cause notice---Scope---Petitioner assailed issuance of notice whereby certain amounts were demanded in respect of alleged short payment of duties pertaining to Goods Declarations of items cleared over the previous year and a half---Validity---Said Goods Declarations pertained to pre-released items, re-assessment whereof was not mandated per S.80 of the Customs Act, 1969---Recourse to S.32 of Customs Act, 1969, required issuance of a show-cause notice, admittedly, abjured by the department---Impugned notice having been issued without any prior show-cause notice was devoid of any lawful foundation---Constitutional petition was allowed and the impugned notice was set aside, in circumstances.

Collector of Customs v. Ahmed Crockery (SCRAs 132 to 153 of 2016); Assistant Collector Customs v. Messrs Khyber Electric Lamps and others 2001 SCMR 838; Collector of Customs (Preventive) Karachi v. PSO 2011 SCMR 1279; Lever Brothers Pakistan Limited v. Customs, Sales Tax and Central Excise Appellate Tribunal and another 2005 PTD 2462; PIA Union Sport Playing Cards Company v. Collector of Customs and another 2002 MLD 130 and PIA v. CBR and others 1990 CLC 868 ref.

(b) Constitution of Pakistan---

----Art.199---Constitutional petition---Show-cause notice---Scope---Departmental notice may not ordinarily merit interference, unless it manifestly that it suffers from want of jurisdiction, amounts to abuse of process or is mala fide, unjust or prejudicial towards the recipient.

Dr. Seema Irfan and others v. Federation of Pakistan and others PLD 2019 Sindh 516 ref.

Pervaiz Iqbal for Petitioner.

Muhammad Ahmar (Assistant Attorney General) for Respondent.

M. Bilal Bhatti for Respondents Nos.1 to 3.

2021 P T D 885

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

The COMMISSIONER INLAND REVENUE, ZONE-IV, CORPORATE REGIONAL TAX OFFICE, KARACHI and others

Versus

Messrs MSC SWITZERLAND GENEVA and others

I.T.R.As Nos.13 of 2018, 395 of 2017, 49, 212 of 2018, 279 of 2019, C.Ps. Nos. D-4570, D-5893 of 2017, D-151, D-655, D-974, D-2692, D-3289, D-8275 of 2018, D-51, D-582, D-1771, D-2758, D-2783, D-2784 of 2019, D-544, D-1248, D-2039, D-3672, D-3673, D-4854, D-4855, D-5927, D-6665, D-6666 of 2020, decided on 12th April, 2021.

Income Tax Ordinance (XLIX of 2001)---

----Ss.4B & 107---Double taxation---International Treaties---Super tax, levy of---Question was with regard to exemption of taxpayer from Super tax on the plea that they were otherwise qualified and fell within Double Taxation Treaties between Pakistan and foreign countries---Validity---Super tax as levied was prima facie identical / substantially similar to existing levies expounded in Treaty, therefore, case of tax payers was clinched per Art.2(3) of the Treaty---Super tax was a tax on income and such levy was identical / substantially similar to levies existing at the time that the Treaty was entered into--- Tax payers who were otherwise qualified and fell within double taxation treaties between Pakistan and respective foreign countries were either exempt or wherever applicable were liable to pay super tax at reduced rates in terms of their respective treaties---Constitutional petition was disposed of accordingly.

HBL Stock Fund v. ACIR 2020 PTD 1742; A.P.Moller v. Taxation Officer 2011 PTD 1460; A.P.Moller v. CIT 2012 PTD 683; A.P.Moller Maersk v. CIR 2020 PTD 1614; CIR v. Geogizkya Krakow Pakistan Limited 2017 SCMR 140; D.G Khan Cement Company Limited v. FBR 2018 PTD 287; D.G. Khan Cement Company Limited v. FBR 2020 PTD 1186; Federation of Pakistan and another v. Durrani Ceramics and others 2014 SCMR 1630 and Multiline Associates v. Ardeshir Cowasjee and others 1995 SCMR 362 ref.

Hyder Ali Khan, Jam Zeeshan, Sami-ur-Rehman Khan, Hamza Waleed, Shaheer Roashan, Ahtzaz Manzoor Memon, Shafqat Zaman, Kashif Anwar Mumtaz, Ammar Athar Saeed, Rana Sakhawat Ali and Muhammad Adil Saeed for Petitioners.

Kafil Ahmed Abbasi, Shahid Ali Qureshi, Dr. Shahnawaz Memon, S. Mohsin Imam Wasti, Muhammad Zubair Hashmi, Muhammad Aqeel Qureshi, Ameer Bakhksh Metlo, Imran Ali Mithani, Mohsin Ali Mithani, Junaid Ali Mithani, Aslam Khokhar and Irfan Mir Halepoto for Respondents.

2021 P T D 913

[Sindh High Court]

Before Irfan Saadat Khan and Muhammad Faisal Kamal Alam, JJ

Messrs STATE LIFE INSURANCE CORPORATION OF PAKISTAN, KARACHI

Versus

The COMMISSIONER INCOME TAX, COS.III, KARACHI and others

Income Tax Reference Applications Nos.201 of 2005, 47, 52 and 442 of 2006, decided on 24th November, 2020.

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

----Ss.156, 80D & 136---Rectification of mistake---Scope and amplitude of rectification powers available with Department under S.156 of Income Tax Ordinance, 2001---Mistake apparent on record not requiring any further evidence / investigation---Imposition of minimum tax on turnover---Scope---Question before High Court was whether Department could invoke provisions of S.156 of Income Tax Ordinance, 1979 to levy minimum tax under S.80D of said Ordinance upon taxpayer---Held, that per S.156 of Income Tax Ordinance, 1979 rectification could be made in respect of matters which were apparent from record and word "apparent" implied that mistake should be so obvious that it could be seen floating on surface of record and should not require any further investigation / evidence---In the present case, turnover for imposition of minimum tax under S.80D of the Ordinance was available in statement of account submitted by taxpayer and could not be termed as having been obtained by calling for additional evidence or inquiries---High Court observed that imposition of tax in terms of S.80D of Income Tax Ordinance, 1979 did not require any further investigation but rather a simple application of 0.5% tax upon turnover disclosed by taxpayer, and hence the same fell within parameters of "mistake floating on surface not requiring any further investigation" as stated in S.80D of Income Tax Ordinance, 1979 and thus non-imposition of tax under said S.80D was quite apparent on face of record --- Reference was answered accordingly.

Commissioner of Income Tax, Karachi v. Messrs Shadman Cotton Mills Ltd., Karachi through Director 2008 SCMR 204; Commissioner of Income-Tax Company's II, Karachi v. Messrs National Food Laboratories 1992 SCMR 687; Central Insurance Co. and others v. Central Board of Revenue, Islamabad and others 1993 PTD 766 = 1993 SCMR 1232 and Commissioner of Inland Revenue, Karachi v. Messrs E.N.I. Pakistan (M) Ltd., Karachi 2013 PTD 508 rel.

Commissioner of Income Tax/Wealth Tax v. Muhammad Naseem Khan 2013 PTD 2005; Commissioner of Income Tax, Karachi v. Abdul Ghani PLD 2007 SC 308; The State v. Zia-ur-Rahman and others PLD 1973 SC 49; Messrs Elahi Cotton Mills Ltd. and others v. Federation of Pakistan through Secretary Ministry of Finance, Islamabad and 6 others PLD 1997 SC 582; Messrs E.F.U. General Insurance Co. Limited v. The Federation of Pakistan and others PLD 1997 SC 700; Federal Bank for Cooperatives, Islamabad v. Ehsan Muhammad 2004 SCMR 130; Messrs E.F.U. General Insurance Co. Limited v. The Federation of Pakistan and others 1997 PTD 1693; Commissioner (Legal) Inland Revenue v. Messrs EFU General Insurance Ltd. 2011 PTD 2042; Commissioner of Income Tax Legal Division, Lahore and others v. Khurshid Ahmad and others 2016 PTD 1393; Commissioner of Income-Tax Company's II, Karachi v. Messrs National Food Laboratories 1992 PTD 570; Syed Mushahid Shah and others v. Federal Investment Agency and others 2017 SCMR 1218; K. Electric (PST) Ltd. v. The State and others PLD 2019 Sindh 209 and Messrs MCB Ltd. v. Federation of Pakistan and 2 others PLD 2019 Sindh 624 ref.

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

----Ss.80D, 26 & 136---Minimum tax on income of certain persons---State-owned Insurance Corporation---Special provisions for computation of income tax upon profits and gains of business of insurance under S.26 of Income Tax Ordinance, 1979---Imposition of minimum tax under S.80D of Income Tax Ordinance, 1979 on Insurance Corporation---Scope---Question before High Court was whether Department was justified in imposing minimum tax on turnover of Insurance Corporation in light of special provisions for computation of tax on Insurance Corporation provided under S.26 of Income Tax Ordinance, 1979---Held, that S.80D of Income Tax Ordinance, 1979 was a provision enacted later in time, and hence would prevail over S.26 of the said Ordinance---Taxpayer state-owned Insurance Corporation being a statutory entity fell within definition of "person" under Income Tax Ordinance, 1979 and was not absolved from applicability of S.80D of said Ordinance --- High Court observed that taxpayer Insurance Corporation was therefore liable to pay tax on its turnover in terms of S.80D of Income Tax Ordinance, 1979---Reference was answered accordingly.

Syed Mushahid Shah and others v. Federal Investment Agency and others 2017 SCMR 1218; K. Electric (PST) Ltd. v. The State and others PLD 2019 Sindh 209 and Messrs MCB Ltd. v. Federation of Pakistan and 2 others PLD 2019 Sindh 624 rel.

Khalid Mehmood Siddiqui for Applicants (in all the matters).

Kafeel Ahmed Abbasi for Respondents (in all the matters).

2021 P T D 933

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

HUMAN RESOURCES SOLUTIONS (PVT.) LTD. through authorized representative

Versus

FEDERATION OF PAKISTAN through Secretary, Revenue Division/Chairman, Federal Board of Revenue, Islamabad and others

Constitution Petitions Nos. D-2694 of 2019, D-249 of 2018, D-612, D-613, D-4399, D-4812, D-4899, D-4904, D-4941, D-4978, D-4979, D-5138, D-5240, D-5443, D-5510, D-5713, D-7909, D-8196 of 2019, D-648, D-1216, D-2156, D-2157, D-2368, D-2550, D-4785, D-4786, D-5172, D-6160 of 2020, decided on 27th April, 2021.

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

----S.153(1)(b) & Part-III of First Sched.---Deduction of advance tax at source---Rendering or providing of services---Tax deduction in terms of S.153(1)(b) of Income Tax Ordinance, 2001---Scope---Petitioners, who were human resource and manpower providers, sought declaration to the effect that advance tax per S.153(1)(b) of Income Tax Ordinance, 2001 had to be deducted by service-recipient on amount of service fee only, and not on gross amount paid to petitioners, which included amounts for salaries, contributions etc. in addition to service fee---Validity---Section 153(1)(b) required deduction of advanced tax for rendering or providing of services which at time of making payment, service-recipient had to deduct from "gross amount" payable at rate specified in Part-III of First Schedule to Income Tax Ordinance, 2001---Such gross amount payable had to be understood vis-à-vis rendering or providing of services and could not be read in isolation---Such "gross amount" in case of petitioners was therefore amount of service fee received by them, excluding amount of reimbursable expenses and could not include amount of salaries, and other contributions paid by service-recipients---Constitutional petitions were allowed, accordingly.

Commissioner (Legal Division) Karachi v. Novartis Pharma (Pvt.) Ltd., 2009 PTD 891; Pakistan State Oil Ltd. v. Commissioner of Income Tax, Karachi PTCL 2018 CL 783; State Oil Ltd. v. Bakht Siddique 2018 SCMR 1181; Pakistan State Oil Ltd. v. Commissioner of Income Tax Karachi 2018 SCMR 894; Sui Southern Gas Co. Ltd. v. Registrar of Trade Unions 2020 SCMR 638 and Pakistan Telecommunication Company Ltd. v. Government of Khyber Bakhtunkhwa (KPK) 2017 PTD 1359 ref.

Commissioner of Income Tax v. Khurshid Ahmed and others 2016 PTD 1393; Engro Vopak Terminal Ltd. v. Pakistan 2012 PTD 130 and Commissioner (Legal Division), Karachi v, Novartis Pharma (Pakistan) Ltd. 2009 PTD 891 rel.

(b) Interpretation of statutes ---

----Statutory definition of words / phrases---Scope---Where a word had been defined in a statute, such definition most authoritatively expressed Legislative intent, which definition and construction was binding on courts; and such definition was prima facie restrictive and exhaustive.

Commissioner of Income Tax v. Khurshid Ahmed and others 2016 PTD 1393 and Engro Vopak Terminal Ltd. v. Pakistan 2012 PTD 130 rel.

Abdul Moiz Jaferi, Muhammad Taimoor Ahmed Qureshi, Muhammad Aleem, Saleem Altaf, Dil Khurram Shaheen, Ahmed Ali Hussain, Uzair Qadir Shoro, Aijaz Ali, Muhammad Umer Akhund, Imran Ali, Aijaz Ali, Rahmat Shakeel, Mustafa Safvi, Shams Moinuddin Ansari, Qazi Ajmal Kamal, Shehzad Rahim, Shiraz Ahmed, Jam Asif Mehmood, Syed Amir Ali Shah, Syed Sultan Ahmed and K. Jahangir for Petitioners.

Kafeel Ahmed Abbasi (DAG), Shahid Ali Qureshi, Ameer Bakhsh Metlo, Zulfiqar Ali Khan, Khalid Rajpar, Shakeel Ahmed, Muhammad Aqeel Qureshi, Imran Ali Mithani, Junaid Ali Mithani, Muhammad Aslam Khokhar, Mohsin Ali Mithani, Pervez Ahmed Memon, Muhammad Khalid for Bilal Bhatti, Zehra Jabeen holding brief for Zubair Hashmi, Syed Ahmed holds brief for Ghulam Asghar Pathan for Respondents.

2021 P T D 949

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

FAUJI CEMENT COMPANY LIMITED through constituted attorney

Versus

DEPUTY COLLECTOR OF CUSTOMS (APPRAISEMENT-V) and 2 others

Special Custom Reference Application No.548 of 2014 along with C.P. No.672 of 2020, decided on 10th March, 2021.

Customs Act (IV of 1969)---

----S.196---Reference, jurisdiction of High Court---Factual controversy---Scope---Dispute regarding exemption in import duty on imported machinery---Validity---Questions of law raised by applicant-importer were not relevant as there was factual determination vis-à-vis locally manufactured status of goods in question---Such determination had already been done by a committee constituted pursuant to the request of applicant-importer by Division Bench of High Court---High Court in exercise of its reference jurisdiction under S.196 of Customs Act, 1969, declined to attend any question, as no question of law had arisen out of the order passed by Customs Appellate Tribunal---Reference was dismissed, in circumstances.

Fauji Cement Co. Ltd. v. Appellate Tribunal 2004 PTD 621; Pakistan Muslim League (N) v. Federation of Pakistan and others PLD 2007 SC 642; Muhammad Ikhlaq Memon v. Zakaria Ghani and others PLD 2005 SC 819; Irshad Ali v. Province of Sindh through Home Secretary and 3 others 2015 PLC (C.S.) 283; Commissioner Income Tax v. Habib Bank Limited and ANZ Grindlays Bank PLC 2014 SCMR 1557; Zarai Taraqiati Bank Limited and others v. Said Rehman and others 213 SCMR 642; Justice Muhammad Farrukh Irfan Khan, Judge, Lahore High Court, Lahore v. Federation of Pakistan through Secretary, Ministry of Law, Justice and Parliamentary Affairs Division Government of Pakistan Islamabad and 4 others PLD 2019 SC 509; Muhammad Hussain and another v. Muhammad Shafi and others 2004 SCMR 1947; Mian Bashir Haider v. Mrs. Nur Jehan Kirmani 1984 SCMR 730; Muhammad Tahir v. Abdul Latif and 5 others 1990 SCMR 751; Muhammad Hussain v. Fazal Haq and another PLD 1974 Lah. 208 and 2014 SCMR 949 ref.

Mayhar Kazi for Applicant.

Khalid Rajpar for Respondents.

2021 P T D 971

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

SAPPHIRE TEXTILE MILLS LIMITED through Company Secretary

Versus

FEDERATION OF PAKISTAN through Secretary Revenue Division and Ex-Officio Chairman, FBR, Islamabad and others

C.P. No.D-4970 of 2017 (and connected petitions, particularized in the Schedule1 hereto) decided on 30th April, 2021.

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

----S.5A---Constitution of Pakistan, Art.73---Companies Act (XIX of 2017), Ss. 240 & 243---Money Bill---Scope---Bypass of regular Legislative process by unmerited recourse to Money Bills---Tax on undistributed profits of public limited companies---Section 5A of Income Tax Ordinance, 2001, vires of---Petitioner's impugned S.5A of Income Tax Ordinance, 2001, inter alia, on ground that same was ultra vires the Constitution, on basis that it sought to regulate companies, which could not be done as Companies Act, 2017 was a special law, and furthermore, it could not have been enacted under Art. 73 Constitution---Validity---Intent for insertion of S.5A in the Income Tax Ordinance, 2001 was to specifically supplement provisions of the Companies Act, 2017 insofar as distribution of dividends by certain public companies was concerned, and not for raising revenues for general purpose, and therefore such provision was not amenable for promulgation vide a Money bill---Companies Act, 2017 did not contain any mandatory requirements for declaring dividends nor any prejudicial consequences for same, and while Legislature could vary the law in such regard, recourse for such right was not merited through a Money Bill---High Court observed that regulation of companies' behavior pertaining to dividends could not be effected via a Money Bill within mandate of Art. 73 of the Constitution---Section 5A of the Income Tax Ordinance, 2001 was declared ultra vires the Constitution and struck down---Constitutional petitions were allowed, accordingly.

Abdul Aziz v. Province of West Pakistan PLD 1958 SC 499; Inamur Rehman v. Federation of Pakistan 1992 SCMR 563; Pakistan v. Hazrat Hussain 2018 SCMR 939; Pakistan International Freight of Forwarders Association v. Sindh 2017 PTD 1; Pakistan Industrial Development Corporation v. Pakistan 1992 SCMR 891; Keshav Mills Ltd. v. Commissioner Income Tax 23 ITR 230; In Re: B.M Kamdar 14 ITR 10; Sambhaji Rao v. State of MP ILR 1975 MP 475; Commissioner Inland Revenue v. Frank Bernard Sanderson 1921 8 Tax cases 38; Haji Muhammad Shafi v. Wealth Tax Officer 1992 PTD 726; Pakistan Industrial Development Corporation v. Pakistan 1992 SCMR 891; HBL Stock Fund v. Pakistan and others C.P. No.D-1849 of 2016; D.G Khan Cement Company v. Pakistan 2018 PTD 287; D.G Khan Cement Company v. Pakistan 2020 PTD 1186; Tennessee v. Whitworth 117 US 129; Federation of Pakistan and another v. Durrani Ceramics and others 2014 SCMR 1630 and CIR v. MSC Switzerand Geneva ITRA 13 of 2018) ref.

LDA and others v. Imrana Tiwana and others 2015 SCMR 1739; Shahid Gul and Partners v. DCIT Peshawar 2021 SCMR 27; Workers Welfare Funds and others v. East Pakistan Chrome Tannery (Pvt.) Ltd. PLD 2017 SC 28; KC Gajapati Natayan Deo v. Orissa AIR 1953 SC 375; G Nageswara Rao v. Andhra Pradesh State Road Transport AIR 1959 SC 308; Ashok Kumar Alias Golu v. Union of India (1991) 3 SCC 498; Constitutional Law of India, A Critical Commentary (Third Edition) by H.M. Servai; Federation of Pakistan v. Shaukat Ali Mian PLD 1999 SC 1026; Federation of Pakistan v. Durrani Ceramics 2014 SCMR 1630; Usmani Glass v. STO PLD 1971 SC 205; Dewan Cement v. Pakistan 2010 PTD 1717; Filters Pakistan v. FBR 2010 PTD 2036; Shahnawaz Ltd. v. Pakistan, 2011 PTD 1558; Association of Builders v. Sindh 2018 PTD 1487; Engro Vopak v. Pakistan 2012 PTD 130; Standard Chartered Bank v. Pakistan 2017 PTD 1585 and Asia Petroleum v. Pakistan, Unreported (C.P. D-2559 of 2009 and others) rel.

Hyder Ali Khan, Qazi Umair Ali, Hussain Ali Almani, Ovais Ali Shah, Ahmed Hussain, Amin Bandukda, Hussain Shah, Rizwan Ahmed, Arshad Hussain Shehzad, Rana Sakhawat Ali, Abdul Ahad, Abdul Qadir Mirza, Naseer Nihal Hashmi, Abbas Razvi, Shoib Khatian, Ghulam Hussain Shah, Yahya Iqbal, Asad Iftikhar and Rahim Khan for Petitioners.

Kafeel Ahmed Abbasi, Deputy Attorney General, Ameer Bux Metlo, Shahid Ali Qureshi, M. Zubair Hashmi, Ms. Naheed Akhtar, Imran Ali Mithani, Dr. Shahnawaz Memon, Aqeel Qureshi, Iqbal Khurram and Dr. Raana Khan for Respondents.

2021 P T D 1007

[Sindh High Court]

Before Muhammad Junaid Ghaffarand Agha Faisal, JJ

Messrs DEWAN SUGAR MILLS LTD. and others

Versus

FEDERATION OF PAKISTAN through Secretary Revenue Division, Islamabad and 2 others

Constitutional Petition No.D-6051 of 2019 (and other connected petitions), decided on 4th January, 2021.

Sales Tax Act (VII of 1990)---

----Ss.8, 7, 4 & 3---SRO 450(I) / 2013 dated 27.05.2013---Determination of sales tax liability---Tax credit not allowed---Input tax adjustment---Denial of input tax adjustment on direct constituents of taxable supply---Scope---Petitioners/taxpayers impugned show-cause notice issued by Department whereby certain input tax adjustments claimed by petitioners were deemed impermissible under SRO No.450(I)/2013 dated 27.05.2013 read with S.8(1) of Sales Tax Act, 1990---Contention of petitioners, inter alia, was that items in question were directly used in facilitating and improving manufacturing of their product and were direct constituents of taxable supply, covered under Ss.7 & 8 of Sales Tax Act, 1990 and thus denial of input tax adjustment was illegal---Validity---Prerogative of the Legislature to allow or deny input tax adjustment and in the present case, it was yet to be determined whether all goods / materials mentioned in impugned show-cause notice were used in manufacture of taxable supply and such determination being a factual one, could not be made in Constitutional jurisdiction of High Court---Intent and purpose of S.8 of Sales Tax Act, 1990 and the impugned SRO, reflected that Legislature had decided that such materials notified, were not a direct constituent of taxable supply and even otherwise input tax adjustment could denied on materials which were a direct constituent of taxable supply---In view on non-obstante clause contained in S. 8 of Sales Tax Act, 1990 and in absence of any bar on Legislature to enact S.8(h) of the Sales Tax Act, 1990, input tax adjustment could be validly denied to taxpayers/petitioners even in respect of direct constituents of taxable supply---Constitutional petitions were dismissed, in circumstances.

Messrs Chiltan Ghee Mills, Quetta and others v. Deputy Collector of Sales Tax (Refund), Customs House, Quetta and another 2016 SCMR 2183 = 2017 PTD 138; Attock Cement Pakistan Ltd. v. Collector of Customs, Collectorate of Customs and Central Excise, Quetta and 4 others 1999 PTD 1892; Ghandhara Nissan Diesel Ltd. v. Collector, Large Tax Payers Unit and 2 others 2006 PTD 2066; Coca-Cola Beverages Pakistan Ltd. v. The Customs, Excise and Sales Tax Appellate Tribunal and others 2017 PTD 2380 and D.G. Khan Cement v. The Federation of Pakistan and others PLD 2013 Lah. 693 distinguished.

Messrs AMZ Spinning and Weaving Mills (Pvt.) Ltd. through Manager v. Appellate Tribunal, Customs Sales Tax and Federal Excise, Karachi 2006 PTD 2821; Messrs Dewan Cement v. Pakistan through Secretary Ministry of Finance 2010 PTD 1717; Ittehad Chemicals Limited Lahore v. Customs, Excise and Sales Tax Appellate Tribunal, Lahore 2005 PTD 2067; Messrs Tauqir Ashraf & Co., Lahore through Managing Partner v. Customs Central Excise and Sales Tax Appellate Tribunal, Lahore and 2 others 2007 PTD 47; Nishat Mills Ltd. v. Federation of Pakistan 2020 PTD 101; Ghandhara Nissan Diesel Ltd. through Sr. General Manager Finance, Karachi v. Collector, Large Tax Payers Unit, Government of Pakistan, Karachi 2006 PTD 2066 and Commissioner of Income Tax v. National Agriculture Ltd. Karachi 2000 PTD 254 rel.

Pervez Iqbal Kasi, Muhammad Faheem Bhayo along with Muhammad Din Qazi, Arshad Hussain Shahzad, Rana Sakhawat Ali, Haroon Shah for Ameen M. Bandukda for Petitioners.

Ameer Bakhsh Metlo, Pervaiz Ahmed Memon, Javed Hussain for Masooda Siraj Muhammad Aqeel Qureshi and Shahid Ali Qureshi for Respondents.

Kafeel Ahmed Abbasi, DAG for Federation.

2021 P T D 1026

[Sindh High Court]

Before Muhammad Junaid Ghaffarand Agha Faisal, JJ

DIRECTOR, DIRECTORATE GENERAL, INTELLIGENCE AND INVESTIGATION (CUSTOMS) and another

Versus

AURANGZAIB and others

Special Customs Reference Application No. 700 of 2019 and C.P. D-1853 of 2020, decided on 24th March, 2021.

Customs Act (IV of 1969)---

----Ss.181, 168 & 196---SRO No.499(I)/2009 dated 13.06.2009---Prevention of smuggling---Confiscation of smuggled vehicle---Option to pay fine in lieu of confiscated goods---Scope---Department impugned order of Appellate Tribunal whereby a vehicle confiscated on ground that same was smuggled, non-duty paid, and had tampered chassis number; was allowed to be released to respondent against payment of fine of twenty percent of vehicle's value, as per SRO No.499(I)/2009 dated 13.06.2009---Validity---Forensic report of vehicle demonstrated that chassis number had been tampered with and Appellate Tribunal dealt with such issue in a perfunctory manner, and merely relied on registration of vehicle, which was unsubstantiated by record, and could not absolve subsequent purchaser of such vehicle from liability---SRO No.499(I)/2009 dated 13.06.2009 expressly excluded smuggled items from purview of relief granted therein and impugned order did not give any findings that said vehicle was not smuggled, and therefore benefit of said SRO could not be given to respondent---Impugned order therefore could not be sustained and was set aside---Reference was answered, accordingly.

Government of Khyber Pakhtunkhwa and others v. Sarfaraz Khan and another 2020 SCMR 1410; Ch. Maqbool Ahmed v. Customs, Federal Excise and Sales Tax Appellate Tribunal and others 2009 PTD 77; Noor Muhammad v. Customs Appellate Tribunal and others 2020 SCMR 246; Umer Zahid Malik v. Federation of Pakistan and others (C.P. No. D-4514 of 2020); Collector MCC Gaddani v. Muhammad Hanif (SCRA No.09 of 2020) and Civil Petitions Nos.730-K to 760-K of 2020 rel.

Khalil Dogar for Applicant (in C.P. No.1853 of 2020).

Ms. Dil Khurram Shaheen for Petitioner (in SCRA No.700 of 2019).

2021 P T D 1042

[Sindh High Court]

Before Muhammad Junaid Ghaffarand Agha Faisal, JJ

The COLLECTOR OF CUSTOMS through Additional Collector of Customs

Versus

Messrs DREAM GARMENTS

Special Customs Reference Applications Nos. 295 to 448 along with Special Customs Reference Applications Nos. 461 to 532 of 2014, decided on 15th February, 2021.

Customs Act (IV of 1969)---

----S.196---Reference to High Court---Exercise of jurisdiction under S.196 of Customs Act, 1969---Question of limitation for filing of reference, determination of---Condonation of delay---Scope---Department could not be given any special treatment or priority in respect of issue of limitation---For question of limitation, Government could not be treated any differently than an ordinary litigant---Jurisdiction to entertain reference under S.196 of Customs Act, 1969 after expiry of period of limitation meant that court had to apply its mind in considering such request for condonation of delay after going through the facts of a case---No general rule or precedent existed whereby delay must necessarily be condoned where Government interest or revenue was involved---Question of limitation was not merely one of technicalities; and rights accrued to a party due to limitation could not be snatched away without sufficient cause and lawful justification.

Government of Pakistan v. Malbrow Builders, Contractor 2006 SCMR 1248; Chairman, District Evacuee Trust, Jhelum v. Abdul Khaliq PLD 2002 SC 436 and Federation of Pakistan v. Jamaluddin and others 1996 SCMR 727 rel.

Muhammad Khalil Dogar and Mirza Nadeem Taqi for Applicants.

2021 P T D 1055

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

YUNUS TEXTILE MILLS LTD. through authorized Officer and others

Versus

PAKISTAN through Secretary Revenue and Ex Officio Chairman, Federal

Board of Revenue and others

Constitution Petitions Nos.D-5552, D-5381, D-5497, D-5528, D-5623, D-5657, D-5758, D-5869, D-5994, D-6019, D-6204, D-6307, D-6407, D-6408, D-6570, D-6680 of 2020 and D-26, D-68, D-688, D-835, D-870, D-1381, D-1625 of 2021, decided on 11th March, 2021.

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

----S.51---Finance Act (V of 2019) S.15---Constitution of Pakistan, Arts. 73 & 199---Constitutional petition----Procedure with respect to Money Bill---Nature of Anti-Dumping Duty --- Legislative amendment to Anti-Dumping Duties Act, 2015 not to be made vide a Money bill---Scope---Question before High Court was whether amendment brought about in S.51 of Anti-Dumping Duties Act, 2015 via Finance Act, 2019, could have been within sanction of Art.73 of Constitution vide a Money Bill---Held, that Anti-Dumping Duties Act, 2015 did not contemplate a common burden for raising revenue for a general purpose and instead had been enacted to mitigate injury caused by dumping---Anti-Dumping Duty was therefore not a tax or regulatory charge but was a penalty---Impugned amendment vide Finance Act, 2019 which was a Money Bill, could not therefore be justified---High Court declared amendment to S.51 of Anti-Dumping Duties Act, 2015 via Finance Act, 2019 as ultra vires the Constitution and set aside the same---Constitutional petitions were allowed, accordingly.

Workers Welfare Funds and others v. East Pakistan Chrome Tannery (Pvt.) Ltd. PLD 2017 SC 28 and Muhammad Saleem Bikiya and others v. Pakistan and another 2018 PTD 2026 rel.

Jam Zeeshan, Ovais Ali Shah, Qazi Umair Ali, Ayan Mustafa Memon, Rana Sakhawat Ali, Naeem Suleman, Arshad Hussain, Faiz Durrani, Mrs. Saima Faiz Durrani, Ali Nawaz Khuhawar and Ameen M. Bandukda for Petitioners.

Muhammad Ahmer, Assistant Attorny General, Khalid Rajpar, Aamir Raza, Azhar Ali, Muhammad Rashid Arfi, Muhabbat Hussain Awan, Afsheen Aman, Muhammad Khalil Dogar, Durdana Tanveer, Zafar Imam and Tariq Aziz, Principal Appraiser, PMBQ for Respondents.

2021 P T D 1082

[Sindh High Court]

Before Adnan Iqbal Chaudhry, J

RELIANCE PETROCHEMICAL INDUSTRIES (PVT.) LTD. through Authorized Representative

Versus

FEDERAL BOARD OF REVENUE through Secretary Finance and 7 others

Suit No.989 of 2018, decided on 1st March, 2021.

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

----S.40B---Finance Act (XXX of 2018), S.6(11)---General Clauses Act (X of 1897), S.6---Posting of Officers of Inland Revenue / Federal Board of Revenue ("FBR") at manufacturing premises of taxpayer---Omission of proviso to S.40B of Sales Tax Act, 1990 vide Finance Act, 2018---Effect---Plaintiff impugned order of Commissioner to post officers to premises of plaintiff / taxpayer, on ground that such order made under proviso to S.40B of Sales Tax Act, 1990 and same would not survive omission / repeal of said proviso---Validity----Omission of proviso to S.40B of Sales Tax Act, 1990 was essentially a repeal of said proviso---Effect of such repeal was to save certain actions taken under such repealed provision, which was qualified by words "unless a different intention appeared" under General Clauses Act, 1897 and such intention could obviously be gathered from amended provision---Intention of Legislature, by omission of said proviso, was to take away power of Commissioner to deploy officers of Department at premises of taxpayers, and to put an end to such postings---With said intention, it would be absurd to suggest that notwithstanding such repeal, officers could continue the monitoring assignment tasked by Commissioner, and therefore saving consequences of repeal under S.6 of General Clauses Act, 1897 would not triggered---Impugned order, therefore, did not survive repeal of proviso to S.40B of Sales Tax Act, 1990---Suit was disposed of, accordingly.

Commissioner Inland Revenue Karachi v. Pakistan Beverages Ltd. 2018 SCMR 1544; Muhammad Tariq Badar v. National Bank of Pakistan 2013 SCMR 314 and State of Punjab v. Mohar Singh Pratap Singh AIR 1955 SC 84 rel.

Ovais Ali Shah for Plaintiff.

Anwar Kamal, Assistant Attorney General for Defendant No.1.

Muhammad Aqeel Qureshi for Defendants Nos. 2-14.

2021 P T D 1094

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

The COLLECTOR OF CUSTOMS, through Additional Collector of Customs (Law), Karachi

Versus

Messrs SUPER STAR COMPANY

Special Customs Reference Applications Nos.311 to 313 of 2020, decided on 10th March, 2021.

Customs Act (IV of 1969)---

----S.17---SRO 1112 (I)/2014, dated 16-12-2014---SRO No.772(I)/2018, dated 14-06-2018---Confiscation of goods---Beneficial legislation---Scope---Department ordered for outright confiscation of consignments imported by respondent on the premise that the consignment arrived post the cut-off date as prescribed by the Ministry of Commerce in SRO No.1112 (I)/2014 dated 16-12-2014---Appellate Tribunal set aside the order-in-original---Validity---Adjudicating officer had not appreciated the SRO No.772(I)/2018, dated 14-06-2018 in its true perspective and proceeded to order the outright confiscation of the consignments, pursuant to a notification admittedly repealed during the pendency of the proceedings there before---Notification conferring a beneficial effect had to be given retrospective effect---Reference application was decided in favour of the respondent and against the applicant department.

Asif Traders and another v. Collector of Customs and another 2014 PTD 1057; Collector of Customs and others v. Shahida Anwar 2012 SCMR 1698; Rasool Flour Mills (Private) Limited v. Federation of Pakistan (C.P. D-462 of 2013) and Collector of Customs and others v. Rasool Flour Mills (Private) Limited and others (Civil Petition 2-K of 2019) ref.

M. Khalil Dogar for Applicant.

Ahmed Ali Hussain for Respondent.

2021 P T D 1118

[Sindh High Court]

Before Adnan Iqbal Chaudhry, J

ABDULLAH RAFI

Versus

DIRECTOR, PROPERTY AND ENTERTAINMENT TAX, EXCISE AND TAXATION DEPARTMENT, KARACHI and 3 others

Civil Suit No. 618 of 2012, decided on 12th February, 2021.

Sindh Entertainments Duty Act (X of 1958)---

----Ss.2(f)(iii), 3, 5 & 6---Entertainment duty---Scope---Show-cause notice---Charges for utilities services---Plaintiff was running an entertainment park with mechanical rides and games---Plaintiff assailed show cause notice issued by authorities on the plea that amount collected under heading of services and utility charges was not liable to entertainment duty---Validity---Term 'payment of admission' as provided under S.2(f)(iii) of Sindh Entertainments Duty Act, 1958, included any payment for any purpose, whatsoever, connected with an entertainment which a person was required to make as a condition of attending or continuing to attend the entertainment, which could be in addition to the entry ticket---Plaintiff could not charge additional amount as 'utility charges' to constitute a 'payment for admission' when such amount was charged from all those visiting the park alike---Argument that 'utility charges' for public facilities within the amusement park were separate and not subjected to levy was negated by S.3(2) of Sindh Entertainments Duty Act, 1958, as payment for admission to entertainment was made by means of a lump sum paid for any 'privilege, right, facility or thing combined with the right of admission---Entertainment duty was to be paid on amount of lump sum unless the government opined otherwise---Suit was dismissed, in circumstances.

Government of West Pakistan v. Messrs Jabees Ltd. PLD 1991 SC 870 rel.

Zulfiqar Ali Langah for Plaintiff.

K.A. Vaswani, Assistant Advocate General Sindh along with Aftab Ahmed Sahto, AETO, Excise and Taxation Department, Sindh for Defendants Nos. 1-2.

Nemo for Defendants Nos. 3-4.

2021 P T D 1150

[Sindh High Court]

Before Salahuddin Panhwar, J

Messrs KARACHI IRON AND STEEL MERCHANTS ASSOCIATION through Authorised Representative and 30 others

Versus

ANTI-DUMPING APPELLATE TRIBUNAL and 22 others

Miscellaneous Appeals Nos.21, 22 and 26 and C.M.A. No.2197 of 2020, decided on 17th February, 2021.

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

----Ss.70(13) & 64---Appellate Procedure under the Anti-Dumping Duties Act, 2015---Appeal against order of Appellate Tribunal---Territorial jurisdiction of High Court---Scope---Question before High Court was whether appeal against order of Appellate Tribunal established in Islamabad, was maintainable before High Court of Sindh---Contention of appellants, inter alia ,was that appellant under Anti-Dumping Duties Act, 2015 had right to choose any "High Court" as per convenience, and furthermore, that Federal Government was under obligation to establish Appellate Tribunal in all Provinces and had failed to do so---Validity---Appellants had contested matter before Appellate Tribunal constituted in Islamabad, over which High Court of Sindh had no administrative control and mere plea of convenience was never sufficient for choosing the Court(s), and only factor was commandment of law which described jurisdiction---Failure of Federal Government in establishing such Tribunals in Provinces was also no ground to press right of convenience---Appeals were therefore incompetent and were dismissed accordingly.

Messrs Al-Iblagh Limited, Lahore v. The Copyright Board, Karachi and others 1985 SCMR 758; Sandalbar Enterprises (Pvt.) Ltd. v. Central Board of Revenue and others PLD 1997 SC 334; LPG Association of Pakistan through Chairman v. Federation of Pakistan through Secretary, Ministry of Petroleum and Natural Resources, Islamabad and 8 others 2009 CLD 1498; Miss Ayyan Ali v. Federation of Pakistan and others 2017 PCr.LJ 1920; The Federal Government through Secretary Interior, Government of Pakistan v. Ms. Ayyan Ali and others 2017 SCMR 1179; Haji Riaz Ahmed through Attorney v. Messrs Habib Bank Limited through President and 2 others 2012 CLC 507; Karamat Ullah Khan Chaudhry v. Federation of Pakistan and 2 others 2018 PLC (C.S.) 555 and Sandalbar Enterprises (Pvt.) Ltd v. Central Board of Revenue and others PLD 1997 SC 334 ref.

Rashid Latif v. Federation of Pakistan through Secretary Ministry of Inter Proincial Coordination PLD 2014 Kar. 135 rel.

Abdul Moiz Jafri for Appellants.

Ahmed Sheeraz for Respondent No.2.

Saifullah Khan for Respondent No.3.

Waseem Akhtar, Assistant Attorney General.

2021 P T D 1187

[Sindh High Court]

Before Irfan Saadat Khan and Muhammad Faisal Kamal Alam, JJ

Messrs SHIELD CORPORATION LIMITED through Assistant Financial Controller

Versus

GOVERNMENT OF SINDH through Secretary Finance Division, Sindh Secretariat, Karachi and 3 others

Constitutional Petitions Nos.D-4651, D-4652, D-4653, D-4654, D-4655, D-4656, D-4657, D-4658, D-4659, D-4660 and D-4661 all of 2014, decided on 27th October, 2020.

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

----Ss.2(52)(63), 15, 15-A & 43---Sindh Sales Tax on Services Rules, 2011, Rr.22, 22-A & 28---Sindh Sales Tax Special Procedure (Withholding) Rules, 2014, R.3(4)---Withholding sales tax--- Adjustments from unregistered persons---Petitioners were companies engaged in different business registered with Sale Tax authorities, who were liable to withholding sale tax on services---Petitioners sought input adjustment of deductions made by them from unregistered persons---Validity---Law did not bar obtaining of taxable services from unregistered persons---Only impediment in law was with regard to person who otherwise was liable to be registered but not registered would be considered as an unregistered person and penalty was provided under S.43 of Sales Tax on Services Act, 2011, for the act of non-registration--- Registered person obtaining taxable services from unregistered person could not be denied input tax adjustment---Petitioners were entitled to claim input adjustment in respect of taxable services provided to them by unregistered persons---High Court directed Sindh Revenue Board to make necessary amendment / provision in e-return to enable the person filing their returns via e-filing to claim input tax adjustment from unregistered persons also---High Court further directed that till the time such amendment was made, petitioners were allowed to file their returns manually in order to avoid any confusion created in such behalf---Constitutional petition allowed in circumstances.

Commissioner Inland Revenue (Zone-I) LTU, Karachi v. Messrs Linde Pak Ltd., Karachi 2020 SCMR 333 ref.

Naveed Amjad Andrabi, Anwer Kashif Mumtaz, Ammar Athar Saeed and Usman Alam (in all the Petitions) for Petitioners.

Kafeel Ahmed Abbasi, Ghulam Murtaza Korai and Shamshad Ali Narejo (in all the petitions) for Respondents.

2021 P T D 1245

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

Messrs SAHIB DIN LOGISTICS and others

Versus

FEDERATION OF PAKISTAN through Chairman and others

Constitutional Petitions Nos.D-147, D-255, D-256, D-257 and D-3530 of 2020, decided on 30th March, 2021.

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

----Ss.37 & 30A---Constitution of Pakistan, Art. 199---Constitutional jurisdiction of High Court---Conduct of inquiries by Sales Tax Authorities---Power to summon persons to give evidence and produce documents in inquiries---Scope---Petitioners impugned notices issued under S.37 of Sales Tax Act, 1990 on ground that same were issued by an officer who had not been appointed in accordance with S.30A of Sales Tax Act, 1990, and therefore same were liable to be quashed---Validity---Petitioners were in essence seeking writ of quo warranto, being a judicial remedy by virtue of which holder of public office may be called upon to demonstrate right whereunder he held such office---Objection to the officer's entitlement, in the present case, had only been taken in an attempt to deny information sought by impugned notices; and non-interference in present case would not result in any injustice; and in such a case, issuance of writ of quo warranto may be denied where it was invoked with ulterior motive---Constitutional petition was dismissed in circumstances.

Dr. Seema Irfan and others v. Federation of Pakistan and others PLD 2019 Sindh 516; Ghulam Shabbir v. Muhammad Munir Abbasi and others PLD 2016 SC 516; Asif Hassan and others v. Sabir Hussain and others 2019 SCMR 1720 and Rafiq ur Rehman v. Federation of Pakistan and others 2017 PTD 1178 rel.

(b) Constitution of Pakistan---

----Art.199---Constitutional jurisdiction of High Court---Writ of quo-warrano---Essentials---While considering a writ in nature of quo warranto, it was imperative to consider intent and motive of petitioner(s), and if it was manifest that petitioner had invoked Constitutional jurisdiction with ulterior motive, then exercise of such jurisdiction ought to be declined---Exercise of jurisdiction to issue writ of quo warranto was an extraordinary discretionary jurisdiction and High Court was not bound to exercise same in each and every case, especially in matters of minor discrepancies, sheer curable technicalities or where approach was doctrinaire unless it was shown that non-interference would result in grave injustice or would amount to endorsing retention of illegal gains.

Ghulam Shabbir v. Muhammad Munir Abbasi and others PLD 2016 SC 516; Asif Hassan and others v. Sabir Hussain and others 2019 SCMR 1720 and Rafiq ur Rehman v. Federation of Pakistan and others 2017 PTD 1178 rel.

Aqeel Ahmed Khan for Petitioners (in C.Ps. Nos.D-147, D-255, D-256 and D-257 of 2020).

Iftikhar Hussain for Petitioner (in C.P. No.3530 of 2020).

Kafeel Ahmed Abbasi, Deputy Attorney General for Respondent.

Ghulam Asghar Pathan and Tahir Zafar, Assistant Director (Audit) for Respondents.

2021 P T D 1309

[Sindh High Court]

Before Aqeel Ahmed Abbasi and Mrs. Rashida Asad, JJ

MUHAMMAD ADNAN

Versus

FEDERATION OF PAKISTAN through Secretary, Ministry of Law and Parliamentary Affairs, Islamabad and 2 others

Constitutional Petition No.D-1594 of 2021, decided on 5th March, 2021.

(a) Assets Declaration Ordinance (III of 2019)---

----Ss. 3, 4 & 6---Income Tax Ordinance (XLIX of 2001), Preamble---Tax Laws (Amendment) Ordinance (I of 2020), Preamble---Declaration of undisclosed assets, sales and expenditure---Charge of tax and default surcharge---Time for payment of tax---Scope---Petitioner sought declaration to the effect that the Tax Laws (Amendment) Ordinance, 2020, whereby the amount of tax under clause (1) of the Schedule increased default surcharge by amount percentage was illegal and was liable to be struck down or alternatively reduced to 8% per annum---Validity---Rate of taxes had been given in the Schedule attached to the Assets Declaration Ordinance, 2019, whereas, the rate of default surcharge was also provided in the same Schedule with reference to the time period provided for making payment of taxes and in case of delay the amount of the default surcharge---Rate of default surcharge had no nexus either with the tax or surcharge imposed under the Income Tax Ordinance, 2001 nor had any bearing on the interest rate approved by the State Bank of Pakistan---Objection of the petitioner regarding high rate of default surcharge while comparing it with the interest rate of the State Bank of Pakistan was totally misconceived and had no bearing for the reason that the provisions of the Income Tax Ordinance, 2001 and the Assets Declaration Ordinance, 2019, were separate and independent provisions, whereby the authority to impose tax and to charge surcharge in case of any default vested in the Legislature---Constitutional petition was dismissed.

Suresh Kumar v. Federation of Pakistan and others C.P.No.D-4076 of 2019 rel.

(b) Constitution of Pakistan---

----Art.199---Constitutional petition---Tax amnesty scheme---Scope---Issuance of tax amnesty scheme for the purposes of documentation of economy is a matter of public policy and unless it can be shown that such an amnesty scheme is against public policy or in violation of any Constitutional or legal provision the same cannot be challenged on mere ground of harshness, particularly when there is no element of arbitrariness or discrimination amongst the same class of persons.

Mazhar-ul-Hassan for Petitioner.

Nemo. for Respondents.

2021 P T D 1329

[Sindh High Court]

Before Aqeel Ahmed Abbasi and Zulfiqar Ahmad Khan, JJ

Messrs POPULAR JUICE INDUSTRIES (PVT.) LTD. through Authorized Officer and 6 others

Versus

FEDERATION OF PAKISTAN through Chairman Federal Board of Revenue and 3 others

Constitution Petitions Nos.D-4151 and D-4322 of 2020 decided on 28th November, 2020.

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

----Ss.2(s), 10, 156 (1) (8) (89), 162 & 163--- Prevention of Smuggling Act (XII of 1977), Ss. 8, 9 & 10---Notification SRO No.13(I)/2019 dated 1-1-2019---Constitution of Pakistan, Arts. 10-A & 199---Constitutional petition---Quashing of F.I.R.---Raid and search---Jurisdiction---Right to fair trial--- Scope---Petitioners were aggrieved of F.I.R. registered by Customs Authorities as a result of raid conducted in their factory premises from where they alleged to have recovered smuggled goods---Validity---Customs authorities had no jurisdiction beyond area designated as part of sea ports, airports, jetties, wharves, warehouse, container and off-dock terminals and routes specified under S.10 of Customs Act, 1969, globally known and termed as 'areas of coastal trade'---Powers under S.163 of Customs Act, 1969 of Customs Authorities were only available to customs for goods passing through or stocked in "areas of coastal trade"---Such powers were not extended to civil areas notwithstanding their mention in subservient SRO No.13(I)/2019 dated 1-1-2019, on the basis of which jurisdiction of Customs authorities was claimed on the goods found in factory of petitioners located in industrial area--- If there were allegations of smuggling on goods stationed in factory of petitioners, appropriate course was to take action against petitioners under Ss.8, 9 & 10 of Prevention of Smuggling Act, 1977 and not under Customs Act, 1969, as contemplated by Customs authorities---Search and seizure by Customs authorities of factory premises of petitioners in odd hours of night at 1:00 am without obtaining search warrants from concerned Magistrate under S.162 of Customs Act, 1969, and invoking provisions of S.163 of Customs Act, 1969, in absence of approval by competent authority, without recording reasons in writing and consequently registration of F.I.R., were without lawful authority based on mala fide on the part of Customs authorities--- In absence of determination of liability of duty and taxes against petitioners, if any, through process of assessment or adjudication under Customs Act, 1969, resort to initiating criminal proceedings against petitioners, including search, seizure and registration of F.I.R. without providing opportunity of being heard to petitioners, amounted to violating principles of natural justice and was denying fair trial to petitioners as guaranteed under Art.10-A of the Constitution---High Court quashed F.I.R. and proceedings against petitioners---Constitutional petition was allowed accordingly.

Collector of Customs (Preventive) and 2 others v. Muhammad Mehfooz PLD 1991 SC 630 rel.

Collector of Customs (Preventive) and 2 others v. Muhammad Mehfooz PLD 1991 SC 630; PTCL 2016 CL 793; State v. Muhammad Nawaz 2002 SCMR 634; Zaheer Ahmed v. Directorate General of Intelligence and Investigation-IR and 4 others 2015 PTD 349; The State v. Asif Ali Zardari and another 1994 SCMR 798 and Taj International (Pvt.) Ltd. and others v. Federal Board of Revenue and others 2014 PTD 1807 ref.

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

----Ss.162 & 163---Raid and search by Customs authorities---Pre-conditions---Before embarking upon a search without warrants, Customs official is under legal obligation to prepare statement in writing of grounds of his belief that smuggled goods are concealed or kept in any place and there is a danger that the goods may be removed before a search can be effected under provision of S.162 of Customs Act, 1969---Such safeguard prescribed by Legislature is to ensure that rights of citizen in respect of private property are interfered with only for genuine reasons related to prevention of smuggling and evasion of customs duty etc.---Such safeguard can be effective only if procedure prescribed by law is faithfully and honestly followed by application of mind in each individual case.

S.M. Yousaf and others v. Collector of Customs PLD 1968 Kar. 599 F.B. rel.

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

----S.63---Sealing---Scope---Neither godown, factories nor storage facilities can be sealed as a punishment under Customs Act, 1969.

Ms. Navin Merchant and Salman Yousuf along with Petitioners.

Khalid Rajpar along with Saqif Saeed, Collector of Customs, Haroon Malik, Additional Collector, Shafiullah, Assistant Collector, Hasan Sardar, P.O. Seizing Officer, Ali Asjad Bukhari, I.O. and Malik Safdar Ali, SPO for Customs Department.

Muhammad Aminullah Siddiqui, A.A.G. for Respondents.

2021 P T D 1386

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

BYCO PETROLEUM PAKISTAN LIMITED through Head of Tax and Certification

Versus

FEDERATION OF PAKISTAN through Secretary (Revenue Division) and 2 others

Constitution Petitions Nos.D-7255, 4535, 5886, 8451, 8669 of 2017, D-1288, 2281, 2282, 2283, 6641, 6642, 7107, 7126 to 7130, 7162 to 7169, 6194, 7195, 7196, 7474, 7475, 7584, 7990, 8101, 8177, 8216, 8269, 8270, 8885, 1477, 1476, 1253, 1251, 1158, 7726, 738, 144, 7802, 7804, 7803, 7727, 175, 1157, 1289 of 2018, D-169, 1857, 1858, 2176, 2508, 2509, 2799, 3237, 3303, 3338, 3339, 3590, 4410, 5666, 5690, 6277, 6476, 6821, 7025, 7196, 7237, 757, 7583, 7708, 7802, 8115, 8138, 8149, 8150, 8151, 8152, 8153, 8435 of 2019 and D-123, 1078, 2462, 3557, 3558, 3685, 3759, 378, 3957, 4222, 4481, 4678, 4737 of 2020 decided on 16th October, 2020.

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

----Ss.11 & 25---Assessment and recovery of sales tax---Access to record and documents of taxpayer---Departmental powers of recovery of tax and for conducting audit of taxpayer---Scope---Question to be determined by High Court was whether without conducting or initiating audit under S.25 of Sales Tax Act, 1990, could the Department issue show-cause notice under S.11(2) of said Act for recovery of tax---Validity---Provisions of Sales Tax Act, 1990 showed that there was no such linkage or prerequisite for audit to be mandatory before issuance of show-cause notice under S.11(2) of the Act in each and every case, and such a prerequisite could not be read impliedly into the statute---Department could resort to audit under S.25 of Sales Tax Act, 1990 before issuance of Show-Cause Notice under S.11 of the Act, however, at the same time, Department could issue such show-case notice without conducting an audit, upon perusal of sales tax return of taxpayer---Constitutional petition was dismissed, in circumstances.

(b) Constitution of Pakistan---

----Art.199---Sales Tax Act (VII of 1990), Ss.11 & 25---Constitutional jurisdiction of High Court---Maintainability of Constitutional petition against show-cause notice issued by Tax Authorities---Statutory alternate remedy provided for by a special law---Scope---Where no question of jurisdiction had been raised or where it was not shown as to which provision of law and Constitution impugned show-cause notices contravened, then Constitutional jurisdiction of High Court could not be invoked---Where a special law provided legal remedy for resolution of a dispute, then it was intention of the Legislature that disputes falling within its ambit be only taken before such forum.

Maritime Agencies (Pvt.) Ltd. through Company Secretary, v. Assistant Commissioner-II of SRB and 2 others 2015 PTD 160; Dr. Seema Irfan and 5 others v. Federation of Pakistan through Secretary and 2 others 2019 PTD 1678 and Indus Trading and Contracting Company v. Collector of Customs (Preventive) Karachi and others 2016 SCMR 842 rel.

Munawwar Hussain, Ahmed Hussain, Hyder Ali Khan, Naeem Suleman, Faheem Bhayo, Aitzaz Manzoor Memon, Arshad Hussain, Ghulamullah Shaikh, Aqeel Ahmed, Ch. Bilal Lutufullah, Rana Sakhawat Ali, Ms. Sehrish Wasif, Mohsin Imam Wasti on behalf of Syed Riaz, Imran Ali Abro, Jawaid Farooqi, Yousuf Ali, Gohar Mehmood, Iftikhar Hussain, Fazal Mehmood Sherwani, Shahid Ali Qureshi, Muhammad Adil Saeed holding brief for Rashid Anwar and M. Taseer Khan for Petitioners.

Muhammad Ahmer, Assistant Attorney General.

2021 P T D 1430

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

UNITED REFRIGERATION INDUSTRIES LIMITED and others

Versus

DIRECTOR, DIRECTORATE OF INTELLIGENCE AND INVESTIGATION, FBR and others

Special Customs Reference Applications Nos.426 of 2019 (and others connected Applications) decided on 8th April, 2021.

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

----Ss. 32(1)(2), 79 & 196---Mis-declaration---Show-cause notice---Pakistan Customs Tariff (PCT) Heading, question of---Importer was aggrieved of show-cause notice issued on the allegation of referring wrong PCT Heading--- Validity--- Earlier Classification Committee determined Classification of goods in question under HS Code 3824.9091 and it continued for a number of years till early year 2017 when Federal Board of Revenue withdrew its earlier letter and referred the matter once again to Classification Committee---Matter was referred by same person who had issued new Public Notice as its Chairman---Such was a question of interpretation which required much deeper appreciation--- Classification of goods was not per se that easy to be determined as apparently on a number of occasions it was held that classification under HS Code 3824.9091 was correct---Not only show-cause notices were issued for alleged mis-declaration of classification code but so also fine and penalties were imposed---Such could not be a case of mis-declaration when all along until 12-06-2017 earlier Classification Ruling and communication were in filed and it was not that those Rulings were issued by any incompetent authority, rather it was done by same Classification Committee through its Chairman, having appropriate authority and jurisdiction as well as expertise for doing so---Classification of goods was question based on legal and factual determination and so also of interpretation of HS Codes and Customs Tariff, there could always be difference of opinion in interpreting the same---Such was not that it always was a case of mens rea and imposition of penalty if claimed HS Code was not accepted by Department---Customs own department as well as Federal Board of Revenue who determined and directed release of goods in claimed classification code of 3824.9091--- In such case allegation of mis-declaration and imposition of fine and penalty could not be made out and could not sustain--- High Court set aside all orders passed against importer---Reference was allowed accordingly.

2014 PTCL CL 437; Muhammad Amer Seed and 7 others v. Model Customs Collectorate of Customs (East) and 7 others 2016 PTD 2910; Pakistan State Oil Company Ltd. v. Collector of Custom, East (Adjudication-II) and others 2006 SCMR 425; Messrs A-One Feeds v. Deputy Collector Adjudication-I, Karachi and another 2008 PTD 1029; Messrs Nayatel (Pvt.) Ltd. v. Appellate Tribunal Customs, Islamabad and others 2019 PTD 288; Messrs P&G International, Lahore v. Assistant Collector of Customs (Appraisement GR-II), Karachi and 3 others 2010 PTD 870; Dada Soap Factory Ltd. v. Pakistan PLD 1984 Kar. 302; Dada Soap Factory v. Collector of Customs Appraisement 1999 CLC 762; Radaka Corporation v. Collector of Customs 1989 SCMR 353; Asian Food Industries Ltd. v. Pakistan 1985 SCMR 1753; Government of Pakistan v. Manzoor Brothers 1994 SCMR 1953 and Central Board of Revenue v. Shakeel Brothers 1998 SCMR 237 ref.

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

----S.18 & Sched. I---Customs General Order 12 of 2002, Para. 74---Dutiable goods--- Tariff Rulings, change of---Retrospective effect---Scope---In cases of change of Tariff Rulings for the purpose of Classification it is always made applicable from date of its issuance or prospectively---Such changed Tariff Ruling does not apply to past consignments already cleared before issuance of such Ruling as it would adversely affect importers.

Collector of Customs v. Shaikh Shakeel Ahmed 2011 PTD 495 and Collector of Customs v. Power Electronic Pakistan (Pvt.) Limited 2011 PTD 2837 rel.

Abdul Ghaffar Khan (in Special Customs Reference Applications Nos.426 to 433 of 2019), Sardar M. Ishaque (in Special Customs Reference Applications Nos.394 to 401 of 2019), Dr. Muhammad Khalid along with Muhammad Arshad (in Special Customs Reference Applications Nos.441 and 442 of 2019), Rasheed Ashraf (in Special Customs Reference Applications Nos.477, 478 and 479 of 2019), Sh. Riaz Ahmed (in Special Customs Reference Application No.574 of 2019), Obaidullah Nadeem (in Special Customs Reference Applications Nos.601 and 602 of 2019), Madan Lal (in Special Customs Reference Applications Nos.603 and 607 of 2019), Rana Sakhawat Ali (in Special Customs Reference Application No.682 of 2019), Shamshad Younus (in Special Customs Reference Application No. 635 of 2019) for Applicants.

Khalid Mahmood Rajpar along with Saud Hassan, Superintendent MCC East/I.O.

Khalid Mehmood Siddiqui (in Special Customs Reference Applications Nos.603, 604 to 607 of 2019) and Dr. Shadab Imam (in Special Customs Reference Applications Nos.603 to 607 of 2019) for Respondents.

2021 P T D 1568

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

Messrs ANSARI SUGAR MILLS LIMITED, through Senior Manager and others

Versus

FEDERATION OF PAKISTAN through Secretary Revenue and 3 others

C.Ps. Nos.D-2608, D-2693, D-3726, D-3727 of 2020, decided on 13th January, 2021.

Sales Tax Act (VII of 1990)---

----S.47A---Alternative Dispute Resolution ("ADR") mechanism under the Sales Tax Act, 1990---Scope---Question before High Court was whether petitioners / taxpayers had an actionable vested right to seek ADR under S.47A of Sales Tax Act, 1990 notwithstanding pending proceedings before the Appellate Tribunal which were initiated by petitioners----Held, right to seek ADR was subject to terms and conditions of S.47 of Sales Tax Act, 1990 and such statutory provision was qualified and did not confer an inalienable right for a party to pick and choose a fora---Petitioners in the present case, could not demonstrate any vested right to insist upon adjudication via the ADR mechanism, when recourse thereto could not be sought before conclusion of proceedings before Appellate Tribunal---Constitutional petitions were dismissed, in circumstances.

Federation of Pakistan and others v. Attock Petroleum Limited 2007 PTD 1495 rel.

Taimoor Ahmad Qureshi for Petitioner.

Ameer Bukhsh Metlo for Respondents Nos.3 and 4 (in C.Ps. Nos.D-2608, D-3726 and D-3727 of 2020).

Moshin Shehwani on behalf of Imran Ahmed Mithani for Respondents Nos.3 and 4. (C.P. No.D-2693 of 2020).

Rana Sakhawat Ali hoding brief for Muhammad Ahmer Assistant Attorney General.

2021 P T D 1576

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

AACHEE GARMENTS (PVT.) LTD., through duly Authorized Representative and another

Versus

FEDERATION OF PAKISTAN through Chairman FBR and 2 others

Constitutional Petition No.D-6920 of 2019, decided on 25th March, 2021.

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

----S.37---Conduct of inquiries by Sales Tax Authorities---Power to summon persons to give evidence and produce documents in inquiries---Exercise of powers under S.37 of Sales Tax Act, 1990 predicated upon existence of an inquiry---Scope---Petitioner impugned notice under S.37 for personal appearance, and production of record; inter alia, on ground that same was an abuse of process, unjust and no inquiry being conducted was identified in impugned notice---Validity---Departmental notice may only be interfered with if same suffered from want of jurisdiction, amounted to abuse of process and / or was mala fide and prejudicial towards recipient---Section 37 of Sales Tax Act, 1990 was predicated upon exercise of authority so conferred in respect of an inquiry and impugned notice made no reference to any requisite specified inquiry---In the present case, absence of an inquiry, underlying impugned notice, was prima facie discernable----Statutory requirements in respect of the impugned notice were, therefore, unfulfilled, and no inquiry pending before relevant officer or otherwise had been particularized therein, and therefore was an abuse of process of law and liable to be set aside---Constitutional petition was allowed, accordingly.

Taj International (Private) Limited and others v. Federal Board of Revenue and others 2014 PTD 1807; Iqbal & Sons v. Federation of Pakistan and others 2017 PTD 590; Rafiq ur Rehman v. Federation of Pakistan and others 2017 PTD 1178; Dr. Seema Irfan and others v. Federation of Pakistan and others PLD 2019 Sindh 516; PIA v. CBR and others 1990 CLC 868 and Assistant Collector Customs and others v. Khyber Electric Lamps and others 2001 SCMR 838 rel.

(b) Interpretation of statutes---

----Principles of construction of statutes---Maxim "verba cum effectu accipienda sunt, applicability of---Maxim: Verba cum effectu accipienda sunt was a judicial maxim which meant that words must be interpreted so as to have effect---Every word and every provision was to be given effect and none should be ignored so as to needlessly be given another interpretation that caused it to duplicate another provision or have no consequence---Redundancy could not be attributed to a Legislation and words could not be considered meaningless, else they would not have been used.

Black's Law Dictionary, Seventh Edition; Antonin Scalia and Bryan A Garner; Collector of Sales Tax v. Messrs Mega Tech (Pvt.) Ltd. 2005 SCMR 1166; Iqbal Hussain v. Pakistan 2010 PTD 2338 and United States v. Butler 297 US 165 rel.

Barrister Ovais Ali Shah for Petitioner.

Ameer Bukhsh Metlo and Kafeel Ahmed Abbasi, Deputy Attorney General for Respondents.

2021 P T D 1617

[Sindh High Court]

Before Nazar Akbar, J

ASIM KHAN and others

Versus

The STATE through Collector of Customs, Model Customs Collectorate of Exports

Special Criminal Appeals Nos.01, 02, 04, 06 and 07 of 2019, decided on 6th May, 2021.

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

----Ss.32, 32-A, 156(1)(14) & 156(1)(14-A)---Mis-declaration---Scope---Allegation against accused persons was that they filed a fake Form-E, which resulted in loss of foreign exchange---First Information Report was lodged with a delay of more than five months---Complainant had admitted in his cross-examination that he could not say that "Form-E" was sent for verification after five months of the shipment of the goods and that he had never dispatched the "Form-E" in his entire service---Complainant had claimed in his examination-in-chief that the "Form-E" was sent to the issuing Bank for verification of genuineness and had claimed that he had received the reply from the Bank that "Form-E" was not issued by the branch but had not produced any witness from the Bank to verify the alleged correspondence---Complainant had not verified the "Form-E"---Investigating Officer had admitted in his cross-examination that he had not exhibited any document of the State Bank of Pakistan which showed that the "Form-E" was fake---Prosecution had failed to prove its case against the accused, in circumstances---Appeals against conviction were allowed, in circumstances.

(b) Criminal Procedure Code (V of 1898)---

----S.154---Information in cognizable cases---Delayed FIR---Scope---Delay in lodging FIR is always fatal.

Umar Farooq for Appellants (in Special Criminal Appeals Nos.1, 4 and 6 of 2019).

Shoukat Ali Shahroze for Appellant (in Special Criminal Appeal No.02 of 2019).

Muhammad Jamil for Appellant (in Special Criminal Appeal No.07 of 2019).

Ashiq Ali Anwar Rana, Special Prosecutor Customs for the State.

2021 P T D 1683

[Sindh High Court]

Before Aqeel Ahmed Abbasi and Abdul Malik Gaddi, JJ

The ADDITIONAL DIRECTOR, DIRECTORATE GENERAL OF INTELLIGENCE AND INVESTIGATION-FBR, REGIONAL OFFICE, KARACHI and another

Versus

IMRAN and another

Special Customs Reference Application No.110 of 2014 along with S.C.R.As. Nos. 35 of 2010, 311 of 2013, 219 of 2014, 2391 of 2015, 386 of 2016, 80, 42, 419, 420, 541, 905 of 2017, H.C.A. No.334 of 2017, C.Ps. Nos.5230 of 2014, 3351, 7527 of 2017 and 5163 of 2018, decided on 9th July, 2020.

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

----S.211(i)---Maintenance of record---Limitation---Importer or owner of imported items is under no legal obligation to maintain any record pertaining to import beyond the period of five years under Customs Act, 1969---Authorities cannot demand such record beyond such period.

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

----Ss.2(s), 187, 194, 196 & 211(i)---"Smuggling"---Onus to prove---Shifting of onus, principle of---Import documents---Duration to retain---Authorities seized vehicles owned by respondents on the allegation that they failed to show import documents thus the same were "smuggled"---Appellate authority set aside the order of seizing the vehicles and the same was maintained by Customs Appellate Tribunal---Validity---Respondents claimed to be owners / subsequent purchasers and had produced documents to customs authorities to discharge initial burden of proof regarding their lawful possession of vehicles in terms of S.187 of Customs Act, 1969---Customs authorities without adopting legal course of adjudications or to establish that documents produced by owners / subsequent purchasers were forged or bogus and subject vehicles were otherwise "smuggled", could not detain in violation of law, merely on unlawful presumption that the owners could not produce import documents of subject vehicles which were manufactured beyond the period of 'five years'---No material or even allegation was on record to the effect that the vehicles were smuggled within five years from the date of their manufacture---If such authority was given to public functionaries to charge owners of vehicles of a criminal offence of smuggling in absence of any evidence or material to such effect, the same would amount to giving them unbridled powers to act arbitrarily and to abuse process of law---Such was neither intent of law nor could be approved by Courts under any circumstance---High Court in exercise of Reference jurisdiction declined to interfere in the findings of Customs Appellate Tribunal as the same were based on proper application of law and did not suffer from any factual error or legal infirmity---Reference was dismissed in circumstances.

Saif-ur-Rehman and Waheed-ur-Rehman v. The Member Judicial-I, Customs Appellate Tribunal Bench-I, Karachi and others SCRA No.263 of 2010 rel.

Messrs Muhammad Ateeq Paracha and others v. The State 2005 PTD (Trib.) 135; Abdul Razzaq v. Directorate General of Intelligence and Investigation - FBR and 2 others 2016 PTD 1861; Collector of Customs v. Messrs Muhammad Tahir Construction Company, Loralai 2019 PTD 1599 and Federation of Pakistan through Director-General of Intelligence and Investigation FBR, Karachi v. Muhammad Jamal Rizvi and others 2012 PTD 90 ref.

Kashif Nazee, Muhammad Khalid Dogar and Ms. Afsheen Aman for Applicants (in all SCRAs).

Ms. Dilkhurram Shaheen, Zia-ul-Hassan, Shafqat Zaman and Pervez Ahmed Mastoi for Respondents (in all SCRAs).

Khalid Mehmood Siddiqui for Appellants (in H.C.A. No.334 of 2017).

Jawed Farooqui and Kashif Nazeer for Respondents (in H.C.A. No.334 of 2017).

Omer Soomro, Khaleeq Ahmed and Irfan Aziz for Petitioners (in C.Ps. Nos.5230 of 2014, 3351, 7527 of 2017 and 5163 of 2018).

Kashif Nazeer, Dr. Shahnawaz Memon, Khalid Mehmood Rajpar and Shaheryar Qazi and Sajjad Abbasi for Respondents (in C.Ps. Nos.5230 of 2014, 3351, 7527 of 2017 and 5163 of 2018).

Ms. Lubna Pervez, Deputy Attorney General.

2021 P T D 1779

[Sindh High Court]

Before Irfan Saadat Khan and Muhammad Faisal Kamal Alam, JJ

COMMISSIONER OF WEALTH TAX, KARACHI

Versus

SADRUDDIN HASHWANI, KARACHI

Wealth Tax Appeals Nos.938 and 939 of 2000, decided on 14th September, 2020.

Wealth Tax Act (XV of 1963)---

----Ss.16(3), 23 & 27---Income Tax Appellate Tribunal Procedure Rules, 1981, Rr. 24 & 25---Additional evidence, production of---Wealth not declared---Proof---Appellant/Assessing Officer assessed wealth of respondent/taxpayer by including certain amounts which were alleged to be invested abroad and were undeclared---Appellate Authority maintained assessment order but Income Tax Appellate Tribunal deleted the amounts from the wealth of respondent/taxpayer---Validity---In affidavit from abroad duly attested by Notary Public of USA and Embassy of Pakistan, it was mentioned that respondent/taxpayer was only guarantor and had only acted in such capacity who was not an investor in the company---Income Tax Appellate Tribunal rightly deleted two additions made in the years under consideration---Income Tax Appellate Tribunal was last fact finding authority and was fully authorized under Rr.24 & 25 of Income Tax Appellate Tribunal Procedure Rules, 1981, to take additional evidence, looking to facts and circumstances of each case---Accepting of additional evidence of respondent/taxpayer was within the powers of Income Tax Appellate Tribunal---High Court declined to interfere in the order passed by Income Tax Appellate Tribunal as there was no illegality or infirmity in the order---Appeal was dismissed, in circumstances.

Muhammad Aqeel Qureshi for Appellant.

Abid H. Shaban for Respondent.

2021 P T D 1788

[Sindh High Court]

Before Aqeel Ahmed Abbasi and Mrs. Rashida Asad, JJ

S.M. ALI ZAMAN GARDEZI and another

Versus

FEDERATION OF PAKISTAN through Secretary (Revenue Division) and others

Constitutional Petitions Nos.D-1213 and D-1214 of 2015, decided on 25th February, 2021.

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

----Ss.9 & 10---Federal Investigation Agency (Inquiry and Investigation) Rules, 2002, R.5---Constitution of Pakistan, Arts. 13 & 199---Constitutional petition---Quashing of proceedings---Inquiry by Federal Investigation Agency---Principle of double jeopardy---Prior permission of direction of Federal Tax Ombudsman non-seeking of---Petitioners were aggrieved of initiation of inquiry proceedings by FIA on the directions issued by Federal Tax Ombudsman---Validity---Once matter was sub-judice before competent Court of jurisdiction, no other Court or authority, including FIA or for that purpose Tax Ombudsman, could initiate any duplicate proceedings in respect of the same subject matter, as it amounted to showing disrespect to the Court proceedings at one hand and tentamount to double jeopardy and multiplicity of proceedings on the other hand--- For the purposes of implementing tax law, including Income Tax Ordinance, 2001, Sales Tax Act, 1990 and Customs Act, 1969, complete mechanism and hierarchy was provided for the purposes of assessment and adjudication of tax liability through quasi-judicial proceedings---Forums of appeals had been provided by the Legislature for the purposes of deciding all factual and legal controversies relating to tax laws, rules and regulations, SROs etc---In addition to appellate forums, reference jurisdiction was also available before respective High Courts and even leave to appeal could be filed before Supreme Court for final adjudication of proceedings under tax laws--- Matters pertaining to Customs Act, 1969, and quasi-judicial orders passed by Tax Authorities, which were subject to scrutiny by another High Court could not be taken cognizance by FIA authorities under inquiry initiated on the directions issued by Federal Tax Ombudsman in suo motu exercise of jurisdiction--- Inquiry initiated by FIA on the directions issued by Federal Tax Ombudsman in suo motu jurisdiction was in violation of Ss.9 and 10 of Establishment of Office of Federal Tax Ombudsman Ordinance, 2000---High Court quashed inquiry proceedings initiated by FIA as the same were illegal and without jurisdiction---Constitutional petition was allowed, in circumstances.

2014 PTD 1531; Universal Cables Industries Limited v. Federation of Pakistan and others PLD 2020 Sindh 601; Wali Muhammad Shaikh v. Federation of Pakistan and others 2018 YLR 2624; Dr. Ashfaq Ahmed Tunio and others v. FIA and others 2018 PLC (C.S.) 1264 and Syed Nusrat Nasir v. Federation of Pakistan through Secretary and 3 others 2013 PTD 486 rel.

Khawaja Shams-ul-Islam for Petitioner.

Muhammad Khalil Dogar for Respondent.

Muhammad Aminullah Siddiqui, Assistant Attorney General.

2021 P T D 1813

[Sindh High Court]

Before Aqeel Ahmed Abbasi and Zulfiqar Ahmad Khan, JJ

SALEEM AHMED and others

Versus

FEDERATION OF PAKISTAN and others

C.P. No.D-8101 of 2017, C.P. No.D-6303 of 2016, C.P. No.D-8102 of 2017, C.Ps. Nos.103, 117, 376, 7634, 8065, 8066, 8455 of 2018, D-277, 1126, 1127, 1190, 1701, 2541, 2584, 2811, 3044, 3124, 3569 and 755 of 2019, decided on 12th September, 2019.

(a) Interpretation of statutes---

----Delegated Legislation---Rules/regulations under a parent statute---Rules framed under parent statute were to remain within precinct of statute itself and could not transgress limits and parameters of parent statute.

(b) Constitution of Pakistan---

----Art.199---Constitutional jurisdiction of High Court---Adjudication of vires of delegated legislation---Scope---Where rules overstretched powers granted by parent statute, then High Court may come to rescue of affectees of the same.

National Electric Power Regulatory Authority v. Faisalabad Electric Supply Company Limited 2016 SCMR 55; Ziauddin v. Punjab Local Government 1985 SCMR 365; Pakistan v. Aryan Petrochemical Industries (Pvt.) Limited 2003 SCMR 370 and Suo Motu Case No.13/2009 PLD 2011 SC 619 rel.

(c) Words and phrases---

----"Satisfied" distinguished from word "opinion"---Meaning of word "satisfaction" was of stricter connotation when compared to word "opinion" which usually meant belief resulting from what one thought on his own on a particular question, while "satisfied / satisfaction" was a term of considerable expansiveness, understood to mean free from anxiety, doubt, perplexity, suspense or uncertainty.

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

----S.21---Sales Tax Rules, 2006, R.12.---Constitution of Pakistan, Arts. 10A & 18---Sales Tax---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 Right to fair trial, due process of law and freedom of trade and business---Provision of "due process" to be read in S.21 of Sales Tax Act, 1990---Scope---Petitioners impugned vires of R.12 of Sales Tax Rules, 2006 and S.21 of Sales Tax Act, 1990, inter alia, on ground that said scheme of law offended Fundamental Rights of fair trial, and freedom of business and trade under Constitution---Validity---Word "satisfied" used in S.21(2) of Sales Tax Act, 1990 meant that Commissioner had to come to conclusion regarding blacklisting or suspension of taxpayer on basis of material sufficient to prove that fake invoices had been issued or fraud had been committed, and "satisfaction" could only be reached when judicial determination had been completed by placing sufficient facts from both sides; and thus in order to be satisfied Commissioner must give full opportunity to the taxpayer and be convinced beyond reasonable doubt before exercising powers of suspension / blacklisting under S.21 of Sales Tax Act, 1990---Once Commissioner under said section came to conclusion that fake invoices had been issued or fraud committed, then process of fair trial as enshrined in Art.10A of Constitution had to be followed and opportunity of hearing must be provided to taxpayer---Rule 12(a)(i) of Sales Tax Rules, 2006 to extent same gave authority to Commissioner to suspend registration of taxpayer "without prior notice" was therefore ultra vires the Constitution---High Court held that all orders of suspension of sales tax registration made without confronting taxpayer with reasons in writing were therefore illegal and set aside, and furthermore, all orders of suspension of registration where show-cause notices under S.21(2) of Sales Tax Act, 1990 had not been issued or no order of blacklisting had been passed within ninety days of issuance of notice of hearing, then such suspension was void ab initio and liable to be restored---Constitutional petitions were allowed, accordingly.

Altaf Ibrahim Qureshi v. Aam Log Ittihad PLD 2019 SC 745; Fancy Foundation v. Commissioner of Income Tax, Karachi 2017 SCMR 1395; Al-Hilal Motors Stores v. Collector Sales Tax and Central Excise East 2004 PTD 868; Commissioner Inland Revenue v. Imran Ali Lubricants 2019 PTD 1213 and Inbox Business Technologies Ltd. v. Pakistan 2018 PTD 621 rel.

Ajeet Sundar, Iqbal Salman Pasha, Aqeel Ahmed Khan, Imran Iqbal Khan, Arshad Hussain, Faheem Ahmed Bhayo and Rana Sakhawat Ali for Petitioners.

Ameer Baksh Melto, along with Fayaz Ali Metlo, Muhammad Hassan Wasim Ursani and Muhammad Aqeel Qureshi for Respondents.

Syed Mohsin Imam, Khalid Rajpar, Pervez Ahmed Memoon, M. Bilal Bhatti, Shahid Hussain Qureshi and Dil Khurram Shaheen for Respondents.

Khilji Bilal, Assistant Attorney General.

2021 P T D 1858

[Sindh High Court]

Before Muhammad Shafi Siddiqui and Aga Faisal, JJ

Messrs AL-HAMD STEEL FURNACE through attorney

Versus

FEDERATION OF PAKISTAN through Secretary, Revenue and Statistics/Chairman and 2 others

C.P. D-4776 of 2021, decided on 9th September, 2021.

Customs Act (IV of 1969)---

----S.45(2)---Import of goods---Signature and contents of import manifest and amendment thereof---Amendment of "obvious error"---Scope---Petitioner impugned order of Customs Authorities whereby petitioner's request for amendment in import manifest under S.45(2) of Customs Act, 1969 was denied---Contention of Department, inter alia, was that the petitioner had sought amendment / change in name of consignee as original name on the import manifest was of another entity, and amendment sought was an attempt to escape recovery notice pending against original consignee---Validity---Amendment sought by petitioner / importer could not be carried out in terms of S.45(2) of Customs Act, 1969 as said section related to only "obvious error" in the import manifest or an omission which, in opinion of Departmental Officer, was result of an accident or inadvertence and present case did not fall into any such exception---High Court observed that petitioner had made an attempt to avoid payment / consequences of recovery notice of Departmental authorities, and therefore amendment sought could not be allowed---Constitutional petition was dismissed, in circumstances.

Imran Iqbal for Petitioner.

Kafeel Ahmed Abbasi, Deputy Attorney General and Hussain Bohra, Assistant Attorney General for Respondent No.1.

Khalid Rajpar for Respondent No.2.

None present for Respondent No.3.

Tariq Aziz, Principal Appraiser, Port Qasim.

2021 P T D 1867

[Sindh High Court]

Before Muhammad Shafi Siddiqui and Agha Faisal, JJ

Messrs CIVIL AVIATION AUTHORITY through Authorized Representative

Versus

APPELLATE TRIBUNAL INLAND REVENUE and another

Income Tax Reference Application 49 and C.M.A No.95 of 2021, decided on 7th September, 2021.

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

----Ss. 236A & 133---Advance tax at time of sale by auction---Collection of tax under S.236A by Civil Aviation Authority---Explanation to S.236A of Income Tax Ordinance, 2001, construction and effect of---Question before High Court was whether taxpayer Civil Aviation Authority was obligated to collect withholding tax under S.236A of Income Tax Ordinance, 2001 on basis of explanation inserted in said section, and whether such statutory explanation as inserted, could operate retrospectively---Held, that S.236A of Income Tax Ordinance, 2001 required taxpayer Civil Aviation Authority to collect / withhold tax at time of making sale by public auction and said provision was crystal clear---High Court observed that no necessity had therefore existed for inserting such explanation for removal of doubt, as said S.236A was clear in its entirety---Explanation inserted in S.236A of Income Tax Ordinance, 2001 catered for retrospective effect as it was only clarificatory in nature and taxpayer Civil Aviation Authority was therefore bound to collect withholding tax under said S.236A---Reference was answered, accordingly.

(b) Interpretation of statutes---

----Clarificatory explanation inserted in statute, construction of---Explanation, which was of a clarificatory nature, operated retrospectively as it only provided an assistance in interpreting a provision correctly in terms of intention of Legislature, unless if there was a situation in which contradiction was identified by Court by giving interpretation to the basic provisions as being against the explanation.

2021 P T D 1873

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

COLLECTOR OF CUSTOMS

Versus

Messrs HABIB SUGAR MILLS LIMITED

Special Customs Reference Application No.98 of 2017, decided on 26th February, 2021.

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

----Ss.32, 32A & 156(1)---Mis-declaration---Fiscal fraud---Imposition of penalty---Scope---Respondent imported a trailer and claimed assessment of goods under HS Code No. 7311.0030, which was disputed by the department, as according to them the trailer was correctly classifiable under HS Code 8716.3190 attracting customs duty at the rate of 15%---Show cause notice was issued and the matter was adjudicated, whereby, fine and penalty was imposed, which in appeal was set aside to the extent of such fine and penalty---Validity---Tribunal had held that since all import related documents including the Free Trade Agreement (FTA) Certificate were showing HS Code 7311.0030, whereas, the description of the goods was correctly mentioned by the respondent, therefore, present was not a case of any intentional mis-declaration and element of mens rea was missing---Appellate Tribunal had also accepted the plea of the respondent that if any mis-declaration could have been made it was the description, which could have been changed; however, admittedly correct description of goods was declared on the Goods Declaration---Tribunal's findings were correct in law and it was not that in each and every case wherein upon scrutiny of the Goods Declaration if HS Code is changed attracted a higher rate of customs duty, that fine and penalty had to be imposed mandatorily, as it is always dependent upon facts and circumstances of the case as well---One had to see the intention in doing so as well as presence of element of mens rea---Reference application was dismissed.

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

----Ss.32 & 32A---Mis-declaration---Fiscal fraud---Scope---Classification of goods is a question based on legal and factual determination and so also of interpretation of HS Code and the Customs tariff; hence, there could always be difference of opinion for interpreting the same, it is not that it always be a case of mens rea and imposition of fine and penalty if the claimed HS Code is not accepted by the Department.

Collector of Customs v. Shaikh Shakeel Ahmed 2011 PTD 495 and Collector of Customs Karachi v. Power Electronic Pakistan (Pvt.) Limited Lahore 2011 PTD 2837 ref.

Ms. Masooda Siraj for Applicant.

Nemo. For Respondent.

2021 P T D 1901

[Sindh]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

Messrs HARIS TRADING CO.

Versus

DEPUTY COLLECTOR OF CUSTOMS, EXPORT

Special Customs Reference Applications Nos.39 to 50 of 2016, decided on 19th November, 2020.

Customs Act (IV of 1969)---

----Ss.32, 156(1)(9) & 156(1)(45)---Export Policy Order, 2013, Paras 3 & 16(g)---Mis-declaration---Scope---Appellant was imposed upon a penalty for mis-declaring actual value of the goods in order to evade Foreign Exchange; for violation of Ss. 16 & 131 of Customs Act, 1969 and for violation of paras. 3 & 16(g) of the Export Policy Order, 2013 punishable under Cls. (9) & (45) of S.156(1) of Customs Act, 1969---Validity---Authority while imposing the penalty had not cited any specific provision in the order-in-original---No order-in-original could have been passed in such a manner without specifying the relevant clauses under which the penalty was being imposed---Clause (9) & (45) of S.156(1) of Customs Act, 1969 as mentioned in the show cause notice did not apply to the facts in question as neither there was an alleged evasion of duty nor the goods in question were notified in terms of S.16 of the Customs Act, 1969, to be banned or otherwise restricted and lastly nor the goods so declared were concealed---No penalty could have been imposed in circumstances---Officer concerned had no jurisdiction in respect of violation of Foreign Exchange Regulations Act, 1947---High Court declared that the adjudicating authority had no jurisdiction to impose penalty under Cls. (9) & (45) of S.156(1) of the Customs Act, 1969---Impugned orders were set aside and the reference applications were allowed.

Collector of Customs (Exports) and another v. Messrs R.A. Hosiery Works 2007 PTD 2215; Farooq International v. Chief Controller of Imports and Exports and 4 others 1985 CLC 1781 and 2014 PTD 894 ref.

Sardar Faisal Zafar for Applicant.

Iqbal M. Khurram for Respondents.

2021 P T D 1938

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

COLLECTOR OF CUSTOMS

Versus

Messrs AL-KARAM TRADING

Special Customs Reference Applications Nos.2186 of 2015 along with Special Customs Reference Applications Nos.868 to 927 of 2015 decided on 25th February, 2021.

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

----Ss. 25, 25-A & 180---Value of imported and exported goods---Power to determine customs value---Issue of show cause notice before confiscation of goods or imposition of penalty---Defective and vague show-cause notice---Scope---Directorate General of Post Clearance Audit claimed that the consignments imported by the respondent were released without proper application of Valuation Ruling; hence the same resulted in short payment of government revenue; for which show cause notices were issued and adjudicated against the respondents; however, Collector of Customs (Appeals) as well as Appellate Tribunal decided the issue in favour of the respondents---Validity---Valuation Ruling by itself had not determined any values under S.25-A of the Customs Act, 1969---Director Valuation had notified a method of making assessment of the goods in question---Adjudicating authority had not bothered to give details as to how the amount alleged to have been short paid by the respondents was worked out/calculated---No exercise was carried out as was required pursuant to the Valuation Ruling wherein the method of valuation was notified---Findings in the show-cause notice(s) by itself were defective, vague and unlawful; hence, could not be sustained.

Sadia Jabbar v. Federation of Pakistan 2018 PTD 1746 rel.

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

----Ss. 25 & 25-A---Value of imported and exported goods---Power to determine the customs value---Determination of formula instead of value---Scope---Only values can be notified after following one of the methods of assessment as provided under S.25 of the Customs Act, 1969---None of the methods permit determination of any formula or method, and instead values are to be determined and notified.

Iqbal M. Khurram for Applicant.

2021 P T D 1955

[Sindh High Court]

Before Muhammad Shafi Siddiqui and Agha Faisal, JJ

COLLECTOR OF CUSTOMS through Additional Collector of Customs

Versus

Messrs LAKE VIEW FOREST (PVT.) LTD.

Special Customs Reference Applications Nos.(D) 239 to 267 of 2014, decided on 23rd August, 2021.

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

----Ss. 79, 80, 81 & 83---Declaration and assessment for home consumption---Checking of goods declaration by the Customs---Provisional determination of liability---Clearance for home consumption---Scope---Declaration is filed under S.79 of the Customs Act, 1969, for the assessment under S.80 of the Customs Act, 1969, or in case provisional assessment is required, then under S. 81 of the Customs Act, 1969---Two material issues are essentially considered at the time of assessment that whether PCT Heading is rightly claimed and what can be the value of goods for the assessment---Scheme of the Customs Act, 1969, reveals that the subject is governed in terms of S.25 of the Customs Act, 1969 and in case it cannot be determined under S.25, then the recourse is available by applying valuation ruling if available in terms of S.25-A whereafter it is finalized under the Customs Act, 1969---After the assessment and the release of consignment, the goods are made out of any charge of the Customs---If such process is required to be revisited, (in appropriate cases), the mechanism is available under the law such as Ss. 32, 193 & 195 of the Customs Act, 1969.

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

----Ss. 80, 32, 193 & 195---Checking of goods declaration by the Customs---Mis-declaration---Appeals to Collector (Appeals)---Powers of Federal Board of Revenue or Collector to pass certain orders---Scope---Respondent imported several consignments of Soft Wood Swan Ash Timber (CBM) which were cleared---Later, in scrutiny, the goods declarations were found to be assessed on the lower side as the relevant Valuation Ruling was not applied---Department issued show cause notice under S. 80(3) of the Customs Act, 1969---Validity---Section 80(3) primarily provided that if "during the checking of goods declaration" it was found that any statement in such declaration or document or any information so furnished was not correct in respect of any matter relating to the assessment, the goods shall, without prejudice to any other action may be taken under the Customs Act, 1969, be re-assessed to duties and taxes as levied---Section 80(3) was applicable at the time of original checking of the goods declaration---Such situation was catered by Ss. 32, 193 & 195 of Customs Act, 1969, where a show-cause notice and/or an appeal within 30 days could have been preferred or the Board or the Collector or the Collector of Customs (Adjudication) might, within his jurisdiction, have called for the examination of the records of any proceedings under the Act for the purpose of satisfying itself as to the legality or propriety of any decision or order passed by a subordinate officer, however, none of them were invoked---Reference applications were dismissed.

Muhammad Khalil Dogar for Applicants.

Imran Iqbal Khan for Respondent.

2021 P T D 2020

[Sindh High Court]

Before Muhammad Shafi Siddiqui and Agha Faisal, JJ

Messrs SILVER SURGICAL COMPLEX (PVT.) LTD. through Company Secretary

Versus

COMMISSIONER INLAND REVENUE, ZONE-IV

Special Sales Tax Reference Applications Nos. 183, 184 and C.M.A. No.1717 of 2017, decided on 13th August, 2021.

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

----Ss.8 & 10---Sales Tax Rules, 2006, R. 25---Tax credit not allowed---Determination of input tax---Refund of input tax---Scope---Applicant assailed concurrent findings of three forums below---Department, during scrutiny of monthly sales tax and federal excise returns of applicant, had observed that the amount of input tax incurred for making both exempt and taxable supplies was not claimed as per apportionment formula prescribed in R. 25(3) of Sales Tax Rules, 2006, read with S. 8(2) of Sales Tax Act, 1990---Validity---Supplies involving exempt and taxable purchase could not be treated in a generalized way---Applicant argued to the extent of claiming refund in terms of S. 10 of Sales Tax Act, 1990---Held; where input tax adjustment was claimed on both exempt and taxable supplies, S. 8(2) of Sales Tax Act, 1990, an unambiguous provision, had to be applied which directly dealt with the input tax in respect of the supplies involving both exempt and taxable supplies---Special sales tax reference applications were dismissed.

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

----S.8---Sales Tax Rules, 2006, R. 25---Tax credit not allowed---Determination of input tax---Scope---Federal Board of Revenue under S. 8(2) of Sales Tax Act, 1990, has notified a formula for objective apportionment of input tax under sub-Rule (3) of R.25 of the Sales Tax Rules, 2006---Amount of input tax incurred for making both exempt and taxable supplies shall be apportioned according to the said formula.

Aminuddin Ansari for Applicant.

Ms. Dil Khurram Shaheen for Respondent.

2021 P T D 2042

[Sindh High Court]

Before Muhammad Shafi Siddiqui and Agha Faisal, JJ

The COLLECTOR OF CUSTOMS and 2 others

Versus

Messrs A.U. TECHNOLOGIES and another

Special Customs Reference Application No.275 of 2010, decided on 20th August, 2021.

Customs Act (IV of 1969)---

----Ss. 81 & 25---Provisional determination of liability---Value of imported and exported goods---Determination of value of goods after six months of import---Effect---Respondent imported consignments of Bar Code Reader at declared value---Goods were released provisionally under S. 81 of Customs Act, 1969 and the matter was referred to Valuation Department for determination of correct customs value for levying duties and taxes---Directorate General of Valuation determined the value of the goods higher than the one declared, which resulted into levying of duties and taxes---Order-in-original was challenged before the Collector of Customs but the same was turned down---Appellate Tribunal, however, set aside the order-in-original and order-in-appeal by observing that the origin of goods was not the same---Validity---Valuation ruling was issued after about six months of the arrival of the goods---Questions proposed by the department did not germane to the root of the cause as firstly the subject valuation ruling itself did not demonstrate the value of the subject goods when they arrived, hence it became a question of fact rather than law and the Appellate Tribunal was right in observing that the subject valuation ruling was not applicable---Special customs reference application was dismissed, in circumstances.

Aamir Raza for Applicant.

None for Respondents.

2021 P T D 2063

[Sindh High Court]

Before Muhammad Shafi Siddiqui, Muhammad Iqbal Kalhoro and Adnan Iqbal Chaudhry, JJ

IMAD SAMAD and others

Versus

FEDERATION OF PAKISTAN through Secretary Commerce and 3 others

Constitutional Petitions Nos.D-5430, D-5536 of 2020 and D-1196, D-1434 and D-3911 of 2021, decided on 10th September, 2021.

Per Muhammad Shafi Siddiqui, J; Muhammad Iqbal Kalhoro, J and Adnan Iqbal Chaudhry, J agreeing [Majority View]

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

----S.19---Imports and Exports (Control) Act (XXXIX of 1950), S.3--- Notifications SRO No.345(I)/2016, dated 18-4-2016---SRO No.833(I)/2018, dated 3-7-2018---SRO No.901(I)/2020, dated 25-9-2020---Import Policy Order, 2020---Judgment per incuriam--- Vintage cars, import of---Dispute was with regard to import of cars in question on the basis of notification SRO No.833(I)/2018, dated 3-7-2018, issued under S.19 of Customs Act, 1969--- Full Bench was constituted to consider earlier judgment on the subject passed by Judge in Chambers of High Court---Validity---Federal Government in exercise of powers under S.19 of Customs Act, 1969, could levy or relax duties and taxes on import and export of goods but while dealing with permission of import and export, provision of S.19 of Customs Act, 1969, was irrelevant--- Prohibition and restrictions flown from S.3 of Imports and Exports (Control) Act, 1950, Federal Government was required to exercise its powers of business of import and export then it was required to be exercised under S.3 of Imports and Exports (Control) Act, 1950--- Constraints and restrictions of S.3 of Imports and Exports (Control) Act, 1950, were not taken into consideration in earlier judgment of High Court which was per incuriam---Petitioners could not seek release of their respective vehicles by enforcing Notification SRO No.833(I)/2018, dated 3-7-2018, as long as restrictions and prohibitions of Ministry of Commerce in terms of notification SRO No.345 (I)/2016, dated 18-4-2016 and Notification SRO No.901 (I)/2020, dated 25-9-2020, forming Import Policy Order, 2016/2020 were to relaxed--- Constitutional petition was dismissed in circumstances.

Moin Jamal Abbasi's case 2020 PTD 660; Writ Petition No.4020/2019 (Islamabad) order dated: 17.8.2020; Writ Petition No.68810/2019 (Lahore) order dated: 16.12.2020; Mustafa Impex v. Government of Pakistan PLD 2016 SC 808 and Aryan Petro's case 2003 SCMR 370 ref.

(b) Administration of justice---

----Rule of law--- Conceiving---Principle---For a rule of law, it is not important as to how and in what manner 'interested persons' conceive a law but intention of legislature matters---Court cannot give a premium to litigants who are amiss in law and that too for a monetary gain.

Per Adnan Iqbal Chaudhry, J and Muhammad Iqbal Kalhoro, J agreeing.

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

----S.19---Imports and Exports (Control) Act (XXXIX of 1950), S.3---Notifications SRO No.345(I)/2016, dated 18-4-2016---SRO No.833 (I)/2018, dated 3-7-2018---SRO No.901(I)/2020, dated 25-9-2020--- Import Policy Order, 2020, Cls. 21--- Constitution of Pakistan, Art. 199---Constitutional petition--- Vintage cars, import of--- Dispute was with regard to import of cars in question on the basis of notification SRO No.833(I)/2018, dated 3-7-2018, issued under S.19 of Customs Act, 1969--- Validity--- Import Policy Order vested certain discretion in Federal Government to allow an import in relaxation of a prohibition therein--- Federal Government had in past exercised such discretion to issue one-time import permit for a vintage car--- Provision of Cl. 21 of Import Policy Order catered to an import made bona fide with unintended consequences, as was the matter of petitioners--- High Court directed Federal Government to consider case of petitioners for a one-time relaxation / permit of import under Cl. 21 of Import Policy Order, 2020, in respect of vintage cars falling under notification SRO No.833(I)/2018, dated 3-7-2018, already imported by them.

Qazi Umair Ali for Petitioner (in C.P. No.D-5430 of 2020).

Mehmood ul Hassan and Muhammad Khalid for Petitioner (in C.P. No.D-1196 of 2021).

Salman Talibuddin in person (in C.P. No.D-3911 of 2021).

None present (in C.Ps. Nos.D-5536 of 2020 and D-1434 of 2021).

Kafeel Ahmed Abbasi, Deputy Attorney General and M. Hussain Vohra, Assistant Attorney General along with Muhammad Naeem Tariq, Deputy Director/Staff Officer, Ministry of Commerce for Respondents Nos.1 and 2.

Shahab Imam for Respondents Nos.3 and 4.

2021 P T D 2101

[Sindh High Court]

Before Aqeel Ahmed Abbasi and Zulfiqar Ahmad Khan, JJ

Messrs M. MUBBASHIR TRADER through Owner

Versus

APPELLATE TRIBUNAL SINDH REVENUE BOARD, KARACHI and 3 others

Special Sales Tax Reference Application No.06 of 2019 along with Special Sales Tax References Applications Nos.09 to 24, 114, 768 and 811, 812, 813, 814 and 815 of 2019, 768, 119 and 09 of 2019, decided on 10th September, 2021.

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

----S.24B---Service provider---Supply chain management/distribution (including delivery) service---Sale agreement, residual effect of---Applicant was compulsorily registered under S.24B of Sindh Sales Tax on Services Act, 2011, for providing distribution services to manufacturer---Applicant contended that he was not rendering such services and was already registered and paying Federal Sales Tax under the Sales Tax Act, 1990---Applicant's appeals were rejected by Tax hierarchy---Validity---Relationship between applicant as established under the agreement/appointment letter could be analysed under the doctrine of the "exhaustion of rights after first sale"---Applicant was mandated to perform some services for the benefit of the manufacturer even after making full and final payment---Agreement between the parties left a residual element of control of the manufacturer on the goods which was exercised through the hands of the applicant, which clearly did not fill the regime of classical sale of goods agreement---Some services were performed by the applicant aimed to give a value-add to the manufacturer's profitability---Assesse as distributor was not an agent of company but was a purchaser, hence the transactions in question were liable to be included in the turnover of the assesse---Agreement/appointment letter aimed to propel a service performed by the applicant which could rightly fall under the head of "supply chain management/distribution (including delivery) service"---Application was dismissed accordingly.

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

----S.24B---Doctrine "exhaustion of rights after first sale"---Scope---Doctrine of "exhaustion of rights after first sale" means that an owner of a particular good ceases to have control over further sale of his goods once he had made valid transaction of sale---Besides a litmus test in cases of intellectual property rights, same ratio could also be used in cases where a court had to examine residual effect of a sale agreement---If there appeared that even after the first sale, the seller retained power to exercise control over the goods, the doctrine of "exhaustion of rights" would become an instrument to microscopically analyse such relationship.

(c) Interpretation of statutes---

----While construing a statute/instrument/document, whole document was to be read and be considered to ascertain the scope/object of the document---Court must look into the substance of the document and not the form thereof.

Kamran Industries v. Collector of Customs PLD 1996 Kar. 68 and Habib Insurance Ltd. v. Commissioner of Income Tax (Central), Kar. PLD 1985 SC 109 ref.

Salman Zaheer Khan for Applicant.

Qazi Umair Ali for Applicant (in Spl. STRAs. Nos.811 to 815 of 2019).

Imtiaz Ali for Applicant (in Spl. STRA No.768 of 201).

Ghulam Murtaza Korai for Respondents.

2021 P T D 2146

[Sindh High Court]

Before Nazar Akbar, J

The COLLECTOR OF CUSTOMS, MCC PORT MUHAMMAD BIN QASIM, KARACHI

Versus

SHAHZAD AHMED

Special Criminal Acquittal Appeal No.05 of 2020, decided on 27th November, 2020.

Customs Act (IV of 1969)---

----Ss. 156(1)(9), 156(1)(14A) & 185F---Fiscal fraud---Mis-representation---Evasion of sales tax and income tax---Appeal against acquittal---Scope---Allegation against accused was that he being an importer had no facility of manufacturing at the given address and was physically non-existent; that the imported goods were sold out in the market and that exemption of additional sales tax and income tax was availed, which was otherwise not available---Trial court had held that such infractions did not fall within the domain of the Customs Authorities which could only be initiated by the Commissioner Inland Revenue, having jurisdiction in respect of sales tax and income tax; that the FIR was incompetently lodged and was without lawful authority and that the proceedings could not be ended in conviction of accused---Perusal of impugned order showed that present was the case of no evidence against the accused---Appeal against acquittal was dismissed.

Muhammad Measum and others v. Federation of Pakistan through Secretary and others 2015 PTD 702; Babar Younus v. The State 2006 PCr.LJ 1427 = 2006 PTD 2190; Zaheer Ahmed v. Directorate General of Intelligence and Investigation-R and 4 others 2015 PTD 349; Gufran Ahmed and another v. The State 1983 PCr.LJ 620; Wang Xing v. The State through Customs Department SRDP Sost 2019 MLD 1252; Taj International (Pvt.) v. The Federal Board of Revenue and others 2014 PTD 1807 and M/s. Muhammad Shahzad Industries v. Federation of Pakistan and others (C.P. No.D-2755/2019) ref.

Ashiq Ali Anwar Rana, Special Prosecutor of Customs for Appellant.

Umar Farooq for Respondent.

2021 P T D 1

[Lahore High Court (Bahawalpur Bench)]

Before Shahid Jamil Khan and Muhammad Sajid Mehmood Sethi, JJ

COMMISSIONER INLAND REVENUE

Versus

Messrs THREE STAR RICE FACTORY

P.T.R. No.03 of 2019, heard on 17th February, 2020.

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

----S.122---SRO No.57(I)/2012, dated 24-01-2012---Amendment of assessment---Exemption notification---Retrospective operation---Scope---Taxpayer, being rice mill, had a special tax year starting from 1st of September till 31st of August---Minimum tax was being paid on normal rates till issuance of SRO No.57(I)/2012, dated: 24-01-2012 and on its issuance the tax for the year 2012 was paid at reduced rate---Department, disagreeing on payment at reduced rate retrospectively, proceeded under S.122(5A), Income Tax Ordinance, 2001 and raised a demand of less paid tax---Amended assessment order was successfully assailed before the first appellate authority---Department's appeal was dismissed by the Appellate Tribunal on the ground that remedial law could be given retrospective effect---Validity---Law existing in a particular tax year or tax period was applicable for the purpose of determining tax liability---No right to claim reduction in tax rate existed till closure of tax year 2012---Exemption notifications were always beneficial but were not curative or remedial generally---General rule was that a notification could not operate retrospectively---Exemption notification could not be applied retrospectively---Tax reference was decided in favour of the (applicant) department.

Commissioner of Income Tax v. Shahnawaz Ltd. and others (1992) 66 Tax 126 = 1993 SCMR 73 distinguished.

Messrs Army Welfare Sugar Mills Ltd and others v. Federation of Pakistan and others 1992 SCMR 1652 rel.

(b) Taxation---

----Law existing in a particular tax year or tax period is applicable for the purpose of determining tax liability.

(c) Interpretation of statutes---

----Remedial and curative legislation---Retrospective effect---Scope---Purpose of remedial and curative legislation is to abridge superfluities, remove defects or mischief from an existing law to redress wrongs and injuries being impinged upon the existing rights---Such legislation can be applied retrospectively, if intention of the legislature is manifest from the amending law itself---Any such legislation which creates new rights or takes away existing rights or effects the past and closed transactions cannot be applied retrospectively.

"Understanding Statutes" by Mr. S.M. Zafar, Chapter VII rel.

(d) Interpretation of documents---

----Notification---Retrospectivity---Scope---General rule is that a notification cannot operate retrospective but in case it removes defects, superfluities or mischiefs from an existing notification to advance remedy for enforcement of existing rights, it can be applied retrospectively by the issuing authority or courts can identify the injury or hardship being removed and declare it accordingly, before holding it to apply retrospectively.

Commissioner of Income Tax v. Shahnawaz Ltd. and others (1992) 66 Tax 126 = 1993 SCMR 73 and Messrs Army Welfare Sugar Mills Ltd. and others v. Federation of Pakistan and others 1992 SCMR 1652 rel.

Irfan Majeed Rahmani for Applicant.

Ms. Attiya Rehman, Additional Commissioner Inland Revenue, RTO, Bahawalpur.

Muhammad Siddique Chohan for Respondent.

2021 P T D 43

[Lahore High Court]

Before Shahid Karim, J

NEW CHERAT COAL through Proprietor

Versus

FEDERATION OF PAKISTAN through Secretary, Ministry of Finance, Islamabad and 3 others

Writ Petition No.4214 of 2017, heard on 27th November, 2020.

Sales Tax Act (VII of 1990)---

----S.8(1)(b)---SRO No.549(I)/2006 dated 05.06.2006---Tax credit not allowed---Input tax adjustment---Goods specified by Federal Government upon which registered person shall not be entitled to reclaim or deduct input tax paid---Nature of power conferred on Federal Government under S.8(1)(b) of Sales Tax Act, 1990---Scope---Petitioners / taxpayers impugned SRO No.549(I)/2006 dated 05.06.2006 on ground that same had been issued in excess of jurisdiction conferred on Federal Government under S.8(1)(b) of Sales Tax Act, 1990---Validity---Impugned SRO did not specify any particular goods, with consequence that taxpayers had been denied input tax adjustment on all kinds of goods which were used in making taxable supply of locally produced coal---Power of delegation under S.8(1)(b) of Sales Tax Act, 1990 had been made on Federal Government to specify actual goods and it could not be deemed that under S.8(1)(b), Federal Government could merely specify registered person in relation to taxable supplies made by such person without identifying goods upon which input tax was in fact paid---SRO No.549(I)/2006 dated 05.06.2006 was therefore made by travelling beyond powers conferred by S.8(1)(b) of Sales Tax Act, 1990, which were restrictive in nature, and such notification could only be made in respect of goods on which registered person had paid input tax and for which deduction was claimed---SRO No.549(I)/2006 dated 05.06.2006 therefore failed to meet statutory standard set by S.8(1)(b) of Sales Tax Act, 1990 and was set aside---Constitutional petition was allowed, accordingly.

Ghandhara Nissan Diesel Ltd. v. Collector, Large Tax Payers Unit and 2 others 2006 PTD 2066 rel.

Khurram Shahbaz Butt for Petitioner.

Sarfraz Ahmad Cheema for Respondents.

2021 P T D 80

[Lahore High Court (Multan Bench)]

Before Asim Hafeez, J

MUHAMMAD ZAHID, PROPRIETOR PLUS ENTERPRISES

Versus

FEDERAL BOARD OF REVENUE through Chairperson, Islamabad and 5 others

Writ Petition No.11351 of 2020, decided on 15th September, 2020.

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

----Ss.72-B & 25---Selection of audit of taxpayer under S.72-B of Sales Tax Act, 1990---Records, documents, provision of---Scope---Petitioner / taxpayer impugned selection for audit under S.72-B of Sales Tax Act, 1990 and subsequent notice to submit record under S.25 of the same, inter alia, on ground that his selection for audit was illegal and based on prejudice---Validity---Record revealed that petitioner had filed statutory appeals against selection of audit and order of Appellate Tribunal upheld such selection of audit---Petitioner did not file reference under S.47 of Sales Tax Act, 1990 against such order of Appellate Tribunal raising question of law regarding his selection for audit and alleged prejudice---Such failure to avail remedy manifested petitioner's acquiescence to selection of audit and he was now estopped from questioning such act of selection of audit, as order of Appellate Tribunal had obtained finality----No reason existed for High Court to exercise discretion under its Constitutional jurisdiction to stall proceedings and remedies were provided in Sales Tax Act, 1990 where decisions taken in such proceedings of audit against petitioner could be competently challenged---Constitutional petition was dismissed, in circumstances.

Treet Corporation Ltd v. Federation of Pakistan and others 2018 PTD 1942; Shagufta Begum v. The Income-Tax Officer Circle-XI, Zone-B, Lahore PLD 1989 SC 360 and Executive District Officer Schools and Literacy, District Dir Lower and others v. Qamar Dost Khan and others 2006 SCMR 1630 distinguished.

Trading Corporation of Pakistan v. Devan Sugar Mills Limited and others PLD 2018 SC 828 and Commissioner of Inland Revenue, Sialkot and others v. Messrs Allah Din Steel and Rolling Mills and others 2018 SCMR 1328 rel.

(b) Precedent---

----Nature of precedent---Distinction between "obiter dicta" and "ratio decidendi"---Scope---Distinction was to be made between what was ratio decidendi of a case and what was mere obiter dicta---What was necessary for decision of the issue in a case was ratio decidendi and was binding however, what was said "by the way" and was entirely unnecessary for decision of a case or what was mere gratuitous statement of the law was obiter dicta and was not binding.

Muhammad Sohail and 2 others v. Government of N.-W.F.P. and others 1996 SCMR 218; Pir Bakhsh represented by his Legal Heirs and others v. The Chairman, Allotment Committee and others PLD 1987 SC 145; Irshad Ahmad Shaikh v. The State 2000 SCMR 814 and Judicial Review of Public Actions (Second Edition) Volume-1 by Fazal Karim, J rel.

2021 P T D 155

[Lahore High Court]

Before Ayesha A. Malik and Jawad Hassan, JJ

COMMISSIONER INLAND REVENUE

Versus

Messrs SAMSOL INTERNATIONAL (PVT.) LTD. and others

E.T.R. No.09 of 2013, decided on 26th November, 2019.

Federal Excise Act (VII of 2005)---

----S.34A---Reference to High Court---Exercise of jurisdiction under S.34A of Federal Excise Act, 2005---Findings of fact---Scope---Where order of Appellate Tribunal was based on findings of facts, after detailed discussion, deliberation and interpretation of provisions of law and as such did not carry any mistake apparent on record, then same did not require any interference by High Court while exercising jurisdiction under S.34A of Federal Excise Act, 2005.

Ch. Muhammad Zafar Iqbal for Applicant.

2021 P T D 162

[Lahore High Court]

Before Jawad Hassan, J

Mst. FOUZIA RAZZAK

Versus

FEDERAL BOARD OF REVENUE and others

W.P. No.216965 of 2018, heard on 19th October, 2020.

Income Tax Ordinance (XLIX of 2001)---

----Ss.140 & 138---Constitution of Pakistan, Art.4---Right of individuals to be dealt in accordance with law---Recovery of tax out of property and through arrest of taxpayer---Recovery of tax from persons holding money on behalf of a taxpayer---Scope---Petitioners assailed order of department regarding attaching their Bank accounts and recovery of tax amount by directly issuing notice under S.140 of the Income Tax Ordinance, 2001---Validity---Department, before invoking S.140 of the Income Tax Ordinance, 2001, was required to issue a notice under S.138 of the Income Tax Ordinance, 2001 intimating the taxpayer regarding invocation of S.140 requiring him to make payment of tax liability within a reasonable time---Under Art.4 of the Constitution, it was an inalienable right of every citizen to be treated in accordance with law but, in the present case no notice under S.138 was served before invocation of S.140 of the Income Tax Ordinance, 2001---Impugned actions regarding attachment and recovery of tax amount from the Bank accounts of the petitioners were illegal and without lawful authority---Constitutional petitions were allowed.

Messrs HUAWEI Technologies Pakistan (Pvt.) Ltd. v. Commissioner Inland Revenue and others 2016 PTD 1799 ref.

Shahbaz Butt for Petitioner.

Ch. Muhammad Yasin Zahid for Respondent.

2021 P T D 172

[Lahore High Court (Multan Bench)]

Before Jawad Hassan and Muzamil Akhtar Shabir, JJ

COLLECTOR OF CUSTOMS, MULTAN

Versus

CUSTOMS APPELLATE TRIBUNAL, LAHORE and 3 others

Customs Reference No.19 of 2019, decided on 12th February, 2020.

Customs Act (IV of 1969)---

----Ss.168 & 196---Seizure of things liable to confiscation---Findings of fact---Scope---Department intercepted a vehicle on the suspicion that it was smuggled and duty and taxes leviable thereon were not paid---Adjudicating authority confiscated the vehicle vide order-in-original and appeal filed against the same was dismissed---Appellate Tribunal allowed the appeal on the ground that the respondent had not claimed the said vehicle to be registered with concerned Motor Registration Authority, which Authority had refused to recognize the vehicle as registered rather the vehicle was registered with Motor Registration Authority at another District which Authority had not only confirmed the registration number but had also confirmed the genuineness of the registration and identity of the vehicle---High Court observed that such being findings of facts did not give rise to any question of law---Reference was dismissed.

Caretes v. Collector Sales Tax and Federal Excise and others 2013 PTD 1536; Wak Limited Lahore v. Customs, Central Excise and Sales Tax Appellate Tribunal and 2 others 2018 PTD 253; Messrs Ittehad Textile Industries (Pvt.) Ltd. v. Collector of Sales Tax, Collectorate of Sales Tax and Central Excise, Faisalabad and 2 others 2007 PTD 663; Collector of Customs Karachi and others v. Messrs Haji Ismail Co. and others 2015 SCMR 1383 = 2015 PTD 2642 and Messrs Khan and Co. Bisham v. Deputy Commissioner-IR (Audit-IX), Zone-III, R.T.O. Peshawar and another 2015 PTD 796 ref.

Agha Muhammad Akmal Khan and Tariq Manzoor Sial for Applicant.

2021 P T D 181

[Lahore High Court]

Before Jawad Hassan, J

M.D STEEL FURNACE

Versus

FEDERATION OF PAKISTAN and others

Writ Petition No.56384 of 2020, decided on 9th November, 2020.

Customs Act (IV of 1969)---

----S.193---Constitution of Pakistan, Art.199---Constitutional petition---Maintainability---Alternate remedy, availability of---Appeal to Collector (Appeals)---Scope---Petitioner assailed order passed by Deputy Collector Customs (Adjudication) before the High Court on the ground that it had paid duty/taxes as per calculation of the department, however, its goods were not being released---Validity---Specific remedy of appeal under S.193, Customs Act, 1969, was available to the petitioner, which he had not availed rather instituted the constitutional petition---Jurisdiction of High Court under Art. 199 of the Constitution could not be invoked in the wake of availability of an alternate efficacious remedy---Constitutional petition was dismissed.

Indus Trading and Contracting Company v. Collector of Customs (Preventive) Karachi and others 2016 SCMR 842; DR. Sher Afgan Khan Niazi v. Ali S. Habib and others 2011 SCMR 1813 and Muhammad Abbasi v. S.H.O. Bhara Kahu and 7 others PLD 2010 SC 969 ref.

Abdul Khaliq Safrani for Petitioner.

2021 P T D 192

[Lahore High Court (Multan Bench)]

Before Jawad Hassan and Muzamil Akhtar Shabir, JJ

COMMISSIONER INLAND REVENUE, MULTAN ZONE

Versus

FALAH UD DIN QURESHI

T.R. No.8 of 2019, decided on 11th February, 2020.

Income Tax Ordinance (XLIX of 2001)---

----S.111---Unexplained income or assets---Addition---Scope---Non issuance of separate notice under S.111 of the Income Tax Ordinance, 2001 and failure to confront the taxpayer with the proposed addition in order to require him to explain his position before making addition in his income is unlawful.

C.I.R. Faisalabad v. Faqir Hussain and others 2019 PTD 1828 rel.

Agha Muhammad Akmal Khan, Advocate/Legal Advisor for applicant-CIR.

2021 P T D 212

[Lahore High Court]

Before Shahid Karim, J

HONDA ATLAS CARS PAKISTAN LTD. through Authorized Representatives

Versus

FEDERATION OF PAKISTAN through Minister of Finance and others

Writ Petition No.49497 of 2017, decided on 29th October, 2020.

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

----S.19---Exemption from customs duty---Federal Government, jurisdiction of---Power vested in Federal Government is regarding exemption from customs duty on any goods subject to certain conditions which may be imposed in a notification issued in official gazette.

(b) Discretion---

----Applicability---Discretion must be used to promote policy and objects of Act.

(c) Proportionality, principle of---

----Decision making---Principle of proportionality---Applicability---Courts consider whether there has been a disproportionate interference with claimant's rights or interests---Such is where the general concept of proportionality is invoked as a test requiring decision maker to achieve fair balance.

Administrative law by H.W.R. Wade and C.F. Forsyth (Eleventh Edition); De Smith's Judicial Review (7th Ed.); R. (on the application of Khaton) v. Newham LBC [2004] EWCA Civ. 55, Laws; (R. v. Customs and Excise Commissioner Exp. Hedges and Butler Ltd. [1986] 2 All E.R. 164 and From the article, proportionality: The way Ahead ? by the Rt. Hon. Lady Justice Arden DBE (2013 PL 498) rel.

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

----S.19---SRO No.656(I)/2006 dated 22-6-2006---SRO No.483(I)/2016 dated 29-6-2016---Exemption from customs duty---Suspension of operation of notification---Applicability---Petitioner was automotive cars manufacturer who used to import various parts and components in 'Kit' form whereafter cars were assembled---Federal Government vide notification SRO No.483(I)/2016, dated 29-6-2016 imposed a condition of fitting immobilizers in every car to seek benefit of reduced customs duty on relevant parts---High Court (of other province) had suspended operation of disputed clause of Notification in question in a suit filed by another manufacturer--- Validity--- Pursuant to the decision made by Economic Coordination Committee Notification SRO No.483(I)/2016, dated 29-6-2016, was issued and was notified by Ministry of Industries and Production in respect of Consumer Welfare measures under Automotive Development Policy, 2016, for next five years--- Decision envisaged 'compulsory installation of immobilizers in cars by OEM (Original Equipment Manufacturers)' and did not require at all that the decision be implemented at once without sufficient time to OEMs and significantly to be added as a condition in notification SRO No.656(I)/2006 dated 22-6-2006 and thereby to take away exemption abruptly--- Federal Government was aware in enacting SRO No.483(I)/2016 dated 29-6-2016, that "the kits imported by importer-cum-assembler or OEM of cars must contain immobilizer"--- Immobilizer was to be part of kit to be imported (as against their local manufacture)--- Federal Government could not have turned a blind eye to practicalities involve in fulfilling conditions in two days---High Court (of the other province) in its order suspending clause (b) (iii) of notification SRO No.483(I)/2016, dated 29-6-2016, did not specify whether relief was extended to the person initiating that lis only---Such was deemed that order staying operation of clause in question was across the board and benefit was necessarily be extended to petitioner as well---Portion of notification in question could not be selectively apply to benefit one set of manufacturers and not the others while its operation was suspended---Provisions of notification SRO No.483(I)/2016, dated 29-6-2016, issued by Federal Government were to be applied across Pakistan and its stay by Court of competent jurisdiction was also applicable in respect of all those covered by its mischief---High Court declared relevant condition imposed in notification SRO No.483(I)/2016, dated 29-6-2016, as null and void and of no effect---Constitutional petition was allowed in circumstances.

Otto Preminger Institut v. Austria (13470/87) and Suit No.1630/16 rel.

Waqas Ahmad Mir for Petitioner.

Ch. Muhammad Zafar Iqbal for Respondents.

2021 P T D 275

[Lahore High Court]

Before Jawad Hassan, J

OMER FLOUR MILLS

Versus

GOVERNMENT OF PUNJAB and others

Writ Petitions Nos.103100, 103105, 103108, 107276 and 107079 of 2017, heard on 16th November, 2020.

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

----S.131---Export Goods Declaration---Show-cause notice---Petitioners sought directions to the authorities to withdraw their letters which were correspondence between departments regarding double verification of Export Goods Declarations from Customs Authority and challenged a show-cause notice issued in the name of petitioners wherein the concerned authority required them to appear before the Director for defending their stance---Validity---Correspondence could culminate into an executable order only when it reached the final decision-making authority in the department, gets its approval and the final order is communicated to the person concerned---Show-cause notice was mere initiation of proceedings and not the proceedings in itself and constitutional petition was not maintainable against it unless the same was without jurisdiction or suffered from patent legal defect---Constitutional petitions were dismissed.

Muhammad Gulshan Khan v. Government of Pakistan and others 1996 PLC (C.S.) 102 ref.

Rehmatullah Khan through LRs v. Superintendent, Customs and others 2014 SCMR 1203 and Khalid Mahmood Ch. and others v. Government of the Punjab through Secretary, Livestock and Dairy Development 2002 SCMR 805 rel.

(b) Constitution of Pakistan---

----Art.199---Constitutional petition---Show-cause notice---Maintainability---Scope---Show-cause notice can only be impugned where the same is without jurisdiction and lawful authority, however, challenge to the show-cause notice cannot be made in constitutional petition on merits.

Zulfiqar Cheema v. Technical Education and Vocational Training Authority through Chairman and others 2011 PLC (C.S.) 914; Riffat Hassan and 9 others v. Federation of Pakistan through Chairman Federal Board of Revenue/Secretary Revenue Division and another 2011 PLC (C.S.) 562; D.G. Khan Cement Company Limited v. Federal Board of Revenue and others 2018 PTD 287; Muhammad Aslam v. Federation of Pakistan and others 2017 PTD 803; Messrs Ocean Pakistan Ltd. v. Federal Board of Revenue, Islamabad and others 2012 PTD 1374; Messrs Noble (Pvt.) Ltd. through Manager Finance and Administration v. Federal Board of Revenue through Chairman and 4 others 2009 PTD 841 and Reliance Commodities (Private) Ltd. v. Federation of Pakistan and others 2020 PTD 1464 ref.

Mian Irfan Ahmed, Muhammad Bilal Akhtar and Sh. Muhammad Ali for Petitioner.

Ms. Sadia Malik, Assistant Attorney General for Respondent.

Barrister Umair Khan Niazi, Additional Advocate General, Barrister Hassan Khalid Ranjha, Assistant Advocate-General with Shoaib Anam and Muhammad Sharif Shahid, Assistant Accounts Officer of Respondent No.2/Director for Foods for Respondents.

Ijaz Mahmood Chaudhry, Legal Advisor for Customs Department.

2021 P T D 521

[Lahore High Court]

Before Shahid Karim, J

NESTLE PAKISTAN LTD. through Senior Manager Legal and another

Versus

FEDERATION OF PAKISTAN through Secretary Ministry of Law and 6 others

Writ Petition No.4361 of 2017 (others connected petitions), decided on 29th December, 2020.

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

----Ss.230, 208 & 209---SRO No.115(I)/2015 dated 09.02.2015---Directorate General (Intelligence and Investigation), Inland Revenue ("DG I&I"), functions and powers of---Conferment of powers to officers of DG I&I without specifying functions and jurisdiction of DG I&I ---Scope---Petitioners impugned SRO No.115(I)/2015 dated 09.02.2015 issued under S.230 of Income Tax Ordinance, 2001 whereby certain powers and functions had been conferred on officers of the DG I&I ---Validity---Officers of DG I&I vide impugned SRO, had been conferred with powers of Chief Commissioners and Commissioners and no reasonable or rational basis existed for such conferment ---No rules had been enacted to regulate and define structure of officers of DG I&I and thus with such unregulated powers, reasonable grounds existed for holding that any powers of such officers of DG I&I were based on whims, which was an affront to rule of law---Per S.230(2) of Income Tax Ordinance, 2001, specifying functions and jurisdiction of officers of DG I&I was a prior step before conferring powers on such officers and there could not be conferment of powers without specifying functions and jurisdiction of such officers---Notification regarding functions and jurisdiction of officers of DG I&I thus was to precede notification conferring powers on them, and not the other way around, and on such ground impugned SRO was ultra vires the law ---High Court set aside impugned SRO as well as notices issued under the same and directed Department to initiate process of specifying functions and jurisdiction of officers of DG I&I ---Constitutional petitions were allowed, accordingly.

F.M. Textile Mills and others v. Federal Board of Revenue and others 2017 PTD 1875; Amanullah Khan v. Federal Government of Pakistan PLD 1990 SC 1092 and Administrative Law Treatise Vol.1 (2nd ed.) by Kenneth Culp Davis rel.

(b) Rule of law ---

----Concept---Limitation of government power through law and presupposition that governmental power can be exercised and controlled through law, explained.

Article 16 of the 1789 French Declaration of the Rights of Man and Citizen; (C.H. Mcllwain, Constitutionalism and the Changing World (Cambridge: Cambridge University Press, 1969) at 82; U.S v. Wunderlich, 342 U.S 98; Rule of Law and the European Court of Human Rights; Lon L. Fuller, the Morality of Law (New Haven / London: Yale University Press, 1969 at 46-91 and Tom Bingham (Law Lord of the United Kingdom rel.

Imtiaz Rasheed Siddiqui, Shahryar Kasuri, Syed Naveed A. Andrabi, Ajmal Khan, Rai Amer Ijaz Kharal, Khurram Shahbaz Butt, Haji Abdul Ghafoor, Munawar us Salam, Furqan Naveed, Mian Danish Quddus, Raza Imtiaz, Muhammad Hamza, Sabeel Tariq Manan, Syed Hammad ul Hassan, Faisal Anwar Minhas, Qadeer Ahmad Kalyar, Khurram Saleem, Zeeshan Ghani Sulehria, Muhammad Faizan Saleem, Kashif Habib Sheikh, Nadeem Yousaf Rana, Sardar S.M Tahir and Ch. Saeed Hussain Nagra for Petitioners.

Barrister Muhammad Umer Riaz, Sarfraz Ahmad Cheema, Shahzad Ahmad Cheema, Farrukh Ilyas Cheema, Ch. Muhammad Shakeel, Malik Abdullah Raza, Liaqat Ali Chaudhry, Kausar Parveen, Amna Parveen, Ch. Imtiaz Elahi, Muhammad Asif, Shahid Usman, Falak Sher Khan, Sharjeel Tareef, Waqar Umer Sial, Mir Haroon Rashid and Azmat Ali Khanzada, D.A.G. for Respondents.

2021 P T D 553

[Lahore High Court]

Before Muhammad Ameer Bhatti, J

GHANI GLOBAL GLASS LTD. through Company Secretary

Versus

FEDERAL BOARD OF REVENUE through Chairman and 7 others

Writ Petition No.50298 of 2019, heard on 9th February, 2021.

Sales Tax Act (VII of 1990)---

----Ss.66 & 3---Constitution of Pakistan, Art.199---Constitutional petition---Determination of sales tax liability---Refund / adjustment under S.66 of the Sales Tax Act, 1990---Tax claimed to have been paid or overpaid through inadvertence, error or misconstruction or refund of tax on account of input adjustment---Scope---Petitioner/taxpayer impugned order of Department whereby its claim for refund of excess amount of tax deposited inadvertently, which was undisputed by Department, was declined on ground that such request was not within time stipulated under S.66 of Sales Tax Act, 1990 --- Contention of petitioner, inter alia, was that such delay occurred as petitioner had first filed an application with another wing of the Department, which application was within time, however, when petitioner made request to transfer the matter to relevant wing which was the correct forum, then the said application was declined on ground of being filed late --- Validity----Application of petitioner / taxpayer remained pending with another wing of the Department, therefore it could neither be said to be time-barred nor required obtaining of condonation of delay, especially in view of the fact that when tax was not payable under the law, it could only be termed as an erroneous payment due to inadvertence and therefore, declining petitioner's claim for such refund was unwarranted--- Impugned order was set aside, and Department was directed to return the excess and undisputed amount to petitioner within a period of fifteen days --- Constitutional petition was allowed, accordingly.

Syed Haji Abdul Wahid and another v. Syed Sirajuddin 1998 SCMR 2296; Karachi Electric Supply Corporation Ltd. v. Lawari and 4 others PLD 2000 SC 94; Sherin and 4 others v. Fazal Muhammad and 4 others 1995 SCMR 584; Messrs Pfizer Laboratories Limited v. Federation of Pakistan and others PLD 1998 SC 64 and Aluminium Corporation of India Ltd. v. Union of India and others AIR 1975 SC 2279 rel.

Rana Muhammad Afzal and Shah Jahan Khan for Petitioners.

Tahir Mahmood Ahmad Khokhar, Deputy Attorney General for Pakistan and Alamdar Hussain for Federal Board of Revenue for Respondents.

2021 P T D 587

[Lahore High Court]

Before Abid Aziz Sheikh, J

PATTOKI SUGAR MILLS LIMITED through Authorized Representative

Versus

FEDERATION OF PAKISTAN through Secretary Revenue, Islamabad and 2 others

Writ Petition No.128697 of 2018, heard on 12th January, 2021.

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

----Ss.2(46) & 3---Value of supply ---Power of Department to fix the value of any imported goods or taxable supplies under S.2(46) of Sales Tax Act, 1990---Nature of provisos to S.2(46) of Sales Tax Act, 1990---Petitioner impugned notification issued under S.2(46) of Sales Tax Act, 1990 whereby price of white sugar was fixed, on ground that market price of same was much lower, and petitioner could not be forced to pay sales tax on such inflated fixed price --- Validity--- Petitioner's supply of white sugar was covered by S.2(46)(a) of Sales Tax Act, 1990 and first proviso to S.2(46) of Sales Tax Act, 1990 was an exception to main S.2(46) of Sales Tax Act ,1990 and not confined to being merely an exception to S.2(46)(g) of said Act --- High Court observed that it was neither provided nor it could be construed under said S.2(46), that if market price was lower than value fixed by Federal Board of Revenue under said section, then market price would prevail and such interpretation would render the first proviso to S.2(46) of the Act as redundant and meaningless ---Impugned notification was therefore validly issued under first proviso to S.2(46) of Sales Tax Act, 1990 and was not ultra vires the law --- Constitutional petition was dismissed, circumstances.

Collector of Custom Appraisement, Collectorate Customs House Karachi v. Messrs Gul Rehman Proprietor, Messrs G. Kin Enterprises 2017 SCMR 339 ref.

(b) Interpretation of statutes---

----Proviso to a statutory provision, construction of --- Principles ---"Proviso" to a section of a statute had an overriding effect and control over the whole section, and function of proviso was to exclude and take out certain cases from the rule to which it was a proviso---Proviso modified main provision of an enactment and was added to an enactment to qualify or create an exception---Proviso could also be a precautionary measure, and could be used to explain general words of statute and to exclude some ground of misinterpretation which would extend it to cases not intended to be brought within its purview---Proviso was an exception to general law and must be strictly constructed.

K.E.S.C. Progressive Workers Union through its Chairman and others v. K.E.S.C. Labour Union through its General Secretary and others 1991 SCMR 888; Mst. Nawab Bibi v. Ch. Allah Ditta 1998 SCMR 2381; Ibrar Hussain and others v. Government of N.W.F.P. through Secretary, Board of Revenue and others 2001 SCMR 914; Abid Hussain v. Additional District Judge, Alipur, District Muzaffargarh 2006 SCMR 100; Messrs Hamdard Dawakhana v. Commissioner Income-Tax, Karachi PLD 1980 SC 84 and Messrs Tariq Brothers v. Collector of Customs 2005 PTD 186 rel.

Arshad Nazir Mirza and Shezal Khan Burki for Petitioners.

Malik Abdullah Raza on behalf of Sarfraz Ahmad Cheema for Respondents.

2021 P T D 689

[Lahore High Court]

Before Ayesha A. Malik, J

CRESCENT TEXTILE MILLS LIMITED

Versus

FEDERATION OF PAKISTAN and others

Writ Petitions Nos. 52548, 57455, 56719, 56952, 58606, 52579, 52589, 53961, 54012, 54101, 54213, 54237, 54284, 54315, 54323, 54330, 54338, 54363, 54491, 54506, 54510, 54511, 54544, 54553, 54558, 54697, 54910, 54932, 55172, 55749, 55593, 55588, 55490, 55259, 55255, 58117, 55998, 57230, 55978, 52620, 54487, 58705, 55243, 52560, 54936, 55251, 55518, 56066, 56071, 52608, 55519, 54527, 54535, 54539, 54550, 54556, 54559, 54522, 52600, 52604, 57767, 59968, 59130, 60358, 60726, 61429, 62392, 62443, 64846, 67323, 66262 of 2020 and Crl. Org. 67055-W of 2020, decided on 21st December, 2020.

Income Tax Ordinance (XLIX of 2001)---

----S.209(8A)---Jurisdiction of Income Tax Authorities---Change of taxing jurisdiction---Scope---Petitioners impugned orders whereby their taxing jurisdiction was changed from Regional Tax Office (RTO) to the Large Taxpayers Office (LTO) at another city, on the ground that orders were made without jurisdiction and were therefore illegal---Validity---Under S.209(8A) of Income Tax Ordinance, 2001, power for such change of jurisdiction was categorically provided to Department, therefore such change of jurisdiction was well within powers of the Department---Constitutional petitions were dismissed, in circumstances.

Babar Hussain Shah and another v. Mujeeb Ahmed Khan and another 2012 SCMR 1235; New Jubilee Insurance Company Ltd., Karachi v. National Bank of Pakistan, Karachi PLD 1999 SC 1126; Government of Pakistan v. Messrs Village Development Organization 2005 SCMR 492; Hazara (Hill Tract) Improvement Trust through its Chairman and others v. Mst. Qaisra Elahi and others 2005 SCMR 678; Moulana Atta ur Rehman v. Al-Hajj Sardar Umar Farooq and others PLD 2008 SC 663; Muhammad Khan v. Shamsuddin and others 1969 SCMR 212; Mrs. Anisa Rehman v. P.I.A.C. and another 1994 SCMR 2232; Messrs Dewan Salman Fiber Ltd. and another v. Government of N.W.F.P through Secretary, Revenue Department, Peshawar and others PLD 2004 SC 441; Chairman, Regional Transport Authority, Rawalpindi v. Pakistan Mutual Insurance Company Limited Rawalpindi PLD 1991 SC 14 and Shabbir Ahmed v. Kiran Khursheed and 8 others 2012 CLC 1236 ref.

Khubaib Ahmad, Shehbaz Butt, Muhammad Mohsin Virk, Sumair Saeed Ahmed, Rabeel Safdar Tatla, Hammad lftikhar Malik, H.M Majid Siddiqui, Muhammad Nauman Yahya, Waseem Ahmad Malik, Asmar Tariq Mayo, Rana Ashfaq Ahmad, Dr. Muhammad Saleem Malik, Muhammad Bashir Malik, Rana Usman Habib Khan, Ahsan Siyal, Adeel Shafique, Mian Abdul Ghaffar, Rai Amir Ijaz, Muhammad Ajmal Khan, M. Farooq Sheikh, Azeem Hafeez, Usman Khalil, Hashim Aslam Butt and Zahid Imran Gondal for Petitioners.

Ambreen Moeen, Deputy Attorney General for Official Respondents.

2021 P T D 699

[Lahore High Court]

Before Muhammad Sajid Mehmood Sethi and Shahid Karim, JJ

STIEFEL LABORATORIES PAKISTAN (PVT.) LIMITED

Versus

APPELLATE TRIBUNAL, CUSTOMS, FEDERAL EXCISE AND SALES TAX and others

S.T.R. No.42 of 2008, decided on 30th September, 2020.

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

----S.11---Assessment of tax and recovery of tax not levied or short levied or erroneously refunded---Scope---Applicant was issued a show cause notice with the allegations that it imported "Fongitar and Polytar" liquid shampoos and got cleared the same by mis-declaring as pharmaceutical products under Chapter 30 instead of cosmetics classified under Chapter 33---Show cause notice culminated in passing of order-in-original---Appeal filed by applicant before Appellate Tribunal was disposed of by remanding the case back to the Collector for de novo consideration---Fresh show-cause notice was issued to the applicant in post-remand proceedings which resulted in impugned order-in-original---Applicant's appeal against said order-in-original was dismissed by the Appellate Tribunal---Validity---Once the matter was determined by the Taxation/Customs Authorities, the Revenue should have assailed those orders, instead of simultaneously initiating proceedings through another show cause notice---Applicant had been regularly importing the said products for several years and the products were classified under Chapter 33 and not under Chapter 30---If at all a change from the established practice had to be made, it could only be prospective and not retrospective---Reference was decided in favour of the applicant and against the department.

(b) Constitution of Pakistan---

----Art.13---Protection against double punishment and self-incrimination---Scope---One cannot be tried twice for the charge based on the same allegation and evidence in the same transaction.

Zarai Taraqiati Bank Limited and others v. Mushtaq Ahmed Korai 2007 SCMR 1698; Noor Muhammad and others v. Ghulam Rasul and others 1999 SCMR 705; Arshad Hussain v. Collector of Customs and others 2010 PTD 104; Ch. Sugar Mills Limited v. Chief Commissioner 2016 PTD 527 and K.B. Enterprises v. Federation of Pakistan and others 2016 PTD 483 ref.

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

----S.11---Assessment of tax and recovery of tax not levied or short levied or erroneously refunded---Scope---Most specific description shall be preferred to headings providing a more general description.

GLAXO Laboratories of Pakistan Ltd. v. Federation of Pakistan and others PLD 1992 SC 455 ref.

Waleed Khalid for Applicant.

2021 P T D 844

[Lahore High Court]

Before Ayesha A. Malik, J

CSH PHARMACEUTICALS (PVT.) LTD. through duly Authorized Company Secretary

Versus

COLLECTORATE OF CUSTOMS through Collector Customs and 3 others

Writ Petition No.13728 of 2011, decided on 8th July, 2015.\

Customs Act (IV of 1969)---

----S.19---SRO No.575(I)/2006, dated 05-06-2006---General power to exempt from customs duties---Scope---Petitioner sought benefit of SRO No.575(I)/2006, dated 05-06-2006---Petitioner being a pharmaceutical company had manufactured certain drugs for which customized Air Handling Units (AHUs) were required to control temperature, humidity and pressure level---As per the understanding of petitioner the AHUs required by it were not locally manufactured---Petitioner had imported the AHUs at which it sought the benefit of the SRO No.575(I)/2006, dated 05-06-2006, which was denied---Contention of authorities was that the local manufacturers had the capacity to manufacture the required AHUs---Validity---Authorities had admitted that no physical verification was made to ascertain the statements of local manufacturers, who had claimed that they had the capacity to make the AHU required by the petitioner---AHU required by the petitioner was a customized product with certain specific components---Authorities were required to certify that a particular product was locally manufactured and in doing so it had to understand the requirements of the petitioner---Constitutional petition was accepted, authorities were directed to provide certificate to the petitioner that the product was not locally manufactured and the customs authorities were directed to grant the benefit of the SRO No.575(I)/2006, dated 05-06-2006 to the petitioner in terms thereof.

Waleed Khalid for Petitioner.

Mian Tariq Ahmad, DAG.

Ehsan Ullah Cheema and Irteza Ali Naqvi for Respondent Customs.

M. Inam Chohan for Respondent.

EDB with Tariq Ejaz Chaudhry, CEO EDB and Khuda Bakhsh Ali Technical Manager Respondents Nos.3 and 4.

2021 P T D 871

[Lahore High Court (Rawalpindi Bench)]

Before Shahid Jamil Khan and Muhammad Sajid Mehmood Sethi, JJ

Messrs PUNJAB SMALL INDUSTRIES, RAWALPINDI

Versus

DEPUTY COLLECTOR ADJUDICATION and others

S.T.R. No.02 of 2009, decided on 5th March, 2018.

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

----S.11---General Clauses Act (X of 1897), S.24-A---Assessment of tax and recovery of tax not levied or short levied or erroneously refunded---Reasons to be stated for decision---Scope---Department issued a show cause notice to the taxpayer, alleging therein that it had evaded sales tax, which culminated in passing of the order-in-original---Appeal filed before the Collector (Appeals) was dismissed and so also by the Appellate Tribunal---Validity---Appellate Tribunal had not applied its independent mind rather it had simply referred the order of the adjudicating officer which was not a proper exercise of jurisdiction---Impugned judgment was passed in violation of S.24-A of General Clauses Act, 1897, inasmuch as it lacked valid lawful reasons---Case was remanded to the Appellate Tribunal for decision afresh.

The Collector of Sales Tax, Gujranwala and others v. Messrs Super Asia Mohammad Din and Sons and others 2017 PTD 1756 ref.

Commissioner of Income Tax Companies Zone-II Karachi v. Messrs Sindh Engineering (Pvt.) Limited, Karachi 2002 SCMR 527 = 2002 PTD 419 rel.

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

----S.24-A---Reasons to be stated for decision---Scope---Order passed by judicial or quasi-judicial authority has to be supported by lawful reasons.

Adamjee Jute Mills Ltd. v. The Province of East Pakistan and others PLD 1959 SC (Pak.) 272; Gouranga Mohan Sikdar v. The Controller, Import and Export and 2 others PLD 1970 SC 158; Mollah Ejahar Ali v. Government of East Pakistan and others PLD 1970 SC 173; Muhammad Ibrahim Khan v. Secretary, Ministry of Labour and others 1984 SCMR 1014; Al-Hadayat Textile through Proprietor v. Soneri Bank Limited 2003 CLD 105 and Waqar Alam Saeed v. District Coordination Officer/Chairman and 3 others 2005 YLR 1742 ref.

Syed Tanseer Bukhari for Applicant.

Ms. Farhat Zafar for Respondents.

2021 P T D 892

[Lahore High Court (Bahawalpur Bench)]

Before Jawad Hassan, J

CHENAB FLOUR AND GENERAL MILLS

Versus

FEDERATION OF PAKISTAN and others

Writ Petitions Nos. 7263, 7335, 7432, 7650, 7798, 8004 and 8281 of 2020/BWP, heard on 8th February, 2021.

(a) Federal Board of Revenue Act (IV of 2007)---

----Ss. 2(a), 4 & Preamble---Income Tax Ordinance (XLIX of 2001), S.2(8)---Sales Tax Act (VII of 1990), S. 2(4)---Federal Excise Act (VII of 2005), S. 2(4)---Federal Board of Revenue---Functions and purpose---Federal Board of Revenue (FBR) was the regulator of all fiscal laws in the country, and being a regulator it was vested with the main goal of tax collection in the country---Legal anthropology of FBR stated.

(b) Interpretation of statutes---

----Preamble to a statute---Scope---Preamble of a statute though not a substantive and enforceable part of the enactment, yet being its usher, it provided primary guidelines about the object and scope of the legislation.

Treatise Practical Legislation by Lord Thring J, [Page 92]; Understanding Statutes- Canons of Construction by S.M. Zafar, [Fourth Edition page 53]; Director General, FIA and others v. Kamran Iqbal and others 2016 SCMR 447 and Abwa Knowledge (Pvt.) Ltd. and another v. Federation of Pakistan and another PLD 2021 Lah. 436 ref.

(c) Words and phrases---

----'Regulate' and 'regulator'---Meaning.

Advanced Law Lexicon, 4th Edition, Volume-4, Page-4130; Words and Phrases, Permanent Edition, Volume 36B, Page-249; K J Aiyar Judicial Dictionary 16th Edition, Volume 2-L to Z, Page-1488 and Oxford Advanced Learner's Dictionary, International Student's Edition, Page-1259 ref.

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

----S. 209(8A)---Federal Board of Revenue Act (IV of 2007), Ss. 4(1)(a) & 4(1)(h)---Jurisdiction of income tax authorities---Scope---Federal Board of Revenue (FBR)---Regulatory and administrative powers---Scope---By way of Notification No.F.No.1 (48)Jurisdiction/2014-177049-R dated 12.10.2020 (the "impugned notification") taxing jurisdiction of petitioner-tax-payers was changed from the Regional Tax Office ("RTO") to the Large Taxpayer Office ("LTO"), by the Federal Board of Revenue ("FBR") under S. 209 of the Income Tax Ordinance, 2001 (2001 Ordinance)---Question as to whether exercise of jurisdiction to transfer cases from RTO to LTO under S.209 of the Income Tax Ordinance, 2001 ('the 2001 Ordinance') was ultra vires the 2001 Ordinance---Held, that perusal of the impugned notification revealed that the Chief Commissioner Inland Revenue, LTO, had been given powers to perform functions under the fiscal laws, which was proper, valid and within the permissive ambit of law---If a regulator, such as the FBR, was restrained from performance of its function it would negate the very purpose of law, which chalked out the functionality of such regulator---Impugned Notification, was an expression of policy decision, issued within the ambit of delegated functions of the FBR---Said notification was competently issued under enabling provisions of the law and validly conferred jurisdiction of the Commissioner under the 2001 Ordinance pertaining to particular class of taxpayers as envisaged under S.209, subsection (8A) of the 2001 Ordinance---Impugned notification was within the bound and competence of its parent law and enabling fiscal legislation and well within the object and scope of the Federal Board of Revenue Act, 2007 and the Income Tax Ordinance, 2001, thus, it carried a strong presumption of legality and competence and presumption of intra vires was also attached with the same---Mere 'probable inconvenience' that the impugned notification might have caused to the petitioners-tax-payers could not be equated with infringement of any of their vested right or fundamental rights---Revamping and restructuring of the FBR tax administration in the form of establishing the LTO to deal only with specified category of cases, including those of petitioners-tax-payers, was neither arbitrary nor adverse to the rights of the petitioners recognized under the law and the Constitution---Impugned notification issued by the FBR under S. 209 of the 2001 Ordinance empowered the FBR to transfer the jurisdiction pertaining to particular class of taxpayers of any RTO to the LTO to improve tax governing mechanism---Constitutional petitions challenging the impugned notification were dismissed with the observation that courts always jealously guarded rights of individuals against the arbitrariness of the State institutions, however, at the same time Courts never turned a blind eye on the progress and development happening around the world and always looked positively towards any attempt to reformulate the tax governing mechanism(s) so initiated by the FBR, in an attempt to contribute in the goal of ease of doing business and taxpayer facilitation.

Abwa Knowledge (Pvt.) Ltd. and another v. Federation of Pakistan and another PLD 2021 Lah. 436 and Suo Motu Case No.11 of 2011 PLD 2014 SC 389 ref.

Crescent Textile Mills Limited v. Federation of Pakistan and others 2021 PTD 689 ref.

(e) Legislation---

----Delegated/subordinate legislation---'Notifications' as a form of delegated legislation---Purpose and scope---Subordinate or delegated legislation derived its authority from the primary law and could not go beyond its scope---Such legislation was always aimed to further the object and purpose of the law and was deemed as an effective measure to keep the law well abreast with the change of time and embrace modernism in functional efficiency by exercising the mandate provided under the law.

Mustafa Impex, Karachi v. The Government of Pakistan through Secretary Finance, Islamabad 2016 PTD 2269; Imtiaz Ahmed and others v. Punjab Public Service Commission through Secretary, Lahore and others PLD 2006 SC 472; Muhammad Ibrahim v. Province of Sindh through Secretary Irrigation and Power Department and 3 others 2017 PLC (C.S.) Note 7 and Commissioner Inland Revenue, Regional Tax Office, Peshawar v. Messrs Sheraz Arena Deans Trade Center, Peshawar and another 2018 PTD 2212 ref.

(f) Legislation---

----Delegated/subordinate legislation, vires of---Strong presumption of constitutionality, legislative competence, legality, reasonableness and intra vires was attached with subordinate legislation---To strike down such delegated legislation, the challenger was required to show that the same impinged upon Fundamental rights, or conflicted with any Constitutional provision, or there was lack of legislative competence on part of the delegatee making it, or it was being beyond the scope of the parent statute.

Suo Motu Case No.11 of 2011 PLD 2014 SC 389 ref.

(g) Interpretation of statutes---

----Proviso to a provision in a statute---Scope and purpose---As a general rule, a proviso was added to an enactment to qualify or create an exception to what was in the enactment---Ordinarily, a proviso was not interpreted as stating a general rule---However a proviso which was inserted to remedy unintended consequences and to make the provision workable, (or) a proviso which supplied an obvious omission in the section and was required to be read into the section to give the section a reasonable interpretation, was required to be treated as retrospective in operation, so that a reasonable interpretation could be given to the section as a whole.

Pakistan Match Industries (Pvt.) Ltd. and others v. Assistant Collector, Sales Tax and Central Excise Mardan and others 2019 SCMR 906 and Collector of Customs Appraisement, Collectorate, Customs House, Karachi v. Messrs Gul Rehman, Proprietor Messrs G. Kin Enterprises, Ghazali Street, Nasir Road, Sialkot 2017 SCMR 339 ref.

(h) Interpretation of statutes---

----Where the intention of the legislature and the object for which the law had been enacted were clear, the Courts were not allowed to interpret such a law in a manner which could impede or defeat the object for which such law had been enacted.

Bank of Punjab and another v. Haris Steel Industries (Pvt.) Ltd. and others PLD 2010 SC 1109 ref.

(i) Interpretation of statutes---

----Subsections to a section in a statute---Interpretation---Statute in general and subsections of a section were to be read together to understand the true purpose and meaning of a particular provision.

Saudi Pak Industrial and Agricultural Investment Company (Pvt.) Ltd., Islamabad v. Messrs Allied Bank of Pakistan and another 2003 CLD 596; R V. Venkataswami Naidu v. Narasram AIR 1966 SC 361; Tehsildar Singh v. State of U P. AIR 1959 SC 1012, 1022; Gurmej Singh v. Partab Singh AIR 1960 SC 122,124 and State of Bihar v. Hiralal AIR 1960 SC 47, 50 ref.

(j) Constitution of Pakistan---

----Art. 199 & Pt. II, Chap. 1---Constitutional jurisdiction of the High Court---Scope---High Court was custodian of individual liberties and guardian of Fundamental Rights of citizens but at the same time it was duty of the Court not to unnecessary halt, hamper or pace down equilibrium of progress, modernity and efficiency initiated, installed or introduced in the system of economic governance in order to enhance its utility and to make it more efficient.

(k) Constitution of Pakistan---

----Art. 199 & Pt. II, Chapt. 1---Fiscal notification---Constitutional jurisdiction of the High Court---Scope---Though the High Court never shied away from striking down any notification, which was contrary to law, beyond the scope of parent legislation or abridged or took away any of the Fundamental Right granted and guaranteed under the Constitution, yet if the right of taxpayer was not abridged and his only objection rested upon the parameters of inconvenience then the Court must look objectively towards the collective good of the people.

Muhammad Naveed Farhan, Advocate Supreme Court in this Petition along with connected W.P. No. 7798 of 2020/BWP, W.P.No.8004 of 2020/BWP, W.P.No.7650 of 2020/BWP and W.P.No.7335 of 2020/BWP for Petitioner.

Muhammad Siddiq Chohan, Advocate in connected W.P.No.8281 of 2020/BWP and W.P.No.7432 of 2020/BWP. for Petitioner.

Sardar Abdul Basit Khan Balouch, Advocate Supreme Court and Rai Muzaffar Hussain Kharal for Petitioner.

Muhammad Tariq Mehmood and Irfan Majeed Rehmani, Advocates/Legal Advisor of FBR along with Syed Maroof Gilani, Chief Commissioner, Regional Tax Office (RTO), Bahawalpur and Ms. Attiya Rehman, Additional Commissioner, Inland Revenue Service (FBR) for Respondents.

Mehr Khalil-ur-Rehman, Deputy Attorney General Pakistan for Respondents.

Ch. Muhammad Ramzan Shama, Assistant Attorney General along with Muhammad Shahid Akhtar, Assistant Attorney General and Jam Muhammad Afzal Gasoora, Assistant Advocate General for Respondents.

2021 P T D 929

[Lahore High Court]

Before Shahid Karim, J

MABUSHRA SAM----Petitioner

Versus

GOVERNMENT OF THE PUNJAB and others----Respondents

Writ Petition No.188495 of 2018, heard on 15th January, 2020.

(a) Punjab Luxury House Tax Rules, 2014---

----R.9---Punjab Finance Act (XVII of 2014), S.8---Constitution of Pakistan, Arts.8 & 9---Right of access to justice---Luxury House Tax---Application to grievance committee---Scope---Petitioners assailed the vires of R.9 of Punjab Luxury House Tax Rules, 2014, (the Rules) on the ground that it imposed a condition that at least one instalment of tax had to be paid before filing an application to the grievance committee whereas S.8 of the Punjab Finance Act, 2014, had not imposed such condition---Validity---Section 8 of the Punjab Finance Act, 2014, provided a remedy for filing an application to the grievance committee in case of a dispute---Said S.8 had not prescribed any pre-condition which had to be complied with by a person prior to approaching the grievance committee---If the legislature intended for such a condition to be imposed, it could well have mentioned the condition in the statute itself and, therefore, the necessary implication was that the legislature did not delegate any power to the government to impose a condition which was not contemplated in the main enactment---Statutory scheme could not be upended by providing a condition which was not only stringent but had also unlawfully curtailed the right of a person to approach grievance committee---Such fetter imposed through a sub-legislative measure offended the right of access to justice and could not be countenanced---Rule 9 of the Rules was struck down by the High Court to the extent that it imposed condition on the petitioners to provide proof of payment of at least one installment of the tax.

(b) Interpretation of statutes---

----Rules enacted pursuant to a statute cannot travel beyond the mandate of the main statute.

Sameer Khosa, Jawad Khan Lodhi, Hammad Saad, Barrister Muhammad Ahmad Pansota, Mian Tariq Hassan and Muhammad Saad Khan for Petitioner.

Anis Ali Hashmi, A.A.G. for Respondents.

2021 P T D 945

[Lahore High Court (Multan Bench)]

Before Muzamil Akhtar Shabir and Shahid Karim, JJ

COMMISSIONER INLAND REVENUE

Versus

Messrs MALIK ENTERPRISES

S.T.R. No.07 of 2015, decided on 30th January, 2017.\

Sales Tax Act (VII of 1990)---

----Ss. 8, 8B, 66, 3 & 47---Tax Credit not allowed---Adjustment of input tax---Claim of 100% adjustment of input tax---Nature of S.8B(1) of Sales Tax Act, 1990---Scope---Department impugned order of Appellate Tribunal whereby it was held that taxpayer could adjust 100% of input tax---Contention of Department, inter alia, was that per S.8B(1) of Sales Tax Act, 1990, taxpayer could not adjust more than 90% of input tax---Validity---Per S.8 of Sales Tax Act, 1990 by allowing 90% adjustment in input tax, the law did not disallow adjustment of remaining 10% tax, and by retaining said 10% adjustable amount, taxpayer was compelled to file proper documents to obtain refund as per S.66 of Sales Tax Act, 1990---Section 8B(1) of Sales Tax Act, 1990 was therefore procedural in nature which was followed by procedure under S.66 of the Act, which catered to entitlement of taxpayer to claim 10% refund---Allegation against taxpayer, in the present case, was not that input tax adjustment was not due to taxpayer and was illegally claimed and in absence of any mala fide, either attributed or proved against taxpayer, it would be otiose to drive such taxpayer to run through entire process for claiming adjustment again, which was not intention of Legislature ----Department could have, at worst, proceeded to impose penalty for non-compliance of a procedural formality under Ss.8B(1) & 66 of Sales Tax Act, 1990 and nothing beyond the same---Reference was answered, accordingly.

Agha Muhammad Akmal Khan and Tariq Manzoor Sial for Petitioners.

2021 P T D 1016

[Lahore High Court]

Before Jawad Hassan, J

Messrs Syed JAMIL & COMPANY (PRIVATE) LIMITED through Chief Executive Officer

Versus

PAKISTAN RAILWAYS through Chief Commercial Manager, Lahore and 2 others

Writ Petition No.29306 of 2021, decided on 5th May, 2021.

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

----Ss.236A, 127 & 170---Constitution of Pakistan, Art.199---Constitutional petition---Advance tax at time of sale by auction---Bank guarantee deposited in lieu of advance tax---Ripeness doctrine of ripeness---Applicability---Scope---Adjudication of appeal under S.127 of Income Tax Ordinance, 2001---Scope---Petitioner / taxpayer sought to restrain Department from encashing Bank guarantees deposited by taxpayer in lieu of advance tax under S.236A of Income Tax Ordinance, 2001---Contention of taxpayer, inter alia, was that taxpayer had already filed an appeal under S.127 of Income Tax Ordinance, 2001 along with application to restrain such encashment, which was pending; and per Doctrine of Ripeness, till the matter was settled before tax authorities, no such recovery / encashment could be made----Validity---Petitioner, in the present case, was to be granted temporary relief and High Court directed Department to decide appeal of petitioner within a period of one month, and till decision of said appeal, directed that no coercive measures for recovery of tax liability could be taken against taxpayer / petitioner---Constitutional petition was disposed of, accordingly.

Reliance Commodities (Private) Ltd. v. Federation of Pakistan and others PLD 2020 Lah. 632; Messrs Pak Saudi Fertilizers Ltd. v. Federation of Pakistan and others 2002 PTD 679; Z.N. Exports (Pvt.) Ltd. v. Collector Sales Tax and others 2003 PTD 1746; Messrs Pearl Continental Hotel, Lahore through Director Finance and another v. Customs, Excise and Sales Tax Appellate Tribunal, Lahore and another 2005 PTD 1368; Sun-Rise Bottling Company (Pvt.) Limited v. Federation of Pakistan and 4 others 2006 PTD 535; Karachi Shipyard and Engineering Works Limited Karachi v. Additional Collector Customs Excise and Sales Tax (Adjudication-III), Government of Pakistan, Karachi and 2 others 2006 PTD 2207; Pak Suzuki Motors Co. Ltd. through Senior General Manager (Corporate Planning and Logistics), Karachi v. Collector of Customs through Assistant Collector (Processing), Karachi 2006 PTD 2237; Mari Petroleum Company Ltd. v. Appellate Tribunal Inland Revenue and others 2014 PTD 2406 and Shell Pakistan Limited v. Government of Punjab and others 2020 PTD 1607 rel.

Waheed Shahzad Butt for Petitioner.

2021 P T D 1060

[Lahore High Court (Multan Bench)]

Before Jawad Hassan, J

Messrs AAM DEVELOPERS (PRIVATE) LIMITED

Versus

FEDERAL BOARD OF REVENUE and others

Writ Petition No.4203 of 2020, decided on 17th March, 2020.

Income Tax Rules, 2002---

----R.44(4)---Recovery of income tax---Temporary relief to taxpayer from coercive measures / recovery of disputed income tax amount---Scope--- Petitioner impugned notice under R.44(4) of Income Tax Rules, 2002 on the ground that same was issued without lawful authority---Validity---High Court disposed of the constitutional petition on consent of petitioner that matter be referred to Department to be decided in accordance with law within a period of three months via a speaking order, and High Court, as stop-gap measure, granted temporary relief to petitioner by directing Department not to take coercive measures for recovery of disputed amount till finalization of matter by Department---Constitutional petition was disposed of, accordingly.

Messrs Pak-Saudi Fertilizers Ltd. v. Federation of Pakistan 2002 PTD 679; Sindh Z.N. Exports (Pvt.) Ltd v. Collector of Sales Tax 2003 PTD 1746; Messrs Pearl Continental Hotel, Lahore through Director Finance v. Customs, Excise and Sales Tax Appellate Tribunal, Lahore 2005 PTD 1368; Sun-Rise Bottling Company (Pvt.) Ltd. through Chief Executive v. Federation of Pakistan 2006 PTD 535; Karachi Shipyard and Engineering Works Ltd. Karachi v. Additional Collector of Customs Excise and Sales Tax (Adjudication-III) Government of Pakistan, Karachi and 2 others 2006 PTD 2207; Pak Suzuki Motors Co. Ltd. through Senior General Manager v. Collector of Customs through Assistant Collector (Processing), Karachi 2006 PTD 2237; Daewoo Pakistan Motorway Service Ltd. Lahore v. CIR Zone-II, Lahore 2012 PTD 1976; Chenab Board Faisalabad v. CIR, RTO, Faisalabad 2012 PTD 941; Honda Point (Pvt.) Ltd. Lahore v. CIR, RTO, Lahore 2015 PTD 1354 and Mari Petroleum Company Ltd. v. Appellate Tribunal Inland Revenue 2016 PTD 2406 rel.

Muhammad Imran Ghazi for Petitioner.

Syed Najam-ul-Saqib Mumtaz, Assistant Attorney General (on Court call).

2021 P T D 1136

[Lahore High Court]

Before Shahid Jamil Khan and Asim Hafeez, JJ

MAJEED FABRICS (PVT.) LTD and 36 others

Versus

FEDERATION OF PAKISTAN through Ministry of Energy (Power Division), Islamabad and 6 others

Intra Court Appeal No.33117 of 2020, heard on 3rd February, 2021.

Income Tax Ordinance (XLIX of 2001)---

----Ss.159, 235 & Second Sched. Part-IV, Cl.66---Exemption---Expression 'unless there is in force a certificate issued under subsection (1) of S.159 relating to the collection or deduction of such tax'---Exemption or lower rate certificate---Applicability---Appellants-taxpayers claimed that they were registered with Sales Tax as exporters or manufacturers, who were exempted from applicability of S.235 of Income Tax Ordinance, 2001---Validity---Expression 'unless there is in force a certificate issued under subsection (1) of S.159 relating to the collection or deduction of such tax' as used in S.159(2) of Income Tax Ordinance, 2001, conveyed that as long as certificate was in force, Distribution Companies were obliged to act comply with the mandate of the certificate---Certificate procured under S.159(1) of Income Tax Ordinance, 2001, remained valid/in force, unless factum of inactive status suspension or cancellation of registration, as the case could be, was communicated by Commissioner concerned to the relevant Distribution Company---Such mechanism could not be replaced, substituted or rendered ineffective through judicial interference---Appellants-taxpayers were exempted from operation of S.235 of Income Tax Ordinance, 2001, upon fulfillment of conditions prescribed in terms of Cl.66, Part-IV of Second Sched. of Income Tax Ordinance, 2001, provided such fulfillment was evidenced/affirmed by certificate issued in terms of S.159(1) of Income Tax Ordinance, 2001 and not otherwise---Operation of S.235 of Income Tax Ordinance, 2001, was to effectively remain in abeyance, dormant or non-operative once conditions prescribed in Cl.66, Part-IV of Second Sched. of Income Tax Ordinance, 2001, were fulfilled and which compliance was to be evidenced/affirmed in terms of certificate issued in terms of S.159(1) of Income Tax Ordinance, 2001---Where registration was inactive, suspended or cancelled, operability of S.235 of Income Tax Ordinance, 2001, would become effective, applicable and no exemption was claimable---Intra Court Appeal was dismissed in circumstances.

Usman Hassan and another v. Federation of Pakistan and others 2017 PTD 2340; Indus Jute Mills Ltd. Through Chief Executive v. Federation of Pakistan through Secretary Finance, Islamabad and 3 others 2009 PTD 1473; Assistant of Central Excise, Calcutta v. National Tobacco Co. of India Ltd. (1972) 2 SCC 560; M/s Peekay Re-rolling Mills (p) Ltd v. the Assistant Commissioner and another (2007) 6 VST 541 (SC); M/s Somaiya Organics (India) Ltd. v. State of U.P (2001) 5 SCC 519; Associated Cement Companies Ltd v. State of Bihar and others (2004) 7 SCC 642; H.M. Extraction Ghee and Oil Industries (Pvt.) Ltd. and another v. Federal Board of Revenue and another 2019 PTD 1479; Liaquat National Hospital v. Province of Sindh and others 2019 SCMR 865 and Collector of Custom FBR and another v. Messrs Fitter Pakistan (Pvt.) Ltd. 2020 SCMR 1157 ref.

For Appellants.

Khalil-ur-Rehman, Malik Bashir Ahmad Khalid, Ch. Imtiaz Ullah Khan, Rana Sajid Rasul, Mustafa Kamal, Muhammad Asif Mian, Malik Azhar Abbas Waseer and Syed Alamdar Hussain Naqvi for Petitioners.

For Respondents.

Zahid Sikandar, Assistant Attorney General for Pakistan, Shahzad Ahmad Cheema, Malik Abdullah Raza, Ch. Muhammad Ammar Pasra, Legal Advisor on behalf of LESCO.

Syed Zain ul Abidien Bokhari on behalf of FBR.

Malik Asad on behalf of FESCO.

Mrs. Kausar Parveen, Hafiz Muhammad Imran, Rana Shahzad Khalid and Ch. Mumtaz-ul-Hassan on behalf of FESCO.

Akhtar Ali Monga, Ibrar Ahmed, Malik Bashir Ahmad Khalid, Falak Sher Khan, Ch. Fiaz Ahmad Sanghar on behalf of MEPCO.

Muhammad Yahya Johar, Legal Advisor on behalf of FBR.

Ch. Muhammad Yasin Zahid on behalf of FBR.

Shaigan Ijaz Chadhar, Mian Yusuf Umar, Izhar-ul-Haque and Ch. Abdul Majid.

2021 P T D 1153

[Lahore High Court]

Before Shams Mehmood Mirza and Ayesha A. Malik, JJ

COMMISSIONER OF INCOME TAX, LARGE TAXPAYERS UNIT, LEGAL DIVISION, LAHORE

Versus

Messrs SERVICE INDUSTRIES LIMITED, SERVICE HOUSE, MAIN GULBERG, LAHORE

P.T.R. No.225 of 2008, heard on 16th March, 2021.

Income Tax Ordinance (XXXI of 1979)---

----Ss.2(24), 15 & Third Sched., Cl. 7(b)(i) & 8---"Slump transactions", concept of---Disposal of assets and treatment of resultant gains and losses ----Scope---Department impugned order of Appellate Tribunal whereby sale / transfer of shares by taxpayer to a joint-venture company was declared as a slump transaction and addition made in income of taxpayer on basis of same, was set aside---Validity---Concept of a "slump transaction" / sale / trade; was alien to the Income Tax Ordinance, 1979 (since repealed) as well as to Income Tax Ordinance, 2001 and therefore jurisprudence / principles developed on the same, in Indian Case Law, shall have no applicability in the present case---Transaction, in the present case, was covered squarely by Cl. 7 read with Cl.8 of Third Schedule to the Income Tax Ordinance, 1979 and no provision within the law exempted said transaction from payment of tax---Even otherwise, in order for a transaction to qualify as a "slump sale", it needed to be proved that undertaking of business as a whole was transferred as a going concern, along with its goodwill, assets liabilities etc., and a simple sale of assets would not suffice, thus present transaction did not qualify as such---High Court held that impugned order had erroneously declared the transaction as a "slump sale" and addition made by assessing officer was therefore, correct --- Reference was answered, accordingly.

1993 PTD (Trib.) 1175; Messrs Crescent Pak. Soap and Oil Mills Limited v. Commissioner of Income Tax (East) PTCL 1985 (CL) 73; Commissioner of Income Tax v. National Agriculture Ltd., Karachi 2000 PTD 2173; Commissioner of Income-Tax (EAST), Karachi v. Messrs Forbes Cambell & Company Ltd. PLD 1978 Kar. 1047; 2002 PTD (Trib) 257; 2003 PTD (Trib) 2321 and 2006 PTD (Trib) 2291 ref.

Messrs Crescent Pak. Soap and Oil Mills Limited v. Commissioner of Income Tax (East) PTCL 1985 (CL) 73; Commissioner of Income Tax v. Artex Manufacturing Company (1997) 227 ITR 260 and Punjab Finance Ltd v. Commissioner of Income Tax-I [2008] 307 ITR 75 (SC) distinguished.

Raja Sikandar Khan for Appellant.

Shahbaz Butt, Muhammad Ahsan Mahmood, Muhammad Usman Zia and Asad Raza for Respondent.

2021 P T D 1253

[Lahore High Court (Multan Bench)]

Before Anwaarul Haq Pannun and Tariq Saleem Sheikh, JJ

KAMRAN TEXTILE MILLS (PVT.) LTD.

Versus

FEDERATION OF PAKISTAN and others

I.C.A. No.237 of 2020, heard on 8th December, 2020.

Sales Tax Act (VII of 1990)---

----Ss.72B & 25---Selection of audit of taxpayer under S.72B of Sales Tax Act, 1990---Access to records and documents under S.25 of Sales Tax Act, 1990---Distinction between nature and scope of powers under Ss. 25 & 72B of Sales Tax Act, 1990---Sections 25 & 72B of Sales Tax Act, 1990 were fundamentally different and under the first, Commissioner selected a person for audit on his own motion on basis of record available while under latter, Board made selection for audit through computer ballot, which may be random or parametric---Both Ss. 25 & 72B were therefore independent of each other and had their own sway; and only mutuality between them was to the extent that S.72B(2) adopted procedure prescribed under S.25 of Sales Tax Act, 1990 for audit, and same could not be construed as to render said S.72B(2) subservient to proviso to S.25(2) of Sales Tax Act, 1990 or to limit the Boards' power under the same---Expression "audit under this section" used in S.72B of Sales Tax Act, 1990 affirmed independence of said section.

Faisalabad Electric Supply Company Limited (FESCO) v. The Federation of Pakistan through Secretary, Finance, Islamabad and others 2019 PTD 1780 ref.

Warid Telecom (Pvt.) Ltd v. Commissioner Inland Revenue and others PTCL 2013 CL 331; Laraib Energy Ltd. through Chief Executive Officer v. Commissioner Inland Revenue (Provincial Taxes, Mirpur, Azad Jammu and Kashmir) and 5 others 2015 PTD 165; Pakistan Telecommunication Company Ltd. v. Federation of Pakistan 2016 PTD 1484 and Kohinoor Sugar Mills v. Federation of Pakistan and others 2018 PTD 821 rel.

Tanveer Ahmad for Appellant.

Malik Muhammad Siddique, Assistant Attorney General for Respondent No.1.

Abdul Razzaq for Respondents Nos.2 to 6.

2021 P T D 1270

[Lahore High Court]

Before Muzamil Akhtar Shabir and Muhammad Sajid Mehmood Sethi, JJ

The COMMISSIONER INLAND REVENUE

Versus

Messrs FERROUS ENGINEERING INDUSTRY

S.T.R. No.11843 of 2019, decided on 9th April, 2019.

Sales Tax Act (VII of 1990)---

----S.8B---Adjustible input tax---Adjustment of input tax in excess of ninety per cent---Procedural lapse---Scope---Department assailed the registered person's act of adjusting 100% input tax instead of 90% in violation of S.8B of Sales Tax Act, 1990---Validity---Department was seeking recovery of said 10% excess input tax adjustment amount---Even if the said amount was paid, it would be part of carried forward amount and ultimately registered person would be entitled to claim input tax adjustment of said amount as well at the end of the year, hence, the claim of 100% tax adjustment was only a procedural lapse---Recovery of said amount from the registered person was not justified---Reference application was disposed of accordingly.

STR No.68393 of 2017 foll.

Saeed-ur-Rehman Dogar, Advocate/Legal Advisor for Applicant-department.

2021 P T D 1278

[Lahore High Court]

Before Shahid Jamil Khan and Asim Hafeez, JJ

JHANG FABRICS (PVT.) LTD. through Muhammad Haroon Waheed

Versus

FEDERATION OF PAKISTAN, MINISTRY OF FINANCE, ECONOMIC AFFAIRS, STATISTIC AND REVENUE, REVENUE DIVISION, ISLAMABAD through Secretary and 4 others

I.C.A. No.63674 of 2020 in W.P. No.31309 of 2020, heard on 25th February, 2021.

Sales Tax Act (VII of 1990)---

----S.3---Notifications SRO No. 694(I) / 2019 dated 29-6-2019---SRO No. 777 (I)/2020 dated 25-8-2020---Imposition / levy of extra tax---Charging tax without ascertainment---Principle---Taxpayers were aggrieved of charging extra tax through electricity and natural gas monthly bills---Plea raised by taxpayers was that extra tax could not be charged without ascertainment---Validity---No law was disregarded or breached or violated while claiming / charging or collecting extra tax from the persons, as far as conditions prescribed therein were adhered to in letter and spirit--- Availability of requisite conditions for charging extra tax could be effectively raised before concerned officers Inland Revenue--- Taxpayers could procure requisite certificates /documents affirming effective sales tax registration and appearance on Active Taxpayer List--- Taxpayers could also approach supplier of electric power or natural gas, as the case could be, to verify factum of effective sales tax registration and name on Active Taxpayers List, in terms of notification SRO No.777(I)/2020, dated 25-8-2020, by virtue whereof Chapter XVII-B was inserted in Sales Tax Rules, 2006---Division Bench of High Court declined to interfere in such charging of extra tax---Intra Court Appeal was dismissed in circumstances.

Dewan Farooque Spinning Mills Ltd v. Federation of Pakistan and others W.P. 31824/2020; A.G Textiles Mills v. Federation of Pakistan and others W.P.No.33920/2020; Granada Textile Mills Ltd. and others v. Federation of Pakistan and others W.P.No.47839/2020; Crescent Cotton Mills Ltd. v. FOP and others W.P.No.45806 of 2020; West Punjab Province v. K.B. Amir-ud-Din and others PLD 1953 Lah. 433 and Pearl Continental Hotel and another v. Government of N.W.F.P and others 2010 PTD 2018 ref.

Muhammad Naeem Sheikh, Rai Amer Ijaz Kharal, Baqir Hussain, Imran Sher Bhatti, Khalil ur Rehman, Fozia Bakhsh, Mian Muhammad Arshad Iqbal, Asad Abbas Raza, Muhammad Usman Zia, Ahsam Mehmood Dogar, Mian and M. Arshad Iqbal Khan for Petitioner.

Ahmad Pervaiz, Shah Jahan Khan, Muhammad Yahya Johar, Falak Sher Khan, M. Shahzad Cheema, Kausar Parveen, Arif Imran Awan, Ch. Abdul Majid Khan, Rana Shahzad Khalid, Anas Irtaza Awan, Ali Safian Chan and Malik Abdullah Raza for Respondents.

2021 P T D 1321

[Lahore High Court]

Before Jawad Hassan, J

RAMZAN SUGAR MILLS LIMITED

Versus

FEDERAL BOARD OF REVENUE and others

Writ Petition No.39256 of 2021, decided on 21st June, 2021.

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

----S.122---Amendment of assessment---Alternate remedy, availability of---Scope---Petitioner assailed notice issued by department under S.122(9) read with S.122(4) of Income Tax Ordinance, 2001 whereby certain documents were sought from the petitioner---Validity---No adverse order had been passed against the petitioner and the impugned notice only required certain information/document from it---Alternate remedies were available to the petitioner who could only approach High Court in a Tax Reference after exhausting all those remedies---Petitioner was directed to provide the requisite documents / record/information to the department---Department, under the doctrine of stopgap arrangement, was restrained from taking coercive measures against the petitioner till final decision in the matter---Writ petition was disposed of accordingly.

Reliance Commodities (Private) Ltd. v. Federation of Pakistan and others PLD 2020 Lah. 632 = 2020 PTD 1464 and Shell Pakistan Limited v. Government of Punjab and others 2020 PTD 1607 rel.

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

----S.122(4)---Amendment of assessment---Scope---Subsection (4) of S.122 of the Income Tax Ordinance, 2001, reveals that the Commissioner may further amend, as many times as may be necessary, the original "assessment" order within five years from the end of the financial year in which he has issued or is treated as having issued the amended assessment order to the taxpayer as per section or otherwise one year from the end of the financial year in which the Commissioner has issued or is treated as having issued the amended assessment order to the taxpayer.

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

----Ss.120, 121 & 122---Assessment---"Best judgment assessment"---Amendment of assessment---Scope---Assessment is made under Part II of Chapter X of the Income Tax Ordinance, 2001, which deals with the assessment under S.120 of Income Tax Ordinance, 2001 while the scheme of "best judgment assessment" mechanism to amend the assessment is provided in S.122 of the Income Tax Ordinance, 2001---Complete mechanism for amendment of assessment is given in S.122 of the Income Tax Ordinance, 2001 with nine subsections.

Chenab Flour and General Mills and others v. Federation of Pakistan through Secretary Revenue Division and others PLD 2021 Lah. 343 rel.

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

----S.122---Amendment of assessment---Scope---Section 122(4) of the Income Tax Ordinance, 2001, states that the assessment order, which is defined under S.2(5) of the Ordinance, means an assessment which includes (i) provisional assessment; (ii) re-assessment and (iii) amended assessment while cognate expressions shall be construed accordingly and the Commissioner may further amend, as many times, the original assessment within the time prescribed in subsections (a) & (b) of S.122(4) of the Income Tax Ordinance, 2001.

(e) Constitution of Pakistan---

----Art.4---Right of individuals to be dealt in accordance with law---Scope---Under Art.4 of the Constitution, it is an inalienable right of every citizen of Pakistan to be treated in accordance with law and no action detrimental to his/her life, liberty, reputation or property shall be taken except as per law.

Mudassar Shujauddin for Petitioner.

Malik Abdullah Raza for the FBR assisted by Shahzad Ahmad Cheema (on watching brief).

2021 P T D 1379

[Lahore High Court]

Before Muhammad Sajid Mehmood Sethi and Abid Hussain Chattha, JJ

GHULAM HASSAN

Versus

FEDERATION OF PAKISTAN through Ministry of Finance, Islamabad and 5 others

I.C.A. No.1434 of 2017 in Writ Petition No.17381 of 2012, heard on 15th June, 2021.

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

----Ss.40 & 38---Searches under warrant---Parameters---Access to premises of registered persons---Nature and 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---Purpose of visit of Departmental officers to premises of taxpayer under S.38 of Sales Tax Act, 1990 was to see whether proper records under the Act and Rules and Regulations thereunder had been maintained or not and for such visit, officer(s) must be authorized in this regard and must produce copy of such authorization before commencing inspection---Visit under S.38 of Sales Tax Act, 1990 must be confined to inspecting record and documents available in plain sight or such as may be voluntarily made available for inspection by person present on premises and only such records could be taken into custody by Department---Departmental officers had no power under S.38 of Sales Tax Act, 1990 to compel production of any record or document that was not in plain sight or had not been voluntarily made available to them; and any record taken into custody under compulsion could not be used for any purpose whatsoever by Department---Any action in contravention of such parameters would be wholly illegal and void---Section 40 of Sales Tax Act, 1990 provided procedure for search and seizure and as such controlled S.38's empowerment for access to record---Section 38 of Sales Tax Act, 1990 was merely an enabling provision and had nothing to do with regular search and seizure which could only be done as per S.40 of Sales Tax Act, 1990.

Messrs Food Consults (Pvt.) Ltd., Lahore and others v. Collector (Central Excise and Sales Tax), Lahore and 2 others 2004 PTD 1731 and Collector of Sales Tax and others v. Messrs Food Consults (Pvt.) Ltd. and another 2007 PTD 2356 ref.

A.M.Z. Spinning and Weaving Mills (Pvt.) Ltd. v. Federation of Pakistan and 2 others 2009 PTD 1083; Messrs Iqbal and Sons through Authorized Representative v. Federation of Pakistan through Secretary and 3 others 2017 PTD 590; Messrs Apple Paper Products (Pvt.) Ltd. through Director Chief Executive Officer v. Federation of Pakistan through Chairman and 2 others 2019 PTD 787; Federation of Pakistan through Secretary, Ministry of Finance, Federal Secretariat, Islamabad and 4 others v. Messrs Master Enterprises (Pvt.) Ltd. through Managing Director 2003 PTD 1034; Collector of Sales Tax and Central Excise (Enforcement) and another v. Messrs Mega Tech (Pvt.) Ltd. 2005 PTD 1933; Messrs Ihsan Yousaf Textile Mills (Pvt.) Ltd., Faisalabad v. Federation of Pakistan through Ministry of Finance, Islamabad and 4 others 2003 PTD 2037; Agha Steel Industries Ltd. through Authorized Company Secretary and another v. Directorate of Intelligence and Investigation through Director and 2 others 2019 PTD 2119; Messrs Stylo Shoes and another v. Deputy Director and others 2013 PTD 1780; Messrs N. P. Water Proof Textile Mills (Pvt.) Ltd., Karachi v. Federation of Pakistan and another 2004 PTD 2952 and Collector of Customs (Preventive) and 2 others v. Muhammad Mahfooz PLD 1991 SC 630 = PTCL 1992 CL 155 rel.

(b) Interpretation of statutes---

----Principles---Specific provision in a statute was to control a general provision and where general and a specific provision on same subject were available, then resort to general provision could not be made to do or sustain an act.

Ali Sibtain Fazli, Hasham Ahmad, Muhammad Umer Tariq Gill and Barrister Ameer Abbas Ali Khan, A.A.G. on Court's call for Appellant.

Ch. Imtiaz Elahi, Legal Advisor FBR for Respondent.

Ahmad Zia Ch., Civil Judge / Research Officer, LHCRC.

2021 P T D 1396

[Lahore High Court]

Before Muhammad Sajid Mehmood Sethi and Muhammad Raza Qureshi, JJ

COMMISSIONER INLAND REVENUE, LAHORE

Versus

Messrs KAMAL STEEL RE-ROLLING MILLS LIMITED, LAHORE

P.T.R. No.400 of 2010, heard on 23rd June, 2021.

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

----S.133---Reference to High Court---Exercise of jurisdiction of High Court under S.133 of the Income Tax Ordinance, 2001---Scope---Under S.133 of Income Tax Ordinance, 2001, only such questions of law may be referred to High Court, which arose out of order of Appellate Tribunal.

Commissioner of Income-Tax v. Messrs Kamran Model Factory 2002 PTD 14 and Messrs F.M.Y. Industries Ltd. v. Deputy Commissioner Income Tax and another 2014 SCMR 907 ref.

Messrs Squibb Pakistan (Pvt.) Ltd. and another v. Commissioner of Income Tax and another 2017 SCMR 1006; Commissioner of Income-Tax/Wealth Tax Companies Zone, Faisalabad v. Messrs Taj Flour Mills (Pvt.) Ltd. 2005 PTD 1142 and Commissioner of Income Tax / Wealth Tax, Zone-C, Lahore v. Messrs Minhas Automotive Industries, Lahore 2005 PTD 2338 rel.

(b) Interpretation of statutes---

----Retrospective application of laws---Scope---Any change in substantive law, which divested and adversely affected vested rights of parties, should always have prospective application unless by express wording or by necessary intendment/implication; such law had been made applicable retrospectively---Substitution in a provision could not obliterate vested rights and a Legislation did not operate retrospectively if it touched a right in existence at time of passing of such Legislation---Rights of parties were to be decided according to law existing when an action under a statute began; unless provisions were made to the contrary---Where a statute itself did not make its operation retrospective, it would not be reasonable to claim that by necessary implication it had retrospective application.

Nagina Silk Mill, Lyallpur v. The Income Tax Officer, A-Ward Lyallpur and another PLD 1963 SC 322; Adnan Afzan v. Capt. Sher Afzal PLD 1969 SC 187; Nabi Ahmed and another v. Home Secretary, Government of West Pakistan, Lahore and 4 others PLD 1969 SC 599; Province of East Pakistan v. Sharafatullah and 87 others PLD 1970 SC 514; Sona and another v. The State and others PLD 1970 SC 264; Hassan and others v. Fancy Foundation PLD 1975 SC 1; The Collector, Customs and Central Excise, Peshawar and others v. Messrs Rais Khan Limited through Muhammad Hashim 1996 SCMR 83; Malik Gul Hasan and Co. and 5 others v. Allied Bank of Pakistan 1996 SCMR 237; Manzoor Ali and 39 others v. United Bank Limited through President 2005 SCMR 1785; Commissioner of Income Tax v. Messrs Eli Lilly Pakistan (Pvt.) Ltd. 2009 PTD 1392; Muhammad Tariq Badr and another v. National Bank of Pakistan and others 2013 SCMR 314 and Badshah Gul Wazir v. Government of Khyber Pakhtunkhwa through Chief Secretary and others 2015 SCMR 43 rel.

Malik Abdullah Raza for Applicant.

Barrister Ameer Abbas Ali Khan, A.A.G. on Court's call.

Hashim Aslam Butt for Respondent.

Ahmad Zia Ch., Civil Judge/Research Officers, LHCRC.

2021 P T D 1492

[Lahore High Court]

Before Muhammad Sajid Mehmood Sethi and Abid Hussain Chattha, JJ

COMMISSIONER OF INLAND REVENUE

Versus

Messrs NAILA KAREEM and others

PTRs Nos.389, 390 and 392 of 2009, heard on 31st May, 2021.

(a) Wealth Tax Act (XV of 1963)---

----Ss.16(4) & 27---Assessment---Mandatory requirement of issuance of notice to taxpayer under S.16(4) of Wealth Tax, 1963---Scope---Question before High Court was whether issuance of notice to assessee under S.16(4) of Wealth Tax Act, 1963 was a mandatory pre-requisite before making assessment under said section---Held, that for an explanation to be offered by an assessee, he must have been issued notice within contemplation of S.16(4) of Wealth Tax Act, 1963, without which an assessee would not be able to offer any explanation / defence---Word "may" used in S.16(4) of Wealth Tax Act, 1963 must be read in conjunction with S.16(5) of the same, which suggested that issuance of notice under said S.16(4) was mandatory in nature and its strict compliance was imperative---Being put to notice and proper opportunity of being heard were inseparable and inalienable rights of an assessee which could not be denied under any circumstances---Reference was answered, accordingly.

Muhammad Rafique Chaudhary and another v. Muhammad Yaqoob Janjua and 8 others 2016 CLC 1240; Naeem Abbas v. Government of Punjab through Secretary and 4 others 2017 PLC (C.S.) 404; Secretary, Establishment Division Government of Pakistan v. Dr. Muhammad Arif and others 2017 PLC (C.S.) 907; Ch. Basharat Ali v. Pakistan Telecommunication Company Limited and another 2017 PLC (C.S.) 1093; State Life Insurance Corporation of Pakistan through Zonal Head / Attorney and others v. Mst. Shazia Mir Arshad 2017 CLD 1483; Muhammad Aslam v. Member (Colonies) Board of Revenue Punjab Lahore and others 2019 CLC 1141; Warid Telecom (Pvt.) Ltd. and 4 others v. Pakistan Telecommunication Authority through Chairman 2015 SCMR 338; Suo Motu acting regarding allegation of business deal between Malik Riaz Hussain and Dr. Arsalan Iftikhar attempting to influence the judicial process PLD 2012 SC 664; Babar Hussain Shah and another v. Mujeed Ahmed Khan and another 2012 SCMR 1235; Suo Motu Case No.4 of 2010 W.P. No.26696/2014 (PLD 2012 SC 553); Liaqat Ali Chugtai v. Federation of Pakistan through Secretary Railways and 6 others PLD 2013 Lah. 413; Shabbir Ahmed v. Kiran Khursheed and 8 others 2012 CLC 1236; Pakistan Telecommunication Company Limited through duly authorized attorney v. Pakistan through Secretary Cabinet, Islamabad and 2 others PLD 2020 Sindh 733; Executive Engineer, Qadirabad Barrage Division. Qadirabad and others v. Ejaz Ahmad 2007 SCMR 1860; Habib Bank Limited v. Ghulam Mustafa Khairati 2008 SCMR 1516; Messrs Bissma Textile Mills v. Federation of Pakistan and others 2002 PTD 2780; Messrs Kind Traders v. Dy. Collector and 2 others 2008 PTD 1551; Dr Ashfaq Ahmad Khan v. Deputy Commissioner of Income Tax Peshawar and others 2012 PTD 1329; Messrs Amina Z. Beauty Salon through Managing Member v. Federation of Pakistan through Secretary General and 3 others 2016 PTD 654; Commissioner Income Tax v. Mst. Kundan Bibi 2007 PTD 1667; Zia ur Rehman v. Syed Ahmed Hussain and others 2014 SCMR 1015; The Collector Sales Tax, Gujranwala and others v. Messrs Super Asia Mohammad Din and Sons and others 2017 SCMR 1427; Shahdost Dashti v. Federation of Pakistan through Secretary Ministry of Inter-Provincial Coordination Government of Pakistan, through Secretary, Pakistan Secretariat, Islamabad and 5 others 2019 CLC 1750; Muhammad Hanif v. Revisional Authority and others 2020 CLC Note 36; Muhammad Ameer v. The State and another 2020 MLD 876 and Muhammad Sajid v. Judge Family Court and others 2020 CLC 1524 rel.

(b) Interpretation of statutes---

----Principles of construction---Test to determine whether a provision was directory or mandatory in nature---Integral test was to ascertain Legislative intent and purpose to be achieved by application of a provision of law rather than taking a literal approach---Preferable interpretation would be one which advanced object of an enactment over one which defeated the same---Intention of Legislature was to be ascertained not only from phraseology of a provision but also by considering its nature, object, and the consequences which would follow from construing it one way or the other---Where private rights called for exercise of power vested in a public official, then language used therein, though could be permissive and directory in form, was in fact was pre-emptory or mandatory as a general rule.

Province of Punjab through Secretary Excise and Taxation Department, Lahore and others v. Murree Brewery Company Limited (MBCL) and another 2021 SCMR 305; Province of Punjab through Conservator of Forest, Faisalabad and others v. Javed Iqbal 2021 SCMR 328; Mafizaullah v. Mana Ullah and others PLD 1963 Dacca 318; Muhammad Asghar and 3 others v. Station House Officer and 2 others PLD 2020 Lah. 87 and Province of Punjab through Conservator of Forest, Faisalabad and others v. Javed Iqbal 2021 SCMR 328 rel.

(c) Constitution of Pakistan---

----Art.10-A---Fundamental Right to fair trial---Opportunity of being heard---Scope--Right to fair trial meant grant of proper hearing and necessitated that no one should be penalized by a decision upsetting and afflicting his or her right(s) or legitimate expectations unless he / she was given prior notice and a fair opportunity to explicate / present his or her case.

Warid Telecom (Pvt.) Ltd. and 4 others v. Pakistan Telecommunication Authority through Chairman 2015 SCMR 338; Suo Motu acting regarding allegation of business deal between Malik Riaz Hussain and Dr. Arsalan Iftikhar attempting to influence the judicial process PLD 2012 SC 664; Babar Hussain Shah and another v. Mujeed Ahmed Khan and another 2012 SCMR 1235; Suo Motu Case No.4 of 2010 W.P. No.26696/2014 (PLD 2012 SC 553); Liaqat Ali Chugtai v. Federation of Pakistan through Secretary Railways and 6 others PLD 2013 Lah. 413; Shabbir Ahmed v. Kiran Khursheed and 8 others 2012 CLC 1236 and Pakistan Telecommunication Company Limited through duly authorized attorney v. Pakistan through Secretary Cabinet, Islamabad and 2 others PLD 2020 Sindh 733 rel.

Sarfraz Ahmad Cheema for Applicant (PTR No.389 of 2009).

Malik Abdullah Raza for Applicant (PTR No.390 of 2009).

Shahzad Ahmad Cheema for Applicant (PTR No.392 of 2009).

Adeel Shahid Karim (FBR).

Barriter Ameer Abbas Ali Khan, A.A.G. on Court's call.

M. Hamza for Respondents.

Ahmad Zia Ch., Civil Judge / Research Officer, LHCRC.

2021 P T D 1512

[Lahore High Court]

Before Muhammad Sajid Mehmood Sethi and Abid Hussain Chattha, JJ

COMMISSIONER INLAND REVENUE

Versus

Messrs OLYMPIA CHEMICALS LTD., LAHORE

P.T.R. No.292 of 2012, heard on 1st June, 2021.

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

----Ss.113(2)(c) & 133---Constitution of Pakistan Art. 264---General Clauses Act (X of 1897) S.6----Minimum tax on income of certain persons---Carry forward and adjustment of excess tax under S.133(2)(c) against tax liability in subsequent years ----Amendments in S.113(2)(c) of the Income Tax Ordinance, 2001 to apply prospectively---Vested rights of taxpayer---Scope---Question before High Court was whether taxpayer while filing his return in 2009 could claim adjustment on account of excess tax paid under S.113(2)(c) Income Tax Ordinance, 2001 for years 2004 to 2008, when such provision to carry forward excess tax was deleted by Finance Act, 2008---Validity---Excess amount of tax paid, in the present case, which was carried forward related to years 2004 to 2008 and under the repealed provision of S.113(2)(c) of Income Tax Ordinance, 2001 prevailing at the relevant time, said amount was adjustable against tax liability for a period of five years and per subsequent change in law, such period was reduced to three years----Said amendment in law, however, would not curtail period of adjustment of five years for taxpayer as a substantive and vested right had accrued in favour of taxpayer --- Once vested right of taxpayer accrued under the statute, such right could not be disregarded if such statutory provision was subsequently repealed, and said principle was enshrined in Art. 264 of Constitution and S.6 of General Clauses Act, 1897---Reference was answered, accordingly.

Idrees Ahmad and others v. Hafiz Fida Ahmad Khan and 4 others PLD 1985 SC 376; Gulshan Spinning Mills Ltd. and others v. Government of Pakistan and others 2005 PTD 259 and Shahnawaz (Pvt.) Ltd. through Director Finance v. Pakistan through The Secretary Ministry of Finance Government of Pakistan, Islamabad and another 2011 PTD 1558 ref.

Molasses Trading and Export (Pvt.) Limited v. Federation of Pakistan and others 1993 SCMR 1905 and North Star Textile Limited's case, Constitution Petition No.D-2408 of 2010 distinguished.

(b) Interpretation of statutes---

----Effect of repeal or amendment ---Retrospective effect of such repeal or amendment --- Principles of construction where vested / accrued rights were involved---Scope---In absence of a stipulation to contrary, any change in law affecting substantive rights had to have prospective effect---Courts were to lean against giving retrospective operation where no vested rights or past transactions prejudicially affected or existed---Legislation did not operate retrospectively if it touched a right in existence at time of passing of such Legislation---Statutes were to be presumed to be applicable to cases and facts coming into existence after their enactment unless there existed clear intention to give them retrospective effect---Statutes need not to be read in such a way as to change accrued rights and rights of parties were to be decided according to law existing when action began, unless provisions were made to contrary---Any substituted section in a provision could not obliterate accrued rights---Generally, a repealed law was to be considered a law that never existed, however, for purpose of such actions which were commenced, prosecuted and concluded under said law, it would be considered as an existing law.

F.B. Ali v. State PLD 1975 SC 506; Sutlej Cotton Mills Ltd. v. Industrial Court PLD 1966 SC 472; Shohrat Bano v. Imsail 1968 SCMR 574; Garikapati v. Subbiah Chaudhry AIR 1957 SC 540; P.I.A. Corporation v. Pak Saaf Dry Cleaners PLD 1981 SC 553; Nazir Begum v. Qamarunnisa 1982 CLC 2271; Muhammad Ibrahim v. Surrayiaun Nisa PLD 1992 SC 637; Nagina Silk Mill Lyallpur v. The Income Tax Officer, A-Ward Lyallpur and another PLD 1963 SC 322; Adnan Afzan v. Capt. Sher Afzal PLD 1969 SC 187; Nabi Ahmed and another v. Home Secretary, Government of West Pakistan, Lahore and 4 others PLD 1969 SC 599; Province of East Pakistan v. Sharafatullah and 87 others PLD 1970 SC 514; Sona and another v. The State and others PLD 1970 SC 264; Hassan and others v. Fancy Foundation PLD 1975 SC 1; The Collector, Customs and Central Excise, Peshawar and others v. Messrs Rais Khan Limited through Muhammad Hashim 1996 SCMR 83; Malik Gul Hasan & Co. and 5 others v. Allied Bank of Pakistan 1996 SCMR 237; Manzoor Ali and 39 others v. United Bank Limited through President 2005 SCMR 1785; Commissioner of Income Tax v. Messrs Eli Lilly Pakistan (Pvt.) Ltd. 2009 PTD 1392; Muhammad Tariq Badr and another v. National Bank of Pakistan and others 2013 SCMR 314; Badshah Gul Wazir v. Government of Khyber Pakhtunkhwa through Chief Secretary and others 2015 SCMR 43; Mian Rafiud Din v. Chief Settlement and Rehabilitation Commissioner PLD 1971 SC 252; D.P. Wool Company v. Union of India and others ILR 1979 Delhi 27; Messrs M.S. Shivananda v. Karnataka State Road Transport Corporation and others (1980) 1 SCC 149; Messrs Gurcharan Singh Baldev Singh v. Yashwant Singh and others 1992 (1) SCC 428; Basant Singh v. Rampal Singh AIR 1919 Oudh 217; State of Punjab v. Mohar Singh (1955) 1 SCR 893; State of Orissa v. M.A. Tulloch & Co. (1964) 4 SCR 461; Brihan Maharashtra Sugar Syndicate v. Janardan AIR 1960 SC 794; Kay v. Goodwin (1830) 6 Bing. 576 and Surtees v. Ellison - (1829) 9 B&C. 750 : English Report (Volume 109) at page 278 rel.

Raja Sikandar Khan for Applicant.

Barrister Ameer Abbas Ali Khan, A.A.G. on Court's call.

Usman Khalil for Respondent.

Ahmad Zia Ch., Civil Judge/Research Officer, LHCRC.

2021 P T D 1572

[Lahore High Court]

Before Muhammad Sajid Mehmood Sethi and Abid Hussain Chattha, JJ

COMMISSIONER OF INLAND REVENUE, LAHORE

Versus

Messrs SARITOW SPINNING MILLS LIMITED, LAHORE

P.T.R. No.429 of 2010, heard on 14th June, 2021.

Income Tax Ordinance (XXXI of 1979)---

----Ss.50 & 80C---Deduction of income tax at source---Payments made to associated companies / undertakings---Essential prerequisite for deduction of tax at source---Scope---Question before High Court was whether taxpayer was liable to deduct income tax at source for supply of material to associated company of taxpayer----Held, that taxpayer's unit which purchase material deducted tax from payment made to a seller in accordance with S.50(4) of Income Tax Ordinance, 1979, but said unit, when transferring stock to associated company / sister concern, at cost, made necessary book entries in relevant ledgers of the units without involvement of any cash --- Since instance of payment had not occurred, therefore tax under S.80C of Income Tax Ordinance, 1979 was not chargeable and accordingly provisions of S.50(4) of said Ordinance were not attracted---Event of tax deduction would come into play only at time of making payment and S.50(4) of Income Tax Ordinance, 1979 would not be applicable unless payment was actually made---Reference was answered, accordingly.

Commissioner of Income Tax Legal Division, Lahore and others v. Khurshid Ahmad and others 2916 PTD 1393 distinguished.

Liaquat Ali Chaudhry and Barrister Ameer Abbas Ali Khan, A.A.G. for Applicants Court's call.

Shahbaz Butt and Muhammad Ahsan Mahmood for Respondent.

2021 P T D 1608

[Lahore High Court]

Before Raheel Kamran, J

MUHAMMAD ARIF ICE FACTORY and others

Versus

FEDERATION OF PAKISTAN and others

Writ Petitions Nos. 30936 and 34877 of 2021, heard on 8th June, 2021.

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

----Ss.14 & 3---SRO No.509(I)/2013, dated: 12-06-2013---Registration---Further tax---Extra tax---Scope---Petitioners were engaged in production and sale of "ice" which admittedly stood exempted under S.13 read with item No. 27 of the Sixth Schedule of the Sales Tax Act, 1990---Petitioners assailed the applicability and charging of "further tax" under S.3(1A) and "extra tax" imposed pursuant to SRO No.509(I)/2013, dated: 12-06-2013 issued under S.3(5) of the Sales Tax Act, 1990---Validity---Subsection (1) of S.14 of the Sales Tax Act, 1990, stipulated compulsory registration of persons involved in the making of taxable supplies, including zero rated supplies, in the course or furtherance of any taxable activity carried on by them if their business fell in one or more of the categories specified therein---Subsection (1) had no application to the case of the petitioners as they were not involved in making any taxable supplies, including zero rated supplies---No provision in the Sales Tax Act, 1990, required the petitioners to be registered---Object and purpose of S.3(1A) of the Sales Tax Act, 1990, imposing "further tax" on a person who failed to obtain registration number was to incentivize that person to register or else pay more tax---Such was based on underlying assumption that the person to be burdened with "further tax" was under a lawful obligation to obtain registration number and had for some reason failed to do so---Such "carrot and stick" policy was to induce a person to register and enforce the legislative intent of registering persons making taxable supplies---On a policy level, the wisdom behind this was to move towards a more documented economy and expand the tax base---"Further tax" under S.3(1A) was not intended to apply to and penalize those who made only exempt supplies and were not liable to be registered under the Sales Tax Act, 1990, otherwise the same would defeat the very intent, object and purpose of the levy---Purpose of levying "extra tax", in addition to the tax under subsection (1) of S.3 of the Sales Tax Act, 1990, was to charge the said tax from those persons who, despite being liable to be registered, had failed to do so---High Court observed that a restrictive meaning was to be assigned to the application under Ss.3(1A) & 3(5) of the Sales Tax Act, 1990, read with SRO No.509(I)/2013, dated: 12-06-2013 to those cases where the person was liable to be registered but had failed to register---Constitutional petitions were allowed

Messrs Zia Brother v. Federation of Pakistan and others 2015 PTD 175; Messrs Ashrafi Bread Industries v. Federation of Pakistan and others 2019 PTD 1858; Indus Jute Mills Ltd. through Chief Executive v. Federation of Pakistan through Secretary Finance, Islamabad and 3 others 2009 PTD 1473; Al-Karam CNG and others v. Federation of Pakistan and others 2011 PTD 1 and Syed Mushahid Shah v. F.I.A. 2017 SCMR 1218 ref.

Messrs Haidery Flour Mills v. Federation of Pakistan and others (W.P. No. 65871/21) distinguished.

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

----S.2(25)---"Liable"---Meaning.

Noon Sugar Mills Limited v. Commissioner of Income Tax PLD 1990 SC 1156 foll.

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

----Ss.14 & 3---Registration---Further tax---Extra tax---Scope---Persons who are not registered under the Sales Tax Act, 1990 fall in two distinct classes: firstly, those who are not required by law to be registered under the Act and secondly, those who are liable to be registered under the Act but have failed to register---For purposes of "further tax" or "extra tax" under the Act, any interpretation that refuses to take into account the said classification and purports to impose these taxes on both classes of persons renders the same taxes ex-facie discriminatory thus in violation of Art.25 of the Constitution---Discrimination in such a case would ensue from the lack of classification and similar treatment extended to dissimilarly or differently placed persons---Likewise, burdening those with imposition of "further tax" and "extra tax" who are not liable to be registered under the Act results in violation of the fundamental rights of property, as guaranteed by Arts.23 & 24 of the Constitution.

Kunnathat Thathunni Moopil Nair v. State of Kerala AIR 1961 SC 552; State of Andhra Pradesh v. Nalla Raja Reddy AIR 1967 SC 1458; State of Kerala v. Haji K. Kutty Naha and others AIR 1969 SC 378 and Federation of Pakistan v. Shaukat Ali Mian PLD 1999 SC 1026 ref.

(d) Interpretation of statutes---

----Reading down, theory of---Scope---Theory of reading down is a rule of interpretation resorted to whenever a statutory provision, when read literally, leads to any violation of a fundamental right, or renders it without legislative competence, and courts read such a provision narrowly to save it from invalidity.

Qamar-uz-Zaman Cheema and Kh. Waseem Abbas for Petitioners (in Writ Petition No.34877 of 2021).

Shahzad Ahmad Cheema for Respondents.

2021 P T D 1705

[Lahore High Court]

Before Muhammad Sajid Mehmood Sethi and Abid Hussain Chattha, JJ

COMMISSIONER INLAND REVENUE, FAISALABAD

Versus

Messrs ZAHID JEE FABRICS LIMITED

P.T.R. No.281 of 2010, heard on 7th June, 2021.

Income Tax Ordinance (XLIX of 2001)---

----Ss.114, 120, 122 & 133---Amendment of assessment---Filing of revised return by taxpayer during assessment proceedings---Scope---Question before High Court was "whether during assessment proceedings, when taxpayer filed a revised return under S.114(6) of Income Tax Ordinance, 2001; could the Department and Appellate Tribunal treat such revised return as invalid when the same was to be deemed to be an assessment order under S.122(3) of said Ordinance"---Held, that for amendment of assessment in terms of Ss.120 & 122(3) of Income Tax Ordinance, 2001, Commissioner had to proceed on basis of said assessment and revised return, if competently filed, would have to be accepted and amended assessment would be passed under S.122 of the Ordinance, while return previously filed lost its efficacy and became irrelevant to extent of any omission or wrong statement---At relevant time, no legal bar existed on taxpayer for filing revised return before completion of assessment proceedings and taxpayer had prerogative to revise return of income before finalization of assessment if taxpayer discovered any omission or wrong statement in previous return---Action of Department and Tribunal in treating such revised return as invalid was beyond their jurisdiction as no provision in Income Tax Ordinance, 2001 existed whereby Department could declare such revised return as invalid---Revised return of income, if filed in accordance with requirements of S.114(6) of Income Tax Ordinance, 2001, then no adjudicating authority had power to declare same as invalid---Reference was answered, accordingly.

Zaman Paper and Board Mills v. Taxation Officer, Circle-12, Company Zone, Lahore 2005 PTD 2577; Commissioner of Inland Revenue Zone-II Regional Tax Office, Peshawar v. Messrs Saydon Pharmaceutical Industries (Pvt.) Ltd., Industrial Estate, Jamrud Road, Peshawar 2015 PTD 374 and Commissioner of Income Tax/Wealth Tax, IBD v. Messrs HI-TECH Plastic (Pvt.) Ltd. 2019 PTD 878 rel.

Amjad Hussain Malik and Ch. Muhammad Shakeel for Applicant.

Barrister Ameer Abbas Ali Khan, A.A.G. on Court's call.

Shahbaz Butt, Asad Abbas Raza and M. Usman Zia for Respondent.

2021 P T D 1786

[Lahore High Court (Multan Bench)]

Before Abid Aziz Sheikh, J

NEW SEA LINE INTERNATIONAL

Versus

FEDERATION OF PAKISTAN and others

Writ Petition No.13350 of 2015, heard on 24th April, 2017.

Customs Act (IV of 1969)---

----Ss.32 & 179---Customs Duty not levied due to any inadvertence, error or misconstruction, or short-levied or erroneously refunded---Mandatory issuance of show-cause notice to importer of such goods erroneously assessed---Scope---Petitioner impugned demand notices for payment of customs duty on goods, which per Department had been erroneously given benefit of a "Free Trade Agreement"---Validity---Admittedly no show-cause notice was issued to petitioner nor any determination was made by any appropriate officer before issuance of impugned demand notices, and without show-cause notice to petitioner such notices were in clear violation of Ss.32(3) & 32(4) of Customs Act, 1969---Impugned demand notices were set aside---Constitutional petition was allowed, accordingly.

Tanveer Ahmed for Petitioner.

Ahmed Raza, A.A.G. for Respondent.

2021 P T D 1806

[Lahore High Court]

Before Abid Aziz Sheikh and Shahid Karim, JJ

Messrs HONDA ATLAS CARS (PAKISTAN) LIMITED

Versus

APPELLATE TRIBUNAL, CUSTOMS, EXCISE AND SALES TAX and another

Sales Tax Appeal No.77-A of 2003, heard on 29th October, 2015.

Sales Tax Act (VII of 1990)---

----Ss.2 (27), 6, 33, 34 & 47---Sales tax, recovery of---Sale above retail price---Onus to prove---Roving inquiry---Scope---Appellant was a manufacturing company who was alleged to have paid short sales tax as quotations issued by dealer to some buyer was over and above the retail sale price---Validity---Initial burden and onus of proof was on authorities to bring forth cogent and reliable evidence to establish allegations contained in show-cause notice---Show-cause notice in question was based on roving and fishing inquiry which could not be countenanced---Reliance on a quotation as the only piece of evidence to serve appellant company with show-cause notice was tendentious---Retail price was the price fixed by manufacturer inclusive of all duties, charges and taxes at which any particular brand or variety of any article should be sold to general body of consumers---High Court set aside the order passed by authorities---Appeal was allowed, in circumstances.

Waheed Khalid for Applicant.

Mrs. Kausar Perveen for Respondents.

2021 P T D 1861

[Lahore High Court (Rawalpindi Bench)]

Before Jawad Hassan, J

MUHAMMAD MUNIR PIRACHA

Versus

DEPUTY COMMISSIONER INLAND REVENUE, AUDIT-II, RAWALPINDI

Writ Petition No.2346 of 2012, heard on 9th June, 2021.

Income Tax Ordinance (XLIX of 2001)---

----Ss. 120, 122 & 176---Self Assessment Scheme---Notice to provide information---Taxpayer was aggrieved of notice issued by authorities to provide break up of business capital declared in income tax return---Validity---No purpose i.e. amendment in assessment etc. was mentioned in notice in question---Authorities only sought information regarding break up of business capital declared in income tax return and break up of profit and loss expenses claimed the return---Such was not 'record' as described in Income Tax Ordinance, 2001---Petitioner was neither a company nor a businessman but a practicing advocate, therefore, no question of declaration of capital as well as income and expense had arisen--- Federal Board of Revenue was 'Regulator' of all fiscal laws in the country and as a regulator it was vested with main goal of tax collection in the country--- High Court set aside the notice issued by authorities to petitioner, as the same had no value in the eyes of law--- Constitutional petition was allowed, in circumstances.

Chenab Flour and General Mills v. Federation of Pakistan and others PLD 2021 Lah. 343; Northern Power Generation Company Limited v. Federation of Pakistan and others 2015 PTD 2052; Reliance Commodities (Private) Ltd. v. Federation of Pakistan and others PLD 2020 Lah. 632 and Chairman Federal Land Commission v. Mst. Sanam Iqbal and others PLD 2021 Lah. 42 rel.

Muhammad Munir Piracha, Advocate Supreme Court for Petitioner (in person).

Muhammad Ameer Malik, Advocate Supreme Court along with Inayat Malik, Additional Commissioner, RTO Rawalpindi for Respondents.

2021 P T D 1870

[Lahore High Court]

Before Muhammad Sajid Mehmood Sethi and Muzamil Akhtar Shabir, JJ

COLLECTOR OF CUSTOMS

Versus

Messrs T.U. PLASTIC INDUSTRY COMPANY (PVT.) LTD. and 2 others

Customs Reference No.03 of 2016, decided on 2nd April, 2019.

Customs Act (IV of 1969)---

----S.196---Reference to High Court---Scope---Findings of facts---Scope---Respondent was granted Duty and Tax Remission for Export (DTRE) approval for import of certain goods for the purpose of manufacturing and exporting "Artificial Leather"--- Department received information that the respondent had mis-appropriated the imported goods, which resulted in passing of order-in-original---Appellate Tribunal waived off the penalty imposed on the respondent---Validity---Appellate Tribunal, while considering that the contravention report was framed and order-in-original was passed much before the expiry of approved DTRE time period, had waived the penalty---Findings of facts recorded by Appellate Tribunal, unless found to be either perverse or contrary to record, could not be interfered with by the High Court while examining questions of law---Scope of Reference jurisdiction under the law was restricted to the extent of examining questions of law arising from order passed by Appellate Tribunal and it did not extend to deciding questions of facts or determination of disputed facts---Reference application was decided against the department.

Messrs F.M.Y. Industries Ltd. v. Deputy Commissioner Income Tax 2014 SCMR 907; Commissioner Inland Revenue, Zone-I v. Messrs Industrial Chemicals (Pvt.) Ltd. 2017 PTD 756; Commissioner of Income Tax v. Ghee Corporation of Pakistan (Pvt.) Ltd. 2017 PTD 1167 and Commissioner Inland Revenue, Zone-II v. Al-Hamad International Container Terminal (Pvt.) Ltd. 2017 PTD 2212 ref.

Commissioner Inland Revenue v. Messrs Adeel Brothers 2017 PTD 1579 rel.

Ch. Imtiaz Elahi for Applicant.

2021 P T D 1947

[Lahore High Court]

Before Shahid Jamil Khan and Muhammad Sajid Mehmood Sethi, JJ

HONDA ATLAS CARS PAKISTAN LIMITED through General Manager

Versus

APPELLATE TRIBUNAL and 2 others

Customs Reference No.07 of 2008, decided on 9th December, 2016.

Customs Act (IV of 1969)---

----Ss. 32(1)(2) & 196 --- Notification SRO No.520(I)/94, dated 9-6-1994---Notification SRO No.436(I)/2001, dated 18-06-2001---Evaded/short levied duties---Show-cause notice, issuance of---Deletion Program---Authorities issued show cause notices to importers-taxpayers alleging violation of approved Deletion Program and concessionary notifications on import of CKD Kits of cars--- Validity--- Appellate authority remanded the matter for de novo consideration--- During pendency of proceedings before Appellate authority, proceedings were re-activated by authorities and importers-taxpayers were subjected to face proceedings twice on the same cause of action---Such aspect of the matter was not dilated upon by Customs Appellate Tribunal---High Court set aside judgment passed by Customs Appellate Tribunal as the same was non-speaking and material aspects were not dilated upon---High Court remanded the matter to Customs Appellate Tribunal for re-adjudication after providing opportunity of hearing--- Reference was allowed accordingly.

Commissioner of Income Tax, Companies Zone-II, Karachi v. Messrs Sindh Engineering (Pvt.) Limited, Karachi 2002 SCMR 527 = 2002 PTD 419 rel.

Waleed Khalid for Applicant.

2021 P T D 2024

[Lahore High Court]

Before Muhammad Sajid Mehmood Sethi and Muzamil Akhtar Shabir, JJ

Messrs SAUDAGAR, EPS INDUSTRIES (PVT.) LTD. through Director

Versus

DEPUTY COMMISSIONER INLAND REVENUE, AUDIT UNIT-02, ZONE-III and 3 others

S.T.R. No.255093 of 2018 decided on 6th March, 2019.

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

----S.3(1A)---General Clauses Act (X of 1897), S.24-A---SRO No.648(I)/2013, dated 09-07-2013---Scope of tax---Further tax---Reasons for decision---Scope--- Registered person assailed order passed by Appellate Tribunal and submitted, inter alia, that the charge of further tax under S.3(1A) of Sales Tax Act, 1990 was not examined in its true perspective---Validity---Core issue regarding category/status of sales tax registration of the applicant as manufacturer-cum-retailer, having its retail outlet substantiated through sales tax registration certificate, was not determined by the Appellate Tribunal while passing the impugned order---Such exercise of jurisdiction was not proper---Impugned order was passed in violation of S.24-A of the General Clauses Act, 1897, inasmuch as it lacked valid lawful reasons---Order passed by Appellate Tribunal was set aside and the matter was remanded for re-adjudication through a speaking order---Reference application was disposed of accordingly.

Commissioner of Income Tax, Companies Zone-II, Karachi v. Messrs Sindh Engineering (Pvt.) Limited, Karachi 2002 SCMR 527 = 2002 PTD 419 rel.

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

----S.24-A---Reasons for decision---Scope---Order passed by judicial or quasi-judicial authority has to be supported by lawful reasons.

Shahbaz Butt for Applicant.

2021 P T D 2126

[Lahore High Court]

Before Jawad Hassan, J

SHAHEEN MERCHANT

Versus

FEDERATION OF PAKISTAN/NATIONAL TARIFF COMMISSION and others

Writ Petition No.62992 of 2021, heard on 14th October, 2021.

(a) Constitution of Pakistan---

----Art.37(d)---Constitutional mandate for duty of state to provide inexpensive and expeditious justice---Maxim "Interest Reipublicae Ut Sit Finis Litium"---Legislative insertion of time-bound mechanism for decision on matters before judicial forums / courts---Scope---Maxim "Interest Reipublicae Ut Sit Finis Litium" meant that it was in interest of the State that there should be an end to litigation --- Law of limitation provided and controlled time-duration as a legally permissible span to bring a justiciable lis before a court of law in order to bring certainty and conclusiveness to right of action and to avoid probability of an indefinite threat of exasperation---Courts were also expected to decide the disputes brought before them within reasonable time and in an expeditious manner---Maxim 'justice delayed is justice denied' also highlighted significance of dispensation of justice in a timely manner and laid stress on responsibilities of courts to decide cases in an expeditious manner---Considering the nature and signification of a particular subject-matter which required swift and speedy resolution of disputes by judicial forums, Legislature has always incorporated a time-bound mechanism not only for preferring a dispute or appeal to a judicial forum or appellate tribunal, as the case may be, but also specifically prescribed and laid down a definite time limit to give decision thereon to meet the ends of expeditious justice, which was a command of Constitution under Art. 37(d) of the Constitution, wherein State was duty bound to ensure inexpensive and expeditious justice to the citizens.

Muhammad Sharif and others v. Nabi Bakhsh and others 2012 SCMR 900; Muhammad Arif Ameen and 4 others v. The Province of Punjab through Secretary, Home Department, Lahore and 12 others 2021 PLC (C.S.) 752; Abdul Haleem Siddiqui and others v. Federation of Pakistan through The Law Secretary, Ministry of Law and Justice, Pakistan Secretariat, Islamabad and others 2019 PLC (C.S.) 238; Mehram Ali and others v. Federation of Pakistan and others PLD 1998 SC 1445; Ellecot Spinning Mills Ltd. v. Federation of Pakistan through Secretary, Ministry of Trade and Commerce, Islamabad and 6 others 2016 PTD 1334 and Messrs Home Life through Managing Partner and 10 others v. National Tariff Commission through Chairman, Islamabad 2011 PTD 1007 rel.

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

----Ss.70, 39 & 51---Constitution of Pakistan, Arts. 37(d) & 199 --- National Tariff Commission Act (XII of 2015), S. 3- --- Constitutional jurisdiction of High Court --- Imposition and collection of Anti-Dumping Duties---Final Determination by National Tariff Commission ("NTC")---Appellate Procedures under the Anti-Dumping Duties Act, 2015---Mandatory nature of statutory time-bound mechanism of adjudication of appeals under Anti-Dumping Duties Act, 2015---Implementation of Final Determination of NTC pending appeal under S.70 of Anti-Dumping Duties Act, 2015---Scope---Petitioner, against whom NTC being regulator, took action under Anti-Dumping Duties Act, 2015, filed appeal against "final determination" made against it by NTC under S.70 of Anti-Dumping Duties Act, 2015---Petitioner sought that direction be given to Anti-Dumping Duties Appellate Tribunal to decide pending appeal of petitioner within statutory time-frame and further sought to restrain the NTC / regulator from implementing its final determination (imposition of duties on petitioner) until such time that pending appeal was decided---Validity---Perusal of S. 70 of Anti-Dumping Duties Act, 2015 revealed that time was essence of appellate procedures under the said Act, and Tribunal was a time-specific forum with time-bound mandate to decide appeals within given time of 45 days, with day-to-day hearings and use of word "shall" made such time-bound provisions mandatory---While no consequences for non-adherence or deviation from prescribed statutory time-period were provided in S.70 of said Act, however, non-mentioning of consequences in failure to observe time-frame did not render such provisions or requirements as ineffective or non-est, and same remained substantive part of the Legislation---Petitioner had not averted availing remedy under S.70 of Anti-Dumping Duties Act, 2015 and was awaiting decision of Appellate Tribunal therefore contention of non-maintainability of Constitutional petition due to availability of alternative remedy was not tenable as petitioner only sought direction to Appellate Tribunal regarding decision on petitioner's pending appeal and that its interests must not be pre-judged by implementing final determination against petitioner while appeal was pending---Final determination of the NTC / Regulator was not in fact final and ultimate when appeal thereagainst was preferred by petitioner as Appellate Tribunal could either set at naught the said determination or affirm it---Since the statute had provided specific remedies of appeal to petitioner against final determination by NTC and additionally another right of appeal was available to petitioner against decision of Appellate Tribunal, therefore final determination could not be given effect as doing so would frustrate appellate procedure under Anti-Dumping Duties Act, 2015---High Court directed Appellate Tribunal under Anti-Dumping Duties Act, 2015 to decide pending appeal of petitioner in accordance with law within period of two months and further to decide application of petitioner for grant of stay / restraining order against final determination, in terms of proviso to S.51(1)(c) of Anti-Dumping Duties Act, 2015 within a period of two weeks---Constitutional petition was disposed of ,accordingly.

Reliance Commodities (Pvt.) Ltd. v. Federation of Pakistan and others PLD 2020 Lah. 632; Shell Pakistan Limited v. Punjab through The Secretary Ministry of Finance and others 2020 PTD 1607 and Messrs Saleh Industries (Pvt.) Ltd. v. The Federation of Pakistan and 16 others 2020 PTD 1245 ref.

What's Wrong with the Courts: The Chief Justice Speaks Out (address to American Bar Association meeting, Aug. 10, 1970; Abwa Knowledge Village (Pvt.) Ltd. and others v. Federation of Pakistan and others PLD 2021 Lah. 436; Chenab Flour and General Mills and others v. Federation of Pakistan through Secretary Revenue Division and others PLD 2021 Lah. 343; Additional Registrar Company v. Al-Qaim Textile Mills Limited 2021 CLD 931; Ms. Jet Green (Pvt.) Ltd through Aftab Ahmad v. Federation of Pakistan and others PLD 2021 Lah. 770; Muhammad Sharif and others v. Nabi Bakhsh and others 2012 SCMR 900; Muhammad Arif Ameen and 4 others v. The Province of Punjab through Secretary, Home Department, Lahore and 12 others 2021 PLC (C.S.) 752; Abdul Haleem Siddiqui and others v. Federation of Pakistan through The Law Secretary, Ministry of Law and Justice, Pakistan Secretariat, Islamabad and others 2019 PLC (C.S.) 238; Mehram Ali and others v. Federation of Pakistan and others PLD 1998 SC 1445; Ellecot Spinning Mills Ltd. v. Federation of Pakistan through Secretary, Ministry of Trade and Commerce, Islamabad and 6 others 2016 PTD 1334; Messrs Home Life through Managing Partner and 10 others v. National Tariff Commission through Chairman, Islamabad 2011 PTD 1007; Province of Punjab through Secretary Excise and Taxation Department, Lahore and others v. Murree Brewery Company Limited (MBCL) and another 2021 SCMR 305; Province of Punjab through Conservator of Forest, Faisalabad and others v. Javed Iqbal 2021 SCMR 328; Rana Aftab Ahmad Khan v. Muhammad Ajmal PLD 2010 SC 1066; Shell Pakistan Limited v. Punjab through The Secretary Ministry of Finance and others 2020 PTD 1607 and Dr. Nadeem Kiani v. Federation of Pakistan and others 2021 CLD 33 rel.

Aamir Shahzad Jhammat for Petitioner.

Naveed Suhail Malik, Additional Attorney General and Ms. Sadia Malik, Assistant Attorney General for Respondent.

Barrister Umair Khan Niazi, Additional Advocate General with Waqar Saeed Khan, Assistant Advocate General.

Waqas Amir and Ahmad Sheraz for Respondent No.3.

2021 P T D 2149

[Lahore High Court]

Before Muhammad Sajid Mehmood Sethi and Muzamil Akhtar Shabir, JJ

COMMISSIONER OF INLAND REVENUE

Versus

Messrs SUPER FINE INDUSTRY

P.T.R. No.290 of 2012, decided on 7th March, 2019.

Income Tax Ordinance (XLIX of 2001)---

----S.177 [as amended]---Audit---Scope---Applicant assailed order passed by Appellate Tribunal whereby it had declared the selection of taxpayer's case for audit under S.177(4) (a) & (d), Income Tax Ordinance, 2001, as illegal---Validity---High Court, with the consent of parties, sent the case to the department for complying with the directions of Supreme Court given in 'Chairman, FBR and others v. Idrees Traders and others' reported as 2012 PTD 693 wherein department was directed to follow the policy in letter and spirit and to provide sufficient opportunity of hearing to the taxpayer---Reference application was disposed of accordingly.

Chairman, F.B.R. and others v. Idrees Traders and others 2012 PTD 693 fol.

Ch. Muhammad Yaseen Zahid for Applicant-department.

2021 P T D 2189

[Lahore High Court (Multan Bench)]

Before Muzamil Akhtar Shabir and Asim Hafeez, JJ

COMMISSIONER INLAND REVENUE

Versus

Mst. FARRAH NAZ

Tax Reference No.07 of 2019, decided on 22nd September, 2020.

Income Tax Ordinance (XLIX of 2001)---

----S.133---Reference to High Court---Exercise of jurisdiction of High Court under S.133 of the Income Tax Ordinance, 2001---Scope---Question of law neither raised nor adjudicated upon Appellate Tribunal could not be raised before High Court under Section 133 of Income Tax Ordinance, 2001 --- Where a question of law arising out of an order of Appellate Tribunal was permissible to be raised, then same could also be answered provided it was based on undisputed / settled facts or its answer was not dependent upon determination of certain facts---Where such questions of fact had not been determined, then High Court could remand or refer matter to Appellate Tribunal for rehearing and deciding matter afresh as said forum was competent to decide questions of fact arising in a matter.

Messrs F.M.Y. Industries Ltd. v. Deputy Commissioner Income Tax and another 2014 SCMR 907 rel.

Agha Muhammad Akmal Khan for Applicant/Petitioner.

2021 P T D 130

[Peshawar High Court]

Before Ikramullah Khan and Syed Arshad Ali, JJ

COLLECTOR SALES TAX

Versus

ARMY WELFARE TRUST-NIZAMPUR CEMENT PLANT and another

Tax Reference No.69-P of 2007, decided on 9th September, 2020.

(a) Interpretation of statutes ---

----Construction of statutory authority to public officials in a statute---Authority / power to file appeal or reference on behalf of public Department---Scope---Appeal under any statute could only be filed by authority / officer designated or prescribed for such purpose by statute and filing of such appeal could not be undertaken by any other official or authority.

Fazal Ahmad Jut's case 2018 SCMR 1005 rel.

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

----47 & 30---Reference to High Court---Persons authorized to file Reference under S.47 of Sales Tax Act, 1990 on behalf of Department---Nature of S.47 of Sales Tax Act, 1990---Scope---Question before High Court was whether reference under S.47 of Sales Tax Act, 1990 as it stood in the year 2007, could be filed by officer / person other than Additional Collector or officer authorized by Collector, when S.47 as it stood then, stated that such reference was only to be signed by officer not below the rank of Additional Collector, or officer authorized by Collector Sales Tax---Held, that wording of S.47 of Sales Tax Act, 1990, as it stood at the time of filing of reference in year 2007, was couched in negative language by use of phrase "not below rank of Additional Collector", which manifested intention of Legislature as mandatory and not merely directory---In the present case, no document was available to show that reference was filed either by Additional Collector or on direction of Collector Sales Tax, and therefore same was incompetently field and not maintainable --- Reference was dismissed, in circumstances.

Collector of Sales Tax v. Fazal Vegetable Ghee Mills and others 2009 PTD 1112; Allied Bank of Pakistan Ltd. v. Khalid Farooq 1991 SCMR 599; Al-Faiz Industries (Pvt.) Limited 2006 SCMR 129 and Fazal Ahmad Jut's case 2018 SCMR 1005 rel.

Ishtiaq Ahmad (Junior) for Petitioner.

Ayaz Shokat for Respondent.

2021 P T D 693

[Peshawar High Court (Abbottabad Bench)]

Before Lal Jan Khattak and Ijaz Anwar, JJ

AKHTAR COMPUTERS PAKISTAN

Versus

ADDITIONAL COLLECTOR and others

Tax Reference No.01-A of 2015, decided on 22nd May, 2018.\

Sales Tax Act (VII of 1990)---

----Preamble---Finance Act (III of 2006), Preamble & S.1---Provisional Collection of Taxes Act (XVI of 1931), S.3---Commencement of the Finance Act, 2006---Amendment by Finance Act, 2006 in the Sales Tax Act, 1990---Not retrospective---Scope---Question before High Court was whether the Finance Act, 2006, was applicable with effect from 01-07-2006 or from 06-06-2006, for which declaration was issued under the Provisional Collection of Taxes Act, 1931---Held, preamble and applicability clause of the Finance Act, 2006, clarified that removal of exemption on Sr. 40 of the Sixth Schedule to Sales Tax Act, 1990, was applicable with effect from 01-07-2006---Different fiscal statutes were amended, through Finance Act, 2006, but each amended law was given effect from 01-07-2006, thus, amendment in the Sales Tax Act, 1990 could not be given retrospective effect in any case---Declaration in terms of S.3 of Provisional Collection of Taxes Act, 1931, did not have the status of legislation or even sub-legislation, therefore, for all intents and purposes, it did not have the force of law---Sales Tax Reference was answered in positive.

Engineer Iqbal Zafar Jagra v. Federation of Pakistan and others 2013 SCMR 1337 fol.

Syed Tanseer Bukhari for Appellant-Petitioner.

Zahid Idrees Mufti for Respondents.

2021 P T D 795

[Peshawar High Court]

Before Waqar Ahmad Seth, CJ and Syed Arshad Ali, J

GUL AYAZ PLASTIC INDUSTRY

Versus

TRIBAL AREAS ELECTRIC SUPPLY COMPANY, WAPDA HOUSE through Chief Executive and 6 others

Writ Petition No.2523-P of 2019, decided on 1st September, 2020.

Income Tax Ordinance (XLIX of 2001)---

----Ss.13(2)(A) & 159---Sales Tax Act (VII of 1990), Ss.3 & 13 (2)(a)---Notifications SRO No.1212(I)/2018, dated 5-10-2018---SRO No.1213(I)/2018, dated 5-10-2018---Advance income tax and sales tax---Recovery through electricity bills---Exemption---Petitioner (located in Federal Tribal Areas) was aggrieved of demand of authorities for collection of advance income tax and sales tax from petitioner through monthly electricity bills---Validity---Through Notification SRO No.1213(I)/2018, dated 5-10-2018, provisions in Chap. XII of Income Tax Ordinance, 2001, were not applicable to area of erstwhile Federally Administered Tribal Area---Any person located in erstwhile Federally Administered Tribal Area who exclusively carried his business there was not required to obtain exemption certificate from authorities under S.159 of Income Tax Ordinance, 2001---Federal Government through notification SRO No.1212(I)/2018, dated 5-10-2018, while exercising its power under S.13(2)(a) of Sales Tax Act, 1990, empowered supplies made by persons located in erstwhile tribal area from impost of sales tax---Supplies / consumption of electricity under Sales Tax Act, 1990 was exempted from levy of sales tax, to industrial and commercial consumer except steel and ghee/cooking oil industries---Demand in question of revenue to collect sales tax through electricity bill from petitioner, whose manufacturing unit was located at erstwhile Federally Administered Tribal Area was not justified--- High Court declared that demand of authorities for collection of advance income tax and sales tax from petitioner through monthly electricity consumption bills was illegal and without lawful authority---Constitutional petition was allowed, in circumstances.

Pakistan through Chairman FBR and others v. Hazrat Hussain and others 2018 SCMR 939; Commissioner Income Tax, Peshawar v. Messrs Gul Cooking Oil and Vegetable Ghee (Pvt.) Ltd. 2008 PTD 169; Messrs Taj Packages Company (Pvt.) Ltd. through Manager v. The Government of Pakistan through Federal Secretary Finance and Revenue Division and 6 others 2016 PTD 203 and Messrs Abid Foundry through authorized representative and another v. Pakistan through Federal Secretary, Finance and Revenue Division, Islamabad and 5 others 2019 PTD 1652 ref.

Abdul Rauf Rohaila for Petitioner.

Asad Jan and Ishtiaq Ahmad for Respondents.

2021 P T D 822

[Peshawar High Court]

Before Waqar Ahmad Seth, CJ and Syed Arshad Ali, J

COLLECTOR OF CUSTOMS, MODEL CUSTOMS COLLECTORATE, PESHAWAR

Versus

NOOR SHER ALI and another

Custom Reference No.05-P of 2020, decided on 2nd September, 2020.

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

----Ss. 168, 162 & 163---Seizure of things liable to confiscation---Power to issue search warrant to search and arrest without warrant---Scope---Department conducted raid and recovered huge amount of foreign origin smuggled cloth, which was ordered to be confiscated---Appellate Tribunal allowed the appeal mainly on the ground that the search and seizure was conducted in violation of Ss. 162 & 163 of the Customs Act, 1969---Validity---Raid was allegedly supervised by Assistant Collector and Superintendent, however, the recovery memo. was not signed by the Assistant Collector---Assistant Collector had not recorded reasons as provided by S.163 of Customs Act, 1969, to dispense with the requirement of obtaining search warrant, which was a condition precedent before conducting the raid on any premises---Nothing was available on record to justify the raid i.e. the solid reasons if the time was wasted in obtaining the search warrant, the party concerned would either remove the said goods from the premises or would frustrate the said search and seizure---Absence of reasons rendered the entire process of search and seizure nullity in the eyes of law---Impugned seizure and raid was conducted in violation of S.163 of the Customs Act, 1969---Reference was answered accordingly.

S.M. Yousaf and others v. Collector of Customs and others PLD 1968 Kar. 599; The Commissioner of Sales Tax, Rawalpindi v. Messrs Sajjad Nabi Dar PLD 1977 Lah. 75 and Shaukat Hussain v. Zulfiqar Ahmed, SHO Police Station PLD 1981 Lah. 13 ref.

Muhammad Mahfooz v. Collector of Customs PLD 1986 Kar. 28 rel.

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

----Ss. 168, 162 & 163---Seizure of things liable to confiscation---Power to issue search warrant; search and arrest without warrant---Scope---Perusal of Ss. 162 & 163 of Customs Act, 1969, suggests that ordinarily a place is to be searched only after search warrant is obtained from the Magistrate as is contemplated in S.162 of the Customs Act, 1969 and only in extraordinary circumstances as provided under S.163 of the Customs Act, 1969, this mandatory requirement can be dispensed with---Language of S.163 of the Customs Act, 1969, in this regard is very clear and unambiguous that before embarking upon a search without warrant, the customs officer not below the rank of an Assistant Collector shall prepare a statement in writing disclosing the grounds of his belief that the goods liable to confiscation are concealed or kept in any place and that there is danger that they may be removed before a search can be effected under the provisions of S.162 of the Customs Act, 1969---Stringent requirements envisaged by S.163 of the Customs Act, 1969, are to ensure that the enormous power of search without warrant given to the Gazetted Officer is exercised honestly and judiciously---Pre-condition of search without a warrant from the Magistrate as envisaged by S.163 of the Customs Act, 1969, is mandatory and its non-compliance would render the entire process nullity in the eye of law.

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

---Ss. 168, 162 & 163---Seizure of things liable to confiscation---Power to issue search warrant---Power to search and arrest without warrant---Scope---Law through the requirement of S.163 of Customs Act, 1969, envisaging for the pre-existence of the grounds for belief of Customs Officer to be recorded before the raid by the customs officer concerned, to ensures that the search warrant is made for a bona fide purpose and on reasonable grounds which can be tested later, if challenged by the aggrieved party.

(d) Administration of justice---

----When a thing is to be done in a particular manner, it must be done in that manner and not otherwise.

Atta Muhammad Qureshi's case PLD 1971 SC 61; Agha Shorish Kashmiri's case PLD 1969 SC 14 and Raja Hamayun Sarfaraz Khan's case 2007 SCMR 307 ref.

Gul Hussain Khilji for Petitioner.

Najeeb-ur-Rehman and Jalal-ud-Din for Respondents.

2021 P T D 962

[Peshawar High Court]

Before Ikramullah Khan and Syed Arshad Ali, JJ

COLLECTOR CUSTOMS, MODEL CUSTOMS COLLECTORATE, PESHAWAR

Versus

DIYAR MUHAMMAD KHAN

Customs Reference No.180-P of 2020 with C.M. No.156-P of 2020, decided on 17th September, 2020.

Customs Act (IV of 1969)---

----Ss.2(s), 168 & 196---Foreign Exchange Regulations Act (VII of 1947), S.8---Notification No.SRO 760(I)/2013 dated 2-9-2013---"Smuggling"---Seizure of goods---Option to declare the goods---Customs authorities detected gold Bullion Suisse in personal luggage of accused-respondent at his arrival in Pakistan---Instead of offering accused-respondent to declare his goods, the same was seized---Validity---Accused-respondent did not conceal goods and relevant Officer of Customs Department while noticing goods in bag of accused-respondent as goods not imported in violation of S.8 of Foreign Exchange Regulations Act, 1947 or Import Policy / State Bank of Pakistan Regulation, then by not offering option to accused-respondent for declaration of goods and seizure in terms of S.168 of Customs Act, 1969, was not warranted under the law---Customs Appellate Tribunal rightly allowed release of goods of accused-respondent on payment of applicable duties and taxes---Reference was dismissed, in circumstances.

Masood v. The State 1987 MLD 1602 and Central Board of Revenue and another v. Khan Muhammad PLD 1986 SC 192 ref.

Ishtiaq Ahmad (Junior) for Petitioner.

Irshad Ahmad Durrani for Respondent.

2021 P T D 1273

[Peshawar High Court]

Before Musarrat Hilali and Muhammad Nasir Mahfooz, JJ

Messrs HAMDAAN ENTERPRISES through Proprietor and another

Versus

COLLECTOR OF CUSTOMS (APPRAISEMENT AND FACILITATION) MCC, CUSTOMS HOUSE, PESHAWAR and another

Writ Petitions Nos.2121-P and 2122-P of 2021, decided on 27th May, 2021.

Customs Act (IV of 1969)---

----Ss.16, 17 & 194---Prohibition and restriction on import of certain goods---Detention, seizure and confiscation of such goods---Release of perishable goods subject to payment of leviable duties and taxes --- Adjudication under the Customs Act, 1969---Scope---Petitioner sought release of goods seized on ground of having been brought into the country in violation of S.16 of Customs Act, 1969---Contention of petitioner was that said goods were perishable in nature having expiry dates, and therefore same ought to be released after payment of all leviable taxes and duties---Validity---High Court directed Department to immediately release stock of petitioner which was perishable subject to payment of leviable tax and duties, which would remain with Department as security pending adjudication of appeal of petitioner and furthermore directed that other material seized should not auctioned till decision of appeal of petitioner before Customs Tribunal---Constitutional petition was disposed of, accordingly.

Dil Nawaz Khan and others v. The Director, Directorate of Intelligence and Immigration (Customs) Peshawar and others W.P No.37-P/2021 rel.

Aamir Bilal for Petitioners.

2021 P T D 1360

[Peshawar High Court]

Before Syed Muhammad Attique Shah and Muhammad Naeem Anwar, JJ

COLLECTOR OF CUSTOMS, MODEL CUSTOM COLLECTORATE, PESHAWAR

Versus

FAISAL RASOOL

Custom Reference No.326-P of 2020, decided on 14th January, 2021.

Customs Act (IV of 1969)---

----Ss.2(c), 16, 139 & 196---Imports and Exports (Control) Act (XXXIX of 1950), S.3---Reference---Gold, non-declaring of---Respondent was accused of bringing gold jewelry for aboard which was identified during luggage scanning by Airports Security Force (ASF) personnel---Validity---Foreign origin gold jewelry was detected by scanning machine of ASF, which was handed over to Customs Authorities---On weighing the jewelry was found 1000.75 grams (gross) and net weight 865.230 grams---Respondent should have been given opportunity for declaring the goods carried by him in accordance with mandatory provision of S.139 of Customs Act, 1969---High Court declined to interfere in order passed by Customs Appellate Tribunal as the matter was rightly decided in favour of respondent through appreciation of facts and proper application of law---Reference was dismissed in circumstances.

Collector of Customs v. Wali Khan 2017 SCMR 585 ref.

Feroz Rahim Batla v. The State 1980 PCr.LJ 663 and Mumtaz-ud-Din v. The State 2020 PTD 129 rel.

Gul Hussain Khilji for Petitioner.

Mian Naveed Gul Kakakhel for Respondent.

2021 P T D 1423

[Peshawar High Court (Mingora Bench)]

Before Ishtiaq Ibrahim and Wiqar Ahmad, JJ

Messrs TAMEER STEEL ZONE through Authorise Representative

Versus

GOVERNMENT OF PAKISTAN through Federal Secretary Finance and others

Writ Petitions Nos.654-M, 655-M, 1098-M, 1139-M, 1244-M, 423-M, 443-M, 524-M, 793-M, 887-M, 948-M, 948-M, 1028-M, 1191-M and C.O.C. No.72-M of 2020 in W.P. No.948-M of 2002, decided on 26th November, 2020.

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

----Ss.3, 64 & 70---Constitution of Pakistan, Art.199---Constitutional petition--- Alternate and efficacious remedy---Factual controversy---Petitioners were aggrieved of final determinations for imposing of anti-dumping duties after finding imports of Cold Rolled Coils/Sheets originating in or exported from abroad---Validity---Resolution of dispute required thorough probe and in-depth investigations of disputed questions of facts---Orders in question were passed after investigations under Part-VIII of Anti Dumping Duties Act, 2015, wherein it had been found that subject goods were dumped by countries of their origins---Appellate Tribunal established would be in a better position to call for record of investigations and see whether same had been carried out according to law and whether investigating authorities had reached a correct conclusion on the basis of evidence before it or not---Not only remedy of appeal before Appellate Tribunal was provided under S.70(1) of Anti Dumping Duties Act, 2015, but a further appeal before High Court was also available under S.70(13) of Anti Dumping Duties Act, 2015---High Court declined to dub such mechanism for resolution of alternate dispute as ineffective or inefficacious---High Court converted petitions into appeals and forwarded the same to appropriate Tribunal under S.70(1) of Anti Dumping Duties Act, 2015---Constitutional petition was disposed of accordingly.

Khalid Mehmood v. Collector of Custom, Custom House Lahore 1999 SCMR 1881; Commissioner of Income Tax, Companies-II and another v. Hamdard Darvakhana (Waqf), Karachi PLD 1992 SC 847; Collector of Customs, Lahore and others v. University Gateway Trading Corporation and another 2005 SCMR 37; Jawed Malik v. The State 2005 SCMR 49 and Chief Administrator of Auqaf v. Muhammad Ramzan and others PLD 1991 SC 102 rel.

Isaac Ali Qazi and Ms. Nazish Muzaffar for Petitioners.

Nawroz Khan, Deputy Attorney General, Raza-ud-Din Khan, A.A.G., Saifullah Khan and Ahmad Sheraz for Respondents.

2021 P T D 1842

[Peshawar High Court (Mingora Bench)]

Before Ishtiaq Ibrahim and Wiqar Ahmad, JJ

Messrs HADI KHAN SILK MILLS and another

Versus

GOVERNMENT OF PAKISTAN, through Federal Secretary Finance and 7 others

Writ Petitions Nos.442-M, 886-M, 1090-M to 1094-M, 1210-M, 1245-M, 1267-M, 1268-M, 1243-M of 2020, 1082-M, 1233-M of 2019, 421-M, 422-M, 435-M, 448-M, 522-M, 525-M, 527-M, 670-M, 792-M, 812-M, 813-M, 963-M, 1004-M, 1247-M and 1063-M of 2020, decided on 24th November, 2020.

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

----S.53, Schedule Second, Part-I, Cl. 146 & Part-IV, Cl. 110---SRO No 1213/2018 dated 5-10-2018---Prelude to opening paragraph--- Deeming clause---Effect---Prelude given in opening paragraphs of SRO No.1213/2018, dated 5-10-2018 can be referred to for knowing purpose of making amendments in Second Schedule to Income Tax Ordinance, 2001--- Such prelude cannot be given a super imposing effect, so as to read something not expressly incorporated in Income Tax Ordinance, 2001--- Deeming clause introduced in SRO No.1213/2018, dated 5-10-2018, cannot be given a super imposing effect over other provisions of Income Tax Ordinance, 2001---Effect to deeming clause cannot be given more than the power of Federal Government vested in it by S.53(2) of Income Tax Ordinance, 2001, unless immunity from operation of certain provisions of Income Tax Ordinance, 2001, is found to have been granted by amendment of Part-IV of Second Schedule to Income Tax Ordinance, 2001.

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

----Ss. 53, 159, Schedule Second, Part-I, Cl. 146 & Part-IV, Cl. 110---Notification SRO No. 1213/2018 dated 5-10-2018---Constitution of Pakistan, Arts. 199 & 247---Constitutional petition---Tax exemption at import stage---Principle---Petitioners were importers of raw materials for their respective industrial concerns situated in erstwhile Federally Administered Tribal Area and Provincially Administered Tribal Area, sought tax exemption over raw material at import stage---Validity---When Income Tax Ordinance, 2001 was extended and fully operational in the area, a self-contained mechanism for seeking exemption from payment of liability of income tax stood provided therein--- Resort could not be made to temporary regime provided in an earlier judgment of High Court--- Mechanism was provided under S.159 of Income Tax Ordinance, 2001, through which a person who claimed to be exempted from payment of any tax liability under exemptions provided in Part-I of Second Schedule to Income Tax Ordinance, 2001, could get a certificate to such effect and could be treated as exempted from payment of tax liability--- Such provision of law was not exempted under Cl. 110 of Part-IV of Second Schedule to Income Tax Ordinance, 2001 and had its due operation---Petitioners had recourse thereto if they wanted to seek exemption from liability of income tax at import stage---Constitutional petition was disposed of accordingly.

Messrs Taj Packages Company (Pvt.) LTD. through Manager v. The Government of Pakistan through Federal Secretary Finance and Revenue Division and 6 others 2016 PTD 203; Pakistan through Chairman FBR and others v. Hazrat Hussain and others 2018 SCMR 939; PLD 1975 SC 397; PLD 2012 SC 1; Commissioner of Income-Tax, Peshawar v. Messrs Gul Cooking Oil and Vegetable Ghee (Pvt.) Ltd. through the Chief Executive and 6 others 2003 PTD 1913; Messrs Gul Cooking Oil and Vegetable Ghee (Pvt.) Ltd. through the Chief Executive and 6 others v. Commissioner of Income-Tax, Peshawar ("W.P. No. 1278/1999"); Commissioner of Income-Tax, Peshawar v. Messrs Gul Cooking Oil and Vegetable Ghee (Pvt.) Ltd. through, the Chief Executive and 6 others 2008 PTD 169; National Commission on Status of Women through Chairperson and others v. Government of Pakistan through Secretary Law and Justice and others PLD 2019 SC 218; Waseem Sharif Industries (Pvt.) Ltd. v. Government of Pakistan and others (W.P. No. 1094-M of 2020); Messrs Ikram Ullah Associates and 08 others v. Government of Khyber Pakhtunkhwa through Chief Secretary and 17 others (W.P. No. 886-M/2019); 2005 SCMR 25 and 1997 SCMR 1804 ref.

Issac Ali Qazi, Barrister Asad-ur-Rehman and Muhammad Akbar Khan for Petitioners.

Nawroz Khan, Deputy Attorney General, Raza-ud-Din Khan, A.A.G., Ishtiaq Ahmad, Mukhtar Ahmad Maneri, (via video link) and Ghulam Shoib Jally for Respondents.

2021 P T D 1998

[Peshawar High Court]

Before Muhammad Nasir Mahfooz and Syed Arshad Ali, JJ

Messrs POLY FOAM (PRIVATE) LIMITED

Versus

GOVERNMENT OF PAKISTAN through Federal Secretary Finance and Revenue Division, Islamabad and 10 others

Writ Petition No.1355-P of 2021, decided on 29th March, 2021.

(a) Federal Board of Revenue Act (IV of 2007)---

----S.4---Federal Board of Revenue---Scope---Federal Board of Revenue is a Sate instrumentality responsible for enforcing fiscal laws and collecting revenue for the Federation.

(b) Federal Board of Revenue Act (IV of 2007)---

----S.4---Customs General Order No. 01 of 2021 dated 9-4-2021---Circular No.9 of 2021 dated 1-3-2021---Sales Tax Act (VII of 1990), Sixth Schedule, entry No.151---Constitution of Pakistan, Arts.18 & 247(3)---Policy decision---Right to trade, business or profession---Immunity from payment of sales tax---Petitioner was running an industrial unit in erstwhile Federally Administered Tribal Area and was aggrieved of restrictions imposed upon the immunity provided to such industrial units---Validity---Customs General Orders No. 01 of 2021 and Circular No.9 of 2021 were policy decision of Federal Board of Revenue ensuring transportation of goods right from Karachi till safe transit to dry port Peshawar or the industrial unit of consumer / importer---Circulars in question neither offended any statutory right of petitioner nor contradicted policy rather the policy was in conformity with the concerns of Supreme Court referred in its earlier judgment, for eliminating leakage of public revenue---Customs General Order in question was neither contrary to any law, fundamental rights of petitioner guaranteed under the Constitution nor was beyond the authority of Federal Board of Revenue--- Object of issuance of circular / order was to ensure safe transportation of imported goods which were destined for its consumption at the erstwhile triable area, lest it could not reach into the hands of those industrial units, which were located in settled area---Customs General Order No.01 of 2021 and Circular No.9 of 2021 were issued by competent authority and did not amount to unnecessary fetter on the business activities of petitioner but were prima facie aimed to protect public revenue from being leakage and regulating foolproof transportation/escort of goods imported solely for the purpose of consumption in erstwhile Federally Administered Tribal Area---Constitutional petition was dismissed accordingly.

Messrs Gadoon Textile Mills and 814 others v. WAPDA and others 1997 SCMR 641; Capital Development Authority through Chairman and another v. Mrs. Shaheen Farooq and another 2007 SCMR 1328; Muhammad Amin Muhammad Bashir Limited v. Government of Pakistan through Secretary Ministry of Finance, Central Secretariat, Islamabad and others 2015 SCMR 630; Shuja Sharif and 7 others v. FOP and 3 others PLD 2019 Isl. 491; Collector of Customs, Islamabad v. Messrs Askari Cement (Pvt.) Ltd. and others 2020 SCMR 649; Messrs Taj Packages Company (Pvt.) Ltd. through Manager v. The Government of Pakistan through Federal Secretary Finance and Revenue Division and 6 others 2016 PTD 203; Pakistan through Chairman, FBR and others v. Hazrat Hussain 2018 SCMR 939; Messrs Elahi Cotton Mills Ltd. and others v. Federation of Pakistan through Secretary Ministry of Finance, Islamabad and 6 others 2016 PTD 1555; Dossani Travels (Pvt.) Ltd. and others v. Messrs Travels Shop (Pvt.) Ltd. and others PLD 2014 SC 1 and The Secretary Punjab Public Service Commission, Lahore and others v. Aamir Hayat and others 2019 SCMR 124 rel.

(c) Constitution of Pakistan---

----Art.18---Right to trade, business or profession--- Scope---Such right guaranteed by Art. 18 of the Constitution is not absolute and can be subjected to reasonable restriction and regulation as may be prescribed by law.

2021 P T D 2027

[Peshawar High Court]

Before Lal Jan Khattak and Syed Arshad Ali, JJ

COLLECTOR OF CUSTOMS, MODEL CUSTOM COLLECTORATE

Versus

Messrs NEW SHINWARI LIMITED and another

Custom Reference No.5-P of 2012, decided on 10th June, 2021.

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

----Ss.79 & 129---Goods declaration---Object, purpose and scope---Afghan Pakistan Transit Trade Agreement to Afghanistan---Goods declaration forms are governed under S.79 of Customs Act, 1969, which is meant only for those goods, which on import are assessed for home consumption or warehouses or transhipment--- Essential purpose of filing goods declaration form is to provide true particulars of goods for assessing and payment of liability of duties, taxes and other charges--- Traders transporting goods under Afghan Pakistan Transit Trade Agreement to Afghanistan (APTTA) is required to file a goods declaration, the same is only filed for the purpose of determining nature of goods as to whether the same was in accordance with APTTA and protocol or any other instructions of Federal Government and not for the purpose of taxes and duties, as the same is not subject to impost of any local duties in view of clear immunity from taxation as provided under S.129 of Customs Act, 1969, and Afghan Pakistan Transit Trade Agreement.

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

----Ss.32, 79, 129, 156(64) & 196---Afghanistan Pakistan Transit Trade Agreement---Reference---Mis-declaration---Goods in question were declared under Afghan Pakistan Transit Trade Agreement (APTTA) but authorities seized the goods for mis-declaration---Validity---Offence under S.32 of Customs Act, 1969, could not be constituted in absence of mens rea on the part of person transporting it to Afghanistan when under APTTA, therefore, it could not be put in operation--- Incorrect declaration of goods permissible under and transported under APTTA did not constitute any offence under S.156 (64) of Customs Act, 1969--- Less declared goods were neither for the purpose of consumption in Pakistan in violation of Customs Act, 1969, nor it contravened any provision or S.129 of Customs Act, 1969 and APTTA--- High Court declined to interfere in findings of Customs Appellate Tribunal as the same were factually correct and were not open to any exception---Reference was dismissed in circumstances.

Federation of Pakistan Through Secretary, Ministry of Foreign Affairs, Government of Pakistan Islamabad and 5 others v. Jamaluddin and others 1996 SCMR 727 rel.

Abdul Rauf Rohaila for Petitioner.

Isaac Ali Qazi for Respondent.

2021 P T D 993

[Balochistan High Court]

Before Naeem Akhtar Afghan and Rozi Khan Barrech, JJ

The COLLECTOR OF CUSTOMS, MODEL CUSTOM COLLECTORATE, QUETTA

Versus

MUHAMMAD ASIF and 2 others

Customs Reference Application No.57 of 2017, decided on 17th June, 2020.

Customs Act (IV of 1969)---

----Ss.196 & 168---Customs Baggage Rules, 2016, R. 17---SRO No.574(I)/2005, dated: 06-06-2005---SRO No.499(I)/2009, dated 13-06-2009---SRO No.886(I)/2012, dated: 18-07-2012---Seizure of things liable to confiscation---Treatment of goods brought in commercial quantity---Option to pay fine in lieu of confiscated goods---Scope---Bus entered into Pakistan was found loaded with foreign origin goods in commercial quantities while the number of pilgrims in the bus were not more than five---Validity---Recovered goods were in commercial quantity, therefore, R.17 of Customs Baggage Rules, 2016, was applicable to the case---Goods recovered could only be released on payment of the duty and taxes subject to redemption fine at the rate of 30% in terms of SRO No.574(I)/2005, dated: 06-06-2005 and thereafter, at the rate of 20% in terms of SRO No.499(I)/2009, dated 13-06-2009---Customs Appellate Tribunal was not justified to remit the entire amount of fine and penalty as SRO No.886(I)/2012, dated: 18-07-2012 was not attracted in the facts and circumstances of the case---Reference was accepted, impugned judgment passed by Customs Appellate Tribunal was set aside.

Syed Ikhlaq Shah for Applicant.

Mazhar Ali Khan for Respondent No.1.

Mian Badar Munir, Assistant Attorney General-I.

2021 P T D 1035

[Balochistan High Court]

Before Naeem Akhtar Afghan and Rozi Khan Barrech, JJ

COLLECTOR, MODEL CUSTOMS COLLECTORATE, CUSTOM HOUSE GAWADAR AT GADDANI

Versus

ABDUL RAHEEM

Special Custom Reference Application No.29 of 2020, decided on 23rd July, 2020.

Customs Act (IV of 1969)---

----Ss.168 & 181---SRO No. 499(I)/2009 dated 13-06-2009---Seizure of things liable to confiscation---Option to pay fine in lieu of confiscated goods---Scope---Department assailed order passed by Appellate Tribunal whereby the vehicle used in smuggling was released to its owner against 20% redemption fine on the customs value---Validity---Secret cavities of the seized vehicle were found loaded with foreign origin goods in commercial quantity, which were ordered to be confiscated by the Additional Collector vide order-in-original as neither anyone came forward to claim ownership of the smuggled goods nor any appeal was filed against the said order to the extent of confiscation of the smuggled goods---Seized vehicle being wholly used for the purpose of smuggling and in the light of SRO No. 499(I)/2009 dated 13-06-2009, no option could be given to the owner to pay fine in lieu of confiscation of the seized vehicle---Adjudication officer had rightly ordered confiscation of the seized vehicle whereas the order passed by Appellate Tribunal was in violation of the SRO as well as the provisions of S.181 of the Customs Act, 1969---Reference application was allowed.

Collector of Customs, Peshawar v. Wali Khan and others Civil Appeal No. 1050 of 2009 rel.

Syed Ikhlaq Shah for Applicant.

Abdul Zahir and Hussain Ahmed for Respondent.

2021 P T D 1078

[Balochistan High Court]

Before Abdullah Baloch, J

NABI BAKHSH and 3 others

Versus

The STATE and another

Criminal Miscellaneous Quashment No.63 of 2020, decided on 6th March, 2020.

Customs Act (IV of 1969)---

----Ss.85, 89, 156 & 157---Criminal Procedure Code (V of 1898), Ss.561-A & 403---Constitution of Pakistan, Art.13---General Clauses Act (X of 1897), S.26---Smuggling---Quashing of FIR---Protection against double punishment and self incrimination---Person once convicted or acquitted not to be tried for the same offence---Provision as to offences punishable under two or more enactments---Scope---Accused persons sought quashing of second FIR on the ground that it amounted to double jeopardy---Validity---Customs officials were initially busy in discharge of their official duties and were checking the vehicles when a truck arrived at the check post, which was stopped for checking purposes but in the meantime the accused persons also arrived there in another vehicle, forbade the officials from checking the truck, abused and beaten the officials as well as blocked the road by calling more than 100 persons---However, search of the truck resulted into recovery of foreign origin smuggled goods---Customs authorities had rightly lodged the first FIR under the Customs Act, 1969, for the recovery of foreign origin smuggled goods and the second FIR under the provisions of Pakistan Penal Code, 1860 for restraining the officials from performance of their official duties and giving beatings to them---Section 403, Cr.P.C., Art.13 of the Constitution and S.26 of General Clauses Act, 1897, provided that no one could be vexed twice and prosecuted or punished for the same offence, but if one was guilty of offence under another enactment, though by the same chain of facts, he could be tried, convicted and punished under that very offence committed by him---Principle of double jeopardy was not applicable to the facts of the case---Petition, being devoid of merits, was dismissed, in circumstances.

PLD 2018 SC 322 and PLD 2019 Bal. 27 ref.

Muhammad Nadeem Anwar v. Securities and Exchange Commission of Pakistan 2014 SCMR 1376 rel.

Mazhar Ali Khan for Petitioners.

Nemo for Respondents.

2021 P T D 1732

[Balochistan High Court]

Before Abdullah Baloch, J

The COLLECTOR CUSTOMS, through Additional Collector Model Customs Collectorate, Quetta and others

Versus

ABDUL ZAHIR and others

Customs Appeals Nos.5 of 2016 and 2 of 2018, decided on 23rd October, 2020.

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

----Ss.32, 156(1)(14), 156(1)(86), 156(1)(95-A), 156(1)(96) & 211---Customs Rules, 2001, Rr. 101 & 102---Mis-declaration---Failure to give information regarding offence---Dishonestly issuing a security---Failure to maintain record---Appreciation of evidence---Delayed FIR---Scope---Department assailed the acquittal of respondents by the Special Judge Customs---Alleged forgery was committed in the month of July 2008 but the FIR was lodged with a delay of four years---Entire case of the prosecution rested upon Goods Declarations and E-Forms, wherein allegedly forgery and tampering was committed by the accused in their capacity as Exporters/Clearing Agents, but the prosecution had failed to produce the documents in the trial court in order to establish charges of forgery and tampering---Investigating Officer had admitted that it was the duty the Customs Authorities to keep original documents in the office---Non-production of relevant and essential documents in the trial court had rendered the entire case of prosecution as doubtful and nothing was left to make reliance for awarding conviction and sentence to the accused---Prosecution had failed to establish the charge through concrete and solid evidence, which fact itself was admitted by its own witnesses---Appeals against acquittal were dismissed, in circumstances.

(b) Criminal Procedure Code (V of 1898)---

----S.154---Information in cognizable cases---Scope---Main purpose of lodging FIR is to set criminal law in motion and to bring on record firsthand information about the occurrence of a crime and to provide a sound basis for carrying out investigation in the right direction excluding the possibility of fabrication of any false story.

(c) Criminal Procedure Code (V of 1898)---

----S.154---Information in cognizable cases---Delayed FIR---Condonation of delay---Scope---Delay in lodging the FIR can only be condoned when such delay has been adequately explained.

(d) Appeal against acquittal---

----Once the accused is acquitted of the charge by the Court of competent jurisdiction, double presumption of innocence is attached with such order, which cannot be reversed until and unless it is proved that the order of acquittal is perverse, fanciful, capricious or contrary to record.

Syed Ikhlaq Ahmed Shah for Appellants (in both Appeals).

Muhammad Rahim Mandokhail for Respondents (in Custom Appeal No.05 of 2016).

Mirwise Bazai for Respondent (in Custom Appeal No.05 of 2016).

2021 P T D 1764

[Balochistan High Court]

Before Naeem Akhtar Afghan and Zaheer ud Din Kakar, JJ

Messrs MEERAB ENTERPRISES, through Authorized Attorney

Versus

The FEDERATION OF PAKISTAN through Secretary Federal Board of Revenue and 3 others

C.P. No.198 of 2021, decided on 6th April, 2021.

Customs Act (IV of 1969)---

----Ss.3A & 25A---SRO No.486(I)/2007, dated: 09-06-2007---Directorate General of Intelligence and Investigation---Power to determine the customs value---Jurisdiction---Scope---Petitioner imported two consignments of pistachios with shell (Iran origin) via land route in respect whereof Goods Declaration Forms were filled in for customs clearance---Unit value of the consignments was declared by the petitioner as 1.00 US$ per kg and it was assessed by the Appraising Officer as 1.32 US$ per kg on the basis whereof leviable customs duty and tax were paid by the petitioner---Directorate of Intelligence and Investigation Customs, before release of consignments, seized the consignments for alleged contravention of Ss.2(s), 15, 16, 18 & 32 of Customs Act, 1969---Validity---Officers of Directorate of Intelligence and Investigation Customs, in pursuance of Notification SRO No.486(I)/2007 dated: 09-06-2007, could intercept the goods which were liable to confiscation due to mis-declaration of description of goods or mis-declaration in respect of quality and quantity of the goods resulting in loss of revenue but they could not intercept the goods due to non-application or wrong application of a Valuation Ruling as it was not within their domain and jurisdiction---Constitutional petition was accepted and the seizure report was declared to be void and of no legal effect.

Saadat Khan v. Federation of Pakistan 2014 PTD 1615; Shahzad Ahmed Corporation v. Federation of Pakistan 2005 PTD 23 and Civil Appeal No.20 of 2015 ref.

Barrister Asad Khan and Mirwais Bazai for Petitioner.

2021 P T D 1823

[Balochistan High Court]

Before Jamal Khan Mandokhail, CJ and Abdullah Baloch, J

The COLLECTOR OF CUSTOMS, through Additional Collector of Customs and others

Versus

AKHTAR HUSSAIN and others

Special Custom Reference Applications Nos.41, 42, 43, 44, 45 and 46 of 2019, decided on 16th December, 2019.

Customs Act (IV of 1969)---

----Ss.2(s), 16, 156(1), 157(2) & 196---Imports and Exports (Control) Act (XXXIX of 1950), S.3(1)---Smuggling---Release of truck---Owner of truck, knowledge of---Proof---Trucks in question were confiscated as the same were being used to smuggle diesel from foreign country, whereas drivers managed to escape from the scene---Customs Appellate Tribunal imposed penalty upon owners and released the trucks---Validity---Prosecution failed to establish charge against owners to prove that they in any manner were involved in smuggling of foreign diesel---Prosecution failed to bring any evidence that the owners were aware or in knowledge of act which were done by drivers or cleaners---High Court declined to interfere in the judgment passed by Customs Appellate Tribunal as the Appellate authority had rightly appreciated such facts in its true sense and perspective through judgment in question and the same was not suffering from any legal defect---Customs Authorities failed to point out any illegality or irregularity in the judgment passed by Customs Appellate Tribunal---Reference was dismissed, in circumstances.

Syed Ikhlaq Shah and Sumera Abid for Appellant.

Hussain Ahmed for Respondents.

2021 P T D 11

[Supreme Court of Pakistan]

Present: Umar Ata Bandial, Munib Akhtar and Sayyed Mazahar Ali Akbar Naqvi, JJ

The COMMISSIONER INLAND REVENUE

Versus

The SECRETARY REVENUE DIVISION and others

Civil Appeal No. 647 of 2018, decided on 28th September, 2020.

(On appeal from the judgment dated 16.6.2011 passed by the Peshawar High Court, Peshawar in W.P. No. 602 of 2011)

(a) Income Tax Ordinance (XXXI of 1979) [since repealed]---

----Second Sched. Pt. I, Cl. 126F [since omitted]---Franchisee of mobile company (franchisor) carrying out business in District Nowshera---Payment of commission by franchisor to the franchisee---Exemption from deduction of advance tax on payment of commission for a period of three years starting from tax year 2010 ('the exemption clause')---Applicability---Held, that Sr. No. 1 of paragraph 3 of Circular No.14 of 2011 dated 6.10.2011 issued by the Federal Board of Revenue ('the Circular) provided benefit of exemption clause to those tax payers located inside the affected and moderately affected areas of Khyber Pakhtunkhwa, ('the specified areas') and whose business was also carried on inside the specified areas---Place of business of respondent-tax payer in the present case was admittedly located in a 'moderately affected area' within the meaning of the exemption clause---Case of respondent-tax payer fell squarely within Sr. No. 1 of paragraph 3 of the 'Circular'---Department itself regarded the income of taxpayers such as the respondent as entitled to the benefit of the exemption clause---Such scenario was also clearly confirmed in para 7 of the judgment in Husnain Cotex Limited v. Commissioner Inland Revenue 2017 SCMR 822 = 2017 PTD 1561, wherein such tax-payers had been described as the "affectees" of the "adverse business environment" for whom the exemption clause was intended---Respondent-tax payer was clearly entitled to the benefit of the exemption clause--- Appeal filed by department was dismissed.

Husnain Cotex Limited v. Commissioner Inland Revenue 2017 SCMR 822 = 2017 PTD 1561 ref.

(b) Constitution of Pakistan---

----Art. 185(3)---Leave refusing order passed by the Supreme Court---Such order did not constitute a binding authority.

Ghulam Shoaib Jally, Advocate Supreme Court and Masud Akhtar, Chief Legal, FBR for Appellant (in both cases).

Respondent No. 3, ex parte.

Qazi Ghulam Dastegir, Advocate Supreme Court for Respondent No. 4.

2021 P T D 227

[Supreme Court of Pakistan]

Present: Umar Ata Bandial, Sajjad Ali Shah and Sayyed Mazahar Ali Akbar Naqvi, JJ

Messrs LIBERTY CAR PARKING (PVT.) LTD. through Director

Versus

COMMISSIONER INLAND REVENUE (EX-COMMISSIONER OF INCOME TAX/WEALTH TAX), LAHORE and others

Civil Petitions Nos. 2021-L to 2025-L of 2015, decided on 15th December, 2020.

(On appeal against the judgment dated 17.06.2015 passed by the Lahore High Court, Lahore in WTA Nos. 189 to 193 of 2003)

Wealth Tax Act (XV of 1963)---

----S.2(18)---Civil Procedure Code (V of 1908), O.VI, R.14 & O.XXIX, R.1---Wealth Tax Appeals filed by a company without a resolution from the Board of Directors, but duly signed by the Chief Executive Officer (CEO)---Sufficient compliance---Ratification of appeals---Scope---Company was a juristic entity and it could duly authorize any person to sign the plaint or the written statement on its behalf and this would be regarded as sufficient compliance with the provisions of Code of Civil Procedure, 1908---Person may be expressly authorized either by the Board of Directors or by a power of attorney---However, in absence thereof and in cases where pleadings had been signed by one of its officers, the same could be accredited by the company by express or implied action---In the present case, the appeals filed before the High Court were not authorized by Board of Directors by proper resolution but they were duly signed by the Chief Executive Officer of the petitioner-company---Definition of 'principal officer' provided in S. 2(18) of the Wealth Tax Act, 1963 clearly showed that the Chief Executive Officer was the principal officer and if he had signed the appeals before the High Court, the same would be accorded as express ratification by the company---In such circumstances the High Court ought to have decided the appeals on merits and not on technical grounds---Petitions for leave to appeal were converted into appeals and allowed, and the case was remanded back to the High Court to decide the appeals filed by the petitioner-company afresh in accordance with law.

Rahat and Co. v. Trading Corporation of Pakistan PLD 2020 SC 366 ref.

Mian Ashiq Hussain, Advocate Supreme Court for Petitioners (Through video link from Lahore).

Amir Malik, Advocate Supreme Court for Respondents.

2021 P T D 299

[Supreme Court of Pakistan]

Present: Umar Ata Bandial, Munib Akhtar and Yahya Afridi, JJ

Messrs SHAHID GUL AND PARTNERS

Versus

DEPUTY COMMISSIONER OF INCOME TAX, AUDIT-V, RTO, PESHAWAR

Civil Appeals Nos. 2444 to 2449 of 2016, decided on 14th February, 2019.

(On appeal against the judgment/order dated 18.06.2016 of the Peshawar High Court, Peshawar passed in ITRs Nos. 37-P, 38-P, 39-P, 48-P, 47-P and 45-P of 2014)

Per Yahya Afridi, J; Umar Ata Bandial, J agreeing; Munib Akhtar, J also agreeing but finding the discussion in the majority view on the legal meaning of "building" in relation to the land beneath any structure, as not necessary for purposes of present case.

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

----Ss. 20 & 24---Sale of immoveable property---Deductible expense---Scope---Income Tax Ordinance, 2001 did not expressly require registration of sales of immovable properties for its cost to be accepted as a deductible expense.

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

----Ss. 20 & 21---Income from business---Deductible expenses---Burden of proof---Scope---Right has been vested in the taxpayer to claim deductible expenses for the purposes of computing his income---Onus to dispute the said expense, so claimed by a taxpayer, had been cast upon the Revenue department, thus, it was for the Revenue department to show that the expenditure so claimed by the taxpayer was not permissible, or was excluded from deduction under the Income Tax Ordinance, 2001, and in particular, S. 21 thereof.

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

----Ss. 20, 21(n), 22(15) & Third Sched., Pt. I---Deductible expenses---Scope--- Depreciable assets--- Unsold improved land---Structural improvements---Deduction was allowed for depreciation of the taxpayer's depreciable assets used in furtherance of his business in the said tax year---Term "depreciable assets", as explained in subsection (15) of S. 22 of the Income Tax Ordinance, 2001 in essence, referred to any tangible moveable property, immovable property (other than unimproved land), and included "structural improvement" made on the immovable property---"Structural improvement", in relation to the immovable property, was to include the changes made on the unimproved or even the improved land, which transformed its existing shape and was used for any purpose in furtherance of taxpayer's business---Word "building", provided in Part I of the Third Schedule to the Income Tax Ordinance, 2001, would include structural improvements made on unsold land fulfilling the attributes of a depreciable asset, as provided in S. 22 of the Ordinance.

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

----Ss. 20, 21(n), 22(13)(b), 22(15) & Third Sched., Pt. I---Deductible expenses--- Scope--- Depreciable assets--- Unsold improved land---Structural improvements---Cost of land beneath a building---Whether the cost of land beneath a "building" would be included in determining the value of the rate of depreciation specified in the Third Schedule to the Income Tax Ordinance, 2001---Land beneath the structural improvements in the shape of corridors, pavements, roads and other such improvements that were made would not qualify to be included as a cost of the land on which depreciation was sought---Value of the "building" for the purposes of determining the rate of depreciation had to be restricted only to the cost/expenses incurred on the "structural improvements" on the land, and not the costs of land on which it was built upon.

Corporation of the City of Victoria v. Bishop of Vancouver Island (1921) 2 A.C. 384; Thomas v. Long 166 N.W. 287, 288, 182 Iowa, 859; State ex rel. Holbert v. Robinsons (59 S.E.2d 884, 888, 134 W.Va. 524) and Wade v. Odle (54 S.W. 786, 788, 21 Tex. Civ. App. 656) ref.

Commissioner of Income-Tax, Punjab Jammu and Kashmir and Himachal Pradesh v. Messrs Alps Theatre, Patiala (1967) 65 ITR 377 (SC); Commissioner of Income-Tax, Bombay City-IV, Bombay v. Teritex Knitting Industries Pvt. Ltd. (1978 114 ITR 634 Bom) and Commissioner of Income-tax, Bombay v. Messrs. Gwalior Rayon Silk Manufacturing Co. Ltd. AIR 1992 SC 1782 distinguished.

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

----Ss. 20(1), 21(n), 22(13)(b), 22(15) & Third Sched., Pt. I---Sale of constructed shops/offices on purchased land---Deductible expenses---Scope---Depreciable assets---Unsold improved land---Structural improvements---[Per Yahya Afridi, J (Majority view): While computing the income of the tax-payer from the sale of the shops so constructed on the purchased land, the cost so incurred from the purchase thereof could be deducted under subsection (1) of S. 20 of the Income Tax Ordinance, 2001 ('the Ordinance')---Tax-payer was also entitled to seek depreciation under S. 22 of the Ordinance on the expenditure incurred by him on structural improvements of unsold improved part of the land for the furtherance of his business, which factual determination was to be undertaken by the assessing officer --- Cost/expenses incurred on the structural improvements on the unsold improved land owned by the tax-payer being utilized for the furtherance of his business would be included in the value of a depreciable asset of the tax-payer within the contemplation of S. 22 of the Ordinance---Cost incurred by the tax-payer for purchasing the unsold land would not be included in the value of the depreciable asset for the purposes of depreciation, within the meaning of S.22 read with the Third Schedule of the Ordinance]---[Per Munib Akhtar, J (Minority view): His Lordship observed that present matter was clinched, insofar as the facts and circumstances of the present case were concerned, by S. 22(13) of the Ordinance, therefore, the discussion as regards the legal meaning of "building" in relation to the land beneath any structure contained in paragraphs 27 to 30 of the present judgment, was not necessary and the matter ought to be regarded as left open for future consideration in an appropriate case].

Muhammad Idris, Advocate Supreme Court for Appellants.

Rehmanullah, Advocate Supreme Court, Syed Rifaqat Hussain Shah, Advocate-on-Record and Abdul Hameed Anjum, Chief Legal, FBR for Respondents Nos. 1 - 2.

2021 P T D 379

[Supreme Court of Pakistan]

Present: Umar Ata Bandial, Sajjad Ali Shah and Sayyed Mazahar Ali Akbar Naqvi, JJ

Messrs LIBERTY CAR PARKING (PVT.) LTD. through Director

Versus

COMMISSIONER INLAND REVENUE (EX-COMMISSIONER OF INCOME TAX/WEALTH TAX), LAHORE and others

Civil Petitions Nos. 2021-L to 2025-L of 2015, decided on 15th December, 2020.

(On appeal against the judgment dated 17.06.2015 passed by the Lahore High Court, Lahore in WTA Nos. 189 to 193 of 2003)

Civil Procedure Code (V of 1908)---

----O.VI, R.14 & O. XXIX, R. 1---Wealth Tax Act (XV of 1963), S. 2(18)---Wealth Tax Appeals filed by a company without a resolution from the Board of Directors, but duly signed by the Chief Executive Officer (CEO)---Sufficient compliance---Ratification of appeals---Scope---Company was a juristic entity and it could duly authorize any person to sign the plaint or the written statement on its behalf and this would be regarded as sufficient compliance with the provisions of Code of Civil Procedure, 1908---Person may be expressly authorized either by the Board of Directors or by a power of attorney---However, in absence thereof and in cases where pleadings had been signed by one of its officers, the same could be accredited by the company by express or implied action---In the present case, the appeals filed before the High Court were not authorized by Board of Directors by proper resolution but they were duly signed by the Chief Executive Officer of the petitioner-company---Definition of 'principal officer' provided in S. 2(18) of the Wealth Tax Act, 1963 clearly showed that the Chief Executive Officer was the principal officer and if he had signed the appeals before the High Court, the same would be accorded as express ratification by the company---In such circumstances the High Court ought to have decided the appeals on merits and not on technical grounds---Petitions for leave to appeal were converted into appeals and allowed, and the case was remanded back to the High Court to decide the appeals filed by the petitioner-company afresh in accordance with law.

Rahat & Co. v. Trading Corporation of Pakistan PLD 2020 SC 366 ref.

Mian Ashiq Hussain, Advocate Supreme Court for Petitioners (Through video link from Lahore).

Amir Malik, Advocate Supreme Court for Respondents.

2021 P T D 578

[Supreme Court of Pakistan]

Present: Umar Ata Bandial, Sajjad Ali Shah and Munib Akhtar, JJ

Civil Appeals Nos. 26 to 29 of 2015

(On appeal from the judgment/order dated 26.04.2014 of the Peshawar High Court, Peshawar passed in TR No. 5-P-8-P/2013)

Civil Appeal No. 16 of 2016

(On appeal from the judgment/order dated 17.09.2015 of the Peshawar High Court, Peshawar passed in TR No. 25-P/2015)

Civil Appeals Nos. 1550 to 1554 of 2016

(On appeal from the judgment/order dated 28.01.2016 of the Peshawar High Court, Peshawar passed in TR Nos. 01-P to 04-P/2015,85-P/2014)

Civil Appeal No. 1931 of 2019

(On appeal from the judgment/order dated 21.05.2019 of the Peshawar High Court, Peshawar passed in TR No. 20-P/2015)

The COMMISSIONER INLAND REVENUE, PESHAWAR---Appellant

Versus

TARIQ MEHMOOD and others---Respondents

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

----Ss.121, 122C [since omitted] & 127 [as amended by the Finance Act (XXVII of 2017), Finance Act (XVII of 2012), Finance Act (XVI of 2011) and Finance Act (XVI of 2010)]---Best judgment assessment/provisional assessment order/final assessment order made by the Commissioner---Right of appeal to the Commissioner (Appeals) under S. 127 of the Income Tax Ordinance, 2001---Scope---Prior to Finance Act, 2010, when S. 121 of the Income Tax Ordinance, 2001 ('the 2001 Ordinance') alone was in the field, there was a right of appeal against a best judgment assessment---Between the Finance Act, 2010 and Finance Act, 2011, when S. 122C of the 2001 Ordinance was brought in but S. 127 remained untouched, the right of appeal remained unaffected---Right of appeal existed against either the provisional assessment order or the (deemed) final assessment---Effect of Finance Act, 2011 was to take away the right of appeal against the provisional assessment order, but the right against the (deemed) final assessment remained unaffected---Purported effect of Finance Act, 2012 was to take away altogether the right of appeal against any order/assessment made under S.122C---Finally, Finance Act, 2017 restored the position (with respect to right of appeal) to what it had been prior to Finance Act, 2010.

(b) Appeal---

----Right of appeal---Scope---Such right was a substantive right, which had to be conferred by statute.

(c) Constitution of Pakistan---

----Art.25---Discrimination---Reasonable classification---Scope---Article 25 of the Constitution allowed for reasonable classification, which was one that was based on intelligible differentia, which must have a rational nexus with the object sought to be achieved.

I. A. Sharwani and others v. Government of Pakistan and others 1991 SCMR 1041 ref.

(d) Constitution of Pakistan---

----Art.25---Fiscal statute---Discrimination---Reasonable classification--Scope---In the context of Article 25 of the Constitution, the courts gave a relatively greater latitude to the State in fiscal legislation in terms of selecting the persons liable to tax (or exemption), the objects of taxation, the methods employed and as to the rates of taxation---However, the latitude so granted was not infinitely elastic and it was not as though the courts regarded taxation to be wholly beyond the purview of Art. 25.

Amin Soap Factory's case PLD 1976 SC 277 and Elahi Cotton Mills and others v. Federation of Pakistan and others PLD 1997 SC 582 ref.

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

----Ss. 122C [since omitted] & 127(1) [as amended by the Finance Act (XVII of 2012) and before its amendment by the Finance Act (XXVII of 2017)]---Finance Act (XVII of 2012), S. 15(25)---Constitution of Pakistan, Art. 25---Section 15(25) of the Finance Act, 2012, vires of---Provisional assessment order made by the Commissioner---No right of appeal against such order to the Commissioner (Appeals) under S. 127 of the Income Tax Ordinance, 2001 for the time period falling between the Finance Act, 2012 and the Finance Act, 2017---Constitutionality---Held, that no intelligible differentiae existed that distinguished, insofar as the right of appeal under S. 127 of the Income Tax Ordinance, 2001 ('the 2001 Ordinance') was concerned, taxpayers who fell in the period between the Finance Act, 2012 and the Finance Act, 2017 from the taxpayers who came in the other periods---Furthermore, the differentiation created as a result of Finance Act, 2012 did not have any rational nexus with the object sought to be achieved by S. 122C of the 2001 Ordinance---Change made to S. 127(1) of the 2001 Ordinance by the Finance Act, 2012 was discriminatory within the meaning of Art. 25 of the Constitution and being in violation of the fundamental right so conferred was liable to be struck down---Subsection (25) of S. 15 of Finance Act, 2012 was declared to be ultra vires the Constitution---Resultantly the Supreme Court declared that at all times material for present purposes the right of appeal under S. 127(1) of the 2001 Ordinance had the form that it took as a result of Finance Act, 2011, and that tax-payers falling in the time period between the Finance Act, 2012 and the Finance Act, 2017, also had a right of appeal to the Commissioner (Appeals) under S. 127 of the 2001 Ordinance---Appeals were dismissed.

Ghulam Shoaib Jally, Advocate Supreme Court for Appellant (in C.As. Nos.26-29/15, 16/16, 1931/19).

Rehmanullah, Advocate Supreme Court for Appellant (in C.As. Nos.1550-1554/16).

Naeem Hassan, Sec. Lit. FBR for Appellant.

Isaac Ali Qazi, Advocate Supreme Court for Respondents (in C.As. Nos.26-29/15).

Respondent in-person (in C.A. No.1931/19).

Ex parte for Respondents (in C.As. Nos.16/16, 1553-1554/16).

Ayaz Shaukat, DAG on Court's Notice.

2021 P T D 639

[Supreme Court of Pakistan]

Present: Maqbool Baqar and Qazi Muhammad Amin Ahmed, JJ

COMMISSIONER INLAND REVENUE MULTAN

Versus

Sh. MUHAMMAD AMIN ARSHAD

Civil Petition No. 2732-L of 2016, decided on 7th January, 2021.

(Against the judgment dated 9.6.2016 passed by the Lahore High Court Multan Bench Multan in T.R. No.26/2013)

Income Tax Ordinance (XLIX of 2001)---

----Ss. 39, 122(5) & 182(2)---Income on account of supplies made to a company---Amendment of assessment by Commissioner---"Definite information"---Scope---Respondent-tax payer, who was a commission agent/broker, declared an income of Rs.34,42,374/- on account of supplies to a company; he assessed his income tax as Rs.3,42,437---Deputy Commissioner (Inland Revenue), however, detected receipt of payments through bank cheques far beyond the declared amount, running to the tune of Rs.56,12,36,365---Deputy Commissioner initiated proceedings against the respondent-tax payer under Ss. 122(5)(9) & 111(1) of the Income Tax Ordinance, 2001 ("the 2001 Ordinance"), considering the detection as "definite information" and determined tax liability---Legality---Respondent-tax payer did not deny the payments, the modes thereof and productwise quantum of the purchases---Respondent failed to substantiate his contention qua business activities with the company, to which it had made supplies, in the light of banking transactions---Department had rightly determined the income of the respondent under S. 39 of the 2001 Ordinance along with income tax chargeable and penalty consequent thereupon under S. 182(2) thereof---Orders passed by the Commissioner Inland Revenue (Appeals) and the Deputy Commissioner (Inland Revenue) being well within the remit of law were restored---Petition for leave to appeal was converted into appeal and allowed.

Ch. Muhammad Shakil, Advocate Supreme Court for Petitioner.

Sheikh Zafar-ul-Islam, Advocate Supreme Court for Respondent.

2021 P T D 1182

[Supreme Court of Pakistan]

Present: Umar Ata Bandial, Sajjad Ali Shah and Munib Akhtar, JJ

COMMISSIONER INLAND REVENUE ZONE BAHAWALPUR, REGIONAL TAX OFFICE, BAHAWALPUR

Versus

Messrs BASHIR AHMED (DECEASED) through LRs

Civil Appeal No. 1125 of 2020, decided on 28th January, 2021.

(On appeal from the Order dated 21.02.2017 of the Lahore High Court, Bahawalpur Bench passed in P.T.R. No. 04 of 2014)

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

----Ss. 111(1)(b), 122(1), 122(5) & 122(9)---Amendment of deemed assessment order---'Definite information' ---Scope---Tax return filed by the respondent (deemed assessment order) was scrutinized, and it was found that the respondent had only declared agricultural income of Rs.500,000/, whereas the department (as claimed by it) had definite information that the latter had acquired immoveable property in the sum of Rs.56,00,000---On such basis a notice ('the first notice') was issued under S. 122(1) of the Income Tac Ordinance, 2001 ('the 2001 Ordinance') read with subsections (5) & (9) thereof, requiring the respondent to show cause as to why the deemed assessment order should not be suitably amended---Subsequently another notice (second notice), under S. 111(1)(b) of the 2001 Ordinance was also issued in respect of the said property---Legality---First notice purported to state that "the department is in possession of definite information" regarding the investment allegedly made in immoveable property---Such claim was repeated in the second notice under S. 111 of the 2001 Ordinance---Respondent was not given an opportunity, as was mandatorily required by S. 111, to satisfy the tax authorities as to the source etc. of the funds by which the immoveable property was acquired---Rather, the department from inception, and throughout, proceeded on the basis that it already had definite information with it in this regard, such as was sufficient to allow the amendment of the deemed assessment order---However, that could not be so until first the proceedings under S. 111 of the 2001 Ordinance had culminated in an appropriate order--- Such an order could have constituted the definite information as would allow the amendment of the deemed assessment order---Proceedings under S. 111 were, as it were, "short circuited" altogether since the department began with the (incorrect) premise that it already had definite information available with it, and the concerned officer proceeded accordingly---Department did not have definite information available with it within the contemplation of the 2001 Ordinance---Appeal was dismissed.

Commissioner of Inland Revenue-Zone I v. Khan CNG Filling Station 2017 SCMR 1717 distinguished.

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

----Ss. 111(1)(b), 122(1), 122(5) & 122(9)---Amendment of deemed assessment order on basis of 'definite information'---Scope---Finding under S. 111 of the Income Tax Ordinance, 2001 (the 2001 Ordinance) and the amendment of the deemed assessment order could be done together, and the notice under S. 111 could also be issued along with the notice to amend---However, in such a case, the proceedings and notice(s) must expressly so state on the face of it.

Sarfraz Ahmed Cheema, Advocate Supreme Court for Appellant (via video-Link, Lahore).

Javed Iqbal Qazi, Advocate Supreme Court for Respondent.

2021 P T D 1315

[Supreme Court of Pakistan]

Present: Umar Ata Bandial, Munib Akhtar and Sayyed Mazahar Ali Akbar Naqvi, JJ

The COMMISSIONER IR (LEGAL), RTO, PESHAWAR and others

Versus

AGE INDUSTRIES (PVT.) LTD., 97-A INDUSTRIAL ESTATE JAMRUD ROAD, PESHAWAR through Director and another

Civil Appeals Nos. 489, 490 of 2013 and 1302 of 2014, decided on 31st March, 2021.

(On appeal from the order dated 02.07.2010 passed by the Peshawar High Court, Peshawar in S.A.Os. Nos.17 and 18 of 2000)

Income Tax Ordinance (XXXI of 1979) [since repealed]---

----S. 80C & Second Sched., Pt IV, Cl. 9 [as amended by the Finance Act, 1996]---Presumptive tax regime---Finance Act, 1996 amended Cl. (9) of Part IV of the Second Sched. to the Income Tax Ordinance, 1979 ("Clause 9") by substituting the words "who opts out of" the presumptive tax regime, with the words "unless he opts for" the presumptive tax regime---Question as to whether or not the amendment made to "Clause 9" by the Finance Act, 1996 was procedural in nature and hence would have retrospective effect---Held, that as originally inserted, Cl. 9 gave the choice of opting out of S. 80C of the Income Tax Ordinance, 1979 ('the 1979 Ordinance') if the option, as given in terms of the first proviso, was properly exercised---Thus, S. 80C applied unless the "opt-out" was triggered---In other words, the legal meaning of income stood altered in respect of the payments within the ambit of S. 80C unless the assessee concerned took steps to the contrary---Amendment made to Cl. 9 made by the Finance Act, 1996 reversed this position, and now provided that it was only if the option given in terms of the proviso was exercised that S. 80C applied---In other words, the assessee had to "opt-in" into the Presumptive Tax Regime---If the option was not exercised, the legal meaning of income, even in respect of the payments within the ambit of S. 80C, was not altered---Prior to the amendment, the legal meaning of income stood altered to the extent of S. 80C unless the assessee did something; after the amendment, the legal meaning of income did not stand altered unless the assessee did something---Said two resultant situations were starkly different, and each had a substantive effect that was diametrically opposed to the other---In such circumstances the amendment made to Cl. 9 by the Finance Act, 1996 could not be regarded as procedural, having retrospective effect.

Ghulam Shoaib Jally, Advocate Supreme Court and Syed Rifaqat Hussain Shah, Advocate-on-Record for Appellants (in all cases).

Isaac Ali Qazi, Advocate Supreme Court for Respondents (in C.As. Nos.489 and 490 of 2013).

Ex-parte (in C.A. No. 1302 of 2014)

2021 P T D 1355

[Supreme Court of Pakistan]

Present: Umar Ata Bandial, Syed Mansoor Ali Shah and Munib Akhtar, JJ

COMMISSIONER INLAND REVENUE, MULTAN and others

Versus

ACRO SPINNING AND WEAVING MILLS LTD., MULTAN and others

Civil Petitions Nos. 846-L and 2074-L of 2017, decided on 27th May, 2021.

(Against the order of Lahore High Court, Multan Bench dated 23.01.2017, passed in W.P. No.570 /2017 and order of Lahore High Court, Lahore dated 08.12.2016 passed in W.P. No.37508 of 2016)

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

----Ss. 3(1), 3(1A) & 4 [as they existed before the Finance Act, 2017]---SRO No. 1125(I)/2011 dated 31-12-2011 (as amended vide SRO No. 491(I)/2016 dated 30-06-2016)---Taxable supplies to be charged at zero percent---Scope---Taxable supplies made by taxpayer to persons not registered under the Sales Tax Act, 1990---Held, that provision of S. 4 of the Sales Tax Act, 1990 dealing with zero rating of taxable supplies was an overriding provision on account of the non-obstante clause by which it started---Provisions of S. 3(1A) of the Sales Tax Act, 1990 pertaining to further tax were subservient to the effect of zero rating---Consequently, zero rated goods were not liable to any of the provisions under S. 3 of the Act---SRO No. 1125(I)/2011 dated 31.12.2011 (as amended vide SRO No. 491(I)/2016 dated 30-06-2016 provided, in sub-entry (iii) of entry No. 1 of Table II thereof that taxable supplies made by persons doing business in five specified sectors to "registered or unregistered persons" would be taxed at zero percent---SRO No. 1125 applied, as it stated on the face of it, not only to supplies made to registered persons (who would otherwise be covered by subsection (1) of S. 3 of the Sales Tax Act, 1990) but also those made to unregistered persons, who would be covered by both subsections (1) & (1A) of S. 3.

MKB Spinning Mills (Pvt.) Ltd. v. Federation of Pakistan and others 2018 PTD 2364 ref.

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

----Ss. 3(1), 3(1A) & 4 [as they existed before the Finance Act, 2017]---SRO No. 1125(I)/2011 dated 31-12-2011 (as amended vide SRO No. 491(I)/2016 dated 30-06-2016)---Taxable supplies to be charged at zero percent---Scope---Taxable supplies made by taxpayer to persons not registered under the Sales Tax Act, 1990---Certain erroneous observations regarding the Sales Tax Act, 1990 recorded by the High Court in Paragraphs 5 and 10 of the judgment reported as MKB Spinning Mills (Pvt.) Ltd. v. Federation of Pakistan and others 2018 PTD 2364 highlighted by the Supreme Court.

Certain observations regarding the Sales Tax Act, 1990 made by the High Court in the decision reported as MKB Spinning Mills (Pvt.) Ltd. v. Federation of Pakistan and others 2018 PTD 2364 ("MKB Spinning Mills") were erroneous and could not be sustained. It had been observed in para 5 of the said judgment that "the Act visualizes two regimes of tax; one under section 3…. and the other under section 4 under which tax is to be charged at zero rate". It had also been said, of section 4, in para 10 of the judgment that "the benefit of zero percent tax conferred by this provision was meant to support that component of local industry which was engaged in manufacturing export-oriented products". These observations were incorrect, run contrary to the conceptual framework of a tax levied in the VAT mode, and, if not corrected, were liable to mislead. The Sales Tax Act, 1990 did not impose two (or more) tax regimes. It created and enforced one integrated tax regime, which operated as a single whole, namely the levy of tax in VAT (value added) mode.

MKB Spinning Mills (Pvt.) Ltd. v. Federation of Pakistan and others 2018 PTD 2364 ref.

Supreme Court observed that the erroneous observations of the High Court in the ("MKB Spinning Mills") were hereby rectified in terms of what had been said about the manner in which the VAT mechanism worked and the conceptual framework of the same including, in particular, the reason why exports were zero rated as explained in the judgment reported as Pakistan Beverage Ltd. v. Large Taxpayer Unit 2010 PTD 2673 (paras 10-17).

MKB Spinning Mills (Pvt.) Ltd. v. Federation of Pakistan and others 2018 PTD 2364 and Pakistan Beverage Ltd. v. Large Taxpayer Unit 2010 PTD 2673 ref.

Sarfraz Ahmad Cheema, Advocate Supreme Court for Petitioners (in both cases).

Ex-parte for Respondents (in C.P. No. 846-L of 2017).

Nemo for Respondents (in C.P. No. 2074-L of 2017).

2021 P T D 1367

[Supreme Court of Pakistan]

Present: Umar Ata Bandial, Sajjad Ali Shah and Munib Akhtar, JJ

CIVIL APPEAL NO. 502 OF 2017

(Against judgment dated 06.03.2015 passed by the Lahore High Court, Lahore in in PTR No.239/2014.)

AND

C.M.A. NO.1066-L OF 2015 IN CIVIL APPEAL NO.502 OF 2017

AND

CIVIL APPEAL NO.503 OF 2017

(Against judgment dated 06.03.2015 passed by the Lahore High Court, Lahore in PTR No.240/2014.)

AND

C.M.A. NO.1068-L OF 2015 IN CIVIL APPEAL NO.503 OF 2017

AND

CIVIL APPEAL NO.504 OF 2017

(Against judgment dated 06.03.2015 passed by the Lahore High Court, Lahore in PTR No.241/2014.)

AND

C.M.A. NO.1130-L OF 2015 IN CIVIL APPEAL NO.504 OF 2017

AND

CIVIL APPEAL NO.505 OF 2017

(Against judgment dated 06.03.2015 passed by the Lahore High Court, Lahore in PTR No.242/2014.)

AND

C.M.A. NO.1131-L OF 2015 IN CIVIL APPEAL NO.505 OF 2017

AND

CIVIL APPEAL NO.506 OF 2017

(Against judgment dated 06.03.2015 passed by the Lahore High Court, Lahore in in PTR No.243/2014.)

AND

C.M.A. NO.1087-L OF 2015 IN CIVIL APPEAL NO.506 OF 2017

COMMISSIONER INLAND REVENUE ZONE-I, LTU

Versus

MCB BANK LIMITED

Civil Appeal No. 502 of 2017 and C.M.A. No.1066-L of 2015 in Civil Appeal No.502 of 2017 and Civil Appeal No.503 of 2017 and C.M.A. No.1068-L of 2015 in Civil Appeal No.503 of 2017 and Civil Appeal No.504 of 2017 and C.M.A. No.1130-L of 2015 in Civil Appeal No.504 of 2017 and Civil Appeal No.505 of 2017 and C.M.A. No.1131-L of 2015 in Civil Appeal No.505 of 2017 and Civil Appeal No.506 of 2017 and C.M.A. No.1087-L of 2015 in Civil Appeal No.506 of 2017, decided on 13th January, 2021.

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

----S. 161---Failure to pay tax collected or deducted---Show cause notice---General and vague Show-Cause Notices issued by tax authorities under S. 161 of Income Tax Ordinance, 2001 by incorrectly relying on the observations of the High Court in the judgment reported as Bilz (Pvt) Ltd. v Deputy Commissioner of Income Tax and another 2002 PTD 1, PLD 2002 SC 353 ("Bilz case")---Supreme Court deprecated such misreading of the Bilz case by tax authorities and termed general and vague Show-Cause Notices issued under S. 161 as a fishing expedition and roving inquiry.

The judgment reported as Bilz (Pvt) Ltd. v Deputy Commissioner of Income Tax and another 2002 PTD 1, PLD 2002 SC 353 ("Bilz case") was sometimes taken as an authority for a broad and general proposition, namely, that since the taxpayer especially had knowledge of the persons to whom payments were being made, all that the tax authorities had to do for purposes of section 161 of the Income Tax Ordinance, 2001 ('the 2001 Ordinance') was to identify the payments, whether singly or in lump sum (i.e., as part of a broader class or category of such payments); that it was then for the taxpayer entirely to show whether the required deductions were made and if he failed to do so then section 161 came into operation. This interpretation was a complete misunderstanding of the law, and misreading of the Bilz case.

Bilz (Pvt.) Ltd. v. Deputy Commissioner of Income Tax and another 2002 PTD 1 = PLD 2002 SC 353 ref.

Tax authorities had seized on certain observations made in Bilz case and, taking them out of context, were misusing them as a tool and instrument to harass taxpayers. This so-called "understanding" and application of the decision must be strongly deprecated. It must be clearly understood that Bilz case was not, and could not be used as, a platform by the tax authorities to launch fishing expeditions and roving inquiries. It could not, and did not, support or allow the issuance of Show-Cause Notices of deliberate vagueness and breathtaking generality. And it certainly did not shift the burden under section 161, from the very inception, wholly and solely on the taxpayer by the expedient of simply identifying one or more payments, or a class or category of payments. The High Court misunderstood Bilz case in the judgment reported as Commissioner Inland Revenue v. Islam Steel Mills 2015 PTD 2335 ("Islam Steel Mills case"). Supreme Court held that the observations made in the Islam Steel Mills case which were inconsistent with the findings of the present judgment were overruled.

Bilz (Pvt.) Ltd. v. Deputy Commissioner of Income Tax and another 2002 PTD 1 = PLD 2002 SC 353 ref.

Commissioner Inland Revenue v. Islam Steel Mills 2015 PTD 2335 overruled.

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

----S. 161---Failure to pay tax collected or deducted---Show cause notice---Section 161 of the Income Tax Ordinance, 2001 ('the 2001 Ordinance')---Scope---Section 161 of the 2001 Ordinance became applicable not simply because a payment was made (or a transaction or event happens) but rather on a failure to either collect tax or deduct it---Failure was the triggering event, therefore, it was a gross misreading of S. 161 to conclude that for the said section to apply all that the Commissioner had to do was point to a payment, and that was sufficient to cast the burden wholly and solely on the taxpayer to show that there was no failure---At the very least, initially, there must be some reason or information available with the Commissioner for him to conclude that there was, or could have been, a failure to deduct---Such reason or information must satisfy the test of objectiveness, i.e., must be such as would satisfy a reasonable person looking at the relevant facts and information in an objective manner---Threshold was not so stringent as to require "definite information" but it was also not so low as to be bound merely to the subjective satisfaction of the Commissioner; it was only if this threshold was successfully crossed that the notice could be issued, and it was only then that the burden may shift on the person allegedly in default to show that S. 161 did not, or ought not to, apply Commissioner Inland Revenue v. Islam Steel Mills 2015 PTD 2335 overruled.

Bilz (Pvt.) Ltd. v. Deputy Commissioner of Income Tax and another 2002 PTD 1 = PLD 2002 SC 353 ref.

Commissioner Inland Revenue v. Islam Steel Mills 2015 PTD 2335 overruled.

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

----S. 161---Failure to deduct tax---Show cause notice---Legality---Show cause notice issued to the taxpayer did not merely demand information regarding deductions; it also contained the monthly breakup of the deductions allegedly required under various sections, and also the amounts actually deducted and the alleged difference---In other words, there was an application of mind to the question whether there had been a failure to deduct and if so, on what basis and in what amount---Show cause notice under S. 161 of the Income Tax Ordinance, 2001 was validly issued---Appeals were partly allowed.

Ibrar Ahmed, Advocate Supreme Court and Naseem Hassan, Sec. Lit. (FBR) for Appellants/Appellants.

Sikandar Bashir Mohmand, Advocate Supreme Court for Respondents.

2021 P T D 1392

[Supreme Court of Pakistan]

Present: Umar Ata Bandial, Sajjad Ali Shah and Munib Akhtar, JJ

Messrs FATEH YARN (PVT). LTD. FAISALABAD

Versus

COMMISSIONER INLAND REVENUE, FAISALABAD and others

Civil Petition No. 1972-L of 2017, decided on 15th January, 2021.

(Against the judgment dated 24.05.2017 of the Lahore High Court, Lahore passed in Sales Tax Reference No. 74 of 2010)

(a) Taxation---

----Factual controversy---Superior courts, jurisdiction of---Scope---Superior courts could not engage in factual controversies, however an exception had been carved out for situations where a substantial defect in the reading of oral or documentary evidence was pointed out.

Abdul Majeed v. Muhammad Subhan 1999 SCMR 1245 ref.

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

----S. 7(1)---Input tax credit, claim of---Fake documentary evidence---No reliable documentary evidence was provided by the petitioner-tax payer to support its claim of input tax credit, therefore the same should be disallowed (in fact whatever evidence had been provided was fake)---Petition for leave to appeal was converted into appeal and partly allowed.

(c) Taxation---

----Notice---Tax liability mentioned in the notice---Scope---Order of adjudication passed on the basis of a ground not stated in the notice was palpably illegal and void on the face of it---Same logic should extend to an order imposing a tax liability for a time period not mentioned in the notice---Purpose of serving a notice on a taxpayer was to notify him of the case against him---When such a document contained incomplete information it could seriously prejudice the taxpayer's defence.

The Collector Central Excise and Land Customs v. Rahm Din 1987 SCMR 1840 ref.

Shahbaz Butt, Advocate Supreme Court (v.1 Lahore) for Petitioner.

Dr. Farhat Zafar, Advocate Supreme Court for Respondents.

2021 P T D 1582

[Supreme Court of Pakistan]

Present: Umar Ata Bandial, Sajjad Ali Shah and Munib Akhtar, JJ

SUI NORTHERN GAS PIPELINES LIMITED

Versus

COMMISSIONER INLAND REVENUE, LEGAL DIVISION, LARGE TAXPAYERS UNIT

Civil Appeal No. 1134 of 2018, decided on 5th March, 2021.

(On appeal from the judgment dated 07-09-2017 of the Lahore High Court, Lahore passed in P.T.R. No. 464 of 2010)

Income Tax Ordinance (XLIX of 2001)---

----Ss. 170 & 171---Additional payment for delayed refunds---Scope---Compensation payable to a taxpayer under S. 171 of the Income Tax Ordinance, 2001 ('the Ordinance') on account of a delay in the payment of a refund that becomes due and payable to the taxpayer---Whether such compensation was to be regarded as a capital or revenue---Held, that such compensation was not a capital receipt---Payment under S. 171 of the Ordinance became due when the taxpayer was not refunded, in a timely manner, the tax in excess to the amount which the taxpayer was properly chargeable under the Ordinance---In essence the question boiled down to this: if the amount that was liable to be refunded in terms of S. 170 was to revenue account, whether the compensation payable under S. 171 on account of late payment could nonetheless take the character of a capital receipt---High Court rightly came to the conclusion that in such circumstances the character of the compensation could not be altered or affected and continued to retain the character of what might be called principal payment (the refund payable under S.170)---Even the audited accounts of the taxpayer in the present case showed that the compensation was disclosed by the tax payer itself as part of its income---Appeal filed by taxpayer was dismissed.

Mansoor Usman Awan, Advocate Supreme Court for Appellant.

Ibrar Ahmed, Advocate Supreme Court and Naeem Hassan, Sec. Lit. FBR for Respondent.

2021 P T D 1986

[Supreme Court of Pakistan]

Present: Umar Ata Bandial, Munib Akhtar and Amin-ud-Din Khan, JJ

Messrs NISHAT MILLS LIMITED and another

Versus

The COMMISSIONER OF INCOME/ WEALTH TAX, COMPANIES ZONE, FAISALABAD (Now CIR, LTU, Lahore)

Civil Petition No. 2256-L of 2015 and Civil Petition No. 2257-L of 2015 and Civil Petition No. 2283-L of 2015, decided on 30th June, 2021.

(On appeal from judgment dated 09.06.2015 passed by the Lahore High Court, Lahore in I.T.As. Nos.382-1999 and 383-1999 and PTR No.675 of 2007)

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

----S. 213---Income Tax Ordinance (XXXI of 1979), S. 7 [since repealed]---Guidance to Deputy Commissioner---Scope and meaning of S. 213 of the Income Tax Ordinance, 2001 and S. 7 of the Income Tax Ordinance, 1979 (since repealed).

Section 213 of the Income Tax Ordinance, 2001 ('the 2001 Ordinance') and section 7 of the Income Tax Ordinance, 1979 ('the 1979 Ordinance') [since repealed] were cast in virtually identical terms. In any organization (including a Government department) it was only to be expected that there would be, in the ordinary course and as part of the normal routine, an ongoing consultation and interaction among persons holding different posts in the hierarchy. Junios would wish (and indeed, in most cases, be expected) to seek informal guidance from their seniors, or to be assisted and even instructed by them, and thereby benefit from their experience and the collective institutional wisdom. For example, fresh recruits and probationers were attached for some time to senior officers for this very purpose. But the process was not so narrow or limited. It continued throughout an officer's career, certainly at the junior or middle levels. Even seniors could benefit from what other seniors (or even junior officers) may have to offer. Such consultations, communications, interactions, assistance, guidance or instruction were part of the woof and warp of any organization, and that certainly included the bureaucracies of the State. There was nothing strange or exceptional about this. Indeed, it was the absence of such activity that would call for comment and be a matter of concern. It was also to be kept in mind that the informality of the process meant that the assistance, guidance or instruction (under sections 7 and 213 of the 1979 and 2001 Ordinances respectively) was not generally regarded as binding in a formal sense. They were, rather, a resource that was available, and one which inured especially to the benefit of those lower down the hierarchy. It was something that could be usefully and productively drawn upon, as and when needed.

Scope and intent of sections 7 and 213 of the 1979 and 2001 Ordinances respectively could be characterized as being concerned with administrative instructions meant for the internal consumption of the department. The said sections were, neither enabling or permissive in the technical sense but rather more akin to an explanation (i.e., meant for the avoidance or resolution of any doubt).

(b) Income Tax Ordinance (XXXI of 1979) [since repealed]---

----Ss. 7, 62(2) & 66-A--- Assessments framed by the Deputy Commissioner of Income Tax ("ITO") under S. 62 of the Income Tax Ordinance, 1979 ('the 1979 Ordinance')---Powers of Inspecting Additional Commissioner ("IAC") under S. 66-A of the 1979 Ordinance to revise assessment framed by the Deputy Commissioner---Scope---In circumstances where the ITO framed the assessments with the approval and in consultation with the concerned IAC, whether the IAC was subsequently precluded from revising such assessment under S. 66-A of the 1979 Ordinance.

Section 62(2) of the Income tax Ordinance, 1979 ('the 1979 Ordinance') depending on the facts and circumstances of the case, resulted in two distinct types of outcome, one being a matter of law and the other being one of fact. As a matter of law section 62(2) of the 1979 Ordinance cast a statutory duty on the Deputy Commissioner of Income Tax ("ITO") to frame the assessment and make the necessary order. The officer, if any, authorized by the Board under section 62(2) was also under a statutory duty, to assist the ITO in the making of that assessment. The assisting officer was also under a statutory duty. Both had to separately apply their minds to the case. If the outcome was concurrence the assessment order followed accordingly. If there was discordance then the view of the officer under the primary duty (i.e., the ITO) prevailed, but he had to set out the point(s) of disagreement, and give reasons for coming to a conclusion contrary to that of the assisting officer under the collateral duty.

On its true construction section 62(2) of the 1979 Ordinance required the assisting officer, as a matter of law, to apply his mind to the case. It follows from the duty so cast that if the assisting officer was the Inspecting Additional Commissioner ("IAC") concerned then he would stand precluded from taking recourse to section 66-A. If the earlier application of mind resulted in an assessment order on which there was complete agreement then the IAC could not turn around and claim under section 66-A that there had been an error prejudicial to the interests of the revenue. And if there had been any point(s) of disagreement, which ended in the view of the ITO prevailing, it would still have been impermissible for the IAC to continue to press his view under the guise of invoking section 66-A. He could not, as it were, have two bites at the cherry. It also follows that if section 62(2) applied in the facts and circumstances of the case an irrebuttable presumption of law was raised. Since the subsection required the assisting officer, as a statutory duty, to apply his mind to the case it did not matter whether (and, more importantly, did not have to be shown that) he had in fact done so and if so to what degree. If therefore the assisting officer was the IAC concerned it would be sufficient, to preclude any exercise of powers under section 66-A, to show simply that he had been authorized by the Board under the subsection in respect of the case. Whether he had in fact provided any assistance, and if so to what degree of intensity or involvement, would be irrelevant as a matter of law. This was the first of the two possible outcomes.

Turning to the other possible outcome, which would be a matter of fact. Even if section 62(2) did not apply in the facts and circumstances of the case it could still have been that the ITO took assistance, guidance or instruction from a superior officer in terms of section 7. However, now it would be a question of fact whether any officer (and in particular the concerned IAC) had been so involved. An affirmative finding would not in itself be sufficient to preclude the IAC from invoking section 66-A in relation to a particular case. It would also further have to be shown, as a matter of fact, that the degree of involvement (of the IAC) was of such intensity that it would make subsequent recourse to section 66-A impermissible. For, it must be remembered, the nature of the assistance, guidance or instruction under section 7 was essentially general, informal and non-binding. Notwithstanding this, in a particular case the involvement could have been to such a degree, and of such intensity, that it would amount to the superior officer (here the IAC) having been materially involved in the very making of the assessment order. But all of this would raise questions of fact. Those questions would have to be answered in the usual manner, as appropriate for tax proceedings under the statute. Certainly, there would be no presumption of law. This was the second of the two possible outcomes.

H. M. Abdullah v. Income Tax Officer 1991 PTD 217 distinguished.

Muhammad Ajmal Khan, Advocate Supreme Court (Video-Link, Lahore) (in all cases) for Petitioners.

Muhammad Shakeel, Advocate Supreme Court for Respondent (Video-Link, Lahore) (in C.Ps. Nos. 2256-L and 2257-L of 2015).

Mian Yousaf Umer, Advocate Supreme Court for Respondent (Video-Link, Lahore) (in C.P. No. 2283-L of 2015).