PTD 2022 Judgments

2022 P T D (Trib.) 320

[Punjab Revenue Appellate Tribunal]

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

Messrs SHAKARGANJ FOODS PRODUCT (PVT.) LTD.

Versus

COMMISSIONER PRA, FAISALABAD

Appeal No.121 of 2019, decided on 6th December, 2019.

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

----Ss.14 & 32---Special procedure and tax withholding provisions---Retention and production of records and documents---Scope---Appellant assailed order passed by Commissioner whereby it was taxed---Validity---Additional Commissioner had issued a notice to the appellant whereby it was required to provide the invoices/documents along with proof of payment in respect of transportation, contractual execution of work and of commission paid to petroleum agent---Appellant and the Authority overlooked the significance of the notice---Importance of said documents could not be brushed aside because without documentary evidence, no fair and effective decision could be passed---Defence of the appellant was not discussed in the impugned order---Case was remanded to the competent authority for decision afresh after giving an opportunity to the appellant for submitting all the required documents---Impugned order was set aside and the appeal was accepted.

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

----S.60---Powers of adjudication---Scope---Appellant assailed order passed by Commissioner on the ground that show cause notice was issued by Additional Commissioner but the order was passed by Commissioner---Validity---Section 60(2), Punjab Sales Tax on Services Act, 2012, empowered the Commissioner to adjudicate any case falling in the jurisdiction and powers of any officer subordinate to him but it did not mean that whenever Commissioner felt it appropriate he could initiate the proceedings himself, which otherwise fell within the pecuniary jurisdiction of the subordinate officer, without mentioning the reasons for the same---Impugned order was bad in law as it curtailed a right of appeal of the appellant---Case was remanded to the competent officer for adjudication afresh---Appeal was accepted.

Nouman Razzaq, FCA/AR for Appellant.

2022 P T D (Trib.) 630

[Punjab Revenue Appellate Tribunal]

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

Messrs KHAYAL & SONS (MINARA RESIDENCE)

Versus

ADDITIONAL COMMISSIONER PRA, RAWALPINDI

Appeal No.17 of 2019, decided on 15th October, 2019.

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

----S. 3, Sr. Nos. 15 & 32, Second Sched.---Taxable service---Property developers and dealers (including allied services)---Property dealers---Scope---Appellant was taxed for providing taxable services as provided under serial No. 15 of Second Schedule to the Punjab Sales Tax on Services Act, 2012---Contention of appellant was that its business fell under serial No. 32 of Second Schedule to the Punjab Sales Tax on Services Act, 2012, and that it was not a "property dealer"---Validity---Construction of plaza/building and its development as residences / offices with the intention of selling it out was enough proof of the activities of the appellant as falling under serial No. 15 of Second Schedule to the Punjab Sales Tax on Services Act, 2012---Order passed by Commissioner (Appeals) was upheld and the appeal was dismissed.

Shoukat Ali Qureshi for Appellant.

2022 P T D (Trib.) 335

[Customs Appellate Tribunal]

Before Jahanzaib Wahlah, Member Judicial-III

Messrs BAHRIA LINK SHELL PUMP, KARACHI and another

Versus

SUPERINTENDENT, ANTI-SMUGGLING ORGANIZATION, MCC OF PREVENTIVE, CUSTOM HOUSE, KARACHI and 2 others

Customs Appeals Nos.K-369 and K-370 of 2018, decided on 2nd March, 2020.

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

----Ss.2(s) & 177---Smuggling---Restriction on the possession of goods in certain area---Scope---Case revolved around the charge of smuggling of High Speed Diesel Oil procured by appellant from another Petrol Station---Validity---Oil was purchased by appellant through a valid invoice and was being transported within the territory of Pakistan confirming that the goods were not brought into Pakistan in breach of any prohibition or restriction for the time being in force---Such transportation could not be termed as smuggling---Checking by Customs Officials during transportation of goods within the territory of Pakistan was beyond their jurisdiction as none of the provisions of Customs Act, 1969, authorized any designated official of customs to intercept the local transportation of goods on the sham plea of smuggling---Appellate Tribunal observed that appellant was needlessly dragged into unwarranted litigation by the department despite having no proof of the alleged offence---Impugned orders were set aside and the appeal was allowed, in circumstances.

2005 PTD (Trib.) 135 and PLD 1991 SC 630 ref.

(b) Administration of justice---

----If any Authority, Court or Tribunal gives a finding of fact which is not based on material available on record the same is considered illegal, arbitrary and perverse finding of fact, which being violative of the established principle of appreciation of evidence on record is not sustainable in law.

(c) Administration of justice---

----Principle that every judicial or quasi-judicial finding should be based on reasons containing the justification for the finding in the order itself is 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 ref.

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

----Ss.2(s) & 177---Smuggling---Restriction on the possession of goods in certain area---Scope---Sections 2(s) & 177 of Customs Act, 1969 and SRO No.118(I)/83 confirm that the transportation of the goods within the territorial limit of Pakistan does not constitute an offence, meaning thereby that transportation of the locally purchased goods cannot be termed as smuggled goods and as such cannot be contrary to law.

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

----Ss.2(s) & 187---Smuggling---Burden of proof as to lawful authority---Scope---Framers of law in order to thwart the act of smuggling and flourishing business of smuggled goods have formulated a strict confiscatory regime with a very extended connotation and law is set in motion only against the actual smuggler, but also against those who come into possession of the delinquent goods after having acquired the same---Section 187 and cl. (2) of S.156 of Customs Act, 1969, come into motion on every occasion when goods are seized.

Kamran Industries v. Collector of Customs (Export) PLD 1996 Kar. 68 and Collector, Model Customs Collectorate, Multan v. Customs Appellate Tribunal, Bench-I, Karachi and 3 others 2019 PTD 1716 rel.

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

----S.180---Show-cause notice---Scope---Issuance of show-cause notice is pre-requisite and cannot be dispensed with under any circumstances.

Assistant Collector of Customs, Dry Port Peshawar v. Messrs Khyber Electric Lamp MFG Co., Ltd., Peshawar 2001 SCMR 838 rel.

(g) Administration of justice---

----Thing required by law to be done in a certain manner must be done in the same manner as prescribed by law.

Ubaid Mirza for Appellants.

Safdar Malik, SPO for Respondents.

2022 P T D (Trib.) 349

[Customs Appellate Tribunal]

Before Jahanzaib Wahlah, Member Judicial-III

Messrs S.S. TRADING COMPANY, KARACHI

Versus

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

Custom Appeal No.K-96 of 2019, decided on 21st November, 2019.

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

----Ss. 80, 81(5), 193-A (3), 194-A & 198---Customs Rules, 2001, Rr. 433, 435, 438 & 440---Appeal---Remand of case---Appellate Authority---Jurisdiction---Goods imported were selected for examination and declared value was confirmed---Subsequently Assessing Officer on the basis of different Valuation Ruling levied duty and taxes under S.80 of Customs Act, 1969 and R.438 of Customs Rules, 2001---Appellate Authority remanded the matter to Assessing Officer for decision afresh---Validity---Appellate Authority was not empowered to pass remand order against which appeal before him was filed---By passing remand order Appellate Authority acted without lawful authority / jurisdiction--- Assessment order under S.81(2) of Customs Act, 1969, was to be passed prior to expiry of stipulated period of 6 months given therein i.e. on or before 23-3-2018 from date of provisional assessment i.e. 25-9-2017---Assessment Order was passed by Assessing Officer on 27-6-2018, thus the same was barred by 96 days and was without power / jurisdiction---Such order was not enforceable under law and declared value of importer stood final under S.81(4) of Customs Act, 1969---Customs Appellate Tribunal set aside order passed by Assessing Officer as well as Appellate Authority--- Appeal was allowed, in circumstances.

Sadia Jabbar v. Federation of Pakistan and others 2018 PTD 1746; Danish Jehangir v. Federation of Pakistan through Secretary/Chairman and 2 others 2016 PTD 702; Muhammad Hussain and another v. Muhammad Shafi and another 2004 SCMR 1947; Munawar Hussain and 2 others v. Sultan Ahmed 2005 SCMR 1388; DGI&I and others v. Al-Faiz Industries (Pvt.) Ltd. and others 2006 SCMR 137; CBR v. Chanda Motors 1993 SCMR 39 and Ghulam Nabi v. Federation of Pakistan 2013 PTD 581 rel.

Messrs AFU International v. The Director General Valuation and another 2016 PTD (Trib.) 1305; 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. Federation of Pakistan and others 2008 PTD 1587; Collector of Customs, MCC of Appraisement v. Pak Arab Refinery 2010 PTD 900; Sus Motors (Pvt.) Ltd. v. Federation of Pakistan 2011 PTD 235; Messrs Crescent Art Fabric v. Assistant Collector and Customs and 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 and Salman Tin Merchant v. Collector of Customs, Karachi 2014 PTD 438; CBR v. Chanda Motors 1993 SCMR 39; Ghulam Nabi v. Federation of Pakistan 2013 PTD 581 and 2002 CLC 825 ref.

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

----S.24-A---Speaking order---Scope---Every judicial or quasi-judicial finding should be based on reasons containing justification for finding in the order itself as such 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; 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.

Ilyas Gicki, A.O. for Respondents.

2022 P T D (Trib.) 381

[Customs Appellate Tribunal]

Before Jahanzaib Wahlah, Member Judicial-III

Messrs AHMED RUBBER, KARACHI

Versus

ASSESSMENT OFFICER, GROUP-II, MCC Of PMBQ, KARACHI and 3 others

Custom Appeal No.K-1333 of 2019, decided on 2nd March, 2020.

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

----Ss. 83 & 25---Clearance for home consumption---Value of imported and exported goods---Scope---Appellant imported a consignment of auto care products---Assessing officer enhanced the value of declared goods in accordance with Ss.25(5) & 25(6) of Customs Act, 1969---Validity---Only where the goods could not have been assessed on transaction value then goods to be assessed on the basis of value of identical goods sold for export to Pakistan---Respondents in determining the value of goods had to resort to sequential manner under S.25 of the Customs Act, 1969, where the exercise had to stop at the first method found applicable and it was neither permissible nor necessary to go on or consider any of the succeeding methods---Form-I and invoice produced by appellant were not alleged to be flawed---Value declared by appellant was found to be in consonance with the provision of the Customs Act, 1969---Assessment order and order-in-appeal were set aside, in circumstances.

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

----S.25---Customs Rules, 2001, R. 107---Value of imported and exported goods---Transaction value of identical goods---Scope---Where two or more Translation values of identical goods were available in the data of import of 90 days, the lowest value has to be applied for completing the assessment of identical goods under dispute.

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

----S.193A---Appeal to Collector (Appeals)---Remand---Scope---Subsection (3) of S.193-A of Customs Act, 1969, confirms that Collector (Appeals) can only extend, confirm, modify or annul an order challenged before him---Absence of phrase remand by the Legislature substantiates that the intent was not to grant such power.

2014 PTD 956 ref.

(d) Administration of justice---

----When the law requires an act to be done in a particular manner it has to be done in that manner alone, not otherwise.

Muhammad Hussain and another v. Muhammad Shafi and another 2004 SCMR 1947 and Munawar Hussain and 2 others v. Sultan Ahmed 2005 SCMR 1388 ref.

Ubaid Mirza for Appellant.

Raza, A.O. for Respondents.

2022 P T D (Trib.) 639

[Customs Appellate Tribunal]

Before Jahanzaib Wahlah, Member Judicial-III

Messrs ABDUL AZIZ SAVUL & CO., KARACHI

Versus

The DIRECTOR, DIRECTORATE GENERAL OF INTELLIGENCE AND INVESTIGATION, (ENFORCEMENT), KARACHI and 2 others

Custom Appeal No.K-253 of 2018, decided on 6th January, 2020.

Customs Act (IV of 1969)---

----S.32---Mis-declaration---Liability of clearing agent---Scope---Appellate, a clearing agent, was imposed upon a penalty on the allegation that he transmitted Goods Declaration, which he had filed on the strength of the documents supplied by the importer---Nothing contrary to the documents was transmitted---No fault or default was spelt out in the show cause notice---Imposition of penalty on the appellant was not sustainable---Appeal was allowed and the order to the extent of appellant was quashed.

2004 PTD (Trib.) 1324; PLD 1961 SC 237; PLD 1964 SC 410; PLD 1964 SC 536; PLD 1965 SC 90; 1983 SCMR 1208; PLD 1987 SC 304; 1994 SCMR 2232; 2003 SCMR 1505; 2006 SCMR 129; 2006 SCMR 1023; 2013 PTD (Trib.) 353 and 2015 PTD (Trib.) 1422 ref.

Nadeem Ahmed Mirza, Consultant for Appellant.

Moula Baksh Behen, I.O. for Respondents.

2022 P T D (Trib.) 64

[Customs Appellate Tribunal]

Before Jahanzaib Wahlah, Member Judicial-III

Messrs AUTO CORPORATION, KARACHI

Versus

The ASSISTANT COLLECTOR, GROUP-VII, MCC OF APPRAISEMENT-WEST, CUSTOMS HOUSE, KARACHI and another

Custom Appeal No.K-61 of 2019, decided on 16th December, 2019.

(a) Administration of justice---

----When law requires an act to be done in a particular manner, it has to be done in that manner alone and not otherwise.

Muhammad Hussain and another v. Muhammad Shafi and another 2004 SCMR 1947; Munawar Hussain and 2 others v. Sultan Ahmed 2005 SCMR 1388 and DGI&I and others v. Al-Faiz Industries (Pvt.) Ltd. and others 2006 SCMR 129 rel.

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

----Ss.2 (a), 83, 130, 193, 193A & 205---Customs Rules, 2001, Rr.438, 442 & 450---SRO No.371(I)/2002, dated 15-6-2002---Clearance of goods---Reassessment---Despite payment of all duties and taxes levied by authorities, goods in question were not released by Customs Authorities---Validity---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 SRO 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---Reassessment was permitted prior to passing of order of clearance / shipment under Ss.83 & 130 of Customs Act, 1969, and Rr. 442 & 450 of Customs Rules, 2001, upon filing of review by importer / exporter under Rr. 441 & 450(3) of Customs Rules, 2001 against assessment orders of Appraiser / Principal Appraiser before Principal Appraiser and subsequently before Assistant / Deputy Collector of the Group as the case may be--- Post clearance reassessment made by Assessing authorities was tantamount to amendment under S.205 of Customs Act, 1969, out of charge of the goods--- Such reassessment was nullity to the provision of Ss.29, 80(2) & (3) of Customs Act, 1969, besides without any power or jurisdiction under Ss.80 & 131 of Customs Act, 1969 and Rr. 438 & 450 of Customs Rules, 2001 and SRO No.371(I)/2002, dated 15-6-2002---Customs Appellate Tribunal set aside reassessment order, demand notice as well as order in appeal passed by Appellate Authority as it suffered from legal infirmities and was illegal, null and void---Appeal was allowed, in circumstances.

CBR v. Chanda Motors 1993 SCMR 39; Ghulam Nabi v. Federation of Pakistan of the Honourable Supreme Court of Pakistan 2013 PTD 581; PLD 1986 Lah. 237; Messrs Paramount International (Pvt.) Ltd. v. Federation of Pakistan and others 2014 PTD 1256; Collector of Customs and other's case C.P.L.A. 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; 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 465; 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 and 2010 SCMR 431 ref.

(c) 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.

Abdul Ghaffar Khan A.O. for Respondents.

2022 P T D (Trib.) 144

[Customs Appellate Tribunal]

Before Jahanzaib Wahlah, Member Judicial-III

SALMAN ENTERPRISES, KARACHI

Versus

The DEPUTY DIRECTOR, DIRECTORATE GENERAL OF PCA, CUSTOM HOUSE, KARACHI and 2 others

Custom Appeal No.K-776 of 2019, decided on 17th December, 2019.

(a) Administration of justice---

----Doing of a thing---Principle---Thing has to be done as it has been prescribed to be done---Doing the same in any other manner renders the same illegal and as such void ab-initio.

Case law referred.

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

----Ss.2(a), 80, 83, 186, 193-A & 202---Customs Rules, 2001, R.438--- Sales Tax Act (VII of 1990), Sixth Schedule, Serial No.79---Notification SRO 42(I)/2010, dated 23-1-2010---Clearance of goods---Audit proceedings---Directorate of Post Clearance Audit (PCA), after lapse of 4 to 5 years of clearance of consignments initiated proceedings for mis-declaration and after adjudication additional taxes and penalty were imposed---Validity---All communication including audit observations and contravention reports were prepared and served in the capacity of Deputy Director PCA, which was non-existent in column No.3 of SRO 42(I)/2010, dated 23-1-2010, rendering the same without power/jurisdiction hence was ab-initio void and coram non judice---Entire proceedings right from audit, audit observations, contraventions reports were of no legal effect---"Cheese" imported was "shredded mozzarella cheese", which fell under PCT heading 0406.1010 by virtue of being unripe cheese according to Codex Alimentarius, on which benefit / exemption under Serial No.79 of Sixth Schedule to Sales Tax Act, 1990, was available to importer---Deputy Collector Appraisement and his subordinates at the time of passing assessment order under S.80 of Customs Act, 1969 and R.438 of Customs Rules, 2001, rightly allowed the benefit---Opinions of Directorate of PCA and Adjudication authorities were based on assumption/presumption and conjecture and fishing inquiries which were not permitted under the law---Customs Appellate Tribunal set aside the orders passed by Directorate of PCA and Adjudication authorities---Appeal was allowed, in circumstances.

Case law referred.

(c) Interpretation of statutes---

----Fiscal laws---Applicability---Taxing laws are not to be extended by implication beyond clear import of language used---To hold otherwise would violate another principle of interpretation of taxing statute---Tax law should be construed in favour of citizen and against government---As such the principle is based on the fact that taxation is a process which interferes with personal and property right of people---Although it is necessary inference yet it does take from the people portion of their properties. [p. 167] D

Case law referred.

Nadeem Ahmed Mirza, Consultant for Appellant.

Arif Maqbool, A.D. and Ameer Ahmed Samoo, A.O. for Respondent No.1.

Ishaq Sheikh, Appraiser for Respondent No.2.

2022 P T D (Trib.) 427

[Customs Appellate Tribunal]

Before Syed Sardar Hussain Shah, Member Judicial/Chairman

AMJAD ALI and another

Versus

The COLLECTOR OF CUSTOMS, ADJUDICATION,ISLAMABAD and 2 others

Appeal No.30/CU/IB of 2019, decided on 6th May, 2019.

Customs Act (IV of 1969)---

----Ss. 17 & 2(s)---Detention, seizure and confiscation of goods---Smuggling---Goods purchased in open market---Presumption---Scope---Anti-Smuggling Staff of Directorate General of Intelligence and Investigation (Customs) intercepted a truck loaded with 40 feet container and found foreign made juice---Loaded foreign origin goods along with truck and container were detained under S.17 of the Customs Act, 1969---Collector of Customs ordered outright confiscation of seized goods, however, gave an option to the owner of the truck/trailer to redeem the same against redemption fine of 20% of the customs appraised value---Contention of appellant was that he had purchased the goods in open market and was transporting the goods to another district---Contention of respondent was that no import documents were available with the appellant but admitted that the bilty was available with him---Validity---Place from where the goods were taken into possession by the customs staff was far away from the border area so it could safely be presumed that transportation of the goods did not fall under S.2(s) of Customs Act, 1969---Section 2(s) of Customs Act, 1969, clearly depicted that the "smuggling" meant to bring or take out of Pakistan, in breach of any prohibition or restriction for the time being in force---Appeal was allowed, in circumstances.

Collector of Customs Quetta v. Wali Jan and others (Customs Reference No.03 of 2008) rel.

Collector of Customs v. S. M. Saleem Partner (C.A. No. 68 of 2002) fol.

Ms. Saima Haider Tareen and Ms. Safina Khan Hoti for Appellants.

M.D. Shahzad for Respondents.

2022 P T D (Trib.) 484

[Customs Appellate Tribunal]

Before Muhammad Sajid Abbassi, Member Judicial (Chairman)

Messrs AHMED TRADING COMPANY, GUJRANWALA

Versus

The DEPUTY DIRECTOR, DIRECTOR GENERAL OF I&I FBR and 3 others

Custom Appeal No.K-762 of 2018, decided on 3rd September, 2020.

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

----Ss.32 & 25A---Mis-declaration---Power to determine the customs value---Scope---Department issued show-cause notice for mis-declaration alleging that the appellant had obtained delivery of consignment without application of infield valuation ruling---Validity---Goods of the appellant were not auto cleared but were cleared after examination and passing of assessment/clearance order, therefore, his consignment could not be construed by any stretch of imagination as cleared on self-assessment basis---No charge of mis-declaration on the basis of valuation ruling could be levelled---Valuation ruling was only for the purpose of assessment and not for levelling charge of mis-declaration---Valuation ruling could not be applied subsequent to clearance of the goods for home consumption---Impugned orders were set aside and the appeal was allowed, in circumstances.

Messrs S.T. Enterprises v. Federation of Pakistan and 4 others 2009 PTD 467; 1991 PTD 551 and 2006 PCr.LJ 1427 = 2006 PTD 2190 rel.

Messrs Shoaib Tayyab International v. Additional Collector of Customs, Karachi 2014 PTD (Trib.) 190 fol.

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

----Ss.3DD & 26A---SRO No.500(I)/2009 dated 13-09-2009---Directorate General of Post Clearance Audit---Conducting the audit---Scope---Legislature has inserted S.3DD in the Customs Act, 1969, through which Directorate General of Post Clearance Audit has been created and its officials have been delegated powers through SRO No.500(I)/2009 dated: 13-09-2009 for conducting audit under S.26(2), of the record/books of an importer maintained under S.211 after serving notice/summons under S.26A, wherein, they check all the aspects corresponding to the declaration made under S.79(1) based on defined documents in S.2(kka) and assessment order passed by the competent authority under S.80 of the Customs Act, 1969---Upon finding discrepancy or any ambiguity in any context i.e. declaration or the contravention of law, prepares audit observation and serve that on the importer for clarification, if the reply is not convincing as per their formed opinion, frame contravention report and forward that to the Collector of Customs of the respective Clearance Collectorate, which onward forwards it to the respective Collector of Customs, (Adjudication) for issuance of show cause notice under S.180 and passing of order-in-original as per the expression of S.179, Customs Act, 1969.

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

----Ss. 25A, 80 & 83---Power to determine customs value---Checking of goods declaration by the Customs---Clearance for home consumption---Scope---Competent officer of Clearance Collectorate is empowered to determine/evaluate the declared value of the imported goods for levy/collection of duty and taxes after passing valid appealable assessment order under the provisions of S.80 of Customs Act, 1969 and R. 438 of Customs Rules, 2001 but prior to passing of clearance order under S.83 of Customs Act, 1969 and R.442 of Customs Rules, 2001, whereas under S. 25A powers have been delegated to the Director, Directorate General of Valuation, for determination of value of the goods and class of goods imported under the provisions of subsections (7) to (9) of S. 25 of the Customs Act, 1969 and to issue the ruling to the said effect for application on the goods for levy of duty and taxes at the time of passing assessment order.

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

----S.195---Powers of Board or Collector to pass certain orders---Scope---Section 195 of the Customs Act, 1969, empowers the Collector of Customs or Board to call for the record of the order/decision passed by subordinate officer for determination of their legality or propriety, in case any illegality or impropriety is apparent from the passed order/decision, are empowered to reopen the same and pass a fresh order as he/it deems fit after issuance of show cause notice, enabling the importer or the person concerned to assail the same before the forum outlined in the provision of S.194A(1) of the Customs Act, 1969.

(e) Administration of justice---

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

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

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

----S. 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 a charging section but under the said section the appropriate authority is officer of Inland Revenue, whereas S.6 defines the mode and manner of collection of sales tax at import stage by the Customs Authority, resultantly, it is not a charging section instead a machinery section---Section 7 of the Sales Tax Act, 1990, speaks about determination of tax liability at the time of filing of sales tax return under S. 26 of the Sales Tax Act, 1990, this is a machinery section as well and S.33 contains penal clauses synonymous to S. 156(1) of the Customs Act, 1969---Section 34, Sales Tax Act, 1990, speaks about default surcharge to be paid upon contravention and establishing of the charge under charging section---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.

Asst. Collector v. Khyber Elec. Lamps 2003 PTD 1275; D.G. Khan Cement v. Collector of Customs 2005 PTD 480; Caltex v. Collector (2003) 88 Taxation 128 (Lah.); 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; Rose Color v. Chairman, CBR and 2013 PTD 813 ref.

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

----S. 180---Show cause notice---Scope---Issuance of show-cause notice while invoking irrelevant/erroneous sections renders it void and of no legal effect.

(h) 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---Mention 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 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.

(i) 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---Custom 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 respectively.

2011 PTD (Trib.) 110; 2010 PTD (Trib.) 2086; SCRA No.01/2010; 2004 PTD 801; 2014 TD 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; 2018 PTD (Trib.) 1318; 2016 PTD (Trib.) 2463; 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 rel.

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

----S.83---Clearance for home consumption---Scope---Assessment order cannot be disturbed by any authority for preparing contravention report by overlapping the existing assessment order for initiation of adjudication proceedings.

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

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

CPLA No.105-K of 2014 ref.

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

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

----Ss. 83 & 180---Clearance for home consumption---Show cause notice---Scope---Fresh order cannot be passed in the presence of appealable order, even in the shape of re-assessment order or through issuance of show cause notice under S.180, Customs Act, 1969, while exercising powers under the provisions of S.179, Customs Act, 1969.

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

(m) 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, as per S.205 of Customs Act, 1969, is allowed in the column of the declared value, quantity or description after removal of the goods from the customs area or the Customs Reference Number is allotted to the Goods Declaration electronically---Cap has been laid on the importer for obtaining amendment post filing of Goods Declaration and after clearance of the goods---Word "assessed for duty" used in S.29 of the Customs Act, 1969, restricts the Customs not to amend itself the contents of the Goods Declaration after clearance under S.83 of Customs Act, 1969 and R.442 of Customs Rules, 2001.

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

----S. 193A---Procedure in appeal---Extension of time by Board after lapse of 120 days---Scope---Appeal was filed before Collector of Customs (Appeals) on 23-06-2017 and order on appeal should have been passed on or before 20-10-2017 or within further extended period of 60 days prior to lapse of initial 120 days on availability of exceptional circumstances and recording of those, after serving notice to the appellant---No extension whatsoever was given by the Collector of Customs (Appeals) prior to expiry of initial period of 120 days, evident from the order itself, which was completely silent in that regard---For validating the delay in passing order Collector of Customs (Appeals) had relied on extension granted by Board on 23-03-2018---Such extension was not valid by virtue of the fact that it had to be given prior to the lapse of currency of initial period of 120 days---Extension granted by Board was nothing more that flogging a dead horse for giving a lease of life---Any medication or cure had to be undertaken prior to demise of an issue, it could not be revived even through artificial support when the issue had gone to the annul of history---Order passed by Collector of Customs (Appeals) was barred by 221 days, hence void ab initio and not enforceable under law.

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

----S.24-A---Reasons for decision---Scope---Principle that every judicial or quasi-judicial finding should be based on reasons containing the justification for the finding in the order itself is an established principle of dispensation of justice---Orders passed in violation of basic principle of good governance and mandatory requirement of S. 24A of the General Clauses Act, 1897, are not only illegal and void but also not sustainable under law.

2005 YLR 1019; 2007 PTD 2500; 2004 PTD 1973; 2005 YLR 1719; 2003 PTD 777; 2003 PTD (Trib) 2369; 2002 MLD 357; 1983 CLC 2882; 2005 PTD 2519; 2005 PTD 1189; PLD 1995 SC (Pak) 272, PLD 1970 SC 158; PLD 1970 SC 173; 1984 SCMR 1014; 2012 PTD (Trib.) 619 and 2016 PTD 589 ref.

Obaydullah Mirza for Appellant.

Z.R. Hashmi (I/O) for Respondents.

2022 P T D (Trib.) 1345

[Customs Appellate Tribunal]

Before Abdul Jabbar Qureshi, Member Judicial-I and Abdul Basit Chaudhary, Member Technical-I

Messrs FARM PLANT

Versus

The COLLECTOR OF CUSTOMS (ADJUDICATION-I) and 3 others

Customs Appeal No.K-7569 of 2021, decided on 3rd June, 2022.

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

----S.32---Mis-declaration---Incorrect PCT heading---Scope---No charge of mis-declaration can be invoked with regard to PCT (Pakistan Customs Tariff) heading as the importer only assists the department by citing PCT heading of the goods for assessment of taxes---Declared PCT may be accepted or rejected by the competent authority but it is not punishable offence under the provisions of the Customs Act, 1969.

State Cement Corporation v. Government of Pakistan 2002 MLD 1980 and State Cement Corporation of Pakistan v. Collector of Customs and another 2002 MLD 180 rel.

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

----S.32---Mis-declaration---Incorrect PCT heading---Scope---Citation of particular PCT (Pakistan Customs Tariff) heading in the goods declaration does not amount to mis-declaration within the meaning of S. 32 of Customs Act, 1969.

State Cement Corporation v. Government of Pakistan 2002 MLD 1980 and State Cement Corporation of Pakistan v. Collector of Customs and another 2002 MLD 180 rel.

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

----S.32---Mis-declaration---Incorrect PCT heading---Scope---Incorrect PCT (Pakistan Customs Tariff) for the declared item, as against the customs determined PCT heading, is not tantamount to any mis-declaration.

Collector of Customs Karachi v. Power Electronic Pakistan (Pvt.) Ltd. Lahore 2011 PTD 2387 and Collector of Customs v. Shaikh Shakeel Ahmed 2011 PTD 495 rel.

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

----S.80---Customs Rules, 2001, R. 438---Checking of goods declaration by the customs---Scope---Customs department can determine correct description and PCT (Pakistan Customs Tariff) of the imported goods under S. 80 of the Customs Act, 1969 and R.438 of Customs Rules, 2001.

(e) Constitution of Pakistan---

----Art.4---Right of individuals to be dealt with in accordance with law---Scope---Article 4 of the Constitution says that every citizen enjoys the protection of law---Clause (a) of Sub-Article (2) expresses that no action detrimental to the life, liberty, body, reputation or property of any person shall be taken except in accordance with law.

(f) Administration of justice---

----Things should be done as they are required to be done, or not at all.

2006 SCMR 129 ref.

2002 PTD 2457; 2001 SCMR 838 and 2003 SCMR 1505 rel.

(g) Administration of justice---

----Neglect of plain requirement of an absolute statutory enactment prescribing how something is to be done would invalidate thing being done in some other manner.

PLD 1973 SC 236 ref.

PTD 1971 SC 61 rel.

Adnan Moton for Appellant.

Nadeem Rehman, A.O for Respondent.

2022 P T D (Trib.) 1360

[Customs Appellate Tribunal]

Before Abdul Jabbar Qureshi, Member Judicial-I

AMANULLAH

Versus

The COLLECTOR OF CUSTOMS (APPEALS) and 2 others

Customs Appeal No.K-1647 of 2020, decided on 18th October, 2021.

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

----Ss.157, 168, 2(s) & 180---Extent of confiscation---Seizure of things liable to confiscation---Smuggling ---Issue of show cause notice before confiscation of goods or imposition of penalty---Scope---Appellant appealed against the confiscation of his vehicle used in smuggling---Validity---Contents of the show-cause notice were not specific in nature nor the seizing agency had complied the proper provisions of law to establish the charge against the appellant---By doing so, the seizing agency/respondent had not discharged the burden cast on them nor shifted it on to the appellant---Prosecution was to establish through the independent evidence that the vehicle was smuggled or brought into the country through unauthorized route or otherwise, unfortunately, the same aspect was never controverted nor any efforts were made---Appellant on the other side had produced evidence along with the registration documents before the competent authority for showing the bona fide possession---Report of Forensic Laboratory was sufficient evidence to observe that the subject vehicle was not tampered nor any replacement of the chassis number was made---Impugned orders were set aside---Charge under S. 157(2) of Customs Act, 1969 having stood established Appellate Tribunal imposed 20% redemption fine and penalty---Appeal was allowed accordingly.

PLD 1974 SC 5; PLD 1988 Lah. 177; 1991 SCMR 1753; 2007 PTD 2265 and Black Law Dictionary ref.

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

----S.180---Issue of show-cause notice before confiscation of goods or imposition of penalty---Scope---Where the initial order or notice was void, all subsequent proceedings or superstructures built on it were also void---Where any adverse finding was given in the adjudication order on allegations or contentions or findings which were not incorporated in the show-cause notice, the entire proceedings would be rendere as void for reason of breach of principles of natural justice and law.

Anisa Rehman v. P.I.A 1994 SCMR 2234; Ciba Geigy v. Deputy Collector 2005 PTD 1182 and Tripple-M (Pvt.) Ltd. v. Federation of Pakistan 2002 YLR 2792 ref.

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

----Ss.180 & 168---Issue of show-cause notice before confiscation of goods or imposition of penalty---Seizure of things liable to confiscation---Scope---Section 180 of the Customs Act, 1969, mandatorily requires that the show-cause notice shall be issued for all proper, lawful and legal adjudication of any matter---When there no charge is alleged against the owner, the confiscation of goods or imposition of penalty is barred under the law---Consequently, adjudicating officer cannot pass order for confiscation of the goods.

(d) Administration of justice---

---If the law has prescribed method for doing a thing in a particular manner such provision of law is to be followed in letter and spirit for achieving or attaining the objectives performing or doing of a thing in a manner other than that provided by law would not be permitted.

Haji Abdullah Jan and other's case 1994 SCMR 749; Collectors Central Excise and Land Customs v. Rahm uddin (CPLA No.44-Q of 1986) dated 11.04.2087 (1987 SCMR 1849) and Director, Directorate General of Intelligence and Investigation and others v. Messrs Al-Faiz Industries (Pvt.) Ltd. and others 2006 SCMR 129 ref.

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

----Ss.32 & 180---Mis-declaration---Issue of show cause notice before confiscation of goods or imposition of penalty---Scope---State functionaries have no power and authority to conduct fishing and roving inquires without possessing any definite and proper information, just in hope to unveil some concealment and illegality on the part of the tax payer/citizen---Before embarking upon any inquiry against citizen, the state functionary must already possess some definite material so as to establish any illegal action having been taken by the citizen.

1995 PTD (Trib.) 580; Assistant Director Intelligence and Investigation v. Messrs B.R. Hermen PLD 1992 SC 485 and Imtiaz v. Ghulam Ali PLD 1963 SC 382 ref.

G.H. Niazi for Appellant.

Ziaullah, Naib Subedar for Respondent.

2022 P T D (Trib.) 1447

[Customs Appellate Tribunal]

Before Jahanzaib Wahlah, Member Judicial-III

Messrs QAZI & COMPANY and 4 others

Versus

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

Customs Appeals Nos.K-1391 and K-867 to K-870 of 2019, decided on 20th May, 2020.

Customs Act (IV of 1969)---

----Ss.32 & 25---Mis-declaration---Value of imported and exported goods---Transaction value of identical goods---Transaction value of similar goods---Scope---Appellants were charged for alleged mis-declaration of description, concealment of actual value and evasion of the customs duties and taxes---Validity---Manufacturer's certificates and the Forensic Laboratory's report confirmed that the "Tri-basic Lead Sulphate" imported by the cable manufacturers and the "TS-T" (Lead Sulphate), imported by the appellants were two different trade commodities due to difference in quality, purity and subsequent usage---Price of the commodities could not be equated at par because the goods could not be termed as identical and/or similar within the meaning of subsections (5) & (6) of S. 25 of the Customs Act, 1969---Appellants were discriminated against by the department as the Clearance Collectorate had, at an earlier point in time, determined the values after considering the strength, percentage and usage of Lead (Pb)---No substance was found in the Contravention Reports---Appeals were allowed and the impugned orders were set aside.

Sadia Jabbar's case 2018 PTD 1746 and Saadat Khan v. Federation of Pakistan 2014 PTD 1615 ref.

Ilyas Ahsan Khan, Legal Consultant, present for Appellants.

Ejaz, I.O present for Respondents.

2022 P T D (Trib.) 1515

[Customs Appellate Tribunal]

Before Abdul Jabbar Qureshi, Member Judicial-I

Messrs YOUNUS & SONS (PVT.) LTD. KARACHI WEST

Versus

The COLLECTOR OF CUSTOMS, MCC APPRAISEMENT AND FACILITATION (EAST), KARACHI and another

Custom Appeal No.K-7418 of 2021, decided on 13th October, 2021.

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

----S.32---Mis-declaration---Classification of goods---Scope---Appellant imported consignments of 2/s coated writing paper sheets (gloss)---Goods were released under PCT Heading 4810.1910 (writing paper) attracting 20% customs duty reduced to 16% on the strength of FTA (Free Trade Agreement) certificates---Department, after release of goods, issued a show-cause notice with the allegation that goods were actually classifiable under PCT Heading 4810.1990 (other) chargeable to 20% customs duty but without FTA concession---Appellant's stance was that PCT Heading 4810.1910 was created for such paper having one of its use as writing paper, on the other hand, the department's stance was that such paper was classifiable in the heading which had exclusive use of writing---Validity---Subject goods fell under PCT Heading 4810.1910 which provided most specific description i.e. writing paper---No justification was given by the department regarding deviation from previous practice of classification of similar goods---Impugned order interpreting the PCT Heading 4810.1910 lead to the redundancy to classifying the subject goods under PCT heading 4810.1990 which provided more general description---Where two reasonable interpretations were possible, but one lead to redundancy while the other avoided surplusage, it was the later interpretation that had to be preferred---Appeal was allowed.

2010 PTD 1216; 2013 PTD (Trib.) 600; Muhammad Amer Saaed v. MCC (East) 2016 PTD 2910; Collector of Customs v. Pakistan State Oil PTCL 2012 CL 27; Muhammad Waheed v. Customs Appellate Tribunal 2016 PTD 35; Messrs Sadat Khan v. FOP and others 2014 PTD 1615; 2017 YLR Note 400; PLD 1972 SC 271; 2016 PTD 2910; 2016 PTD 35; 2021 PTD 699; 2011 SCMR 1279 = 2011 PTD 2220; 2020 SCMR 649; PLD 2010 Lah. 138; 2010 PTD 2338 and United Refrigeration Industries Ltd. and others case SCRA No.426/2019 ref.

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

----S.223---Customs General Order, 2002---Officers of Customs to follow Board's orders----Scope---Directions of the Board contained in Customs General Order, 2002, are not binding on officers exercising quasi judicial powers but the same are binding upon the field officers discharging their functions and duties under the Customs Act, 1969, relating to administrative matters in terms of S.223 of the Customs Act, 1969---Field officers are not authorized to act as per their own discretion in a situation, wherein, FBR has already issued direction and/or guidelines---Any act of the Field Officer in violation of such mandatory direction would be illegal and of no consequence.

Muhammad Amer Saaed v. MCC (East) 2016 PTD 2910; Muhammad Waheed's case 2016 PTD 35 and Akhtar Hussain v. Collector of Customs 2003 PTD 2090 ref.

(c) General Rules of Interpretation---

----R.3---Rule 3 of the General Rules of Interpretation in its sub-rule (a) provides guideline that heading which provides the most specific description of an article shall be preferred for classification rather than the heading providing more general description.

Aqeel Ahmed for Appellant.

Samiullah, AO for Respondents.

2022 P T D (Trib.) 1545

[Customs Appellate Tribunal]

Before Jahanzaib Wahlah, Member Judicial-III

MUHAMMAD SOHAIL

Versus

The COLLECTOR OF CUSTOMS (APPEALS), KARACHI and another

Customs Appeal No.K-500 of 2011, decided on 11th April, 2020.

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

----Ss.129, 198, 2(s), 16, 32, 32-A, 178 & 156(1)(64)---Constitution of Pakistan, Arts. 4 & 25 ---Transit of goods across Pakistan to a foreign territory---Power to open packages and examine, weigh or measure goods---Smuggling---Mis-declaration---Punishment of persons accompanying a person possessing goods liable to confiscation---Scope---Customs officials examined the imported goods and found the same to be alcoholic beverages instead of soft drinks---Clearing agent had filed the declaration for transit to Afghanistan under S.129 of the Customs Act, 1969, purportedly on the instruction of the appellant---Appellant was imposed upon a penalty ---Appeal filed before Collector (Appeals) was dismissed---Validity---Customs officials were not empowered to examine the goods for the reason that goods had arrived in transit to Afghanistan and were not meant for home consumption---Section 2(s) did not apply to the case as the goods were imported in transit to Afghanistan---Section 16 was a machinery section under which no charge could be framed---Appellant had not submitted goods declaration for home consumption but had sought clearance of goods for transit to Afghanistan, resultantly neither S. 32 nor S. 32-A was applicable---Invoking of S. 178 was out of place as the appellant was not found with the goods---Since there were no rules for Afghan Transit Trade when show-cause notice was issued, therefore, clause (64) of S. 156(1) contained no consequence in contravention of S. 129---Treatment meted out to the appellant was against the principles enshrined in Arts.4 & 25 of the Constitution as a person having similar role as that of appellant was not booked in the case---Appeal was allowed and the impugned orders were set aside.

Messrs Najib Zarab Ltd. v. Government of Pakistan PLD 1993 Kar. 93; Messrs Mazhar Iqbal v. Collector of Customs 2004 PTD 2994; M/s. Shazad Ahmed Corporation v. FOP 2005 PTD 23; Shakeel Ahmed v. FOP; M/s. Jamal Din and others and FOP and 2 others 710 to 714/2010; 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; 2013 PTD (Trib.) 1375; 2001 SCMR 838; 2006 SCMR 1519; Rehm Din v. Collector of Customs 1987 SCMR 1840; (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; PLD 1992 SC 485; 2013 PTD (Trib.) 353; 2002 MLD 261; 2002 PTD 976; 2002 SCMR 312; 2009 PTD 1507; 2005 SCMR 492; 1990 SCMR 1072; 1990 SCMR 1059; 1975 SCMR 352; PLD 1995 SC 396; 1998 SCMR 1404; PLD 1997 SC 582; PLD 1997 SC 334 and 1997 SCMR 1874 ref.

F.O.P v. Jamaluddin and others 1996 SCMR 727; C.P. No.D-2410 of 2010 and 2010 SCMR 431 rel.

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

----Ss.193 & 194-A---Appeal to Collector (Appeals)---Appeal to the Appellate Tribunal---Scope---If a person is not desirous of depositing the adjudged amount of duty and imposed penalty, he is not barred under Ss. 193(1) & 194-A of the Customs Act, 1969, from assailing the impugned order.

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

----Ss.193, 194-A & 194-B---Appeal to Collector (Appeals)---Appeals to the Appellate Tribunal---Orders of Appellate Tribunal---Scope---Right of appeal is guaranteed to an aggrieved person against any decision or order passed by Customs officer within 30 & 60 days under the proviso of Ss. 193(1) & 194-A(3) of the Customs Act, 1969---Right of appeal is an inalienable right and cannot be made ineffective/redundant on account of non-deposit of duty or penalty---Collector (Appeals) and Appellate Tribunal are bound to grant opportunity of personal hearing to the parties to the appeal in terms of Ss. 193-A(1) & 194-B(1) of the Customs Act, 1969 and then pass order thereon---Even otherwise, no consequences are flowing in the expression of S. 195-B regarding the fate of appeal, in case of non-deposit of adjudged amount, thus it cannot be taken to mean that non-deposit would automatically mean rejection of appeal in limine.

Messrs Meaple Leaf Cement Factory, Lahore v. The Collector of Central Excise and Sales Tax (Appeals), Lahore and others 1993 MLD 1645 rel.

PLD 1989 SC 6; M/s. Riaz Bottlers (Pvt.) Ltd. v. Collector (Appeals) Central Excise and Sales Tax, North Zone, Lahore and 3 others 1993 CLC 1405 and Billal Fabric Ltd. and 9 others v. Collector of Customs, Excise and Sales Tax by the Customs, Excise and Sales Tax Appellate Tribunal 2005 PTD (Trib.) 731 ref.

Obaydullah Mirza along with Mirza Abeer for Appellant.

Asim Iqbal, Appraiser present for Respondents.

2022 P T D (Trib.) 1645

[Customs Appellate Tribunal]

Before Abdul Jabbar Qureshi, Member Judicial-I and Abdul Basit Chaudhary, Member Technical-I

Messrs COASTEX (PVT.) LTD., through Director and others

Versus

The COLLECTOR OF CUSTOMS (ADJUDICATION-II) and others

Customs Appeals Nos.K-3865, K-7080, K-7081 of 2021 and Intervener Application Nos.168 and 169 of 2021, decided on 12th May, 2022.

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

----Ss.32 & 32-A---Customs Rules, 2001, R. 226---Customs Export Processing Zones Rules, 1981, R. 3---Mis-declaration---Import of goods into the Export Processing Zones---Scope---Customs authorities on spy information detained three containers containing banned goods destined for Export Processing Zone---In order to fulfill the requirement of issuance of NOC (No Objection Certificate) from the Export Processing Zone Authority (EPZA), online application through Unique User ID was filed by the appellant company---After detention of containers, a letter was received from the appellant, whereby it had informed that their ID had been misused for NOC from EPZA and they had no concern with the goods---Customs authorities seized the containers and imposed penalty on the appellant company---Validity---Section 32 of Customs Act, 1969, was only attracted when alleged mis-declaration or mis-statement was made for obtaining illegal gain by evasion of payment of customs duty and other taxes or for causing loss of revenue---Similar was the case of applicability of S. 32-A because there was no question of levy of duty and taxes on goods destined for Export Processing Zones---Goods meant for Export Processing Zones were exempt from all duty and taxes---When all goods destined for Export Processing Zones were exempt from customs duty and taxes there arose no question of invoking Ss. 32(1), 32(2) & 32-A of Customs Act, 1969---Goods declaration (Bill of Entry) was required to be under R. 3(2) of the Customs Export Processing Zones Rules, 1981 and goods found at the time of examination did not fall in prohibited category as detailed in R.3(7) of Customs Export Processing Zones Rules, 1981---Appellate Tribunal held that the user ID of the appellant had been misused---Imposition of penalty on the appellant was not only unjustified but also against all canons of law, hence, the same was ordered to be remitted---Appeal was allowed.

Collector of Customs (Exports) v. R.A. Hosiery Works 2007 SCMR 1881; Kamran Industries v. The Collector of Customs (Exports), Karachi and 4 others PLD 1996 Kar. 68; Messrs Al-Hamel Edible Oil Limited and others v. Collector of Customs and others 2003 PTD 552; Pakistan v. Hardcastle PLD 1967 SC 101; Sikandar and Brothers v. Government of Pakistan PLD 1986 Kar. 3783 and Finest Corporation v. Collector of Customs PLD 1990 Kar. 338 ref.

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

----S.32---Mis-declaration---Scope---Reading of S.32 clearly indicates that it is related to a situation where a person makes any statement or files any document which is false in any material particular by reason of which any duty or charge is not levied or short levied or is refunded---In such event, the Customs Authority is empowered to issue to the person concerned a notice to show-cause why he should not pay the loss of revenue suffered by the Department and after giving him a hearing beside any other action under law, order payment of the same, if a case is made out---Entire provision revolves around the central point of loss of revenue suffered by the Customs Department on account of conduct of any person.

Messrs Al-Hamel Edible Oil Limited and others v. Collector of Customs and others 2003 PTD 552 foll.

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

----S.138---Customs Rules, 2001, Rr. 86, 87, 88 & 89---Frustrated cargo---Scope---Section 138 of the Customs Act, 1969, stipulates that where any goods are brought into a Customs Station by reason of inadvertence, misdirection or un-traceability of the consignee the consignment can be treated as 'Frustrated Cargo'---For the application of said section, any of the factor(s) mentioned in the section are sine qua non, indispensable, vital, essential and absolutely necessary conditions---Section 138 of Customs Act, 1969, allows re-export in three situations; (i) inadvertence; (ii) misdirection; (iii) un-traceability of consignee---Section 138, Customs Act, 1969, applies if the goods are brought into a Customs Station "by reason of" any of the said referred situations---Section 138 provides that the power under the section is to be exercised "subject to rules"---Rule 86 of the Customs Rules, 2001, makes it clear that the goods may be re-exported if the consignee dishonors the commitment to accept the consignment and the goods may be allowed to be re-exported---Rule 86 provides that the frustrated cargo shall be such goods as are brought into a Customs Station by reason of inadvertence or misdirection or where the consignee is untraceable or has dishonored his commitment and the consignor wishes to have it re-shipped to him---Rule 88 of the Customs Rules, 2001, provides that the Collector of Customs is to satisfy himself that the goods are frustrated cargo with reference to the relevant import manifest and other documents---Import manifest or IGM (Import General Manifest) is an important document for determining whether a case has been made out for the exercise of powers under S. 138 of the Customs Act, 1969.

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

----S. 138---Customs Rules, 2001, Rr. 86, 87, 88 & 89---Frustrated cargo---Scope---"Frustrated Cargo" is any shipment of supplied and/or equipment which while en-route to destination is stopped prior to receipt and for which further disposition instructions must be obtained.

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

----S.138---Frustrated cargo---Scope---Generally frustrated cargo is that cargo which is disowned by the consignee on account of difference from the contracted desired specification, models, standard, numbers of values---As such cargo is disowned by the consignee: the title of such goods is not shifted to consignee and remains in favour of supplier---If the supplier, who is still rightful owner of imported goods is legally authorized to take back his goods.

(f) Words and phrases---

----"Re-export"---Meaning.

Re-export means export of foreign goods which have already been imported to the country from a foreign country. However, if any goods are already imported into a country and the same goods are again exported to either the same country, such movement of goods is called re-export.

(http//howtoexportimport.com) rel.

(g) Words and phrases---

----"Inadvertence"---Meaning.

Heedlessness, lack of attention; want of care; carelessness, failure of a person to pay careful and prudent attention to the progress of a negotiation or a proceeding in court by which his right may be affected. [p. 1662] G

Black Law Dictionary rel.

(h) Interpretation of statues---

----Harmonious interpretation---Scope---Every provision of law must be construed in harmony with other provisions of law so as to avoid any conflict. [p. 1664] K

2003 PTD 552 ref.

Ghulamullah Shaikh for Appellant (in Customs Appeal No.3865 of 2021, Intervener Applications Nos.168 of 2021 and 169 of 2021).

Adnan Moton for Intervener (in Customs Appeal No.3865 of 2021, Intervener Applications Nos.168 of 2021 and 169 of 2021).

Tauseef Ahmed, A.O. for Respondents (in Customs Appeal No.3865 of 2021 Intervener Applications Nos.168 of 2021 and 169 of 2021).

Adnan Moton for Appellant (in Customs Appeal No.7080 of 2021).

Tauseef Ahmed, A.O. for Respondent No.2 (in Customs Appeal No.7080 of 2021).

Ghulamullah Shaikh for Respondent No.3 (in Customs Appeal No.7080 of 2021).

Adnan Moton for Appellant (in Customs Appeal No.7081 of 2021).

Tauseef Ahmed, A.O. for Respondent No.2 (in Customs Appeal No.7081 of 2021).

Ghulamullah Shaikh for Respondent No.3 (in Customs Appeal No.7081 of 2021).

2022 P T D (Trib.) 1700

[Customs Appellate Tribunal]

Before Abdul Jabbar Qureshi, Member Judicial-I and Abdul Basit Chaudhry, Member Technical-I

Messrs AMK STEEL (PVT.) LTD., SHEIKHUPURA

Versus

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

Customs Appeal No.K-7075 of 2021, decided on 3rd June, 2022.

Customs Act (IV of 1969)---

----Ss. 32 & 32-A---Mis-declaration---Fiscal fraud---Scope---Appellant imported re-rollable scrap---Department found the goods to be flame cut rectangular/ square Billets (4.8 to 5 feet length) and flame cut iron and steel rods (5 feet length)---Case of department was that the importer had mis-declared the description of goods, as such, the goods were confiscated---Contention of appellant, inter alia, was that imported goods were admittedly re-rolling scrap falling under PCT heading 7204 which covered waste and scrap of iron and steel; that such waste and scrap of iron and steel was of miscellaneous nature and generally took the form of waste and scrap from the manufacturer of mechanical working of iron and steel; that Explanatory notes to HS (Harmonized System) categorically reflected that article of iron and steel definitely not useable as such because of cutting fell in the category of waste and scrap---Validity---Appellant had not committed any offence, which could warrant confiscation of goods---Charge of mis-declaration as alleged by the department was based on assumptions and presumptions---Department had failed to prove its case---Impugned order-in-original was set aside and the department was directed to release the goods imported by appellant---Appeal was allowed.

Moin Jamal v. Federation (C.M.A. No.18195/9/C.P. No.D-4214 of 2019); Central Insurance Company v. CBR 1993 SCMR 1232; Commissioner of Income Tax v. Messrs Muslim Commercial Bank 2001 PTD 720; Messrs Radaka Corporation and others v. Collector of Customs and another 1989 SCMR 353; Nazir Ahmad v. Pakistan and others PLD 1970 SC 453; Government of Pakistan v. Messrs Village Development Organization 2005 SCMR 492; Messrs Nazir Ahmad Taj Din v. Deputy Collector of Customs, Lahore and 2 others PLD 1977 Lah. 1392; Collector of Customs Karachi v. Messrs Power Electronic Pakistan (Pvt.) Limited, Lahore 2011 PTD 2837; State Cement Corporation of Pakistan v. Collector of Customs and others 2002 MLD 180 and 2010 PTD 870 rel.

Zia ul Hassan for Appellant.

Raza, A.O., Present for Respondents.

2022 P T D (Trib.) 1787

[Customs Appellate Tribunal]

Before Abdul Jabbar Qureshi, Member Judicial-I and Abdul Basit Chaudhry, Member Technical-I

The DIRECTOR, DIRECTORATE OF POST CLEARANCE AUDIT (SOUTH), KARACHI

Versus

Messrs JW SEZ (PRIVATE) LIMITED and 2 others

Customs Appeal No.K-713 of 2022, decided on 30th August, 2022.

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

----Ss.25, 32 & 32-A---Value of imported and exported goods---Transaction value---Mis-declaration---Fiscal fraud---Scope---Directorate of Post Clearance Audit initiated a comprehensive audit of imports of vehicles by the respondent-importer---Directorate of Post Clearance Audit found that the buyer and seller were related parties, as such, transaction value could not be accepted; that identical/similar goods method was not applicable as the respondent was sole importer of vehicle and that the respondent had caused a huge loss to the exchequer---Collector of Customs (Adjudication) vacated the show-cause notice on the ground that method of determination of value of vehicles was incorrect---Validity---Supplier of the respondent had purchased CBU (Completely Built Up) vehicles from the OEM (Original Equipment Manufacturer) and had sold the same to the respondent at much lower values, which could not be considered as bona fide transaction value---Correct value of the vehicle appearing at the official website of the manufacturer was much higher, which established that the supplier had engaged in an undervalued transaction---Verification by Chinese Customs, China Council for Promotion of International Commerce did not have any legal cover under the Customs Act, 1969---The only authentic document was by the manufacturer which was hopelessly missing in the case---Respondent had initially imported three vehicles from the OEM, which were assessed at a higher value but when the bulk quantity of 2080 units were imported through the supplier, the price came down---Charges levelled in the show cause notice stood established---Order-in-original was set aside and the appeal was allowed.

Collector of Customs v. China National Water Resources Hydropower Eng. (SCRA No. 154/2008) rel.

(b) Constitution of Pakistan---

----Art.25---Equality of citizens---Scope---All importers engaged in the activity of import of identical items may be provided level playing field---Constitution of Pakistan also provides that all citizens are equal and must be treated with equality.

Sultan Orangzeb, P.A. for Appellant.

Ghulamullah Shaikh for Respondents.

2022 P T D (Trib.) 1812

[Customs Appellate Tribunal]

Before Abdul Jabbar Qureshi, Member Judicial-I and Muhammad Iqbal Bhawana, Member Techical-III

Messrs KHYBER EXPORT (FAR-EAST) CO. through Proprietor

Versus

The DIRECTOR GENERAL, DIRECTORATE GENERAL OF CUSTOMS VALUATION and 3 others

Customs Appeal No.K-7457 of 2021, decided on 6th June, 2022.

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

----Ss.25 & 25-A---Value of imported and exported goods---Power to determine the customs value---Scope---No assessment can be made on the basis of working of a committee constituted for the purpose of determining the deductive valuation under S.25(7) of Customs Act, 1969, without associating importer or his representative in each case.

Rehan Umar's case 2006 PTD 909 ref.

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

----S. 25---General Agreement on Tariffs and Trade (GATT), Arts. I to VIII---Value of imported and exported goods---Scope---Section 25 of the Customs Act, 1969, completely corresponds with the Articles of the General Agreement on Tariffs and Trade and mandatorily requires its implementation, as such, the legal strength of S.25 empowers the concerned officials of customs to act accordingly.

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

----Ss.25 & 25-A---General Clauses Act (X of 1897), S.24-A---Value of imported and exported goods---Power to determine the customs value---Reasons for decision---Scope---Customs authorities are limited or restricted only to the methods set forth in S. 25 and are not to act otherwise---If, some method other than that specified in S. 25 is complied, that would be ultra vires the powers conferred under S.25-A---Determination of value under S. 25-A is not a simple thing---Ruling should contain sufficient details to show that S. 25-A has been properly applied---Valuation ruling should be issued through a speaking order as per the mandatory requirement of S. 24-A of General Clauses Act, 1897.

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

----Ss. 25 & 25-A---Value of imported and exported goods---Power to determine the customs value---Scope---When S. 25 of Customs Act, 1969, exhaustively provides the modes for determination of value then resorting to S.25-A without convincing reasons is uncalled for.

Messrs Goodwill Traders Karachi v. Federation of Pakistan 2014 PTD 176 ref.

Sadia Jabbar v. Federation of Pakistan 2018 PTD 1746 rel.

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

----Ss.25 & 25-A---Value of imported and exported goods---Power to determine the customs value---Scope---Revised valuation ruling would be deemed to have taken effect from the date when original ruling was given.

Messrs Bilal Enterprises v. Federation of Pakistan and others 2013 PTD 1332 rel.

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

----Ss.25 & 25-A---Value of imported and exported goods---Power to determine the customs value---Scope---Where valuation ruling was issued during pendency of case of importer, which was yet to be finalized and was in continuation of earlier valuation ruling and proceedings, Appellate Tribunal observed that the importer could not be deprived of benefit of the same, as it would amount to gross injustice.

Collector of Customs v. Messrs Khas Trading and Company 2015 PTD 22 rel.

Muhammad Adnan Moton for Appellant.

Naeem Butt, V.O. for Respondents.

2022 P T D (Trib.) 1922

[Customs Appellate Tribunal]

Before Abdul Jabbar Qureshi, Member Judicial-I

Messrs SALMAN PAPER PRODUCTS (PVT.) LTD. and another

Versus

The COLLECTOR OF CUSTOMS, MODEL CUSTOMS COLLECTOR APPRAISEMENT (EAST), KARACHI and others

Customs Appeals Nos.K-798 and K-807 of 2022, decided on 16th August, 2022.

Customs Act (IV of 1969)---

----S.25-A---Power to determine the customs value---Valuation ruling, applicability of---Scope---Department, after clearance of goods, issued a show cause notice to the importer alleging mis-declaration on the ground that the importer had not assessed the duty and taxes in accordance with the valuation ruling issued under S. 25-A of Customs Act, 1969---Deputy Collector of Customs vacated the show cause notice---Intervener, another importer of identical goods who was paying duty and taxes in accordance with the valuation ruling, assailed order passed by Deputy Collector of Customs---Appeal was dismissed, both intervener and importer assailed the order-in-appeal---Validity---Importer and other parties had not disputed classification of imported goods and the customs value which was determined through valuation ruling---Value determined under S. 25-A(1) was the applicable customs value for assessment of such imported goods---Locus standi of the intervener was found established in the case---Impugned order-in-original was discriminatory, illegal and arbitrary---Order-in-appeal and order-in-original were set aside---Appeals were allowed, in circumstances.

Nasir Ali v. Government of Punjab and 3 others 2021 MLD 1712 rel.

Aqeel Ahmed and Muhammad Bilal for Appellants (in C.A. No.K-798 of 2022).

Ghulam Yaseen, Consultant for Appellants (in C.A. No.K-807 of 2022).

Saboor Kakar, A.O. for Respondents.

2022 P T D (Trib.) 1027

[Customs Appellate Tribunal]

Before Syed Sardar Hussain Shah, Member Judicial

COLLECTOR OF CUSTOMS, MODEL CUSTOMS COLLECTORATE, CUSTOMS HOUSE, JAMRUD ROAD, PESHAWAR

Versus

FAHAD BIN FIREDOON

Custom Appeal No.43/PB of 2018, decided on 10th March, 2019.

Customs Act (IV of 1969)---

----S.168---SRO No.499(I)/2009, dated 13-06-2009---Seizure of goods liable to confiscation---Option to redeem the confiscated vehicle on payment of redemption fine---Customs Mobile Squad intercepted a non-duty paid vehicle and driver/owner on inquiry produced photocopies of auction certificate---Vehicle was brought to the office of Customs Mobile Squad for want of verification---Auction documents produced by owner were found genuine and verification of vehicle revealed that its model as per auction documents was 1992 while the seat belts of vehicle were of 1994 model---Owner of the vehicle failed to produce legal import documents of the body of 1994 model vehicle---Additional Collector of Customs (Adjudication) released the replaced body of the vehicle against 30 percent redemption fine in addition to payment of leviable duty and taxes---Non-duty paid body was mounted on the duty paid chassis frame---Additional Collector of Customs (Adjudication) had rightly given an option to the rightful owner of the vehicle to redeem the replaced body on payment of leviable duty and tax plus redemption fine---Order passed by Additional Collector of Customs (Adjudication) was confirmed---Appeal was dismissed, accordingly.

Shahid Qayyum Khattak for Appellant.

Muhammad Faizan for Respondent.

2022 P T D (Trib.) 1051

[Customs Appellate Tribunal]

Before Abdul Jabbar Qureshi, Member Judicial-I and Abdul Basit Chaudhary, Member Technical-I

Messrs LUCKY COTTON MILLS (PVT.) LTD.

Versus

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

Customs Appeal No.K-1819 of 2015, decided on 20th December, 2021.

Customs Act (IV of 1969)---

----S.32---Sales Tax Act (VII of 1990), Ss.4 & 6---SRO No.1125(I)/2011 dated: 31-12-2011---False statement, error, etc---Withholding tax---Zero-rating---Scope---Time and manner of payment of sales tax---Scope---Question before Appellate Tribunal was whether the concessionary regime of sales tax under SRO No.1125(I)/2011 dated: 31-12-2011 was available and reduced rate of withholding tax was applicable or not---Validity---Careful perusal of the SRO No.1125(I)/2011 dated: 31-12-2011 revealed that concessionary regime was available to textile products beyond spinning stage---Import made by the appellant did not qualify under the condition of the SRO as the raw and ginned cotton was excluded from the purview of the SRO---Importer had not fulfilled the condition of SRO, therefore, it was not entitled to the reduced rate of withholding tax @ 1%---Contention of appellant that Customs officers were not empowered to record the short paid/not paid sales tax at import stage did not hold good while keeping in view the insertion of the expression "recovery" in S.6 of the Sales Tax Act, 1990---Appeal was rejected.

Shanshah Husnain, Consultant for Appellant.

Naeem A.O., for Respondent.

2022 P T D (Trib.) 80

[Federal Tax Ombudsman]

Before Dr. Asif Mahmood Jah, Federal Tax Ombudsman

Messrs SPRINT OIL AND GAS SERVICE, FZC

Versus

The SECRETARY, REVENUE DIVISION, ISLAMABAD

Complainant No.1485/ISB/IT of 2021, decided on 10th November, 2021.

Income Tax Ordinance (XLIX of 2001)---

----S.120---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), Ss.10 & 2(3)---Maladministration---Notice under S.120(3) for incomplete returns---Harassment of taxpayer---Scope---Complaint against Departmental harassment, violation of protocols, SOPs and fiscal laws and misuse of authority by Large Taxpayer Office ("LTO")---Contention of complainant, inter alia, was that taxpayer was facing undue harassment by Department with the design to block taxpayer's legal and admissible refunds---Federal Tax Ombudsman observed that record revealed that maladministration was embedded in routine neglect, inattention, delay and incompetence of Departmental functionaries, and in the administration and discharge of duties and responsibilities at the LTO---Federal Tax Ombudsman recommended Department to withdraw notice under S.120(3) of Income Tax Ordinance, 2001 issued to taxpayer and furthermore, to direct IT Wing of Department to review IRIS application to ensure that system should not allow completion of audit / assessment in cases where returns were incomplete and that indiscreet notices under S.120(3) of Income Tax Ordinance, 2001 were not issued by the enforcement officers for tax years wherein audit / assessment proceedings were completed and to further ensure immediate implementation of system based scrutiny of returns----Complaint was disposed of, accordingly.

Muhammad Tanvir Akhtar, Advisor Investigation and Appraisal for Petitioner.

Waheed Shahzad Butt, Authorized Representative.

2022 P T D (Trib.) 1187

[Federal Tax Ombudsman]

Before Dr. Asif Mahmood Jah, Federal Tax Ombudsman

UMER AYAZ KHAN

Versus

SECRETARY, REVENUE DIVISION ISLAMABAD

Complaints Nos.0541, 1068, 1069, 1070, 1071, 1076, 1126, 1128, 1129, 1131, 1133, 1134, 1135, 1136, 1138, 1140, 1143, 1166, 1168, 1169, 1170, 1171, 1172, 1176, 1178, 1181, 1193, 1194, 1195 and 1196/PWR/IT of 2022, decided on 18th April, 2022.

Income Tax Ordinance (XLIX of 2001)---

----Ss.12, 149 & 153---Salary---Payment for goods, services and contracts---Scope---Complainant was a temporary lecturer at a government college---College deducted income tax at the rate of 20% from salary of the complainant---Contention of complainant was that his salary was below the taxable limit of salaried persons---Contention of department was that the complainant was a lecturer hired by government college as such the payment made to the complainant fell under S. 153(1)(b) of the Income Tax Ordinance, 2001---Validity---Legal provisions governing "Salary Taxation" under Ss.12 & 149 of Income Tax Ordinance, 2001, neither obligated any valid contract of employment, nor placed any other condition for a case to be treated as a salaried case except for employer-employee equation based on master and servant relationship---Such criterion formed the basic parameter for any employment---Regular/ad-hoc/temporary/hired/daily wages, all were different shapes and forms of employment and the law had not created any distinction among all the said forms---Department's treatment of the case under S.153(1)(b) of the Income Tax Ordinance, 2001, was against the dictates of law and excessive tax detection from the wages of a hired employee of educational institution was tantamount to maladministration in terms of Federal Tax Ombudsman Ordinance, 2000---Department was directed to ensure that the lecturers were not burdened with excessive tax deductions at withholding stage.

Ziauddin Wazir, Advisor Dealing Officer.

Muhammad Tanvir Akhtar, Advisor-Appraisal.

Nemo for Authorized Representative.

Nemo for Departmental Representative.

FINDING/RECOMMENDATIONS

DR. ASIF MAHMOOD JAH, FEDERAL TAX OMBUDSMAN.----This complaint has been filed under Section 10(1) of the Federal Tax Ombudsman Ordinance, 2000 (FTO Ordinance) against Commissioner IR, D.I. Khan Zone.

1. Briefly, the facts of the case that complainant is a temporary lecturer at Post Graduate College, Bannu. The said college deducted income tax at rate of 20% from salary of the complainant. According to complainant his salary is not liable to tax.

2. Identical complaints have been filed by lecturers of education institutions tabulated below:

| | | | | | | --- | --- | --- | --- | --- | | S.No. | Complaint No. | Name of Complainant | CNIC No. | Designation / Place of Posting | | 1 | C.No.1068/PWR/IT/ 2022 | Mrs, Firdous Syed | 11101-9572167-4 | Government Girls Post Graduate College, Bannu | | 2 | C.No.1069/PWR/IT/ 2022 | Mrs. Tamheeda | 36302-3962680-0 | DO | | 3 | C.No.1070/PWR/IT/ 2022 | Mrs. Mahwish Iqbal | 11101-0223917-8 | DO | | 4 | C.No.1071/PWR/IT/ 2022 | Mrs.Farheen Khan | 11101-1439183-4 | DO | | 5 | C.No.1076/PWR/IT/ 2022 | Mrs. Memoona Gul | 11101-1531484-0 | Government Girls Degree College KDA Karak | | 6 | C.No.1126/PWR/IT/ 2022 | Mr.Waqar Ali Shah | 11101-4018827-7 | Lecturer / Post Graduate College, Bannu | | 7 | C.No.1128/PWR/IT/ 2022 | Rauf Khan | 11101-7097390-7 | DO | | 8 | C.No.1129/PWR/IT/ 2022 | Mr. Muhammad Fawad | 11101-2818717-9 | DO | | 9 | C.No.1131/PWR/IT/ 2022 | Mr. Sohail Khan | 11101-5790572-3 | DO | | 10 | C.No.1133/PWR/IT/ 2022 | Mr. Faizan Ullah | 11101-0371048-5 | DO | | 11 | C.No.1134/PWR/IT/ 2022 | Mr. Rehmat Ullah Khan | 11101-8397498-5 | DO | | 12 | C.No.1135/PWR/IT/ 2022 | Mr. Mansoor Khan | 11101-9251482-5 | DO | | 13 | C.No.1136/PWR/IT/ 2022 | Mr. Muhammad Aqib Khan | 11101-4370502-1 | DO | | 14 | C.No.1138/PWR/IT/ 2022 | Mr. Israr Ullah | 21505-471900-7 | DO | | 15 | C.No.1140/PWR/IT/ 2022 | Muhammad Tayyab Khan | 11101-8904438-9 | DO | | 16 | C.No.1143/PWR/IT/ 2022 | Mr. Sufian Mehmood | 11101-3334971-3 | DO | | 17 | C.No.1166/PWR/IT/ 2022 | Mrs. Asma Gul | 11101-5525406-4 | Government Girls Post Graduate College, Bannu | | 18 | C.No.1168/PWR/IT/ 2022 | Mrs. Laila Amin | 11101-5720278-2 | DO | | 19 | C.No./1169PWR/IT/ 2022 | Mrs. Hassina Bibi | 11101-899752-8 | DO | | 20 | C.No.1170/PWR/IT/ 2022 | Mrs. Shumaila Bibi | 11101-2038286-2 | DO | | 21 | C.No.1171/PWR/IT/ 2022 | Mrs. Noreen Jamal | 11101-3654826-0 | DO | | 22 | C.No.1172/PWR/IT/ 2022 | Mrs. Haseena Khan | 11101-9764618-8 | DO | | 23 | C.No.1176/PWR/IT/ 2022 | Mrs. Shandana Mahnoor | 11101-4356028-4 | DO | | 24 | C.No.1178/PWR/IT/ 2022 | Mrs. Sajila Karim Khan | 11101-5359458-2 | DO | | 25 | C.No.1181/PWR/IT/ 2022 | Mrs. Noor Nama Jamal | 11101-4609763-8 | DO | | 26 | C.No.1193/PWR/IT/ 2022 | Mrs. Nudrat Shaheen | 11101-8778405-8 | DO | | 27 | C.No.1194/PWR/IT/ 2022 | Mrs. Muzdalfa Rehman | 11101-6916231-6 | DO | | 28 | C.No.1195/PWR/IT/ 2022 | Mrs. Faiza Sarwar | 11101-1813737-4 | DO | | 29 | C.No.1196/PWR/IT/ 2022 | Mrs. Rimsha Younas | 11101-3732023-2 | DO |

As the issue raised in the above 29 complaints is identical therefore, all cases are being disposed of through single order.

1. The instant complaint was referred to the Secretary, Revenue Division for comments in terms of Section 10(4) of the FTO Ordinance, read with Section 9(1) of the Federal Ombudsmen Institutional Reforms Act, 2013. In response thereto, Chief Commissioner RTO Peshawar forwarded comments vide letter dated 17.03.2022, reproduced as under:

"the complainant is a lecturer, hired by Govt. Post graduate College, Bannu. The payment made to the complainant falls under the head services and tax under Section 153(1)(b) is deductible under Division III, of the 1st Schedule to the Income Tax Ordinance, 2001 @ 10% of the gross amount payable and when the recipient is non filer/not appearing on active taxpayer's list, then the tax required to be deducted or collection shall be increased by 100% of the rate specified in accordance with the rules in Tenth Schedule of the Income Tax Ordinance, 2001."

EXAMINATION OF RECORD AND FINDINGS:

1. Under section 153(1)(b) of Income Tax Ordinance, 2001, income tax is deducted at rate of 10% in case of filer and 20% in case of non-filer. The complainant has, however, agitated vide his application dated 16.01.2022, that after paying tax, he is not given any solid proof and slip where it is mentioned that he has paid 20% income tax out of this. The complainant has prayed that his salary is below the taxable limits for salaried persons.

2. Contention of the department has been examined in the light of submissions by the complainant as above and relevant legal provisions i.e. sections 12 and 149 of the Income Tax Ordinance, 2001. Resulting position is as under:

Section 12. Salary- (2) Salary means any amount received by an employee from any employment, whether of a revenue or capital nature, including-

(a) any pay, wages or other remuneration provided to an employee, including leave pay, payment in lieu of leave, overtime payment, bonus, commission, fees, gratuity or work condition supplements (such as for unpleasant or dangerous working conditions).

Section 149. Salary.----(1) Every [person responsible for] paying salary to an employee shall, at the time of payment deduct tax from the amount paid at the employee's average rate of tax computed at the rates specified in Division I of Part I of the First Schedule on the estimated income of the employee chargeable under the head "Salary".

1. Examination of FBR's reply dated 09.02.2022, has been examined in depth but found deficient due to the following:

i. Legal provisions governing "Salary Taxation" i.e. Sections 12 and 149 of Income Tax Ordinance, 2001 neither obligate any valid contract of employment, nor place any other condition for a case to be treated as a salaried case except for employer-employee equation based on "Master-Servant Relationship". This criterion forms the basic parameter for any employment. Regular / Adhoc / Temporary / Hired / Daily Wages, all are the different shades and forms of employment and law doesn't create any distinction among all the above forms.

ii. While law treats hired employee's wages at par with PAY, while defining salary, how hired lecturer's salary can be excluded from the ambit of salary taxation?

In view of above FBR's treatment of the instant cases under section 153(1)(b) of the Ordinance is against the dictates of law and excessive tax deductions from the pay / wages of a hired employee of educational institution tantamount to maladministration in terms of FTO Ordinance, 2000.

1. This office has already issued recommendations in a similar Complaint No. 2538/ISB/1T/2021 filed by an employee of Pakistan Broadcasting Corporations, wherein during Investigation and Review proceedings, the FBR conceding the wrong being done in such cases has not only implemented the recommendations rather widely circulated the same among all concerned.

RECOMMENDATIONS:

1. FBR is directed to:-

2022 P T D (Trib.) 1202

[Federal Tax Ombudsman]

Before Dr. Asif Mahmood Jah, Federal Tax Ombudsman

JEHANZEB KHAN

Versus

SECRETARY, REVENUE DIVISION, ISLAMABAD

Complaint No.0402/SKT/IT of 2022, decided on 15th April, 2022.

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

----S.10---Redressal of grievances---Procedure and evidence---Scope---Complainant filed a complaint regarding probe and investigation of tax evasion and un-disclosed assets of a person---Chief Commissioner Inland Revenue, in response to notices, submitted reply wherein it was stated that the complainee's registration profile showed him registered with another regional tax office---Chief Commissioner Inland Revenue sent letter to the Secretary Inland Revenue (Jurisdiction) followed by reminders for change of jurisdiction but to no avail---Office of the Federal Tax Ombudsman also sent a letter to the Secretary Inland Revenue (Jurisdiction) but that also remained unattended and the jurisdiction was not transferred---Federal Tax Ombudsman held that inordinate delay on the part of Secretary Inland Revenue (Jurisdiction) in changing the jurisdiction of the complainee despite repeated letters, followed by reminders, was tantamount to maladministration in terms of S.2(3)(ii) of the Federal Tax Ombudsman Ordinance, 2000---Federal Board of Revenue was directed to call for explanation from Secretary Inland Revenue (Jurisdiction) for his carelessness; to direct the later to transfer the jurisdiction and direct the Chief Commissioner to ensure that complaint be decided on merit after the jurisdiction was transferred.

Mansoor Ahmad Bajwa, Advisor Dealing Officer.

Muhammad Tanvir Akhtar, Advisor-Appraisal.

Nemo for Authorized Representative.

2022 P T D (Trib.) 1297

[Federal Tax Ombudsman]

Before Dr. Asif Mahmood Jah, Federal Tax Ombudsman

ALAMGIR KHAN FEROZE

Versus

The SECRETARY, REVENUE DIVISION, ISLAMABAD

Complaint Nos.1046 and 1047/MLN/IT of 2022, decided on 23rd May, 2022.

Income Tax Ordinance (XLIX of 2001)---

----Ss. 124, 122(5A), 170(3), 140 & 111---Establishment of the Office of Federal Tax Ombudsman (XXXV of 2000), S.2(3)---Maladministration---Assessment giving effect to an order---Scope---Taxpayer complained against non-issuance of refund---Facts of the case were that during pendency of refund application, statutory proceedings under S.122(5A) of Income Tax Ordinance, 2000, were initiated and an ex parte order was passed by Additional Commissioner---Order was challenged in appeal before Commissioner (Appeals)---Commissioner (Appeals) upheld the Additional Commissioner's order---Department, without consent of the taxpayer, adjusted refund without passing any order under S.170(3) of the Income Tax Ordinance, 2001, and also recovered certain amount under S.140 of the Income Tax Ordinance, 2001---Taxpayer preferred appeal before the Appellate Tribunal, wherein addition under S.111, Income Tax Ordinance, 2001 was deleted and the department was directed to allow credit of sum recovered as well as vacated the orders of two authorities below and remanded the matter to Additional Commissioner for decision afresh---Department filed reference before the High Court, which was dismissed---Taxpayer, in terms of S. 124, approached the department to give effect to the order passed by Appellate Tribunal but failed to get any response---Held; neglect, inattention and delay in giving effect to the order of Appellate Tribunal consequent to High Court's order was tantamount to maladministration---Commissioner was directed to give effect to the order passed by Appellate Tribunal within 30 days and the CCIR (Chief Commissioner Inland Revenue) was directed to hold a fact finding inquiry as to who was responsible for the neglect and take appropriate action.

Dr. Khalil Ahmad, Advisor for Dealing Officer.

Muhammad Tanvir Akhtar, Advisor Appraisal.

Muhammad Akram Khan, Authorized Representative.

2022 P T D (Trib.) 85

[Inland Revenue Appellate Tribunal]

Before Justice (Retd.) Nadeem Azhar Siddiqui, Chairman

Messer FAIZAN AND BROTHERS

Versus

ASSISTANT COMMISSIONER, SRB, HYDERABAD

Appeal No.AT-08 of 2019, decided on 30th September, 2019.

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

----S.24B---Compulsory registration---Scope---Appellant, being a distributer of goods, was compulsorily registered under S. 24B of Sindh Sales Tax on Services Act, 2011---Validity---Appellant, under an agreement of distribution, purchased goods and supplied to wholesalers and retailers within the area assigned to it as per the instructions and rate fixed by its principal---Such an activity was covered by tariff heading 9845.0000 (supply chain management or distribution (including delivery) services)---Appeal was dismissed.

Messrs JSN Traders, Hyderabad v. Assistant Commissioner, SRB, Karachi (Appeal No.AT-61 of 2018) rel.

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

----Ss.24 & 24B---Registration---Compulsory registration---Scope---Section 24 of the Sindh Sales Tax on Services Act, 2011 provides that registration shall be required for all persons who are residents and provide services, listed in the Second Schedule, from their registered office or place of business in the province---Section 24B, Sindh Sales Tax on Services Act, 2011 provides that if a person is required to be registered under the Act and that person has not applied for registration, the officer of the Provincial Board of Revenue shall, after such enquiry as he may deem fit and after notice, register the person through an order to be issued in writing and such person shall be deemed to have been registered from the date he became liable to registration.

Ghazanfar Siddiqui, Nasir Altaf, ACMA and Imran Zaidi FCA for Appellant.

Kaleemullah, AC-DR and Nabi Bux, AC for Respondent.

2022 P T D (Trib.) 97

[Inland Revenue Appellate Tribunal]

Before M.M. Akram, Judicial Member and Wajid Akram, Accountant Member

COMMISSIONER INLAND REVENUE, ZONE-II, LARGE TAXPAYER UNIT (LTU), LAHORE

Versus

Messrs PEPSI COLA INTERNATIONAL (PVT.) LTD.

I.T.A. No.253/LB of 2014, decided on 30th June, 2020.

Income Tax Ordinance (XLIX of 2001)---

----S.122(5A)---Reassessment---Principle---Limitation---Taxpayer was aggrieved of reassessment made by Assessing Officer beyond time limitation---Validity---Held, it was not open for a tax authority to pick any item of expense from return of taxpayer on the basis of guesswork, seek explanation from taxpayer or call records and then frame an opinion to amend assessment under S.122(5A) of Income Tax Ordinance, 2001---Factum of erroneousness and loss of revenue must be afloat from records beyond any shadow of doubt or ambiguity in order to make a resort to S.122(5A) of Income Tax Ordinance, 2001--- Assumption of jurisdiction by Assessing Officer was incorrect---Taxpayer furnished its return of income for tax year 2007 on 30-09-2009 i.e. prior to amendment in S.122(2) vide Finance Act, 2009, through which limitation to complete assessment was extended from five years to six years---Deemed assessment was required to be amended up to 10-9-2012 whereas it was amended on 30-6-2013 and the same was barred by time limitation as provided under law---High Court set aside amended assessment order as the same was barred by time---Appeal was dismissed accordingly.

Additional Commissioner Inland Revenue, Audit Range, Zone-I and others v. Messrs Eden Builders Limited and others 2018 PTD 1474; Commissioner of Income Tax v. Cochin Refineries Ltd. (1996) ITR 220 ITR 398; New India Life Assurance Co. Ltd. v. CIT, (1957) 31 ITR 844; Moulana Atta Ur Rehman v. Al-Hajj Sardar Umer Farooq and others PLD 2008 SC 663; Nirmala Bala Ghosh v. Balai Chand Ghosh, AIR 1965 SC 1874, 1884; CIT v. Mahalakshmi Textile Mills Ltd., (1967) 166 ITR 710 (SC); National Thermal Power Co. Ltd. v. Commissioner of Income Tax, (1998) 229 ITR 383 (SC); Sang-ram Singh v. Election Tribunal AIR 1955 SC 425; Pir Sabir Shah v. Shah Muhammad Khan PLD 1995 SC 66; CIT v. Ghazi Barotha Construction 2004 PTD 1994; Messrs Squib Pakistan (Pvt.) Ltd. v. Commissioner of Income Tax and other 2017 PTD 1303; Chairman, Nab v. Muhammad Usman and others PLD 2018 SC 28 and Caltex Oil (Pakistan) Ltd. v. Collector, Central Excise and Sales Tax and others 2005 PTD 480 ref.

None for Appellant.

Maqsood Ahmed, FCA and Arshad Javed, FCA for Respondents.

2022 P T D (Trib.) 187

[Inland Revenue Appellate Tribunal]

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

Messrs SHAHPOSH GARMENTS, GUJRANWALA

Versus

The CIR ZONE-II, RTO, GUJRANWALA

I.T.A. No.1015/LB of 2021, decided on 22nd June, 2021.

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

----S.111---Unexplained income or assets---Scope---Appellant assailed order passed by department as well as Commissioner (Appeals) whereby the amount of gross sales was held to be its income and was taxed accordingly---Validity---Appellant had rightly availed Amnesty Scheme under the Voluntary Declaration of Domestic Assets Ordinance, 2018, whereunder, its S.10 at its Serial No. 1, had declared Undisclosed Income after deducting all sort of business expenditures permissible under law and had correctly discharged its liability as such, no interference was called for in the declaration---Impugned liability was raised by taxing the total gross sales instead of imposing tax on net profits earned from the business after defraying all such business expenditures incurred thereon as permissible under law, act on the part of Inland Revenue Officer was illegal, unlawful and unfounded particularly when the expenses were duly documented for which books of accounts were maintained as per requisitions of law---Impugned notices and consequent orders were vacated---Appeal was allowed.

Messrs Al-Hilal Motors Stores and other's case 2004 PTD 868 ref.

Messrs Nawab Karyana Store, Gujrat v. The Commissioner Inland Revenue, Sialkot 2021 PTD 1223 rel.

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

----Ss.18 & 20---Income from business---Deductions in computing income chargeable under the head "income from business"---Scope---Liability as to tax on income from business must be created on the mechanism as enshrined in the Part-IV, Division-I and Division-II of the Income Tax Ordinance, 2001, whereunder, Ss.18 & 20 of the Income Tax Ordinance, 2001, when read in conjunction with each other facilities deductions of business expenditures incurred on income earned and it is the net profit which has to be taxed and not the gross sales deeming them as undisclosed income.

(c) Income tax---

----Undisclosed income---Scope---Term "undisclosed income" means any income which was chargeable to tax but was not so-charged.

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

----S.111---Unexplained income or assets---Scope---Scope of S.111(1)(d) of the Income Tax Ordinance, 2001, is very definite for the persons allegedly concealing income or furnishing inaccurate particulars of income that is (i) suppression of any production, sales or any amount chargeable to tax or (ii) the suppression any items of receipts liable to tax as a whole or in part---Production and sales are the particulars of income but not income by itself and which if found inaccurate cannot be taxed as income---Provisions of said section never offer suppressed sales to be treated as undisclosed income instead income from business does allow deductions of all business expenditures incurred on its carry taxing net profits instead of total gross sales.

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

----Ss.18 & 20---Income from business---Deductions in computing income chargeable under the head "income from business"---Scope---Gross sales of a person cannot be treated as total income chargeable to tax instead it is the net profit earned from the business which has to be taxed.

(f) Constitution of Pakistan---

----Art.13---Protection against double punishment and self-incrimination---Scope---Issuance of a notice regarding the same taxed amounts tantamount to double jeopardy which cannot be given legal credence but also offends and defies the fundamental rights set out in Art.13 of the Constitution, which provides that no person shall be prosecuted and punished for the same offence more than once---Doctrine of "double jeopardy" which corresponds to the principle of "Autre Fois Acquit and Autre Fois Convict" always prohibits the duplicate trial and duplicate punishment for the same offence.

2015 PTD 1839; 2017 SCMR 1006 and PLD 2005 SC 605 ref.

Messrs Seven-up Bottling Company (Pvt.) Ltd. v. Lahore Development Authority (L.D.A.) Lahore through Managing Director 2003 CLC 513 rel.

Abuzar Hussain for Petitioner.

Mrs. Kiran Maqsood, D.R. for Respondent.

2022 P T D (Trib.) 207

[Inland Revenue Appellate Tribunal]

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

Messrs MUKHTAR-UL-HAQ POWER LOOMS, TOBA TEK SINGH

Versus

The COMMISSIONER INLAND REVENUE (APPEALS), RTO., FAISALABAD

S.T.A. No.68/LB of 2020, decided on 23rd February, 2021.

Sales Tax Act (VII of 1990)---

----Ss.3 & 11---Sales tax---Assessment of tax and recovery of tax not levied or short levied or erroneously refunded---Sales tax levied on the basis of income tax returns---Scope---Appellant was engaged in manufacturing and supply of greige cloth on job basis against conversion/weaving charges---During scrutiny of electricity bills and income tax returns, it was observed that the appellant was not only liable to be registered but was also liable to pay sales tax on the basis of sales declared in the income tax returns for the financial years 2014, 2015, 2016 and 2017---Resultantly, a show cause notice was issued and the impugned orders were passed against the appellant---Validity---Income tax record could be looked into for the purposes of conducting investigations and if any difference was detected by the detecting agency then it should be substantiated with solid and convincing material evidences as records relating to income tax could not be made basis for creating sales tax liability against any registered person without any other corroborating material evidence---Documents relating to the income tax could not be taken as a valid evidence for the purposes of sales tax and the reason for this was obvious as the income tax was always levied and collected on the basis of income but the sales tax is levied on the goods manufactured and sold by the manufacturer---Department had not produced any material to show that the amount reflected in the income tax returns was in anyway linked with the taxable supplies or with any taxable activities or represented an amount on account of any business activity---Impugned show-cause notice and consequent orders passed by the authorities below were set aside---Appeal was accepted.

PTCL 2014 CL 262; 1987 SCMR 1840; GST 2005 CL 73; 2005 PTD 72; 2007 PTD 47 and 2019 PTD (Trib.) 144 ref.

Messrs Siddique Enterprises, Faisalabad v. The CIR(A), Faisalabad and others 2013 PTD (Trib.) 2130 rel.

Khubaib Ahmad for Appellant.

Atif Bashir, (D.R.) for Respondent.

2022 P T D (Trib.) 325

[Inland Revenue Appellate Tribunal]

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

Messrs KARACHI PORT TRUST KARACHI

Versus

COMMISSIONER INLAND RE VENUE ZONE-III, LTU, KARACHI

M.A. (Rect.) No.1166/KB/2018 in I.T.A. No.53/KB/2015, decided on 5th March, 2019.

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

----S.221---Rectification of mistake---Pendency of Reference before High Court against the same order---Effect---Appellant sought rectification of order passed by the Tribunal---Appellant had also filed an Income Tax Reference Application against the same order of the Tribunal before the High Court---Validity---Appellant could not have the best of both worlds, as seeking relief simultaneously at two Appellate forums was not justified---Issues highlighted in the miscellaneous application did not fall within the limited scope of mistake apparent from the record as envisaged under S. 221 of the Income Tax Ordinance, 2001---Re-considering the issues would tantamount to review of the appeal order and not rectification of mistake apparent from record as the controversies which devolved on a process of arguments and counter arguments for their resolution clearly fell outside the purview of rectification---Application was dismissed being devoid of any merit.

2003 PTD (Trib.) 2683 rel.

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

----S.221---Rectification of mistake---Review jurisdiction---Scope---Resolution of once decided issue tantamounts to "review", which is not allowed to the Tribunal and falls under the domain of Superior Courts.

C.I.T. v. Abdul Ghani 2007 PTD 967 rel.

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

----S.221---Rectification of mistake---Scope---Scope of rectification is limited to the extent of rectification of an "error" or a "mistake" apparent from record---Provisions, as envisaged under S. 221 of the Income Tax Ordinance, 2001, cannot be invoked as an alternative or substitute of an appeal, revision or a review.

C.I.T. v. Messrs National Foods 1992 SCMR 687; Islamuddin v. I.T.O. 2000 PTD 306 and Maw v. Muhammad Rafique 2003 SCMR 1401 ref.

CIT v. Shadman Cotton Mills Ltd. 2008 PTD 253 rel.

Asif Haroon, FCA for Appellant.

Muhammad Akbar Mahar, DR (LTU) for Respondent.

2022 P T D (Trib.) 368

[Inland Revenue Appellate Tribunal]

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

Messrs SALEEM BATTERY CENTER, SARGODHA ROAD, FAISALABAD

Versus

The COMMISSIONER INLAND REVENUE (APPEALS), RTO, FAISALABAD

S.T.A. No.218/LB/2020, decided on 2nd February, 2021.

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

----Ss.3 & 11---Sales Tax Special Procedure Rules, 2007, Rr. 58S & 58T---Sales tax---Assessment of tax and recovery of tax not levied or short levied or erroneously refunded---Special procedure for payment of sales tax on specified goods---Mode, manner and rate applicable for payment of extra amount of tax---Scope---Appellant was a registered person running its business as an authorized distributor of storage batteries---Inland Revenue Officer, on selection of audit by the FBR under S.72B of the Sales Tax Act, 1990, conducted audit of appellant's sales tax records under S.25 of the Act which resulted in certain discrepancies on the basis of which a show-cause notice was issued and ultimately impugned orders were passed---Validity---Appellant was engaged in business of Storage Batteries falling at Sr. No. 7 of the Table provided in Chapter XIII of the Sales Tax Special Procedure Rules, 2007 and had to pay sales tax at the rate of 17% along with 2% extra sales tax at the time of purchases and its subsequent supplies were exempt from 'payment' of sales tax under sub-rule (5) of R.58T of the Sales Tax Special Procedure Rules, 2007---Appeal was accepted, impugned show-cause notice and consequent orders of both the authorities below being illegal and unlawful were set aside.

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

----Ss.7 & 73---Determination of tax liability---Certain transactions not admissible---Scope---Registered person can claim 'input tax adjustment' against 'output tax' in accordance with provisions of S.7 read with S.73 of the Sales Tax Act, 1990.

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

----Ss.33 & 34---Offences and penalties---Default surcharge---Establishment of mens rea---Scope---Initial onus of proving mens rea in the context of penalty for late filing of returns is on the department---Imposing of penalties in case of committing default in payment of tax or late filing of sales tax returns is not automatic and some determination with regard to element of mens rea is required and the presence of mens rea is essential for imposition of any penalty under the law---Mens rea in short denoted the state of mind that would compel a person to deviate from the law or to commit an offence which also encompassed recklessness within its ambit---Concept of mens rea basically revolved around the state of mind and the conduct of the person---Necessary to establish mens rea before levying penalty and imposition of penalty was a quasi-criminal act.

Khubaib Ahmad for Appellant.

Atif Bashir, (DR) for Respondent.

2022 P T D (Trib.) 392

[Inland Revenue Appellate Tribunal]

Before Nasir Mahmud, Judicial Member and Anwaar ul Haque, Accountant Member

UNITED FINISHING MILLS LIMITED

Versus

COMMISSIONER INLAND REVENUE (APPEAL-II), LAHORE and another

S.T.A. No.321/LB/2014, decided on 3rd August, 2021.

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

----Ss.11 & 8---Assessment of tax and recovery of tax not levied or short levied or erroneously refunded---Tax credit not allowed---Retrospective application of Computerized Risk Based Evaluation of Sales Tax (CREST)---Scope---Computerized Risk Based Evaluation of Sales Tax was enacted with effect from June, 2013---Tax period for which the appellant was charged pertained to July, 2011 to February, 2013, when CREST forming part of show-cause notice was non-existent---Appellant could not be subjected to CREST retrospectively, specifically when the provision was prospective---Assessment order and the order passed by Commissioner Inland Revenue (Appeals) was set aside---Appeal was accepted.

W.Ps. Nos.30643 and 30645 of 2013 and S.T.A. No.284/LB/2012 ref.

1996 SCMR 83 and Mohammad Mansha v. IDBP 2020 SCMR 1069 rel.

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

----S.45-B---Appeal---Remand---Scope---Bare reading of S. 45B(3) of Sales Tax Act, 1990, establishes that the Commissioner Inland Revenue (Appeals) in exercise of power so vested in him has no power to remand the case---Commissioner Inland Revenue (Appeals) has no statutory backing clothing him with jurisdiction to pass order of remand and go beyond the scope of powers vested in him under S. 45B of Sales Tax Act, 1990.

Commissioner Inland Revenue v. Messrs Supreme Tech. International (S.T.R No.12 of 2012) rel.

(c) Maxim---

----Expressum facit cessare tacitum---Meaning---What is expressed makes what is implied to cease.

PLD 1993 SC 473 rel.

(d) Administration of justice---

----What cannot be achieved directly cannot be achieved indirectly.

PLD 1993 SC 473 rel.

Abuzar Hussain for Appellant.

Husnain Ahmad Hali, DR for Respondents.

2022 P T D (Trib.) 420

[Inland Revenue Appellate Tribunal]

Before Zahid Sikandar, Judicial Member

MANZOOR AHMAD

Versus

COMMISSIONER INLAND REVENUE, ZONE II, RTO, FAISALABAD

I.T.A. No.314/LB of 2015, decided on 20th December, 2021.

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

----S.122---Amendment of assessments---Failure to confront specific provision of law in notice---Scope---Taxpayer assailed order passed by assessing officer whereby he had amended the deemed assessment order and the dismissal of his appeal---Validity---Show-cause notice issued to the taxpayer did not reflect the addition proposed under S.21(m) rather the allegations contained in the notice confronted to the taxpayer proposed the addition under S. 111(1)(b)---Non-mentioning of S. 21(m) and the proposed addition under the said provision could not be condoned as it tantamounted to denial of statutory right of the taxpayer---If the taxpayer did not know as to under what provision of law the addition in the income was going to be made, he would not be able to come up with his view to the legality of jurisdiction and would not be able to take objections against the proposed action---Order passed by the officers below suffered from legal infirmity and were not sustainable in the eyes of law---Second appeal was allowed.

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

----S. 122---Amendment of assessments---Failure to confront specific provision of law in notice---Scope---It is a right of the taxpayer to know as to under what provision of law the officer is intended to make assessment so that he may get an opportunity to defend the proposed action accordingly.

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

----S.122---Amendment of assessments---Failure to confront specific provision of law in notice---Scope---Without specifically confronting the specific provision of law and without issuance of any notice in respect of the proposed addition/action, the proceedings initiated are defective and nullity in the eyes of law.

Raja Fida Hussain v. Deputy Director 2021 PTD 1710 rel.

Sohail Ibn e Siraj for Appellant.

Nemo for Respondent.

2022 P T D (Trib.) 447

[Inland Revenue Appellate Tribunal]

Before Mrs. Ambreen Aslam, Judicial Member

Messrs ENVICRETE LIMITED, KARACHI

Versus

The COMMISSIONER INLAND REVENUE, (WHT) ZONE, RTO-I, KARACHI

S.T.A. No.528/KB of 2015, decided on 27th November, 2019.

Sales Tax Act (VII of 1990)---

----S.11---Sales Tax Special Procedure (Withholding) Rules, 2007, R.2---SRO No.897(I)/2013, dated, 4-10-2013---Assessment of tax and recovery of tax nor levied or short levied or erroneously refunded---Responsibility of withholding agent---Scope---Appellant assailed order passed by department whereby it was ordered to pay short-levied amount of withholding tax---Contention of appellant was that Commissioner (Appeals) erred by levying withholding tax at the rate of 17% instead of 1%---Validity---Appellant was a withholding agent by virtue of SRO No.897(I)/2013, dated, 4-10-2013---Before issuance of said SRO, the rate of withholding tax was 17% and from 4-10-2013 the withholding rate was 1%---Appellant was required to withhold the tax at the rate of 17% before 4-10-2013 and after 4-10-2013 withholding tax was reduced to 1%, in case of unregistered person---Impugned order did not require interference---Appeal was disposed of accordingly.

Faiz Ahmed for Appellant.

Ali Hassan, D.R. for Respondent.

2022 P T D (Trib.) 524

[Inland Revenue Appellate Tribunal]

Before Mrs. Seema Imran, Judicial Member and Saifullah Khan, Accountant Member

Messrs PRIME AGENCIES

Versus

The COMMISSIONER OF INLAND REVENUE, ZONE-III, RTO-III, KARACHI

I.T.As. Nos.971, 972 and 973 of 2018, decided on 12th February, 2019.

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

----Ss. 122, 111, 2(28A) & 177---Amendment of assessment---Unexplained income and assets---Imputable income---Audit---"Definite information" non-availability of---Effect---Appellant/taxpayer being an exporter paid tax on exports under Final Tax Regime (FTR) and filed wealth statements---Deputy Commissioner Inland Revenue (DCIR) observed that the appellant had claimed higher income in wealth reconciliations than the "imputable income" worked back on the basis of tax on exports---Deputy Commissioner Inland Revenue worked out 'imputable income' based on tax collected under FTR and arrived at impugned additions, treating the same as "income from unexplained sources" assessable under S.111, Income Tax Ordinance, 2001---Deputy Commissioner Inland Revenue directed the appellant to produce books of accounts and documents and on its failure passed the impugned orders---Validity---Expression 'imputable income' as used in S.2(28A), Income Tax Ordinance, 2001, could not have been applied to the whole of the Ordinance---"Definite information" was not available with the DCIR and the very jurisdiction was exercised without first satisfying the pre-requisite of subsection (5) of S.122, Income Tax Ordinance, 2001---Alleged 'imputable income' already declared by the taxpayer in the wealth reconciliation statements was not a "definite information"---Commissioner (Appeals) had erred in ignoring the fact that the books of accounts could only be produced under S.177 of the Income Tax Ordinance, 2001, whereas appellant's case was not selected for audit---No addition under S.111(1)(b), Income Tax Ordinance, 2001, was warranted as no specific notice was issued in that regard---Impugned orders were annulled and the appeals were allowed.

1997 PTD 1555; Messrs Ellcot Spinning Mills's case 2008 PTD 1401; 2016 PTD 1667; Commissioner Inland Revenue v. Messrs Khan CNG Filling Station 2017 PTD 1731; 2017 PTD 1839; Commissioner Inland Revenue Sukkur v. Ranipur CNG Station 2012 PTD 790; 2015 PTD (Trib.) 1242; 2015 PTD (Trib.) 2042 and 2010 PTD 704 ref.

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

----S.122---Amendment of assessment---"Definite information"---Scope---Availability of 'definite information' as envisaged in subsection (5) read with subsection (9) of S. 122 is an essential pre-requisite to amend an order under S.122, Income Tax Ordinance, 2001.

Syed Riazuddin and Vashno Raja Qavi for Appellant.

Muhammad Aslam Jamro, DR for Respondent.

2022 P T D (Trib.) 547

[Inland Revenue Appellate Tribunal]

Before Mian Tauqeer Aslam, Judicial Member and Dr. Tariq Mahmood Khan, Accountant Member

TOURSISM DEVELOPMENT CORPORATION OF PUNJAB, LAHORE

Versus

COMMISSIONER INLAND REVENUE, ZONE-III, CRTO, LAHORE

I.T.As. Nos. 2853/LB and 4153/LB of 2004, decided on 16th March, 2020.

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

----Ss.161 & 205---Income Tax Ordinance (XXXI of 1979) [since repealed], Ss.50 & 156---Failure to pay tax collected or deducted---Deduction of tax at source---Rectification of mistake---Scope---Assessing officer worked out tax liability under Ss. 161 & 205 of Income Tax Ordinance, 2001, for its failure to deduct or deposit withholding tax---Commissioner of Inland Revenue (CIR(A)) observed that the assessment for the year 1996-97 was completed on 28-06-1997, that the assessment for the year 1999-00 was completed on 29-03-2001, that notice for the recovery of tax was issued on 15-12-2003; that the limitation as prescribed under S.156 of Income Tax Ordinance, 1979, for the assessment year 1996-97 had expired, however, confirmed the order of assessing officer for the year 1999-00---Appellate Tribunal declared the order passed for the assessment year 1999-00 to be barred by limitation on the ground that the period of limitation had to be calculated from the end of financial year and not from the date of assessment order---High Court remanded the case to the Tribunal for determination in each case regarding the reasonableness of the period within which the notices were issued and for determination whether the notices ought to be sustained on the touchstone of having been issued within a reasonable period of time or not---Validity---Assessing officer's only question was to show tax deposit challans---Taxpayer did not provide the challans---No records were being called from the taxpayer for examination---Reasonableness of time to assess or determine the amount of default on examination of documents or record was not the issue in hand, hence question of reasonableness of time or time limiting factor did not arise---No time limitation could be prescribed for recovery under S.161, Income Tax Ordinance, 2001, of withholding tax default which included a default committed under S.50 of the Income Tax Ordinance, 1979---Order passed by CIR (A) was vacated and the recovery order under S.161, Income Tax Ordinance, 2001, was upheld.

Commissioner of Inland Revenue v. Pakistan Mobile Communication (Pvt.) Ltd. (I.T.Rs. Nos.44 and 45 of 2007) and Messrs Pakistan Mobile Communication (Pvt.) Ltd. v. The Commissioner of Inland Revenue (Civil Appeals Nos 1901-1092/2009) ref.

Messrs Pakistan Mobile Communication (Pvt.) Ltd. v. The Commissioner of Inland Revenue (Civil Appeals Nos 1901-1092/2009); Messrs Habib Bank Limited v. FOP 2013 PTD 1659; Commissioner of Income-Tax Zone-C, Karachi v. Messrs Agha's Super Market, Karachi 2003 PTD 1571; Commissioner of Income Tax v. Kamran Model Factory 2002 PTD 14 and Maple Leaf Cement Factory (Pvt.) Ltd. v. FBR 2016 PTD 2074 rel.

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

----Ss.161 & 205---Income Tax Ordinance (XXXI of 1979) [since repealed], Ss.50 & 156---Failure to pay tax collected or deducted---Deduction of tax at source---Rectification of mistake---Default surcharge, determination of---Scope---Assessing officer worked out tax liability under Ss.161 & 205 of Income Tax Ordinance, 2001, for its failure to deduct or deposit withholding tax---Assessment for the year 1996-97 was completed on 28-06-1997, assessment for the year 1999-00 was completed on 29-03-2001, additional tax was charged upto 31-12-2002 while the order under S.161, Income Tax Ordinance, 2001, was passed on 01-01-2004---Validity---Assessing officer at the relevant time had all the information with him regarding the expenses but he had failed to use it then to determine the default of withholding tax and to recover it by passing appropriate order under S.52 of the Income Tax Ordinance, 1979, which was applicable at the relevant time---Charge of additional tax for the delay over several years was not justified especially when much of the delay was attributable to the department---Appellate Tribunal declared that the reasonable period of default would be taken to end on the dates of 28-06-1997 for the tax year 1996-97 and 29-03-2001 for assessment year 1999-00 being date on which assessment under S.62 of Income Tax Ordinance, 1979, was completed and that the rates applicable during the default period under S.86 of the Income Tax Ordinance, 1979, would be applied to determine the additional tax---Appeal was allowed accordingly.

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

----S.205---Default surcharge---Scope---Each and every case has to be decided on its own merits as to whether the evasion of payment of tax was willful or mala fide, decision of which would depend upon the question of recovery of additional tax.

Messrs D.G. Khan Cement Company Ltd. and others v. The Federation of Pakistan and others 2004 SCMR 456 = 2004 PTD 1179 ref.

Iqbal Hashmi and Qadeer Ahmed for Appellant (in I.T.A. No.2853/LB of 2004).

Kashif Azhar, DR for Respondent (in I.T.A. No.2853/LB of 2004).

Kashif Azhar, DR for Appellant (in I.T.A. No.4153/LB of 2004).

Iqbal Hashmi and Qadeer Ahmad for Respondent (in I.T.A. No.4153/LB of 2004).

2022 P T D (Trib.) 599

[Inland Revenue Appellate Tribunal]

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

Messrs INDUS PENCIL INDUSTRIES (PVT.) LTD.

Versus

The COMMISSIONER INLAND REVENUE, ZONE-I, LTU-II KARACHI

I.T.A. No.1805/KB of 2018, decided on 20th December, 2019.

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

----S.113---Minimum tax on the income of certain persons---Scope---Appellant/taxpayer adjusted tax under Cl. (c) of subsection (2) of S.113 of Income Tax Ordinance, 2001, for two years---Deputy Commissioner Inland Revenue (DCIR) adjusted such carried forward excess amount from the tax liability and in course of such adjustment he also adjusted levy of "Workers' Welfare Fund"---Additional Deputy Commissioner Inland Revenue (ADCIR) treated such adjustment as erroneous, made adjustment of tax chargeable under Part-I, Division-II of the 1st Schedule to the Income Tax Ordinance, 2001 and reduced the same from the minimum tax chargeable under S.113, Income Tax Ordinance, 2001---Validity---Held; orders of departmental authorities were vacated to the extent of adjustment of carried forward of excess amount available to the appellant under Cl.(c) of subsection (2) of S.113, Income Tax Ordinance, 2001 for the reason that Cl. (c) provided for carrying forward of excess amount of tax paid in terms of S.113(1), Income Tax Ordinance, 2001, for adjustment against tax liability under Part I of 1st Schedule for the subsequent year---Said adjustment was not restricted to the difference between minimum tax liability and normal tax liability---Appellant had conceded that adjustment of levy of Workers' Welfare Fund from such available excess amount was not correct---Appeal was disposed of accordingly.

Messrs Indus Benson & Co. v. Commissioner Income Tax 2002 PTD 2169; Collector of Sales Tax v. Abbot Laboratories Pakistan (Pvt.) Ltd. 2010 PTD 592; CIT Karachi v. W.J. Towel Agencies 2006 PTD 1709; Pakistan Petroleum Ltd. v. CIT 2009 PTD 662; Federation of Pakistan v. Zeal Pak Cement Factory Limited 1985 SCMR 1968 and Messrs Hirjina & Co. Pakistan Ltd. Karachi v. Commissioner Sales Tax 1971 SCMR 128 ref.

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

----S.113---Minimum tax on the income of certain persons---Scope---Clause (a) of subsection (2) of S.113, Income Tax Ordinance, 2001, provides that the aggregate of the person's turnover as defined in subsection (3) for the tax year shall be treated as the income of the person per year chargeable to tax---Clause (b) of subsection (2) of said section provides that the person shall pay as income tax for the tax year (instead of the actual tax payable under Income Tax Ordinance, 2001) an amount equal to one-half per cent of the person's turnover for the year---Clause (c) of subsection (2) provides that where tax paid under subsection (1) exceeds the actual tax payable under Part-I, Division-II of the First Schedule, the excess amount of tax paid shall be carried forward or adjusted against tax liability under the aforesaid part i.e. Part-I, Division-II of the First Schedule of the subsequent tax year---Proviso to clause (c) of subsection (2) provides that the amount under clause (c) shall be carried forward and adjusted against tax liability for five tax years immediately succeeding the tax year for which the amount was paid.

(c) Interpretation of statutes---

----Taxing statue---Scope---Courts are merely supposed to interpret the law as it is and have no authority to add, delete or subtract any word in or from the language used by the legislature and in a taxing statute, a tax on any person is to be levied by clear and unambiguous words and the expressions used in the charging sections are not to be stretched by any process of interpretation, as to bring a person within the tax net not falling under the clear and plain language of the statute.

Messrs Indus Benson & Co. v. Commissioner Income Tax 2002 PTD 2169; Collector of Sales Tax v. Abbot Laboratories Pakistan (Pvt.) Ltd. 2010 PTD 592; CIT Karachi v. W.J. Towel Agencies 2006 PTD 1709; Pakistan Petroleum Ltd. v. CIT 2009 PTD 662; Federation of Pakistan v. Zeal Pak Cement Factory Limited 1985 SCMR 1968 and Messrs Hirjina & Co. Pakistan Ltd. Karachi v. Commissioner Sales Tax 1971 SCMR 128 ref.

(d) Interpretation of statutes---

----Principles emerged from case-law on the subject, recorded elaborately.

(1888) 13 AC 294 ref.

(e) Interpretation of statutes---

----Principles Court can evolve for the interpretation of statues, detailed.

Sohail Jute Mills Ltd. v. Federation of Pakistan PLD 1991 SC 329 and Eli Lilly Pakistan (Pvt.) Limited's case 2009 SCMR 1279 = 2009 PTD 1392 ref.

Arshad Siraj for Appellant.

Laiq Zaman, D.R. for Respondent.

2022 P T D (Trib.) 645

[Inland Revenue Appellate Tribunal]

Before Sajjad Asghar Khokhar, Judicial Member and Dr. Shahid Siddiq, Accountant Member

Syed HASSAN ASKARI, RAJOVA SADAAT P.O. KHAS TEH, CHINIOT DISTRICT

Versus

COMMISSIONER INLAND REVENUE, RTO, FAISALABAD

I.T.As Nos.570/LB and 571/LB of 2021, decided on 4th February, 2022.

Income Tax Ordinance (XLIX of 2001)---

----S.111---Unexplained income or assets---Separate notice, non-issuance of---Effect---Department observed that the appellant had claimed exemption to the agricultural income but had not attached the proof of payment of agricultural income as required by proviso to S.111(1) of Income Tax Ordinance, 2001---Deemed assessments were declared to be erroneous in so far as prejudicial to the revenue---Show cause notice under S. 122(9) read with S. 122(5A) of Income Tax Ordinance, 2001, was issued---Deemed assessments were amended under S.122(5A) of Income Tax Ordinance, 2001---Appeal filed before Commissioner (Appeals) was rejected---Contention of appellant was that no separate notice under S. 111 of Income Tax Ordinance, 2001, was issued---Validity---Non-issuance of separate notice under S. 111 had caused prejudice to the taxpayer as substantial compliance of the provision of law was not made---Law had mandated issuance of separate notice/explanation within the contemplation of S. 111, therefore, the same could not be made redundant---Orders of authorities below were annulled---Appeals of the taxpayer were allowed.

2012 PTD 964 ref.

Commissioner Inland Revenue v. Faqir Hussain and another 2019 PTD 1828 fol.

Hamza Sheikh and Azhar Ehsan Sheikh for Appellants.

Syed Hassan Sardar, DR for Respondent.

2022 P T D (Trib.) 653

[Inland Revenue Appellate Tribunal]

Before Sajjad Asghar Khokhar, Judicial Member and Dr. Shahid Siddiq, Accountant Member

Syed HASSAN MURTAZA, POST OFFICE KHAS RAJOYA, CHINIOT, FAISALABAD

Versus

COMMISSIONER INLAND REVENUE, RTO, FAISALABAD

I.T.As. Nos.2059/LB and 2058/LB of 2021, decided on 4th February, 2022.

Income Tax Ordinance (XLIX of 2001)---

----S.111---Unexplained income or assets---Separate notice, non-issuance of---Effect---Show cause notice under S. 122(9) read with S.122(5A) of Income Tax Ordinance, 2001, was issued for wrongly claiming exemption to agricultural income tax and for non-explanation of accretion in wealth---Contention of appellant was that no separate notice under S.111 of Income Tax Ordinance, 2001, was issued---Validity---Non-issuance of separate notice under S.111 had caused prejudice to the taxpayer as substantial compliance of the provision of law was not made---Law had mandated issuance of separate notice/explanation within the contemplation of S.111, therefore, the same could not be made redundant---Orders of authorities below were annulled---Appeals of the taxpayer were allowed.

2012 PTD 964 ref.

Commissioner Inland Revenue v. Faqir Hussain and another 2019 PTD 1828 fol.

Hamza Sheikh and Azhar Ehsan Sheikh for Appellant.

Syed Hassan Sardar, DR for Respondent.

2022 P T D (Trib.) 662

[Inland Revenue Appellate Tribunal]

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

Messrs ISLAM SOAP INDUSTRIES (PVT.) LTD.

Versus

COMMISSIONER INLAND REVENUE, LTU, LAHORE

I.T.A. No.1219/LB of 2019, decided on 24th February, 2020.

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

----Ss.122, 177, 111 & 174(2)---Amendment of assessment---Audit---Unexplained income or assets---Record or evidence of transaction---Scope---Case of taxpayer was selected for audit under S.177 of the Income Tax Ordinance, 2001---Taxation officer issued show-cause notice under S.122(9), Income Tax Ordinance, 2001, for confrontation of amended assessment---Taxation officer found the reply of taxpayer to be unsatisfactory and amended the tax liability---Commissioner (Appeals) remanded the matter to the taxation officer for de-novo consideration---Validity---Case of taxpayer was selected for audit on 18-01-2018 and the amended assessment was framed on 28-09-2018, which was hit by limitation because the assessment was not completed within the same financial year---No justification was found in the order of the Commissioner (Appeals) for remanding the matter to the taxation officer---No notice under Ss.111 & 174(2) of Income Tax Ordinance, 2001 were issued to the taxpayer nor was it specifically confronted with proposed addition so that it could have offered some explanations in that regard---Additions made by the taxation officer under Ss.111 & 174(2) of Income Tax Ordinance, 2001 were without lawful authority---Order passed by Commissioner (Appeals) was vacated and the order under S.122(1) of the Income Tax Ordinance, 2001 was annulled---Appeal filed by taxpayer was allowed.

2018 SCMR 1328 = 2019 PTD 1828; 2009 PTD 281 and ITAs Nos.2135-37/LB/2015 ref.

2018 PTD 1444; 2004 PTD 1263 and 1997 PTD 1555 rel.

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

----S.127---Appeal to Commissioner (Appeals)---Duty of appellate forum---Scope---Appellate forum is not meant to fill in the legal lacuna in the orders appealed against but to see as to whether the order has been passed within the given parameters and framework of the law.

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

----Ss. 111 & 174(2)---Unexplained income or sources---Record or evidence of the transaction---Issuance of notice---Scope---Law mandates issuance of separate notices within the contemplation of Ss.111 & 174 of Income Tax Ordinance, 2001---Where an opportunity is provided to the taxpayer through specific notice, he is confronted with any of the eventuality as visualized under Ss. 111 & 174(2) of the Income Tax Ordinance, 2001 and if he fails to offer any explanation about nature and source of the amount credited or investment made or funds from which expenditure was made; only then, such addition can be made in the income of the taxpayer.

(d) Jurisdiction---

----Where an Act confers jurisdiction, it also impliedly grants the powers of doing all such acts or employing such means as are essentially necessary to its execution.

(e) Maxim---

----Audi alteram partem---Scope---Order without notice is void because an act performed in disregard of the provisions of the statute and any further action taken on the basis of such void order would also be vitiated and the defects at the initial stage would be incurable by a hearing at a subsequent stage.

M. Imran Rashid for Appellant.

Waqas Aslam, DR for Respondent.

2022 P T D (Trib.) 749

[Inland Revenue Appellate Tribunal]

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

Messrs TOWN CRIER (PVT.) LTD., SARGODHA ROAD, FAISALABAD

Versus

The COMMISSIONER INLAND REVENUE (APPEALS), RTO, FAISALABAD

S.T.A. No.216/LB of 2020, decided on 24th March, 2021.

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

----Ss.7, 21 & 73---Determination of tax liability---De-registration, blacklisting and suspension of registration---Certain transactions not admissible---Scope---Appellant had transacted all payments to his suppliers through Banking channel by complying with the mandatory provisions of S. 73 of the Sales Tax Act, 1990, which was the sole obligation on the buyer to ensure veracity of transactions in addition to verifying normal and operative status of his suppliers---Both the necessary conditions of verifying genuineness of suppliers from e-portal of FBR for its operative status and sufficient condition of making payments through Banking channel to ascertain the veracity of such transactions were complied with by appellant---Legislature had consciously given a right to a buyer in such cases to reclaim input tax so paid, where registration of the supplier was suspended or blacklisted, either as a refund or by way of adjustment---Subsequent blacklisting did not disentitle the buyer from his lawful right of input tax in respect of invoices issued when the supplier was a registered and active person unless those invoices were specifically declared fake and had direct nexus with blacklisting and admittedly, the invoices in question had no direct nexus with the subsequent blacklisting of the alleged suppliers---Appeal was accepted.

Commissioner Inland Revenue v. Messrs Tariq Poly Pack (Pvt.) Ltd. 2015 PTD 2256 rel.

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

----Ss. 7, 8 & 10---Determination of tax liability---Tax credit not allowed---Refund of input tax---Scope---Appellant was registered under the Sales Tax Act, 1990, as a manufacturer and was engaged in the business of textile printing material which were mainly supplied to exporters of garments---Appellant claimed input tax refund on the goods purchased with valid sales tax invoices and which were used for manufacturing of taxable activity, veracity of which was not questioned---Alleged goods/services were not directly in use for manufacturing or production of taxable goods yet they were indirectly used for the progress, promotion, advancement and enhancement of business activity and there was nothing emphatic in the Sales Tax Act, 1990, which strictly provided for direct use of any goods or services in manufacturing process of taxable goods for the purpose of claiming of input tax credit or adjustment thus, recovery of already refunded amount thereon was illegal and unjustified---Appeal was accepted.

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

----S.7---Determination of tax liability---Scope---Once a registered person established that the goods/services in question on which input tax had been paid were used or to be used "directly, indirectly or even remotely" for the purpose of 'taxable activity' or for the purpose of 'taxable supplies' made or to be made by that person, then the person became entitled to the deduction of the said input tax for the purpose from the output tax that was due from the person in respect of a particular tax period in terms of S.7 of the Sales Tax Act, 1990.

Collector of Customs Sales Tax and Central Excise and others v. Messrs Sanghar Sugar Mills Ltd., Karachi PLD 2007 SC 517 = 2007 PTD 1902 rel.

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

----Ss. 7 & 8---Determination of tax liability---Tax credit not allowed---Scope---Keyword used in S. 7 and S. 8(1)(a) of the Sales Tax Act, 1990, is "purpose" which means that input tax can be deducted on goods used for the purpose of taxable supplies---In other words, issue of adjustment of input tax is to be resolved with reference to the actual use of input in making of taxable supplies and criterion of integral part is not valid---Expression "purpose" has a very wide application and according to dictionary meaning the same refers to what something is supposed to be achieved.

Collector of Sales Tax v. Messrs Dhan Fibre Limited 2005 PTD 2012 rel.

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

----S.8---Tax credit not allowed---Scope---No condition of direct relationship of input goods to manufacturing of finished goods is provided in S. 8(1)(a) of Sales Tax Act, 1990.

Commissioner Inland Revenue, Faisalabad v. Messrs Chenab Board, Faisalabad 2014 PTD (Trib.) 558 rel.

Khubaib Ahmad for Appellant.

Atif Bashir, (DR) for Respondent.

2022 P T D (Trib.) 783

[Inland Revenue Appellate Tribunal]

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

Messrs AYAN TRADING COMPANY, FAISALABAD

Versus

COMMISSIONER INLAND REVENUE (APPEALS), RTO, FAISALABAD

S.T.A. No.1223/LB of 2019, decided on 24th March, 2021.

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

----S.11---Sales Tax Special Procedures Rules, 2007, Chap. XIII [Rr. 58S & 58T]---Special procedure for payment of extra sales tax on specified electric home appliances---Assessment of tax and recovery of tax not levied or short levied or erroneously refunded---Scope---Appellant was engaged in business of Storage Batteries falling at Sr.No.7 of the Table provided in Chap. XIII of the Sales Tax Special Procedures Rules, 2007; was conducting its business as an authorized distributor and was paying sales tax at the rate of 17% along with 2% extra sales tax at the time of purchases and its subsequent supplies were exempt from 'payment' of sales tax under sub-rule (5) of R.587 of the Chap. XIII (Special Procedure for Payment of Extra Sales Tax on Specified Good)---Appellant had paid extra tax on the items therefore, subsequent supplies made by it were exempt from 'payment' of sales tax under R.58-T(5) of the Sales Tax Special Procedures Rules, 2007, as payment of extra tax was considered as its final discharge of tax liability---Since, the appellant had duly fulfilled all prescribed requirements by discharging its sales tax liability on account of extra tax as a final discharge in terms of the Sales Tax Special Procedures Rules, 2007, as such, the appellant was not legally required to pay sales tax on supply of items---Appeal was accepted, impugned show cause notice and consequent orders of both the authorities below being illegal and unlawful were set aside.

Collector of Customs Sales Tax and Central Excise and others v. M/s Sanghar Sugar Mills Ltd., Karachi and others PLD 2007 SC 517 = 2007 PTD 1902; M/s. Siddique Brothers (Pvt.) Ltd v. Federation of Pakistan and others (W.P. No.5186 of 2014), 2019 PTD (Trib.) 120; 2015 PTD 2256; 2016 PTD 467; 2018 PTD 986; 2019 PTD 257; 2019 PTD 298; M/s D.G. Khan Cement Factory Ltd's case 2004 SCMR 456 = 2004 PTD 1179 and M/s. K.B. Enterprises, Faisalabad's case 2019 PTD (Trib.) 56 ref.

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

----Ss.21 & 73---De-registration, blacklisting and suspension of registration---Certain transactions not admissible---Scope---Appellant had transacted all payments to his suppliers through Banking channel by complying with the mandatory provisions of S. 73 of the Sales Tax Act, 1990, which was the sole obligation of the buyer to ensure veracity of transactions in addition to verifying normal and operative status of his suppliers---Both necessary conditions of verifying genuineness of suppliers from e-portal of FBR for its operative status and sufficient condition of making payments through Banking channel to ascertain the varsity of such transactions were complied with by appellant---Legislature had consciously given a right to a buyer in such cases to reclaim input tax so paid---Input tax adjustment of the appellant was denied only for the reason that the suppliers of the appellant were subsequently blacklisted---Held; subsequent blacklisting did not disentitle the buyer from his lawful right of input tax in respect of invoices issued when the supplier was a registered and an active person unless those invoices were specifically declared fake and had direct nexus with blacklisting---Appeal was accepted, impugned show cause notice and subsequent orders of both the authorities below being illegal and unlawful were set aside.

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

----Ss.33 & 34---Offences and penalties---Default surcharge---Scope---In case of penalty for late filing of returns, the initial onus of proving of mens rea is on the department---Imposing of penalties in case of committing default in payment of tax or late filing of sales tax returns is not automatic and some determination which regard to element of mens rea is required and the presence of mens rea is essential for imposition of any penalty under the law---Mens rea, in short, denotes the state of mind that would compel a person to deviate from the law or to commit an offence which also encompasses recklessness within its ambit---Concept of mens rea basically resolves around the state of mind and the conduct of the person and it is necessary to establish mens rea before levying penalty.

Commissioner Inland Revenue v. Tariq Poly Pack (Pvt.) Ltd. 2015 PTD 2256 rel.

(d) Jurisdiction---

----Power vested in any authority can only be exercised by that authority, in default whereof, the entire action would be without jurisdiction, void ab initio and of no legal effect.

M/s. Ayan Battery Traders, Faisalabad v. The CIR (Chenab Zone), RTO, Faisalabad 2018 PTD (Trib.) 787 and 2014 PTD 104 ref.

(e) Jurisdiction---

----Question of jurisdiction in forum is considered to be very important and any order passed by a Court or a forum having no jurisdiction, even if it is found to be correct on merits, is not sustainable under law.

PLD 2005 SC 482 rel.

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

----S.11---Assessment of tax and recovery of tax not levied or short levied or erroneously refunded---Scope---Where show-cause notice issued by the officer is without jurisdiction, any subsequent proceeding and superstructure based on such illegal or void notice has no legs to stand and has to fall on the ground automatically along with the orders on which it is based.

Muhammad Tariq Khan v. Khawaja Muhammad Jawad Asami and others 2007 SCMR 818; Moulana Atta-ur-Rehman v. Al-Hajj Sardar Umar Farooq and others PLD 2008 SC 663 and Rehmatullah and others v. Saleh Khan and others 2007 SCMR 729 ref.

M/s. Ayan Battery Traders, Faisalabad v. The CIR (Chenab Zone), RTO, Faisalabad 2018 PTD (Trib.) 787 and Izhar Alam Farooqi v. Sheikh Abdul Sattar 2008 SCMR 240 rel.

Khubaib Ahmad for Appellant.

Atif Bashir, (DR) for Respondent.

2022 P T D (Trib.) 799

[Inland Revenue Appellate Tribunal]

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

Messrs GRAVITY TRADING CO. HYDERABAD

Versus

COMMISSIONER INLAND REVENUE ZONE-I, RTO, HYDERABAD

S.T.A. No.350/KB of 2019, decided on 28th October, 2019.

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

----S.21(2)---Term 'satisfied'---Scope---When term satisfaction is used for the purpose of judicial determination, it is necessary that nothing more nor less it should be bona fide and not actuated by malice, a fact and not a pretext and the same can be determined from all facts and circumstances of the case.

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

----S.21(2)---Term 'committed tax fraud'--- Connotation--- Tax fraud occurs when an individual or business entity willfully and intentionally falsifies information essentially fraud, entails cheating on a tax return or an attempt to avoid paying entire tax obligation.

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

----S. 21---Deregistration and blacklisting---Change of address---Tax payer was aggrieved of order passed by tax authorities under S. 21(2) of Sales Tax Act, 1990, whereby taxpayer was blacklisted---Validity---Taxpayer sought through a letter restoration of its registration and had also informed to tax authorities for its relocation---Taxpayer also sought verification of its business genuineness---Taxpayer did not falsify any information so also had not committed any tax fraud---No claim of input tax adjustment or refund was sought by taxpayer as it was registered as commercial importer and had discharged its liabilities at import stage---Question of loss to exchequer was incomprehensible---Appellate Tribunal Inland Revenue set aside the order passed by Commissioner Inland Revenue---Appeal was allowed in circumstances.

Constitution Petition No.D-8101 of 2017 rel.

Iftikhar Hussain for Appellant.

None for Respondent.

2022 P T D (Trib.) 967

[Inland Revenue Appellate Tribunal]

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

Messrs ZAHEER SOAP FACTORY (PVT.) LTD. FAISALABAD and others

Versus

COMMISSIONER INLAND REVENUE, ZONE-I, RTO, FAISALABAD and others S.T.As. Nos.1187/LB and 1215/LB of 2013, decided on 30th August, 2021.

(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---Time limitation to initiate proceedings under S.11 of the Sales Tax Act, 1990 by way of issuance of show-cause notice is 5 years from the relevant date---Limitation of 5 years is for the issuance of show-cause notice and not for the passing of order-in-original---Once, show-cause notice is issued within 5 years from the relevant date then the Officer Inland Revenue is required to pass an order against the show-cause notice within one hundred and twenty days from the issuance of show-cause notice or within extended period.

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

----Ss.10, 8 & 21---Tax credit not allowed---Refund of input tax---De-registration, blacklisting and suspension of registration---Scope---Invoices which are issued by the suppliers at the time when the suppliers are operative or not blacklisted/suspended or such invoices which have no nexus with the blacklisting order cannot be held inadmissible for input tax adjustment---Initial burden lies on the department to establish that invoices had been issued during when the supplier was blacklisted or suspended---If invoices are not issued during such period of blacklisting/suspension then the department has to prove that the cause or reason for the blacklisting has some nexus with such invoices---Such burden can be shifted upon the registered person claiming adjustment or refund of tax, in case of tax fraud, in accordance with the provisions of S.2(37) of Sales Tax Act, 1990.

2020 PTD 232; 2019 PTD 298; 2019 PTD 257; 2019 PTD 2260 and 2019 PTD 160 ref.

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

----Ss.10, 8, 21 & 73---Tax credit not allowed---Refund of input tax---De-registration, blacklisting and suspension of registration---Certain transactions not admissible---Scope---Though, any subsequent blacklisting of the supplier does not render the transactions invalid or fake on this score unless such subsequent blacklisting has some nexus with the invoices in dispute, but there is another aspect of the case with regards to the genuineness of claim of input tax by the purchaser---Even if the supplier was active or operative at the time of transactions still the purchaser claiming the input tax adjustment is supposed to hold taxable invoices duly issued by the supplier and to prove the same along with the physical delivery of goods---Purchaser is required to prove the mandatory compliance of S. 73 of the Sales Tax Act, 1990 to ensure veracity of the transactions in addition to verifying normal and operative status of his suppliers---Burden of proving that input tax claim is correct lies upon the person claiming such input tax---For the purpose of input tax claim, it is also to be ascertained by the department that the sales tax was deposited in the government treasury---Once all these conditions stand fulfilled only then the claim of input tax is allowable under the law

Commissioner Inland Revenue v. Messrs Ali Hassan Metal Works 2018 PTD 108 ref.

(d) Public functionaries---

----Authorities exercising quasi-judicial powers under a statute are bound to conduct fair adjudication.

The Province of East Pakistan v. MD Mehdi Ali Khan PLD 1959 SC 387 rel.

S.M. Raheel for Appellant (in STA No.1187/LB of 2013).

Rao Shehzad Akhtar Ali Khan, DR for Respondent (in STA No.1187/LB of 2013).

Rao Shehzad Akhtar Ali Khan, DR for Appellant (in STA No.1215/LB of 2013).

S.M. Raheel for Respondents (in STA No.1215/LB of 2013).

2022 P T D (Trib.) 1010

[Inland Revenue Appellate Tribunal]

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

COMMISSIONER INLAND REVENUE, ZONE-I, RTO, FAISALABAD

Versus

AL-SEHAR MANUFACTURER (PVT.) LTD., FAISALABAD

S.T.A. No.611/LB of 2014, decided on 31st August, 2021.

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

----S.45B---Appeal---Inquiry---Scope---Section 45B of the Sales Tax Act, 1990, empowers the Commissioner (Appeals) to make further inquiry for the purpose of deciding appeal provided that he does not remand the case---Elementary rule of construction of statutes is that the court is called upon to interpret any provision needs to ascertain the intention of law-makers from the words used which may receive their literal, natural and ordinary meaning where the words are not defined in the statute which is known as 'rule of litera legis'---Applying the said rule of construction, the use of word 'may' in the above referred provision was not accidental but a deliberate and conscious insertion by the law makers who were aware about the implication of word 'may'---Deliberate use of word 'may' and phrase 'as may be necessary' suggests that the legislature has left it on the discretion of the Commissioner (Appeals) to decide with application of mind whether to make any inquiry or not varying from case to case as deemed necessary with a condition that the Commissioner (Appeals) shall not remand the case for de novo consideration.

Ashfaq Ahmad Khan v. PTCL PLD 2016 Isl. 112; Webster's New World Dictionary (Third Edition); Chambers 21st Century Dictionary (Revised Edition); Chandra Nath Bhattacharjee v. State of West Bengal and others (1991) 1 CALLT 72 and Judicial Dictionary of Words and Phrases, Vol. 2, 3rd Edition, 1952 ref.

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

----S.45B---Appeals---Inquiry---Scope---Taking evidence is one of the ingredients of an act of inquiry to find out the real truth of the matter---Word 'further' means that the Commissioner (Appeals) can inquire into matter in furtherance of any previous inquiry already held and that denotes the previous inquiry held by the taxation officer at the stage of adjudication---Provision leaves no ambiguity that the Commissioner (Appeals) is empowered to make any inquiry in furtherance of any previous inquiry held by the taxation officer at the adjudication stage if after due consideration and application of mind the Commissioner (Appeals) deems it appropriate and necessary---Commissioner (Appeals) may entertain or take evidence produced before him for the purpose of inquiry to find out the truth---Commissioner (Appeals), after making such inquiry is debarred from remanding the matter to the lower authority for de novo consideration and is required to pass the order under S. 45B(2).

Ashfaq Ahmad Khan v. PTCL PLD 2016 Isl. 112; Webster's New World Dictionary (Third Edition); Chambers 21st Century Dictionary (Revised Edition); Chandra Nath Bhattacharjee v. State of West Bengal and others (1991) 1 CALLT 72 and Judicial Dictionary of Words and Phrases, Vol. 2, 3rd Edition, 1952 ref.

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

----S.45B---Appeal---Inquiry---Scope---Commissioner (Appeals) may entertain documents or take evidence for the purpose of inquiry at the appellate stage if after due consideration and applying judicial mind he deems it appropriate and necessary.

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

----S.11---Assessment of tax and recovery of tax not levied or short levied or erroneously refunded---Scope---Once the transaction is complete fulfilling and complying with all the provisions of law, the supplier cannot be penalized for the default and failure of another person---Said principle is applied vice versa as well---Supplier does not have control over the buyer and no means to police the buyer to ensure that the buyer shows purchases in the sales tax return.

D.G Khan Cement v. FOP PLD 2013 Lah. 693 rel.

(e) Interpretation of statutes---

----Customary usage of terms of art 'may' and 'shall' when they appear in a statute is that 'may' involves a choice and 'shall' an order.

Muhammad Sadiq v. University of Sindh PLD 1996 SC 182 ref.

Rao Shehzad Akhtar Ali Khan, DR for Appellant.

Ch. Muhammad Ashraf for Respondent.

2022 P T D (Trib.) 1319

[Inland Revenue Appellate Tribunal]

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

SAMINA YASMIN, PROP; FAISAL ELECTRONICS, WAZIRABAD

Versus

COMMISSIONER INLAND REVENUE, RTO, GUJRANWALA

I.T.A. No.5436/LB of 2021, decided on 14th March, 2022.

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

----Ss.122 & 177---Amendment of assessments---Audit---Definite information---Non-consideration of taxpayer's explanation---Effect---Appellant/ taxpayer assailed orders passed by Commissioner Inland Revenue (CIR) (Appeals) and assessing officer---Validity---Assessing officer by considering the difference between declared receipts and Bank credit entries as suppressed income had added the income without proving exact nexus of the transactions---Neither the assessing officer nor the CIR (Appeals) had made any observation on the explanation of the taxpayer that the disputed transactions were made for personal use---Only information for the purpose of 'definite information' that the assessing officer possessed was the difference in amount between declared receipts and credit entries---Requirements of S.122(5) of Income Tax Ordinance, 2001, were not met---After completion of audit, the authority had to issue an audit report, containing all the issues raised in audit and to provide an opportunity to settle the said issues prior to commencement of amendment proceedings---Language of subsection (6) of S. 177 was express, explicit and mandatory to the effect that the Commissioner could amend the assessment only after obtaining taxpayer's explanation on all the issues raised in the audit report---Confrontation on the issues raised in audit was mandatory and sine qua non, in absence whereof the judicial proceedings could not be triggered or commenced---Assessing officer had failed to comply with the mandatory provisions relating to audit proceedings and amendment, therefore, the additions and disallowances were annulled---Appeal was allowed.

Commissioner Inland Revenue Sialkot v. Messrs Allah Din Steel and Re-rolling Mills and others 2018 PTD 1444; Branch Activate (Pvt.) Ltd. v. CIR Karachi (I.T.A. No.1540/KB/2019); CI v. Mahvish and Jhangir Siddiqui (ITR A 32 of 2020); 2017 PTD 1731 and C.I.R. v. Khan CNG Filling Station 2013 PTD 884 rel.

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

----S.177---Audit---Scope---Commissioner after completion of audit shall issue audit observations and findings and then after issuing audit report he may amend the assessment order after providing opportunity of hearing to the taxpayer.

Nestle Pakistan Limited v. FBR 2017 PTD 686 rel.

Shahbaz Butt for Appellant.

Ali Khalid, DR for Respondent.

2022 P T D (Trib.) 1336

[Inland Revenue Appellate Tribunal]

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

Messrs CHAWALA ENTERPRISES, FAISALABAD

Versus

The COMMISSIONER INLAND REVENUE(A), RTO, FAISALABAD

S.T.A. No.541/LB of 2019, decided on 4th February, 2020.

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

----Ss.11 & 10---Sales Tax Rules, 2006, R. 34---Assessment of tax and recovery of tax not levied or short levied or erroneously refunded---Refund of input tax---Refund of excess input tax not relating to zero-rated supplies---Scope---Appellant tax-payer was imposed upon a liability for illegally receiving refund against local sales---Validity---Rule 34(1)(b) of Sales Tax Rules, 2006, required the appellant to claim sales tax refund against the local supplies, if the same was not adjusted within a minimum consecutive period of twelve months or as the case may be, to carry forward the excess amount of input tax over output tax in the said tax period, however, the appellant had claimed refund in the current tax period which was a procedural omission and technical mistake---Appellant had committed procedural violation by claiming refund in the same month instead of carrying forward the excess input tax to the subsequent tax period, yet there was no legal provision in the Sales Tax Act, 1990 and the rules made thereunder which denied or extinguished the substantive right of the appellant tax-payer to claim refund of the excess input tax---Input tax paid by a registered person was an inalienable and substantive right which could not be taken away or withheld on mere some technicalities and procedural lapses , whatsoever---Impugned show-cause notice as well as consequent orders of both the authorities below were declared to be illegal, void ab initio and were set aside---Appeal was accepted.

2002 PTD 2780; 1996 SCMR 230; 2002 PTD 407; 2006 PTD 2482 and 2011 PTD (Trib.) 1124 ref.

Messrs Waqas Enterprises, Faisalabad v. The CIR (Appeals), RTO, Faisalabad 2019 PTD (Trib) 120 and Messrs Pfizer Laboratories Ltd. v. Federation of Pakistan and others PLD 1998 SC 64 rel.

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

----S.11---Assessment of tax and recovery of tax not levied or short levied or erroneously refunded---Scope---Appellant was imposed upon a liability for non-payment of sales tax on disposal of polypropylene bags, paper cones and wastages, etc---Validity---Department had not denied that the appellant had supplied yarn to different registered weavers to get it converted into grey cloth on job basis accordingly against sales tax invoices for conversion charges---Such weavers had never returned the leftover wastes such as polypropylene bags and paper cones, etc., to the appellant---Department had not produced any evidence of clandestine supply of such goods, which entailed necessary delivery of goods or/and receipts of money consideration thereto, without which charge was unsubstantiated having no legal force at all hence, no tax could be assessed and recovered thereon---Impugned show-cause notice as well as consequent orders of both the authorities below were declared to be illegal, void ab initio and were set aside---Appeal was accepted.

2002 PTD 2780; 1996 SCMR 230; 2002 PTD 407; 2006 PTD 2482 and 2011 PTD (Trib.) 1124 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---Acts of inadvertence on the part of taxpayer due to any procedural mistake would not create demand of sales tax.

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

----S.10---Refund of input tax---Scope---Input tax paid by a registered person is an inalienable and substantive right which cannot be taken away or withheld on mere technicalities and procedural lapses whatsoever.

Messrs Waqas Enterprises, Faisalabad v. The CIR (Appeals), RTO, Faisalabad 2019 PTD (Trib) 120 and Messrs Pfizer Laboratories Ltd. v. Federation of Pakistan and others PLD 1998 SC 64 rel.

Khubaib Ahmad for Appellant.

2022 P T D (Trib.) 1435

[Inland Revenue Appellate Tribunal]

Before Mian Tauqeer Aslam, Judicial Member and Anwaar-ul-Haque, Accountant Member

COMMISSIONER INLAND REVENUE, ZONE-III, RTO, FAISALABAD

Versus

Messrs KAMAL TEXTILE MILLS, FAISALABAD

S.T.As. Nos.79/LB to 81/LB of 2014, decided on 20th April, 2021.

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

----Ss.3, 8 & 11---SRO No.490(I)/2004---SRO No.450(I)/2013---Tax credit not allowed---Assessment of tax and recovery of tax not levied or short levied or erroneously refunded---Retrospective application---Scope---Department on the basis of three separate show-cause notices sought explanation of certain discrepancies which were detected during the post refund audit of the registered person---Adjudication proceedings culminated in passing of order-in-original---Appeal filed by registered person before the Commissioner (Appeals) was accepted---Validity---Input tax paid on cement, paint, thermopolis, re-touching emulsion, consumer panel. SSR, etc. was not hit by SRO No.490(I)/2004 dated 12th June, 2004 as the restriction on input tax adjustment or credit thereon was subsequently imposed by way of an amending Notification No. SRO No.450(I)/2013 dated 27th May, 2013---Contrarily, registered person's input tax credits on such items pertained to the tax periods of October 2011, May, 2012 and September, 2012 prior to imposition of such restriction on input tax credit or adjustment---Provisions of SRO No.490(I)/2004 dated 12th June, 2004, as stood prior to 27th May, 2013, never debarred a registered person from claiming input tax on such goods as alleged in impugned cases---Amendments made in S.8(1)(a) of the Sales Tax Act, 1990, by way of inserting clauses (h) and (i) through Finance Act, 2014, could not be allowed to apply retrospectively when there was no such express or apparent legislative intent to allow any such retrospection---Order impugned by the department being based on facts and strictly in accordance with law did not call for any interference by the Tribunal---Appeals were dismissed.

2013 PTD (Trib.) 466; GST 2003 CL 598 HC Lah.; Army Welfare Sugar Mills Ltd. and others v. Federation of Pakistan and others 1992 SCMR 1652 and Government of Pakistan v. Messrs Village Development Organization 2005 SCMR 492 ref.

Messrs Anoud Power Generation Limited and others v. Federation of Pakistan and others PLD 2001 SC 340 rel.

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

----Ss.10 & 7---Sales Tax Rules, 2006, R.33---Determination of tax liability---Refund of input tax---Extent of payment of refund claim---Scope---Consumption of raw material is a mandatory condition for claiming refund of input tax but the R.33 of the Sales Tax Rules, 2006, does not provide any restriction and condition of consumption of such raw material in the same tax period against which input tax credit is being claimed as refund---Registered person is entitled to deduct input tax paid or payable during a tax period for the purpose of taxable supplies made or to be made by him from output tax under S.7(1) of the Sales Tax Act, 1990 and in case, input tax credit exceeds output tax due to zero-rated local supplies or exports thereof, its refund is made available under S.10(1) of Sales Tax Act, 1990---None of the provisions of S.7(1) of the Sales Tax Act, 1990 or S.10(1), Sales Tax Act, 1990 or even the rules made thereunder provides for input tax credit/refund on the basis of consumption, instead it is on basis of purchases and imports---In case, input tax incurred on purchases or imports exceeds output tax due to zero-rated local supplies or exports thereof, excess amount shall be refunded to registered person under S.10(1) of the Sales Tax Act, 1990.

2013 PTD (Trib.) 466 and GST 2003 CL 598 HC Lah. rel.

Aman Ullah Virk, DR for Appellant.

Khubaib Ahmad for Respondent.

2022 P T D (Trib.) 1459

[Inland Revenue Appellate Tribunal]

Before M.M. Akram, Judicial Member

MUNIR FAZLA

Versus

The COMMISSIONER INLAND REVENUE, ZONE-III RTO, ISLAMABAD

I.T.A. No.469/IB of 2015, decided on 13th February, 2020.

Income Tax Ordinance (XLIX of 2001)---

----S.129(1)(a) [as amended by Finance Act (VII of 2005)]---Remand of case---Appellate Authority, jurisdiction of---In appeal filed by taxpayer against assessment order Commissioner (Appeals) remanded the matter for re-assessment---Validity---Appellate Authority was empowered under provision of S.129(1)(a) of Income Tax Ordinance, 2001, (as amended by Finance Act, 2005), to undertake further inquiries and examine record for deciding case by itself without sending the case back to Assessing Officer---Appellate Tribunal Inland Revenue set aside remand order passed by Commissioner (Appeals), dismissed appeal filed by taxpayer before Appellate Authority and restored order passed by Assessing Officer---Appeal was dismissed accordingly.

H & Sons v. Central Board of Revenue 2005 PTD 147; Messrs Fazal Din & Sons v. Federal Board of Revenue, Islamabad and others 2009 SCMR 973 and 2012 PTD 1032 ref.

Waseem Ahmed Siddiqi, FCA for Appellant.

Ms. Naheed Aktar Durrani, DR for Respondent.

2022 P T D (Trib.) 1508

[Inland Revenue Appellate Tribunal]

Before Muhammad Tahir, Accountant Member and Muhammad Waseem Ch., Judicial Member

Messrs MASOOD TEXTILE MILLS LIMITED, FAISALABAD

Versus

The COMMISSIONER INLAND REVENUE, RTO, FAISALABAD

MA/Stay No.6282/LB of 2019, decided on 20th November, 2019.

Sales Tax Act (VII of 1990)---

----S.46---Appeal to Appellate Tribunal---Stay of proceedings pending appeal---Scope---Applicant sought grant of stay against initiation of re-assessment proceedings---Appeal of the registered person/applicant against remand order of Commissioner (Appeals) was pending adjudication before the Tribunal but in the meantime the department had initiated re-assessment proceedings in pursuance of that appellate order, despite the fact that the appeal of the registered person had not gone through the scrutiny by an independent judicial forum---Appeal of the applicant assailing the treatment meted out by first Appellate Authority was pending for decision before the Tribunal---Tribunal directed the department to wait for the decision of Tribunal---Application was disposed of accordingly.

Writ Petition No.7636 of 2017 and 2005 PTD 678 rel.

Khubaib Ahmad for Petitioner.

Ashfaq Ahmad, DR for Respondent.

2022 P T D (Trib.) 1542

[Inland Revenue Appellate Tribunal]

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

Messrs ANWAR TRADERS, GUJRANWALA

Versus

COMMISSIONER INLAND REVENUE, RTO, GUJRANWALA

S.T.A. 119/LB of 2019, decided on 14th April, 2020.

Sales Tax Act (VII of 1990)---

----Ss.3 & 2(12)---Sales tax---Further tax---"Goods"---Scope---Appellant declared supplies made to unregistered person on which sales tax at the rate of 17% was correctly paid but further tax leviable under S.3(1A) of Sales Tax Act, 1990, was neither charged nor paid thereon--Commissioner Inland Revenue adversely adjudged the liability as to further tax---Validity---Appellant had supplied "Zinc Ingots" to the Master of Mint, Finance Division, Government of Pakistan---Master of Mint was engaged in manufacturing of coins which was "money"---"Money" was excluded from the very purview of "Goods" as defined in S.2(12) of Sales Tax Act, 1990---Master of Mint was not required to be registered in the sales tax, hence, did not fall under the scope of S.3(1A) of Sales Tax Act, 1990---Impugned order, being not maintainable, was annulled.

2005 SCMR 492; 2007 PTD 67; PLD 2001 SC 340 and 2006 SCMR 129 ref.

Abuzar Hussain for Appellant.

Ms. Shazia Gull, D.R. for Respondent.

2022 P T D (Trib.) 1665

[Inland Revenue Appellate Tribunal]

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

Messrs NAVEED ENTERPRISES, FAISALABAD

Versus

The COMMISSIONER INLAND REVENUE (APPEALS), RTO, FAISALABAD

S.T.A. No.1228/LB of 2020, decided on 2nd February, 2021.

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

----S.10---Refund of sales tax---Scope---Appellant assailed disallowing of input tax against packing material---Validity---Consumption of packing material was necessary for packing of confectionary items and there was no provision in the Sales Tax Act, 1990, or the Rules made thereunder which restricted the consumption of packing material and in case packing material exceeded 3.6% of the total amount of refund claimed even then the samples of goods exported were to be drawn at the time of exports as provided under S. 25(A) of the Sales Tax Act, 1990, but no such samples were drawn by the sales tax department without which rejection of refund was not only against the letter and spirit of the impugned agreement but also unjustified and unlawful---Appeal was accepted.

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

----S.4---"Zero rating"---Scope---Sales tax functionaries were not empowered to restrict and fix input tax refund on exports as it is the Federal Government who may, by a notification in the official gazette, restrict amount of credit for input tax actually paid and claimed by a person making zero-rated supplies of goods otherwise chargeable to sales tax under the 2nd proviso to Cl.(c) of S.4 of the Sales Tax Act, 1990.

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

---S. 10---Refund of input tax---Scope---Rejection of refund on the basis of an agreement made between sales tax department and an Association of taxpayers, which is not converted into law by the Federal Government, is illegal and void.

2011 PTD (Trib.) 20; 2012 PTD (Trib.) 31 and 2010 PTD (Trib.) 2126 rel.

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

---Ss. 3 & 7---Scope of sales tax---Determination of tax liability---Scope---Any agreement between an Association of taxpayers and the revenue department has no binding effect against the express provisions of law unless the same is supported by any superior or subordinate legislation.

Messrs Muhammad and Company's case 2005 PTD 72 ref.

Messrs Crescent Re-Rolling Mills, Lahore's case 2005 PTD 2436 = GST 2005 CL 73 and Messrs Tauqir Ashraf and Company, Lahores' case 2007 PTD 47 rel.

Khubaib Ahmad for Appellant.

Atif Bashir, (DR) for Respondent.

2022 P T D (Trib.) 1722

[Inland Revenue Appellate Tribunal]

Before Habib Ullah Khan, Accountant Member and M.M. Akram, Judicial Member

Messrs ZIA STEEL RE-ROLLING MILLS, ISLAMABAD

Versus

COMMISSIONER INLAND REVENUE, ENF-IX, LTU, ISLAMABAD

I.T.As. Nos.226/IB and 227/IB of 2014, decided on 9th September, 2020.

Income Tax Ordinance (XLIX of 2001)---

----S.182---SRO No.550(I)/2012 dated 23-05-2012---SRO No.494(I) / 2013 dated 10-06-2013---Failure to furnish return of income---Scope---Appellant was imposed upon penalties for late filing of income tax returns for the tax years 2011 and 2012---Validity---Federal Government through SRO No.550(I)/2012 dated 23-05-2012 had allowed the steel melters to deposit the tax liability by 31-05-2012 who had opted to pay sales tax under the Sales Tax Special Procedure Rules, 2007, for the tax year 2011---Appellant by availing the aforesaid benefit had paid the tax liability and filed the return for the tax year 2011 on 11-05-2012---Appellant, as far as the tax year 2012 was concerned, had paid the tax liability along with the tax return and there was no dispute regarding the tax liability---Penalty was imposed by the assessing officer only for late filing of the return---Case of the appellant for both the tax years was fully covered in the amnesty by the Federal Government through SRO No.494(I)/2013 dated 10-06-2013 and therefore, the appellant was entitled to relief under the said notification by deleting the penalty imposed by the assessing officer---Orders passed by the lower authorities were annulled---Appeals were disposed of accordingly.

Yousaf Sugar Mills Ltd. v. Government of Pakistan and others 2008 PTD 1461 and Premier Kadanwari Development Co. v. State Islamabad 2013 PTD 1037 ref.

Sheikh Wahid-ud-Din Industries v. ACST 2006 PTD 336 rel.

Zahid Hussain, ACMA for Appellant.

Faheem Sikandar, DR for Respondent.

2022 P T D (Trib.) 1839

[Inland Revenue Appellate Tribunal]

Before Muhammad Waseem Ch., Judicial Memberand Muhammad Tahir, Accountant Member

Messrs CHINA NATIONAL ELECTRIC WIRE AND CABLE IMPORT AND EXPORT CORPORATION, LAHORE

Versus

The COMMISSIONER INLAND REVENUE, RTO, LAHORE

M.As. (R) Nos.272, 273, 274, 275, 276/LB/2022 in I.T.As. Nos.2814, 2815, 2816, 2817, 2818/LB/2022, decided on 5th August, 2022.

Income Tax Ordinance (XLIX of 2001)---

----Ss.221, 131, 129, 128 & 127---Rectification of mistakes---Appeal to the Appellate Tribunal---Decision in appeal---Oral order, legality of---Scope---Appellate Tribunal while invoking its jurisdiction under S. 221 of Income Tax Ordinance, 2001 on its own observed that in an earlier order it had committed some grave mistakes of law, which were based on some omitted law and statement of counsel for the appellant who had stated that the Commissioner (Appeals) had refused to entertain appeals manually, which was factually incorrect---Appellate Tribunal could entertain an appeal under S.131(1) of the Income Tax Ordinance, 2001 against an order passed by the Commissioner (Appeals) under S. 129 of the Income Tax Ordinance, 2001---Subsection (4) of S. 129 explicitly mandated that as soon as practicable after deciding an appeal, the Commissioner (Appeals) would serve his order on the appellant and the Commissioner---Said provision clearly provided that a written order had to be passed by the Commissioner (Appeals), irrespective of fate of matter argued before him by any taxpayer---If written order was not passed by the Commissioner (Appeals), Ss.127, 128 and 129 would become redundant---Redundancy was not attributable to the law---Tribunal observed that appeals should not have been entertained by the Tribunal under S. 131 of the Income Tax Ordinance, 2001, as no written orders were in field---Earlier order passed by the Appellate Tribunal was re-called and withdrawn.

Kot Addu Power Company Limited v. Commissioner Inland Revenue, Regional Tax Officer, Multan (ITR No.224 of 2015) and Hon'ble Supreme Court of Pakistan in Commissioner of Income Tax v. Pakistan Petroleum Ltd. 2012 SCMR 371 ref.

Shoaib Hassan Butt for Appellant.

Talat Mehmood, DR for Respondent.

Waheed Shahzad Butt, Amicus Curie.

2022 P T D (Trib.) 1895

[Inland Revenue Appellate Tribunal]

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

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

Versus

Messrs A.O. CLINIC, KARACHI

I.T.A. No.867/KB/2017, decided on 18th September, 2018.

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

----Ss.122 & 177---Amendment of assessment---Audit---'Definite information'---Failure to obtain taxpayer's explanation on issues raised in the audit report---Effect---Department assailed order passed by Commissioner (Appeals) whereby order of assessing officer amending the deemed assessment was set aside---Validity---Amended assessment was framed on presumption and without adhering to audit procedure---Assessing officer had not confronted the taxpayer with the contents of the audit report before amending the assessment order or even before issuance of notice under S.122(9) of the Income Tax Ordinance, 2001---Subsection (5) of S.122 of the Income Tax Ordinance, 2001, allowed amendment of assessment only when the department was in possession of 'definite information' and not otherwise, and in that context, the assessing officer was under legal obligation to specifically identify the nature of suppressed income and issue notice in terms of Cls. (i), (ii) and (iii) of subsection (5) of S.122 of Income Tax Ordinance, 2001, highlighting the facts under which category of taxpayer's case fell---Non-issuance of such notice clearly meant that while passing the amended assessment order, assessing officer was not in possession of 'definite information' and the reason assigned for additions/disallowances, while passing the amended assessment order, could not be termed as based on 'definite information'---Appellate Tribunal found no illegality or infirmity in the order of the Commissioner (Appeals), which was maintained---Appeal was dismissed.

2017 PTD 686 ref.

2013 PTD 884; 2007 PTD (Trib) 2601 and 2013 PTD 1083 rel.

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

----Ss.122 & 177---Amendment of assessment---Audit---Procedure---Scope---'Definite information'---Assessing officer, after formulation of the audit report/audit observation/objections/charge sheet, ought to first confront the same to the taxpayer and secondly, after considering the explanation of the taxpayer, if he considers that assessment order is required to be amended on the basis of 'definite information', he may invoke subsection (1) of S.122, Income Tax Ordinance, 2001 for acquiring jurisdiction to amend the order under subsection (4) read with subsection (5) as the case may be.

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

----Ss.177 & 122---Audit---Amendment of assessment---Scope---Audit proceeding under S.177, Income Tax Ordinance, 2001, is only a procedure/mode and method to find out some defects in the accounts and to obtain information to further enter into the jurisdiction under S.122(1), Income Tax Ordinance, 2001, for making an amended assessment after acquiring authority on the basis of "definite information"---Section 177, Income Tax Ordinance, 2001, is just a process/mode and method and prescribed path to reach to conclusion as to from where the assessing officer can further modify an already assessed income.

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

----Ss.177 & 122---Audit---Amendment of assessment---Scope---Section 177 of Income Tax Ordinance, 2001, does not in itself provide any power or absolute empowerment to modify assessment or re-determine the income of taxpayer---Key point to be kept in mind is that it is not a return of income which is being processed by the assessing officer; Assessing officer deals with an 'assessment order' which by process of law has acquired a sanctity---Finalized assessment, therefore, cannot just be modified or disturbed in continuation of the proceedings of audit under S.177 of Income Tax Ordinance, 2001.

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

----Ss.177 & 122---Audit---Amendment of assessment---Procedure---Scope---Selection for audit or even conducting an audit does not mean modification of assessment---Selection for audit and thereafter conducting of audit proceeding is just a process---Assessing officer, before invoking the provisions of S.122, Income Tax Ordinance, 2001, has to frame charge sheet/audit observation/audit report and the same ought to be communicated to the taxpayer for rebuttal and the explanation/reply/assertion/contention/objection of taxpayer must be obtained and considered---Assessment order can only be amended by acquiring jurisdiction and fulfilling all the requirements of subsections (1) and (5) of S.122, Income Tax Ordinance, 2001---Mere (firstly) issuance of notice under S.122(9), Income Tax Ordinance, 2001, read with S.122(1), Income Tax Ordinance, 2001, after selection for audit and before conducting audit of the taxpayer, does not fulfill the requirements of law---Assessing officer first has to reject the objections/rebuttal of taxpayer on audit report and then acquire jurisdiction under S.122(1), Income Tax Ordinance, 2001 and then under S.122(5), Income Tax Ordinance, 2001.

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

----S.122---Amendment of assessment---Expression 'Subject to this section'---Scope---Provisions of S.122 of Income Tax Ordinance, 2001 start with the language "subject to this section"---Such language restricts all further proceedings for amendment of an assessment which means it can only be amended if they are covered by the provisions of said section---Assessment cannot be amended if the requirements and qualifications prescribed in S.122, Income Tax Ordinance, 2001, are not completed.

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

----Ss.177 & 122---Audit---Amendment of assessment---Procedure---Scope---'Definite information'---Scope---Deemed assessment, if selected for audit, may be amended by invoking jurisdiction under S.122(1), Income Tax Ordinance, 2001, subject to fulfillment of conditions as envisaged under subsection (6) of S.177, Income Tax Ordinance, 2001, after fulfilling the pre-requisite/requirement of "definite information" under subsection (5) of S.122 and subject to execution of conditions of clauses (i), (ii) and (iii) of S.122(5) of Income Tax Ordinance, 2001.

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

----S.111---Unexplained income or assets---Non-issuance of specific notice---Effect---Assessing officer made additions under S.111, Income Tax Ordinance, 2001, without issuance of specific and separate notice under S.111---Validity---Issuance of separate notice was sine qua non and no addition under S.111 could be made without independent, specific and separate notice under S.111 of Income Tax Ordinance, 2001.

2012 PTD (Trib.) 312; CIR v. Pharmaceutical, Karachi I.T.A. No.65/KB/2018 dated 24-9-2018 and The Commissioner Inland Revenue, Zone-I, RTO, Sukkur v. Messrs Ranipur CNG Station, Sukkur 2017 PTD 1839 rel.

(i) Administration of justice---

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

Khalid Saeed v. Shamin Rizvi 2003 SCMR 1505 ref.

(j) Taxation---

----No tax shall be levied or collected except by authority of law---Tax can only be imposed by a legislative Act and not by an executive order; it thus, embodies the democratic principle "no taxation without representation"---Law imposing a tax must be valid law, that is, it should not violate any provisions of the Constitution and should be within the legislative competence of the legislature---Law will be valid only if it is made in accordance with the procedure prescribed by the statute.

Azhar Erum Memon, D.R., RTO for Appellant.

Syed Muhammad Faraz Zaidi, ITP for Respondent.

2022 P T D (Trib.) 1927

[Inland Revenue Appellate Tribunal]

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

Messrs NEW DADU SUGAR MILLS (PVT.) LTD. KARACHI

Versus

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

M.A. (Stay) No.1017/KB and ITA No.1153/KB of 2019, decided on 30th September, 2019.

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

----Ss.131 & 132---Appeal to Appellate Tribunal---Limitation---Successive appeals on the same cause of action---Scope---Appellant filed application for grant of stay along with supporting appeal for the third time against the same order of refusal to stay the recovery of tax demand by the Commissioner (Appeals)---Validity---Appellant's appeal was barred by time---Appellant had no locus standi to file the appeal against the same cause of action which was decided twice by the Appellate Tribunal---One who knocked at the door of the court had to come with clean hands---Application along with the supporting appeal were dismissed.

(b) Administration of justice---

----One who knocks at the door of the court has to come with clean hands.

Rao Nisar Ahmed, FCA for Applicant.

Abdul Qadeer Abbasi, D.R. for Respondent.

2022 P T D (Trib.) 1935

[Inland Revenue Appellate Tribunal]

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

THE COMMISSIONER INLAND REVENUE, RTO, LAHORE

Versus

Messrs HABIB STEEL RE-ROLLING MILLS, LAHORE

I.T.A. No.759/LB of 2014, decided on 17th August, 2021.

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

----S.161---Failure to pay tax collected or deducted---Scope---Assessing officer issued notice to the taxpayer under Ss.161(1A) & 205 of Income Tax Ordinance, 2001, for its failure to deduct withholding tax---Taxpayer was declared to be in default of tax deduction---Commissioner (Appeals) remanded the matter for de novo consideration---Assessing officer had confronted the whole amount appearing in the return of income of taxpayer without establishing that these were all payments---Neither the assessing officer had pointed out specific default in terms of S. 161 nor identified names and addresses of the parties from whom and how much tax was to be deducted---Commissioner (Appeals) had rightly held that the impugned order was passed without following statutory provisions and without properly considering the contentions of the taxpayer---Appeal was dismissed.

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

---S. 129---Decision in appeal---Scope---Section 129 of Income Tax Ordinance, 2001, has two shades: In case of an appeal against an assessment order the Commissioner (Appeals) may confirm, modify or annul the order whereas in any other case, the Commissioner (Appeals) may make such order as he deems fit---Words confirm, modify and annul used in S. 129(1)(a) confine and limit the power of the Commissioner (Appeals) to decide an appeal against an assessment order---Legislature has specifically inserted these words specifying the powers of Commissioner (Appeals) to exclude any other way of disposal of appeal against assessment orders, hence, it is clear from the plain language of S. 129(1)(a) that Commissioner (Appeals) is not vested with power to remand a case where the appeal is against an assessment order and he can only confirm, modify or annul the assessment order of assessing officer---Against an order other than assessment order, the Commissioner (Appeals), in case of appeal may pass an appropriate order as he thinks fit.

(c) Words and phrases---

----"As it deems fit"---Meaning---Scope---Expression "as it deems fit" means to make an order in terms of the statute, an order which would give effect to a right which the Act has elsewhere conferred.

Babulal Nagar v. Shree Synthetichs Lt., AIR 1984 DV 1164, 1165 ref.

(d) Words and phrases---

----"As it thinks fit"---Scope---Expression "as it thinks fit" confers a very wide jurisdiction enabling it to take an entirely different view on the same set of facts---Such is wide enough to include the power of remand to the authority competent to make the requisite order in accordance with law.

Babulal Nagar v. Shree Synthetichs Lt., AIR 1984 DV 1164, 1165 and CIT v. Assam Travel Shipping Service 1993 PTD 885 = (1993) 199 ITR 1 (SC) ref.

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

----S.129---Decision in appeal---Scope---Phrase "make such order as the Commissioner (Appeals) thinks fit" used in S. 129(1)(b) is not restricted term, phrase or expression rather it gives wide powers and broad discretion to Commissioner (Appeals) to pass an order including a remand of case to the assessing officer keeping in view the merits of the case and based on his judicial conscience---Such power or broad discretion are not limitless and have to be exercised within legal bounds.

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

----S.129---Decision in appeal---Scope---Commissioner (Appeals) under S. 129(1)(b) is vested with the powers to remand a case in an appeal against any order under Income Tax Ordinance, 2001, other than an assessment order.

(g) Taxation---

----Taxing statute---Normally there are three distinct types of provisions provided under the law namely charging provisions, assessment provisions and collection provisions---Charging provisions relate to levy and charge of tax, assessment provisions deal with the assessment, calculation or quantification of tax whereas collection provisions relate to the mode and manner of recovery or collection of tax.

Commissioner Inland Revenue v. Messrs Medimakers Pharmaceuticals 2018 PTD 1533 rel.

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

----S.161---Failure to pay tax collected or deducted---Scope---Provisions under S. 161 are of collection or recovery in nature and are distinct from provisions of assessment in the Income Tax Ordinance, 2001---Provisions of S. 161 are neither provisions for assessment of income nor same are charging provisions rather provisions under S.161 are simpliciter in nature of collection/recovery of tax.

Rao Shehzad Akhtar Ali Khan for Appellant.

Ikram-ul-Haq for Respondent.

2022 P T D 413

[Islamabad High Court]

Before Aamer Farooq, J

PAKISTAN OILFIELDS LTD.

Versus

FEDERATION OF PAKISTAN and others

Writ Petitions Nos.1693 and 1694 of 2011, decided on 18th November, 2021.

Income Tax Ordinance (XLIX of 2001)---

­----Ss.122(5), 122(5A), 122(5AA) & 122(4)---Amendment of assessments---Power of Commissioner to further amend / alter assessment in terms of Ss.122(5), 122(5A) & 122(5AA) of Income Tax Ordinance, 2001---Time-barred amendment in assessments not sustainable---Scope---Petitioner/taxpayer impugned notice for further amendment in assessment issued by Department under S.122(5AA) of Income Tax Ordinance, 2001 issued in 2011, for tax years 2005 and 2006, inter alia, on ground that such further amendment in assessment was time-barred---Validity---Amendment in assessment order was not restricted to one amendment, however power to further amendment was subject to limitation of five-years in total and under S.122(4) of the Ordinance, further amendment or amendments had to be made within one year of the same---Where subject-matter was under appeal, power of Commissioner to further amend an assessment had been restricted under S.122(5AA) of the Ordinance, and only pertained to where amendment or further amendment was being made under S.122(5A) of the Ordinance---Impugned notices had been issued invoking power of S.122(5A) of Income Tax Ordinance, 2001 seeking further assessment with respect to tax-payers 2005 and 2006 while the matter was pending before Appellate Tribunal, and thus no notice for further amendment could have been issued or amendment made, as same was barred by time under operation of S.122(5AA) of Income Tax Ordinance, 2001---Impugned show-cause notices were set aside---Constitutional petition was allowed, accordingly.

Messrs Pakistan Oilfields Limited through General Manager v. Federation of Pakistan through Ministry of Finance and 4 others 2020 PTD 110 rel.

Additional Commissioner Inland Revenue Audit Range, Zone-I and others v. Messrs Eden Builders Limited and others 2018 SCMR 991; Federal Board of Revenue through Chairman, Islamabad and others v. Abdul Ghani and another 2021 SCMR 1154; Federation of Pakistan through Secretary Finance, Islamabad and 4 others v. Messrs Ibrahim Textile Limited and others 1992 SCMR 1898; Nasrullah Khan and another v. Mst. Khairunnisa and others 2020 SCMR 2101; Khushi Muhammad through LRs and others v. Mst. Fazal Bibi and others PLD 2016 SC 872 and ENGRO VOPAK Terminal Limited through Manager Finance and Corporate Service, Karachi 2012 PTD 130 ref.

Abad ur Rehman for Petitioner.

Dr. Farhat Zarar and Sh. Anwaar-ul-Haq for Respondents.

2022 P T D 413

[Islamabad High Court]

Before Aamer Farooq, J

PAKISTAN OILFIELDS LTD.

Versus

FEDERATION OF PAKISTAN and others

Writ Petitions Nos.1693 and 1694 of 2011, decided on 18th November, 2021.

Income Tax Ordinance (XLIX of 2001)---

­----Ss.122(5), 122(5A), 122(5AA) & 122(4)---Amendment of assessments---Power of Commissioner to further amend / alter assessment in terms of Ss.122(5), 122(5A) & 122(5AA) of Income Tax Ordinance, 2001---Time-barred amendment in assessments not sustainable---Scope---Petitioner/taxpayer impugned notice for further amendment in assessment issued by Department under S.122(5AA) of Income Tax Ordinance, 2001 issued in 2011, for tax years 2005 and 2006, inter alia, on ground that such further amendment in assessment was time-barred---Validity---Amendment in assessment order was not restricted to one amendment, however power to further amendment was subject to limitation of five-years in total and under S.122(4) of the Ordinance, further amendment or amendments had to be made within one year of the same---Where subject-matter was under appeal, power of Commissioner to further amend an assessment had been restricted under S.122(5AA) of the Ordinance, and only pertained to where amendment or further amendment was being made under S.122(5A) of the Ordinance---Impugned notices had been issued invoking power of S.122(5A) of Income Tax Ordinance, 2001 seeking further assessment with respect to tax-payers 2005 and 2006 while the matter was pending before Appellate Tribunal, and thus no notice for further amendment could have been issued or amendment made, as same was barred by time under operation of S.122(5AA) of Income Tax Ordinance, 2001---Impugned show-cause notices were set aside---Constitutional petition was allowed, accordingly.

Messrs Pakistan Oilfields Limited through General Manager v. Federation of Pakistan through Ministry of Finance and 4 others 2020 PTD 110 rel.

Additional Commissioner Inland Revenue Audit Range, Zone-I and others v. Messrs Eden Builders Limited and others 2018 SCMR 991; Federal Board of Revenue through Chairman, Islamabad and others v. Abdul Ghani and another 2021 SCMR 1154; Federation of Pakistan through Secretary Finance, Islamabad and 4 others v. Messrs Ibrahim Textile Limited and others 1992 SCMR 1898; Nasrullah Khan and another v. Mst. Khairunnisa and others 2020 SCMR 2101; Khushi Muhammad through LRs and others v. Mst. Fazal Bibi and others PLD 2016 SC 872 and ENGRO VOPAK Terminal Limited through Manager Finance and Corporate Service, Karachi 2012 PTD 130 ref.

Abad ur Rehman for Petitioner.

Dr. Farhat Zarar and Sh. Anwaar-ul-Haq for Respondents.

2022 P T D 737

[Islamabad High Court]

Before Saman Rafat Imtiaz, J

MOL PAKISTAN OIL AND GAS COMPANY through Authorized Officers

Versus

The ISLAMABAD CAPITAL TERRITORY ADMINISTRATION through Chief Commissioner and 4 others

Writ Petition No.3562 of 2020, decided on 28th February, 2022.

West Pakistan Finance Act (XXXIV of 1964)----

----S.11 & Seventh Schedule, Serial No.1 [as amended by S.4 of Finance Act, 2019]---Motor Vehicles Ordinance (XIX of 1965), S. 28---Companies Act (XIX of 2017), Ss.2(17)(35), 434 & 450---Foreign company---Professional tax---Registration of vehicles---Petitioner was a foreign company and aggrieved of demand made by Motor Registration Authority for deposit of Professional tax---Validity---Foreign company was not a company registered under Companies Act, 2017---Foreign companies with place of business established in Pakistan were regulated and required to deliver certain documentation pursuant to Ss.434 to 450 of Companies Act, 2017 but could not be equated to the status of companies formed and registered under Companies Act, 2017---Foreign companies were incorporated outside Pakistan and registered under applicable law of country of their incorporation--- Regarding "company" and "foreign company" under Companies Act, 2017, none of subcategories under serial No.1 contained in Seventh Schedule to S.11 of West Pakistan Finance Act, 1964, as substituted vide S. 4 of Finance Act, 2019 applied to a place of business / branch office established by a foreign company in Pakistan as they were only applicable to companies registered under Companies Act, 2017--- Demand of professional tax was applicable upon company registered under Companies Act, 2017, having capital exceeding PK.Rs. 200 million whereas petitioner company was a branch office of a foreign company---High Court set aside issuance of demand notice to petitioner company as the same was ultra vires West Pakistan Finance Act, 1964 duly amended vide S.4 of Finance Act, 2019--- Constitutional petition was allowed accordingly.

Lone Cold Storage, Lahore v. Revenue Officers, Lahore Electric Power Company 2010 PTD 2502; Province of Punjab v. Sargodha Textile Mills Limited PLD 2005 SC 988 and Federal Government Employees Housing Foundation v. Malik Ghulam Mustafa 2021 SCMR 201 ref.

Muhammad Hamzah for Petitioner.

Rana Imran Farooq, A.A.G.

Barrister Syeda Jugnoo Kazmi, State Counsel.

Asif Jahangir Khan, Inspector Excise and Taxation Office for Respondents.

2022 P T D 1097

[Islamabad High Court]

Before Athar Minallah, CJ

Messrs TELENOR PAKISTAN (PVT.) LTD.

Versus

FEDERATION OF PAKISTAN through Ministry of Finance and 4 others

Writ Petition No.1768 of 2021, decided on 21st February, 2022.

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

----Ss.54, 124 & 134A---Alternate dispute resolution---Recovery notice---Plea raised by petitioner company was that all orders passed by various forums had to be taken into account before initiating recovery proceedings---Validity---Liability to pay tax was relatable to assessment order or an order passed under any other provision---Liability of tax due, once created, had to be discharged immediately unless it was stayed or allowed to be paid in a particular manner e.g. in installments---Provision of S.124 of Income Tax Ordinance, 2001, did not have an overriding effect nor contemplated that all orders passed by competent forums had to be dealt with together so that a consolidated order was passed to determine total tax profile liability of taxpayer---Authorities were at liberty to proceed in accordance with law pursuant to issuance of recovery notice in question---Petitioner company was entitled to apply to competent authority to allow payment of outstanding amount in installments---Constitutional petition was dismissed, in circumstances.

China Harbour Engineering Company Ltd. through Liu Ce v. Pakistan through Secretary Revenue Division and 3 others 2017 PTD 1852 rel.

(b) Interpretation of statutes---

----Fiscal statute---Two explanations---Principle---Fiscal statutes are that the provisions are required to be interpreted literally and equity or presumption are alien thereto---If a provision of taxing statute can have two reasonable explanations then one which is favourable to taxpayer has to be accepted---Any ambiguity is required to be resolved in favour of taxpayer---Redundancy cannot be attributed to lawmaker---Every word and part of statute has to be given meaning and effect---Presumption is always that Legislature has used every word in a context and for a purpose---Statute has to be read as a whole and intention of Legislature has to be discovered by paying attention to what has been said---While interpreting fiscal statutes Court looks at what is clearly said and there is no room for any intendment nor is there any equity about a tax---No presumption as to tax and nothing has to be read in or implied and one can only look fairly at the language used.

Federation of Pakistan through Secretary Ministry of Finance and others v. Haji Muhammad Sadiq and others PLD 2007 SC 133; Aslam Industries Ltd., Khanpur v. Pakistan Edible Corporation of Pakistan and others 1993 SCMR 683; Collector of Customs (Appraisement), Karachi and others v. Messrs Abdul Majeed Khan and others 1977 SCMR 371 and Messrs Hirjina & Co. (Pakistan) Ltd., Karachi v. Commissioner of Sales Tax Central Karachi 1971 SCMR 128 rel.

Ali Sibtain Fazli, Advocate Supreme Court, Naeem Ahmed Awan and Abad ur Rehman for Petitioners.

Syed Muhammad Tayyab, Dy. Attorney General for Respondents.

Syed Ishfaq Hussain Naqvi, Advocate Supreme Court for Respondents.

Ahmad Shakeel Babar, Deputy Commissioner Inland Revenue.

2022 P T D 1220

[Islamabad High Court]

Before Athar Minallah, CJ and Sardar Ejaz Ishaq Khan, J

Messrs WARID TELECOM (PVT.) LIMITED through Head of Tax, Corporate and Regulatory Litigation

Versus

APPELLATE TRIBUNAL INLAND REVENUE through Chairman, ATIR DIVISIONAL BRANCH, ISLAMABAD and 4 others

Sales Tax Reference No.11 of 2022, heard on 9th May, 2022.

(a) Interpretation of statutes---

----Fiscal statute---Scope---Fiscal statute is required to be interpreted literally and equity or presumption are alien thereto---If provision of taxing statute can have two reasonable explanations then one which is favourable to taxpayer has to be accepted---Any ambiguity is required to be resolved in favour of tax payer---Redundancy cannot be attributed to lawmaker---Every word and part of statute has to be given meaning and effect---It is always presumed that Legislature has used every word in a context and for a purpose---Statute has to be read as a whole and intention of Legislature has to be discovered by paying attention to what has been said--- While interpreting fiscal statute Court looks at what is clearly said---No room for any intendment nor is there any equity about a tax---No presumption as to tax and nothing was to be read in or implied and one could only look fairly at the language used.

Federation of Pakistan through Secretary Ministry of Finance and others v. Haji Muhammad Sadiq and others PLD 2007 SC 133; Aslam Industries Ltd., Khanpur v. Pakistan Edible Corporation of Pakistan and others 1993 SCMR 683; Collector of Customs (Appraisement), Karachi and others v. Messrs Abdul Majeed Khan and others 1977 SCMR 371 and Messrs Hirjina & Co. (Pakistan) Ltd., Karachi v. Commissioner of Sales Tax Central Karachi 1971 SCMR 128 rel.

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

----Ss.11, 11-B & 47---De novo proceedings---Assessment giving effect to any order---Scope---Tax payer was aggrieved of remand of proceedings for de novo consideration by Taxation Officer---Validity---Such power was not vested in Commissioner Inland Revenue (Appeals)---Such orders were not assailed and, therefore, after independent determination, Taxation Officer decided earlier issued show-cause notices anew--- Proceedings were covered under S.11 of Sales Tax, Act 1990 and did not attract S.11(B) of Sales Tax Act, 1990---Appellate Tribunal Inland Revenue also directed Taxation Officer to scrutinize all issues so raised and then to make determination whether taxpayer was eligible for grant of exemption---Such remand was in the nature of 'de novo consideration' and it did not affect nor prejudice the show-cause notice, which had been issued under S.11(5) of Sales Tax Act, 1990---Subsequent proceedings in all the cases were covered under S.11 of Sales Tax Act, 1990 and not under S.11(B) of Sales Tax Act, 1990---High Court set aside the order passed by Appellate Tribunal Inland Revenue as it did not properly appreciate distinction between Ss. 11 & 11(B) of Sales Tax Act, 1990 and erred in deciding appeals on the sole ground that those were not competent---High Court remanded the matter to Appellate Tribunal Inland Revenue for decision afresh on appeals as proceedings were covered under S.11 of Sales Tax Act, 1990, after affording opportunity of hearing to parties---Reference was disposed of accordingly.

Muhammad Usman Shaukat and Muhammad Mohsin Nazir for Applicants.

Syed Ishfaq Hussain Naqvi and Babar Bilal and Dr. Muhammad Hasnain, AC, IR for Respondents.

2022 P T D 1235

[Islamabad High Court]

Before Babar Sattar, J

USMAN ARSHAD

Versus

FEDERATION OF PAKISTAN through Secretary Revenue, Islamabad and 6 others

Writ Petitions Nos.728, 890 and 924 of 2021, decided on 16th February, 2022.

(a) Interpretation of Constitution---

----Excessive delegation---Scope---Scheme of rule of law is based on principle of limited powers as enumerated by the Constitution---Separation of powers is a salient feature of the Constitution and therefore to the extent that the Constitution entrusts the Legislature with certain function it is not for the Legislature to sub-delegate such function to another branch of the State such as the Executive.

(b) Interpretation of statutes---

----Delegated legislation---Scope---Delegated legislation can be ultra vires parent legislation when it is in conflict with provisions of parent statute, when enacted without following procedures prescribed in parent statute, if it has been enacted in excess of powers conferred by parent statute, if it has been enacted for mala fide or collateral purposes not envisaged by parent statute or when exercise of authority is found to be arbitrary or capricious.

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

----Ss. 207 & 209(6)---Notification SRO No.115(I)/2015, dated 09-02-2015---Delegation of power--- Notification, vires of---Petitioner assailed issuance of show-cause notices by Director General (I&I) who had been delegated authority of Federal Board of Revenue under notification SRO No.115(I)/2015, dated 09-02-2015---Validity---Legislative delegated to Federal Board of Revenue extremely wide powers for the purposes of administration of tax machinery and human resource management within the tax structure---Creating parallel structures within the tax machinery might not be the smartest way of administering tax collection system---Creating parallel structures might result in disputes and confusing regarding vesting of jurisdiction within tax officers---Provision of S.209(6) of Income Tax Ordinance, 2001, clarified that in the event of disagreement over who had jurisdiction in relation to a person, such question was to be settled by the Board---Mechanism was provided within Income Tax Ordinance, 2001, to address any conflict or confusion regarding overlapping jurisdiction of officials exercising authority in relation to taxpayer--- No question of breach of fundamental rights of taxpayers was involved--- Petitioners did not assail exercise of any adjudicatory power or function by officers comprising Director General (I&I)---Petitioners only assailed manner in which administrative discretion and rule-making authority delegated by Legislature pursuant to Income Tax Ordinance, 2001, and Federal Board of Revenue Act, 2007, had been discharged by Federal Board of Revenue on the ground that such exercise was liable to be struck down for being unreasonable---Deferential review of SRO No. 115(I)/2015, dated 09-02-2015, did not lead to the conclusion that exercise of authority by Federal Board of Revenue was so unreasonable that no reasonable person could have exercised administrative authority in such manner---Such exercise of authority was capricious or aimed at serving a collateral purpose not envisaged by S.230 of Income Tax Ordinance, 2001---High Court declined to interfere in show cause notices as the same were not marred by any jurisdictional defect---Constitutional petition was dismissed, in circumstances.

Nestle Pakistan Limited and another v. Federation of Pakistan and others 2021 PTD 521 disent.

Saleem Butt v. Pakistan through Secretary Revenue Division and others (Suit No.1872 of 2016) rel.

The Commissioner Inland Revenue, Zone-III, RTO-II, Lahore v. Messrs Hamza Nasir Wire and others 2020 PTD 1790; Hassan Shahjehan v. FPSC PLD 2017 Lah. 665; Pakistan Tobacco Company Ltd. v. Federation of Pakistan and others 2016 PTD 596; Lahore Development Authority v. Ms. Imrana Tiwana 2015 SCMR 1739; The Judicial Review of Public Actions (PP 1828, Second Edition, Pakistan Law House, 2018); Brundaban Chandra v. State of Orissa AIR (1953) Orissa 121; OGRA through Secretary v. Midway II, CNG Station 2014 SCMR 220; Power Construction Corporation of China Ltd. v. Pakistan Water and Power Development Authority PLD 2017 SC 83 and Lahore Development Authority v. Imrana Tiwana 2015 SCMR 1739 ref.

(d) Constitution of Pakistan---

----Art.199---Constitutional jurisdiction---Judicial review---Separation of powers---Effect---Principle of separation of powers which endows Court with responsibility to ensure that powers as enumerated by the Constitution are exercised by branch of the State in which such powers are vested---Such principle also requires High Court to exercise restraint while exercising judicial review powers in relation to administrative and rule-making authority by the Executive which is per se not in breach of fundamental rights of citizens---Where a petition invites High Court to exercise judicial review over discharge of administrative and rule-making functions delegated by the Legislature to the Executive, High Court would be slow in assuming jurisdiction and would undertake a deferential review only to ensure that the authority has been exercised by the Executive within the bounds prescribed by the Legislature---While exercising such deferential review High Court does not second guess the manner in which such authority has been exercised merely because the Court believes that there was a preferential manner in which such authority could have been exercised---Where a petitioner invites High Court to exercise judicial review over exercise of adjudicatory authority or even rule-making and administrative authority by the Executive in a manner that infringes fundamental rights of citizens, the Court would subject such exercise of authority to strict scrutiny---No assumption that the Legislature would ever delegate authority to the Executive with the assumption that such authority would be exercised to undermine or circumvent fundamental rights of citizens as guaranteed by the Constitution.

Ch. Naeem ul Haq, Muhammad Faheem ul Haq and Muhammad Imran ul Haq for Petitioners.

Barrister Atif Raheem Burki, Raja Khalid Mehmood Khan, Deputy Attorney General and Farrukh Shahzad Dall, Assistant Attorney General for Respondents.

2022 P T D 1263

[Islamabad High Court]

Before Aamer Farooq, J

Messrs PAKISTAN HOUSING AUTHORITY FOUNDATION

Versus

The COMMISSIONER INLAND REVENUE APPEAL and others

Writ Petition No.2069 of 2021, decided on 16th June, 2021.

Income Tax Ordinance (XLIX of 2001)---

----Ss.127 & 128---Appeal to Commissioner (Appeals)---Procedure in appeal---Stay of recovery proceedings---Scope---Petitioner sought direction to the Commissioner (Appeals) to decide its pending appeal and stay application and in the meanwhile sought a restraining order against the department from initiating recovery proceedings in pursuance of recovery notice---Validity---Taxpayer was entitled to adjudication in respect of his disputed tax liabilities by at least one independent forum outside hierarchy of the department---Constitutional petition was disposed of with direction to the Commissioner (Appeals) to hear and decide the appeal and stay application within a period of sixty days and till then no coercive measures were to be adopted by the department.

Messrs Pak Saudi Fertilizers Ltd. v. Federation of Pakistan and others 2002 PTD 679; Z.N. Exporters (Pvt.) Ltd. v. Collector of Sales Tax 2003 PTD 1746 and Brothers Engineering (Pvt.) Ltd. v. Appellate Tribunal Sales Tax 2003 PTD 1836 ref.

Mehram Ali v. Federation of Pakistan and others PLD 1998 SC 1445 rel.

2022 P T D 1574

[Islamabad High Court]

Before Babar Sattar, J

PAKISTAN TOBACCO COMPANY LIMITED through Company Secretary

Versus

FEDERATION OF PAKISTAN through Secretary, Ministry of Finance, Islamabad and 3 others

Writ Petition No.272 of 2021, decided on 8th November, 2021.

(a) Constitution of Pakistan---

----Art.4---Administration of justice---Discretionary power---Remedy against---Discretionary power is to choose amongst more than one courses of action---Such exercise of discretion can only be interfered with when reasons for exercise of discretion (i) are not just, fair and reasonable i.e. are not bona fide reasons which can take into account relevant considerations and do not take into account extraneous considerations, and (ii) are not reasons in pursuit of objects of the statute i.e. in pursuit of purposes for which such power has been granted---If exercise of discretion is found to be unreasonable or driven by extraneous considerations or inspired by objects other than objects of statute, exercise of discretion is then liable to judicial review---Decision maker is under obligation under Art.4 of the Constitution to act in accordance with law---Discretion vested in an authority by law cannot be fettered--- Discretion is to be exercised by authority it is vested in, in a just, fair and reasonable manner--- Exercise of discretion for extraneous considerations amounts to unlawful exercise of such authority.

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

----Ss.177(1) & 214-C---Audit---Selection powers---"Commissioner" and "Federal Government"---Distinction---Object of vesting audit selection powers in Commissioner under S.177(1) of Income Tax Ordinance, 2001 are different from the object of vesting audit selection powers in FBR under S.214-C of Income Tax Ordinance, 2001---Exercise of powers by Commissioner under S.177(1) of Income Tax Ordinance, 2001 are always on subjective basis in view of an individual taxpayer's returns and history of compliance or non-compliance with provisions of Income Tax Ordinance, 2001---Exercise of audit selection powers by Federal Board of Revenue (FBR) under S.214-C of Income Tax Ordinance, 2001, are meant to be exercised on an objective basis for larger policy purposes.

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

----Ss.177(1) & 206---Selection for audit---Discretion of Commissioner---Authority of Federal Board of Revenue (FBR)---Scope---FBR is vested with no authority or jurisdiction under S.206 of Income Tax Ordinance, 2001, to control discretion vested in Commissioner under S.177(1) of Income Tax Ordinance, 2001.

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

----Ss.177, 206, 213 & 214-C---Sales Tax Act (VII of 1990), S.25---Federal Excise Act (VII of 2005), S.46---Constitution of Pakistan, Art.199---Constitutional petition---Audit---Pre-condition for selection---Self-assessment---Direction by Federal Board of Revenue---Effect---Petitioners / taxpayers assailed notices issued for purposes of audit under S.177(1) of Income Tax Ordinance, 2001, S.25 of Sales Tax Act, 1990 and S.46 of Federal Excise Act, 2005---Validity---FBR could exercise its audit powers on objective basis under S.214-C of Income Tax Ordinance, 2001, in the manner prescribed, but could not force hand of Commissioners to exercise their subjective powers under S.177(1) of Income Tax Ordinance, 2001 to trigger audit of taxpayers effectively selected by FBR---Notices to some petitioners / taxpayers who were oil marketing companies were issued by Commissioner under S.177(1) Income Tax Ordinance, 2001 in view of circular issued by FBR---- Exercise of authority by Commissioner in such manner was based on extraneous consideration not contemplated by S.177(1) of Income Tax Ordinance, 2001---Fact that Commissioner, in compliance with direction of FBR, selected certain petitioners / taxpayers for audit and then documented reasons for purposes of S.177(1) of Income Tax Ordinance, 2001, had established that such taxpayers were not selected after independent application of mind by Commissioner for reasons that could be deemed reasonable for purposes of S.177(1) of Income Tax Ordinance, 2001---Audit selection notices issued under S.177(1) of Income Tax Ordinance, 2001, in compliance with circulars issued by FBR under S.206 of Income Tax Ordinance, 2001 were based on extraneous considerations---Such exercise of discretion controlled and directed by FBR suffered from legal infirmity---FBR was vested with no authority under S.206 read with Ss. 213 & 214 of Income Tax Ordinance, 2001 or any provision of Sales Tax Act, 1990 or Federal Excise Act, 2005 to issue directive or circular to Commissioners directing them to undertake sectoral audits or otherwise bind them in terms of how they were to exercise their discretionary authority under S.177(1) of Income Tax Ordinance, 2001 or S.25(1) of Sales Tax Act, 1990 or S.46 of Federal Excise Act, 2005---Any such directive was devoid of justification and a nullity---Audit selection notice issued by Commissioner under S.177(1) of Income Tax Ordinance, 2001 to Oil Marketing Company on the basis of sectoral audit directive issued by FBR was tantamount to a notice issued for extraneous reasons and was liable to be set-aside---Audit proceedings initiated on the basis of a directive issued by FBR having been declared to be void would also be devoid of lawful authority and would cease---Such proceedings did not inhibit Commissioner from independently exercising his/her authority under S.177 of Income Tax Ordinance, 2001 on the basis of reasons that satisfied requirements of S.177 of Income Tax Ordinance, 2001---Constitutional petition was disposed of accordingly.

Pakistan Telecommunication Company Ltd. v. Federation of Pakistan 2016 PTD 1484; Commissioner of Inland Revenue, Sialkot v. Allah Din Steel and Rolling Mills 2018 SCMR 1328; Hyundai Nishat Motor (Pvt.) Limited v. FBR (W.P No. 25793/2021); Messrs Chenone Stores Ltd. v. Federal Board of Revenue 2012 PTD 1815; Messrs Pfizer Pakistan Ltd. v. Deputy Commissioner and others 2016 PTD 1429; Kohinoor Sugar Mills v. Federation of Pakistan 2018 PTD 821; The Federal Board of Revenue v. Chenone Stores Ltd. 2018 PTD 208; Shahnawaz (Pvt.) Ltd. v. Pakistan through the Secretary Ministry of Finance Government of Pakistan, Islamabad 2011 PTD 1558 and Indus Motor Company v. Federation of Pakistan 2020 (121) Tax 8 Karachi ref.

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

----S.117(1)---Audit---Selection power---Federal Board of Revenue, (FBR) direction to Commissioner---Scope---Federal Board Revenue is devoid of authority to direct Commissioners as to how to exercise discretionary authority under S.117(1) of Income Tax Ordinance, 2001, in relation to select taxpayers and does not have subject matter jurisdiction to issue such orders.

Chief Settlements Commissioners, Lahore v. Raja Muhammad Fazil Khan and others PLD 1975 SC 331; The Chairman, District Screening Committee, Lahore and another v. Sharif Ahmed Hashmi PLD 1976 SC 258 and Sarosh Haider v. Muhammad Javed Chundirgar PLD 2014 SC 338 rel.

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

----S.25(1)---General Clauses Act (X of 1897), S.24-A---Selection for audit---Record summoning of---Exercise of power---Scope---Commissioner is empowered under S.25(1) of Sales Tax Act, 1990, to call for record as and when required given that such is discretionary authority vested in Commissioner by statute---Commissioner is under obligation to record reasons for exercise of such discretionary authority in view of S.24A of General Clauses Act, 1897---Such exercise of authority must be just, fair and reasonable, on the basis of relevant considerations and not in pursuit of any extraneous considerations---Prior to exercising his discretionary authority under S.25(1) of Sales Tax Act, 1990, to summon record, Commissioner must state that there are reasonable grounds to conclude that self-assessed returns are not accurate reflection of registered person's tax liability and consequently there is need to audit record maintained by taxpayer in order to ascertain whether there is need to pass any reassessment order---Determination of existence of reasonable grounds to summon record for purposes of audit, is a prerequisite for exercise of such authority under S.25(1) of Sales Tax Act, 1990.

Raza Motor Industries v. Federation of Pakistan (W.P No.37251/2021) and Dewan Sugar Mills v. Federation of Pakistan (Suit No. 850/2020) rel.

(g) Constitution of Pakistan---

----Arts.4 & 199---Constitutional jurisdiction of High Court---Judicial review---Treating in accordance with law---Applicability---Every citizen has a right to be treated in accordance with law---Public official has an obligation to discharge authority vested in him in accordance with law as mandated by Art.4 of the Constitution--- Citizen on receiving end of exercise of authority not backed by law has a right to have such exercise of authority subjected to judicial review powers of High Court under Art. 199 of the Constitution, subject to the satisfaction of other requirements of maintainability prescribed therein.

Hyder Ali Khan and Shaheer Roshan Shaikh, for Petitioners (in Writ Petitions Nos. 1499 to 1507 and 1600 to 1606 of 2021).

Sirdar Jamal Sukhera and Sirdar Ahmed Jamal Sukhera for Petitioners (in Writ Petitions Nos. 1265 to 1269 and 2237 of 2021).

Hassan Kamran Bashir and Arif Humayun for Petitioner (in Writ Petitions Nos. 272 and 2202 of 2021).

Hafiz Muhammad Idrees and Syed Farid Bukhari for Petitioners (in Writ Petitions Nos. 1052, 1373, 1374, 1391, 1392, 1393, 1394 and 2364 of 2021).

Aamir Ahmed Khawaja for Petitioners (in Writ Petitions Nos.1168 to 1175 of 2021).

Ch. Naeem ul Haq and Ch. Imran ul Haq for Petitioners (in W.Ps. Nos. 1590 to 1594 of 2021).

Sahibzada Uzair Hashim for Petitioner (in W.P. No.2409 of 2021).

Muhammad Musawar Gill for Petitioner (in W.P No.2287 of 2021).

Farrukh Shahzad Dall, Assistant Attorney General.

Saeed Ahmed Zaidi, Barrister Atif Rahim Burki, Babar Bilal and Sheikh Anwar ul Haq for Respondents.

2022 P T D 1624

[Islamabad High Court]

Before Aamer Farooq, J

MOL PAKISTAN OIL AND GAS B.V

Versus

FEDERAL BOARD OF REVENUE, through Chairman, Islamabad and others

Writ Petition No.3902 of 2021, decided on 22nd September, 2022.

Sales Tax Act (VII of 1990)---

----S.48 ---Sales Tax Rules, 2006, R.71---Sales tax, recovery of---Tax recovered from bank accounts of tax payer before expiry of the 30 days period mentioned in R.71 of the Sales Tax Rules, 2006---Legality---Admittedly, the period of 30-days was not allowed to lapse or expire before initiation of the recovery process and the modalities mentioned in R.71 of the Sales Tax Rules, 2006 ('the Rules') were also not followed as required under the law inasmuch as the judgment of the Appellate Tribunal Inland Revenue was handed on 28-09-2021 and recovery was effected on the same day, which action on part of the revenue authorities (respondents) clearly violated R.71 of the Rules---Impugned action of effecting recovery from the bank accounts of the taxpayer (petitioner) without complying with R.71 was declared to be without lawful authority and accordingly set-aside---Constitutional petition was allowed with the direction that the amount unlawfully recovered from the bank accounts of the taxpayer shall be refunded/reimbursed to it within 30-days.

Abuzar Salman Khan Niazi and Wasim Abid for Petitioner.

2022 P T D 1632

[Islamabad High Court]

Before Mohsin Akhtar Kayani and Fiaz Ahmad Anjum Jandran, JJ

Messrs TELENOR PAKISTAN (PVT.) LTD.

Versus

APPELLATE TRIBUNAL INLAND REVENUE, ISLAMABAD and others

C.M. No.480 of 2021 in I.T.R. No.04 of 2015, C.M. No.481 of 2021 in I.T.R. No.01 of 2017, C.M. No.482 of 2021 in I.T.R. No.39 of 2018, C.M. No.479 of 2021 in I.T.R. No.40 of 2018 and C.M. No.477 of 2021 in I.T.R. No.41 of 2018, decided on 5th May, 2021.

Income Tax Ordinance (XLIX of 2001)---

----S.133---Reference to High Court---Suspension of judgment passed by High Court---Scope---Applicant sought sixty days' time to approach the Supreme Court and in the meanwhile Income Tax Department be restrained from recovery of the tax, the request was made on the basis of referred precedents---Validity---Case of applicant was entirely distinguishable from said case laws and even no restraining order could be passed as it would amount to causing loss to the public revenue---Applications being devoid of merit were dismissed.

2009 PTD 1880; 2003 YLR 1450 and PLD 2009 Kar. 69. distinguished.

Ali Sibtain Fazli for Appellants.

2022 P T D 1638

[Islamabad High Court]

Before Miangul Hassan Aurangzeb and Tariq Mehmood Jahangiri, JJ

COLLECTOR OF CUSTOMS, MODEL CUSTOMS COLLECTORATE (MCC), ISLAMABAD

Versus

Messrs SUGI DUTY FREE SHOP (PVT.) LTD. through Authorized Representative and another

Custom Reference No.19 of 2020, decided on 25th October, 2021.

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

----Ss.194-A & 13---Appeal to the Appellate Tribunal---Power to license private ware-houses---Scope---Department assailed order passed by Customs Appellate Tribunal on the ground that since the order in original was passed under S. 13, therefore, Customs Appellate Tribunal did not have jurisdiction to entertain appeal as remedy of an appeal against order passed under S. 13 is not provided under S. 194-A---Validity---Section 194-A did not provide a right of an appeal against an order passed under S. 13 by Collector of Customs (Adjudication)---Order passed by Customs Appellate Tribunal was set aside and the reference was answered in affirmative.

Writ Petition No.804 of 2018 dated 6-8-2020 and Zainab DF (Pvt.) Ltd. v Customs Appellate Tribunal 2018 PTD 1742 ref.

Messrs Sugi (Pvt.) Ltd. v. Collector of Customs 2011 PTD 2839 rel.

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

----S.194-A---Appeal to the Appellate Tribunal---Scope---Section 194-A of the Customs Act, 1969, shows that remedy of an appeal is provided against order passed under S. 179 by an Officer of Customs not below the rank of Additional Collector; an order passed by the Collector (Appeals) under S. 193; an order passed under S.195 by the Federal Board of Revenue (FBR) or an Officer of Customs not below the rank of Additional Collector; an order passed in revision by Director General, Customs under S. 25-D provided that such appeal shall be heard by a special bench of the Tribunal consisting of one Technical Member and one Judicial Member---Under S. 194-A(2) of the Customs Act, 1969, the FBR or Collector of Customs can prefer an appeal to the Customs Appellate Tribunal if aggrieved by an order passed by Collector (Appeals).

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

----S.196---Constitution of Pakistan, Art.199---Reference to High Court---Constitutional jurisdiction of High Court---Scope---Article 199 of the Constitution cannot be invoked while deciding customs reference.

(d) Appeal---

----Right of an appeal is a substantive right and can only be availed if the law provides for the same---Right of an appeal being the creature of a statute must be specified in clear terms that an appeal against a certain order was competent---Right of an appeal cannot be supplemented by implication.

Muhammad Amin Feroz Khan for Applicant.

Touqeer Akram for Respondents.

2022 P T D 1690

[Islamabad High Court]

Before Babar Sattar, J

SUNGI DEVELOPMENT FOUNDATION EMPLOYEES PROVIDENT FUND TRUSTEES

Versus

FEDERATION OF PAKISTAN through Secretary Ministry of Finance, Revenue and Economic Affairs and others

Writ Petition No.171 of 2021, decided on 16th May, 2022.

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

----Ss.4(1)(s) & 140---Tax recovery---Coercive measures---Mechanism--Redressal of grievance---Federal Board of Revenue is endowed with duty to facilitate taxpayers and establish mechanism to address their grievances and complaints---Under fiscal laws, including Income Tax Ordinance 2001, officials are conferred vast powers to adopt coercive measures to affect recovery of tax liability under S.140 of Income Tax Ordinance, 2001, from person holding money on behalf of taxpayer--- Such powers should never be abused to meet collection targets by Commissioner or by adopting abhorrent procedures such as not serving notice under S.140 of Income Tax Ordinance, 2001, in a timely fashion on taxpayer and or third party from whom collection is to be made in order to pre-empt opportunity for such persons to verify or challenge such demand to seek redressal against it---In case such power is abused by tax officials or wrongly exercised, leading to recovery from a person from whom collection could not be made under S.140 of Income Tax Ordinance, 2001, there must be provided a grievance redressal mechanism in discharge of Federal Board of Revenue's functions under S.4(1)(s) of Income Tax Ordinance 2001.

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

----Ss.122(5A), 140 & 170---Constitution of Pakistan, Art.199---Constitutional petition---Refunds---Coercive measures---Authorities recovered amount of tax from Bank account of petitioner / taxpayer---Grievance of petitioner / taxpayer was that amount recovered from bank account was not due and it was illegal and unlawful---Validity---Petitioner/taxpayer was neither liable for payment of any tax due nor paid any tax in lieu of any deemed generated by Commissioner---Question of refund of additional tax paid by petitioner / taxpayer did not arise---Provisions of S.170 of Income Tax Ordinance, 2001, was not attracted---Enforcement of recovery notice under S.140 of Income Tax Ordinance, 2001, against petitioner / taxpayer was illegal in breach of provisions of Income Tax Ordinance, 2001, and Art.24 of the Constitution---Such powers tantamount to abuse of authority or reckless disregard of need to exercise diligence by tax officials whose action resulted in confiscation of funds of petitioner / taxpayer from its Bank accounts--- High Court directed Chairman Federal Board of Revenue to ensure that cheque or pay order would be issued in the name of petitioner / taxpayer in an amount equal to that appropriated from the account---High Court further directed Chairman Federal Board of Revenue to bring to the attention of the Board, absence of grievance redressal mechanism for benefit of persons whose funds were wrongfully appropriated by tax officials in exercise of powers under Income Tax Ordinance, 2001, and lack of prescription of standards of diligence to be employed by tax officials, while exercising coercive powers to realize tax demand under provisions of income Tax Ordinance, 2001---High Court directed Federal Board of Revenue to exercise its powers under S.4(2) of Income Tax Ordinance, 2001 to enact an appropriate sub-statutory instrument to breathe life into S.4(1)(s) of Income Tax Ordinance, 2001, read together with S.7 of Income Tax Ordinance, 2001--- High Court further directed Chairman, Federal Board of Revenue to conduct an inquiry to determine whether there existed a practice across Tax jurisdiction in Pakistan whereby tax officials denied taxpayers and third parties due notice of demand under provisions of Income Tax Ordinance, 2001, to frustrate their right to seek remedy against such demand in order to meet recovery targets---High Court further directed Federal Board of Revenue to put in place a system of institutional checks against such practice in order to uphold rights of taxpayers and third part is to avail legal remedies against any tax demand generated against them in accordance with law---Constitutional petition was allowed accordingly.

Shezada Mazhar, Muhammad Jawwad Khan Lodi and Osama Shahid Khawaja for Petitioner.

Syed Ishfaq Hussain Naqvi for FBR.

Farrukh Shahzad Dall, Assistant Attorney General.

Abdul Hameed Khan Kundi for Respondent No.3.

Barrister Umer Aslam Khan for Respondent No.6.

2022 P T D 1730

[Islamabad High Court]

Before Babar Sattar, J

Messrs PAKISTAN TOBACCO COMPANY LTD. and others

Versus

FEDERATION OF PAKISTAN through Secretary, Ministry of Finance and others

Writ Petitions Nos.114, 186, 647 and 649 of 2016, decided on 8th November, 2021.

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

----S.4B---Constitution of Pakistan, Art.25---Super tax for rehabilitation of temporary displaced persons---Equality of citizens---Scope---Section 4B of the Income Tax Ordinance, 2001, is intra vires the Constitution and is also not in breach of any fundament right of citizens guaranteed by the Constitution, including right to equality guaranteed under Art.25 of the Constitution.

Messrs Attack Oil Co. Ltd. v. Federation of Pakistan 2019 PTD 934 rel.

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

----S.4B---Super tax for rehabilitation of temporarily displaced persons---Scope---No prohibition is envisaged in the Constitution that prevents the legislature from introducing a second charging section within a taxing statute and S. 4B of the Income Tax Ordinance, 2001, cannot be declared unconstitutional on such basis.

(c) Constitution of Pakistan---

----Arts.73 & 260---Procedure with respect to Money Bills---"Taxation"---Scope---Constitution in view of definition of "taxation" given in Art. 260 contemplates the imposition of special tax---Mere declaration of special purpose of a tax levied does not in itself transform such levy into fee or cess thereby taking it out of the scope of the tax for purposes of Art. 73(2) of the Constitution.

D.G. Khan Cement Company Limited v. Federal Board of Revenue and others 2018 PTD 287 rel.

(d) Interpretation of statutes---

----Taxing statute---Double taxation---Scope---Intent of framers of the Constitution cannot be read into Constitution to place an embargo on creation of a second incidence of taxation in relation to the same income or property and consequently the levy of any tax cannot be declared unconstitutional on the basis that it amounts to double taxation---Rule against double taxation is a rule of statutory interpretation whereby a court assumes in relation to a fiscal statute that the legislature cannot be deemed to have intended to subject a taxpayer to double taxation unless it does so through clear and unequivocal words---Double taxation cannot be presumed as a matter of statutory interpretation and the presumption is always against double taxation where the language of the statute is open to interpretation----Where the statute imposes double taxation through clear words, there is no room for interpretation and consequently the clear words used by the legislature making legislative intent plain must be given effect by the Courts.

Pakistan Industrial Development Corporation v. Pakistan through Secretary, Ministry of Finance 1992 SCMR 891 and Sohail Jute Mills Ltd. v. Federation of Pakistan PLD 1991 SC 329 ref.

D.G. Khan Cement Company Limited v. Federal Board of Revenue and others 2018 PTD 287 rel.

(e) Taxation---

----Only such person is to be subjected to the charging section of a taxing statute who falls within the scope of such charging section in view of the clear words used in the statute.

(f) Interpretation of statutes---

----Vires of statute---Scope---Court must lean in favour of the constitutionality of a legislation.

Lahore Development Authority v. Ms. Imrana Tiwana 2015 SCMR 1739 ref.

(g) Interpretation of statutes---

----"Laws relating to economic activities"---Principles of interpretation.

Court, while interpreting laws relating to economic activities, view the same with greater latitude than the laws relating to civil rights such as freedom of speech, religion etc., keeping in view the complexity of economic problems which do not admit of solution through any doctrinaire or strait jacket formula.

Messrs Ellahi Cotton Mills Ltd. v. Federation of Pakistan PLD 1997 SC 582 foll.

(h) Interpretation of statutes---

----Vires of statute---Fiscal statute---Laws relating to economic activities---Scope---In relation to challenges to the legality of fiscal statutes, judicial review powers are exercised on deferential basis---Courts exercise judicial restraint when it comes to the fiscal policy of the State and questions about its rationality and reasonability, in view of the doctrine of separation of powers that forms a foundational basis of the Constitution.

Messrs Ellahi Cotton Mills Ltd. v. Federation of Pakistan PLD 1997 SC 582 rel.

(i) Interpretation of statutes---

----Taxing statute---Where taxes are not expropriatory and confiscatory and the court finds that a fiscal statute does not suffer from any constitutional infirmity, it is not supposed to entangle itself with the technical questions as to the scope and modality of its working, etc---Different laws can be validly enacted for different sexes, persons in different age groups, persons having different financial standings and no standard of universal application to test reasonableness of a classification can be laid down as what may be reasonable classification in a particular set of circumstances may be unreasonable in the other set of circumstances---Requirement of reasonable classification is fulfilled if in a taxing statute the legislature has classified persons or properties into different categories which are subject to different rates of taxation with reference to income or property and such classification would not be open to attack on the ground of inequality or for the reason that the total burden resulting from such a classification is unequal.

Messrs Ellahi Cotton Mills Ltd. v. Federation of Pakistan PLD 1997 SC 582 foll.

Hassan Kamran Bashir and Arif Humayun for Petitioner (in W.P No.114 of 2016).

Muhammad Raheel Kamran Sheikh for Petitioners (in Writ Petitions Nos.647 and 649 of 2016).

Jawad Hassan and Barrister Omer Azad Malik for Petitioner (in W.P No. 186/2016).

Farrukh Shahzad Dall, Assistant Attorney General for Respondent.

Syed Ishfaq Hussain Naqvi for Respondents (in W.P No.114 of 2016).

Babar Bilal for Respondents (in W.P. No. 114 of 2016 and W.P No. 186 of 2016).

Dr. Farhat Zafar and Sheikh Anwar ul Haq for Respondent No.4 in Writ Petition No.4 (in Writ Petitions Nos.647 and 649 of 2016).

Saeed Ahmed Zaidi for FBR (in Writ Petitions Nos.647 and 649 of 2016).

2022 P T D 1749

[Islamabad High Court]

Before Aamer Farooq, J

The ASSISTANT COLLECTOR CUSTOMS (PREVENTIVE DIVISION), MCC, ISLAMABAD and another

Versus

SHER MUHAMMAD and others

Writ Petition No.3767 and Criminal Original No.278 in W.P. No.2817 of 2020, decided on 22nd September, 2021.

Customs Act (IV of 1969)---

----S.194---Constitution of Pakistan, Art.199---Constitutional petition---Non-functioning of Customs Appellate Tribunal---Scope---Customs department sized a vehicle owned by respondent---Vehicle was ordered to be released unconditionally vide order-in-original---Department filed appeal before the Customs Appellate Tribunal but the Tribunal was not functional at that time---Meanwhile, respondent filed a petition under Art.199 of the Constitution seeking direction for handing over possession of the vehicle; the petition was allowed---Department challenged the judgment before the Supreme Court---Department through the present petition sought suspension of the order-in-original whereas the respondent filed a contempt petition for violation of the judgment passed by the High Court---Validity---Since the Customs Appellate Tribunal was now functional, hence, the constitutional petition had become infructuous---Order directing the Customs Department to hand over possession of the vehicle was made in the context that the Customs Appellate Tribunal was not functional and order-in-original held the field but since now the Customs Appellate Tribunal was functional, therefore, it was appropriate to allow the forum of competent jurisdiction to decide the matter---Petitions were disposed of accordingly.

M.D. Shahzad and Ch. Talib Hussain for Petitioner (in W.P. No.3767 of 2020).

Kaleem Ullah Khan for Respondents (in W.P. No.3767 of 2020).

Kaleem Ullah Khan for Petitioner (in Criminal Original No.3767 of 2020).

2022 P T D 1763

[Islamabad High Court]

Before Babar Sattar, J

Messrs PAKISTAN LNG LIMITED through Authorized Representative

Versus

FEDERATION OF PAKISTAN, through Secretary Revenue Division, Ministry of Finance, Islamabad and 2 others

Writ Petition No.2622 of 2022, decided on 7th September, 2022.

(a) Constitution of Pakistan---

----Art.4---Protection of law---Act not prohibited in law---Scope---Constitution and body of statutory laws under it, aim to protect citizens and prohibit the State from treating citizens in manner that is not backed by law---Such requirement has to be understood in a context wherein a citizen is at liberty to do what he/she is not prohibited by law from doing---Functionaries of State can only interfere with his/her life, liberty, body, reputation or property where they are authorized by law to interfere in such manner as prescribed by law.

(b) Constitution of Pakistan---

----Part II, Chap 1, Arts. 4 & 10-A---Fundamental rights---Principles of natural justice---Scope---Principles of natural justice have been regarded as a fundamental rights of a citizen--- Principles of natural justice are understood to include right of a citizen to a hearing and right to be heard by an impartial Tribunal--- Independence of judiciary is recognized as a salient feature of the Constitution and right to access to justice includes right to have one's civil entitlements and obligations adjudicated by a Tribunal or Court that is a neutral arbiter of law--- Importance of such rights was formally recognized when Art. 10-A of the Constitution was introduced in the Constitution by 18th Constitutional Amendment to afford a textual basis to such rights.

Mehram Ali and others v. Federation of Pakistan and others PLD 1998 SC 1445; Messrs Pak-Saudi Fertilizers Limited v. Federation of Pakistan and others 2002 PTD Kar. 679; Brothers Textile Mills Limited v. Federation of Pakistan through Secretary and 03 others 2003 PTD Lah. 2834; Z.N. Exports Private Limited v. Collector of Sales Tax 2003 PTD 1746; Sun-Rise Bottling Company Private Limited through Chief Executive v. Federation of Pakistan and 4 others 2006 PTD 535 and Commissioner of Income Tax and others v. Messrs Media Network and others 2006 PTD 2502 rel.

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

----Ss.138 & 140---Constitution of Pakistan, Art. 199---Constitutional petition---Tax liability, recovery of---Time frame to fulfill liability---Coercive measures---Principle---Petitioner / tax payer was aggrieved of recovery of tax liability by attaching its bank accounts---Validity---If tax liability as determined through assessment order by Adjudicating Authority was upheld by Appellate Authority or even by Appellate Tribunal Inland Revenue, the tax due from taxpayer as determined by assessment order might have not been changed, but taxpayer still needed to be notified of the timeframe within which the taxpayer was required to discharge such tax liability, failing which the State could resort the exercise of its coercive power to enforce recovery under Ss.138(2) or 140 of Income Tax Ordinance, 2001--- Recovery notice in question was devoid of legal authority as it was issued in exercise of authority under S. 140 of Income Tax Ordinance, 2001 without complying with mandatory requirement of issuing a notice under S. 138(1) of Income Tax Ordinance, 2001---High Court declared such notice as void ab initio, fraud on the statute---Reasonable timeframe was to be specified under S.138 (1) of Income Tax Ordinance, 2001, by Adjudicating Authority within which the tax due was to be paid---Such reasonable time could not be a period of less than 7 days as purpose of such provision was to put taxpayer on notice to discharge tax obligation within a reasonable period and also afford taxpayer an opportunity to avail his statutory right of appeal, if so advised---Constitutional petition was allowed in circumstances.

Messrs Huawei Technologies Pakistan Private Limited v. Commissioner Inland Revenue and others 2016 PTD 1799; Mst. Fouzia Razzak v. Federal Board of Revenue and others 2021 PTD 162 and Romex International v. Federation of Pakistan and others 2022 PTD 760 ref.

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

----S.138(1)---Tax liability, recovery of---Coercive measures---Object, purpose and scope---Purpose of S. 138(1) of Income Tax Ordinance, 2001 is to inform taxpayer that tax liability created by Adjudicating Authority has been affirmed by Appellate Authority and would be recovered by the State unless such assessment is interfered with by a higher appellate forum.

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

----Ss.138 & 140---Tax liability, recovery of--- Duties of Recovery officials---Scope---Public servants discharging State authorities under Income Tax Ordinance, 2001 cannot assume role of revenue generators on behalf of the State working with premeditation to meet monthly, quarterly, biannual or annual quotas--- Public servants acting as tax authorities exercising powers under recovery provisions of the Ordinance cannot act like bankers with monthly fund-raising targets that they must meet as a measure of their performance--- Public servants are under obligation to act in just, fair and reasonable manner and as functionaries of the State they are under an obligation to exercise their authority under Income Tax Ordinance, 2001, such that it does not undermine rights of taxpayers to due process, fair trial and access to justice--- Tax authorities are under an obligation to afford protection of law to citizens rather than becoming instruments of denuding taxpayer of such protection.

Uzair Shafie for Petitioner.

Sheikh Anwar ul Haq for FBR.

Farrukh Shahzad Dall, Assistant Attorney General.

2022 P T D 1876

[Islamabad High Court]

Before Mohsin Akhtar Kayani and Sardar Ejaz Ishaq Khan, JJ

COMMISSIONER OF INLAND REVENUE, ZONE-III, REGIONAL TAX OFFICE, ISLAMABAD

Versus

Messrs PEARL SECURITY (PVT.) LIMITED

Income Tax Reference Applications Nos.51 and 52 of 2016, decided on 31st August, 2022.

Income Tax Ordinance (XLIX of 2001)---

----Ss.133 & 170---Tax return---Limitation---Inaction of authorities---Effect---Question was with regard to limitation of tax refund---Validity---Taxpayer was estopped from asserting a favourable refund order by default where it had statutory recourse against inaction of authorities, which it opted not to pursue---Taxpayer not filing an appeal under S.170(5)(b) of Income Tax Ordinance, 2001 was apparently not pushed for an early resolution of its refund claim---Taxpayer could not turn around to hold tax officer to his duty to pass refund order within 60 days, while absolving itself altogether of any responsibility for proactive action for refund claim to be decided as early as possible after expiry of 60 days---High Court answered Reference in favour of authorities and against the taxpayer, the question of law so formulated---Timeframe under S.170(4) of Income Tax Ordinance, 2001 to pass refund order was directory as long as right of appeal under S.170(5)(b) of Income Tax Ordinance, 2001 subsisted---Reference was allowed accordingly.

Commissioner Inland Revenue, Zone-II and another v. Messrs Sarwaq Traders and another 3 (Civil Petition No.4599 of 2021); The Collector of Sales Tax, Gujranwala and others v. Messrs Super Asia Mohammad Din and Sons and others 2017 SCMR 1427 and Mujahid Soap and Chemical Industries (Pvt.) Limited v. Customs Appellate Tribunal, Bench-I, Islamabad and others 2019 SCMR 1735 rel.

Manzoor Hussain for Applicant.

Amraiz Khan for Respondent.

2022 P T D 8

[Sindh High Court]

Before Muhammad Shafi Siddiqui and Agha Faisal, JJ

COLLECTOR OF CUSTOMS, MODEL CUSTOMS COLLECTORATE OF PREVENTIVE, CUSTOM HOUSE, KARACHI

Versus

Syed JAVED AHMED and another

Special Customs Reference Application No.424 and C.M.As. Nos.3750 and 3751 of 2018, decided on 27th September, 2021.

Customs Act (IV of 1969)---

----Ss.139 & 2(s)---Declaration of passenger or crew of baggage---Smuggling---Verbal declaration---Scope---Question before High Court was whether the Appellate Tribunal had not erred in applying Ss.139 & 142 of the Customs Act, 1969, by allowing the re-export of jewelry which was brought in violation of Customs Act, 1969---Respondent had arrived through a passenger flight from abroad, he was asked to declare if he was carrying any goods to be declared on which he told he had jewelry---Declaration in terms of S.139 of Customs Act, 1969, could be verbal---Verbal declaration was accepted as the respondent was in the arrival hall when he was asked to declare---Respondent had opted for authorized route to bring the goods in the jurisdiction---Prima facie there was no element of smuggling---Clause (89) of S.156(1) of the Customs Act, 1969, was of no avail as the prosecution had failed to establish that the accused was making an attempt to smuggle the goods into or out of Pakistan and the consequences of Cl. (8) were not attracted---No concrete evidence existed to prove that the goods were attempted to be smuggled nor even a case of reasonable suspicion was made out---Reference application was dismissed.

2022 P T D 39

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

QUALITY STEEL RE-ROLLING MILL, through Legally Authorized Officer

Versus

FEDERATION OF PAKISTAN through Secretary Revenue Division, Islamabad and 7 others

Constitutional Petition No.D-4662 of 2017 (And connected petitions, particularized in the Schedule1 hereto), decided on 16th April, 2021.

Sales Tax Act (VII of 1990)---

----S.74-A [as inserted by Finance Act, 2017]---SRO No.583(I)/2017 dated 1-7-2017---Vires of notification---Variation in incidence of taxation---Federal Board of Revenue---Jurisdiction---Petitioner companies assailed vires of Notification SRO No.583(I)/2017, dated 1-7-2017 on the plea that the same was issued in violation of the Constitution, as Federal Board of Revenue had brought variation in taxation---Validity---Authorities conceded that notification in question was hit by ratio laid down by Supreme Court in the case of Mustafa Impex PLD 2016 SC 808---Verbiage of S.74-A of Sales Tax Act, 1990 was that it was never inserted to afford any protection to exercise of powers exercised by the Board with the approval of Federal Minister in charge---Notification in question could not be saved in reliance upon S.74-A of Sales Tax Act, 1990---High Court declared that Notification SRO No.583(I)/2017 dated 1-7-2017 was ultra vires and of no legal effect as the same was violative of the law illumined by Supreme Court in Mustafa Impex case PLD 2016 SC 808---Constitutional petition was allowed in circumstances.

Mustafa Impex and others v. The Government of Pakistan and others PLD 2016 SC 808 fol.

P.M.D.C. v. Federation of Pakistan 2018 SCMR 1956; Pakistan Television v. Commissioner Inland Revenue 2017 SCMR 1145; Premier Systems v. Federation of Pakistan 2018 PTD 861; Dewan Motors v. Federation of Pakistan 2021 PTD 232; Al Razzaq Fibres v. Federation of Pakistan 2021 PTD 542; T.U. Plastic Industry Co. (Private) Limited v. Federation of Pakistan 2019 PTD 1542 and Multiline Associates v. Ardeshir Cowasjee and others 1995 SCMR 362 rel.

Barrister Kamal Azfar, Ms. Naveen Merchant, Jam Zeeshan, Imran Iqbal Khan, Muhammad Adeel Awan, Yacoob Nasir, Salman Yousuf, Ghulam Nabi Shar, Yasir Ali, Syed Irshad-ur-Rehman, Muhammad Waleed and Barrister Zain Mustafa Soomro for Petitioners.

Kafeel Ahmed Abbasi, Deputy Attorney General, Khalid Rajpar, Shahid Ali Qureshi, Muhammad Khalil Dogar, Dr. Shah Nawaz Memon, Ameer Bakksh Metlo, Masooda Siraj, Javed Hussain, Muhammad Aqeel Qureshi, Zulfiqar Ali Khan, Imran Ali Mithani, Irfan Mir Halepota, Zubair Hashmi, Qaim Ali Memon, Syed Mohsin Imam, Sarfaraz Khan Marwat, Mirza Nadeem Taqi, Noor Nabi, Mohabbat Hussain Awan, Okash Mustafa, Muhammad Taseer Khan and Zulfiqar Ali Mirjat for Respondents.

Tariq Aziz, Principal Appraiser, PMBQ.

2022 P T D 59

[Sindh High Court]

Before Muhammad Shafi Siddiqui and Agha Faisal, JJ

Messrs PANJGOOR GOODS TRANSPORT CO. through Attorney and others

Versus

FEDERATION OF PAKISTAN through Secretary, Ministry of Finance, Islamabad and others

C.P. D-4188 of 2020, S.C.R.As. Nos. 469, 955 of 2017 and 139 of 2018, decided on 11th October, 2021.

Customs Act (IV of 1969)---

----Ss. 2(s), 156(2), 157(2) & 196---SRO No.499(I)/2009, dated 13-06-2009---Smuggling of goods---Confiscation of vehicle---Respondent was alleged to have smuggled goods and his vehicles were also found to be used in violation of Ss.2(a), 156(2), 157(2) & 178 of Customs Act, 1969, therefore, vehicles were confiscated by authorities---Validity---Offence was governed by SRO No.499(I)/2009, dated 13-06-2009, issued under S.181 of Customs Act, 1969, and it provided that no option would be given to pay fine in lieu of confiscation in respect of goods or class of goods mentioned therein---Lawfully registered vehicle/conveyance, having packages and containers inside, found carrying smuggled goods, in false cavities or exclusively or wholly for transportation of offended goods under S.2(s) of Customs Act, 1969, had become subject matter of such offence---Vehicle or conveyance used exclusively or wholly for transportation of offended goods could not be distinguished from the one having packages and containers inside as such conveyance having packages and containers were inclusive of such definition of vehicle / conveyance---High Court answered the question in affirmative in favour of authorities and against the respondent---Reference was allowed accordingly.

Ms. Dil Khurram Shaheen for Petitioners.

Kafeel Ahmed Abbasi, Deputy Attorney General along with Hussain Bohra, Assistant Attorney General for Respondent No.1.

Khalid Rajpar for Respondent No.3 (in all S.C.R.As.)

2022 P T D 94

[Sindh High Court]

Before Muhammad Shafi Siddiqui and Mahmood A. Khan, JJ

UNIVERSAL ENTERPRISE through Proprietor

Versus

CUSTOM APPELLATE TRIBUNAL and 2 others

S.C.R.A. No.203 and C.M.A. No.1506 of 2019, decided on 27th October, 2021.

Customs Act (IV of 1969)---

----Ss.25 & 196----Import of goods---Determination of customs value of goods---Onus on importer to discharge burden with regard to determination of value of goods---Scope---Question before High Court was whether Appellate Tribunal could ignore material produced by taxpayer / importer (a corrected version of the invoice and apology letter from principal) to determine value of imported goods, and instead rely on the invoice that the Department had retrieved from the consignment, which was of a higher value---Held, that assessee / importer had failed to prove the corrected version of the invoice and the undated apology letter from the principal; did not disclose the actual invoice and did not prove as to what amount was remitted through banking or other channels to the principal - Importer had failed to discharge his burden as to the corrected version of invoice and therefore, the original invoice stood proved for simple ease that applicant itself had asked Bank to remit amount on basis of said invoice---Invoice which was retrieved was acted upon in terms of remittance through the Bank---Appellate Tribunal therefore adjudicated on the matter correctly---Reference was answered, accordingly.

Syed Nadeem-ul-Haq for Applicant.

Sarfaraz Khan Marwat for Respondent No.3.

Kafeel Ahmed Abbasi, DAG.

Hussain Bohra, Assistant Attorney General.

2022 P T D 109

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

Dr. ZAFAR SAJJAD through authorized attorney

Versus

COMMISSIONER INLAND REVENUE ZONE-I, REGIONAL TAX OFFICE-III, KARACHI

Income Tax Reference Application No.276 of 2018, decided on 19th April, 2021.

Income Tax Ordinance (XLIX of 2001)---

----Ss.2(20), 12, 18(b), 120, 122(9), 133 & Sched.II, Part-III Cl. 1(2) proviso [as inserted by Finance Act, 2019]---Tax payer, a permanent employee of a Hospital---Salary---Clinical supplements and incentives---Show-cause notice, issuance of---Taxpayers (assessees) were aggrieved of show-cause notice issued to them to include clinical supplements and incentives received by them from their employers as part of salary---Validity---Such income of taxpayers was excluded from purview of admissible rebate, earlier it was not excluded---If it had not been admissible earlier, there would have been no need for inserting the proviso to Sched.II, Part-III Cl.1(2) to Income Tax Ordinance, 2001 vide Finance Act, 2019, for exclusion such particular income---Legislative intent by not giving retrospective effect to the proviso showed that what was not excluded earlier was excluded with effect from Finance Act, 2019---Legislature was deemed to be aware of previous state of the law and if knowing that it made a change when repealing it and re-enacting some of its provisions the intention was to effect a change---Provision of proviso to Sched. II, Part-III Cl.1(2) of Income Tax Ordinance, 2001, showed intent of the Legislature and even otherwise benefit / rebate was admissible at least prior to Finance Act, 2019---Authorities below failed to appreciate correct proposition of law and Income Tax Ordinance, 2001, to conclude that two heads of income did not fall within the definition of salary in terms of S.12 of Income Tax Ordinance, 2001---High Court answered question in affirmative in favour of taxpayers and against the authorities---Reference was allowed accordingly.

Dr. A. Razzak Kazi v. Commissioner of Income Tax Hyderabad 1990 PTD 810; Commissioner of Income Tax v. Dr. Mrs. Usha Verma (2002) 254 ITR 404; Engro Vopak Terminal Ltd. v. Pakistan 2012 PTD 130; Standard Chartered Bank (Pakistan) Ltd. v. Pakistan 2017 PTD 1585; Commissioner of Income Tax v. I.B.M. SEMEA 2011 PTD 2275; Malik Muhammad Inam v. Federation of Pakistan 2006 SCMR 1670 and Qasim Ali v. Commissioner of Income Tax 2000 PTD 1288 ref.

Pakistan Tobacco Co. Ltd. v. Karachi Municipal Corporation PLD 1967 SC 241 rel.

Hussain Ali Almani, Sami-ur-Rehman Khan, Sameen Hayat, Mustafa Naqvi and Aitzaz Manzoor Memon for Petitioners/AKUH.

Kafeel Ahmed Abbasi and Muhammad Aqeel Qureshi for Respondents.

2022 P T D 168

[Sindh High Court]

Before Muhammad Shafi Siddiqui and Agha Faisal, JJ

Messrs SAMAD PIPE INDUSTRIES (PVT.) LTD. through Authorized Attorney

Versus

FEDERATION OF PAKISTAN through Secretary, Revenue Division Chairman, Islamabad and 2 others

C.P. D-3682 and C.M.A. No.18365 of 2016, decided on 1st October, 2021.

Customs Act (IV of 1969)---

----Ss.79 & 81---Constitution of Pakistan, Art.199---Constitutional petition---Goods declaration---Provisional assessment---Determination---Bank Guarantee for differential amount---Scope---Bank guarantee, deposit of---Petitioner company was importer who claimed that goods imported were released after provisional assessment---Authorities contended that goods were released after final assessment---Validity---If it was final determination or final assessment, there was no occasion of releasing of consignment on securing differential amount through Bank guarantee---Authorities did not ask for entire amount as was determined finally---Requirements of S.81 of Customs Act, 1969, were not complied with by authorities---High Court set aside notice issued by authorities to importer for re-validation of Bank guarantee as the same was of no effect---Constitutional petition was allowed accordingly.

Ahmed Ali Hussain for Petitioner.

Kafeel Ahmed Abbasi, D.A.G. for Respondents.

2022 P T D 205

[Sindh High Court]

Before Muhammad Shafi Siddiqui and Mahmood A. Khan, JJ

LOUIS DREYFUS COMPANY PAKISTAN (PVT.) LTD. through Authorized Officer

Versus

FEDERAL BOARD OF REVENUE through Chairman and 2 others

Constitutional Petition No.D-8297 of 2019, decided on 2nd November, 2021.

Sales Tax Act (VII of 1990)---

----Ss.71, 3 & 8---Sales Tax General Order No. 105/2019 dated 13.12.2019---Sales Tax Liability---Adjustment/refund of sales tax paid under special procedures---Scope---Petitioner, an importer of palm oil, sought input tax adjustment for period ending 30.06.2019 in respect of stocks available with it, after introduction of new sales tax regime on import of oil, effective from 01.07.2019---Held, that Sales Tax General Order No. 105/2019 dated 13.12.2019 provided clarity that after introduction of new regime, goods which had already been subject to sales tax under previous regime and were in stock till 30.09.2019 and were to be supplied after effective date of new regime, would be subjected to input tax adjustment under standard regime to save such goods from double / increased incidence of sales tax --- High Court observed that several sectors had been accommodated by the Department but importers of edible oil were not given equal fair opportunity and directed that said Sales Tax General Order was to be applied in true spirit in case of petitioner---Constitutional petition was disposed of, accordingly.

Zeeshan Khan for Petitioner.

Zulfiqar Ali Khan for Respondent No.2.

Kafeel Ahmed Abbasi, D.A.G. along with Hussain Bohra, Assistant Attorney General.

2022 P T D 212

[Sindh High Court]

Before Adnan Iqbal Chaudhry, J

AMSONS TEXTILE MILLS (PVT.) LIMITED Attorney

Versus

FEDERATION OF PAKISTAN through Secretary/Chairman and 5 others

Suit No.3 of 2019, decided on 5th May, 2021.

Sales Tax Act (VII of 1990)---

----S.4(d)---Notification SRO 509(I)/2009 dated 09-07-2007 and SRO 1125 (I)/ 2011 dated 31-12-2011---Civil Procedure Code (V of 1908), S.11---Suit for declaration and injunction---Zero-rating, entitlement of---Determination---Constructive res-judicata---Applicability---Plaintiff company was taxpayer and claimed benefit of zero-rating status to charge sales tax---Validity---Plaintiff sought essentially the same relief as earlier sought in Constitutional petition against Sales Tax General Orders, which relief was not granted by High Court--- Seeking such relief was barred by constructive res judicata and doctrine of election--- Classification of plaintiff by Gas Company, as a 'General industrial consumer' instead of 'registered manufacturer or exporter of five zero-rated sectors', for the purposes raising gas bills, was a consequence of withdrawal of zero-rated facility from plaintiff pursuant to the Sales Tax General Orders in question---Relief sought by plaintiff was only consequential to main relief sought against Sales Tax General Orders in question---If suit was not maintainable for the main relief, it could not be considered independently for consequential relief---If withdrawal of zero-rated facility had no bearing on its eligibility as a 'registered manufacturer or exporter of five zero-rated sectors' then issue raised by plaintiff was in the nature of a billing dispute and special remedy before special forum was provided under 'Complaint Resolution Procedure for Natural Gas, Liquefied Petroleum Gas (LPG), Compressed Natural Gas (CNG) and Refined Oil Products Regulations, 2003'---Suit was dismissed, in circumstances.

Muhammad Chiragh-ud-Din Bhatti v. The Province of West Pakistan 1971 SCMR 447 and Trading Corporation of Pakistan v. Devan Sugar Mills Ltd. PLD 2018 SC 828 ref.

Mushtaque Hussain Qazi for Plaintiff.

Nemo for Defendant No.1.

Dr. Shahnawaz Memon for Defendant No.2.

Muhammad Aqeel Qurashi for Defendant No.3.

Haider Naqi for Defendant No.4.

Nemo. for Defendant No.5.

2022 P T D 245

[Sindh High Court]

Before Muhammad Shafi Siddiqui and Mahmood A. Khan, JJ

COLLECTOR OF CUSTOMS through Additional Collector of Customs

Versus

Messrs FORTE IMPEX

Special Customs Reference Applications Nos.335 to 391 of 2012, decided on 25th October, 2021.

Customs Act (IV of 1969)---

----Ss.162, 163 & 196---Prevention of smuggling---Power to issue search warrant---Power to search and arrest without warrant---Question before High Court was whether Appellate Tribunal was justified in declaring proceedings for search and seizure unlawful on ground that mandatory requirements of S.163 of Customs Act, 1969 were not met---Held, that requirements of S.162 of Customs Act, 1969 could only be dispensed with when exceptional circumstances existed and S.163 of said Act empowered Departmental officer to make search without warrant, if he was satisfied that there was danger of removal of goods (which were to be specified)---Mandatory requirements of S.163 of Customs Act, 1969 meant that there was heavy burden on concerned officer carrying out search without warrant and he / she must prepare statement to include grounds for his / her beliefs , and list the goods or documents or things for which search was being made ---- Text of such statement in the present case seemed to be fishing expedition before dispensing with procedure of S.162 of Customs Act, 1969 and Departmental officer did not disclose what subject goods were smuggled and what specific documents he apprehended would be removed --- Only a genuine ground could have enabled such officer to invoke powers under S.163 of Customs Act, 1969---Nothing in the present case demonstrated any danger such officer apprehended nor there existed any details of goods required to be searched and furthermore a signed copy of such goods was not handed over to the occupier and therefore Appellate Tribunal rightly annulled proceedings initiated under S.163 of Customs Act, 1969 being illegal search and seizure---Reference was answered, accordingly.

Shahab Imam for Applicant.

2022 P T D 266

[Sindh High Court]

Before Muhammad Shafi Siddiqui and Agha Faisal, JJ

PAKISTAN MOBILE COMMUNICATIONS LTD. through Authorized Officer and others

Versus

PAKISTAN / FEDERATION OF PAKISTAN through Secretary Ministry Finance and others

Constitution Petitions Nos.D-4778 to D-4780 of 2021, decided on 8th October, 2021.

(a) Jurisdiction---

----Conferment---Principle---Jurisdiction is not conferred on mere surrender of a litigant by filing a lis before a Court or authority---Jurisdiction is conferred as to where the cause has triggered and this would create jurisdiction in accordance with law---Parties cannot opt or choose to decide jurisdiction on their own.

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

---- S.3, First Schedule, Table II, Item 6A---Sindh Sales Tax on Services Act (XII of 2011)---Constitution of Pakistan, Arts.142, 199, Fourth Schedule Entry Nos. 58 & 59---Constitutional petition--- Sales tax on services--- Regime of Federal and Concurrent Legislative List--- Pre and post 18th Amendment of Constitution--- Petitioner company assailed insertion of item 6A in Table II of First Schedule to Federal Excise Act, 2005---Plea raised by petitioner was that after 18th Amendment of the Constitution, sales tax on services had been excluded from the purview of Federation---Validity--- Post 18th Amendment of the Constitution, subject to Art. 142 of the Constitution the Legislative competence of Federation was questioned and whatever came within the domain of Federation for legislation after 18th Amendment of the Constitution, was excluded from provincial regime---Subjects which were excluded from Federal domain came in pool for Provincial consideration unless a case of trans-provincial subject could be made out---Despite such there could not be a physical yardstick to segregate the Legislative intent as the individual subject for legislation had to be seen from the scheme of Constitution as it was---Held, it was neither competence of the Federation to legislate after 18th Amendment of the Constitution nor it related to Federation to invoke Entry No.58 of the Fourth Schedule to the Constitution---Matters referred to in Entry No.59 of the Fourth Schedule to the Constitution were inconsequential as the same could not be invoked independently unless a reciprocal entry was found within the competence of Federation---High Court declared that legislation in question / Entry 6A to Table II of First Schedule to Federal Excise Act, 2005 was ultra vires the Constitution and the same was struck down--- Constitutional petition was allowed, in circumstances.

Pakistan International Freight Forwarders Association v. Province of Sindh and others 2017 PTD 1; Hirjina & Co. v. Islamic Republic of Pakistan 1993 SCMR 1342; Sindh Revenue Board v. Civil Aviation Authority 2017 SCMR 1344; Telenor Pakistan (Pvt.) Ltd. v. Pakistan 2017 PTD 2269; Muslim Commercial Bank v. Momin Khan 2002 SCMR 958; Shahida Maqsood v. President of Pakistan 2005 SCMR 1746; Asghar Hussain v. Election Commissioner of Pakistan PLD 1968 SC 387; Al Iblagh Limited v. Copyright Board 1985 SCMR 758; Flying Kraft Paper Mills (Pvt.) Ltd. v. Central Board of Revenue 1997 SCMR 1874; Federal Government v. Ayyan Ali 2017 SCMR 1179; Haji Farman Ullah v. Latif ur Rehman Khan 2015 SCMR 1708; Rana Tanveer Khan v. Naseer ud Din 2015 SCMR 1401; Mian Ghulam Jilani v. The Federal Government PLD 1975 Lah. 65; Meeran Bibi v. Manager Zarai Taraqayati Bank 2012 CLD 2029; Ejaz Rasool v. Member National Industrial Relations Commission 2014 PLC 288; Yousaf A. Mitha v. Aboo Baker PLD 1980 Kar. 492 and Collector of Sales Tax v. Wyeth Pakistan Limited 2009 YLR 2096 ref.

LPG Association of Pakistan v. Pakistan 2021 CLD 214 and Sui Southern Gas Company Ltd. v. Pakistan 2018 SCMR 802 distinguished.

(c) Interpretation of statutes---

----Conflict between a provision of statute and Constitution---Principle---In such conflict, the statute must yield to the superior mandate of the Constitution. [p. 277] C

Makhdoom Ali Khan along with Sami-ur-Rehman and Khawaja Aizaz Ahsan for Petitioners (in Constitution Petition No.D-4778 of 2021).

Raashid Anwar for Petitioner (in Constitution Petitions Nos.D-4779 to D-4780 of 2021).

Kafeel Ahmed Abbasi, Deputy Attorney General along with Hussain Bohra, Assistant Attorney General for Respondent No.1.

Ameer Bakhsh Metlo along with Fayaz Ali Metlo and Imran Ahmed Metlo for Respondents Nos.2 and 3.

2022 P T D 290

[Sindh High Court]

Before Muhammad Shafi Siddiqui and Mahmood A. Khan, JJ

OBS PAKISTAN (PVT.) LTD. through Manager Legal

Versus

FEDERATION OF PAKISTAN through Secretary Revenue Ex-Officio Chairman Federal Board of Revenue and 2 others

Constitutional Petition No.D-5113 of 2021 along with 72 others petitions decided on 17th November, 2021.

Income Tax Ordinance (XLIX of 2001)---

----Ss.170 & 221---Workers' Welfare Fund Ordinance (XXXVI of 1971), S.4 (1)---Federal Board of Revenue Circular No.4 of 2000 dated 17-2-2000 (FBR Circular)---Workers' Welfare Fund---Adjustment, availing of---Retrospective effect of Circular---Scope---Petitioners / companies were required to contribute towards their workers' welfare as Workers' Welfare Fund---Authorities on the basis of a FBR Circular declined adjustment of Workers' Welfare Fund liabilities against tax refund---Validity---Federal Board of Revenue Circular in question had only restored process of S.170 of Income Tax Ordinance, 2001, for claiming refund only however the actions which had already been taken thereunder were not open for a scrutiny at least under S.221 of Income Tax Ordinance, 2001---Notification in question had prospective effect only---Adjustments made and allowed on the basis of FBR Circular No.4 could not be subjected to the provisions of S.221 of Income Tax Ordinance, 2001--- Applications made under S.170 of Income Tax Ordinance, 2001, for refund had limitation of three years in terms of S.170(2) of Income Tax Ordinance, 2001 i.e. deemed assessment or when tax was paid whereas deemed assessment itself could not be subjected to amendment within five years of such deemed assessment---Purpose which could not be achieved under S.170 of Income Tax Ordinance, 2001, was available under other provisions of Income Tax Ordinance, 2001---High Court declared that subject of notices in question issued under S.221 of Income Tax Ordinance, 2001, claiming Workers' Welfare Fund prior to the effect of FBR Circular No.4 dated 25-5-2001, were illegal and unlawful for the purposes of S.221 Income Tax Ordinance, 2001---High Court declared that FBR Circular No.4 dated 25-5-2021, issued by Federal Board of Revenue under Income Tax Ordinance, 2001, was lawful and had its prospective effect---Constitutional petition was disposed of accordingly.

Workers Welfare Funds v. East Pakistan Chrome Tannery and others PLD 2017 SC 28; 2017 PTD 903; 1992 PTD 570; 2013 PTD 508; 2009 PTD 2139; 2008 PTD 253; PLD 2007 SC 308; 2006 PTD 2001; 2000 PTD 306 and 1971 PTD 204 ref.

Ovais Ali Shah, Ali Almani, Khawaja Aizaz Ahsan, Qazi Umair Ali, Sami-ur-Rehman Khan, Ms. Saman Rafat Imtiaz, Javaid Farooqi, Munir Iqbal and M. Amin Bandukda for Petitioners.

Kafeel Ahmed Abbasi, Deputy Attorney General along with Hussain Bohra, Assistant Attorney General, Iqbal Hussain, Munawar Ali, Syed Zaim Hyder Musavi along with Aizaz Ahmed, Tauqeer, Ahmed and Syed Farhan Ali Shah for Respondents.

2022 P T D 310

[Sindh High Court]

Before Irfan Saadat Khan and Muhammad Faisal Kamal Alam, JJ

HONG KONG SHANGHAI BANKING CORPORATION LTD.

Versus

DEPUTY COMMISSIONER OF INCOME TAX

I.T.A. No.945 of 2020, decided on 14th October, 2020.

Income Tax Ordinance (XXXI of 1979)---

----Ss.61, 62, 135 & 136---Banking Companies Ordinance (LVII of 1962), Ss.41, 83(5) & 91-A---Loan to employees---Factual controversy---Appellant/taxpayer was a Banking Company and dispute was with regard to amounts advanced to its employees as loan---Validity---Income Tax Appellate Tribunal ignored examination of factual aspect that whether any expenditure was incurred by appellant/taxpayer or not in providing loan to its employees at concessional rate---Appellant/taxpayer claimed that amounts so given to employees were from non-interest bearing account or current account or reserve account, which required a factual examination of the matter---No such exercise was made in such behalf as until and unless it was shown or proved that amounts of concessional loans given to employees had any nexus with diversion of expenditure, it could not be claimed that a benefit was provided either at concessional rate or free of cost to the employees, when it was claimed by appellant/taxpayer that amount so advanced to employees was from separate identifiable funds either from current account or reserve accounts--- High Court remanded the matter to Income Tax Appellate Tribunal, as the matter pertained to ascertainment of factual controversy--- Appeal was allowed accordingly.

Iqbal Salman Pasha for Appellant.

Muhammad Aqeel Qureshi for Respondent.

2022 P T D 345

[Sindh High Court]

Before Muhammad Shafi Siddiqui and Mahmood A. Khan, JJ

COMMISSIONER INLAND REVENUE

Versus

Messrs FILTERS PAKISTAN (PVT.) LTD.

Special Sales Tax Reference Applications Nos.94 to 96 of 2021, decided on 18th October, 2021.

Sales Tax Act (VII of 1990)---

----Ss.11, 74 & 47---Assessment of Tax and Recovery of Tax not levied or short levied or erroneously refunded---Time-frame prescribed by S.11(5) of Sales Tax Act, 1990 for issuance of show-cause notice to taxpayer for action under S.11 of the said Act, extension of---Scope---Question before High Court was whether after expiry of timeframe prescribed by S.11(5) of Sales Tax Act, 1990 for issuance of show-cause notice, could the same be extended or resurrected in a time-barred cause under SRO No.394(I)/2001 dated 20.05.2009 read with S.74 of Sales Tax Act, 1990---Held, that such powers to extend time were only to be exercised in a matter where proceedings were pending or notice had been initiated, meaning that an action had already been triggered and could not at belated stage when prescribed time had already lapsed---Such timeframe could not be extended in a past and closed transaction where rights were accrued in favour of an assessee/taxpayer---Reference was answered, accordingly.

2022 P T D 363

[Sindh High Court]

Before Muhammad Shafi Siddiqui and Mahmood A. Khan, JJ

Messrs DRIVELINE MOTORS LTD. through Authorized Officer

Versus

FEDERATION OF PAKISTAN through Secretary/Chairman Federal Board of Revenue and 2 others

Constitutional Petition No.D-6544 of 2020 and Special Customs Reference Application No.693 of 2019, decided on 5th November, 2021.

Customs Act (IV of 1969)---

----Ss.138 & 196---Customs Rules, 2001, Rr.86 & 89---Frustrated cargo---Re-export of shipment---Principle---Dispute was with regard to re-export of a vehicle which was denied by consignee to get it cleared---Validity---Frustrated cargo was the one which was brought into customs station by reason of inadvertence or misdirection or where consignee was untraceable or had dishonored his commitments and the consignor wished to have it re-shipped to him---Consignee had refused or dishonored his commitment, the consignor immediately acted upon by moving an application for re-export and that was exercised under the provision of R.88 of Customs Rules, 2001---No occasion for Collector Customs to have avoided or discarded application of consigner for re-export of vehicle as it was within the definition of frustrated cargo and permission should have been followed in terms of R.89 of Customs Rules, 2001, when Collector was satisfied--- Consignee on refusal to accept the cargo had requested customs authorities to re-ship the car to the consignor in terms of S.138 of Customs Act, 1969, read with relevant rules---Consigner was not aware of Import Policy Order, 2016 which did not permit import of vehicle which was older than three years---On account of dishonoring commitments of consignee, it had become a frustrated cargo and treatment in terms of S.138 of Customs Act, 1969, was to be provided---High Court declined to interfere in the order passed by Customs Appellate Tribunal and the question was answered in affirmative---Reference was dismissed, in circumstances.

Adnan Ahmed Zafar along with Aga Zafar Ahmed for Petitioner (in C.P. No.D-6544 of 2020 and for Respondent in S.C.R.A. No.693 of 2019).

Khalid Rajpar for Applicant (in S.C.R.A. No.693 of 2019).

Kafeel Ahmed Abbasi, Deputy Attorney General along with Hussain Bohra, Assistant Attorney General.

2022 P T D 372

[Sindh High Court]

Before Muhammad Shafi Siddiqui and Mahmood A. Khan, JJ

COLLECTOR OF CUSTOMS through Additional Collector of Customs

Versus

Messrs ABDULLAH TRADERS and others

SCRA No.948 of 2015 along with SCRAs Nos.949 to 1036 of 2015, decided on 21st October, 2021.

Customs Act (IV of 1969)---

----Ss.25-A, 32 & 32(3A)---Valuation ruling---Determination---Dispute was with regard to applicability of proper valuation ruling---Goods declaration in question was filed prior to insertion of S.25-A(4) in Customs Act, 1969---Validity---In earlier regime importers were neither issued fresh valuation ruling nor endorsed reasons for continuity of earlier valuation ruling---Section 25-A(4) of Customs Act, 1969, was clarified for continuity of existing valuation ruling until and unless revised or rescinded by competent authority---Authorities applied sequential method of S.25 of Customs Act, 1969, which was acceptable in previous regime prior to amendment carried out in terms of S.25-A (4) of Customs Act, 1969---Provision of S.25-A(4) of Customs Act, 1969, could not be pressed into service in respect of consignments which were imported in earlier regime i.e. between 9-4-2010 to 18-6-2010 in order in question to which no challenge was made---Only question raised was with regard to considering of valuation ruling, which ruling had been reviewed by competent authority by virtue of powers conferred under Ss.25-A & 25-D of Customs Act, 1969---High Court decided the question in favour of respondents---Reference was dismissed, in circumstances.

Iqbal M. Khurram for Applicant.

Nemo. for Respondent.

2022 P T D 390

[Sindh High Court]

Before Muhammad Shafi Siddiqui and Mahmood A. Khan, JJ

COMMISSIONER INLAND REVENUE ZONE-I

Versus

Messrs FAIZAN STEEL

Special Sales Tax Reference Application No.104 and C.M.A. No.793 of 2019, decided on 18th October, 2021.

Sales Tax Act (VII of 1990)---

----Ss.71, 3 & 47---Sales Tax (Special Procedure) Rules, 2007, Rr.58H, 58F & 58G---Sales tax liability, computation of---Payment of additional sales tax---Special procedure---Special procedure for payment of sales tax by steel melters, re-rollers and ship breakers---Nature of special procedure prescribed under S.71 of Sales Tax Act, 1990---Scope---Question before High Court was whether taxpayer paying sales tax under Special Procedure of R.58H of Sales Tax (Special Procedure) Rules, 2007, could be subjected to pay further sales tax under S.3(1)(A) of Sales Tax Act, 1990 on supplies---Held, that taxpayer in the present case being a manufacturer of steel products came within frame of special procedure extended through S.71 of Sales Tax Act, 1990---Since such taxpayer was being dealt with through a special regime, therefore the general treatment may not be applied for recovery of additional sales tax in terms of S.3(1)(A) of Sales Tax Act, 1990 from such taxpayer---Rule 58H of Sales Tax (Special Procedure) Rules, 2007 provided that payment of sales tax by manufacturer of steel products under said section would be considered final discharge of sales tax liability, and S.71 of Sales Tax Act, 1990 had an overriding effect of general provisions of the said Act, and therefore S.3(1)(A) of Sales Tax Act, 1990 could only be enforced in respect of goods which were being charged under S.3(1) of Sales Tax Act, 1990 at rate prescribed therein on ad-valorem basis---Reference was answered accordingly.

DIGICOM Trading (Pvt.) Ltd. v. Federation of Pakistan through Secretary Revenue Division/Chairman and another in 2016 PTD 648 rel.

2022 P T D 402

[Sindh High Court]

Before Muhammad Shafi Siddiqui and Mahmood A. Khan JJ

The COLLECTOR OF CUSTOMS

Versus

ABDUL GHAFOOR

Special Customs Reference Application No.418 and C.M.As Nos.3436, 3437 of 2018 and 1910 of 2021, decided on 18th October, 2021.

Customs Act (IV of 1969)---

----Ss.156(2) & 196---Smuggling---Nomenclature of goods---Goods were seized by authorities for discrepancy of showing the same as LCD TVs instead of LED TVs---Validity---Show-cause notice did not demonstrate that the goods were brought within the territory of Pakistan through routes other than notified routes or that duties were not paid---On a minor discrepancy showing goods as LCD instead of LED nothing would turn and was of no consequence when rest of the nomenclatures of seized goods were same---Auction report dated 11-9-2015, which was a delivery order as well, disclosed auction date as 26-08-2015 and seizure report was of the following month i.e. 18-09-2015---High Court declined to interfere in the order of release of goods passed by Customs Appellate Tribunal---High Court decided the question framed in affirmative---Reference was dismissed, in circumstances.

Pervez Ahmed Memon for Applicant.

2022 P T D 410

[Sindh High Court]

Before Muhammad Shafi Siddiqui and Agha Faisal, JJ

Messrs SEA KING SHIPPING AGENCIES through Proprietor

Versus

ASSISTANT COLLECTOR OF CUSTOMS (GROUP-VII) MODEL CUSTOMS COLLECTORATE OF APPRAISEMENT and 2 others

C.P. No.D-2616 of 2018, decided on 24th September, 2021.

(a) Constitution of Pakistan---

----Art.199---Customs Act (IV of 1969), S.209---Constitutional petition---Liability of principal and agents---Clearing agent, responsibility of---Scope---Petitioner, a clearing agent, challenged notice issued for the recovery of duties and taxes as assessed by the customs authorities---Validity---Recovery was required to be made from importer, even in terms of the impugned notice---No evidence was available on record from which it could even remotely be presumed that there was any kind of connivance between petitioner and the importer or that the petitioner had acted as ostensible importer---High Court observed that in absence of any determination against the petitioner, notice for recovery of outstanding duties and taxes against the petitioner was unlawful---Constitution petition was allowed.

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

----S.209---Liability of principal and agents---Scope---Section 209 of Customs Act, 1969 does not extend its arms against a clearing agent acting in good faith without any collusion or negligence to cause financial loss to national exchequer.

(c) Customs Rules, 2001---

----R.101---Responsibilities of licensee---Scope---Rule 101(e) of Customs Rules, 2001, requires a clearing agent to pay the evaded amount of duties and taxes only in case it is established that the evasion has taken place because of negligence and failure to perform his functions as prescribed under the law and/or because of connivance or wilful act of its employee or permit holder---Similarly, other sub-clauses of R.101 require customs authorities to establish connivance and willful negligence on the part of the clearing agent.

Zia-ul-Hassan for Petitioner.

Khalid Mehmood Rajpar for Respondent No.2.

Hussain Bohra, Assistant Attorney General for Respondent No.3.

2022 P T D 431

[Sindh High Court]

Before Muhammad Shafi Siddiqui and Agha Faisal, JJ

COLLECTOR OF CUSTOMS through Additional Collector of Customs

Versus

Messrs ALLIED ENGINEERING AND SERVICES LTD.

Special Customs Reference Applications Nos.450, 451, 452 and C.M.As. Nos.2557, 2558 of 2016, decided on 30th August, 2021.

Customs Act (IV of 1969)---

----S.81---Provisional determination of liability---Delay in making final determination---Effect---Goods of the respondent were released provisionally on its application---Provisional assessments were required to be finalized within the timeframe given under S.81(2) i.e. six months---Final determination ought to have been made within prescribed time as the law required finalization within six months---Final assessment was made on 15-05-2013---Reliance was placed by the department on note of Additional Director of Customs which forwarded a summary for the approval of extension---Allegedly the time was granted by 60 days---By the time the purported summary was granted, six months' time had already lapsed---Fact of the matter was that the time for finalization had already lapsed, even if 60 days' time was counted from the date when time lapsed, it should not have gone beyond the prescribed time whereas final determination was made beyond time---No interference in the impugned judgment was required---Reference applications were dismissed.

Collector of Customs Lahore v. Fazal Ilahi & Sons reported as 2015 SCMR 1488 rel.

2022 P T D 439

[Sindh High Court]

Before Irfan Saadat Khan and Yousuf Ali Sayeed, JJ

ALPHA INSURANCE COMPANY LIMITED

Versus

The COMMISSIONER OF INCOME TAX CENTRAL ZONE-A, KARACHI

I.T.R. No.150 of 1997, decided on 3rd December, 2020.

Income Tax Ordinance (XXXI of 1979)---

----Ss.65 & 136---Additional assessment---Exercise of authority under S.65 of Income Tax Ordinance, 1979 for additional assessment of taxpayer---Inadmissible expenditures---Scope---Question before High Court was whether income tax assessment of taxpayer, which was an insurance company, could be reopened under S.65 of Income Tax Ordinance, 1979, inter alia, on basis that amounts paid by taxpayer in taxes, including those deducted at source, were inadmissible expenditures, benefit of which could not be claimed by taxpayer---Held, that provision of S.65 of Income Tax Ordinance, 1979 was attracted when income of an assesee had either been under assessed or assessed at a lower rate or that such income had been subject to excessive relief---Assessments, in the present case, were rightly reopened as such income for assessment years in question, was under assessed and amount of taxes actually paid including tax deducted as source, had been incorrectly allowed to company as expenditures, meaning thereby that taxpayer got incorrect relief which it was not entitled to---Reference was answered, accordingly.

Messrs Home Insurance Co. Ltd., Karachi v. Commissioner of Income Tax, Companies Range III, Karachi 1992 PTD 1177; Commissioner Inland Revenue Zone-I, RTO, Rawalpindi v. Messrs Khan CNG Filling Station, Rawalpindi and others 2017 SCMR 1414; Messrs Habib Insurance Co. Ltd. v. Commissioner of Income-Tax (Central), Karachi PLD 1985 SC 109; Commissioner of Income Tax Central Zone, 'A' Karachi v. Messrs Phoenix Assurance Co. Ltd. 1991 PTD 1028 and Tanveer Brother Oil Dealers v. The Commissioner of Income-Tax 1990 PTD 383 ref.

Syed Irtaza Hussain Zaidi for Applicant.

Kafeel Ahmed Abbasi for Respondent.

2022 P T D 467

[Sindh High Court]

Before Irfan Saadat Khan and Muhammad Faisal Kamal Alam, JJ

COMMISSIONER (LEGAL DIVISION) LARGE TAXPAYER UNIT, KARACHI

Versus

Messrs BROOK BOND PAKISTAN LIMITED, KARACHI

Income Tax Case No.300 of 2004, decided on 22nd October, 2020.

Income Tax Ordinance (XXXI of 1979) (Since Repealed)---

----Ss.50(4A), 52 & 86---Sales of Goods Act (III of 1930), S. 4---Income Tax Ordinance (XXXI of 2001), S. 133(4)---Commission/trade discount---Assessee in default---Determination---Sale agreement---Scope---Respondent-assessee claimed that disputed amount was not commission rather it was trade discount, therefore no tax was deducted---Assessing Officer made assessment under S.52 of Income Tax Ordinance, 1979, treating respondent as assessee in default---Assessment order was set aside by Appellate Authority and Income Tax Appellate Tribunal dismissed appeal filed by authorities---Validity---Transaction between parties culminated when seller or transferee agreed to transfer property to buyer for a price---Goods were delivered by respondent-assessee after receiving full amount in advance from distributor, hence such aspect of sale of goods to distributor had come to an end as distributer had become owner of the product--- Authorities below had reached to a finding of fact that nature of transaction entered between respondent-assessee with its distributor denoted allowing of trade discount and not commission to the distributor and no convincing material was placed either before Appellate Authority or Income Tax Appellate Tribunal or before the High Court---High Court declined to interfere in the orders passed by two forums below as arrangement so entered between respondent-assessee and distributor allowed trade discount and not a commission to the distributor, hence provisions of S. 50 (4A) of Income Tax Ordinance, 1979 (since repealed) were not applicable---Reference was dismissed, in circumstances.

Habib Insurance Co. Ltd. v. Commissioner of Income Tax Karachi PLD 1985 SC 109; Commissioner of Income Tax v. Gammon (Pak) Limited, Karachi [(1966) 14 Tax 304 Karachi]; I.T.C. No.243 of 2001; Commissioner of Income Tax v. Messrs Motor and General Store 66 ITR 692 (SC India); Commissioner of Income Tax v. Messrs Mughal Lines Ltd. 46 ITR 590; 30 TC 11; Decision of Tribunal in Tax I.T.A. Nos.755-756-KB of 1993-94; Decision of the Tribunal in Tax I.T.A. No.303-KB/1993 dated 26.10.1994; 46 ITR 144 (S.C. India); Messrs Habib Insurance Ltd. v. Commissioner of Income Tax 1985 (SC) 109; Sir Kikanahi Premchand v. Commissioner of Income Tax (Central) Bombay (1953) 24 ITR 506 (SC India); Pakistan Paper Corporation Ltd. v. National Trading Company Ltd. 1983 CLC 1695; Pakistan Insurance Corporation v. Messrs United Liner Agencies and others 1988 CLC 425; Rehmatullah Khan and others v. Government of Pakistan 2003 SCMR 50; Concentrate Manufacturing Company of Ireland and 3 others v. Seven-up Bottling Company (Pvt.) Ltd. and 3 others 2002 CLD 77; Bolan Beverages (Pvt.) Limited v. PEPSICO Inc and 4 others PLD 2004 SC 860; Messrs Caltax Oil (Pakistan) Ltd., Karachi v. Sheikh Rehan-ud-Din PLD 1957 Lah. 998; Messrs Caltex Oil (Pakistan) Ltd, Karachi v. Sheikh Rehan-ud-Din PLD 1958 (W.P) Lah. 63; Messrs Pak Saudi Fertilizers Limited v. Commissioner of Income Tax and others 2005 PTD 1605; Ahmedabad Stamp Vendors v. Union of India (2002) 257 ITR 202; Harihar Cotton Pressing Factory v. Commissioner Income Tax (1960) 39 ITR 594; Commissioner of Income Tax and others v. Ahmedabad Stamp Vendors Association (2012) 348 ITR 378 (SC); Commissioner of Income Tax Companies I, Karachi v. Messrs National Investment Trust Ltd. Karachi 2003 PTD 589; Messrs Royal Travel Services (Pvt.) Ltd v. Income Tax Appellate Tribunal 2005 PTD 1157 and Commissioner (Legal Division) v. Novertis Pharma (Pakistan) Ltd. 2009 PTD 891 ref.

Muhammad Aqeel Qureshi for Appellant.

Arshad Siraj Memon for Respondent.

2022 P T D 512

[Sindh High Court]

Before Muhammad Shafi Siddiqui and Mahmood A. Khan, JJ

FALAK JAN and others

Versus

FEDERATION OF PAKISTAN through Secretary,Ministry of Finance, Islamabad and others

Constitutional Petition No.D-8568 of 2019 along with Special Customs Reference Application No.850 of 2019, decided on 6th December, 2021.

Customs Act (IV of 1969)---

----Ss.19 & 196---Diplomatic and Consular Privileges Act (IX of 1972), First Schedule---Notification SRO No.577(I)/2006 dated 05-06-2006---Reference---Exemption for duty and taxes---Diplomatic privileges---Dispute was with regard to vehicle imported by a diplomate of a foreign country and sold without clearance of duties and taxes--- Vehicle in question was seized by Customs authorities but the same was released by Customs Appellate Tribunal and order passed by adjudication officer was set aside---Validity---Vehicle in question was last transferred in the name of respondent- a private person, with new registration number without receipt of duties and taxes---No permission of Foreign Ministry of Pakistan was handed over by any of the transferees of the vehicle, which could exempt the vehicle from any further claim of Customs authorities---High Court set aside judgment passed by Customs Appellate Tribunal---Reference was allowed, in circumstances.

Zakir Hussain Khaskheli for Petitioners (in Constitutional Petition No.D-8568 of 2019) and Respondent No.1 (in S.C.R.A. No.850 of 2019).

Shahid Ali Qureshi for Respondent No.2 (in Special Customs Reference Application No.850 of 2019).

Kafeel Ahmed Abbasi, Deputy Attorney General along with Hussain Bohra, Assistant Attorney General for Respondent No.1 (in Constitutional Petition No.D-8568 of 2019).

2022 P T D 539

[Sindh High Court]

Before Muhammad Shafi Siddiqui and Mahmood A. Khan, JJ

Messrs OUTDOORSMAN through Sole Proprietor

Versus

FEDERATION OF PAKISTAN through Secretary Ministry of Commerce, Islamabad and 8 others

C.P. No.D-4292 of 2021, decided on 6th December, 2021.

Import Policy Order, 2020---

----Notification SRO No.772(I)/2018, dated 14-6-2018---Sindh Arms Act (V of 2013), Ss.4, 5, 9 & 10---Constitution of Pakistan, Art.199---Import of arms by dealer---Necessary requirements---Petitioner was an arms dealer who imported arms from abroad---Provincial Government Home Department declined to clear the consignment on the ground that petitioner did not have any permission to import weapons---Validity---All that was required was a dealership licence and certificate from Original Equipment Manufacturer (OEM) in case of import directly from OEM---Otherwise a certificate was required from any of the prescribed Pre-shipment Inspection Companies (PSI) as listed in Appendix-H of Import Policy Order to demonstrate weapons' nomenclature, caliber and / or bore or gauge or weapon manufacturing logo, weapon serial number embossed thereon and other related information---Importability of such consignments was only recognized through air and sea---Such conditions were satisfied by petitioner as far as customs department was concerned---High Court set aside demand of Provincial Government for presenting of an import authorization as a separate 'import licence' for arms and ammunition as such demand was not supported by law and was contrary to Import Policy Order, 2016 and Import Policy Order, 2020---Constitutional petition was allowed, in circumstances.

Mohsin Kadir Shahwani along with Azain Nadeem for Petitioners.

Kafil Ahmed Abbasi, DAG along with Hussain Bohra, Asstt. Attorney General for Respondents Nos.1 and 2.

Muhammad Khalil Dogar for Respondents Nos.3 and 4.

Syed Zaim Hyder for Respondent No.5.

Salman Talibuddin, AG Sindh along with Saifullah, Addl. A.G. Sindh for Respondents Nos.6 to 9.

2022 P T D 558

[Sindh High Court]

Before Aqeel Ahmed Abbasi and Mahmood A. Khan, JJ

ALLIED ENGINEERING AND SERVICES LTD. through Attorney

Versus

The COMMISSIONER INLAND REVENUE, ZONE-II and another

Income Tax Reference Applications Nos.141 to 144 of 2016, decided on 10th July, 2020.

Income Tax Ordinance (XLIX of 2001)---

----Ss.67, 169, 18, 20 & 11----Deductions---Deductions in computing income chargeable under head "Income from Business"---Composite business activities---Expenses common to income under Normal Business Income and Presumptive Tax Regime---Apportionment of deductions---Scope---Question before High Court was whether allowable expenses towards earning Normal Business Income ("NTR") could be prorated against expenses incurred for earning income under Presumptive Tax Regime ("PTR"); when income from such business was derived from composite business activity---Held, that under head of "income from business" there seemed to be no distinction between income derived under NTR and PTR as both were derived from "income from business" as per S.18 of Income Tax Ordinance, 2001---Different types of income of a person for a tax year, to be charged from business, had been defined in said S.18 whereas deductions in computing income chargeable under "income from business" had been provided in S.20 of said Ordinance---While computing "income from business" all types of income from a business, falling under the NTR and PTR, had to be treated as part of composite business income whereas all expenses (deductions) incurred wholly and exclusively for purposes of said business were to be allowed while computing income charged under head of "income from business"---Total income, if the same consisted of more than one head, then expenses incurred where not separable and such apportionment of expenses towards income under NTR and PTR could be made in terms of S.67 read with S.169 of Income Tax Ordinance, 2001---Total income, if it was received from same head of income as a composite business activity, then there was no occasion of proration of expenses between NTR and PTR particularly when such expenses were common and not separable---Once expenses were verifiable and admissible in terms of S.20 of Income Tax Ordinance, 2001 against business income, then there existed no reason to disallow such expenses by making by simply making proration against NTR and PTR income.

PLD 1992 SC 723; Elahi Cotton Mills Ltd. v. Federation of Pakistan and others PLD 1997 SC 582; A.P. Moller through Agent v. Taxation Officer of Income Tax and another 2011 PTD 1460 and Government of Sindh through Secretary and Director General, Excise and Taxation and another PLD 2015 SC 380 ref.

Arif Muhammad Khan for Applicant.

Altamash Faisal Arab for Respondents.

2022 P T D 576

[Sindh High Court]

Before Muhammad Shafi Siddiqui and Mahmood A. Khan, JJ

IMS HEALTH PAKISTAN (PRIVATE) LIMITED through Authorized Officer and others

Versus

COMMISSIONER-III, SINDH REVENUE BOARD and others

Special Sales Tax Reference Application No.02 of 2017 along with C.Ps. Nos.D-1869 of 2019 and D-4061 of 2021, decided on 29th November, 2021.

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

----Ss.3, 5, 8, 44, 47, 63 & Second Schedule Tariff Heading 98500---Reference---Value of taxable services---Determination---Fee for provision of services---Default in payment of tax---Applicants / assessees were aggrieved of orders passed under Ss.44 & 47 of Sindh Sales Tax on Services Act, 2011, by adjudicating officer---Validity---Held, it was only the value of service rendered and provided that could be subjected to Sindh Sales Tax on Services Act, 2011---Any other component could invade jurisdiction of other statutes as invoice contained a component of an amount likely to be reimbursed an amount which either had already been subjected to a treatment on the basis of other applicable laws or otherwise---By including reimbursed and other components of invoice in charging tax on value of services rendered by tax assesses, the authorities had misapplied provision of S.5 of Sindh Sales Tax on Services Act, 2011---Authorities validly considered case of applicants / assessees fallen under Tariff Heading 9805 with its sub-heading /suffix 9200 in Second Schedule of Sindh Sales Tax on Services Act, 2011---Rate specified in third column of Second Schedule of Sindh Sales Tax on Services Act, 2011, at the relevant time was recoverable on value of services rendered, which was disclosed in invoices and was not disputed throughout by authorities---Tax in question was to be recovered on the basis of service, the amount was to be deposited in 30 days' time and only on failure thereof penalty and surcharge was then liable to be paid and recovered--- Reference was disposed of accordingly.

Sami Pharmaceuticals (Pvt.) Ltd. v. Sindh 2021 PTD 731; Union of India v. Intercontinental Consultants and Technocrats (P.) Ltd. AIR 2018 SC 3754; Human Resource Solutions (Pvt.) Ltd. v. Federation of Pakistan 2021 PTD 933; Deputy Collector Central Excise v. ICI Pakistan 2006 SCMR 626 and Commissioner of Income Tax v. Habib Bank Ltd. 2007 PTD 901 ref.

Hyder Ali Khan along with Sami-ur-Rehman Khan and Hamza Waheed for Petitioner/Applicant.

Saifullah, Assistant Advocate General for Province of Sindh for Respondent.

Shamshad Ahmed along with Syed Zain-ul-Abdin Shah, Deputy Commissioner SRB for Respondents.

2022 P T D 618

[Sindh High Court]

Before Irfan Saadat Khan and Fahim Ahmed Siddiqui, JJ

COMMISSIONER INLAND REVENUE (ZONE-III), LARGE TAXPAYERS UNIT

Versus

Messrs NEW JUBILEE INSURANCE CO. LIMITED

I.T.R.A. No.163 of 2013, decided on 13th March, 2020.

Income Tax Ordinance (XLIX of 2001)---

----Ss.26(a), 99, 122 (5A) & 133---Term 'subject to adjustment'---Amendment of assessment---Scope---Authorities withdrew the advantage given to taxpayer company on account of its associated company and revised the assessment order by making an addition to its tax assessment---Appellate Tribunal Inland Revenue deleted the addition made by the authorities---Validity---As per R.5 of 4th Schedule to Income Tax Ordinance, 2001, certain adjustments in computation of income were provided with regard to taxability of an insurance business, which alone could be considered and applied and not the other provision of Income Tax Ordinance, 2001, dealing with normal business, incomes and their computations---Term 'subject to adjustment' related to adjustment as provided under Rules of 4th Schedule to Income Tax Ordinance, 2001, only and did not speak of other adjustments made in the case of other normal/ordinary business---Jurisdiction of assessment/adjustment by department was restricted to the extent as provided under the relevant Rules of 4th Schedule to Income Tax Ordinance, 2001---High Court declined to interfere in the order passed by Appellate Tribunal Inland Revenue---Reference was dismissed, in circumstances.

Commissioner (Legal) Inland Revenue v. Messrs EFU General Insurance Ltd. 2011 PTD 2042 ref.

Kafeel Ahmed Abbasi for Applicant.

Arshad Siraj for Respondent.

2022 P T D 634

[Sindh High Court]

Before Muhammad Shafi Siddiqui and Agha Faisal, JJ

GOVIND RAM

Versus

The FEDERATION OF PAKISTAN through Secretary Finance and 2 others

C.P. D-8642 of 2017, along with C.Ps. Nos.D-5809, 6637, 7154 of 2017, 5725, 640 of 2018 and 2203 of 2019 and C.M.As. Nos.29134 of 2018, 36187 of 2017, decided on 20th September, 2021.

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

----S.176---Anti-Money Laundering Act (VII of 2010), S. 3---Notice to obtain information or evidence---Offence of money laundering---Scope---Petitioners through constitutional petitions attempted to set the process at naught from initiating the proceedings as undertook by the Income Tax department in terms of S.176(1)(b) of Income Tax Ordinance, 2001---Case of petitioners was that such powers could not have been conferred upon the concerned Deputy Director and that the authority had already made up its mind that it was not only the case of tax evasion but also the case of laundered money---Validity---Deputy Director was duly empowered through SRO No.115(I)/2015 to issue the summons---No one could deny powers and jurisdiction of the concerned officer requiring explanation of an amount which was not taken into consideration for taxation purposes, however, it was a pre-conceived idea that such amount was laundered money---Unless and until such explanation was forwarded and an opportunity was given to the petitioners to explain the un-accounted amounts, not made part of the taxable income, it would be premature to consider the amount as laundered money---Petitioners were directed to forward their reply along with documents and explanation as required in the impugned notices/summons and opportunity of hearing was directed to be provided to them to enable the department to reach a just and fair conclusion---Petitions were disposed of accordingly.

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

----S.111---Anti-Money Laundering Act (VII of 2010), S.3---Unexplained income or assets---Offence of money laundering---Scope---Non-declaration of an asset by an assessee under the Income Tax Ordinance, 2001, is not a scheduled offence, unless proved otherwise as required under the Anti-Money Laundering Act, 2010.

PLD 2021 SC 1 ref.

(c) Anti-Money Laundering Act (VII of 2010)---

----Ss.3 & 5---Offence of money laundering---National Executive Committee to combat money laundering---Scope---Under the Anti-Money Laundering Act, 2010, a person is presumed to be guilty of offence of money laundering if he acquires, converts, possesses, uses or transfers property knowing or having reason to believe that such property is proceeds of crime or conceals or disguises the true nature, origin, location or if he holds or possesses on behalf of any other person any property with knowledge that such property is proceeds arising out of some offences and lastly participate and associates or conspires to commit or attempts to commit the commission of the acts specified and explained in S. 3 of the Anti-Money Laundering Act, 2010---Under S. 5 of the Act, National Executive Committee is required to be constituted by the Federal Government within thirty days of the commencement of the Act through notification in the official gazette and the committee is required to oversee such object which includes suspicious transaction and the finances that concerns with terrorism.

Yousuf Ali for Petitioner (in C.P. No.D-8642 of 2017).

Muhammad Tamoor Ahmed for Petitioners (in C.P. No.D-7154 of 2017, 640 of 2018 and 2203 of 2019 along with Inzimam Shareef).

Imran Baksh Metlo holding brief for Ameer Bakhsh Metlo for Respondents.

Ghulam Asghar Pathan for Respondents.

Mohsin Imam Wasti for Respondents.

Kafeel Ahmed Abbasi, DAG along with Hussain Bohra, Asstt. Attorney General.

2022 P T D 642

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

Messrs K.K. MART (MULTAN) and another

Versus

Messrs S.S. TRADERS and 2 others

Special Customs Reference Applications Nos.526 and 599 and C.M.As. Nos. 2116 and 2363 of 2020, decided on 15th February, 2021.

Customs, Federal Excise and Sales Tax Appellate Tribunal (Procedure) Rules, 2006---

----R.4---Customs Act (IV of 1969) S.196---Adjudication by Customs Appellate Tribunal---Distribution of work among Benches---Transfer of pending appellate matter to another Bench---Scope---Question before High Court was whether matter pending before Appellate Tribunal before the Bench at city "K" could be, on an urgent application by respondent, transferred to Bench at city "I" and decided by said Bench on same date---Held, that record revealed that transfer was made on an urgent hearing application and not a proper transfer application and Customs, Federal Excise and Sales Tax Appellate Tribunal (Procedure) Rules, 2006 did not permit such an act of transfer by Chairman Appellate Tribunal---Impugned order was also passed in absence of the other party which could not be sustained by law---Matter was remanded to Appellate Bench at city "K" for decision afresh after hearing all parties---Reference was answered, accordingly.

Muhammad Khalil Dogar for Applicant (in SCRA No.599 of 2020).

Dr. Shah Nawaz Memon for Applicant (in SCRA No.526 of 2020).

Sarfaraz Khan Marwat for Respondent No.2.

Munim Masood for Respondent No.3.

2022 P T D 648

[Sindh High Court]

Before Irfan Saadat Khan and Yousuf Ali Sayeed, JJ

The COMMISSIONER OF INCOME TAX, COMPANIES-III, KARACHI

Versus

FEROZUDDIN KHAN

Wealth Tax Appeals Nos.786, 787, 788 and 789 of 2000, decided on 2nd December, 2020.

(a) Wealth Tax Act (XV of 1963)

----Ss.2(1)(16) & 27---"Net wealth"; computation of---Incidence of wealth tax upon property belonging to minor children of taxpayer---Inclusion of wealth of minor(s) in wealth tax assessment of either parent of such minors by Wealth Tax Officer---Scope---Question before High Court was whether wealth tax assessment of respondent taxpayer ought to be revised under S.17-B of Wealth Tax Act, 1963 on ground that said taxpayer had not disclosed property / shares belonging to his minor children, thereby reducing his wealth tax liability---Held, that record revealed that Wealth Tax Officer ("WTO") had already included such shares of minor children in wealth tax assessment of taxpayer's wife who was mother of said minors ---- Contention of Department that such shares of minor children should have been included in computation of wealth of taxpayer instead, being higher taxpayer than his wife, was incorrect as requirement of law had been fulfilled when wealth of minors was included in wealth tax assessment of mother of such minors, and therefore no justification existed in reopening assessment of taxpayer and adding said wealth of minors in wealth of taxpayer---Appeal was disposed of, accordingly.

(b) Taxation---

----"Tax Avoidance" and "Tax Evasion"---Distinction---Tax avoidance was permissible under law whereas tax evasion entailed penalty as it was always open for taxpayer to arrange his / her matters in such a manner as to lessen his /her burden---Taxpayer could arrange his / her affairs in such a manner so that brunt of taxation falling upon such taxpayer was reduced and same was permissible under law.

CIT v. Raman & Co. 67 ITR 11 rel.

Kafeel Ahmed Abbasi for Appellant (in all the matters).

Nemo. despite proper service for Respondents (in all the matters).

2022 P T D 656

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

COLLECTOR OF CUSTOMS, through Additional Collector of Customs (Adjudication)

Versus

Messrs DANISH IQBAL ENTERPRISES, (CHAL-2160), KARACHI and another

Special Customs Reference Applications Nos.2147 of 2014, 334 of 2015, 95, 96, 99, 100, 101, 102, 198 to 202, 335 to 574, 576 to 728, 1081, 1493, 1711 to 2150, 2792 of 2015 and 07 to 12, 14, 15 of 2016, decided on 24th November, 2020.

Customs Act (IV of 1969)---

----Ss. 32, 32A & 196---False statements, or error---Fiscal fraud by Clearing Agents---Production of "Cross Border Certificates (CBC)" by authorized customs agents---Scope---Question before High Court was whether failure to produce CBCs by respondents who were authorized customs agents, made them liable for pilferage and misappropriation of consignments under Ss. 32 & 32A of Customs Act, 1969---Held, that nothing had been placed on record which showed that responsibility was fixed upon respondents/customs agents to manage transportation of containers and obtain CBCs, notwithstanding the fact that such responsibility had been fixed on the NLC, which was the authorized carrier---No justifiable reason therefore existed to issue show-cause notices to respondents for something which they had not been entrusted any responsibility for---Order of Appellate Tribunal whereby respondents were held not to be liable to bring CBCs for containers / consignments handled by them, could therefore not be interfered with---Reference was answered accordingly.

Khalid Rajpar for Applicants.

Zain A. Jatoi along with Waseem-ur-Rehman, Pervaiz Iqbal, Zia-ul-Hassan, Adnan Ahmed Zafar, Mohabbat Hussain Awan, Zafar Hussain, Abdul Qadir Sayed, Atta Muhammad Qureshi, Abdul Rahim Lakhani along with Abdul Jabbar Mallah, Sardar Aamir, Faheem Shah and Kafeel Ahmed Abbasi, D.A.G. for Respondents.

2022 P T D 674

[Sindh High Court]

Before Muhammad Shafi Siddiqui and Mahmood A. Khan, JJ

COLLECTOR OF CUSTOMS through Additional Collector of Customs

Versus

Ms. SHAZIA AMAN

Special Customs Reference Application No.1233 and C.M.A. No.3281 of 2015, decided on 7th December, 2021.

Customs Act (IV of 1969)---

----Ss.25-A, 194-A(1) & 196---Customs Rules, 2001, R.107(A)---Valuation Ruling, applicability of---Appeal---Limitation---Authorities were aggrieved of order passed by Customs Appellate Tribunal on the plea that appeal was barred by limitation---Validity---Valuation ruling applied by authorities was not applicable as valuation was to be issued on the basis of data of 90 days either before or after, import in terms of R.107(A) of Customs Rules, 2001---Exact dates of clearance of goods were not disclosed---In absence of clear date of clearance of goods, applicability of Valuation Ruling of 15-07-2009 and 27-07-2010 were farfetched---Provision of S.25-A of Customs Act, 1969, was amended by Finance Act, 2010 and assented on 30-06-2010, which was subsequent to the last ruling relied upon---By the time goods were cleared, the regime of availability of 90% data pre or post, was applicable as applicability of last issued Valuation Ruling was introduced after 30-06-2010---Even show-cause notice was silent as to the date of clearance of goods---High Court declined to interfere in the order passed by Customs Appellate Tribunal---Reference was dismissed, in circumstances.

Iqbal M. Khurram for Applicant.

None for Respondent.

2022 P T D 716

[Sindh High Court]

Before Adnan Iqbal Chaudhry, J

SALEEM BUTT

Versus

PAKISTAN through Secretary Revenue Division and 2 others

Suit No.2415 of 2016, decided on 31st May, 2021.

Income Tax Ordinance (XLIX of 2001)---

----S.177(1)---Specific Relief Act (I of 1877), Ss.42 & 54---Suit for declaration and injunction---Mala fide, proof of---Show-cause notice---Plaintiff / taxpayer assailed show-cause notice to conduct audit on the plea of mala fide and discrimination---Validity---Mere allegation of mala fides was not enough to dislodge presumption of correctness attached to official acts---Before allegation of mala fides in fact could be allowed to be proved, such mala fides had to be pleaded with particulars---Apart from bald averment of mala fides, plaint did not give any particulars and allegation of mala fides which required no probe---Audit notice could have been discriminatory to plaintiff / taxpayer and offended his fundamental right under Art. 25 of the Constitution, if notice had not assigned any reasons---Notice had given plausible reasons for asking for documents under S.177(1) of Income Tax Ordinance, 2001 but plaintiff / taxpayer did not reply the notice---High Court declined to interfere in the matter as plaintiff / taxpayer did not attack grounds taken in the notice nor set up a case for discrimination---Suit was dismissed, in circumstances.

Chenone Stores Ltd. v. Federal Board of Revenue 2012 PTD 1815; Commissioner of Inland Revenue, Sialkot v. Allah Din Steel and Rolling Mills 2018 SCMR 1328; Federal Board of Revenue v. Chenone Stores Ltd. 2018 PTD 208; Pakistan Telecommunication Company Ltd. v. Federation of Pakistan 2016 PTD 1484; Lahore Development Authority v. Imrana Tiwana 2015 SCMR 1739; Sui Southern Gas Company Ltd. v. Federation of Pakistan 2018 SCMR 802 and Commissioner Inland Revenue Zone-I, RTO, Rawalpindi v. Khan Filling CNG Station, Rawalpindi 2017 SCMR 1414 ref.

Ahmed Hussain and Ms. Pooja Kalpana for Plaintiff.

Anwar Kamal, Assistant Attorney General for Defendant No.1.

Nemo. for Defendant No.2.

Syed Mohsin Imam and Aqeel Qureshi for Defendant No.3.

2022 P T D 732

[Sindh High Court]

Before Muhammad Shafi Siddiqui and Agha Faisal, JJ

Messrs SPECTRUM ENTERPRISES through Attorney

Versus

FEDERATION OF PAKISTAN through Secretary Ministry of Finance, Islamabad and 3 others

C.P. No.D-5674 of 2020, decided on 2nd September, 2021.

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

----S.81---Provisional determination of liability---Delay in making final determination---Effect---Petitioner imported two consignments and filed goods declaration---Declaration was objected by the department and consequently under S. 81 of Customs Act, 1969, the goods were provisionally released after securing the differential amount of duties and taxes---Petitioner, after lapse of more than a year, filed constitutional petition for release of the security as the department had failed to make final determination within the time prescribed under subsection (2) of S.81 of Customs Act, 1969---Release was objected on the grounds that the subsection (4) of S.81 of Customs Act, 1969 provided that if final determination was not completed within the period prescribed under subsection (2) of S.81 then the provisional determination would be deemed to be final determination and that the explanation to the subsection (4) of S.81 Customs Act, 1969 had defined the provisional assessment as the amount of duties and taxes paid or secured by Bank Guarantee or pay orders---Validity---Word provisional assessment was neither used in subsection (1) of S.81 nor in subsection (2) of S.81 Customs Act, 1969---Subsection (1) of S.81 had secured differential amount on provisional determination and provisional assessment---If the interpretation of department was accepted then Customs would never bother to determine it finally and would enjoy benefit of not doing anything after provisional release---To claim the amount which was secured from the importer as differential amount, the final determination was inevitable---Since final determination was neither made within the prescribed time nor within any extended period of time, therefore, the High Court allowed the petition to the extent that the amount of security would be released.

2011 PTD 235 ref.

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

----S.81---Provisional determination of liability---Scope---Spirit of S.81 Customs Act, 1969 provides that when it is not possible for the officer of the Customs to reach to the correctness of the assessment of the goods declared by the importer under S.79 for any statutory reason, the officer not below the rank of Assistant Collector Customs may order that the duty and taxes or other charges payable on such goods be determined provisionally.

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

----S.81---Provisional determination of liability---Scope---First proviso of S.81 of the Customs Act, 1969 provides that in case the goods are being entered for warehousing, the additional amount either be paid on the basis of provisional assessment or Bank guarantee be furnished or pay order of the like amount of a scheduled bank along with an indemnity bond for the payment as the officer deems sufficient to meet the possible differential amount between the final determination of duty, taxes and other charges and the amount determined provisionally.

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

----S.81---Provisional determination of liability---Scope---Subsection (2) of S.81 of Customs Act, 1969 caters for a situation when the goods are allowed to be cleared or delivered on the basis of provisional determination, the amount of duty, taxes and charges correctly payable to those goods shall be determined within six months from the date of provisional determination---Time is further extendable provided the officer concerned may in circumstances of exceptional nature and after recording such situation extend period of final determination, which shall in no case exceed ninety days---Proviso to subsection (2) of S.81 of the Act provides the calculating mechanism of the period prescribed in subsection (2) of S. 81---Subsection (3) of S.81 provides the mechanism on completion of final determination---Amount already paid or guaranteed shall be adjusted against the amount payable on the basis of final determination and difference between the two amounts shall be paid forthwith to or by the importer as the case may be.

(e) Interpretation of statutes---

----Explanation---Scope---Explanation in a statute/enactment does form an integral part to the extent of explaining and elaborating meaning of the word in the section and the purpose is to explain, clarify, add or subtract something by clarification.

Commissioner Inland v. Messrs Trillium 2019 SCMR 1643 and PLD 2010 Lah. 468 ref.

Sardar Muhammad Ishaque for Petitioner.

Kafeel Ahmed Abbasi, DAG along with Hussain Vohra, Asstt. Attorney General for Respondent No.1.

Mohabbat Hussain Awan along with Mohib Khan, Assistant Collector, MCC Port Qasim for Respondents Nos.2 to 4.

2022 P T D 779

[Sindh High Court]

Before Muhammad Shafi Siddiqui and Mahmood A. Khan, JJ

Messrs ZARIF KHAN HUSSAIN ZAI AND BROTHERS through Authorised Attorney/Authorised Representative

Versus

FEDERATION OF PAKISTAN through Secretary Revenue Division/Chairman, Islamabad and others

C.P. No.D-5596 and Special Customs Reference Application No.246 of 2020, decided on 7th December, 2021.

Customs Act (IV of 1969)---

----Ss.80 & 196---Import Policy Order, 2016, Cl.9(ii)(5)---Goods declaration---Report from manufacturer, absence of---Factual controversy---Customs authorities passed order of confiscation of vehicles in question on the plea that those were more than 5 years old and not importable in terms of Para 9(5) of Import Policy Order, 2016---Customs Appellate Tribunal set aside the order passed by authorities---Validity---Pre-shipment Certificate disclosed the model year as 2012, which was importable when goods declarations were filed---Vehicles were not older than five years at the time of import in terms of pre-shipment certificate--- Challenge to such certificate as far as model year was concerned was a factual controversy which was not mandate of High Court under Reference jurisdiction under S.196 of Customs Act, 1969---No evidence of any nature was filed by authorities to disclose that manufacturer had disclosed year of its manufacture as other than 2012---Entering into such debate at reference stage was not permissible under law unless satisfactory evidence was available on record--- Report relied upon by authorities was not of the manufacturer from Japan but was of a local assembler---In presence of requisite document, as required under Import Policy Order, 2016, letter of local assembler could only be an extraneous material---High Court declined to interfere in the order passed by Customs Appellate Tribunal as it had rightly not taken it into consideration---Reference was dismissed in circumstances.

Sardar Muhammad Ishaque for Petitioner (in C.P. No.D-5596 and for Respondent Special Customs Reference Application No.246 of 2020).

Khalid Rajpar for Applicant (in Special Customs Reference Application No.246 of 2020).

Kafeel Ahmed Abbasi, Deputy Attorney General along with Hussain Bohra, Assistant Attorney General for Respondent No.1.

Ms. Masooda Siraj for Respondent No.2 (in C.P. No.D-5596 of 2020).

2022 P T D 796

[Sindh High Court]

Before Muhammad Shafi Siddiqui and Agha Faisal, JJ

COLLECTOR OF CUSTOMS through Additional Collector of Customs, Karachi

Versus

Messrs SAMAD ENTERPRISES

Special Customs Reference Application No.826 and C.M.A. No.2636 of 2015, decided on 30th August, 2021.

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

----S.32---Sales Tax Act (VII of 1990), S. 4---Mis-declaration---Zero rating---SRO No.1125(I)/2011, dated 31-12-2011---Scope---SRO No.1125(I)/2011, dated 31-12-2011 gave concession to manufacturer, importer, exporter and wholesale dealers of textile, carpets, leather, sports and surgical goods---Department's case was that in view of the facts of the case Appellate Tribunal had erred in law by misreading the effect that the importer was a textile manufacturer within the meaning of SRO No.1125(I)/2011, dated 31-12-2011---Validity---Taxpayer Registration Certificate filed by the department itself disclosed that the principal activity of the importer was manufacturing of plastic products and other activities were import, export or manufacture of other textile NEC---SRO No.1125(I)/2011, dated 31-12-2011 in column (2) provided zero rating for textile and articles thereof excluding some articles---Importer's case did not fall within the excluding components---Registration Certificate was a comprehensive evidence---Since the conditions as required under SRO No.1125(I)/2011, dated 31-12-2011 was fulfilled, no other view could be taken than the one taken by the Appellate Tribunal---Customs Reference Application was dismissed.

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

----S.202---Sales Tax Act (VII of 1990), S. 48---Income Tax Ordinance (XLIX of 2001), S. 148---Recovery of government dues---Scope---Customs authorities have not been conferred with the powers of adjudication as far as Sales Tax Act, 1990 and the Income Tax Ordinance, 2001, are concerned---Customs authorities have powers to collect sales tax, income tax, etc., at the import stage in the capacity of collecting agents on the basis of registration certificate.

2022 P T D 812

[Sindh High Court]

Before Adnan Iqbal Chaudhry, J

SALEEM BUTT

Versus

PAKISTAN through Secretary Revenue Division and 9 others

Suit No.1872 of 2016, decided on 31st May, 2021.

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

----S.6---Repeal of law---Principle---Where Federal law is struck-down by High Court of one Province and is not struck-down or is held valid by High Court of another Province, and in the meantime the Legislature or Federal authority concerned complies with the judgment of first High Court and makes necessary amends or withdraws the law, the effect of that amendment or withdrawal in the other Province would be that of "repeal"---Consequences of which are then set out in S.6 of the General Clauses Act, 1897.

(b) Interpretation of statutes---

----Fiscal laws---Charging and machinery provisions---Applicability---Unlike a charging provision, a machinery provision in a fiscal statute has to be construed liberally and in a manner that facilitates realization of tax.

Friends Sons and Partnership Concern v. The Deputy Collector Central Excise and Sales Tax PLD 1989 Lah. 337 and Commissioner of Income Tax v. Eli Lilly Pakistan (Pvt.) Ltd. 2009 SCMR 1279 rel.

(c) Specific Relief Act (I of 1877)---

----Ss.42 & 54---Income Tax Ordinance (XLIX of 2001), Ss. 176 & 177---Suit for declaration and injunction---Mala fide---Proof---Notice of providing information---Plaintiff company assailed notice issued by authorities to furnish them record to explain income tax returns filed by the company and also provide record to conduct audit--- Plea of plaintiff company was that notice was result of mala fide and discriminatory which had offended Fundamental Right of Art. 25 of the Constitution---Validity---Mere allegation of mala fides was not enough to dislodge presumption of correctness attached to official acts---Before the allegation of mala fides in fact could be allowed to be proved, such mala fides had to be pleaded with particulars---Apart from bald averment of mala fides, plaint did not give particulars---Plea of plaintiff was not worthwhile as the notice did not assign any reasons---Notice in question had given plausible reasons for asking for documents under S. 176 of the Income Tax Ordinance, 2001 but plaintiff company did not reply the notice---Plaint did not attack the grounds taken in the notice, nor were such grounds addressed during the course of proceedings---Plaintiff failed to set-up a case for discrimination---Suit was dismissed, in circumstances.

Sakrand Sugar Mills Ltd. v. Federation of Pakistan (PTCL 2014 CL. 154; Pakistan Tobacco Company Ltd. v. Government of N.W.F.P. PLD 2002 SC 460; Jurists Foundation v. Federal Government PLD 2020 SC 1; Zaibtun Textile Mills Ltd. v. Central Board of Revenue PLD 1983 SC 358; Muhammad Ismail & Co. PLD 1966 SC 388; Lahore Development Authority v. Imrana Tiwana 2015 SCMR 1739; Sui Southern Gas Company Ltd. v. Federation of Pakistan 2018 SCMR 802; Wasim Ahmad v. Federation of Pakistan 2014 PTD 1733; F.M. Textile Mills v. Federal Board of Revenue 2017 PTD 1875; Nestle Pakistan Ltd. v. Federation of Pakistan (W.P. No. 4361/2017); Hassan Shahjehan v. FPSC (PLD 2017 Lah. 665; Commissioner Inland Revenue Zone-III, RTO-II Lahore v. Hamza Nasir Wire 2020 PTD 1790; Commissioner Inland Revenue Zone-I, RTO, Rawalpindi v. Khan Filling CNG Station, Rawalpindi 2017 SCMR 1414 and Justice Qazi Faez Isa v. The President of Pakistan PLD 2021 SC 1 ref.

Ahmed Hussain and Ms. Pooja Kalpana for Plaintiff.

Anwar Kamal, Assistant Attorney General for Defendant No.1.

Nemo for Defendants Nos.2, 4, 6 and 7.

Syed Mohsin Imam for Defendant No.3.

Muhammad Khalid for Defendant No.5.

Naveed Ali for Defendants Nos.8 and 10.

2022 P T D 836

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

COLLECTOR OF CUSTOMS through Additional Collector of Customs

Versus

Messrs OSAKA ELECTRONICS AND INDUSTRIES CO.

Special Customs Reference Applications Nos.852 to 859 of 2017, decided on 26th February, 2021.

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

----Ss.25 & 25A---Value of imported and exported goods---Power to determine the customs value---Scope---Respondent imported a consignment of PVC Electric Insulation Tapes in Jumbo Rolls and excluded net weight of inner core and cartons for assessment of duty and taxes whereas department included the weight of inner core---Collector of Customs (Appeals) excluded the weight of inner core packing for the purpose of assessment of duty and taxes---Appeal filed before Appellate Tribunal was dismissed---Contention of department was that while making assessment of goods under S.25(2)(b) of Customs Act, 1969, it was permissible to add the weight of essential packing---Validity---Section 25(2)(b) could be invoked when the assessment of imported goods was being made in terms of S. 25(1)---Even otherwise, determination of value had already been made by the Valuation Department in terms of S. 25-A Customs Act, 1969, after following the methods provided under S. 25---Assessment of goods, according to valuation ruling, had to be made on net weight of the goods---Valuation ruling had declared that a difference of 25% between the net and gross weight had to be allowed as a maximum for making assessment of the goods---Weight of inner core in the case was approximately 17.58%---Orders passed by the forums below were in accordance with law---References were dismissed.

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

----S.25---Value of imported and exported goods---Scope---Section 25(1) to (4), Customs Act, 1969 provides a mechanism in giving assistance to the Customs Department for determination of a transactional value, whereas, such exercise is only to be carried out when the Customs Department intend to invoke the Transactional Value method which in the Customs Act, 1969 is provided under S. 25(1)---Subsections (2) to (4) of S. 25 provide the basics and assist in arriving at a correct transactional value.

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

----S.25---Value of imported and exported goods---Transaction value---Scope---First and foremost factor while applying S. 25(2)(b) is that the cost of containers or essential packing can only be added, and to the extent that they are incurred by the importer, and this would only come into force when the value declared by the importer is being accepted as a transactional value and not otherwise.

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

----S. 25---Value of imported and exported goods---Transaction value---Scope---While determining the transactional value of imported goods there shall also be added to such price to the extent that they are incurred by the importer but are not included in the price actually paid or payable of the imported goods; which may include cost of containers which are treated as being one for Customs purposes with the goods in question and the cost of packing whether for labor or materials.

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

----Ss. 25A & 25---Power to determine the customs value---Value of imported and exported goods---Scope---Once a ruling has been issued in terms of S. 25A of Customs Act, 1969, then recourse to the methods and assists as well as powers conferred upon the Customs department in terms of S. 25 cannot be resorted to as the ruling in terms of S. 25A is statutory in nature and cannot be deviated; nor any other method of valuation can be applied by the Collectorate while making assessment of goods.

Kafeel Ahmed Abbasi for Applicant.

Ghulam Hyder Shaikh for Respondent.

2022 P T D 866

[Sindh High Court]

Before Muhammad Shafi Siddiqui and Mahmood A. Khan, JJ

ATLAS HONDA LTD. through authorized Attorney

Versus

PAKISTAN through Secretary Revenue and 3 others

C.P. No.D-5107 of 2021, decided on 18th February, 2022.

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

----Ss.177 & 214C---Audit---Selection of case---Commissioner and Federal Board of Revenue, jurisdictions of---Commissioner under S.177 of Income Tax Ordinance, 2001, is required to apply his mind and provide reasons for selection, whereas Federal Board of Revenue under S.214C of Income Tax Ordinance, 2001, may select a person through random parametric ballot---If a taxpayer is not selected in balloting then Federal Board of Revenue cannot direct Commissioner to select a taxpayer for audit as the same would defeat entire legislative scheme separating powers of the Commissioner and Federal Board of Revenue in relation to audit selection by directing Commissioner to select certain taxpayer for audit.

Pfizer Pakistan Ltd. v. Deputy Commissioner 2016 PTD 1429; Dr. Tariq Iqbal v. Government of Khyber Pakhtunkhwa 2019 PLC (C.S.) 821; Saif-ur-Rehman v. Additional District Judge 2018 SCMR 1885; Muhammad Nawaz Chandio v. Muhammad Ismail Rahu 2016 SCMR 875; Dilawar Hussain v. Province of Sindh PLD 2016 SC 514; Director General FIA v. Kamran Iqbal 2016 SCMR 447; Wateen Telecom Ltd. v. Sindh 2019 PTD 1030; Indus Sugar Mills Ltd. v. Federation of Pakistan (W.P. No.37213 of 2020); Cellandgene Pharmaceuticals International v. Federation of Pakistan (C.P. No.D-715 of 2018) and Commissioner of Inland Revenue v. Allah Din Steel and Rolling Mills 2018 SCMR 1328 rel.

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

----Ss.177, 213, 214 & 214C---Constitution of Pakistan, Art. 199---Constitutional petition---Audit, selection of case---Jurisdiction of Commissioner---Judicial review---Directions of Federal Board of Revenue---Scope---Petitioners / taxpayers were aggrieved of issuance of notices by Commissioner selecting there cases for audit on the basis of directions from Federal Board of Revenue---Validity---To judicially review such actions, Court must be able to scrutinize reasons based on which authority has acted---Authorities sought to shield themselves from any form of judicial review of the reasoning to be assigned by Commissioner while acting in terms of S.177 of Income Tax Ordinance, 2001---If such actions were covered as being arbitrary, mala fide and discriminatory, the same were amenable to scrutiny---Proceedings meant independent proceedings under Ss. 177 & 214C of Income Tax Ordinance, 2001---Following orders / directions in terms of Ss. 213 & 214 of Income Tax Ordinance, 2001 did not mean that Federal Board of Revenue would trespass or transgress statutory limits of authorities as defined under Income Tax Ordinance, 2001--- High Court set aside notices for audit issued against petitioner as selection for audit was arbitrary, mala fide, discriminatory and predatory in nature and Federal Board of Revenue trespassed beyond statutory limits of S.214C of Income Tax Ordinance, 2001, directing Commissioner to conduct sector wise audit such was not permitted under law---Constitutional petition was allowed in circumstances.

Mohammad Baran v. Board of Revenue PLD 1991 SC 691; Government of Khyber Pakhtunkhwa v. Saeed-ul-Hasan 2021 SCMR 1376; Mujahid Oil Refinery (Pvt.) Ltd. v. Director I&I Inland Revenue 2015 PTD 2572; Honda Fort (Pvt.) Ltd. v. Commissioner of Income Tax 2009 PTD 20; Pakistan Petroleum Ltd. v. Pakistan 2016 PTD 2664; 1997 PTD 1555; Judgment in Writ Petition 272 of 2021 in the case of Pakistan Tobacco; Pakistan Telecommunication Employees Trust v. Pakistan PLD 2017 SC 718 and Wazir Ali Industries Ltd. v. Federation of Pakistan (C.P. No.4729 of 2021) ref.

Hyder Ali Khan along with Shaheer Roshan Shaikh, Sami-ur-Rehman Khan, Furqan Mushtaq, Hamza Waheed, Ovais Ali Shah along with Ms. Mariam Riaz, Ms. Fizzah Bucha, Umer Ilyas, Ijaz Ahmed, Qazi Umair Ali, Anwar Kashif Mumtaz along with Usman Alam, Ammar Athar Saeed, Inzimam Sharif, Jawaid Farooqi, Hussain Ali Almani, Syed Mohsin Ali, Amin Bandukda, Naeem Suleman along with Arshad Hussain, Muhammad Salim Mangrio, Ms. Lubna Pervez, Abdul Rahim Lakhani, Abdul Jabbar Mallah, Atta Muhammad Qureshi, Naveed Sultan, Syed Muhammad Hassan Meerza, Saleem Altaf, Ms. Syeda Abida Bukhari, Darvesh K. Mandhan, Manzar Bashir, Waqas Asad Shaikh, Muhammad Faheem, Muhammad Aleem, Taimur Ahmed, Jehangir K. Agha, Muhammad Faheem Bhayo along with Muhammad Din Qazi, Saleem Altaf, Waseem Shaikh, Muhammad Khalid, Muhammad Adeel Awan, Manzar Hussain Memon along with Aamir Ali Shaikh and Irfan Ali Shaikh, Hashmatullah Aleem along with Aijaz Ahmed and Kamran Arshad for Petitioners.

Kafeel Ahmed Abbasi, DAG along with Hussain Bohra, Assistant Attorney General, Ameer Buksh Metlo along with Fayaz Ali Metlo, Imran Ahmed Metlo, Barkat Ali, Irfan Mir Halepoto, Shahid Ali Qureshi, Munawwar Ali Memon, Ghulam Murtaza Korai, Qaim Ali Memon, Aatif Awan, Ali Tahir, Syed Shafqat Ali Shah Masoomi for FBR, Tauqir Ahmed for FBR, Rana Sakhawat Ali for FBR, Ayaz Sarwar Jamali for FBR along with Raja Love Kush, Akhtar Hussain Jabbar, Iqbal Hussain, Muhammad Zubair Hashmi, Taseer Ahmed, Imran Ali Mithani, Shahnawaz Memon, Muhammad Faisal Qureshi, Muhammad Bilal Bhatti, Ch. Mehmood Anwar and Imtiaz Ali Solangi for Respondents.

2022 P T D 901

[Sindh High Court]

Before Irfan Saadat Khan and Arshad Hussain Khan, JJ

Messrs SAKRAND SUGAR MILLS LIMITED through Authorized Representative/Manager Finance

Versus

FEDERATION OF PAKISTAN through Federal Secretary Revenue Division Pakistan Secretariat, Islamabad and 3 others

Constitutional Petitions Nos.D-1359, 1360, 1361, 1362, 1363, 3190, 3191, 3192, 3193, 3194, 1484, 1485, 1486, 1487, 1548, 1549, 1550, 1551, 1552, 1560, 1561, 1562, 1563, 1564, 1615, 1616, 1617, 1819, 1843, 1844, 1845, 1906, 1907, 1908, 1909, 1944, 1945, 1946, 1947, 4300, 4301 and 4302 all of 2021 decided on 11th February, 2021.

Income Tax Ordinance (XLIX of 2001)---

----Ss.111 & 182---Assessment and penalty proceedings---Penalty, imposing of---Particulars of income---Determination---Petitioners / taxpayers were aggrieved of show-cause notices issued by authorities for imposing of penalty for furnishing inaccurate particulars of their income---Validity---Penalty proceedings could not be either deferred or dropped simply on the ground that appeals were filed by them before Commissioner (Appeals) in respect of additions made under S.111 of Income Tax Ordinance, 2001, in the main assessment proceedings under S.122 of Income Tax Ordinance, 2001, which was pending adjudication--- Assessment proceedings and penalty proceedings were two separate proceedings and it was not at all necessary while proceeding with penalty matters against petitioners the penalty was to be imposed mandatorily---Proceedings for imposition of penalty were either criminal or quasi criminal in nature and burden in such regard was always upon authorities to prove that the person had brought himself in the ambit of penalty as spelt out under Ss. 111 & 182 of Income Tax Ordinance, 2001, on the ground that assessee failed to satisfactorily explained amount / income would not / should not be considered as a valid reason warranting authorities to impose penalty---Authorities, in penalty proceedings was to establish independently on the basis of material available on record, the reasons for imposition of penalty---High Court directed petitioners / taxpayers to give proper / detailed reply to authorities in respect of show-cause notices issued by them for imposition of penalty under S.182 of Income Tax Ordinance, 2001---Authorities were legally bound to consider such replies of petitioners / taxpayers and thereafter to pass speaking order after granting opportunity of hearing to petitioners / taxpayers in accordance with law---Constitutional petition was disposed of accordingly.

Central Board of Revenue and others v. Chanda Motors 1992 PTD 1681; Mst. Heemat Jehan and another v. Attaullah Shah 2012 CLC 686; Messrs Castrol Pakistan (Pvt.) Ltd. through Accountant v. Additional Commissioner Inland Revenue and others 2015 PTD 2467; Deputy Commissioner of Income Tax/Wealth Tax, Faisalabad and others v. Messrs Punjab Beverage Company (Pvt.) Ltd. 2007 PTD 1347; Roche Pakistan Ltd. v. Deputy Commissioner of Income Tax and others 2001 PTD 3090; Messrs Pakistan Telecommunication Company Ltd. Through duly Authorized Attorney and others v. Province of Sindh through Secretary, Ministry of Finance and 2 others 2015 PTD 2072 and Messrs Maritime Agencies (Pvt.) Ltd. Through Company Secretary v. Assistant Commissioner-II of SRB and 2 others 2015 PTD 160 rel.

Muhammad Saleem Mangrio for Petitioner (in C.Ps. Nos.D-1359, 1360, 1361, 1362 and 1363 of 2021).

Taimoor Ahmad Qureshi for Petitioner (in C.Ps. Nos.D-1484, 1485, 1486 and 1487 of 2021).

Muhammad Faheem Bhayo for Petitioner (in C.Ps. Nos.D-1548, 1549, 1550, 1551, 1552, 1560, 1561, 1562, 1563, 1564, 1615, 1616, 1617, 1819, 1843, 1844 and 1845 all of 2021).

Abdul Rahim Lakhani for Petitioner (in C.Ps. Nos.D-3190, 3191, 3192, 3193, 3194, 1906, 1907, 1908, 1909, 1944, 1945, 1946, 1947, 4300, 4301 and 4302 all of 2021).

Kafeel Ahmed Abbasi, Deputy Attorney General for Pakistan (DAG) (for respondent No.1 in all C.Ps.) for Respondents.

Ameer Bux Maitlo (for the Department /respondents Nos.2 and 3 /2, 3 and 4 in all C.Ps) for Respondents.

2022 P T D 914

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

The COLLECTOR OF CUSTOMS, MCC PORT MUHAMMAD BIN QASIM and others

Versus

M.M. FLOUR MILLS (PVT.) LIMITED and others

Special Customs Reference Applications Nos.284 to 288 of 2017, decided on 29th January 2021.

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

----S.32---Customs Rules, 2001, R.412---Mis-declaration---Delay or cancellation of arrival of vessel---Scope---Respondents were called upon to show cause as to why the evaded amount of duty and taxes might not be recovered from them and penal action, as warranted under the law, might not be taken against them---Firstly, the allegation per se was unwarranted inasmuch as admittedly it was not a case of making any recovery of the alleged evaded amount of duty and taxes, as at the time of issuance of show-cause notice, it was already paid and recovered---No question for calling upon the respondents to make payment of any duty and taxes---Secondly, even if there was a case of imposition of any penalty, then an appropriate action ought to have been initiated against the shipping agent, who had allegedly filed a wrong estimated time of arrival of the vessel---Such again was notwithstanding that even otherwise, how could a person be issued show-cause notice merely for filing a wrong date of an estimated arrival---Estimate by itself was not a final conclusion; hence, on that account also show cause notice could not be sustained---As to implication of two other respondents (Importer and Clearing Agent) in the same show-cause notice, it was only a bald allegation of connivance without any substantial material on record---No case was made out by the department---Reference applications were dismissed.

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

----S.180---Issue of show-cause notice before confiscation of goods or imposition of penalty---Scope---Imposition of penalty is the discretion of the adjudicating authority and barring exceptional circumstances, it must not be interfered with.

Dr. Shah Nawaz Memon for Applicant.

2022 P T D 956

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

The COLLECTOR OF CUSTOMS through Additional Collector of Customs, Model Customs Collectorate of Appraisement (East), Customs House, Karachi

Versus

Mian AZAM WAHEED

Special Customs Reference Applications Nos.212 to 361 of 2016, decided on 22nd March, 2021.

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

----Ss.81 & 196---Provisional determination of liability---Release of goods on order of Court---Scope---Respondents imported a number of consignments of tiles and filed goods declarations on the basis of declared values for assessment purposes---Department refused to accept such values and determined the same in terms of a valuation ruling---Respondents impugned the valuation ruling before High Court wherein the Court passed interim orders directing release of goods provisionally by securing differential amounts of duty and taxes---Petition filed by respondents was ultimately dismissed---Department finally determined the duty and taxes---Respondents challenged the determination of duty and taxes before Collector of Customs (Appeals) through appeals, which were dismissed---Appellate Tribunal allowed the appeals of respondents on the ground that since provisional assessments were not finalized within the period provided in S. 81 of Customs Act, 1969, therefore, the final assessments were time barred---Held; it was never a case of provisional assessment sticto sensu in terms of S. 81 of Customs Act, 1969---Such was an order of Court exercising jurisdiction under Art. 199 of the Constitution in a writ petition and not under S.81 of Customs Act, 1969---Such provisional arrangement was subject to final decision of the Court---Appellate Tribunal had miserably failed to take note of crucial facts and had dragged itself into the limitation aspect for purported failure of the department in finalizing the assessments which was never the case ---Impugned judgment was set aside and the orders of forum below were restored.

Flying Board and Paper Products (Pvt.) Ltd. v. Deputy Collector 2006 SCMR 1648 ref.

(b) Civil Procedure Code (V of 1908)---

----O.XXXIX, Rr.1 & 2---Temporary injunction---Scope---If a case or petition is finally dismissed; then a party cannot take shelter under the garb of an ad-interim order.

(c) Civil Procedure Code (V of 1908)---

----O.XXXIX, Rr. 1 & 2---Temporary injunction---Scope---No litigant can derive benefit from mere pendency of case in a Court of Law, as the interim order always merges in the final order to be passed in the case and if the petition is ultimately dismissed, the interim order stands nullified automatically---Party cannot be allowed to take any benefit of his own wrongs by getting interim order and thereafter blame the Court---Fact that petition is found ultimately devoid of any merit shows that a frivolous petition had been filed.

Amarjeet Singh and others v. Devi Ratan and others AIR 2010 SC 3676 ref.

(d) Civil Procedure Code (V of 1908)---

----O.XXXIX, Rr.1 & 2---Temporary injunction---Scope---Interim order merges with the final order and if the final order is against the petitioner, it is deemed that the petitioner had no favourable order in his favour at any time.

V.M. Aniyan v. The University of Calicut and others (ILR 2017(3) Kerala 96 ref.

Shahab Imam for Applicant.

Aqeel Ahmed Khan for Respondent (in SCRAs Nos.212, 324 and 331 of 2016).

2022 P T D 984

[Sindh High Court]

Before Muhammad Shafi Siddiqui and Mahmood A. Khan, JJ

ZONA PAKISTAN (PVT.) LTD.

Versus

PROVINCE OF SINDH through Chairman and 3 others

C.P. No.D-5791 of 2016, decided on 10th January, 2022.

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

----S.2(96), Explanation---Economic activity---Scope---Economic activity in relation to both the categories of indenters, either originated or terminated (rendering of services) in Sindh and such is the original requirement of the Statute and is irrespective of ultimate destination of goods/ commodities---Sales tax on service has nothing to do with ultimate destination of the goods.

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

----Ss.5 &24---Sindh Sales Tax on Services Rules, 2011, R. 41-B---Constitution of Pakistan, Art.199---Constitutional petition---Services provided by indenters and commission agents---Value Added Tax (VAT)---Dispute was with regard to applicability of Sindh Sales Tax on Services Act, 2011, on business activities of service providers / indenters---Validity---General principle of passing on value added tax (VAT) to end consumer was not an absolute principle for any legislation but exceptions were always there considering the circumstances---At times such exceptions were inbuilt in VAT mode legislation---Such had always remained prerogative of the Legislature to shift the burden either to end consumer or to provider of service for administrative or legal needs---Formula of shifting burden of tax either on recipient or provider of service was established around the globe and was being implemented all over the world where VAT regime of tax existed---Such was not an absolute mechanism that on an event of indirect tax, it must be passed on to end consumer though in general the principle existed but carried exceptions along with---Provisions of R.41B of Sindh Sales Tax on Services Rules, 2011 read with S.5 of Sindh Sales Tax on Services Act, 2011, had authorized the Board to fix any other value of service or class of service where it deemed appropriate in the facts and circumstances of the transaction---Provision of R.41-B of Sindh Sales Tax on Services Rules, 2011 deviated the general principle---Constitutional petition was disposed of accordingly.

Pakistan Mobile Communication Ltd. v. Pakistan and others 2022 PTD 266; Imperial Tobacco Co. of India v. Commissioner of Income Tax PLD 1958 SC 125; Sui-Southern Gas Co. Limited v. Federation of Pakistan 2018 SCMR 802; KESC v. National Industrial Relations Commission PLD 2014 Sindh 553; Murri Brewery Company Limited v. Province of Punjab PLD 2017 Lah. 230; Quetta Textile Mills v. Province of Sindh PLD 2005 Kar. 55; Atta Muhammad v. Ahmad Bakhsh PLD 1971 SC 401; Hirjina & Co. v. Islamic Republic of Pakistan and another 1993 SCMR 1342; Pakistan International Freight Forwarders Association v. Province of Sindh and others 2017 PTD 1; Federation of Pakistan v. Durrani Ceramics 2014 SCMR 1630; Sapphire Textile Mills Limited v. Federation of Pakistan 2021 PTD 971 and Chhotabhai Jethabhai Patel & Co. v. Union of India AIR 1962 SC 1006 ref.

Muhammad Yousuf, Imran Ahmed, Khadim Ali Kaka, Jehanzeb Awan, Muhammad Rashid Khan Mahar, Ms. Anum, Muhammad Aizaz Ahmed, Ms. Lubna Perwez, Zubair Abro, Arshad Hussain, Nadir Hussain Abro, Ajeet Kumar, Zafar Khokhar, Gharib Shah, Faiz Durrani, Ghulam Mohammad, Uzair Qadir Shoro, Anwar Kashif Mumtaz, Usman Alam, Fazal Mehmood Sherwani, Iftikhar Hussain, Abdul Rahim Lakhani, Jabbar Mallah, Atta Muhammad, Gazain Magsi, Shahab Usto, Taha Soomro, Hanif Faisal Alam, Naseer Nehal Hashmi, Muneer Iqbal, Haider Naqi, Ahmed Ali Hussain, Umer Akhund, Qazi Umair Ali, Muhammad Inzimam Sharif, Muhammad Iqbal, Muhammad Aleem, Jawad Qureshi, Taimur Ahmed, Shams Mohiuddin, Darvesh K. Mandhan, Abdul Latif Chandio for Petitioner (in C.Ps. and Private application in some SSTRAs).

Shamshad Ahmed, Muhammad Idrees Jakhrani, Javed Ali Sangi, Zulfiquar Ali Bhutto, Law Officer and Zamir Khalid, Commissioner Sindh Revenue Board along with Zainul Abidin, Deputy Commissioner, in person.

Kafeel Ahmed Abbasi, Deputy Attorney General and Hussain Bohra, Assistant Attorney General for Respondent Federation.

Saifullah, Assistant Advocate General for Respondent Province of Sindh.

2022 P T D 1040

[Sindh High Court]

Before Muhammad Iqbal Kalhoro and Abdul Mobeen Lakho, JJ

TAHIR ASHRAF DURRANI and others

Versus

FEDERAL INVESTIGATION AGENCY, through Director General, F.I.A., Headquarter, Peshawar Morr, Islamabad and others

Constitutional Petitions Nos.D-631 to D-636, D-2632 of 2010 and D-3051 of 2012, decided on 11th March, 2022.

Income Tax Ordinance (XLIX of 2001)---

----S.227---Sales Tax Act (VII of 1990), S.51---Penal Code (XLV of 1860), 409, 419, 420, 468 & 471---Prevention of Corruption Act (II of 1947), S.5(2)---Criminal Procedure Code (V of 1898), S. 173---Constitution of Pakistan, Art. 199---Constitutional petition--- Quashing of proceedings---Prior approval of Federal Board of Revenue---Petitioners were serving in Federal Board of Revenue and Income Tax department---Federal Investigating Agency initiated investigations against petitioners for committing criminal breach of trust, cheating, forgery and misconduct---Contention of petitioners was that under S.51 of Sales Tax Act, 1990 and under S.227 of Income Tax Ordinance, 2001, suit or criminal prosecution against them was barred unless a prior approval was granted in that respect by Federal Board of Revenue---Validity---Province under the petitioners related to only official acts, orders or anything done in good faith by the officials performing duty under those laws, rules, instructions or directions made or issued thereunder---Petitioners were not charged for committing contravention much the same embraced by those laws, etc. that needed an approval in advance from the Board for an action against them under some other laws--- Petitioners were alleged to have fake companies and directed tax return refunds to such companies' bogus accounts and accounts of non-existent persons with a predetermined mind and Bank officials colluding with them in the spree--- Whole episode was full of mens rea and was an outcome of proclivity to commit actus reus with plan base in approach and consequences--- Such acts and ensuing effects were nowhere defined or covered or comprehended by Sales Tax Act, 1990 and Income Tax Ordinance, 2001, therefore not protected under aforesaid provisions nor could such construction even otherwise be construed running under other laws---High Court declined to interfere in criminal proceedings pending against petitioners---Constitutional petition was dismissed, in circumstances.

PLD 2020 Sindh 601; Syed Mushahid Shah's case 2017 SCMR 1218; 2016 SCMR 447; 1993 SCMR 71; PLD 2002 Kar. 464; 2008 YLR 387; 2009 CLD 1422; 2018 YLR 2624; 1990 MLD 1161; 2012 YLR 353; PLD 2000 Kar. 181; PLD 1999 Kar. 336; 2019 PCr.LJ 594; 2011 YLR 1825; A. Habib Ahmed v. M.K.G. Scott Christian and 5 others PLD 1992 SC 353 and ZHV Securities (Pvt.) Ltd. and others v. Federation of Pakistan and others 2018 CLD 1338 ref.

Raj Ali Wahid for Petitioner (in Constitutional Petition No.D-2632 of 2010).

Ovais Ali Shah for Petitioners (in Constitutional Petition No.D-632 of 2010).

Nadeem Yaseen for Petitioner (in Constitutional Petition No.D-3501 of 2012).

Irfan Ahmed, D.A.G.

2022 P T D 1059

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

COLLECTOR OF CUSTOMS

Versus

Messrs JUNAID ENTERPRISES and others

Special Customs Reference Application No.638 of 2019 along with S.C.R.As. Nos.653, 654, 655 and 664 of 2019, decided on 24th December, 2020.

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

----Ss.32, 25 & 181---SRO No.499(I)/2009, dated: 13-06-2009---Mis-declaration---Value of imported and exported goods---Option to pay fine in lieu of confiscation---Scope---Case of department was that the respondent imported used vehicles and declared value, which was less than the value determined pursuant to a valuation ruling and therefore, it was a case of mis-declaration---Order-in-original was passed, vehicle was confiscated and redemption fine as well as penalty were imposed---Respondent assailed the order before Appellate Tribunal---Appellate Tribunal set aside the order-in-original to the extent of redemption fine in lieu of confiscation along with penalty and vehicles were ordered to be released upon payment of duty and taxes assessed by the department---Validity---Assessment was being made on the basis of valuation ruling, no case for any mis-declaration to the extent of value, so declared by an importer, could be made out in terms of S. 32 of Customs Act, 1969---Redemption fine in terms of S. 181 of Customs Act, 1969, read with SRO No.499(I)/2009, dated: 13-06-2009, reflected that fine could be imposed when the declared value was less than 30% from the value ascertained/determined on the basis of a direct evidence---Department's case was not that there was any direct evidence of the identical or similar goods---Reference applications were dismissed.

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

----Ss. 181 & 25---SRO No.499(I)/2009, dated: 13-06-2009---Value of imported and exported goods---Option to pay fine in lieu of confiscation---Scope---Value notified through a valuation ruling by the department is in fact based on estimation and is not always reflective of the transactional value---Such is in fact notional at times and in majority has been subject to challenge in accordance with S.25-D of the Customs Act, 1969---Though it is required to be notified after following the methods as provided under S. 25, but in any case it is not reflective of any direct evidence of exactly an identical goods; hence, will not fulfill the criterion as laid down in para 1(d) of SRO No.499(I)/2009 dated: 13-06-2009 to sustain any confiscation and imposition of fine.

Muhammad Bilal Bhatti for Applicant.

Nemo. for Respondents (in all S.C.R.As.)

2022 P T D 1082

[Sindh High Court]

Before Irfan Saadat Khan and Zulfiqar Ahmed Khan, JJ

Messrs YUNUS TEXTILE MILLS LIMITED through Constituted Attorney

Versus

FEDERATION OF PAKISTAN through Secretary Revenue Division, Islamabad and 4 others

Constitutional Petition No.D-3548 of 2019, decided on 28th March, 2022.

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

----S.122 (4)---Assessment order---Amendment---Period of limitation---Word "or" used after S.122 (4) (a) of Income Tax Ordinance, 2001---Scope---Two conditions, as provided in clauses (a) & (b) of S.122(4) of Income Tax Ordinance, 2001, where Commissioner wants to further amend an original assessment, limitation within the later of the two would be applied---Word "or" used at the end of clause (a) and before beginning of clause (b) of S.122(4) of Income Tax Ordinance, 2001 stipulates that Commissioner is empowered by looking to the situation of matter to apply either clause (a) or clause (b), as the case may be.

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

----S.122---Constitution of Pakistan, Art. 199---Constitutional petition---Amendment of assessment order---Limitation---Petitioner / tax payer was aggrieved of show cause notice issued by authorities to furnish reply warranting further amendment under S.122 (5-A) of Income Tax Ordinance, 2001---Plea raised by petitioner / taxpayer was that matter was barred by time---Validity--- Case of taxpayer fell under S.122(4) of Income Tax Ordinance, 2001, for which time limit was five years---Show-cause notice issued for amending assessment was within five years which was within the later of the two clauses (a) & (b) of S.122 (4) of Income Tax Ordinance, 2001---Authorities could apply either clause (a) or clause (b) of S.122(4) of Income Tax Ordinance, 2001, looking to facts and circumstances of each case---Show-cause notice was not time barred---Where statutory right of a person was infringed Constitutional jurisdiction was proper remedy---High Court in exercise of Constitutional jurisdiction declined to interfere in the matter as no statutory right of taxpayer was infringed and in show cause notice taxpayer was simply directed to furnish some details /explanations, whereas matter with regard to adjudication on those aspects was to be made by the authorities---Constitutional petition was dismissed accordingly.

Commissioner of Income Tax v. Messrs Eli Lilly Pakistan (Pvt.) Ltd. 2009 PTD 1392; Dewan Khalid Textile Mills Ltd. v. Commissioner of Income Tax (Legal (Division), Large Taxpayers Unit, Karachi 2019 SCMR 158 = 2019 PTD 291; E.F.U. General Insurance Co. Limited v. The Federation of Pakistan and others PLD 1997 SC 700 = 1997 PTD 1693; Messrs Central Insurance Co. and others v. The Central Board of Revenue, Islamabad and others 1993 SCMR 1232; Messrs Pakistan Tobacco Co. Ltd. v. Government of Pakistan through Secretary, Ministry of Finance and 3 others 1993 PTD 697 and Commissioner of Income-Tax, Central Zon-'C', Karachi v. Messrs American Express International Banking Corporation Limited, Karachi 1992 PTD 751 distinguished.

Commissioner of Income-Tax, Peshawar v. Messrs Islamic Investment Bank Ltd. 2016 PTD 1339; Seasons Edible Oil Limited (Formerly Wali Oil Mills Limited) through Authorized Attorney v. The Federal Board of Revenue through Chairman, FBR, Islamabad and 3 others 2019 PTD 1619; Commissioner of Income Tax, Companies-II and another v. Hamdard Dawakhana (Waqf), Karachi PLD 1992 SC 847; Commissioner Inland Revenue v. Ch. Muhammad Akram PLD 2013 Lah. 627; Commissioner Inland Revenue, Zone-1, RTO, Rawalpindi v. Messrs Khan CNG Filling Station, Rawalpindi and others 2017 PTD 1731; Messer Sakrand Sugar Mills Limited v. Federation of Pakistan and others (C.P. No.D-1359 of 2021); Commissioner Inland Revenue and others v. Jahangir Khan Tareen and others 2022 PTD 232; Deputy Commissioner of Income Tax/Wealth Tax, Faisalabad and others v. Messrs Punjab Beverage Company (Pvt.) Ltd. 2007 PTD 1347; Messrs Amin Textile Mills (Pvt.) Ltd. v. Commissioner of Income-Tax and 2 others 2000 SCMR 201; Dr. Seema Irfan and others v. Federation of Pakistan and others PLD 2019 Sindh 516; Van Oord Dredging and Marine Contractor B.V. through authorized attorney v. Pakistan through Secretary Revenue and 3 others 2020 PTD 2008; Messrs Usmania Glass Sheet Factory Limited, Chittagong v. Sales Tax Officer, Chittagong PLD 1971 SC 205; Utility Stores Corporation of Pakistan Limited v. Punjab Labour Appellate Tribunal and others PLD 1987 SC 447; Noor Hospital v. I.A.C. of Income Tax 1994 PTD 1323; Ahmad Fabric v. Inspecting Additional Commissioner of Income Tax and others 1999 PTD 2899; Commissioner of Income Tax, Rawalpindi Zone, Rawalpindi v. Safdar and Company, Gujrat 1980 PTD 336 and J.L. Wei and Co. v. Commissioner of Income Tax 1989 PTD 271 ref.

Mushtaq Hussian Qazi for Petitioner.

Kafeel Ahmed Abbasi, Deputy Attorney General for Pakistan (DAG) for Respondents Nos.1 and 2.

Ameer Baksh Metlo for Respondents Nos.3 to 5.

2022 P T D 1112

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

UMER ZAHID MALIK through Attorney

Versus

FEDERATION OF PAKISTAN, through Secretary Ministry of Finance, Islamabad and 2 others

Constitution Petition No.4514 of 2020 and SCRA No.557 of 2019, decided on 17th February, 2021.

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

----Ss.168 & 2(s)---Seizure of things liable to confiscation---Smuggling---Scope---Vehicle of respondent was intercepted on the suspicion of being smuggled/non-duty paid---Respondent presented registration documents of another vehicle instead of the vehicle in question, hence, the vehicle was detained for verification and the petitioner was directed to furnish the pertinent import documentation, a task he failed to accomplish---Forensic report of the vehicle revealed that the chassis number on the vehicle was fake as the chassis sheet was welded and replaced at the site of original chassis number---Department confiscated the vehicle, however, the Appellate Tribunal ordered for its release---Validity---Respondent had not challenged the Forensic Report in the adjudication proceedings---Appellate Tribunal had denigrated the report by observing that it failed to identify the particulars, ostensibly implying the original chassis particulars, which had been concealed/replaced---Such callous disregard for primary evidence could not be sustained by the High Court---Documents produced by the respondent were contradictory inter se and were never produced in the original proceedings---Reference application was allowed and the constitutional petition filed by respondent for release of vehicle was dismissed.

Government of Khyber Pakhtunkhwa and others v. Sarfaraz Khan and another (Civil Petition No.800-P of 2019); 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; 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; Kamran Industries v. Collector Customs and others PLD 1996 Kar. 68 ref.

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

----Ss.2(s) & 168---Smuggling---Seizure of things liable to confiscation---Scope---Mere reliance on registration of a vehicle, unsubstantiated by the record, cannot absolve a subsequent purchaser from liability.

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

----Ss.168 & 2(s)--Seizure of things liable to confiscation---Smuggling---Scope---While initial responsibility lies with the person tempering with a vehicle, however, a subsequent purchaser ought to take due care towards ensuring compliance with the requirements of law; in the absence whereof he cannot claim to a bona fide purchaser---Purchaser's remedy lies in a claim of damages against the person from whom he purchased the vehicle---Smuggled vehicle with an apparent tampered chassis frame merits outright confiscation.

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

----S.2(s)---Smuggling---Scope---It is a presumption that items coming into the country have been sieved through the customs barrier and the pertinent levies have been paid. [p. 1122] G

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

----Ss.168 & 2(s)---Seizure of things liable to confiscation---Smuggling---Scope---Law places the initial burden upon the owner/possessor to show that the items are in accordance with lawful authority; such a burden may only be displaced once evidence is demonstrated to discharge this initial burden.

Ms. Dil Khurram Shaheen for Petitioner.

Muhammad Bilal Bhatti for Applicant.

Khalid Rajpar for Respondent.

Kafeel Ahmed Abbasi, Deputy Attorney General for Respondents.

2022 P T D 1139

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

Messrs DASTAGIR ENGINEERING

Versus

COLLECTOR OF CUSTOMS (APPEALS) CUSTOMS HOUSE, KARACHI and another

Special Customs Reference Application No.191 along with Special Customs Reference Applications Nos.192 to 202 of 2012, decided on 15th December, 2020.

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

----S.32---SRO No.575(I)/2006, dated: 05-06-2006---Mis-declaration---Wrong classification---Scope---Applicant imported Bakery Counter Refrigerator through different shipments; claimed assessment under HS Code 8418.9000; paid duty at the rate of 5% and such assessment as claimed under SRO No.575(I)/2006, dated: 05-06-2006 was accepted--- After clearance of goods show-cause notice was issued to the applicant on the ground that the goods were correctly classifiable under HS Code 8418.5000 chargeable to duty at the rate of 35% and in addition the exemption was also not applicable---Order-in-original was accordingly passed and the appeals against order-in-original were dismissed---Validity---Classification of the Refrigerators imported by the applicant was under HS Code 8418.5000 wherein it was specifically covered as "Other refrigerating or freezing chests, cabinets, display counters, show cases and similar refrigerating or freezing furniture"---Imported goods could not be classified under HS Code 8418.9000 which specified "furniture designed to receive refrigerating or freezing equipment" was not understandable---Exemption claimed by applicant under SRO No.575(I)/2006, dated: 05-06-2006 was not available to the goods imported by applicant---Reference applications were partly dismissed to the extent of claimed assessment and exemption and partly allowed to the extent of penalty which was remitted.

Messrs A.R. Hosiery v. Collector of Customs (Export), Karachi and another 2004 PTD 2977 and Messrs Pakistan Telephone Cables Ltd. v. Federation of Pakistan and 3 others 2011 PTD 2849 ref.

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

----S.32---Mis-declaration---Mens rea---Imposition of penalty---Wrong classification---Scope---Where department had accepted the classification claimed by importer instead of objecting and refusing the assessment or issuing any show cause notice at the time of clearance of goods, High Court observed that merely for the fact that some other HS Code was mentioned would not ipso facto mean that the element of mens rea was present making the importer liable for imposition of penalty.

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

----S.32---Mis-declaration---Mens rea---Imposition of penalty---Wrong classification---Scope---Classification of goods is a question based on legal and factual determination and so also of interpretation of the HS Code and the Customs Tariff; hence, there can always be difference of opinion for interpreting the same---Such will not always be a case of mens rea and imposition of penalty if the claimed HS Code is not accepted by the department.

Mrs. Arjumand Khan for Applicant.

Mrs. Masooda Siraj for Respondents.

2022 P T D 1153

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

COLLECTOR OF CUSTOMS through Additional Collector of Customs

Versus

CUSTOMS APPELLATE TRIBUNAL and another

Special Custom Reference Applications Nos.150 to 193 of 2015, decided on 4th June, 2021.

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

----S.196---Reference to High Court---Scope---Various show cause notices were issued to the respondent demanding payment of duty and taxes on the re-importation of engines sent abroad for repairs---Department's stance was that the value of repair was not correctly declared at the time of re-import of engines, resulting in lesser payment of duty and taxes---Respondent's case was that during pendency of the proceedings they had availed amnesty scheme and had paid the duty and taxes as per the scheme; hence, no question of payment of any further amount arose---Validity---In terms of the amnesty scheme fine and penalty stood remitted, whereas, the duty and taxes so adjudicated stood paid---Department had accepted the request of the respondent to grant them benefit of the amnesty scheme after making payment of duty and taxes calculated by the respondent on its own---Department had no case so as to seek interference in the impugned order of the Appellate Tribunal---Reference applications were dismissed.

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

----S.180---Issuance of show cause notice before confiscation of goods or imposition of penalty---Scope---Order of adjudication cannot go beyond the allegations mentioned in the show-cause notice.

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

----S.180---Issuance of show-cause notice before confiscation of goods or imposition of penalty---Scope---Purpose of serving show-cause notice on a taxpayer is to notify him of the case against him---When such a document contains incomplete information it can seriously prejudice the taxpayer's defence.

The Collector Central Excise and Land Customs v. Rahm Din 1987 SCMR 1840 and Fatal Yarn (Pvt.) Ltd. v. Commissioner Inland Revenue 2021 SCMR 1133 ref.

Ms. Masooda Siraj for Applicant.

Khalid Javed along with Barriste Yousuf Makda for Respondents.

Ms. Farkhanda Shaheen for Respondent No.2.

2022 P T D 1163

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

Messrs HARRIS SILICONES AND GLASS (PVT.) LTD.

Versus

FEDERATION OF PAKISTAN

Constitution Petition No.6051 of 2020, decided on 14th April, 2021.

(a) Constitution of Pakistan---

----Art.199---Customs Act (IV of 1969), Ss.80 & 83---Constitutional petition---Checking of goods declaration by the customs---Clearance for home consumption---Scope---Petitioner, through constitutional petition, impugns a demand created in respect of four goods declarations which was generated in the computer inbox of the petitioner after clearance of goods---Validity---Averment of the petitioner to the effect that a direct demand created through some re-assessment was not disputed in the comments---Neither any hearing notice was issued nor any other opportunity was provided to the petitioner, even no reasoned order was ever passed---Notwithstanding at powers in terms of S.80(3) could only be exercised during checking of goods declaration and not thereafter---Insofar as the purported re-assessment order was concerned, it could not have been done in the manner it had been done---No jurisdiction or authority was vested in the officer to re-assess the goods declaration in terms of S.80(3) of the Customs Act, 1969, after goods were out of charge and cleared by the Customs---Constitutional petition was allowed.

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

----S.80---Checking of goods declaration by the customs---Scope---Subsection (1) of S. 80 of the Customs Act, 1969, reflects that on receipt of a goods declaration, an officer of Customs shall satisfy himself regarding the correctness of the particulars of imports, including declaration, assessment, and in case of the Customs Computerized System, payment of duty, taxes and other charges thereon.

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

----S. 80---Checking of goods declaration by the customs---Scope---Sub-section (3) of S. 80 of the Customs Act, 1969, provides that if during checking of goods declaration, it is found that any statement in such declaration or documents or information furnished is incorrect in respect of any matter relating to the assessment, the goods shall, without prejudice to any other action which may be taken under the Customs Act, 1969, be re-assessed to duty and taxes---It has been further provided that in case of Computerized system, if any re-assessment is being made a proper notice and opportunity of hearing is to be provided.

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

----Ss.80, 83, 32, 193 & 195---Checking of goods declaration by the customs---Clearance for home consumption---Mis-declaration---Appeals to Collector (Appeals)---Scope---Power under S. 80(3) can only be exercised during checking of goods declaration and not thereafter---Subsection (3) cannot be read in isolation to subsection (1) as it refers to a goods declaration filed under S. 79 of Customs Act, 1969, which requires the importer to file a true declaration, assess and pay his liability of duty, taxes and other charges thereon---Self-assessment of the goods declaration can be re-assessed in terms of subsection (3)---This power would not continue to be available at all times---It stops once the goods declaration has been assessed to duty/taxes and consignment has been released---Thereafter, no re-assessment can be made under S. 80(3)---The only way out is either through a proper show cause notice issued under S. 32 or by way of an appeal in terms of S. 193 and lastly in exceptional circumstances by way of re-opening of the assessment order in terms of S.195 of the Customs Act, 1969.

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

----Ss.32 & 180---Mis-declaration---Show-Cause Notice---Scope---Demand notice in the absence of statutory show-cause notice is without lawful foundation---No demand notice requiring payment of any alleged short levy can be issued without show-cause notice.

Assistant Collector Customs and others Khyber Electric Lamps and others 2001 SCMR 838 and Collector of Customs (Preventive) Karachi v. PSO 2011 SCMR 1279 ref.

M. Rafi Kumboh for Petitioner.

Kafeel Ahmed Abbasi D.A.G. for Respondent No.1.

M. Khalil Dogar for Respondent No.2.

2022 P T D 1174

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

COLLECTOR OF CUSTOMS, MODEL COLLECTORATE OF CUSTOMS (PREVENTIVE), CUSTOMS HOUSE, KARACHI

Versus

NIAZ MUHAMMAD and another

Special Customs Reference Application No.417 of 2018 and C.P. D-1753 of 2020, decided on 7th April, 2021.

Customs Act (IV of 1969)---

----Ss.157 & 2(s)---S.R.O. No.499(I)/2009, dated 13-6-2009---Constitution of Pakistan, Art. 199---Constitutional petition---Smuggling---Seizure of things liable to confiscation---Extent of confiscation---Scope---Dumper truck was intercepted, post a chase on the highway, and inside a concealed specially designed tank was discovered loaded with ostensibly smuggled diesel---Pursuant to a show-cause notice, an order-in-original was rendered, whereby diesel was confiscated, however, the truck was allowed release while placing reliance on SRO No.499(I)/2009, dated: 13-06-2009---In the order-in-appeal, the outright confiscation of the truck was also ordered---Appellate Tribunal set aside the order-in-appeal and restored the order-in-original---Reference application filed by department assailed order passed by Appellate Tribunal whereas a constitutional petition was also filed seeking implementation of the order-in-original ---Validity---Petitioner was cleaner of the truck, arrested along with the driver at the time when the diesel and truck were apprehended---Powers under Art.199 of the Constitution could be exercised upon application of an aggrieved person---Petitioner was not an aggrieved person, as such, he had no locus standi to maintain the constitutional petition---Release of a confiscated vehicle carrying smuggled goods could not be sanctioned in lieu of payment of a redemption fine pursuant to clause (b) of the S.R.O. No.499(I)/2009, dated: 13-06-2009---Impugned order was not in dissonance with the law, hence, could not be sustained---Findings contained in the order-in-appeal were incorrect appreciation of law---Reference application was allowed and constitutional petition was dismissed.

Pervaiz Ahmed Memon for Applicant.

Dil Khurram Shaheen for Petitioner.

Kafeel Ahmed Abbasi, Deputy Attorney General for Respondents.

2022 P T D 1183

[Sindh High Court]

Before Muhammad Iqbal Kalhoro and Agha Faisal, JJ

Messrs FAIZ CHEMICAL INDUSTRIES (PVT.) LTD. through Authorized Person

Versus

COLLECTOR OF CUSTOMS, MODEL CUSTOMS COLLECTORATE OF APPRAISEMENT and another

Special Customs Reference Applications Nos.221, 222 and 223 of 2012, decided on 15th April, 2022.

Customs Act (IV of 1969)---

----S.81---Provisional determination of liability---Limitation---Scope---Section 81 of Customs Act, 1969, stipulates that where it is not possible for an officer of the Customs to satisfy himself of correctness of assessment of the goods made by the importer, then an officer not below the rank of Assistant Collector of Customs may determine such goods for the duty, taxes and other charges provisionally and release them against the Bank guarantee to be furnished by the importer to meet a likely disparity at the time of final determination---In terms of S. 81(2), then, final determination, within 6 months of such provisional release of the goods, is required to be made---Said period, for the reasons of exceptional nature, can be extended for further 3 months by the Collector of Customs or the Director of Valuation---Irrespective of whether such course has been followed or not, when final determination is not made within specified period, the framework under subsection (4) of the S. 81 irrepressibly rolls out requiring provisional determination to be deemed as final determination---Failure to finalize provisional determination of value of the goods within specified time shall translate into clearing of the goods on the value declared by the assessee, and, therefore the provisional assessment as final.

2007 PTD 1519; 2008 PTD 1950; 2010 PTD 343 and 2010 PTD 900 ref.

Ms. Pooja Kalpna for Applicant.

Ms. Masooda Siraj for Respondent No.4.

Irfan Memon, D.A.G.

2022 P T D 1193

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

DIRECTOR INTELLIGENCE AND INVESTIGATION (CUSTOMS)

Versus

NASIR UL HAQ and another

Special Custom Reference Application No.443 of 2019 and C.P. No.4524 of 2020, decided on 13th April, 2021.

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

----S.168---SRO No.499(I)/2009, dated: 13-06-2009---Seizure of things liable to confiscation---Scope---Question before High Court was whether a vehicle used in smuggling could be released in terms of SRO No.499(I)/2009, dated: 13-06-2009---Validity---SRO No.499(I)/2009, dated: 13-06-2009 expressly excluded smuggled items and conveyances carrying smuggled items from the purview of the relief granted therein---Release of a confiscated vehicle carrying smuggled goods could not be sanctioned in lieu of payment of a redemption fine---Question framed for determination was answered in the negative---Reference application was allowed.

Civil Petitions Nos.730-K to 760-K of 2020; Order dated 11.02.2021 fol.

Collector MCC Gaddani v. Muhammad Hanif (SCRA 09 of 2020); judgment dated 23.07.2020 ref.

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

----Ss.168 & 2(s)--Seizure of things liable to confiscation---Smuggling---Scope---Initial responsibility lies with the person tempering with a vehicle, however, any subsequent purchaser ought to take due care towards ensuring compliance with the requirements of law; in the absence whereof he cannot claim to a bona fide purchaser---Purchaser's remedy lies in a claim of damages against the person from whom he purchased the vehicle---Smuggled vehicle with an apparent tampered chassis frame merits outright confiscation.

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 and Noor Muhammad v. Customs Appellate Tribunal and others 2020 SCMR 246 ref.

Ms. Masood Siraj for Applicant.

Ms. Dil Khurram Shaheen for Petitioner.

Khalid Rajpar for Respondent.

Kafeel Ahmed Abbasi, Deputy Attorney General for Respondent.

2022 P T D 1205

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

SANOFI-AVENTIS PAKISTAN LIMITED and others

Versus

FEDERATION OF PAKISTAN and others

C.Ps.Nos.D-410, D-7919, D-539 and D-540 of 2020, decided on 2nd February, 2021.

Income Tax Ordinance (XLIX of 2001)---

----Ss.80 & 148---Drugs (Import and Export) Rules, 1976, R. 13---Imports---Person---Import of drugs for personal use---Scope---Petitioners imported finished pharmaceutical products, which at the relevant time required certification from Drug Regulatory Authority of Pakistan (DRAP) for claiming a reduced rate of deduction of income tax under S. 148 of the Income Tax Ordinance, 2001, to be collected by the Customs authorities---When DRAP was approached for such certification, the impugned letter was issued on the ground that S.80 of Income Tax Ordinance, 2001, was only relevant for persons importing finished pharmaceutical products under R.13 of the Drugs (Import and Export) Rules, 1976---Held; it was never a business of DRAP to interpret the word "person" appearing in S. 80 of the Income Tax Ordinance, 2001 nor the certification was for such purposes---Rather, it was only for and to the extent of, that it was a finished pharmaceutical product not being manufactured locally---Whether the importer was a "person" within the meaning of the Income Tax Ordinance, 2001, or not was not required to be determined by DRAP nor it fell in their domain---Rule 13 of Drugs (Import and Export) Rules, 1976, had no relevance as it was in respect of and applied to persons importing drugs for personal use in small quantities and not as commercial imports---Section 80 of the Income Tax Ordinance, 2001 very clearly defined a "person", which included an individual as well as a company and therefore, impugned letter of DRAP was not in consonance with the relevant provisions of the Income Tax Ordinance, 2001---Impugned letter was set aside to that extent; however, certification that it was a finished pharmaceutical product not being manufactured locally would still be required to be obtained from DRAP---Constitutional petitions were allowed.

Hyder Ali Khan and Sami-ur-Rehman for Petitioners (in C.P. No. D-410 of 2020 and C.P. No.D-7919 of 2019).

Mamoon N. Chaudhry for Petitioners (in C.Ps. Nos.D-539 and D-540 of 2020).

Khalid Rajpar, Ms. Masooda Siraj, Kashir Nazeer, Syed Mohsin Imam, Kafeel Ahmed Abbasi, D.A.G. and Syed Hakim Masood, FID, DRAP, Karachi (in all Petitions) for Respondents.

2022 P T D 1253

[Sindh High Court]

Before Irfan Saadat Khan and Zulfiqar Ahmad Khan, JJ

Messrs AKHTER EYE HOSPITAL (PVT.) LTD. through Chief Accountant

Versus

The COMMISSIONER OF INCOME TAX, COMPANIES ZONE-V

I.T.R. Nos.255, 256 and 257 of 2005, decided on 25th January, 2022.

Income Tax Rules, 1982---

----Rr.27, 28 & 29---Income Tax Ordinance (XLIX of 2001), S.133(1)---Account registers, non-maintaining of---Effect---Assessee hospital was aggrieved of rejecting of accounts by respondent / authorities on the basis of non-maintenance of registers under Rr.27.3 & 29 of Income Tax Rules, 1982---Validity---Without any substantial material or cogent reasons accounting method employed by a person could not be rejected---Respondent / authorities rejected trading results and estimated trading receipts of assessee hospital merely on the ground that full addresses of patients were not given and their CNIC numbers were not mentioned---High Court answered that all questioned referred by assessee hospital in "Negative" i.e. in its favour and against respondent / authorities---Reference was allowed, in circumstances.

Messrs Ghazi Tanneries Ltd., Karachi v. Commissioner of Income Tax, Central Zone 'B' Karachi 2011 PTD 2161; Commissioner of Income Tax, Companies-III, Karachi v. Krudd Sons Ltd., (1993) 68 Tax 41 (S.C. Pak.); Ajmir Shah, Ex-Sepoy v. The Inspector-General, Frontier Corps Khyber Pakhtunkhwa and another 2020 SCMR 2129; Muhammad Hanif Abbasi v. Imran Khan Niazi PLD 2018 SC 189 and Shahida Bibi v. Habib Bank Limited PLD 2016 SC 995 ref.

Arshad Siraj for Petitioner.

Zulfiqar Ali Khan Jalbani for Respondent.

2022 P T D 1279

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

SUMMIT BANK LTD. and others

Versus

PROVINCE OF SINDH and others

Constitutional Petitions Nos.D-6831, D-7016, D-7646 of 2018, D-395, D-396, D-686, D-804, D-1187, D-1188, D-1358, D-1359, D-1369, D-1524, D-1562, D-1586, D-1842, D-1960, D-1995, D-1996, D-2090, D-2339, D-2340, D-2610, D-2770, D-3010, D-3421, D-3722, D-4091, D-4741, D-4743, D-4769, D-6117 of 2019, D-987, D-988, D-1167, D-1485, D-4443, D-4774, D-4775, D-5805, D-6089 of 2020 and D-1364 of 2021, decided on 2nd March, 2021.

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

----S.23---Assessment of tax---Show-cause notice---Limitation---Scope---Petitioners assailed show-cause notices on the ground that the notices were time-barred for the reason that they were to be governed by the limitation period of 5 years applicable to them when the respective monthly sales tax returns were filed and that subsequent amendment in S.23 whereby limitation period was enhanced to 8 years was applicable only on sales tax returns filed on or after the date of amendment of law---Validity---When the amendment in S. 23 was introduced, the original limitation period in respect of all the petitioners had not expired---Had the enhancement in limitation not been brought in S.23, petitioners could have been issued show-cause notices by the department---In such a situation, it was neither a case of past and closed transaction nor of accrual of any vested right in favour of petitioners---Constitutional petitions were dismissed.

Income Tax Officer (Investigation) Circle, III, Dacca and another v. Daulatpur Jute Mills Limited 1970 (XXI) Taxation 62; The Taxation Officer/Deputy Commissioner of Income Tax, Lahore v. Messrs Rupafil Ltd. and others 2018 SCMR 1131; Unreported Order dated 03.09.2014 passed in Civil Petition No. 1306/2014, by the Hon'ble Supreme Court, Messrs Super Engineering and another v. Commissioner Inland Revenue, Karachi 2019 SCMR 1111, Adnan Afzal v. Capt. Sher Afzal PLD 1969 SC 187; Commissioner of Income Tax, Peshawar v. Messrs Islamic Investment Bank Ltd. 2016 SCMR 816; Commissioner of Income Tax, Sukkur Zone, Sukkur through The Deputy Commissioner of Income-Tax, Circle-I, Quetta 1998 PTD 2769; Saeed Ahmad v. The State PLD 1964 SC 266; Commissioner of Income Tax v. Messrs Eli Lilly Pakistan (Pvt.) Ltd. 2009 SCMR 1279; Air League of PIAC Employees through President v. Federation of Pakistan Ministry of Labour and Manpower Division Islamabad and others 2011 SCMR 1254; Zila Council Jehlum through District Coordination Officer v. Messrs Pakistan Tobacco Company Ltd. and others PLD 2016 SC 398; Molasses Trading & Export (Pvt.) Limited v. Federation of Pakistan and others 1993 SCMR 1905; Messrs Shahbaz Garments (Pvt.) Ltd. and others v. Pakistan through Secretary Ministry of Finance, Revenue Division, Islamabad and others PLD 2013 Sindh 449 ref.

Additional Commissioner Inland Revenue, Audit Range, Zone-I and others v. Eden Builders Limited 2018 PTD 1474 distinguished.

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

----Ss.3 & 23---Taxable service---Assessment of tax---Scope---Pursuant to filing of a sales tax return on monthly basis before the due date, no right accrues to the service providers for a number of reasons---Such is only a determination of input/output tax adjustment and its refund, if any---No finality of the same as against the concept of a deemed assessment order---Service recipient is merely required to see that whether any sales tax has been charged to it by the service provider; and if so, then the service recipient is entitled to adjust the same as its input tax---Secondly, it may be a case that the service recipient is to act as a withholding agent under the Sindh Sales Tax on Services Act, 2011; and in all such circumstances it has nothing to do with any vested right being accrued to it.

(c) Limitation---

----Once a matter becomes barred by time then the subsequent enhancement in the period of limitation shall not have the effect of reopening the past and closed transaction and resuscitating the matters which attained finality and had gone in the annuls of history.

Ghandhara Nissan Diesel Ltd. v. Collector of Customs 2007 PTD 117 ref.

(d) Limitation---

----Law prescribing period of limitation is to be considered as procedural rather than substantive; though where right to commence a proceeding has already become time barred then a subsequent enlargement of time through an amendment can be of no avail, as with the lapse of time prescribed, the transaction becomes a past and close transaction vesting a party with a right thus accrued which cannot be taken away by a subsequent amendment.

The Taxation Officer/Deputy Commissioner of Income Tax, Lahore v. Messrs Rupafil Ltd. and others 2018 SCMR 1131 ref.

Hyder Ali Khan along with Ghulam Hussain Shah, Shaheer Roshan Shaikh, Ms. Nehl Chamdia, Sami-ur-Rehman, Qazi Umair Ali, Naeem Suleman, Arshad Hussain Shahzad, Nadir Khan Burdi, Mazharul Hassan, Jawaid Farooqui, Taha Samad, Muhammad Yousuf, Nazia Hanjrah, Mansoor Ali Ghanghro, Mohsin Ali, Ahmed Madani and Imran Ahmed for Petitioners.

Ghulam Murtaza Korai, Shamshad Ali Narejo along with Zamir Khalid, Commissioner and Syed Zain-ul-Abidin, Deputy Commissioner, SRB and Aamir Ali Shaikh for Respondents.

Kafeel Ahmed Abbasi, DAG (For Federation).

Jawad Dero, Addl. A.G.

2022 P T D 1302

[Sindh High Court]

Before Muhammad Shafi Siddiqui and Mahmood A. Khan, JJ

Messrs QUICK CONTRACTOR AND TRADERS and others

Versus

FEDERATION OF PAKISTAN and others

Constitutional Petitions Nos.D-3068, D-3070 of 2019 along with S.C.R.A. No.36 of 2019 and 927 of 2017, decided on 24th December, 2021.

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

----S.3---Import Policy Order, 2013, Para. 9---Powers to prohibit or restrict imports and exports---Import of used plant, machinery and equipment---Scope---Two companies imported old and used truck-mounted crane---Department contested the importability on the touchstone of paragraph 9 of the Import Policy Order, 2013---Contention of department was that crane and truck had been purposely imported as being one unit and that crane and truck were welded together to make it one unit to bring it within specifications of Import Policy Order, 2013---Validity---Import Policy Order, 2013, had not required that a truck-mounted crane should be factory-fitted or that the crane and truck should not be dissimilar as far as their makes were concerned---Impugned judgments did not call for interference---Reference applications were dismissed and constitutional petitions seeking implementation of Tribunal's judgments were allowed.

Collector of Customs v. Eastern Construction Company 2015 PTD 963 ref.

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

----S.194C---Procedure of Appellate Tribunal---Scope---Department raised an objection that before the Appellate Tribunal only single Member had heard the appeal and had decided the same in the absence of Member Technical---Held; subsections (3) & (4) of S. 194C of Customs Act, 1969, clarified that the Single Member Bench of the Tribunal had the jurisdiction to decide certain class of cases, but the jurisdiction was dependent upon and circumvented by certain conditions---Such was an internal administrative arrangement---Chairman was entitled to assign it to any of the Members of the Bench---Preliminary objection of the department was turned down.

Collector of Customs v. Eastern Construction Company 2015 PTD 963 rel.

Director Intelligence and Investigation v. Bagh Ali 2010 PTD 1024 foll.

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

----S.3---Import Policy Order, 2013, Para. 9---Powers to prohibit or restrict imports and exports---Import of used plant, machinery and equipment---Scope---Paragraph 9(ii) of the Import Policy Order, 2013 provides for import of used plant, machinery and equipment which may be summarized as secondhand specialized machinery by construction, mining and petroleum sector---Import Policy Order, 2013, provides that the construction companies duly registered with Pakistan Engineering Council are allowed to import secondhand plant, machinery and equipment actually required for their projects in Pakistan subject to pre-shipment certification by any one of the prescribed pre-shipment inspection companies listed as Appendix H to Import Policy Order, 2013, to the effect that the plant, machinery and equipment are in good working condition and are not older than ten years---Sub-paragraph (6) of Paragraph 9(ii) of Import Policy Order, 2013 provides further that commercial importers are also allowed to import used plant, machinery and equipment excluding specialized vehicle-mounted machinery or transport equipment on behalf of construction companies duly registered with Pakistan Engineering Council subject to the conditions mentioned in sub-paragraph (1) of para. 9(ii) of Import Policy Order, 2013.

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

----S.3---Import Policy Order, 2013, Para. 9---Powers to prohibit or restrict imports and exports---Import of used plant, machinery and equipment---Scope---Where department raised an objection that the pre-shipment inspection report/certificate was not issued by the company listed in Appendix H of Import Policy Order, 2013 but by its agent, as such, the same could not be relied upon---High Court observed that the said companies were operating throughout the world either themselves or through their agents and/or acting as agent of other listed company, duly recognized and authorized---Department had not contended that the agents were not authorized agents but in fact their stand was that an agent under the law was not recognizable by Import Policy Order, 2013---Pre-shipment inspection report issued through agent was deemed to have been issued by the principal itself and the Import Policy Order, 2013, had not restricted the registration of such companies in the countries from where the goods were imported.

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

----S.196---Reference to High Court---Scope---Where objection regarding the age of vehicles was not raised in the show-cause notice or before any of the two forums below, High Court observed that question would not arise from the pleadings and/or proceedings below, as such, High Court refrained from answering the question in reference jurisdiction.

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

----S.3---Import Policy Order, 2013, Para. 9---Powers to prohibit or restrict imports and exports---Import of used plant, machinery and equipment---Scope---In presence of pre-shipment certificate, no extraneous material, unless it is established otherwise, can be taken into consideration in forming a view other than described in pre-shipment certificate.

Collector of Customs v. Messrs Muhammad Tahir Construction (Civil Petition No.435-K of 2019) and Collector of Customs v. Khan Gul (Civil Petition No.657 of 2018) ref.

Sardar Muhammad Ishaque for Petitioners.

Muhammad Bilal Bhatti for Respondent (in S.C.R.A. No.36 of 2019).

Khalid Rajpar for Respondent (in S.C.R.A. No.927 of 2017).

Kafeel Ahmed Abbasi, Deputy Attorney General along with Hussain Bohra, Assistant Attorney General for Respondents.

2022 P T D 1314

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

The DIRECTOR CUSTOMS VALUATION, KARACHI

Versus

Messrs USMAN TRADER and 11 others

Special Customs Reference Applications Nos.527 to 538 of 2020, decided on 27th January, 2021.

Customs Act (IV of 1969)---

----Ss.194-A & 25-A---Appeals to the Appellate Tribunal---Power to determine the customs value---Scope---Department assailed order passed by Appellate Tribunal whereby it not only set aside the valuation ruling issued by the department but also revived the earlier valuation ruling and directed the department to finalize the provisional assessments in accordance with the earlier valuation ruling---Validity---Appeal before the Appellate Tribunal was only in respect of the impugned ruling and not the provisional assessments---Neither any assessments were finalized against the respondents nor any other assessment orders were before the Appellate Tribunal---Department had to pass a final assessment order and while doing so the department could always resort to S. 25, if a ruling issued under S. 25-A had been set aside---Tribunal was not justified in giving the referred directions---Directions issued by the Tribunal were set aside and the order stood modified to that extent---Reference applications were party allowed.

Rehan Umar v. Collector of Customs 2006 PTD 909 ref.

Ms. Masooda Siraj for Applicant.

Asad Raza Khan for Respondents.

2022 P T D 1330

[Sindh High Court]

Before Irfan Saadat Khan and Zulfiqar Ahmad Khan, JJ

The COLLECTOR OF CUSTOMS and others

Versus

ZEESHAN and others

Special Customs Reference Applications Nos.471, 472, 613, 616 and 618 of 2019, decided on 3rd March, 2022.

Customs Act (IV of 1969)---

----Ss.79, 80 & 196---Import Policy Order, 2016, Appendix E, paras. 6 & 19---Notification SRO No.499(I)/2009 dated 13-06-2009---Goods declaration---Re-export of vehicle---Chassis number---Verification---Third party examination---Effect---Dispute was with regard to verification of chassis number of imported vehicle through forensic analysis by police department---Customs Appellate Tribunal directed the authorities to permit the import to re-export the vehicle---Validity---Once goods under examination were sent out to examination of third party, chain of safe custody was broken and examination reports coming from an alien department would always be shrouded in doubts and was considered with a pinch of salt---Such evidence or incriminating material could not be relied upon unless test was conducted in presence of affected party(i.e. importer)---Such outcome also vitiated provision of Art. 10-A of the Constitution which provided for transparency and fair trial---Authorities failed to show bona fide and charge of tampering chassis was ill founded---Customs Appellate Tribunal permitted re-export of vehicles at the request of importer, which was just and in accordance with law---Provision of para 6 of Appendix E of Import Policy Order, 2016 or proviso to para 19 read with paragraph 6 of Import Policy Order, 2016 or SRO No.499(I)/2009 dated 13-06-2009, was not attracted or applicable---High Court declined to interfere in the order passed by Customs Appellate Tribunal---Reference was dismissed, in circumstances.

Collector of Customs Peshawar v. Wali Khan 2017 SCMR 585 ref.

Khalid Rajpar for Applicant.

Sardar Muhammad Ishaque for Respondents.

2022 P T D 1342

[Sindh High Court]

Before Aqeel Ahmed Abbasi and Zulfiqar Ahmad Khan, JJ

ORIENT ELECTRONICS (PVT.) LTD.

Versus

GOVERNMENT OF SINDH PAKISTAN and others

Special S.T.R.A. No.291 of 2017, decided on 23rd May, 2019.

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

----S.63---Reference to High Court---Scope---Reference application was filed against the order passed by Appellate Tribunal of Sindh Revenue Board on a rectification application---Questions proposed through the reference application had not arisen from the order of rectification and the same were subject matter of main order-in-appeal passed by the Appellate Tribunal---Applicant instead of filing reference application against the order-in-appeal in terms of S. 63 of Sindh Sales Tax on Services Act, 2011, had chosen to file rectification application---If the order of rectification was to be ignored and reference was considered to have been filed against the order-in-appeal of Appellate Tribunal then the reference application, on the face of it, was time barred---No explanation was given nor any condonation of delay was sought by the applicant---Reference application filed against order-in-appeal was dismissed in limine for being time barred.

Commissioner of Income-Tax v. Ateed Riaz 2002 PTD 570 rel.

2022 P T D 1356

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

ISMAT TRADER and others

Versus

The DEPUTY COLLECTOR OF CUSTOMS and others

Special Customs Reference Applications Nos.148 to 154 of 2014, decided on 27th January, 2021.

Customs Act (IV of 1969)---

----S.194-B---Orders of Appellate Tribunal---Speaking order---Scope---Petitioners invoked reference jurisdiction of the High Court against the order passed by Appellate Tribunal whereby it had dismissed the appeals without adverting to facts of the cases---Validity---Tribunal after having failed to independently decide the controversy before it had approved the findings of Collector (Appeals) in a slipshod and cursory manner which did not seem to be appropriate and in accordance with law---Tribunal was the last facts finding forum and therefore, it was incumbent upon it to decide the controversy on its own and in an independent manner after considering the contention so raised by the parties before it---Mere approval of appellate order of Collector (Appeals) or for that matter of the forum below, it could not be sustained and approved by the High Court---Impugned orders were set aside and the matters were remanded to the Tribunal to decide them afresh and pass a reasoned and independent order---Reference was decided in favour of the applicants and against the department.

Wateen Telecom Ltd. v. Commissioner Inland Revenue 2015 PTD 936 ref.

Sardar Faisal Zafar for Applicants.

Iqbal M. Khurram and Ms. Naheed Akhter for Respondents.

Kafeel Ahmed Abbasi Deputy Attorney General.

2022 P T D 1370

[Sindh High Court]

Before Zulfiqar Ahmad Khan, J

H. AKBER ALI & COMPANY (PVT.) LTD.

Versus

FEDERATION OF PAKISTAN through Secretary Revenue Divisions and others

Suit No.841 and C.M.As.Nos.5840, 6275, 9290, 12584 of 2020, decided on 12th November, 2021.

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

----Ss.12, 217 & 241---Customs Rules, 2001, Rr. 345 & 46---Civil Procedure Code (V of 1908), O.XXXIX, Rr.1 & 2---Plaintiff's Warehousing License revived/revalidated---Notice of suspension of plaintiff's Warehousing License on ground of certain violation---Plaintiff's constitutional petition declared the said suspension as illegal---Authority restored the License however, sent a Show-Cause Notice---Plaintiff moved Constitutional petition against said Show-Cause Notice---High Court directed plaintiff to respond to said Show-Cause Notice---Plaintiff contended that defendant/Customs Authority be restrained from interference, obstructing in-bonding/ex-bonding activities of plaintiff on his plot; that authority had violated High Court's restraining orders that plaintiff's letter to Assistant Collector Customs remained unanswered---Licensee had perpetual right of revival/revalidation of Warehousing License by making application before expiry date---Principle "before every expiry date" was applicable---Collector had to be satisfied that no action under the Act was pending against licensee---Application for revival had to be made before a license had expired---Such was life giving oxygen to a dying patient---Unless revived/revalidated through the process of R.46, a license would fail to remain a valid/legal document---For all legal purposes, issuance of Show-Cause Notice would amount to an action pending under the Act---Section 217 of Customs Act, 1969, granted protection to all "actions" taken thereunder---Collector was required to satisfy himself of the fact that whether or not an action under the Customs Act, 1969, was pending against the applicant or not---No decision had been taked by the Collector against the plaintiff---Petitioner had not even applied for revival of its license---Said letter even if considered to be an application for revival of license, was delayed by four months---No application for extension of time was made justifying the delay under section 241---Plaintiff did not have an arguable case and had neither filed for revival/validation of its license in time nor had made any speedy efforts to have the Show-Cause decided---Balance of convenience did not tilt in favour of the plaintiff as his business had come to a standstill---Irreparable losses were solely attributable to the acts of plaintiff who was neither vigilant in reviving its license nor having the Show-Cause adjudicated---Applications were dismissed accordingly.

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

----S.12---Customs Rules, 2001, R.46---"Revival" and "revalidation" of license---Customs Rules, 2001 used the words "revival" and "revalidation" instead of "renewal" of license---"Renew" meant as to make fresh/strong again which indicated that something/someone was tired/worn out and needed to be refreshed/strengthened---"Revive" was to return to life; to recover life, to live anew---"Revalidate" was to make (something) legal/valid again---License, on expiry of three years term, would die (or become illegal) and was needed to be recovered to life rather than being restored to its original/fresh condition (if it was to be renewed)---Corpse of an expired license had to be brought to life by the mechanism provided by R.346, and if one had not followed such remedial transportational path, license's dead body could not be given a new lease of life and any declaration seeking right to bring a dead body to life was impossible to be granted.

(c) Civil Procedure Code (V of 1908)---

----O.XXXIX, Rr. 1 & 2---Temporary injunction, grant of---Pre-requisites---Efficacious relief, availability of---For grant of temporary injunction three factors have to be satisfied which were prima facie case; balance of convenience; and irreparable loss---Injunction being discretionary equitable relief could not be granted when equally efficacious relief was obtainable in any other usual mode or proceeding.

(d) Words and phrases---

----"Reason to believe" and "appears to the Court"---Connotation---Words "has reason to believe" and "appears to the Court" were to be construed to suggest that there must be some tangible evidence and the belief of the Court must not rest on imaginative, speculative, hypothetical or arbitrary grounds.

Munshi Khan v. The State 1982 PCr.LJ 778 SC AJ&K rel.

Ishrat Zahid Alvi for Plaintiff.

Khalid Rajpar for Defendant No.2.

Ghulam Mohiuddin, Assistant Attorney General.

2022 P T D 1391

[Sindh High Court]

Before Irfan Saadat Khan and Zulfiqar Ahmed Khan, JJ

Messrs MANACO INTERNATIONAL through Proprietor

Versus

FEDERATION OF PAKISTAN through Secretary, Revenue Division/Chairman Federal Board of Revenue and 3 others

Constitution Petition No.D-7153 of 2021, decided on 25th January, 2022.

Customs Act (IV of 1969)---

----Ss.121, 123 & 168---Customs Rules, 2001, R.335---Seizure of goods---Transshipment---Non-payment of duties---Goods imported by petitioner were seized by authorities due to evasion of duty /taxes--- Plea raised by petitioner was that goods imported were meant for transshipment purposes and were required to be sent to respective port for clearance---Validity---There were ample powers with authorities of the port where consignment arrived, to physically examine goods and to randomly check the same as specifically mentioned under R.335(5) of Customs Rules, 2001---All goods arriving at port were to be weighed and in case of any variation in weight which was more than 5% of declared and ascertained weight, customs authorities had power to examine the same---Declared quantity of goods by petitioner was 18500, whereas on physical checking same were found to be 63212 pieces i.e. some 44712 undeclared pieces were found in the consignment which had come to 214% enhanced quantity of imported goods---Goods belonged to Indian and Israeli origin and some undeclared items were also found---Law envisages initiation of action against a person for mis-declaration either with regard to weight or description of goods--- High Court declined to interfere in seizure made by the authorities, as their action was in accordance with law--- Constitutional petition was dismissed, in circumstances.

M. Hameedullah Khan v. Director of Customs Intelligence and 3 others 1992 CLC 57; Famous Corporation v. Collector of Customs (Appraisement) Karachi and others 1989 MLD 2322; Messrs N.B. Trading Company, Samberial (Sialkot) and others v. Collector of Customs (Appraisement), Custom House, Lahore and others 2003 PTD 14; Director General, Intelligence and Investigation (Customs and Excise) v. Amanat Ali and others (HCA 307 of 2002); Messrs P&G International, Lahore v. Assistant Collector of Customs, (Appraisement GR-II), Karachi and 3 others 2010 PTD 870 and Messrs Baba Khan v. Collector of Customs, Quetta and 2 others 2000 SCMR 678 ref.

Aqil Ahmed for Petitioner.

Kafeel Ahmed Abbasi, Deputy Attorney General for Pakistan (DAG) for Respondent No.1.

Khalid Rajper for Respondents Nos.2 and 4.

Muhammad Rashid Arfi for Respondent No.3.

2022 P T D 1408

[Sindh High Court]

Before Muhammad Shafi Siddiqui and Agha Faisal, JJ

COLLECTOR OF CUSTOMS

Versus

Messrs A.R. & COMPANY

Special Customs Reference Application No.354 of 2013 and C.M.As. Nos.2191 of 2013, 657 of 2014, decided on 23rd September, 2021.

Customs Act (IV of 1969)---

----Ss.2(s) & 97---Warehousing---Goods not to be taken out of warehouse except as provided in the Act---Smuggling---Scope---Show cause notice was issued to the respondent on receipt of some information pertaining to illegal removal of alcoholic drinks by the management of Diplomatic Bonded Warehouse---Respondent was operating the warehouse---Respondent was imposed upon a penalty along with duty and taxes---Appeal filed by respondent before the Collector (Appeals) was dismissed---Appellate Tribunal allowed the appeal filed by respondent---Validity---Directorate of Intelligence and Investigation had not found any evidence at the gate of the port which could substantiate that the owner of the warehouse had filed bills of export in order to cover the illegal removal from the bonded warehouse---Show cause notice had not suggested any substantive provision of Customs Act, 1969 being violated in the facts and circumstances of the case---In-bonding and ex-bonding in the Diplomatic Bonded Warehouse involved intricate and complex procedure, which under normal circumstances made it impossible for the importer to cause misappropriation, unless the officials of the customs were also involved and there was no denial to the fact that at all times the goods in the Diplomatic Bonded Warehouse remained in actual physical possession and custody of the customs authorities---In such a situation when none of the customs officials were lopped into the investigation, rather one way investigation claimed to have been carried out that the owner of the Diplomatic Bonded Warehouse removed the subject goods, it was difficult to conceive---Reference application was dismissed.

2022 P T D 1418

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

COLLECTOR OF CUSTOMS

Versus

Messrs BNN ENTERPRISES

Special Customs Reference Application No.145 of 2019, decided on 20th January, 2021.

Customs Act (IV of 1969)---

----S.32---Customs General Order, 2002, Para. 101---Mis-declaration---Question of taking cognizance of mis-declaration of description, value and PCT Headings---Scope---Respondent imported a new road roller but declared the same to be used one---Department confiscated the goods, imposed redemption fine of 35% and a penalty---Appellate Tribunal remitted the fine and penalty while placing reliance on para. 101 of the Customs General Order, 2002---Validity---Paragraph 101 of Customs General Order, 2002, applied in cases where an importer claimed assessment under certain HS Code which was not accepted and the assessment was made in some other HS Code by the department and if as a result thereof, there was no change in the rate of duty, then benefit of the referred paragraph could be claimed by the importer---In the present case, the facts were entirely different as an attempt had been made to declare goods as used as against new and as a consequence thereof, notwithstanding that the rate of duty remained same, an attempt had been made to pay duty and taxes on lower/reduced value of used goods as against the value of new goods---If such would have gone undetected, naturally lesser taxes and duties would have been paid on the value of used road roller as against the value of a new road roller---Such apparently was a case of mis-declaration of actual description of goods warranting initiation of proceedings in terms of S.32 of the Customs Act, 1969---Order passed by Appellate Tribunal was set aside.

Muhammad Khalil Dogra for Applicant.

Taimoor Ahmed Qureshi for Respondent.

2022 P T D 1444

[Sindh High Court]

Before Muhammad Shafi Siddiqui and Mahmood A. Khan, JJ

Messrs AL-TARIQ CONSTRUCTORS (PRIVATE) LIMITED through authorized Officer

Versus

PROVINCE OF SINDH through Chairman, Sindh Revenue Board and 2 others

Constitutional Petition No.D-310 of 2019, decided on 29th December, 2021.

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

----S.8(2)---Sales Tax on Services Rules, 2011,R.42-B---Notifications No. SRB 3-4/3/2015, dated 1-7-2015, SRB 3-4/5/2015 dated 1-7-2015---Amendment in rules, vires of---Tax on construction services---Special procedure---Petitioner company assailed amendment in R.42-B of Sales Tax on Services Rules, 2011 meant for special procedure for payment of tax on construction services---Validity---Change in R.42-B of Sales Tax on Services Rules, 2011 by prescribing limitation and restriction for opting to charge at standard rate, was within the frame of S.8(2) of Sindh Sales Tax on Services Act, 2011, which exercise was not availed, as required in terms of time specification, which consequently led to an attempt on the part of petitioner to challenge amendment brought by way of a notification duly approved by government---Amendments in question were neither ultra vires the Constitution nor law itself---Constitutional petition was dismissed in circumstances.

Dr. Ahsan Laliwala for Petitioner.

Saifullah, A.A.G for Respondent No.1.

Shamshad Ahmed for Respondents Nos.2 and 3.

2022 P T D 1464

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

Messrs CELLANDGENE PHARMACEUTICAL INTERNATIONAL through Partner

Versus

The FEDERATION OF PAKISTAN through Secretary, Ministry of Finance, Islamabad and others

Constitutional Petition No.D-715 of 2018, decided on 18th November, 2020.

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

----S.177---Audit---Scope---Petitioner assailed its selection for audit vide impugned notice on the premise that the selection did not fulfill the criteria of S.177(7) of the Income Tax Ordinance, 2001---Contention of petitioner was that there were no reasonable grounds to call for the audit since a similar exercise was carried in respect of a period preceding the period denoted vide the impugned notice---Validity---Obligation of a person to pay the correct quantum of tax meant that a vested right had accrued to the State to examine the books of the taxpayer since the audit of accounts was the most effective way of determining the correct tax liability---Selection of petitioner for audit in respect of previous tax years did not preclude the department from initiating audit proceedings for a subsequent year, especially in view of S.177(7) of Income Tax Ordinance, 2001---No case was set forth to suggest that the grounds invoked for audit were not reasonable---Case of the petitioner was not that any vested constitutional rights had been infringed by its selection for audit---Constitutional petition was dismissed.

Pfizer Pakistan Limited and others v. Deputy Commissioner and others 2016 PTD 1429 foll.

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

----S.177---Audit---Scope---Statutory framework of audit coupled with the overarching umbrella of constitutional guarantees furnishes adequate and sufficient safeguards to the taxpayer; hence, the lawful exercise of the power to conduct an audit cannot be denied.

Commissioner of Inland Revenue Sialkot and others v. Allah Din Steel and Rolling Mills and others 2018 SCMR 1328 rel.

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

----S.177---Audit---Scope---Where the notice provides sufficient reasoning for selection of a case for audit, the law did not provide for a voir dire upon the taxpayer's objections to the rationale invoked---Taxpayer remains at liberty to avail the statutory hierarchy if aggrieved by the conclusion of the audit proceedings.

Pakistan Petroleum Limited v. Federation of Pakistan and others 2016 PTD 2664 rel.

Haider Naqi for Petitioner.

Kafeel Ahmed Abbasi, Deputy Attorney General and M. Aqeel Qureshi for Respondent.

2022 P T D 1474

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

COMMISSIONER INLAND REVENUE

Versus

DAWOOD ISLAMIC BANK LIMITED (NOW BURJ BANK)

Income Tax Reference Application No.74 of 2016, decided on 9th April, 2021.

Income Tax Ordinance (XLIX of 2001)---

----Ss.133, 108 & 109---Transactions between associates---Recharacterisation of income and deductions---Scope---Question before High Court was whether the Appellate Tribunal was justified to delete the addition made by Assessing Officer on account of interest on the advances/disbursement to a company by the respondent-Bank---Finding of the Appellate Tribunal reflected that apparently the Assessing Officer under some misconception had treated the re-payment of the deposits of company as loan advanced by the Bank to company without charging of interest/mark up and worked out the same as per formula adopted by him in his amended assessment order under S.122(5) of the Income Tax Ordinance, 2001 by treating it as income chargeable to tax under S.108/109 of the Income Tax Ordinance, 2001---Assessing Officer was confronted by the Tribunal with such factual aspect and his wrong treatment to such a transaction but he was unable to give satisfactory explanation to support such treatment given by him in his order---No Question of law was apparently in the matter---Reference application, being misconceived, was dismissed.

Kashif Nazeer for Applicant.

Nemo for Respondent.

2022 P T D 1491

[Sindh High Court]

Before Muhammad Iqbal Kalhoro and Agha Faisal, JJ

PAKISTAN DENTAL ASSOCIATION through President 9 and others

Versus

The PROVINCE OF SINDH through Secretary Finance Sindh Secretariat, Karachi and 3 others

C.P. No.D-3349 of 2017, C.P. No.D-8809 2018, C.P. No.D-8883 of 2018 and C.P.No. D-2586 of 2019, decided on 18th May, 2022.

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

----S.23(2)---Constitution of Pakistan, Art.199---Constitutional petition---Assessment of tax---Show-cause notice---Petitioners were aggrieved of show-cause notices issued to them by authorities---Validity---Merits of a notice were to be agitated by recipient before issuing authority at the first instance---Mere notice did not ordinarily give rise to any cause of action as it did not amount to an adverse order which affected rights of any party---Tendency to assail notices in Constitutional jurisdiction while bypassing statutory hierarchy of remedy and redress was deprecated---High Court declined to interfere in the notices issued by authorities to petitioners---Constitutional petition was dismissed, in circumstances.

2001 PTD 3090; 2003 PTD 1285; 2014 PTD 2014; 2015 PTD 160; 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; Dr Faisal Akhlaq Ali Khan v. Province of Sindh and others Order dated 23-9-2021 and judgment dated 24-9-2021; Multiline Associates v. Ardeshir Cowasjee 1995 SCMR 362; Syed Iqbal Hussain Shah Gillani v. PBC and others 2021 SCMR 425 and Muhammad Fiaz Khan v. Ajmer Khan and another 2010 SCMR 105 rel.

Amjad Javed Hashmi for Petitioner.

Shamshad Ahmed Narejo for Respondents.

Zeeshan Adhi, Additional Advocate General Sindh.

2022 P T D 1506

[Sindh High Court]

Before Muhammad Shafi Siddiqui and Agha Faisal, JJ

PARKASH LAL

Versus

The DEPUTY COLLECTOR OF CUSTOMS (ADJUDICATION) COLLECTORATE OF CUSTOMS and 2 others

Special Customs Reference Application No.913 of 2017, decided on 20th September, 2021.

Customs Act (IV of 1969)---

----S.194-B---Orders of the Appellate Tribunal---Limitation for decision---Scope---Applicant agitated only a solitary question that the Appellate Tribunal had failed to deliver its decision within the time frame as provided under proviso to S.194-B of Customs Act, 1969 and such alone would render the impugned judgment as nullity---Validity---Word "shall" alone could not demonstrate the mandatory test of the provision---What was more essential was the consequence and further test such as penal action, if prescribed---In absence of such consequences or penal action the word 'shall' alone could not be construed as the time frame being mandatory when the Tribunal itself had been given authority to extend the period as deemed fit by it---Reference application was dismissed.

PLD 1974 SC 134; Special Customs Reference Application No.159/2010 (unreported - decided by the Court 23.12.2016 Para-17) and PTCL 2017 CL 736 ref.

Madan Lal for Applicant.

2022 P T D 1535

[Sindh High Court]

Before Irfan Saadat Khan and Yousuf Ali Sayeed, JJ

COMMISSIONER INLAND REVENUE ZONE-I

Versus

Messrs EXCELL PAKISTAN (PVT.) LTD

I.T.R.A No.86 of 2017, decided on 20th November, 2020.

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

----Ss.32 & 34---Method of accounting and accrual-basis accounting---Principles---Entry made in accounts, as per accounting system employed by a person regularly maintained by him is considered to be valid and allowable, if it is not contrary to other provisions of law---In mercantile system of accounting any ascertained liability accruing to any person, with reasonable apprehension that it would become payable, is an allowable deduction.

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

----Ss.20, 32, 34, 122 & 133---Method of accounting and accrual-basis accounting---Principles---Entry made in accounts---Assessing Authority did not accept claim of loss suffered by taxpayer due to currency exchange rate and added the loss into total income of taxpayer---Appellate Authority deleted the addition of exchange loss which order was maintained by Appellate Tribunal Inland Revenue---Validity---Certain amount was payable by taxpayer to its foreign company and the same was to be considered as an ascertained liability and allowance of the same was to be made on accrual basis, as per mercantile system of accounting---Extra amount payable at the time of actual payments due to devaluation of Pakistan Rupee was to be taken care of in accounts as an ascertained liability of taxpayer as per accounting system employed---Such was considered as a lawful deduction in the hands of taxpayer---If amount was accrued and ascertained but actual payment was made afterwards, the same was allowable expenditure as per the system of accounting maintained by taxpayer---Entries made in books of accounts as per accounting method followed by taxpayer was mercantile and was to be considered as valid entry for the purposes of allowing exchange loss in question---High Court declined to interfere in orders passed by Appellate Authority and Appellate Tribunal Inland Revenue, as the same were in conformity with the provisions of S.32 read with S.34 of Income Tax Ordinance, 200---High Court decided the question in favour of taxpayer and against the Authorities---Reference was disposed of accordingly.

Commissioner of Income Tax, Companies II, Karachi v. General Tyre and Rubber Company of Pakistan Ltd. 1993 PTD 383; Commissioner of Income Tax, Companies II, Karachi v. Messrs Oriental Dyes and Chemical Co. Ltd. 1992 PTD 668; Abbot Laboratories Ltd. v. Commissioner of Income Tax, Central Zone, Karachi 1989 PTD 602; Commissioner of Income Tax Central Zone 'A' v. Messrs Chemdyes Pakistan Limited 1990 PTD 248 and General Tyre and Rubber Co. of Pakistan Ltd. v. The Commissioner of Income Tax, Central Zone, Karachi 1989 PTD 582 rel.

Kafeel Ahmed Abbasi for Applicant.

Iqbal Salman Pasha for Respondent.

2022 P T D 1566

[Sindh High Court]

Before Aftab Ahmed Gorar, J

IKRAAM KHAN and others

Versus

The STATE

Special Criminal Bail Applications Nos. 39 and 40 of 2021, decided on 6th September, 2021.

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

----Ss.156(1)(59) & 178---Criminal Procedure Code (V of 1898), S.497---Fraudulent removal of warehoused goods---Punishment of persons accompanying a person possessing goods liable to confiscation---Bail, grant of---Scope---Allegation against accused persons was that they were involved in stealing goods from government warehouse---Names of accused persons were not mentioned in the FIR and their names were only mentioned in the interim charge-sheet---Investigation against accused persons was complete and they were not required for further investigation---No exceptional circumstances appeared in the case to withhold bail of accused persons---Accused persons were not previous convicts---Petitions for grant of bail were accepted, in circumstances.

Suba Khan v. Muhammad Ajmal 2006 SCMR 66 ref.

(b) Criminal Procedure Code (V of 1898)---

----S. 497---Constitution of Pakistan, Arts. 4 & 9--- Right of individuals to be dealt in accordance with law---Security of person---Bail---Scope---Liberty of an individual has been guaranteed by the Constitution besides the fact that speedy trial is inalienable right of every accused, therefore, even if S. 497, Cr.P.C., in ordinary course is not applicable, the broader principle of the same can be pressed into service in hardship cases to provide relief to a deserving accused person incarcerated in jail for an indefinite period.

Sanjay Chandra v. Central Bureau of Investigation AIR 2012 SC 830 rel.

(c) Criminal Procedure Code (V of 1898)---

----S.497---Bail---Scope---Where case does not fall within the prohibitory clause of S. 497, Cr.P.C., bail is to be granted as a rule and refusal is an exception.

Ghulam Abbas v. State 2006 PCr.LJ 413; Tahir Mehmood v. The State 2007 PCr.LJ 112 and Tariq Bashir v. The State PLD 1995 SC 34 ref.

Waqar Alam Abbasi for Applicant (in Special Criminal Bail Application No. 39 of 2021).

Muhammad Hanif Samma for Applicant (in Special Criminal Bail Application No. 40 of 2021).

Ashiq Ali Anwar Rana, Special Prosecutor Customs.

Choudhary Waseem Akhtar, Assistant Attorney General.

2022 P T D 1611

[Sindh High Court]

Before Muhammad Iqbal Kalhoro and Shamsuddin Abbasi, JJ

DAWOOD-UR-REHMAN

Versus

The STATE

C.P. No. D-4145 of 2020, decided on 17th September, 2020.

Customs Act (IV of 1969)---

----S. 2(s)---Control of Narcotic Substances Act (XXV of 1997), Ss.9, 72, 74 & 76---Possession of narcotics---Smuggling---Application of Customs Act, 1969---"Act to override other laws"---Scope---Prosecution case was that the FIA conducted raid at a house and recovered 170 bags of ketamine, tactfully concealed in bags of rice meant for export---Accused was arrested as he was present at the spot---Challan of the case was not filed in any court, therefore, the accused approached High Court for seeking bail---Special Judge (Customs, Taxation and Anti-Smuggling) had not entertained the report of the police and had returned the same---Investigating Officer, thereafter, reportedly attempted to submit the challan in the court established under Control of Narcotic Substances Act, 1997, but it was not accepted for want of jurisdiction---Validity---Section 72 of Control of Narcotic Substances Act, 1997, envisaged that prohibition and restriction imposed under the Act on import, export of narcotic drug, psychotropic substances would be deemed to be prohibitions and restrictions imposed under the Customs Act, 1969, and the provisions of said Act would apply---First proviso stipulated that notwithstanding anything contained in any law including the Customs Act, 1969, all the offences relating to narcotic drugs would be tried under the provision of the Act---Second proviso, which appeared to be aimed at meeting any investigation related exigency in that regard, elucidated that where an Officer of Customs apprehended a person involved in any such offence, he would be empowered to carry out inquiry or investigation in the manner as an officer authorized under this Act, which meant that if an offence of smuggling in terms of Customs Act, 1969, was committed in respect of any narcotic drug, etc. the scheme under Control of Narcotic Substances Act, 1997, would come into play and the accused would be dealt with under the provisions of said Act---Arrest and investigation by an officer not strictly authorized by the Act would stand legitimized as having been done by an officer under the Act---Outcome of such investigation for conducting a trial would be the subject matter of the Act and would be looked into by a Court established under the Act---Combined reading of Ss. 74 & 76 of Control of Narcotic Substances Act, 1997, jointly provided an overriding character of Control of Narcotic Substances Act, 1997, in the matters of punishment to an accused involved in narcotics cases and applicability of its provisions notwithstanding anything contained in any other law---Even in the face of any conflict between provisions of said Act and other laws criminalizing an action, its consequence, and the medium to deliver or enforce it, provisions of Control of Narcotic Substances Act, 1997, would prevail over the other law---Investigating Officer was directed by the High Court to submit challan in the court established under the Control of Narcotic Substances Act, 1997---Petition was disposed of accordingly.

The State through Collector of Customs v. Nasim Amin Butt and others 2001 SCMR 1083; Hussain Abdullah Salum v. The State PLD 2001 Kar. 283 and John Bernard Sender v. The State PLD 2004 Kar. 136 rel.

Khalid Mehmood Khan Kayani for Petitioner.

Mukesh Kumar Khatri, Assistant Attorney General for the State.

2022 P T D 1619

[Sindh High Court]

Before Muhammad Iqbal Kalhoro and Agha Faisal, JJ

Messrs TELENOR MICRO FINANCE BANK LTD. through Authorized Attorney

Versus

COMMISSIONER INLAND REVENUE

I.T.R. As. Nos.327, 328 of 2019 and 28 of 2020, decided on 17th May, 2022.

Income Tax Ordinance (XLIX of 2001)---

----Ss. 53, 133, 159, 161 & Second Sched. Part IV, Cl. 47B---Withholding tax---Exemption Certificate---Recovery of tax---Dispute between parties was that in absence of Certificate of exemption under S.159 of Income Tax Ordinance, 2001, applicant/Tax payer was liable to recovery of tax under S.161 of Income Tax Ordinance, 2001, as per Cl. 47B of Part IV of Second Schedule read with S.53 of Income Tax Ordinance, 2001---Validity---Withholder was not to form his own opinion that a person's case fell within the ambit of Cl. 47B of Part IV to Second Schedule of Income Tax Ordinance, 2001, unless a valid exemption certificate issued under S.159(1) of Income Tax Ordinance, 2001 was presented---Even the person whose payments were otherwise liable for advance tax deduction under Ss.150, 151 & 233 of Income Tax Ordinance 2001, could not insist that he was to be extended benefit of Cl. 47B of Part IV to Second Schedule of Income Tax Ordinance, 2001, in absence of exemption certificate in the face of provisions of S.159(2) of Income Tax Ordinance, 2001---Entitlement of concession under Cl.47B of Income Tax Ordinance, 2001, can be availed only when exemption certificate was presented to withholder and upon such presentation obligation of withholder to deduct advance tax as provided under S.159(2) of Income Tax Ordinance, 2001, stood discharged---Benefit under Cl. 47B of Part IV to Second Schedule of Income Tax Ordinance, 2001 could not be availed by withholdee out-rightly and directly from withholder on account of bar contained in S.159(2) of Income Tax Ordinance, 2001 unless withholding person had a valid exemption certificate issued to him under S.159(1) of Income Tax Ordinance, 2001---Reference was disposed of accordingly.

Meezan Islamic Fund and others v. D.G (WHT) FBR and others 2016 PTD 1204 fol.

Shams Mohiuddin for Applicants.

Ammer Bakhsh Metlo and Imran Ahmed Metlo and Fayaz Ali Metlo for Respondents.

2022 P T D 1629

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

COLLECTOR OF CUSTOMS

Versus

Messrs ASTRONTECH INC.

Special Customs Reference Application No.279 of 2017, decided on 20th January, 2021.

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

----Ss.196 & 81---Provisional determination of liability---Scope---Question before High Court was whether provisional assessment under S. 81 of the Customs Act, 1969, was finalized within 180 days---Such would not give rise to a question of law and perhaps at most was a matter of rectification as Appellate Tribunal had recorded the finding pursuant to the oral arguments made during course of hearing on behalf of the department---Question that whether the assessment was finalized within the statutory period or not, neither arose out of the order of the Tribunal, nor in view of the above facts could be agitated by the department.

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

----S.196---Factual controversy---Scope---Question before High Court was whether goods in question i.e. High Styrene Rubber was similar or identical to Styrene-Butadiene Rubber (SBR) as notified in the Valuation Ruling---Such was purely a question of fact and could not be adjudicated upon by High Court in reference jurisdiction, whereas, the Appellate Tribunal had decided that factual aspect of the matter after a threadbare discussion and considering even the Laboratory Tests carried out by the department itself.

Ms. Masooda Siraj for Applicant.

Dr. Muhammad Khalid Hayat along with Muhammad Arshad for Respondents.

2022 P T D 1642

[Sindh High Court]

Before Aqeel Ahmed Abbasi and Mahmood A. Khan, JJ

PRINCELY JETS (PRIVATE) LIMITED through Attorney

Versus

FEDERATION OF PAKISTAN through Secretary Ministry of Finance, Karachi and 4 others

Constitutional Petition No.D-870 of 2020, decided on 20th February, 2020.

Sales Tax Act (VII of 1990)---

----S.46---Federal Excise Act (VII of 2005), S.34---Constitution of Pakistan, Art.199, 10A & 4---Civil Procedure Code (V of 1908), O.XXXIX, Rr.1 & 2---Temporary injunction, grant of---Constitutional jurisdiction of High Court---Scope---Fair trial and due process---Principles and Scope---Petitioner sought to restrain Department from recovery of tax liability of petitioner, while petitioner's appeals were pending before competent forums---Validity---Petitioner, in the present case, could show no material to establish maintainability of Constitutional petition---While interim injunction could be granted by High Court in its Constitutional jurisdiction where matters were pending in appeal, however, said cases should pertain to where parties were vigilant; and prima facie actually required an adjudication on merits in protection of an actual existing right of fair trial and due process and while approaching court with clean hands, which was lacking in the present case---Constitutional petition was dismissed, in circumstances.

Talha Javed for Petitioner.

None for Respondents.

2022 P T D 1679

[Sindh High Court]

Before Irfan Saadat Khan and Fahim Ahmed Siddiqui, JJ

Messrs SINDH IRRIGATION AND DRAINAGE AUTHORITY (SIDA)

Versus

The COMMISSIONER OF INCOME TAX HYDERABAD ZONE, HYDERABAD and another

I.T.R.As. Nos. 967 and 968 of 2008, decided on 3rd January, 2020.

Income Tax Ordinance (XLIX of 2001)---

----S.84---Joint Venture---Association of Persons (AOP)---Filing of separate income tax return---Non-Resident status, determination of---Dispute was with regard to treating Joint Venture Association of Persons as Non-Resident by imposing tax at the rate of 15% instead of 5%---Validity---Held, it made no difference that one of the members of the Association filed income tax return as non-resident, as the same would not change legal position of Association of Person (AOP)---As such the AOP remained a resident AOP as defined in S.84 of Income Tax Ordinance, 2001---Income Tax Appellate Tribunal erred in treating the AOP as a non-resident and in concurring to the finding that the tax was required to be deducted at the rate of 15% instead of 5% as it was non-resident---Reference was answered accordingly.

Anwar Kashif Mumtaz along with Ammar Athar Saeed for Applicant.

Kafeel Ahmed Abbasi for Respondents.

2022 P T D 1742

[Sindh High Court]

Before Adnan Iqbal Chaudhry, J

PAKISTAN PETROLEUM LIMITED through Senior Manager

Versus

PAKISTAN through Secretary Revenue Division and Ex-Officio Chairman, Federal Board of Revenue, Islamabad and another

Suit No.1682 of 2014, decided on 23rd February, 2021.

Income Tax Ordinance (XLIX of 2001)---

----Ss.172, 127 & 227---Civil Procedure Code (V of 1908), S.9---Courts to try all civil suits unless barred---Representatives---Appeal to Commissioner (Appeals)---Bar of suits in Civil Courts---Scope---Plaintiff challenged a show-cause notice issued under S.172(5) of the Income Tax Ordinance, 2001, through a civil suit---Validity---Order passed under S.172(3)(f) of the Income Tax Ordinance, 2001, declaring a person a representative of a non-resident person was appealable before the Commissioner (Appeals) under S.127(1) of the Income Tax Ordinance, 2001---While applying the ratio of "Searle IV Solution (Pvt.) Ltd. v. Federation of Pakistan" (2018 SCMR 1444) to the present suit, jurisdiction of the High Court of Sindh to entertain the suit was not barred by reason of the ouster clause in S. 227(1) of the Income Tax Ordinance, 2001, there was nonetheless an implied bar within the meaning of S.9 of C.P.C. when the Income Tax Ordinance, 2001, provided for a special mechanism and special fora to determine matters arising under the Income Tax Ordinance, 2001---Plaint manifested that what the plaintiff essentially sought a determination by the High Court on the show cause notice so as to by-pass the special fora and remedies provided under the Income Tax Ordinance, 2001---Plaint was rejected.

Commissioner of Income Tax v. Hamdard Dawakhana (Waqf) PLD 1992 SC 847; Deputy Commissioner of Income Tax v. Punjab Beverage Company (Pvt.) Ltd. 2007 PTD 1347 and Indus Trading and Contracting Company v. Collector of Customs (Preventive) Karachi 2016 SCMR 842 ref.

Dr. Seema Irfan v. Federation of Pakistan PLD 2019 Sindh 516 rel.

Sagar Ladhani for Plaintiff.

Anwar Kamal, Assistant Attorney General for Pakistan for Defendant No.1.

Ameer Bakhsh Metlo for Defendant No.2.

2022 P T D 1752

[Sindh High Court]

Before Irfan Saadat Khan and Muhammad Faisal Kamal Alam, JJ

The COMMISSIONER OF INCOME TAX, COMPANIES ZONE-IV, KARACHI

Versus

MUHAMMAD HAMID

I.T.R. No.220 of 2005 and Reference Case No.141/KB of 2002, decided on 20th August, 2020.

Income Tax Ordinance (XXXI of 1979)---

----Ss.65, 62 & 136----Additional assessment/reopening of previously completed assessment on basis of "Definite Information"---Nature and meaning of term "definite information"---Scope---Question before High Court was whether assessment of taxpayer could be reopened on basis of information already furnished by taxpayer and whether such information could be termed "definite information"---Held, that no information had come to Department from outside sources but was already available with Department in shape or forced/details as furnished by taxpayer under assessment proceedings---For reopening of any assessment under provisions of S.65 of Income Tax Ordinance, 1979, there had to be "definite information" available with Department and no previously completed assessment could be reopened when no "definite information" was available and in the present case, case fell under category of "change of opinion" upon which Department could not reopen assessment of taxpayer---"Definite information" did not mean a reanalysis of existing information or further information or an opinion which was accessible but not taken into consideration previously---High Court observed that no information had come to paossession of Department which constituted "definite information" and therefore, impugned action taken by Department under Ss.65 & 62 of Income Tax Ordinance, 1979 was not legally maintainable---Reference was answered, accordingly.

Chief Commissioner Inland Revenue, RTO, Peshawar v. Sabrina Tent Services 2019 SCMR 1639 and Dewan Khalid Textile Mills Ltd. v. Commissioner of Income Tax Legal Division LTU, Karachi 2019 SCMR 158 rel.

Muhammad Aqeel Qureshi for Applicant.

Nemo for Respondent (called absent).

2022 P T D 1760

[Sindh High Court]

Before Fahim Ahmed Siddiqui, J

DIRECTOR, DIRECTORATE OF INTELLIGENCE AND INVESTIGATION FBR

Versus

Malik ABDUL QAYYUM

Special Criminal Acquittal Appeal No.20 of 2018, decided on 10th March, 2020.

Customs Act (IV of 1969)---

----Ss.32, 156(1)(14) & 156(1)(14-A)---Criminal Procedure Code (V of 1898), S.417---Appeal against acquittal---Mis-declaration---Production of fake pre-shipment inspection certificates---Scope---Allegation against accused was that he imported 28 Old and Used Concrete Transit Mixture Trucks under false and bogus PSI (Pre-Shipment Inspection) Certificates---Entire case of the prosecution depended upon the verification of PSI Certificate issued by the Pre-Shipment Inspection Company---Prosecution witnesses had not sought any verification of the letter---Person who had issued the letter on behalf of the Pre-Shipment Inspection Company was never produced before the trial court to support his letter and to disclose about his source of information regarding fake certificates---Prosecution itself had axed the roots of their case; hence the trial court had rightly acquitted the accused---Appeal was dismissed.

Dr. Shah Nawaz Memon for Appellant.

Khawaja Shamsul Islam, Shehzad Memood and Imran Taj for Respondent.

2022 P T D 1781

[Sindh High Court]

Before Irfan Saadat Khan and Mrs. Rashida Asad, JJ

COMMISSIONER INLAND REVENUE, ZONE-IV

Versus

Messrs HAMDAM PAPER CORPORATION (PVT.) LTD., KARACHI

Special S.T.R.A No.2500 of 2015, decided on 22nd August, 2022.

Sales Tax Act (VII of 1990)---

----Ss.8-B & 47---Input against output adjustment---Quantum---Dispute was with regard to adjustment / refund of more than 90% input against output---Validity---Though S.8-B of Sales Tax Act, 1990 restricted adjustment to the extent of 90% only, on the other hand granted certain exclusions also---Commissioner Inland Revenue (Appeals) and the Appellate Tribunal Inland Revenue while dealing with the matter observed that action of taxpayer in making adjustment did not cause any loss to exchequer and authorities failed to point out---Registered person was not entitled for adjustment of input tax of remaining 10% amount in case of 90% adjustment but the registered taxpayer was legally entitled in case of non-adjustment of excess amount to adjust the same at the end of financial year---Even in case of 100% adjustment by taxpayer at the end of financial year position would have remained the same as in such situation there would not have been a refund arisen in favour of taxpayer---High Court declined to interfere in order passed by Appellate Tribunal Inland Revenue---Reference was dismissed, in circumstances.

Commissioner Inland Revenue, Multan v. Messrs Hafeez Ghee and General Mills (Pvt.) Ltd., Multan 2020 PTD 2025; The Commissioner Inland Revenue v. Messrs Ferrous Engineering Industry 2021 PTD 1270 and Commissioner Inland Revenue v. Messrs Malik Enterprise 2021 PTD 945 ref.

Kafeel Ahmed Abbasi for Appellant.

Aqeel Ahmed Khan for Respondent.

2022 P T D 1806

[Sindh High Court]

Before Muhammad Shafi Siddiqui and Agha Faisal, JJ

COMMISSIONER INLAND REVENUE

Versus

MAHVASH AND JAHANGIR SIDDIQUI FOUNDATION

I.T.R.A. No.32 of 2020, decided on 25th August, 2021.

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

----Ss.177 & 122---Audit---Amendment of assessment---Non-issuance of audit report---Effect---Department invoked Reference jurisdiction of the High Court against the order passed by Appellate Tribunal---Validity---Respondent was selected for audit and the department had every right to conduct such an exercise, within the remit of the law---No audit report was issued to the respondent containing audit observations---Reasonable opportunity of hearing was not provided to the respondent---Such was done considering the time constraint for completion of audit proceedings---Conduct of the department, subjecting a taxpayer to arbitrary adversarial orders merely to circumvent the constraints of limitation, could not be appreciated---Reference application was dismissed.

CitiBank NA v. Commissioner Inland Revenue 2014 PTD 284 ref.

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

----S.177---Audit---Issuance of audit report---Opportunity of hearing---Scope---Statutory scheme of audit cannot be short-circuited by ignoring the mandate of the law---Statutory requirement is that an audit report is to be issued and thereafter the taxpayer is to be afforded an opportunity of a hearing.

Collector of Customs v. Mazhar ul Islam 2011 PTD 2577 ref.

(c) Taxation---

----Taxing statute---No intendment about tax and nothing may be read in or assumed in respect thereof---One has to merely look at what is clearly said and there can be no equity or presumption in such regard---Only the verbiage of the Act may be considered and merits are not be read or implied therein.

Cape Brandy Syndicate v. Inland Revenue Commissioners [1992/1 KB 64; Commissioner of Agricultural Income Tax v. B.M.W Abdur Rehman 1973 SCMR 445; Government of Pakistan v. Hashwani Hotels Limited PLD 1990 SC 68; Government of West Pakistan v. Jabees Limited PLD 1991 SC 870: A&B Food Industries Limited v. CIT 1992 SCMR 663; Mehran Associates Limited v. CIT 1993 SCMR 274; Star Textile Limited v. Government of Sindh 2002 SCMR 356; Zila Council Jehlum v. PTC PLD 2016 SC 398 and CIR v. IGI Insurance Company 2018 PTD 114. ref.

(d) Taxation---

----Fiscal statute---Form, in a fiscal statute, is of primary importance---Principle is that if a person sought to be taxed comes within the letter of the law, he must be taxed, however great a hardship may thereby be involved, but on the other hand, if the State cannot bring the subject within the letter of the law he is free, however apparent it may be that his case is within what may be called the spirit of the law.

(e) Interpretation of statutes---

----Taxing statute---Scope---Provision creating a tax liability must be interpreted strictly in favour of the taxpayer and against the revenue authorities---Any doubts arising from the interpretation of a fiscal provision must be resolved in favour of the taxpayer---If two reasonable interpretations are possible, the one favouring the taxpayer must be adopted.

Ameer Bukhsh Metlo for Applicant.

2022 P T D 1836

[Sindh High Court]

Before Muhammad Shafi Siddiqui and Mahmood A. Khan, JJ

The COLLECTOR OF CUSTOMS

Versus

Messrs SONIA INTERNATIONAL and another

Special Customs Reference Applications Nos.174 and 175 of 2016, decided on 10th November, 2021.

Customs Act (IV of 1969)---

----Ss.25 & 196---Valuation of goods imported---Method applicable---Customs authorities determined value of goods under Fall Back Method as provided in S.25(9) of Customs Act, 1969---Customs Appellate Tribunal allowed appeal of importer and directed the authorities to apply Sequential Method as provided in S.25(1) to (8) of Customs Act, 1969---Validity---Customs Appellate Tribunal allowed appeals in the matter on the basis of valuation of Customs authorities as determined in the matter violating Sequential Method provided under S.25(1) of Customs Act, 1969, as the was in violation of mandatory period of time required for such exercise after provisional release---Value of imported goods could not be determined by Customs authorities directly under S.25(9) of Customs Act, 1969, bypassing preceding provision from S.25(1) to (8) of Customs Act, 1969---High Court declined to interfere in order passed by Customs Appellate Tribunal holding that valuation could not be made directly under S.25(9) of Customs Act, 1969, and the same was time barred--- Reference was dismissed, in circumstances. [p. 1838] A

Mrs. Masooda Siraj for Applicant.

None present for Respondents.

2022 P T D 1860

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

IMAD SAMAD and others

Versus

FEDERATION OF PAKISTAN through Secretary Commerce, Ministry of Commerce, Islamabad and 3 others

Constitutional Petitions Nos.D-5430, D-5536 of 2020, D-1196 and D-1434 of 2021, decided on 31st March, 2021.

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

----S.19---Imports and Exports (Control) Act (XXXIX of 1950), S.3---Import Policy Order, 2020, Para. 21---SRO No.833(I)/2018, dated: 03-07-2018---Power to exempt from customs duties---Powers to prohibit or restrict imports and exports---Scope---Petitioners sought a direction to the Federal Government to release vintage cars under SRO 833(I)/2018, dated: 03-07-2018 in view of the law laid down by Division Bench in "Moin Jamal Abbasi v. Federation of Pakistan, etc" reported as 2020 PTD 660---Validity---SRO No.833(I)/2018, dated: 03-07-2018 had been issued in exercise of powers conferred under S. 19 of Customs Act, 1969---Section 19 of the Customs Act, 1969, did not govern importability; nor the Federal Government while exercising powers in terms thereof could regulate the import and export of any goods---Though said power was undoubtedly vested with the Federal Government but for that it had to exercise such powers under S. 3 of Imports and Exports (Control) Act, 1950---Words "Federal Government" in SRO No.833(I)/2018, dated: 03-07-2018 would only be in respect of exercise of powers under the Customs Act, 1969, and it could not be so construed to have also issued a notification in terms of the Imports and Exports (Control) Act, 1950, notwithstanding that it was the very same "Federal Government"---Division Bench of High Court directed the office to place all these matters before the Chief Justice for constitution of a Larger Bench inter alia to consider as to whether SRO No.833(I)/2018, dated: 03-07-2018 issued in terms of S.19 of the Customs Act, 1969, could also be treated as an SRO issued by the Ministry of Commerce in terms of S.3 of the Imports and Exports (Control) Act, 1950, permitting import of vintage cars which were otherwise not importable as being old and used in terms of the Import Policy Order, 2020.

Moin Jamal Abbasi's Case 2020 PTD 660 ref.

(b) Practice and procedure---

----Precedent---Constitution of a larger Bench---An earlier judgment of a Division Bench is binding on a subsequent Division Bench, and in case if any contrary view is being taken, then the matter has to be referred to the Chief Justice for constitution of a larger Bench to resolve the controversy.

Multiline Associates v. Ardeshir Cowasjee 1995 SCMR 362 / PLD 1995 SC 423; Province of East Pakistan v. Dr. Aziz ul Islam PLD 1963 SC 296 and Muhammad Amir Khan v. Government of Khyber Pakhtunkhwa 2019 SCMR 1021 ref.

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

----S.3---Power to prohibit or restrict imports and exports---Scope---FBR or for that matter the Federal Government acting through Ministry of Finance has no business to regulate import or export of any goods, which was and still is the domain of the Ministry of Commerce under S.3 of the Imports and Exports (Control) Act, 1950.

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

----S.19---General power to exempt from customs duties---Scope---It has nowhere been provided in S.19 of the Customs Act, 1969, authorizing the Federal Government to allow or restrict import or export of goods---It only allows exempting or reducing the customs duties.

(e) Public functionaries---

----One ministry or wing of the Federal Government is not authorized or permitted to exercise powers of the other; as they act under different Acts and spheres.

Qazi Umair Ali, Afnan Saeed-uz-Zaman, Mehmood-ul-Hasan and Aijaz Ali Siyal for Petitioners.

Shahab Imam and Ms. Naima for Respondents.

Muhammad Naeem Tariq, Deputy Director, Ministry of Commerce.

Kafeel Ahmed Abbasi, Deputy Attorney General.

2022 P T D 1882

[Sindh High Court]

Before Irfan Saadat Khan and Arshad Hussain Khan, JJ

The COLLECTOR OF CUSTOMS

Versus

UROOJ AUTOS

Special Customs Reference Application No.491 of 2016, decided on 27th January, 2022.

Customs Act (IV of 1969)---

----Ss.2(kka), 25 & 196---Reference---Goods Declaration---Valuation, determination of---Factual inquiry---Forum---Dispute was with regard to valuation of goods imported by respondent company---Validity---Customs Appellate Tribunal was the last fact finding authority, which had opined that respondent company submitted all required commercial documents including commercial invoice, packing list and bill of lading to customs authorities---Documents presented and relied upon by respondent company were admissible in terms of S.2(kka) of Customs Act, 1969---Customs Appellate Tribunal had given factual finding that examination report furnished by Examination Staff of Customs Department did not object to quantity of the items imported---Difference between authorities and respondent company was only with regard to the fact that whether parts imported were genuine or non-genuine---Such aspect according to the Tribunal was satisfactorily explained by respondent company---Price of items, as determined by Directorate General Valuation, was in consonance with rates as declared by respondent company in various documents furnished by them and in Good Declaration as well pertaining to non-genuine parts---High Court declined to interfere in findings of Customs Appellate Tribunal, as while exercising advisory jurisdiction, points of facts determined by Customs Appellate Tribunal could not be interfered with---Reference was dismissed in circumstances.

Junaid Traders v. Additional Collector of Customs, Appraisement-I 2012 SCMR 1876; Collector of Customs, Port Muhammad Bin Qasim v. Messrs Zymotic Diagnostic International, F.A. Islamabad 2008 SCMR 438; Messrs International Petrochemicals (Pvt.) Ltd., v. Deputy Collector of Customs, (Preventive) Custom House, Karachi and 2 others 2017 PTD 370 and Punjab Beverages (Pvt.) Ltd. v. Appellate Tribunal (Customs, Excise and Sales Tax) and 2 others 2002 PTD 2957 ref.

Muhammad Khalil Dogar for Applicant.

Dr. Shah Nawaz Memon for Respondent.

2022 P T D 1918

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

COLLECTOR OF CUSTOMS

Versus

Messrs Z.A. INDUSTRIES

Special Customs Reference Application No.63 of 2015 along with S.C.R.As. Nos.64 to 75 of 2015, decided on 16th December, 2020.

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

----S.81---Provisional determination of liability---Limitation---Scope---Where provisional assessment was not finalized within a period of six months by the department on the ground that since the matter was referred to the Valuation Department and once the advice was received the provisional assessment was finalized---High Court observed that this was an internal matter between the concerned Collectorate and the Valuation Department and in any case it could not be made basis to enlarge the statutory period of limitation of six months as provided in the S. 81 of Customs Act, 1969.

SUS Motors (Pvt.) Ltd. v. Federation of Pakistan 2011 PTD 235; Salman Tin Merchant, Karachi v. Collector of Customs, Karachi 2014 PTD 438; Messrs Wall Master v. The Collector of Customs Appraisement, Karachi 2005 PTD 2573; Messrs Hassan Trading Company v. Central Board of Revenue, Government of Pakistan, Islamabad and others 2006 PTD 1276 and Messrs Dewan Farooque Motors Ltd., Karachi v. Customs, Excise and Sales Tax Appellate Tribunal, Karachi and others 2011 PTD 235 ref.

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

----S.81---Provisional determination of liability---Limitation---Scope---If a provisional assessment is not finalized within the period provided in S. 81 of Customs Act, 1969, such provisional assessment attains finality.

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

----S.196---Reference to High Court---Factual controversy---Scope---High Court cannot disturb factual findings while exercising reference jurisdiction.

Iqbal M. Khurram for Applicant.

2022 P T D 1

[Lahore High Court (Rawalpindi Bench)]

Before Mirza Viqas Rauf and Raheel Kamran, JJ

COMMISSIONER INLAND REVENUE (ZONE-I), RTO, RAWALPINDI

Versus

TARIQ MAHMOOD, PROPRIETOR STANDARD MEDICAL STORE

I.T.Rs. Nos.25, 27 and 31 of 2015, decided on 20th October, 2021.

Income Tax Ordinance (XLIX of 2001)---

----Ss.113, 122(5A), 133(1) & Second Schedule, Part-III, clause 8---Tax rebate, entitlement of---Authorities were aggrieved of order passed by Appellate Tribunal Inland Revenue against tax rebate allowed to taxpayer who was not distributor of pharmaceutical products---Validity---While allowing appeal of taxpayer, Appellate Tribunal Inland Revenue had erroneously found pharmaceutical products to fall within the fast moving consumer goods, therefore, taxpayer was not entitled to any rebate on that basis---High Court set aside order in question and remanded the matter to Appellate Tribunal Inland Revenue for decision afresh---Reference was allowed accordingly.

Syed Mukhtar Hussain Shah v. Mst. Saba Imtiaz PLD 2011 SC 260; Chairman Pakistan Railway v. Shah Jehan Shah PLD 2016 SC 534; Mst. Samra Ashfaq v. Government of N.W.F.P. 1996 SCMR 273; Commissioner Inland Revenue, Lahore v. Saritow Spinning Mills Ltd. 2016 PTD 786; Province of East Pakistan v. Sharafatullah PLD 1970 SC 514; Al-Samrez Enterprises v. Federation of Pakistan 1986 SCMR 1917; Molasses Trading and Export (Pvt.) Ltd. v. Federation of Pakistan 1993 SCMR 1905; Manzoor Ali v. UBL 2005 SCMR 1785; Muhammad Tariq Badr and another v. National Bank of Pakistan 2013 SCMR 314; Malik Muhammad Inam and others v. Federation of Pakistan 2006 SCMR 1670; Commissioner Inland Revenue v. Messrs Haier Pakistan (Pvt.) Ltd. 2018 PTD 1582; Karamat Hussain v. WAPDA and another 1998 PLC (C.S.) 507; Commissioner of Sales Tax, Rawalpindi v. Messrs Raja Abdul Razaq Zia ul Qamar 1973 PTD 19; Commissioner of Income Tax, Companies Zone-II, Karachi v. Messrs Sindh Engineering (Pvt.) Ltd., Karachi 2002 SCMR 527 and Messrs Al-Khair Gadoon Ltd. v. The Appellate Tribunal and others 2019 SCMR 2018 rel.

Muhammad Irshad Chaudhry for Applicant.

Proceeded against ex parte vide order dated 28-9-2021 for Respondent.

2022 P T D 19

[Lahore High Court]

Before Shams Mehmood Mirza, J

RAZA MOTOR INDUSTRIES through Authorized Representative

Versus

FEDERATION OF PAKISTAN through Secretary Finance, Revenue Division, Islamabad and 3 others

Writ Petition No.37251 of 2021 (and connected petitions), decided on 22nd September, 2021.

(a) Jurisdiction---

----Discretion---Scope---Jurisdiction by its nature is a general concept of power to do a particular thing whether it involves discretion or not---Legal concept of discretion implies power to make a choice between alternative courses of action---If only one course can lawfully be adopted, the decision taken is not the exercise of a discretion but performance of a duty---Concept of discretion refers to decisions where law does not dictate a specific outcome or where the tribunal is given a choice of options within a statutorily imposed set of boundaries.

De Smith, Woolf and Jowell, Principles of Judicial Review; Baker v. Canada (Minister of Citizenship and Immigration) [1999] S.C.J. No. 39] and Secretary of State for Education and Science v. Tameside Metropolitan Borough Council [1977] A.C. 1014 rel.

(b) Discretion---

---- Discretion, exercise of---Principle---Where discretion is granted by Legislature to an authority to be exercised in a variety of circumstances that discretion is intended to be exercised by the repository without placing any fetters on such jurisdiction.

Province of East Pakistan v. Siraj ul Haq Patwari PLD 1996 SC 854; Mian Rafi-ud-Din and 6 others v. Chief Settlement and Rehabilitation Commissioner and 2 others PLD 1971 SC 252; Padfield v. Minister of Agriculture, Fisheries and Food [1968] 1 All E.R. 694; Muhammad Amin Muhammad Bashir Limited v. Government of Pakistan through Secretary Ministry of Finance and others 2015 SCMR 630; Minister for Aboriginal Affairs v. Peko-Wallsend Ltd. (1986) 162 CLR 24; Attorney-General (NSW) v. Quin (1990) 170 CLR 1 and Intercity Transportation v. United States [737 F.2d 103 (D.C. Cir. 1984)] 140 rel.

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

----S.177 [as substituted through Finance Act, 2010]---Selection for audit---Principle---Petitioners / taxpayers were aggrieved of notices of selection of their cases for audit--- Plea raised by petitioners/ taxpayers was that before selection of case for audit Commissioner was required to call for record or documents from taxpayer and to communicate to him reasons for doing so---Validity---Selection for audit under original S.177 of Income Tax Ordinance, 2001, was subject to fulfillment of certain conditions as enumerated in cls. (a) to (d) of the then S.177 (1) of Income Tax Ordinance, 2001--- Conditions were omitted from S. 177 of Income Tax Ordinance, 2001, as substituted through Finance Act, 2010 and instead requirement of giving reasons for calling of record / documents was imposed on Commissioner through proviso to S.177 (1) of Income Tax Ordinance, 2001---Commissioner was then liable to give reasons for summoning of record and proceedings with the audit---Selection for audit per se did not saddle taxpayers with any liability---Such selection did not constitute an actionable injury to taxpayers entitling them to challenge the same in a Court of law---Audit was a much wider exercise than amendment of assessment---If assessment was to be amended in the course of audit the taxpayers had remedy to challenge the same by resorting to remedies of multiple appeals / references available under Income Tax Ordinance, 2001---Commissioner in the notices gave reasons for summoning record / documents and selection for audit--- Requirements of proviso to S.177(1) of Income Tax Ordinance, 2001, were met with and there was no reason for petitioners / taxpayers to be aggrieved of notices issued to them and to challenge the same---Constitutional petition was dismissed, in circumstances.

Jehangir Ahmad v. The Federation of Pakistan and others Writ Petition No.14710 of 2021 and Indus Motor Company Limited v. Federation of Pakistan and others 2020 PTD 297 ref.

Kohinoor Sugar Mills v. Federation of Pakistan 2018 PTD 82; The Federal Board of Revenue and others v. Messer Chenone Stores Limited and others 2018 PTD 208 and Commissioner of Inland Revenue Sialkot and others v. Messrs Allah Din Steel and Rolling Mills and others 2018 SCMR 1328 rel.

Muhammad Mohsin Virk and Ch. Shahid Mayo for Petitioners (in instant Writ Petition as well as in W.P.No.42648 of 2021).

Imtiaz Rashid Siddiqui, Barrister Sheharyar Kasuri, Raza Imtiaz Siddiqui, Muhammad Hamza, Sabeel Tariq Maan and Qadeer Ahmad Kalyar for Petitioners (in W.P.No.47136 of 2021).

Mansoor Usman Awan for Petitioner (in W.P.No.47139 of 2021).

Muhammad Sohaib Nazar and Sardar Munir Hassan Dogar for Petitioners (in W.P.No.39109 of 2021).

Khalil ur Rehman and Ch. Muhammad Yaqoob for Petitioners (in W.P.No.37523 of 2021).

Waseem Ahmed Malik and Adeel Khawar Nahra for Petitioners (in W.P.No.42471 of 2021).

Mustafa Kamal and Muhammad Faizan Saleem for Petitioners (in W.P.No.41595 of 2021).

Muhammad Ajmal Khan, Muhammad Azhar Joiya for Petitioners (in W.Ps.Nos.37853 and 47379 of 2021).

Hassan Kamran Bashir and Sikander Ali for Petitioner in W.Ps.Nos.22606, 41014, 41021, 41038, 41031 and 41024 of 2021).

Azmat Hayat Khan Lodhi, Assistant Attorney General for Pakistan.

Syed Zain ul Abideen Bukhari, Ch. Muhammad Zafar Iqbal, Ms. Riaz Begum, Sarfraz Ahmed Cheema, Malik Abdullah Raza, Shehzad Ahmed Cheema, Adeel Shahid Karim, Barrister Ahmed Pervaiz, Muhammad Yahya Johar, Anas Sheikh, Shahid Sarwar Chahil, Muhammad Asif, A.W. Butt, Khawar Ikram Bhatti, Naeem Khan and Javed Athar for the respondent FBR.

2022 P T D 51

[Lahore High Court]

Before Ayesha A. Malik, J

PEPSI COLA INTERNATIONAL (PRIVATE) LIMITED through Authorized Representative

Versus

FEDERATION OF PAKISTAN through Secretary Revenue Division, Islamabad and another

Writ Petition No.21602 of 2021, heard on 13th October, 2021.

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

----Ss.174(3), 161 & 162---Records, information collection and audit---Maintenance of record by taxpayer---Statutorily required time-period for maintenance of such record----Maintenance of record after lapse of statutorily required time for such maintenance---Recovery of tax from the person from whom tax was not collected or deducted---Interpretation of Ss.174 & 161 of Income Tax Ordinance, 2001---Scope---In the present case the taxpayer impugned notices issued under S.161 of Income Tax Ordinance, 2001 on ground that impugned notices required taxpayer to provide record in respect of transactions pertaining to period which fell outside the time-period required for maintenance of such record under S.174 of Income Tax Ordinance, 2001---Validity---Held, that burden lay on department to justify delayed proceedings especially in view of S.174(3) of Income Tax Ordinance, 2001---Proceedings under S.161 of said Ordinance were independent proceedings with no time limit, however, the issue for Department was provision of documents for the tax year hit by limitation of S.174(3) of said Ordinance and there was no obligation on taxpayer to produce such documents beyond the prescribed six-year period as they were not required under law to maintain the same---Department, at best, could continue its proceedings under S.161 of the said Ordinance, but could not compel taxpayer to produce documentary evidence, and thereafter burden would lie on Department to establish their case as opposed to relying on taxpayer to produce documents before Department---High Court observed that Department had to discharge their burden before declaring any liability of taxpayer and could not simply conclude that for want of documentary evidence, taxpayer was rendered liable---High Court set side impugned notice to extent for demands of production of documents---Constitutional petition was allowed, accordingly.

Maple Leaf Cement Factory Ltd. v. The Federal Board of Revenue and others 2016 PTD 2074; Habib Bank Ltd. v. Federation of Pakistan through Secretary, Revenue Division and 5 others 2013 PTD 1659; D.G. Khan Cement Co. Ltd. through Chief Financial Officer and others v. Federal Board of Revenue through Chairman and 5 others 2020 PTD 2111 rel.

Salman Akram Raja and Arslan Riaz for Petitioner.

Syed Zain ul Abidien Bokhari for Respondents.

2022 P T D 222

[Lahore High Court (Rawalpindi Bench)]

Before Raheel Kamran, J

ATTOCK PETROLEUM LIMITED (APL)

Versus

NATIONAL HIGHWAY AUTHORITY and another

Writ Petition No.2874 of 2014, decided on 9th November, 2021.

(a) Constitution of Pakistan---

----Art.77---Tax, levy of---Principles---Tax is a compulsory exaction of money by public authorities, which form part of common burden for raising revenue and upon collection it becomes part of public revenue of the State---Tax is an attribute of sovereignty---Tax is a contribution to government imposed in common interest of all is for the purpose of defraying expenses incurred in carrying out public functions.

Messrs Elahi Cotton Mills Ltd and others v. Federation of Pakistan and 6 others PLD 1997 SC 582; Federation of Pakistan through Secretary Ministry of Petroleum of Natural Resources and another v. Durani Ceramics and others 2014 SCMR 1630 and Workers' Welfare Funds v. East Pakistan Chrome Tannery Private Ltd and others PLD 2017 SC 28 rel.

(b) Interpretation of statutes---

----Fiscal statutes---Tax, components of---Scope---First component is the character of imposition known by its nature which prescribes taxable event attracting the levy; second is a clear indication of person on whom the levy is imposed and who is obliged to pay the tax; third is the rate at which tax is imposed and the fourth is the measure or value to which rate has to be applied for computing a tax liability---If such components are not clearly and definitely ascertainable, it is difficult to say that the levy exists in point of law---Any uncertain or vagueness in the Legislative scheme defining any of the components of the levy may be fatal to its validity.

Messrs Govind Saran Ganga Saran v. Commissioner of Sales Tax and others AIR 1985 SC 1041 rel.

(c) National Highway Authority Act (XI of 1991)---

----S.10---National Highway Authority Regulatory Framework and Standard Operating Procedure for Preservation and Commercial use of Right of Way (ROW), 2002, Chapter X---Constitution of Pakistan, Arts.77, 199, Fourth Schedule, Part-I, Entries Nos.34 & 54---Fee, levy of---Principle---Promotional material---Petitioner was an Oil Marketing Company and aggrieved of notices for recovery of fee/tax on display of their promotional material on private properties at National Highways---Validity---Like tax, levy of fee also required enactment by appropriate legislature in the legislative field approved by the Constitution---In view of entry No.54 read with entry No.34 in Federal Legislative List, the Federation was competent to enact and levy fees in relation to services provided or rendered on National Highways and Strategic Roads---No specific clause exists in National Highway Authority Act, 1991, empowering Federal Government to levy any fee or charge on display of promotional material or hoardings--- In absence of any such provision including Ss. 10 & 12 of National Highway Authority Act, 1991, for framing of rules by Federal Government and chapter X of National Highway Authority Regulatory Framework and Standard Operating Procedure for Preservation and Commercial use of Right of Way, 2002 by the Authority were void and ultra vires the National Highway Authority Act, 1991 to the extent of levy of charge / fee on display of promotional material or hoardings on private property---No element of quid pro quo exists on the part of National Highway Authority and demand in question of fee/charge was without lawful authority and of no legal effect---High Court declared notices in question to be without lawful authority and of no legal effect and were set aside--- Petitioner could approach the Authority for refund of amounts if any, deposited with it towards charge / fee on display of promotional material on private property---Constitutional petition was allowed, in circumstances.

Collector of Customs and others v. Sheikh Spinning Mills 1999 SCMR 1442; Pakcom Limited v. Federation of Pakistan PLD 2011 SC 44; Shell Pakistan Ltd. v. Capital Development Authority PLD 2015 Isl. 36 and GAM Corp. (Pvt.) Limited v. National Highway Authority 2021 CLC 1755 rel.

Jamil Ahmed and others v. Government of Pakistan PLD 2019 Lah. 298 distinguished.

(d) Interpretation of statutes---

----Fiscal statute---Fee, charging of---Principles---One principle for charging of fee is quid pro quo i.e. charge payable for rendering specific service or extending specific privilege which the payers can avail subject to the conditions that may be attracted to it--- Such is known as 'fee-simplicitor'--- In such enactment, there is direct and immediate correlation in absolute terms between the service that is rendered and the fee that is charged for it---Other kind of fee-levying legislation is where Cess is imposed with distinction that it is imposed for achieving a specific purpose promised in the enactment itself which when realized, would bring same advantage or benefit for the payers in future---Such fee can be described as 'purpose specific' and in many judicial pronouncements have been termed as a 'Cess fee'---In such form of levy the specified purpose is pre-committed to the payers before the revenue is collected under the legislation--- In such form rule of quid pro quo does not exist in the same sense as it exists in a case where an existing service is rendered or a privilege is extended directly to the payer for a fee.

Khursheed Soap and Chemical Industries Private Ltd. v. Federation of Pakistan PLD 2020 SC 641 rel.

(e) Interpretation of statutes---

----Fiscal statute---License fee---Scope---License fee is charged to permit or allow a person to operate under a regulatory scheme or licensing regime---Such is quite distinct from 'tax', 'fee-simpliciter' or 'Cess-fee'---Such is Fee for conferring a privilege or license---For imposition of a license fee, it is imperative that there must be an enactment prohibiting general public from activity permitted under license.

Rehmatullah Khan and others v. Government of Pakistan and others 2003 SCMR 50 and D.S. Textile Mills Limited v. Federation of Pakistan and others PLD 2006 Lah. 335 rel.

(f) Interpretation of statutes---

----Subordinate legislation---Scope---Rules and regulations are subordinate legislation which cannot go beyond the ambit and scope of parent statute---Mere fact that power has been conferred on the Authority to make rules and regulations does not authorize framing of delegated legislation that is inconsistent with or repugnant to parent Act---Levy of a charge, which falls within an essential legislative function cannot be delegated.

Jurists Foundation v. Federal Government PLD 2020 SC 1; In the matter of: Reference No.2 of 2005 by the President of Pakistan PLD 2005 SC 873; Pakistan Tobacco Company Ltd. and others v. Government of N.W.F.P through Secretary Law and others PLD 2002 SC 460 and Zaibtun Textile Mills Ltd. v. Central Board of Revenue and others PLD 1983 SC 358 rel.

Muhammad Shakeel Mughal for Petitioner.

Abid Hussain Ranjha for Respondent No.1.

Nemo for Respondent No.2.

2022 P T D 305

[Lahore High Court]

Before Shahid Jamil Khan and Asim Hafeez, JJ

COMMISSIONER INLAND REVENUE, LAHORE

Versus

Messrs MONNOOWAL TEXTILE MILLS LTD., LAHORE

I.T.R. No.94 of 2015, heard on 16th September, 2021.

Income Tax Ordinance (XLIX of 2001)---

----Ss.67, 122(1)(5)(9), 133, 154(4) & 169(1)---Income Tax Rules, 2002, Rr.13 & 231---Apportionment of expenditure---Amendment in tax return---Dispute was with regard to apportionment of expenditure incurred and adjustments claimed by taxpayer under R.231 of Income Tax Rules, 2002--- Plea raised by authorities was that apportionment of expenditures was to be done by applying mechanism provided under S.67 of Income Tax Ordinance, 2001, read in consonance with R.13 of Income Tax Rules, 2002---Validity---Income derived from export sales and tax deducted thereupon was treated as final tax in terms of Ss.154 (4) & 169(1) of Income Tax Ordinance, 2001---Apportionment of expenditures, was required to be carried out under S.67 of Income Tax Ordinance, 2001 and R.13 of Income Tax Rules, 2002---In the context of expenditures / deductions claimed by taxpayer, provision of R.231 of Income Tax Rules, 2002 had no application---High Court set aside order in question as Income Tax Appellate Tribunal erred in law while applying R.231 of Income Tax Rules, 2002---High Court remanded the matter to Income Tax Appellate Tribunal for decision afresh---Reference was allowed accordingly.

Commissioner Inland Revenue v. Messrs Quality Textile Mills Ltd. 2013 PTD 2095 ref.

Ch. Muhammad Shakil, M. Sarfraz Cheema and Rizwan Afzal Tarar and Ch. Zeeshan Afzaal Hashmi for Applicant.

Naeem Munawar for Respondent.

2022 P T D 399

[Lahore High Court]

Before Jawad Hassan, J

MUHAMMAD FAYYAZ

Versus

FEDERATION OF PAKISTAN and others

Writ Petition No.17281 of 2020, decided on 22nd February, 2021.

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

----S.70---Constitution of Pakistan, Art.18---Freedom of trade, business or profession---Appeal to Appellate Tribunal---Temporary injunction, grant of---Stop-gap arrangement---Scope---Petitioner complained of coercive measures being adopted by respondents under the garb of impugned notices and contended that his fundamental rights of trade and business guaranteed under Art. 18 of the Constitution would be infringed---Validity---High Court as a stop-gap arrangement granted temporary relief to the petitioner by directing Appellate Tribunal to decide the appeal of petitioner in accordance with law, within a period specified under the Anti-Dumping Duties Act, 2015---Tribunal was also directed to decide the interim relief application of the petitioner at the first instance preferably within a period of one week---Till decision of application for interim relief by the Appellate Tribunal, no coercive measure was to be taken against the petitioner---Constitutional petition was disposed of accordingly.

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

----Ss.70 & 73---Appeal to Appellate Tribunal---Power of the Appellate Tribunal to call for and examine record---Scope---Section 73 of the Anti-Dumping Duties Act, 2015, clearly states that the Tribunal shall handle appeals as priority and issue direction within 30 days by giving day to day hearing as per S.70(6) of the Act---Tribunal may pass order if it thinks fit while examining appeal under S. 70(7) and shall give decision in writing/detailing the issue raised in the appeal with the reasons as provided under S. 70(1)---After decision on the stay application as well as the Appeal the Tribunal shall provide copy of the order, which is appealable under S. 70(13) before High Court within 90 days.

Raja M. Mudassar Iqbal for Petitioner.

Mehar Zameer Hussain Saddal, Deputy Attorney General and Syed Muhammad Najmul Saqib Mumtaz, Assistant Attorney General.

2022 P T D 404

[Lahore High Court]

Before Shahid Jamil Khan, J

Messrs EMIRATES SUPPLY CHAIN SERVICES (PVT.) LIMITED

Versus

FEDERATION OF PAKISTAN and others

Writ Petition No.2323 of 2021, decided on 18th January, 2021.

Income Tax Ordinance (XLIX of 2001)---

----Ss. 131 & 132---Interim relief to taxpayer granted by Appellate Tribunal---Adjudication by Appellate Tribunal---Scope---Petitioner taxpayer impugned order of Appellate Tribunal whereby interim relief already granted to taxpayer and extended subsequently five times by Appellate Tribunal was later declined during pendency of main appeal, which per contention of taxpayer, amounted to frustrating any relief in appeal---Validity---Under such circumstances, impugned order ought to be set aside, and application for extension in interim relief filed by taxpayer shall be deemed pending before Appellate Tribunal, which was to be decided in accordance with law---Constitutional petition was disposed of, accordingly.

Shahbaz Butt for Applicant.

Monim Sultan, Assistant Attorney General for Pakistan.

2022 P T D 424

[Lahore High Court]

Before Asim Hafeez, J

KAMRAN TEXTILE (PVT.) LTD.

Versus

COMMISSIONER INLAND REVENUE, MULTAN and others

Writ Petition No.13607 of 2020, decided on 12th October, 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---Scope---Per S.72B(2) of Sales Tax Act, 1990, procedure prescribed under S.25 of the Act shall be adopted for conducting audit, and said S.72B(2) could not be construed in a manner to render S.72B(1) as subservient to proviso to S. 25(2) of the Sales Tax Act, 1990---Expression "audit under this section" used in proviso to S.25(2) of Sales Tax Act, 1990 limited applicability and scope of said proviso and affirmed independence of S.72B of Sales Tax Act, 1990---No prejudice, bias or injury would occasion upon taxpayer on mere selection of audit under S.72B of Sales Tax Act, 1990.

Faisalabad Electric Supply Company Limited (FESCO) v. The Federation of Pakistan through Secretary Finance, Islamabad and others 2019 PTD 1780; Pakistan Telecommunication Company Ltd v. Federation of Pakistan (2017) 115 TAX 27 (RC. Isl.) = 2016 PTD 1484; Laraib Energy Ltd. through Chief Executive Officer v. Commissioner Inland Revenue (Provincial Taxes) Mirpur Azad Jammu and Kashmir and 5 others 2015 PTD 165; Warid Telecom (Pvt.) Ltd. Commissioner Inland Revenue and others (2013) 107 Tax 278 (H.C. Isl.)= PTCL, 2013 CL 331 and Commissioner Inland Revenue, Sialkot and others v. Messrs Allah Din Steel and Rolling Mills and others 2018 SCMR 1328 rel.

Tanveer Ahmad for Appellant.

2022 P T D 452

[Lahore High Court]

Before Syed Shahbaz Ali Rizvi, J

IMRAN HUSSAIN and another

Versus

The STATE and another

Criminal Miscellaneous No.33826-B of 2021, decided on 30th September, 2021.

Customs Act (IV of 1969)---

----Ss.2(s), 16, 139, 156(1)(8), 156(1)(70), 157 & 178---Criminal Procedure Code (V of 1898), S.497---Smuggling---Declaration by passenger or crew of baggage---Punishment of persons accompanying a person possessing goods liable to confiscation---Bail, grant of---Scope---Prosecution case was that the accused persons were taken into custody by the Immigration and Customs staff at International Airport on their arrival and that they in their baggage were carrying smuggled items---No bag tag as well as information qua the subject bags' booking in the name of accused persons was available on record---Investigation Agency could not take into possession CCTV footage or video from the system installed at the airport to prove recovery of baggage from accused persons' possession---Value of the items recovered was assessed at Rs.32,000,000/- approximately but the Investigating Officer had remained unable to point out the availability or reference of method/formula or any document according to which the value was determined prior to registration of the case---Even name of the person who had assessed the goods' value for the complainant was not given in the file while said aspect of the case was very much relevant with regard to quantum of sentence of imprisonment provided by different provisions of Customs Act, 1969---Case of accused persons was one of further inquiry into their guilt entitling them to the grant of post-arrest bail---Bail was allowed, in circumstances.

Nemo for Petitioners.

Nauman Hassan Baloch, Spl. Prosecutor for Customs.

2022 P T D 510

[Lahore High Court]

Before Syed Shahbaz Ali Rizvi, J

DAD KHAN

Versus

The STATE and another

Criminal Miscellaneous No.55111-B of 2021, decided on 27th September, 2021.

Customs Act (IV of 1969)---

----Ss.2(s), 16, 156(1)(77), 156(1)(85), 156(1)(89), 156(1)(92), 157 & 187---Criminal Procedure Code (V of 1898), S. 497---Smuggling, assault on customs official, carrying smuggled goods and intimidating customs officials---Bail, refusal of---Desperate conduct---Scope---Allegation against accused was that when the trailer loaded with container of smuggled goods was signaled to stop, he along with co-accused while armed with their respective weapons came at the spot, attacked the customs staff, started firing to snatch the container and during scuffle an Intelligence Customs Officer was injured---Held; though the offences punishable under the Customs Act, 1969, with which the accused was charged did not fall within the prohibitory clause of S. 497, Cr.P.C. and in such like cases, grant of bail was a rule, yet there were exceptional circumstances available in the case---Violent, aggressive and desperate purported conduct of the accused disentitled him to the grant of post-arrest bail---No mala fide on the part of the complainant, the recovery witnesses and the injured Customs Intelligence Officer could be surfaced during the arguments---Petition for grant of bail was dismissed, in circumstances.

Asghar Ali Gill for Petitioner.

Amna Parveen, Special Prosecutor Customs.

Nisar Ahmad Virk, Deputy Prosecutor General.

2022 P T D 569

[Lahore High Court]

Before Jawad Hassan and Muzamil Akhtar Shabir, JJ

FAMOUS BRANDS (PVT.) LIMITED

Versus

The CUSTOMS APPELLATE TRIBUNAL BENCH, LAHORE and others

Customs Reference No.51 of 2011, decided on 20th October, 2021.

Customs Act (IV of 1969)---

----S.19-A---Presumption that incidence of duty has been passed on to the buyer---Scope---Shock Pad/consignment imported by applicant was found to be rubber sheets in rolls, therefore, it was assessed accordingly---Applicant, after making payment of duties and taxes, got cleared the consignment without any objection and claim of refund---Later on, applicant filed a claim of refund which remained unsuccessful up till Customs Appellate Tribunal---Contention of department was that the applicant had failed to prove that the burden of duty and taxes was not passed on to the end consumer---Applicant, on the other hand, had submitted a letter issued by the end consumer wherein it was stated that all the taxes/duties/charges would be paid by the applicant under its own arrangements---Validity---Applicant had neither brought anything to the contrary as required by S. 19-A of Customs Act, 1969 nor had it fulfilled the later part of the section---Reference was decided against the applicant.

Messrs Pak Forest Industries (Pvt.) Ltd. v. The Federation of Pakistan and others 2004 PTD 2243 ref.

Pak Suzuki Motor Company Ltd., Karachi v. Secretary Revenue Division, Government of Pakistan and others 2007 PTD 501 rel.

Ch. Faisal Nawaz for Applicant.

2022 P T D 626

[Lahore High Court]

Before Jawad Hassan and Muzamil Akhtar Shabir, JJ

SANA ULLAH KHAN and another

Versus

ASSISTANT COLLECTOR ANTI SMUGGLING ORGANIZATION and others

Custom Appeal No.56 of 2004, decided on 28th October, 2021.

Customs Act (IV of 1969)---

----Ss.156(1)(90) & 181---Option to pay fine in lieu of confiscation of goods---Discretionary jurisdiction---Scope---First appellant was the driver while the second appellant was the owner of trailer on which goods were loaded from port of entry at Karachi to the port of destination i.e. Lahore---Driver instead of terminating his journey at the destined place, took the conveyance to an unknown place where it was confiscated by the Customs authorities---Show cause notice was issued to the appellants which was replied by them and ultimately offences in terms of Cls. (8), (89) & (90) of S. 156(1) of Customs Act, 1969, were held to be fully established---Vehicle was confiscated, however, it was ordered to be released on payment of fine at the rate of Rs.1,00,000/- each in lieu of confiscation---Main argument of the appellants was that the penalty imposed on the driver was harsh---Validity---Section 156(1)(90) of Customs Act, 1969, showed that besides confiscation, any other person concerned was liable to a penalty---Quantum of fine in lieu of confiscation was left on the discretion of the officer of Customs---Driver was incharge of the vehicle and was liable to fulfil his liability to deliver the goods at the destined place---Appeal was dismissed.

Imran Aziz for Appellants.

2022 P T D 678

[Lahore High Court]

Before Jawad Hassan and Muzamil Akhtar Shabir, JJ

COLLECTOR OF CUSTOMS, MODEL CUSTOMS COLLECTORATE, MULTAN

Versus

AMAN ULLAH KHAN

Customs Reference No.47412 of 2021, decided on 27th September, 2021.

Customs Act (IV of 1969)---

----Ss.2(k), 17, 187 & 196---Qanun-e-Shahadat (10 of 1984), Arts. 117 & 120---Smuggled goods---Proof---Onus to prove---Factual controversy---Documents, non-verification of---Customs Authorities seized bitumen of foreign origin from warehouse of respondent on the plea of smuggled / non-duty paid---Customs Appellate Tribunal allowed appeal filed by respondent and goods were ordered to be restored---Validity---Documents produced by respondent about local purchase and corresponding Sales Tax Returns which were official documents were relied upon by Customs Appellate Tribunal---Such documents shifted burden upon Customs Authorities to show that the same were not genuine---Documents were not got verified from relevant quarters by Customs Authorities to reach conclusion whether the same were genuine or not and whether the same related to the goods in question or not---Burden that shifted upon Customs Authorities on production of documents by respondent in terms of S.187 of Customs Act, 1969, to substantiate the goods was non-duty paid had not been properly discharged---Findings of fact about genuineness of documents and lawful possession of goods were not shown to be against record---High Court could not interfere in findings of fact about genuineness of receipts relied upon by Customs Appellate Tribunal as no question of law had arisen that required determination by High Court---High Court answered the question in negative as Customs Authorities could not establish that respondent had produced bogus record--- Reference was dismissed in circumstances.

Muhammad Gul v. Member Judicial, Customs Appellate Tribunal, Karachi and another 2013 PTD 765; Messrs Ittehad Textile Industries (Pvt.) Ltd. v. Collector of Sales Tax and Central Excise, Faisalabad and 2 others 2007 PTD 663; Pakistan Match Industries (Pvt.) Ltd. v. Assistant Collector, Sales Tax and Central Excise Mardan 2019 SCMR 906; Army Welfare Trust (Nizampur Cement Project), Rawalpindi and another v. Collector of Sales Tax (Now Commissioner Inland Revenue, Peshawar) 2017 SCMR 9 and Messrs F.M.Y. Industries Ltd. v. Deputy Commissioner Income Tax and another 2014 SCMR 907 rel.

Ms. Saba Saeed Sheikh for Applicant.

2022 P T D 760

[Lahore High Court]

Before Shahid Jamil Khan, J

ROMEX INTERNATIONAL

Versus

The FEDERATION OF PAKISTAN and others

Writ Petition No.7555 of 2022, decided on 15th February, 2022.

Income Tax Ordinance (XLIX of 2001)---

----S.128 (1AA)---Sales Tax Act (VII of 1990), S.45B (IC)---Federal Excise Act (VII of 2005), S.33(1A)---Maxim: 'actus curiae neminem gravabit'---Applicability---Interim relief, extension in---Delay in disposal of appeal---Petitioners were tax payers who sought extension in interim relief---Validity---Maxim: 'actus curiae neminem gravabit' could be invoked only if delay in deciding appeal was on the part of Appellate Forum (Court)---Tax payer could not be beneficiary of its own inactions while taking unnecessary adjournments and not pursuing for early decision of appeal through applications for early hearing---Jurisdiction was always conferred upon Courts and quasi-judicial forums by Legislature---Restriction on time for granting interim relief could not be exceeded under normal circumstances---Constitutional Courts created an exception by invoking principle for administration of justice and good conscience---Commissioner (Appeals) alone could determine or attribute delay, therefore, application for extension of interim relief granted by Appellate Tribunal beyond statutory period was to be moved before it and rest procedure was to be followed---Constitutional petition was disposed of accordingly.

Mst. Fouzia Razzak v. Federal Board of Revenue and others 2021 PTD 162 ref.

Malik Tariq Mahmood and others v. Ghulam Ahmed and others PLD 2017 SC 674; Khushi Muhammad through L.Rs. and others v. Mst. Fazal Bibi and others PLD 2016 SC 872; Zakaria Ghani and 4 others v. Muhammad Ikhlaq Memon and 8 others 2016 CLD 480; Messrs Lanvin Traders, Karachi v. Presiding Officer, Banking Court No.2, Karachi and others 2013 SCMR 1419 and Amarjeet Singh and others v. Devi Ratan and others AIR 2010 SC 3676 rel.

Dr. Muhammad Saleem Malik, Rai Amer Ijaz Kharal, Mahmood Arif, Zahid Imran Gondal, Naveed Zafar Khan, Rizwan Afzal Tarar and Mian Talat Mahmood for Petitioners (in connected petitions).

Monim Sultan, Assistant Attorney General for Pakistan.

Abdul Muqtadir Khan for Respondents-FBR.

2022 P T D 769

[Lahore High Court]

Before Shams Mehmood Mirza, J

Messrs INTERLOOP LIMITED through General Manager

Versus

FEDERATION OF PAKISTAN through Secretary Finance and 3 others

Writ Petitions Nos.50189 of 2019, 55663 and 53626 of 2020 decided on 21st April, 2021.

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

----S.11---Assessment and recovery---Tax not levied, short levied or erroneously refunded---Scope---Adjudicatory mechanism for assessment of tax liability has been provided only in S.11 of Sales Tax Act, 1990---Both procedure for assessment of tax and substantive grounds on which assessment can be made by officer of Inland Revenue are contained in S.11 of Sales Tax Act, 1990, which combines in its fold authority of Officer of Inland Revenue to detect cases on grounds enumerated therein and power to pass assessment order subject to issuance of show cause notice and granting hearing to taxpayer---Such power can be exercised by Officer Inland Revenue based on tax returns filed by person or with the help of record already available with department---Adjudicatory mechanism can be set in motion once existence of conditions mentioned in S.11 of Sales Tax Act, 1990, come to the notice of Officer of Inland Revenue by looking either at sales tax returns or record already provided by taxpayer / registered person.

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

----S.25---Audit Policy, 2019---Audit---Object, scope and purpose---Main goals sought to be achieved from audit include determination of accuracy of tax return in relation to tax liability and assessment by taxpayer, to review taxpayer's records to ascertain compliance with relevant tax laws; and to promote voluntary compliance and monitoring thereof.

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

----Ss.11 & 25---Assessment and audit---Scope---Audit is a multifaceted device with a much broader purpose and is not about assessment of taxes alone---Powers available to Officer of Inland Revenue under S.11 of Sales Tax Act, 1990, are not in any way dependent on and subject to audit of taxpayer---Audit and assessment of tax under S.11 Sales Tax Act, 1990, are two separate specie of proceedings which have no correlation with each other.

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

----Ss.11, 25 & 73(3)---Assessment and audit---Initiation of proceedings--- Preconditions --- Factual controversy --- Alternate remedies---Petitioners/taxpayers were aggrieved of show cause notices issued to them on the plea that proceedings under S.11(2) of Sales Tax Act, 1990---Validity---Allegations contained in show cause notices were based on information gathered from audited accounts and sales tax returns filed by petitioners---Allegations related to disposal of fixed assets by petitioners without payment of sales tax and claiming of inadmissible input tax against purchase made from inactive / de-registered suppliers, details whereof were mentioned in show-cause notice---Excess input tax claimed on insurance, failure to deposit sales tax on advances from customs, suppression of sales tax by way of export declaration, suppression of sales and violation of S.73(3) of Sales Tax Act, 1990, were also alleged in show-cause notice---Allegations contained in show-cause notice fell within the parameters of S.11(2) of Sales Tax Act, 1990---High Court declined to interfere in the matter as there was no jurisdictional error in show cause notices issued to petitioners and factual allegations contained therein required to be responded to by petitioners---Any adjudication by Officer of Inland Revenue, if adversely affecting rights of petitioners, could be challenged in the manner before forums provided under Sales Tax Act, 1990---Constitutional petition was dismissed in circumstances.

Taj International (Pvt.) Limited and others v. Federal Board of Revenue and others 2014 PTD 1807; Messrs Lahore Electric Supply Company Limited v. The Federal Board of Revenue 2015 PTD 1; The Federal Board of Revenue and others v. Messrs Chenone Stores Limited 2018 PTD 208; Irshads Ahmed Sheikh v. The State 2000 SCMR 814 and S. Muhammad Din & Sons Limited v. Assistant Director, Labour Welfare (Conciliation) Lahore Region and others PLD 1968 Lah. 1012 rel.

Hashim Aslam Butt for Petitioner (in W.P. No.50189 of 2019).

Irtaza Ali Naqvi for Petitioner (in W.P. No.55663 of 2020).

Muhammad Imran Moin for Petitioner (in W.P. No.53626 of 2020).

Azmat Hayat Khan Lodhi, Assistant Attorney General for Pakistan for Respondent No.1.

Mrs. Kausar Parveen for Respondents Nos.2 to 4 (in W.P.No.50189 of 2019).

Syed Zain ul Abedien Bukhari for Respondents Nos.2 to 4 (in W.Ps. Nos.55663 and 53626 of 2020).

2022 P T D 809

[Lahore High Court]

Before Muhammad Sajid Mehmood Sethi and Abid Hussain Chattha, JJ

COMMISSIONER OF INCOME TAX LEGAL DIVISION RTO, LAHORE

Versus

Messrs MECO (PVT.) LTD. LAHORE

P.T.R. No.708 of 2008, decided on 9th June, 2021.

Income Tax Ordinance (XXXI of 1979)[Since repealed]---

----S.64---Limitation for assessment---Scope---Question before High Court was whether time limitation for an assessment also included the time consumed in service of order, whereas S. 64 of the Income Tax Ordinance, 1979, determined the time limitation for an assessment only---Held, that a decision could not be said to have taken place as and when its hearing had concluded---Necessary that an adjudicatory decision be declared and duly communicated to the parties---Date of service of order would be considered to be the date of decision---Reference was decided against the department and in favour of the taxpayer.

Messrs Mujahid Soap and Chemical Industries (Pvt.) Ltd. v. Customs Appellate Tribunal, Bench-I, Islamabad and others 2019 SCMR 1735 = 2019 PTD 1961 foll.

Shahid Sarwar Chahil for Applicant-department.

2022 P T D 852

[Lahore High Court (Rawalpindi Bench)]

Before Abid Hussain Chattha, J

ABDUL HAMEED

Versus

PROVINCE OF THE PUNJAB and 7 others

Writ Petition No.4488 of 2021/BWP, heard on 30th September, 2021.

(a) Punjab Finance Act (XLI of 2012)---

----S.6 [since omitted]---Punjab Finance Act (VI of 2010), S.6 [since omitted]---Constitution of Pakistan, Arts.4, 10-A & 25---Right of individuals to be dealt in accordance with law---Right to fair trial---Equality of citizens---Recovery of Capital Value Tax (CVT)---Due process---Condemned unheard---Scope---Petitioners were aggrieved of issuance of notices by Sub-Registrar for payment of CVT which could not be collected in full at the time of registration of documents---Validity---Impugned notice(s) seeking payment of deficiency of the CVT were not sustainable in the eyes of law for the reason that the same had been issued without providing a right of personal hearing to the petitioner(s), without determination of the amount due mentioned therein as stipulated under the law and without considering the exemptions contained in the applicable law---Impugned notice(s) were illegal and of no legal effect as the same had been issued without lawful authority and in violation of due process of law---Fresh proceedings could be initiated against the petitioner(s) for the recovery of deficient amount of the CVT in accordance with law provided there was a valid assessment order---Constitutional petitions were allowed.

(b) Interpretation of statutes---

----Taxing statute---Amendments---Scope---Procedural amendments providing a machinery to collect and recover a tax through due process are given retrospective effect, especially when they are beneficial to the taxpayer.

Faisalabad Electric Supply Company Ltd. (FESCO) v. Federation of Pakistan through Secretary Finance, Islamabad and others 2019 PTD 1780; Commissioner Inland Revenue Zone-II, Regional Tax Office, Multan v. Mrs. Ambreen Fawad C/o Pak Arab Fertilizers Limited, Multan PLD 2014 Lah. 72; The Commissioner of Income Tax, Central Zone B, Karachi v. M/s Asbestos Cement Industries Limited, Karachi 1993 SCMR 1276 and Messrs Leather Connections (Pvt.) Limited through its Chief Executive v. Central Board of Revenue, Government of Pakistan, Islamabad through Chairman and 2 others 2000 PTD 3369 ref.

(c) Constitution of Pakistan---

----Arts. 4, 10-A & 25---Right of individuals to be dealt in accordance with law---Right to fair trial---Equality of citizens---Scope---Absence of due process offends Arts. 4, 10-A and 25 of the Constitution.

Faisalabad Electric Supply Company Ltd. (FESCO) v. Federation of Pakistan through Secretary Finance, Islamabad and others 2019 PTD 1780; Commissioner Inland Revenue Zone-II, Regional Tax Office, Multan v. Mrs. Ambreen Fawad C/o Pak Arab Fertilizers Limited, Multan (PLD 2014 Lah. 72; The Commissioner of Income Tax, Central Zone B, Karachi v. M/s Asbestos Cement Industries Limited, Karachi 1993 SCMR 1276 and Messrs Leather Connections (Pvt.) Limited through its Chief Executive v. Central Board of Revenue, Government of Pakistan, Islamabad through Chairman and 2 others 2000 PTD 3369 ref.

Mushtaq Musaddiq for Petitioner (in W.P. No. 5316 of 2021 / BWP).

M. Abdul Rasheed Rashid for Petitioner (in W. P. No. 4703 / 2021).

Malik Munir Ahmad Waran for Petitioners (in W. Ps. Nos. 7546 and 7557 of 2021 / BWP).

Muhammad Asif Mehmood Pirzada for Petitionerw (in W.Ps. Nos. 1240, 1241, 1242, 1243, 1244, 1245, 1246 and 4300 of 2021/BWP).

Imran Pasha for Petitioners (in W.Ps. Nos. 5016, 4798, 6260 and 4815 of 2021/BWP).

Mian Muhammad Azhar for Petitioners (in W.Ps. Nos. 5015, 4964 and 4965 of 2021 / BWP).

Mansoor Mooin and Malik M. Hafeez for Petitioners (in W.P. No. 5015 of 2021 / BWP).

Rao Nasir Mehmood for Petitioner (in W.P. No. 5005 of 2021 / BWP).

Zeeshan Ali for Petitioner (in W.Ps. Nos. 4252 and 5099 of 2021 / BWP).

Hassan Mehmood Ch. for Petitioner (in W.Ps. Nos. 5275, 1246, 4254 and 4253 of 2021 / BWP).

Muhammad Uzair Qayyum and Hafiz Muhammad Abdul Qayyum for Petitioner (in W. P. No. 3103 of 2021 / BWP).

Syed Mudassir Hussain Naqvi and Muhammad Farooq, for Petitioner (in W.Ps. Nos. 5406, 5508 and 5407 of 2021 / BWP).

Tariq Mahmood Khan, Advocate in W.P. No. 951 of 2021 / BWP).

Chaudhary Shahid Mehmood, Assistant Advocate General along with Inspector of Stamps, Board of Revenue, Muhammad Saleem Akhtar and Muhammad Shahid Riaz, representatives of the Respondents

Mehwish Mahmood, Research Officer.

2022 P T D 893

[Lahore High Court]

Before Shahid Jamil Khan and Asim Hafeez, JJ

COMMISSIONER INLAND REVENUE, ZONE-VII, REGIONAL TAX OFFICE-II, LAHORE

Versus

Messrs TECHLOGIX PAKISTAN (PVT.) LTD.

P.T.R. No.200 of 2013, heard on 9th November, 2021.

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

----Ss.113(3)(b), 133(1), 153(6) & first proviso---Payments for goods and services---Maximum tax---Scope--- Dispute was with regard to applicability of proviso added to S.153(6) of Income Tax Ordinance, 2001---Appellate Tribunal Inland Revenue set aside orders passed by two forums below---Validity---Turnover, in terms of re-enacted S.113(3)(b) of Income Tax Ordinance, 2001, meant gross fees for rendering of services other than those covered by final discharge of tax liability, for which tax was separately paid or payable---Insertion of third proviso, in the wake of re-enacted S.113 of Income Tax Ordinance, 2001, was unnecessary---With insertion of sub-clause (iii) to second proviso, tax deducted on transactions covered under S.153(1)(b) of Income Tax Ordinance, 2001, was out of the ambit of Final Tax Regime (FTR) and was classified as income under Normal Tax Regime (NTR)--- Exclusion from ambit of FTR otherwise brought income under NTR, which was liable to minimum tax, provided conditions in S.113 of Income Tax Ordinance, 2001 were met---No express or implied repeal of first proviso to S.153 of Income Tax Ordinance, 2001, which exclusively dealt with the companies and third proviso to sub-clause (iii) to second proviso covered person(s), except the companies---Reference was disposed of accordingly.

(b) Interpretation of statutes---

----Harmonious/conjoint reading---Effect---Such reading is imperative, to avoid redundancy or superfluousness.

(c) Interpretation of statutes---

----Circulars / instructions---Status---Circulars / instructions issued cannot be construed or extended status superior to text of the law.

Imran Rasool for Applicant.

Respondent by:

Sarfaraz Ahmad Cheema, Liaquat Ali Chaudhry, M. Shahid Usman, M. Naeem Munawar, Raja Sikandar Khan, Saba Saeed and Salman Zaheer Khan for applicant(s) department in connected reference applications.

Momin Sultan, Assistant Attorney-General.

Shahbaz Butt, Khurram Shahbaz Butt, Muhammad Ahsan, M. Usman Zia and Asad Abbas Raza for taxpayer.

Zohaib Ali Sindhu, Javed Akhtar, Asad Hussain, Azeem Ullah Virk, Ch. Qamar Zaman, Zahid Atiq, Malik Nadir Ali Sherazi, Muhammad Nouman Shams Qazi and Ch. Zeshan Afzaal Hashmi for taxpayers in the connected applications.

2022 P T D 910

[Lahore High Court]

Before Jawad Hassan and Muzamil Akhtar Shabir, JJ

COMMISSIONER INLAND REVENUE LARGE TAXPAYERS UNIT, LEGAL DIVISION, LAHORE

Versus

NEWAGE CABLES (PVT.) LTD. LAHORE

P.T.R. No.551 of 2010, heard on 25th October, 2021.

Income Tax Ordinance (XLIX of 2001)---

----Ss.122 & 153(7)(iv)---Customs General Order No.11/2007, dated 28-8-2007---Amendment of assessment---"Manufacturer"---Meanings---Failure to issue of show cause notice---Scope---Question before High Court was whether business of respondent regarding slitting/cutting of copper cathode and nickel cathode plates fell within the category of manufacturing---Validity---"Manufacturer" meant a person who was engaged in process of assembling, mixing, cutting or preparation of goods in any other manner---Customs General Order No. 11/2007 had also clarified that copper cathode cut to pieces was a manufacturing process---Issuance of show-cause notice to the taxpayers was mandatory as the word "shall" was used in S. 122(9) of the Income Tax Ordinance, 2001---Department despite availing opportunity had not produced copy of show-cause notice purportedly sent to the taxpayer---Reference was dismissed.

Collector of Central Excise and Sales Tax (Central), Karachi and another 2001 PTD 3945; Messrs Central Insurance Co. and others v. The Central Board of Revenue, Islamabad and others 1993 SCMR 1232 and Zila Council Jehlum through District Coordination Officer v. Messrs Pakistan Tobacco Company (Pvt.) Ltd. and others PLD 2016 SC 398 distinguished.

Messrs Army Welfare Sugar Mills Ltd. v. Federation of Pakistan and others 1992 SCMR 1652; Commissioner Income Tax v. Shahnawaz Ltd. and others 1993 SCMR 73; Commissioner Inland Revenue Zone-II, Regional Tax Office, Multan v. Mrs. Ambreen Fawad Co. Pak Arab Fertilizers Limited, Multan 2014 PTD 320; China Harbour Engineering Company Limited v. Federation of Pakistan through Secretary, Chairman and others 2016 PTD Sindh 427 and Muhammad Sadiq v. Inspector-General of Police Lahore and others 2017 SCMR 1880 ref.

Liaqat Ali Chaudhry, Advocate Supreme Court for Petitioner.

Barrister Khawaja Ahmad Tariq Rahim, Senior Advocate Supreme Court Hissam Tariq Rahim and Hashim Tariq Rahim for Respondents.

2022 P T D 951

[Lahore High Court]

Before Shahid Jamil Khan and Asim Hafeez, JJ

COMMISSIONER OF INCOME TAX

Versus

Messrs GRAYS LEASING LTD.

P.T.R. No.354 of 2008, decided on 12th October, 2021.

Income Tax Ordinance (XLIX of 2001)---

----Ss.133(1) & 161---Income Tax Ordinance (XXXI of 1979), S.12(19)---Lease rental income---Scope---Dispute was with regard to assessment of lease rental income under S.12(19) of Income Tax Ordinance, 1979 on actual receipt basis and not on accrual basis---Validity---Assessee could not claim depreciation, initial and normal and simultaneously seek exclusion of receivable rentals from the ambit of deemed income---Lease rentals under S.12(19) of Income Tax Ordinance, 1979, were received and receivables and were to be deemed income of assessee to be accounted for while submitting return of income---High Court set aside judgment passed by Appellate Tribunal Inland Revenue and matter was remanded for decision afresh by the Tribunal---Reference was allowed, in circumstances.

Commissioner of Income Tax v. Grays Leasing Ltd., Lahore 2020 PTD 153 ref.

Mian Yousaf Umer for Applicant.

2022 P T D 978

[Lahore High Court]

Before Muhammad Sajid Mehmood Sethi and Asim Hafeez, JJ

COMMISSIONER INLAND REVENUE, CORPORATE ZONE, REGIONAL TAX OFFICE, FAISALABAD

Versus

Messrs NIAGRA MILLS (PVT.) LTD.

I.T.R. No.34199 of 2019, decided on 24th January, 2022.

Income Tax Ordinance (XLIX of 2001)---

----Ss.115(4), 122(5A), 133(1)---Altering/amending assessment order---Commissioner income tax---Jurisdiction---Validity---Assessment order based on statement of income furnished under S.115(4) of Income Tax Ordinance, 2001, could be altered / amended by Commissioner under S. 122 of Income Tax Ordinance, 2001---Such exercise of jurisdiction under S.122 of Income Tax Ordinance, 2001, could not be construed to offend protections and privileges otherwise extended to income, subject to final tax under the provisions of Income Tax Ordinance, 2001---Decision of Appellate Tribunal Inland Revenue to deny jurisdiction otherwise conferred on Commissioner under S.122 of Income Tax Ordinance, with respect to ascertainment of identity / character of income was illegal and contrary to mandate of the provisions under reference--- Proceedings under S.122 (5A) of Income Tax Ordinance, 2001, could not be initiated against taxpayer which furnished assessment by way of statement under S.115(4) of Income Tax Ordinance, 2001---High Court set aside judgment passed by Appellate Tribunal Inland Revenue and matter was remanded for decision afresh by the Tribunal---Reference was allowed, in circumstances.

Liaqat Ali Ch. for Applicant-Department.

2022 P T D 1019

[Lahore High Court]

Before Shahid Jamil Khan and Asim Hafeez, JJ

COMMISSIONER INLAND REVENUE, ZONE-II, REGIONAL TAX OFFICE, LAHORE

Versus

Messrs DAEWOO PAKISTAN MOTORWAY SERVICES (PVT.) LTD.

P.T.R. No.313 of 2015, heard on 7th October, 2021.

Income Tax Ordinance (XLIX of 2001)---

----Ss.113 & 133(1)---Final Tax Return---Turnover---Dispute was with regard final discharge of liability over turnover---Validity---Turnover excluded tax paid or payable as final discharge of tax liability---Explanation added through Finance Act, 2012 replicated exclusion of deemed income assessed as final discharge of tax liability as envisaged under S.113(3) of Income Tax Ordinance, 2001---Appellate Tribunal Inland Revenue overlooked definition of 'turnover' and misconstrued S.113(3) of Income Tax Ordinance, 2001---Income qualified under Final Tax Return did not form part of turnover, therefore, the same was not covered under minimum tax regime provided under S.113 of Income Tax Ordinance, 2001---Minimum tax regime established under S.113 of Income Tax Ordinance, 2001 prescribed mechanism for computation of minimum tax based on the value of turnover subject to conditions provided---Determination by Appellate Tribunal Inland Revenue that higher of the two taxes- either minimum tax under S.113 of Income Tax Ordinance, 2001 or final tax under Final Tax Return- could be levied was erroneous and contrary to the spirit of minimum tax regime defined under S.113 of Income Tax Ordinance, 2001---High Court set aside judgment passed by Appellate Tribunal Inland Revenue and matter was remanded for decision a fresh by the Tribunal---Reference was allowed, in circumstances.

Commissioner of Income Tax Legal Division, Lahore and others v. Khurshid Ahmad and others PLD 2016 SC 545 ref.

Ms. Foziya Bakhsh for Applicant.

Kh. Muhammad Saeed for Respondent.

2022 P T D 1035

[Lahore High Court]

Before Muhammad Sajid Mehmood Sethi and Asim Hafeez, JJ

COMMISSIONER INLAND REVENUE

Versus

TOYOTA WALTON MOTORS and others

P.T.R. No.268 of 2014, decided on 27th January, 2022.

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

----S.114 (6) & (6A) [as amended through Finance Act, 2009 & Finance Act, 2010]---Revised return, filing of--- Amendment---Scope---Amendments made in S.114 (6) & (6A) of Income Tax Ordinance, 2001, are not applied retrospectively but prospectively.

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

----Ss.114(6) (6A), 122 (5A)(9) & 133 (1)---Reference---Revised return, filing of---Amendment of assessment---Dispute was with regard to filing of revised return which was rejected by authorities---Validity---When revised return was furnished it was in conformity with S.114 (6A) of Income Tax Ordinance, 2001, and pre-conditions imposed thereunder, which were already available on statute book and were attracted to revised tax return furnished---Appellate Tribunal Inland Revenue overlooked cause and effect of amendment introduced through Finance Act 2010, through adding subsection (6A) of S.114 of Income Tax Ordinance, 2001---No determination was made by Appellate Tribunal Inland Revenue regarding effect of amended subsection (6A) of S.114 of Income Tax Ordinance, 2001, and consequence on non-fulfilment of pre-condition before filing of revised return---Notice under S.122(9) of Income Tax Ordinance, 2001, was already issued to taxpayer before amendment and taxpayer took two years to furnish revised return---Appellate Tribunal Inland Revenue also failed to appreciate the record, factual statements / assertions of taxpayer made before Commissioner Inland Revenue while submitting reply to another notice while determining validity of revised return---High Court answered both the questions in negative, set aside judgment passed by Appellate Tribunal Inland Revenue and remanded the matter to consider and decide question of appropriation of expenses under final and normal tax regime afresh---Reference was allowed accordingly.

Sarfraz Ahmad Cheema assisted by Zeeshan Ghani Sulehria for Applicant.

2022 P T D 1069

[Lahore High Court]

Before Shahid Jamil Khan, J

Messrs ASIAN FOOD INDUSTRIES LIMITED through General Manager Finance and others

Versus

FEDERAL BOARD OF REVENUE through Chairman and 4 others

Writ Petition No.39650 of 2019, heard on 8th March, 2022.

Income Tax Ordinance (XLIX of 2001)---

----Ss.114, 120, 122, 174 (3) & 177---Sales Tax Act (VII of 1990), Ss.11 & 25---Constitution of Pakistan, Art. 199---Constitutional petition---Change of opinion---Scope---Dispute was with regard to concept of "Change of opinion" as show cause notice issued under S.65 of Income Tax Ordinance, 1979 (since repealed) was not applicable for a show-cause notice under S.122 of Income Tax Ordinance, 2001 and S.11 of Sales Tax Act, 1990---Validity---No occasion for 'change of opinion' could arise under scheme of existing Income Tax Ordinance, 2001, as return filed under S.114 of Income Tax Ordinance, 2001, was taken to be an assessment order under S.120 Income Tax Ordinance, 2001, for all purposes, without application of mind by any officer/authority---After filing return, record supporting declarations in return, was to be kept by taxpayer for six years under S.174(3) of Income Tax Ordinance, 2001, which could be called for audit under S.177 of Income Tax Ordinance, 2001, to verify declarations in the return and could ensure compliance of different provisions under Income Tax Ordinance 2001---Person registered under Sales Tax Act, 1990 was obliged to make declaration of taxable supplies in tax period and was authorized to adjust input tax paid from amount due as output tax, while filing the return---Such declarations were subject to audit under S.25 of Sales Tax Act, 1990 and consequent proceedings under S.11 of Sales Tax Act, 1990--- Provisions of S.11 of Sales Tax Act, 1990, could be invoked in absence of audit also, if tax due on supplies was not paid, short paid, wrongly adjusted or refunded etc., which in the matter of petitioners, assertively, was non-payment of further tax--- Taxation Officer applied its conscious mind for the first time on the issue of charging further tax under facts and circumstances of the case, therefore, law on 'change of opinion' was inapplicable---High Court declined to interfere in impugned show-cause notice in question---Constitutional petition was dismissed, in circumstances.

Edulji Dinshaw Limited v. Income Tax Officer PLD 1990 SC 399; Northern Power Generation Company Limited v. Federation of Pakistan and others 2015 PTD 2052 and Kamalia Sugar Mills Ltd. v. Customs Central Excise and Sales Tax Appellate Tribunal and others 2016 PTD 2183 ref.

Imtiaz Rashid Siddiqui assisted by Barrister Shehryar Kasuri and Raza Imtiaz Siddiqui for Petitioners.

Syed Zain-ul-Abidin Bokhari for Respondent department.

2022 P T D 1103

[Lahore High Court]

Before Jawad Hassan and Muzamil Akhtar Shabir, JJ

Messrs PRIX PHARMACEUTICA (PVT.) LTD.

Versus

APPELLATE TRIBUNAL REVENUE AUTHORITY and others

STR (PRA) No.62678 of 2021, decided on 11th October, 2021.

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

----S.67-A---Limitation Act (IX of 1908), S. 5---Qanun-e-Shahadat (10 of 1984), Art.129(e)---Reference to the High Court---Limitation---Condonation of delay---Sufficient cause---Presumption as to judicial proceedings---Scope---Applicant assailed order passed by Appellate Tribunal after 691 days and claimed that the impugned order was not communicated by the Appellate Tribunal---Held, that applicant had not contended that the order was reserved or was kept in waiting for orders nor had the applicant made any effort to ascertain as to whether the order was passed by the Appellate Tribunal---No document was produced by the applicant to show that the copy of impugned order was not sent to it---Presumption of correctness was attached to the judicial proceedings in terms of Art. 129(e) of the Qanun-e-Shahadat, 1984 and in order to displace the same, some evidence was required to be produced by the applicant along with application for condonation so as to make out a case for condonation of delay---Delay in filing proceedings could not be condoned lightly unless it was shown that there were sufficient reasons for causing the delay---Law of limitation reduced an effect of extinguishment of a right of party when significant lapses occurred and when no sufficient cause of such lapses, delay or time-barred action was shown by defaulting party, the opposite party was entitled to a right accrued by such lapses---Negligence did not constitute sufficient cause to condone delay---Party seeking advantage of S. 5 of Limitation Act, 1908 must satisfy the Court that it had not been negligent and had been pursuing the case with due diligence and care---Reference application was time barred and the application for condonation of delay had not disclosed any cogent, convincing and justified reason for condonation of delay---Reference application was dismissed.

(b) Limitation Act (IX of 1908)---

----S.5---Limitation---Condonation of delay---Scope---Each and every day's delay is to be satisfactorily explained.

Abdullah Akhtar Butt for Applicant.

Sheikh Nadeem Anwaar, Assistant Attorney General.

Sardar Qasim Hassan Khan for Respondent-department.

2022 P T D 1123

[Lahore High Court]

Before Shahid Jamil Khan, J

FEDERAL BOARD OF REVENUE

Versus

FEDERATION OF PAKISTAN and others

Review Petition No.70644 of 2021 in Writ Petition No.63124 of 2021, heard on 30th November, 2021.

Income Tax Ordinance (XLIX of 2001)---

----S.122---Civil Procedure Code (V of 1908), S.114 & O.XLVII---Review of judgment---Procedure---Ignorance of law and fact---Authorities sought review of judgment passed by High Court on the basis of conceding statement made in favour of taxpayer---Validity---Power to review is available in Constitutional jurisdiction, as provisions of Civil Procedure Code, 1908, are applicable--- One of the grounds for review under S.114, C.P.C. read with O.XLVII, C.P.C. is mistake of law or fact or ignorance of a settled legal position---By conceding in favour of respondent taxpayer's interpretation, the authority comprised its right of different interpretation by invoking provision of S.122 of Income Tax Ordinance, 2001---High Court directed the authorities to provide fair opportunity of hearing to taxpayer before prescribing next return format and in case proposal was not accepted, reasons would be communicated to respondent in writing---Review application was allowed, in circumstances.

Muhammad Yar (Deceased through L.Rs. and others v. Muhammad Amin (Deceased) through L.Rs and others 2013 SCMR 464 rel.

Abdul Muqtadir Khan for Petitioner.

Chaudhry Anwar-ul-Haq Arif, Tahir Mahmood Butt, Rana Munir Hussain, Ch. Qamar-uz-Zaman, Farhan Shahzad, Muhammad Zeeshan Merchant, Mian Talat Mahmood and Kashif Akbar Bandesha for Respondent No.2.

Sarfraz Ahmad Cheema, Yahya Johar and Ashfaq Ahmad Bhullar for Respondent-department.

Monim Sultan, Assistant Attorney General for Federation of Pakistan.

Ashfaq Ahmad Tonio, Member (IT), FBR.

2022 P T D 1135

[Lahore High Court]

Before Shahid Jamil Khan and Asim Hafeez, JJ

COMMISSIONER INLAND REVENUE

Versus

SUI NORTHERN GAS PIPELINES LIMITED

P.T.R. No.314 of 2013, heard on 18th November, 2021.

Income Tax Ordinance (XLIX of 2001)---

----Ss.20 & 133---Income Tax Ordinance (XXXI of 1979), S. 23--- Oil and Gas Regulatory Authority Ordinance (XVII of 2002), S. 8 (5)---General Clauses Act (X of 1897), S.8(5), proviso---Repealed enactments---Construction and references to---Pricing for retail consumers for natural gas---Question was with regard to development surcharge as expense while computing income from business and expenditure under S.20 of Income Tax Ordinance, 2001---Validity---Proviso was placed under S.8(5) of Oil and Gas Regulatory Authority Ordinance, 2002, as a precaution because Income Tax Ordinance, 2001 had been promulgated by that time but was not enforced through notification, as required under S.1(3) of Income Tax Ordinance, 2001--- If proviso to S.8(5) of Oil and Gas Regulatory Authority Ordinance, 2002, was absent then it would have been a complete and clear for the purposes of allowance---Provision of S.8(5) of Oil and Gas Regulatory Authority Ordinance, 2002, referred to S.23 of Income Tax Ordinance, 1979 (since repealed) only for the purposes of computing profits and gains after declaring development surcharge as an allowance---Such was the case if S.20 of Income Tax Ordinance, 2001, was read instead of S.23 of Income Tax Ordinance, 1979 (since repealed), as the same was permissible under S.8 of General Clauses Act, 1897---High Court replied the question in affirmative in favour of respondent / taxpayer--- Reference was dismissed, in circumstances.

Khawaja Farooq Saeed for Applicant-department.

Chaudhary Muhammad Shakeel on behalf of Sarfraz Ahmad Cheema for Applicant (in P.T.Rs. Nos.46 of 47 of 2014).

Shahbaz Butt, assisted by Muhammad Ahsan Gujjar, Asad Abbas Raza, Muhammad Usman Zia, Mudassir Aftab Cheema, Ghulam Abbas, Kashif Akbar Bandesha, Mian Talat Mahmood, Salman Farooq and Rizwan Afzal Tarar for Respondents.

2022 P T D 1161

[Lahore High Court]

Before Muhammad Sajid Mehmood Sethi and Asim Hafeez, JJ

COMMISSIONER INLAND REVENUE LARGE TAXPAYER UNIT, LEGAL DIVISION, LAHORE

Versus

Syed BHAIS LIGHTING LIMITED

P.T.R. No.628 of 2010, decided on 7th March, 2022.

Income Tax Ordinance (XLIX of 2001)---

----Ss.133 (1) & 161---Income Tax Ordinance (XXXI of 1979), S.156---Notice, issuance of---Limitation---Dispute was with regard to applying provision of S.156 of Income Tax Ordinance, 1979, [since repealed]---Validity---Notice under S.161 of Income Tax Ordinance, 2001, could not be issued within five years or beyond the period for which taxpayer was not obliged to maintain the record---Notice in question was issued within limitation---Appellate Tribunal Inland Revenue erred in law while holding that notice was beyond limitation---High Court set aside judgment passed by Appellate Tribunal Inland Revenue and matter was remanded for decision a fresh by the Tribunal---Reference was allowed, in circumstances.

Commissioner Income Tax v. Pakistan Mobile Communication (Pvt.) Ltd. 2003 PTD 1571; Habib Bank Ltd. v. Federation of Pakistan through Secretary, Revenue Division and 5 others 2013 PTD 1659 and Commissioner Inland Revenue Zone-I, LTU v. MCB Bank Limited 2021 SCMR 1325 ref.

Ibrar Ahmad for Applicant.

2022 P T D 1180

[Lahore High Court]

Before Shahid Jamil Khan and Asim Hafeez, JJ

COMMISSIONER INLAND REVENUE

Versus

Messrs NISHAT CHUNIAN POWER LIMITED

S.T.R. No.257100 of 2018, decided on 3rd November, 2021.

Sales Tax Act (VII of 1990)---

----Ss. 8(2) & 47---Sales Tax Rules, 2006, Rr. 13(3) & 24---Input tax, apportionment---Question was with regard to adjustment of input tax on payments made against Capacity Purchase Price---Validity---Amount received on account of Capacity Purchase Price was not part of supply under R.13(3) of Sales Tax Rules, 2006---Provision of S.8(2) of Sales Tax Act, 1990, dealt with a situation where taxable and non-taxable supplies were clearly identifiable and input tax attributable to non-taxable supply was not adjustable---High Court set aside judgment passed by Appellate Tribunal Inland Revenue and remanded the matter to determine whether payments made against Capacity Purchase Price constituted a taxable or non-taxable supply and treat the input adjustment according---Reference was disposed of accordingly.

Messrs Pak Gen Power Ltd. through Senior Manager Finance v. Commissioner Inland Revenue and 4 others 2017 PTD 495 ref.

Sarfraz Ahmad Cheema for Applicant.

Waseem Ahmad Malik for Respondent.

2022 P T D 1209

[Lahore High Court]

Before Muhammad Sajid Mehmood Sethi and Abid Hussain Chattha, JJ

COMMISSIONER INLAND REVENUE

Versus

Messrs DESCON ENGINEERING LIMITED

S.T.R No.28 of 2012, heard on 8th June, 2021.

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

----S.3---Liability of purchaser of goods---Scope---Taxpayer was imposed upon a liability to pay sales tax on account of acquisition of taxable goods for construction of immovable property---Commissioner (Appeals) upheld the imposition of tax---Appellate Tribunal partly allowed the appeal filed by taxpayer---Validity---Section 3 of the Sales Tax Act, 1990, charged tax on the supplier of goods and not on the purchaser---Taxing the purchaser of goods was a flagrant violation of the charging provisions of the Sales Tax Act, 1990---Reference application was decided against the department.

Messrs Noon Sugar Mills Limited v. The Commissioner of Income-Tax, Rawalpindi PLD 1990 SC 1156 and B.P. Biscuit Factory Ltd., Karachi v. Wealth Tax Officer and another 1996 SCMR 1470 rel.

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

----Ss.3, 2(35) & 2(41)---Taxable activity---Taxable supply---Construction of immovable property---Scope---Taxpayer was imposed upon a liability to pay sales tax on account of acquisition of taxable goods for construction of immovable property---Expression "taxable supply" and "taxable activity" both operate in their own respective fields---Quantum of tax liability is determined on the basis of the value of taxable supply, but the liability to pay tax under the charging section arises only when such supply is made in furtherance of taxable activity---Taxable activity defined in the Act means any activity involving in whole or in part, the supply of goods to any other person---Definition of "goods" in subsection (12) of S. 2, construction of immovable property cannot be treated as "goods" by any stretch of imagination---Supply of material consumed in the course of execution of construction is not made in furtherance of a taxable activity, therefore, taxpayer cannot be held liable to pay sales tax---Reference application was decided against the department.

Commissioner of Sales Tax and others v. Hunza Central Asian Textile and Woolen Mills Ltd. and others 1999 SCMR 526; Sheikhoo Sugar Mills Ltd. and others v. Government of Pakistan and others 2001 PTD 2097; Collector of Customs, Central Excise and Sales Tax and others v. Mahboob Industries (Pvt.) Ltd. and others 2006 PTD 730 and Collector of Sales Tax and Central Excise, Lahore v. Water and Power Development Authority and others 2007 SCMR 1736 distinguished.

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

----Ss.3, 2(35) & 2(41)---Sales tax---Taxable activity---Taxable supply---Construction of immovable property---Scope---Building material consumed in the construction of immovable property is neither taxable supply nor in furtherance of taxable activity, hence, beyond the scope of sales tax under the Sales Tax Act, 1990---Construction of immovable property is not taxable activity, which is essential ingredient to charge tax---Consumption of material in an activity, which is not taxable under the Sales Tax Act, 1990, therefore, is not chargeable to sales tax---No construction of immovable property is possible without building material---Consumption of building material by a person, being non-taxable activity, falls out of the supply chain under S. 3.

Messrs Sarwar & Co. (Pvt.) Ltd. v. Customs, Central Excise and Sales Tax, Appellate Tribunal, Lahore and another 2006 PTD 162 rel.

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

----S.3---Construction of immovable property---Scope---Contract of construction of immovable property is indivisible and involves no sale of goods---In such a contract, goods pass on as accession to immovable property and no supply of goods is involved.

International Body Builders v. Sales Tax Officer, Lahore and 2 others 1979 PTD 488 rel.

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

----S.3---Constitution of Pakistan, Art.142, Fourth Sched., Part I, Entry No. 49---Sales tax on services---Sales tax on immovable property---Scope---Taxable activity for the purpose of the Federation is confined to activity in respect of goods and cannot spill over to supply of services or immovable property because taxable supply and taxably activity in respect of both subjects of services and immovable property fall within the exclusive jurisdiction of the Provinces---Since both the subjects are not included in the taxing power of the Federation, they cannot be indirectly taxed by means of interpretation.

State and another v. Sajjad Hussain and others 1993 SCMR 1523 ref.

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

----Ss.3, 2(35) & 2(41)---Taxable activity---Taxable supply---Scope---Taxable supply and taxable activity must co-exist to attract the charge of sales tax under the Act---Absence of either of the ingredients excludes the other from purview of charging provision.

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

----S.2(41)---Taxable supply---Scope---Section 2(41) of the Sales Tax Act, 1990 specifies the persons to which the supply of taxable goods is to be considered as taxable supply---Such persons are importers, manufacturers, wholesalers (including dealers), distributors or retailers.

(h) Interpretation of statutes---

----Courts while construing the provisions of statute should made efforts that the interpretation of the relevant provisions should be in consonance with the provisions of Constitution and the general norms of human rights---All the statutory provisions have to be interpreted harmoniously and consistently with the constitutional provisions, the paramount law, already occupying the field.

Messrs Noon Sugar Mills Limited v. The Commissioner of Income-Tax, Rawalpindi PLD 1990 SC 1156; B.P. Biscuit Factory Ltd., Karachi v. Wealth Tax Officer and another 1996 SCMR 1470; Messrs Sarwar & Co. (Pvt.) Ltd. v. Customs, Central Excise and Sales Tax, Appellate Tribunal, Lahore and another 2006 PTD 162; State and another v. Sajjad Hussain and others 1993 SCMR 1523; International Body Builders v. Sales Tax Officer, Lahore and 2 others 1979 PTD 488; Ghulam Mustafa Jatoi, Karachi v. Commissioner of Income Tax, Central Zone-B, Karachi 2006 PTD 1647 and Caretex v. Collector Sales Tax and Federal Excise and others 2013 PTD 1536 ref.

(i) Interpretation of statutes---

----Taxing statute---Scope---All charges upon the subject must be imposed by clear and unambiguous language, because in some degree they operate as penalties---Subject is not to be taxed unless the language of the statute clearly imposes the obligation and language must not be strained in order to tax a transaction which, had the legislature thought of it, would have been covered by appropriate words.

B.P. Biscuit Factory Ltd., Karachi v. Wealth Tax Officer and another 1996 SCMR 1470 foll.

Sarfraz Ahmad Cheema and Barrister Ameer Abbas Ali Khan, A.A.G. on Court's call for Applicant.

Mian Ashiq Hussain and Muhammad Arshad for Respondent.

2022 P T D 1384

[Lahore High Court]

Before Shahid Karim, J

CRESCENT EDUCATIONAL TRUST through Secretary

Versus

REGISTRAR OF TRADE UNIONS LAHORE and another

Writ Petition No.23007 of 2015, decided on 18th February, 2022.

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

---S.100C---Punjab Industrial Relations Act (XIX of 2010), Ss.24 & 1(3)(h)---Collective Bargaining Agent---Educational institution---'Commercial basis', meaning of---Scope---Petitioner/Establishment was aggrieved of registration of private respondent as a Collective Bargaining Agent by the Registrar of Trade Unions---Petitioner was a charitable educational institution which was a registered trust---Major source of income of the petitioner was donations from trustees and surplus of income and funds over expenditures of the trust were solely used for the promotion of purposes and objects specified in the trust deed---No dividend/bonus from surplus funds of the trust could be given to any members of the trust or his relatives---Petitioner (Institution) was also granted an exemption certificate in terms of S.100C of the Income Tax Ordinance, 2001---Petitioner was issued a NPO (Non Profitable Organization) certificate by a NPO Certification Agency---Registrar was swayed by the fact that the trust was making profits as also that the infrastructure built in the school had not been developed out of the donations made by the trustees but was being made from the fee charged from the majority of the students---Only question was whether the funds were being expended on a commercial basis and in the absence of any evidence, it was unlawful to conclude that the petitioner trust was being run on commercial basis---Petition was allowed, impugned order as well as certificate of Collective Bargaining Agent were declared to have been issued without lawful authority and of no legal effect.

(b) Punjab Industrial Relations Act (XIX of 2010)---

----S.1(3)(h)---Educational institution---Scope---Institutions providing education are exempt from applicability of Punjab Industrial Relations Act, 2010, under S. 1(3)(h) but this clause excludes institutions which are being run on commercial basis.

(c) Constitution of Pakistan---

----Art.199---Punjab Industrial Relations Act (XIX of 2010), Ss.24 & 1(3)(h)---Constitutional petition---Maintainability---Collective Bargaining Agent, certification of---Locus standi---Scope---Petitioner / Establishment was aggrieved of registration of respondent as a Collective Bargaining Agent by the Registrar of Trade Unions---Contention of respondent was that an employer did not have standing to challenge the registration of trade union---Validity---Challenge here was not entirely to the registration of trade union but to a determination made by the Registrar---Petitioner was a trust and was directly aggrieved of the determination of the Registrar, in that, it concluded that it was being run and managed on commercial basis which had impacted the status of the petitioner as a charitable institution and its entitlement to benefits under various laws.

(d) Punjab Industrial Relations Act (XIX of 2010)---

----S.1(3)(h)---Expression 'Commercial basis', definition of---Scope---In the context of Punjab Industrial Relations Act, 2010, the term commercial has to be seen as connoting trade or business occupation carried on for profit---Trust imports commerce, trade or enterprise having financial profit as primary aim---Intrinsic nature of the activity of an organization and its purpose and consequence would be the determining factor---Any educational institution is bound to make profit but the real question is that profit or surplus should not enrich a trustee or his family, it must be diverted back to charitable and welfare activities.

Merriam-Webster's Dictionary of Law rel.

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

----S.100C---Tax credit for charitable organizations---Scope---One of the persons to whom the provision of S.100C, applies is a trust---Subsection (2) of S. 100C, Income Tax Ordinance, 2001, provides the category of income which is eligible for tax credit and includes income from donations, voluntary contributions and subscriptions as also income from investment in the securities of the Federal Government---Said provision pre-supposes that the income of a trust can be invested in the securities of the Federal Government and which income too is subject to tax credit---Under subsection (2)(f) of S. 100C, the eligibility of tax credit is subject to the condition that none of the assets of trust or welfare institutions confers a private benefit to the donors or family, children or author of the trust or any other person---Further a cumulative reading of subsections (1A) & (1B) of S. 100C would show that surplus funds of trust would only be taxed in case funds are not spent on charitable or welfare activities during the tax period---By subsection 2(d) of S.100C, income eligible for tax credit include income of an educational institution being run by a non-profit organization existing solely for educational purposes.

Zain Rehmat Qureshi for Petitioner.

2022 P T D 1400

[Lahore High Court]

Before Muzamil Akhtar Shabir and Muhammad Sajid Mehmood Sethi, JJ

COMMISSIONER INLAND REVENUE, LAHORE

Versus

COCA COLA PAKISTAN LIMITED, LAHORE

P.T.R. No.349 of 2010, heard on 16th June, 2022.

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

----Ss.2(54), 21(c), 67, 122(5A), 133 & 153(1)(b)---Income Tax Rules, 2002, R.13---Withholding tax, collection of---Principle---Royalty---Amended assessment order---Respondent taxpayer was manufacturer of soft drinks selling its product exclusively by chain of restaurants through their outlets---Dispute was with regard to collection of tax on amount paid in consideration for acquiring rights for exclusive sale of brands of respondent taxpayer---Validity---Consideration of acquisition of exclusive rights, by its nature, did not come within the expression of "services" as used in S.153(1)(b) of Income Tax Ordinance, 2001, rather had come within the ambit of "royalty" defined in S.2(54) of Income Tax Ordinance, 2001---Rebate was reduction against sale consideration and could not be equated with consideration for services simply for the reason that buyers of goods did not render any service to seller---Registered person, as per provisions of S.153 of Income Tax Ordinance, 2001, was only required to deduct tax at the time of making payment to a resident person etc.---When payment was not made actually, physically or practically, possibility of deduction of tax did not arise at all---Only rebate was there and not an actual payment and respondent taxpayer was entitled to deduct amount in question as an expense under S.21(c) of Income Tax Ordinance, 2001---Such was impracticable and impossible to deduct certain amount from an amount which was not paid---High Court declined to interfere in judgment passed by Customs Appellate Tribunal---Reference was dismissed accordingly.

Commissioner Inland Revenue v. Messrs Quality Textile Mills Ltd. 2013 PTD 2095; Chairman, Federal Board of Revenue, Islamabad v. Messrs Al-Technique Corporation of Pakistan Ltd. and others PLD 2017 SC 99; Young's (Private) Limited and others v. Province of Sindh and others 2019 PTD 389; Sami Pharmaceutical (Pvt.) Ltd. and others v. Province of Sindh through Chief Secretary and others 2021 PTD 731 and Commissioner Inland Revenue, Lahore v. Messrs Monnoowal Textile Mills Ltd., Lahore (2022 PTD 305 rel.

(b) Interpretation of statutes---

----Rules---Object, purpose and scope---Rules are subordinate and delegated legislation, deriving authority and legal cover from provisions of main statute and cannot override provisions of the Statute---Rules are meant to deal with details and can neither be a substitute for fundamentals of parent statue nor can add to them---Delegated legislation forms an important part of statutory law, which expounds and explains skeleton principles of parent statute in order to achieve purposes of such legislation---To determine vires of delegated legislation, High Court has to examine whether such delegated legislation was beyond the power granted by enabling legislation and whether such delegated legislation was consistent with parent statute---Rules / regulations continue to be rules subordinate to parent statute---Rules are to be treated as if contained in the statute, their true nature as subordinate legislation is not lost---Delegated legislation can only be struck down if it is directly repugnant to general purpose of the statute which authorized it or is repugnant to well established principle of statute.

Suo Motu Case No.13 of 2009 (PLD 2011 SC 619); Khawaja Ahmad Hassan v. Government of Punjab and others PLD 2004 SC 694; Suo Motu Case No.13 of 2009 (PLD 2011 SC 619); Suo Motu Case No.11 of 2011 (PLD 2014 SC 389); Muhammad Amin Muhammad Bashir Limited v. Government of Pakistan through Secretary Ministry of Finance, Central Secretariat, Islamabad and others 2015 SCMR 630; Independent Newspapers Corporation (Pvt.) Ltd. and others v. Federation of Pakistan and others PLD 2017 Lah. 289 and Rida Fatima v. Pakistan Medical Commission and others PLD 2022 Lah. 197 rel.

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

----S.133---Reference---High Court, exercise of jurisdiction---Question of law---Scope---Reference under S.133 of Income Tax Ordinance, 2001, lies before High Court on question of law only and the Court is obliged to answer the same in accordance with a rule of law---Question of law means a question as to what law is on a particular point, which provision of law is applicable to a particular factual situation and what true rule of law is on a certain matter---High Court, in reference jurisdiction, cannot either strike down a provision of law or declare it ultra vires of the Constitution---Any person desirous of a declaration of the kind can very well approach High Court in Constitutional jurisdiction---While exercising reference jurisdiction, High Court confines itself to questions framed / proposed and gives opinion in perspective of facts as found by Tribunal---Constitutionality of a particular provision is not at all required to be entered upon in such matters.

Messrs Pakistan Television Corporation Limited v. Commissioner Inland Revenue (Legal), LTU, Islamabad and others 2017 SCMR 1136; Muhammad Siddique v. The Commissioner of Income-Tax, Zone-A, Lahore 2001 PTD 1998 and Commissioner Inland Revenue, Legal Division, Regional Tax Office, Islamabad v. Messrs Pak Steel Re-Rolling Mills 2020 PTD 1252 rel.

Sarfraz Ahmed Cheema and Shakeel Ahmed, Advocates/Legal Advisors for Applicant.

Barrister Hamza Shehram Sarwar for Respondent-taxpayer.

2022 P T D 1411

[Lahore High Court (Multan Bench)]

Before Shahid Karim and Raheel Kamran, JJ

The COMMISSIONER INLAND REVENUE, MULTAN ZONE

Versus

MUHAMMAD IQBAL RIND & SONS D.G. KHAN

Income Tax Reference No.2 of 2018, decided on 1st June, 2022.

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

----Ss.122(5A) & 133 (1)---Amendment of assessment---Preconditions---Amendment of assessment under S.122(5-A) of Income Tax Ordinance, 2001 can be made only in cases where twin conditions namely, (i) Assessment Order is erroneous; and (ii) it is prejudicial to the interest of revenue, are satisfied---If one of the two pre-requisites is absent i.e. if Assessment Order is not erroneous but prejudicial to revenue or if it is erroneous but not prejudicial to revenue, recourse cannot be had to S.122(5-A) of Income Tax Ordinance, 2001 and it cannot be invoked to correct each and every type of mistake or error in Assessment Order---Incorrect assumption of facts or incorrect application of law satisfies requirement of order being 'erroneous'---Phrase 'prejudicial to interest of revenue' has to be read in conjunction with erroneous Assessment Order---Every loss of revenue as a consequence of Assessment Order cannot be treated as prejudicial to interest of revenue---When Assessment Order is based on one of the courses permissible in law and it has resulted in loss of revenue or where two views are possible and view taken in Assessment Order is the one with which Commissioner does not agree, it cannot be treated as erroneous order prejudicial to the interests of revenue, unless view taken in Assessment Order is unsustainable in law.

Galaxo Laboratories Limited v. Inspecting Assistant Commissioner of Income Tax and others 1992 PTD 932; Messrs S.N.H. Industries (Pvt.) Ltd. v. Income Tax Department and another 2004 PTD 330; Commissioner Inland Revenue, Zone-I, LTU v. MCB Bank Limited 2021 PTD 1367; Honda Atlas Cars (Pakistan) Limited v. Appellate Tribunal Customs, Excise and Sales Tax 2021 PTD 1806 and Caretex v. Collector of Sales Tax and Federal Excise 2013 PTD 1536 rel.

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

----Ss.120(1), 122(5A) (9), 133(1) & 231-A---Reference---Amendment of assessment---Calculation of cash withdrawal and tax deduction---Erroneous and prejudicial order---Proof---Authorities amended assessment order of respondent taxpayer on the plea that it was erroneous and prejudicial to the interest of revenue---Appellate authority annulled amended assessment order which was maintained by Appellate Tribunal Inland Revenue---Validity---Jurisdiction under Ss.122(5A) & (9) of Income Tax Ordinance, 2001, was assumed while treating assessment of taxpayer under S.120(1) of Income Tax Ordinance, 2001, to be erroneous---Assessment of taxpayer could not be prejudicial to the interest of revenue merely on the ground that figure of total cash withdrawal when worked back on the basis of tax deduction under S.231-A of Income Tax Ordinance, 2001, did not commensurate with declared net sales/gross profit---Assumption that such worked back figure reflected sales or gross profit of taxpayer was nothing more than a conjecture and surmise based on arithmetic calculation of Taxation Officer---High Court declined to interfere in orders passed by two forums below as it was rightly held in appeal that it was not sufficient for treating Assessment Order under S.120(1) of Income Tax Ordinance, 2001, to be erroneous in so for as prejudicial to the interest of revenue---Reference was dismissed, in circumstances.

2015 PTD 1639 distinguished.

2016 PTD 832; 115 Tax 257 and Commissioner Inland Revenue Zone Bahawalpur, Regional Tax Office, Bahawalpur v. Messrs Bashir Ahmed (Deceased) through LRs. 2021 PTD 1182 ref.

Agha Muhammad Akmal Khan and Tariq Manzoor Sial for Applicant.

Ex-parte vide order dated 8-12-2020 for Respondents.

2022 P T D 1423

[Lahore High Court (Multan Bench)]

Before Shahid Karim and Raheel Kamran, JJ

ADDITIONAL COLLECTOR, MODEL CUSTOMS COLLECTORATE, MULTAN

Versus

Messrs RELIANCE COMMODITIES (PVT.) LTD. and others

Custom Reference No.12 of 2016, decided on 25th May, 2022.

Customs Act (IV of 1969)---

----Ss. 32 & 196---Customs Rules, 2001, Rr. 302(1)(b) & 307-E(1)---Constitution of Pakistan, Art.4---Recovery of duty and taxes---Show-cause notice, issuance of---Limitation---Protection of law---Dispute was with regard to show-cause notice issued on the basis of audit report for recovery of duty and taxes on remission for export Duty and Tax Remission for Exports (DTRE) Scheme---Customs Appellate Tribunal held such notice to be barred by limitation---Plea raised by authorities was that bar of limitation was not applicable---Validity---Adjudication of liability and limitation for recovery of duty was provided by relevant statutory regime and the same was not governed by R.307-E of Customs Rules, 2001 and the same could not be enlarged in disregard of provisions of S.32 of Customs Act, 1969---Clarification issued by Federal Board of Revenue vide letter dated 16-07-2014 on the issue of SED did not regulate period of limitation for demand of such duty---Provision of S.32(3A) of Customs Act, 1969 contemplated proceedings on the basis of discovery as a result of audit and limitation prescribed therein stipulated relevant date for the purpose of recovery to be the date of payment of duty or charge instead of any date after audit---Limitation of three years was applicable in law---To enjoy protection of law and to be treated in accordance with law was inalienable right of taxpayer which right was guaranteed by Art.4 of the Constitution---No inherent power vested in the Executive to take any action against taxpayer save in accordance with law---High Court declined to interfere in order passed by Customs Appellate Tribunal---Reference was dismissed, in circumstances.

Collector of Customs (Preventive) Karachi v. Pakistan State Oil 2011 SCMR 1270; Syed Mukhtar Hussain Shah v. Mst. Saba Imtiaz and others PLD 2011 SC 260; Commissioner of Sales Tax, Gujrat v. Messrs Union Medical Agency AIR 1981 SC 1; Messrs Pakistan Television Corporation Limited v. Commissioner Inland Revenue (Legal), LTU, Islamabad and others 2017 PTD 1372; Collector of Sales Tax and Central Excise (Enforcement) v. Messrs Mega Tech (Pvt.) Limited 2005 PTD 1933 and Messrs Master Foam (Pvt.) Limited v. Government of Pakistan 2005 PTD 1537 ref.

Agha Muhammad Akmal Khan and Tariq Manzoor Sial for Petitioner.

Jahanzaib Khan for Respondent No.1.

2022 P T D 1433

[Lahore High Court]

Before Jawad Hassan and Muzamil Akhtar Shabir, JJ

COMMISSIONER INLAND REVENUE

Versus

Messrs MASTER TILES AND CERAMIC INDUSTRIES, LTD.

S.T.R. No.67 of 2012, decided on 18th October, 2021.

Sales Tax Act (VII of 1990)---

----S.34A---SRO No.648(I)/2011, dated: 25-06-2011---Exemption from penalty and default surcharge---Retrospective effect---Scope---Taxpayer having paid sales tax and SED (Special Excise Duty) due from it is as much as entitled to the amnesty contemplated in SRO No.648(I)/2011, dated: 25-06-2011, as any other taxpayer who pays the due taxes after issuance of the SRO No.648(I)/2011, dated: 25-06-2011.

Shahzad Ahmad Cheema for Applicant.

2022 P T D 1441

[Lahore High Court]

Before Jawad Hassan, J

ASAD ARFEEN

Versus

PROVINCE OF PUNJAB and others

Writ Petition No.39849 of 2021, decided on 22nd June, 2021.

(a) Punjab Finance Act (XVII of 2014)---

----S.8---Punjab Luxury House Tax Rules, 2014, R.4---Luxury house tax---Duties and powers of assessing authority---Scope---Petitioner invoked constitutional jurisdiction of High Court against the recovery notice for payment of luxury house tax---Validity---Luxury tax had been imposed on the petitioner by the department while ignoring the procedure laid down under S. 8 of Punjab Finance Act, 2014 and R. 4 of Punjab Luxury House Tax Rules, 2014---Constitutional petition was disposed of with a direction to the department to entertain the objections of the petitioner and in the meanwhile, no coercive measures for recovery were to be taken against the petitioner.

Muhammad Khalid Qureshi v. Province of Punjab through Secretary, Excise and Taxation Department Lahore and another 2017 CLC 523 and Mst. Asiya Ashraf Chaudhary v. Government of the Punjab and others 2020 CLC 503 ref.

(b) Punjab Finance Act (XVII of 2014)---

----S.8---Punjab Urban Immovable Property Tax Act (V of 1958), S.10---Punjab Luxury House Tax Rules, 2014, R.10---Constitution of Pakistan, Art. 199---Constitutional jurisdiction---Maintainability---Alternate remedy, availability of---Factual controversy---Scope---Petitioner invoked constitutional jurisdiction of High Court against recovery notice for payment of luxury house tax---Validity---Right of appeal was provided to the petitioner under S.10 of the Punjab Urban Immovable Property Tax Act, 1958 read with R.10 of the Punjab Luxury House Tax Rules, 2014---Factual controversy involved in the matter could be resolved by the High Court while exercising jurisdiction under Art.199 of the Constitution---Constitutional petition was disposed of with a direction to the department to entertain the objections of the petitioner and in the meanwhile, no coercive measures for recovery were to be taken against the petitioner.

(c) Constitution of Pakistan---

----Arts.4, 23 & 24---Right of individuals to be dealt in accordance with law---Provision as to property---Protection of property rights---Scope---It is an inalienable right of every citizen to be treated in accordance with law and no action detrimental to his life, liberty, reputation or property shall be taken except as per law.

(d) Constitution of Pakistan---

----Art.10-A---Right to fair trial---Scope---Article 10-A of the Constitution protects civil rights and obligations of all the citizens in granting them a fair trial and due process.

Barrister Haroon Dugal, Advocate Supreme Court for Petitioner.

Barrister Hassan Khalid Ranjha, A.A.G. (on Court's call).

2022 P T D 1455

[Lahore High Court]

Before Asim Hafeez and Muhammad Sajid Mehmood Sethi, JJ

COMMISSIONER INLAND REVENUE, LAHORE

Versus

Messrs TARIQ & SONS, LAHORE

S.T.R. No.92 of 2013, decided on 1st February, 2022.

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

----S.4---SRO No.1125(I)/2011, dated: 31-12-2011---Zero rating---Retrospective effect---Scope---SRO No.1125(I)/2011, dated: 31-12-2011 reveals that it is specifically given effect from 01-01-2012, therefore, it cannot be given retrospective effect as SRO No.1058(I)/2011, dated: 23-11-2011 was operative which specifically restricted the adjustment of input tax---In the absence of any indication of its retrospective operation, it must not be given retrospective effect.

Government of Pakistan v. Messrs Village Development Organization 2005 SCMR 492 ref.

(b) Interpretation of statutes---

----Beneficial legislation, retrospectivity of---Scope---Beneficial legislation is to be given liberal interpretation, however, for the legislation to have a retrospective effect, the beneficial legislation must carry curative or remedial content---Such legislation must, therefore, either clarify an ambiguity or an omission in the existing law and must, therefore, either be explanatory or clarificatory in nature---While beneficial legislation is to be liberally interpreted, in order to advance the beneficial object, it in no manner means that beneficial legislation or liberal interpretation necessarily includes or interchangeably means retrospective application---Unless the legislation is remedial, curative, explanatory or clarificatory, it cannot be interpreted retrospectively merely on the ground that the legislation is generally beneficial in nature.

Commissioner Inland Revenue Zone-II, Regional Tax Office, Multan v. Mrs. Ambreen Fawad Co. Pak Arab Fertilizers Limited Multan 2014 PTD 320; Commissioner Inland Revenue v. Muhammad Aslam 2019 PTD 381 and Commissioner Inland Revenue v. Messrs Three Star Rice Factory 2021 PTD 1 ref.

Muhammad Ibrar Ahmed, Advocate/Legal Advisor for Applicant-department.

2022 P T D 1485

[Lahore High Court]

Before Jawad Hassan and Muzamil Akhtar Shabir, JJ

COLLECTOR OF CUSTOMS

Versus

Messrs ASSAS ENTERPRISES

Customs Reference No.56 of 2013, decided on 4th October, 2021.

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

----S.196---Limitation Act (IX of 1908), S.5---Qanun-e-Shahadat (10 of 1984), Art.129---Reference to High Court---Limitation---Condonation of delay---Scope---Department assailed order passed by Appellate Tribunal---Validity---Appeal filed by department was time-barred---Neither was it contended in the application for condonation of delay that the judgment was reserved or was kept in wait for orders or any effort was made to ascertain as to whether the judgment had been passed by Appellate Tribunal nor any register of Appellate Tribunal was produced to show that the copy of impugned judgment was not dispatched to the department---Presumption of correctness was attached to the judicial proceedings in terms of Art. 129(e) of the Qanun-e-Shahadat, 1984 and in order to displace the same, some evidence was required to be produced by the department along with application for condonation so as to make out a case for condonation of delay within the contemplation of provisions of S. 196(8) of the Customs Act, 1969, read with S. 5 of the Limitation Act, 1908---Reference application being time-barred was decided against the department.

(b) Limitation Act (IX of 1908)---

----S.5---Limitation---Condonation of delay---Scope---Delay in filing proceedings cannot be condoned unless it is shown that there are sufficient reasons causing the delay---Law of limitation reduces an effect of extinguishment of a right of party when significant lapses occur and when no sufficient cause of such lapses, delay or time-barred action is shown by defaulting party, the opposite party is entitled to a right accrued by such lapses---Negligence does not constitute sufficient cause to condone the delay---Party seeking advantage of S. 5 of Limitation Act, 1908, must satisfy the Court that it had not been negligent and had been pursuing the case with due diligence and care---Government department, on question of limitation, cannot be treated differently from ordinary litigant.

Central Board of Revenue, Islamabad through Collector of Customs, Sialkot Dry Port Sambrial, District Sialkot and others v. Messrs Raja Industries (Pvt.) Ltd. through General Manager and 3 others 1998 SCMR 307 ref.

(c) Limitation Act (IX of 1908)---

----S.5---Limitation---Condonation of delay---Scope---Each and every day's delay is to be satisfactorily explained.

Almas Ahmed Fiaz v. Secretary Government of the Punjab Housing and Physical Planning Development, Lahore and another 2007 PLC 64 rel.

Almas Ahmed Fiaz v. Secretary Government of the Punjab Housing and Physical Planning Development, Lahore and another 2007 PLC 64; Rehmat Din and others v. Mirza Nasir Abbas 2007 SCMR 1560; M/s. Nida-e-Millat, Lahore v. Commissioner of Income Tax Zone I, Lahore 2008 SCMR 284; Food Department Gujranwala v. Ghulam Farid Awan 2010 SCMR 1899; Worldcall Telecom Limited v. Pakistan Telecommunication Authority through Chairman 2011 SCMR 959; Qaiser Mushtaq Ahmad v. Controller of Examinations PLD 2011 SC 174; Lal Khan v. Muhammad Yousaf PLD 2011 SC 657 and Lanvin Traders, Karachi v. Presiding Officer Banking Court No.II, Karachi 2013 SCMR 1419 ref.

Ms. Riaz Begum, Advocate vice counsel for Applicant-Department.

2022 P T D 1502

[Lahore High Court]

Before Ayesha A. Malik, J

UNIQUE ENGINEERING WORKS (PRIVATE) LIMITED, through Chief Executive

Versus

FEDERATION OF PAKISTAN through Secretary, Ministry of Law, Islamabad and 3 others

Writ Petition No.65062 of 2021, heard on 21st December, 2021.

Sales Tax Act (VII of 1990)---

----Ss.11-A & 24 & 34---Maintenance of record---Short paid tax, recovery of---Limitation---"Pending proceedings"---Scope---Petitioner / taxpayer was aggrieved of show-cause notice dated 17-09-2021 issued by authorities to produce record pertaining to tax year 2006-2007---Validity---In terms of S.24 of Sales Tax Act, 1990, a taxpayer was required to maintain documents and accounts for a period of six years, after the end of next year to which they related unless there were pending proceedings before authority or Court where taxpayer might be required to produce accounts or documents---"Pending proceedings" meant proceedings for assessment or amendment in assessment, appeal, revision, reference petition or prosecution, as the case could be---There were no pending proceedings, instead petitioner was issued notice under S.34 of Sales Tax Act, on 17-09-2021 to recover tax---Such was part of due process that any recovery for tax could not be made unless taxpayer was given an opportunity of being heard and produced evidence---Respondents were to seek documentary evidence against petitioner for tax year 2006-2007, for which petitioner had relied upon S.24 of Sales Tax Act, 1990---Authorities were to discharge their burden before declaring any liability and could not simply conclude that for want of documentary evidence and accounts, the taxpayer was rendered liable---Action under S.24 of Sales Tax Act, 1990 should have been taken at the right time---Delayed action meant that burden was on revenue authorities to justify demand raised and imposition of any liability---High Court in exercise of constitutional jurisdiction set aside show-cause notice issued by the authorities---Constitutional petition was allowed in circumstances.

Pepsi Cola International (Private) Limited v. Federation of Pakistan through Secretary Revenue Division, Islamabad and others (W.P. No.21602/2021) rel.

Azeem Ullah Virk and Muhammad Ajmal Khan for Petitioner.

Muhammad Yahya Johar for Respondents.

2022 P T D 1510

[Lahore High Court]

Before Muhammad Sajid Mehmood Sethi, J

MUHAMMAD ASLAM

Versus

FEDERAL BOARD OF REVENUE through Chairman, Lahore and 3 others

Writ Petition No.73555 of 2019, heard on 2nd March, 2022.

Income Tax Ordinance (XLIX of 2001)---

----Ss.133(1) & 236C---Punjab Land Revenue Act (XVII of 1967), Ss. 42 & 45---Advance income tax---Mutation of inheritance---Fait accompli, principle of---Applicability---Petitioner assailed demand of withholding tax on transfer of land through inheritance---Validity---Mutation did not confer on anyone any right in any property as revenue record was maintained only for realization of land revenue and did not by itself confer any title on anyone---Efflux of time does not extinguish any right of inheritance because on death of owner of property, all co-inheritors, immediately and automatically become co-sharers in the property---Succession to property of propositus becomes fait accompli immediately after his demise and it does not need intervention of any of the functionaries of revenue department---Upon death of predecessor-in-interest, petitioner became owner of property by operation of Personal Law---Such transfer of right had no relation with incorporation of mutation, therefore, counting of period of 3 years or 5 years for the purposes of advance income tax as per provisions of S.236C of Income Tax Ordinance, 2001, would start from date of death of deceased and not from date of mutation---Constitutional petition was allowed in circumstances.

Zohra Bibi and another v. Haji Sultan Mahmood and others 2018 SCMR 762 and Haji Muhammad Hanif v. Muhammad Ibrahim and others 2005 MLD 1 ref.

Ghulam Ali and 2 others v. Mst. Ghulam Sarwar Naqvi PLD 1990 SC 1; Mst. Reshman Bibi v. Amir and others 2004 SCMR 392 and Mahmood Shah v. Syed Khalid Hussain Shah and others 2015 SCMR 869 rel.

Sheikh Sajid Mehmood, Jahandur Durrani, Muhammad Riaz, Khawaja Farooq Dildar and Amir Shahzad for Petitioner.

Aftab Rahim, Deputy Attorney General for Respondent.

Barrister Ameer Abbas Ali Khan, A.A.G. for Respondent.

Ch. Muhammad Zafar Iqbal and Barrister Osama Zafar for Respondents.

2022 P T D 1570

[Lahore High Court]

Before Shahid Jamil Khan, J

Messrs MASCO SPINNING MILLS LIMITED

Versus

FEDERATION OF PAKISTAN and others

Writ Petition No.160280 of 2018, decided on 2nd March, 2022.

Sales Tax Special Procedure Rules, 2007---

----R.20---Constitution of Pakistan, Art. 199---Constitutional petition---Sales tax, levy and collection---Recovery as arrears in utility bills---Procedure---Petitioner companies were aggrieved of charging arrears of sales tax in utility bills for natural gas against a column titled arrears / aging (بقایا جات)---Plea raised by petitioner companies was that in absence of any prescribed procedure and determination of tax, no such recovery could be made as arrears---Validity---Full disclosure of particulars and necessary information for recovery was fundamental right under Art.19A of the Constitution---High Court depreciated such practice and declared the same as illegal---No Special procedure, was there for recovery of tax not charged by a distribution company---Recovery of tax arrears through utility bills was without lawful authority---If tax was determined in accordance with law and instructions were issued under the law for recovery of any tax through utility bill, the bill issuing authority was to satisfy itself that such instruction was based on an order determining tax by competent officer and that particulars of recoverable tax were fully disclosed---If recoverable tax was determined and recovery procedure was prescribed, the official communication of instructions to utility provider were to contain those details upon which only the utility provider could recover the tax in a specific and express column---Constitutional petition was disposed of accordingly. [pp. 1573, 1574] A & B

M. Irfan Liaqat for Petitioner.

Mirza Nasar Ahmad, Additional Attorney General for Pakistan.

Monim Sultan, Assistant Attorney General for Pakistan.

Bashir Hussain Ch. for Respondent.

Syed Zain ul Abidien Bokhari for Respondent (in connected W.P. No.257560 of 2018).

2022 P T D 1627

[Lahore High Court (Multan Bench)]

Before Jawad Hassan, J

ASHIQ ALI CHAUDHARY

Versus

FEDERAL BOARD OF REVENUE and others

Writ Petition No.5466 of 2021, decided on 7th April, 2021.

Income Tax Ordinance (XLIX of 2001)---

----S.127---Income Tax Rules, 2002, R.76---Constitutional petition---Appeal to the Commissioner (Appeals)---Prescribed form of appeal to the Commissioner (Appeals)---Scope---Case of petitioner was that he was required to file an appeal under S. 127 of Income Tax Ordinance, 2001; that R.76 of the Income Tax Rules, 2002, provided that remedy of appeal could only be availed electronically, as such, the same was unconstitutional being contrary to the provisions of Art.10-A of the Constitution and that the impugned order had been passed without any Bar Code mechanism as per requirement of IRIS Web Portal due to which the petitioner was unable to file appeal electronically, hence, he sought indulgence of High Court to direct the respondents to allow him to file the appeal manually---Validity---Held; if the impugned order was issued without any Bar Code mechanism, the petitioner would be allowed by the competent authority/forum to manually file appeal under S. 127 of the Income Tax Ordinance, 2001, along with application for condonation of delay otherwise the law would take its own course---Constitutional petition was disposed of accordingly.

Muhammad Imran Ghazi for Petitioner.

Mehar Zameer Hussain Iqbal, Deputy Attorney General (on Court call).

Tariq Manzoor Sial and Malik Muhammad Shahzad Awan for Respondent FBR (on watching brief).

2022 P T D 1755

[Lahore High Court]

Before Abid Aziz Sheikh and Muzamil Akhtar Shabir, JJ

DIRECTOR (ASO) CUSTOMS INTELLIGENCE AND INVESTIGATION through Deputy Director

Versus

AWAIS KHALID

Customs References Nos.44622 and 44636 of 2022, decided on 21st July, 2022.

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

----Ss.2(kk), 163, 168 & 196---Reference---Scope---Smuggled goods---Raid on warehouse---Authorities seized goods lying in warehouse of respondent on the plea of smuggled goods---Customs Appellate Tribunal set aside the order passed by authorities---Validity---Respondent had discharged his burden to possess the goods under lawful import and authorities failed to establish its allegation of smuggling---Authorities merely based their case on contravention report, which was held by Customs Appellate Tribunal to be based upon conjectures and surmises---High Court in its jurisdiction under Reference was only to confine itself to questions of law and was not to decide controversy of fact to interfere in orders passed by Customs Appellate Tribunal unless any illegality or jurisdictional defect going to roots of the matter was pointed out in the same, which could have resulted in miscarriage of justice or perverse decision by the Appellate Tribunal, which without deeper appreciation of disputed facts on the face of record appeared in the given circumstances of the case as not sustainable, and the view taken by the Appellate Tribunal was not possible under any circumstances---High Court declined to answer question referred by authorities as the same was un-necessary for just decision of the matter and without any substance---Reference was dismissed, in circumstances.

Pakistan Match Industries (Pvt.) Ltd. v. Assistant Collector, Sales Tax and Central Excise Mardan 2019 SCMR 906; Army Welfare Trust (Nizampur Cement Project), Rawalpindi and another v. Collector of Sales Tax (Now/Commissioner Inland Revenue), Peshawar 2017 SCMR 9; Messrs F.M.Y. Industries Ltd. v. Deputy Commissioner Income Tax and another 2014 SCMR 907 and Rafiq Spinning Mills (Pvt.) Limited, Faisalabad v. Customs, Central Excises and Sales Tax Appellate Tribunal, Lahore and another 2003 PTD 1789 rel.

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

----S.196---Reference---Advisory jurisdiction of High Court---Scope---High Court in its advisory jurisdiction under Reference is not bound to answer each and every question of law proposed for its decision--- High Court can refuse to answer any question if it reaches the conclusion that substantial question of law has not arisen from decision of Customs Appellate Tribunal or decision of the question is not necessary in given circumstances of the case or does not have any bearing on end result of the case and amounts to an academic discussion only.

Commissioner of Inland Revenue, Legal Division, Lahore and others v. Messrs Rafeh Limited 2020 PTD 1657 (SC) = PLD 2020 SC 518 and Messrs Squibb Pakistan (Pvt.) Limited and another v. Commissioner of Income Tax and another 2017 SCMR 1006 ref.

Nemo for Applicant.

2022 P T D 1930

[Lahore High Court]

Before Muhammad Sajid Mehmood Sethi and Asim Hafeez, JJ

COMMISSIONER INLAND REVENUE, ZONE II, REGIONAL TAX OFFICE GUJRANWALA

Versus

The ALLIED STAINLESS STEEL INDUSTRIES, GUJRANWALA

E.T.R. No.6 of 2015, decided on 9th March, 2022.

Federal Excise Act (VII of 2005)---

----S.14---Recovery of unpaid duty or of erroneously refunded duty or arrears of duty---Scope---Question before High Court was whether the amount of Special Excise Duty (SED) was confronted to the respondent in the show cause notice---Held; except quantifying the amount of loss with respect to non-payment of sales tax and SED and only referring to S. 3-A of Federal Excise Act, 2005, nothing was mentioned to indicate alleged violations, breaches and consequences thereof under the Federal Excise Act, 2005---Substance of allegations in notice, predominantly embodied the violations of Sales Tax Act, 1990 and allegations regarding breaches of Federal Excise Act, 2005, were conspicuously missing---Reference was decided against the department.

Shahid Sarwar Chahil and Ch. Muhammad Shakeel for Applicant.

2022 P T D 1942

[Lahore High Court]

Before Muzamil Akhtar Shabir and Muhammad Sajid Mehmood Sethi, JJ

The COMMISSIONER INLAND REVENUE, ZONE-II, REGIONAL TAX OFFICE, LAHORE

Versus

SHAZIA ZAFAR

I.T.R. No.59534 of 2021, (and others connected cases) heard on 9th June, 2022.

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

----Ss.111, 122 & 133---Unexplained income or assets---Separate notice, issuance of---Words "…the person offers no explanation…" and "…or the explanation offered by the person is not, in the Commissioner's opinion, satisfactory…"---Scope--- Dispute was with regard to additions made by authorities under S.111 of Income Tax Ordinance, 2001--- Appellate Tribunal Inland Revenue deleted such additions on the plea that a separate and specific notice was required for addition under S.111 of Income Tax Ordinance, 2001---Validity---If instances / categories of unexplained income and assets, detailed in S.111 of Income Tax Ordinance 2001, emerged to Commissioner, he was required to invite explanation from taxpayer, confronting information collected that its case would come within the head(s) specified in S.111(1) of Income Tax Ordinance, 2001, before adjudging the matter---Specific word "notice" was not introduced in S.111 of Income Tax Ordinance, 2001 but words "…the person offers no explanation…" and "…or the explanation offered by the person is not, in the Commissioner's opinion, satisfactory…" connoted that notice was the proper mechanism to call for explanation from taxpayer---Notice and corresponding non-satisfactory elucidation were prerequisites to make addition under S.111 of Income Tax Ordinance, 2001 otherwise addition was legally unsustainable owing to non-compliance of law---High Court maintained order passed by Appellate Tribunal Inland Revenue and replied the questions in negative---Reference was dismissed accordingly.

Commissioner Inland Revenue, RTO, Faisalabad v. Faqir Hussain and another 2019 PTD 1828; Commissioner Inland Revenue, Multan Zone v. Falah ud Din Qureshi 2021 PTD 192; Commissioner Inland Revenue Zone Bahawalpur, Regional Tax Office, Bahawalpur v. Messrs Bashir Ahmed (Deceased) through LRs 2021 SCMR 1290; Commissioner Inland Revenue v. Muhammad Shafique 2015 PTD 1823 and Commissioner Inland Revenue, Zone-I, Regional Tax Office, Sukkur v. Messrs Ranipur CNG Station, Ranipur 2017 PTD 1839 rel.

(b) Interpretation of statutes---

----Fiscal statute---Applicability---All fiscal statutes apply prospectively unless specifically and expressly provided otherwise.

(c) Interpretation of statutes---

----Change in law---Retrospective effect---Scope---Change in substantive law, which divests and adversely affects vested rights of parties should always have prospective application, unless by express word of the legislation and/or by necessary intendment/implication, such law has been made applicable retrospectively---Courts lean against giving retrospective operation where no vested rights or past transactions prejudicially affect or exist---No legislation operates retrospectively if it touches a right in existence at the time of passing of legislation---Rights of parties are to be decided according to law existing when action began unless provision made to contrary---Where statute itself does not make its operation retrospective, it would not be reasonable to claim that by necessary implication it has retrospective operation.

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; Badshah Gul Wazir v. Government of Khyber Pakhtunkhwa through Chief Secretary and others 2015 SCMR 43 and Commissioner Inland Revenue, RTO, Rawalpindi v. Messrs Trillium Pakistan (Pvt.) Ltd., Rawalpindi and others 2019 SCMR 1643 rel.

Shahzad Ahmad Cheema, Kamran Sheikh Mughal, Sohail Tariq, Liaquat Ali Chaudhary, Ch. Muhammad Yaseen Zahid, Ch. Muhammad Shakeel, Sarfraz Ahmad Cheema, Naveed Tahir, Shahid Sarwar Chahil, Sheikh Aqeel Ahmad, Barrister Ahmad Pervaiz, Barrister Ahtsham Mukhtar, Barrister Saffi-ul-Hassan, Jawad H. Tarar, Rizwan Qureshi, Advocates / Legal Advisors in instant as well as connected cases for Applicant/Department.

Naeem Khan and Muhammad Yahya Johar, Advocates for FBR.

Barrister Shehryar Kasuri, Imtiaz Rasheed Siddiqui, Shehryar Kasuri, Raza Imtiaz Siddiqui, Hamza Sheikh, Qadeer Ahmad Klyar, Sabeel Tariq Mann, Raza Imtiaz Siddiqui, Zahid Attique Chaudhary, Ahsan Awan, Rashid Khan, Sameer Saeed Ahmad, Asad Abbas Raza, Muhammad Usman Zia, Muhammad Ahsan Mehmood, Muhammad Imran Rashid and Qaiser Mehmood Sipra, Advocates in instant as well as connected cases for Respondent/Taxpayers.

2022 P T D 11

[Peshawar High Court (Mingora Bench)]

Before Ishtiaq Ibrahim and Wiqar Ahmad, JJ

SIKANDAR HAYAT and 16 others

Versus

FEDERATION OF PAKISTAN and others

Writ Petitions Nos.890-M, 705-M, 865-M, 888-M, 892-M, 954-M, 959-M, 1102-M, 1116-M, 1222-M of 2019 and 287-M of 2020, decided on 26th January, 2021.

Income Tax Ordinance (XLIX of 2001)---

----S.53, Second Schedule, Part-I, Cl.146 & Part-IV, Cl.110---Notification SRO No.1213(I)/2018 dated 5-10-2018---Tax relief---Petitioners were civil servants who claimed tax relief in their salaries on the plea that they were also residents of erstwhile Provisionally Administered Tribal Area---Validity---Merely on the basis of positing of a civil servant in specified part, he could not claim exemption from payment of income tax unless such exemption was granted to him under S.53 of Income Tax Ordinance, 2001---No specific exemption was provided to employees of Provincial Government serving in Ex-Provincially Administered Tribal Area from payment of income tax in the Second Schedule maintained under S.53 of Income Tax Ordinance, 2001---When incomes of petitioners were not exempted from payment of income tax earlier then benefit of newly added Cl.146 of Part 1st of Second Schedule to Income Tax Ordinance, 2001, could not be extended to petitioners--- Benefit of Cl.110 of Part-IV of Second Schedule to Income Tax Ordinance, 2001, was also not available to petitioners---Immunity from operation of provision of Income Tax Ordinance, 2001, mentioned therein was given under Cl.110 of Part-IV of Second Schedule to Income Tax Ordinance, 2001, to such persons to whom such provisions had not been applicable prior to promulgation of Twenty-fifth Amendment to the Constitution---Constitutional petition was dismissed, in circumstances.

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; Employees Action Committee v. Government of Pakistan and others 2006 PLC (C.S.) 1311; Sanaullah Khan v. Province of Balochistan 1995 PTD 360; Fazal Ghafar and others v. Government of Pakistan and others (W.P. No.25-M / 2010); Hamid Ullah and others v. Federation of Pakistan and others (W.P. No.507-M/2012); Dr. Muhammad Riaz Khan and others v. District Account Officer Swat and others (W.P. No. 845-M/2017 and Employees Action Committee v. Government of Pakistan and others 2006 PLC (C.S.) 1311 ref.

Sabir Shah, Rahim Ullah Chitrali, Muhammad Nisar Banoo Khel and Aghar Ali for Petitioners.

Mukhtiar Ahmad Maneri and Ishtiaq Ahmad (via video link) for Respondents.

Nawroz Khan, Deputy Attorney General on behalf of Federation.

2022 P T D 171

[Peshawar High Court (Mingora Bench)]

Before Ishtiaq Ibrahim and Wiqar Ahmad, JJ

Messrs TAJ RE-ROLLING AND STEEL MILLS (PVT.) LTD. through Manager Imports and others

Versus

GOVERNMENT OF PAKISTAN through Federal Secretary Finance and others

Writ Petitions Nos.946-M, 947-M, 948-M, 953-M, 981-M, 982-M, 992-M, 1004-M of 2019 and 449-M, 811-M and 966-M and C.M. No.1519 of 2020 (all with Interim Relief), decided on 25th May, 2021.

(a) Interpretation of statutes---

----Object, purpose and scope---Purpose of interpretation is reaching at true intention of the Legislature---When it is manifestly clear from express words employed by the Legislature then it cannot be given any other meaning unless situation of conflict with other laws exists or absurd consequences are apprehended.

Maxwel on the Interpretation of Statutes Twelfth Edition by St. J. Langan; Syed Mehmood Akhtar Naqvi v. Federation of Pakistan through Secretary Law and others PLD 2012 SC 1089 and Baz Muhammad Kakar and others v. Federation of Pakistan through Ministry of Law and Justice and others PLD 2012 SC 923 rel.

(b) Constitution of Pakistan---

----Arts. 8 & 199---Constitutional jurisdiction of High Court---Vires of legislative instrument---Criteria---For testing vires of legislative instrument, the only criteria is Constitutional provisions and fundamental rights therein---Such criteria can be found embedded in Art.8 of the Constitution---Unreasonableness or other grounds available for judging an act done in executive capacity or through subordinate legislation have not been valid grounds for testing validity of valid piece of legislation competently enacted.

(c) Interpretation of statutes---

----Mala fide cannot be attributed to Legislature.

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

----S.13(1), (2), (6) & Sixth Schedule, item No.152--- Constitution of Pakistan, Art. 199---Constitutional petition---Tax exemption---Reading down, doctrine of---Applicability---Petitioners were having their industrial concerns in ex-Federally Administered Tribal Areas and ex-Provincially Administered Tribal Areas, who were aggrieved of item No.152 in Sixth Schedule to Sales Tax Act, 1990--- Plea raised by petitioners was that levy in question was confiscatory---Validity---Schedule was part of the statute and the Legislature had retained powers to amend or repeal any provision of statute including the Schedule---Making changes in Schedule was fully within competence of the Legislature to which no objection could be raised---Provision of S.13(6) of Sales Tax Act, 1990, provided that powers utilized by Federal Government under S.13(1) or (2) of Sales Tax Act, 1990, was subject to Parliamentary oversight--- Parliament could not be held divested of the powers to make changes in the Schedule---Levy in question was not confiscatory as the same had already been adjustable against Federal Excise Duty and it was not creating any additional burden on the petitioners---Law providing for exception was neither violative of any provision of the Constitution nor was inconsistent with any other law---No absurdity or illogical consequences were likely to flow from operation of the law, as it had been fitting in interchangeable regime provided in S.7 of Federal Excise Act, 2005---High Court declined to interfere in the matter as essential conditions provided for employing doctrine of reading down was not forthcoming--- Constitutional petition was dismissed, in circumstances.

Messrs Hadi Khan Silk Mills and others v. Government of Pakistan through Secretary Finance and others (W.P. No. 442-M of 2020); Messrs Abid Foundry and another v. Government of Pakistan through Federal Secretary Finance and others 2019 PTD 1652; PLD 2018 Lah. 255; Province of Sindh through Chief Secretary and others v. M.Q.M through Deputy Convener and others PLD 2014 SC 531; PLD 1975 SC 397; PLD 2006 SC 602; Commissioner Inland Revenue Peshawar v. Tariq Mehmood and others 2021 SCMR 440; Mian Nazir Sons Industries Ltd. and another v. Government of Pakistan and others 1992 SCMR 883; Messrs Elahi Cotton Mill Ltd. and others v. Federation of Pakistan through Secretary Finance and others" PLD 1997 SC 582; Baz Muhammad Kakar and others v. Federation of Pakistan through Ministry of Law and Justice and others PLD 2012 SC 923; Pakistan v. Sala-ud-Din PLD 1991 SC 546 and Abdul Wahid v. Government of Pakistan and others 1993 SCMR 17 ref.

Fauji Foundation and another v. Shamimur Rehman PLD 1983 SC 457; Dr. Tariq Nawaz and another v. Government of Pakistan through Secretary Ministry of Health and another 2000 SCMR 1956; Federation of Pakistan through Secretary Finance and others v. Haji Muhammad Sadiq and others PLD 2007 SC 133; Dr. Mobashir Hassan and others v. Federation of Pakistan and others PLD 2010 SC 265 and Province of Sindh through Chief Secretary and others v. M.Q.M through Deputy Convener and others PLD 2014 SC 531 rel.

Isaac Ali Qazi, Abdul Rahim Jadoon (via video link) and Muhammad Akbar Khan for Petitioners.

Noroz Khan, Deputy Attorney, Ishtiaq Ahmad, Mukhtar Ahmad Maneri, Ghulam Shoib Jally and Syed Fazal Rehman for Respondents.

2022 P T D 254

[Peshawar High Court]

Before Syed Arshad Ali and Wiqar Ahmad, JJ

Messrs NEW MOHMAND STEEL MILLS through Attorney

Versus

GOVERNMENT OF PAKISTAN through Federal Secretary Finance and Revenue Division, Islamabad and 6 others

Writ Petition No.6261-P of 2019 (and others connected petitions), decided on 28th October, 2021.

Sales Tax Act (VII of 1990)---

----Sixth Schedule, entry No. 153--- Federal Excise Act (VII of 2005), First Schedule, Table 1, entry No. 58 [as inserted through Finance Act, 2019]---Constitution of Pakistan, Art.199---Constitutional petition---Amendment, vires of---Doctrine of "Reading Down"---Applicability---Petitioners were running their industrial units in erstwhile Federally Administered Tribal Area and had been included in the province of Khyber Pakhtunkhwa---Petitioners assailed vires of entry No. 58 of Table 1 of First Schedule to Federal Excise Act, 2005 and entry No. 153 of Sixth Schedule to Sales Tax Act, 1990, whereby exemption of duties were denied to them---Validity---Petitioners could not establish that levy in question was running contrary to any provision of the Constitution---High Court declined to apply doctrine of "Reading Down", as legislation in question was not inconsistent with any other legislation and was not producing any absurd or illogical consequences---Federal Legislature had powers for enacting impugned legislation under respective entries to the Federal Legislative List annexed to Fourth Schedule to the Constitution---High Court declined to interfere in the amendment in question---Constitutional petition was dismissed, in circumstances.

Province of Sindh through Chief Secretary and others v. M.Q.M through Deputy Convener and others PLD 2014 SC 531; 2002 SCMR 312; 2015 SCMR 1739; PLD 2007 SC 133; 2013 SCMR 34; Messrs Hadi Khan Silk Mills and others v. Government of Pakistan through Federal Secretary Finance and others 2021 PTD 1842; Hindu Women's Rights to Property Act (1937) In the matter of ; The Supreme Court of India in Dehli Transport Corporation v. D.T.C. Mazdoor Congress AIR 1991 SC 101; Baz Muhammad Kakar and others v. Federation of Pakistan through Ministry of Law and Justice and others PLD 2012 SC 923; Calcutta Guj. Education Society and another v. Calcutta Municipal Corporation and others AIR 2003 SC 4278; Taj Vegetable Oil Processing Unit, Skhakot, Dargai, Malakand Agency v. The Government of Pakistan through Federal Secretary Finance and Revenue Division, Islamabad and others (W.P. No. 4495-P/2017) and Ahzada Colonel Sharif-ud-Din and others v. The Settlement Officer District Upper and Lower Chitral and others 2021 CLC 1968 ref.

Messrs Taj Re-rolling and Steel Mills through Manager Imports v. Government of Pakistan through Federal Secretary Finance and others (W.P No.946-M/2019); Messrs Elahi Cotton Mills Ltd. and others v. Federation of Pakistan through Secretary Ministry of Finance, Islamabad and 6 others 1997 PTD 1555; Pakistan v. Sala-ud-Din PLD 1991 SC 546 and Mian Nazar Sons Industries v. Government of Pakistan and others 1992 SCMR 883 rel.

Isaac Ali Qazi for Petitioner.

Aamir Javed, Addl: Attorney General for Respondent No.1.

Rehmanullah Ishtiaq Ahmad (Junior) and Mukhtar Ahmad Maneri for Respondents Nos.2 and 7.

Ms. Neelam A. Khan and Abbas Bakhtiar for Respondents Nos.3 to 6.

2022 P T D 283

[Peshawar High Court (Abbottabad Bench)]

Before Muhammad Ibrahim Khan and Shakeel Ahmad, JJ

COMMISSIONER INLAND REVENUE and others

Versus

MUHAMMAD TAHIR AND BROTHERS OGHI MANSEHRA and others

Income Tax Reference No.01-A of 2019, decided on 1st December, 2021.

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

----Ss.53, 133 & Second Sched.---Constitution of Pakistan, Arts.247, 246 & 265---Tribal Areas---Merger of Tribal Areas into settled areas---Automatic applicability of Income Tax Ordinance, 2001 to areas that cease to be Tribal Areas by operation of Art.247(6) of the Constitution---Question before High Court was whether after cessation of a District which was a tribal area, vide SRO 118(I)/2011, dated 10-2-2011, all laws including Income Tax Ordinance, 2001 automatically became applicable to such District after issuance of a said SRO---Held, that under Art.247(6) of the Constitution the President had been empowered to abolish, forfeit or change status of a Tribal Area and therefore, previous status of District in question had come to an end after issuance of said SRO, as envisaged by Art.247(6) of the Constitution---Thereafter, such District merged into the settled area, and all laws including Income Tax Ordinance, 2001 became applicable to said District, and the former special status and District enjoyed was no longer attracted to it---Reference was answered, accordingly.

(b) Words and phrases---

----"Cease", meaning of---"Cease" meant to stop, forfeit, suspend, or bring to an end, to become extinct or to pass away.

Black's Law Dictionary Eighth Edition rel.

Zahid Idrees Mufti for Petitioners.

Sarmad Bashir for Respondents.

2022 P T D 406

[Peshawar High Court]

Before Lal Jan Khattak and Musarrat Hilali, JJ

Messrs A.Q. CUSTOMS AGENCY through Proprietor and others

Versus

FEDERATION OF PAKISTAN through Secretary Revenue Division/Chairman FBR, Islamabad and 6 others

Writ Petition No.4428-P of 2020, decided on 14th October, 2021.

Import Policy Order, 2016---

----Appendix-E, para. 3(1)---Constitution of Pakistan, Art. 199---Constitutional petition---Import of vehicle---Category, determination of---Dispute was with regard to category of vehicles imported by petitioner and the same were detained by Customs Authorities---Validity---Detained vehicles could be released upon furnishing export certificates issued by concerned authority of exporting country, in respect of imported vehicles---If such certificate described imported vehicles as 'van' then subject to verification of such certificates from issuing authority, the petitioner would be allowed clearance of vehicles in accordance with law---Constitutional petition was disposed of accordingly.

Ikram Ullah and others v. Federation of Pakistan (Writ Petition No.3353 of 2018) ref.

Civil Petitions Nos.343-K, 344-K and 345-K of 2019 fol.

Amir Bilal for Petitioners.

Qazi Babar Irshad, D.A.G. for Respondent No.1.

Gul Hussain Khilji for Respondents Nos.2 and 3.

2022 P T D 477

[Peshawar High Court]

Before Lal Jan Khattak and S M Attique Shah, JJ

COLLECTOR OF CUSTOMS, FBR PESHAWAR

Versus

SIRAJ WALI

Custom Reference No.33-P of 2020, decided on 8th April, 2021.

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

----Ss. 181 & 157---SRO No.499(I)/2009, dated: 13-06-2009---Confiscation, extent of---Option to pay fine in lieu of confiscated goods---Scope---Department after confiscation of smuggled goods and conveyance gave an option to the rightful owner of the vehicle to get the same released upon payment of 20% redemption fine---Customs Appellate Tribunal allowed the release of smuggled goods along with vehicle upon payment of 20% redemption fine---Validity---Conveyance was also liable to confiscation along with offending goods in view of S.157 of the Customs Act, 1969---Section 181 of Customs Act, 1969, read with SRO No.499(I)/2009, dated: 13-06-2009 provided that option was available to the owner of lawfully registered vehicle used in the smuggling of goods to get his vehicle released upon payment of fine @ 20% of the value of the vehicle in lieu of confiscation---SRO No.499(I)/2009, dated: 13-06-2009 had expressly provided for release of goods and conveyance independently from one another upon payment of fine in lieu of confiscation---Vehicle in question was a lawfully registered vehicle; albeit, it was used for carrying the offending goods, the same was liable to be redeemed upon payment of fine---High Court held that conveyance could only be released upon payment of redemption fine---Judgment passed by Appellate Tribunal was set aside.

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

----S. 157---Extent of confiscation---Scope---Goods as well as the conveyance carrying it, when enters into the territorial jurisdiction of the country in violation of the provisions of the Customs Act, 1969, are liable to outright confiscation in view of the provisions of S. 157 of the Customs Act, 1969.

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

----S.181---Option to pay fine in lieu of confiscated goods---Scope---Provisions of S. 181 of Customs Act, 1969, empower the adjudicating officer to provide an option to the owner of the goods to pay such fine in lieu of confiscation of the goods as the officer think fit, after confiscation of goods.

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

----S.181---Option to pay fine in lieu of confiscated goods---Scope---Section 181 of Customs Act, 1969, also empowers the Board to fix the amount of fine which, in lieu of confiscation, shall be imposed on any goods or class of goods imported in violation of the provisions of S. 16 or any other law for the time being in force.

(e) Interpretation of statutes---

----Taxing statute---Scope---Courts while interpreting a taxing statute must construe the same in the light of what is clearly expressed---Neither any implied meaning can be added to it, nor the expressed meaning can be excluded from thereto at the time of its interpretation, which clearly shows that there is no room for equity in the interpretation of a taxing statute.

Gohar Rehman Khattak for Petitioner.

Muhammad Atlas Khan for Respondent.

2022 P T D 585

[Peshawar High Court]

Before Rooh-ul-Amin Khan and Muhammad Naeem Anwar, JJ

COLLECTOR OF CUSTOMS, MODEL CUSTOMS COLLECTORATE, PESHAWAR

Versus

WASSEF ULLAH and another

Customs Reference No.270-P of 2020, decided on 1st December, 2021.

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

----Ss.19, 32(3A) & 196---Notification SRO No.499 (I)/2013 dated 12-06-2013---Exemption, entitlement of---Dispute was with regard to seeking exemption from duty and taxes under notification SRO No.499(I)/2013 dated 12-06-2013, for import of Hybrid Electric Vehicles (HEVs)---Validity---Vehicles imported by respondents were having engine capacity less than 1800cc---Phrase used in notification SRO No.499(I)/2013 dated 12-06-2013, was withholding tax on import of Hybrid vehicles with the specification of PCT Code No.87.03 and term Hybrid Electric Vehicles (HEVs) was neither particularized as fully or Semi Hybrid and similarly used or new at the time of issuance of SRO in question---Provisions of notification SRO No.499(I)/2013 dated 12-06-2013, were beneficial, where it allowed exemption in leviable duty and taxes @ 50% on import of Hybrid Electric Vehicles (HEVs) and it could not be interpreted for addition of "old" or "new", "fully" or "semi"---Customs Appellate Tribunal rightly set at naught findings of fora below and allowed appeals filed by importers--- Reference was dismissed in circumstances.

Muhammad Hanif Abbasi v. Imran Khan Niazi and others PLD 2018 SC 189 and Hashwani Hotel Ltd. v. Federation of Pakistan PLD 1997 SC 315 rel.

(b) Interpretation of statutes---

----Literal or grammatical rule---Applicability---Words used in text are to be given or interpreted in their natural or ordinary meaning---After interpretation, if meaning is completely clear and unambiguous then effect has to be given to a provision of a statute regardless of what may be the consequences---While interpreting Standing Regulatory Order or law or any clause of it, only plain meaning has to be construed without adding any meaning not mentioned therein because addition or subtraction or interpreting it otherwise would negate spirit of law and if it is allowed then every authority, official or officer may interpret any clause of law as per his own philosophy which is neither permissible nor lawful.

(c) Interpretation of statutes---

----Retrospective effect---Principle---Notification which confers a benefit or right to a person can be given retrospective effect---Notification which disturbs or impairs a vested right of a person or creates a new liability cannot be applied retrospectively in absence of a legal sanction to that effect.

Anode Power Generation Ltd. and others v. Federation of Pakistan and others PLD 2001 SC 340; Messrs Elahi Cotton Mills Ltd. and others v. Federation of Pakistan through Secretary, Ministry of Finance, Islamabad and 6 others PLD 1997 SC 582; Federation of Pakistan v. Shaukat Ali Mian and others PLD 1999 SC 1026; Messrs Army Welfare Sugar Mills Ltd. and others v. Federation of Pakistan 1992 SCMR 1652 and Collector of Customs, Lahore and others v. Mrs. Shahida Anwar 2012 SCMR 1698 rel.

Abdul Rauf Rohaila for Applicant.

Amir Bilal for Respondents.

2022 P T D 729

[Peshawar High Court]

Before Lal Jan Khattak and Musarrat Hilali, JJ

LUCKY CEMENT LIMITED through Authorized Representative

Versus

FEDERATION OF PAKISTAN through Secretary Economic Affairs, Revenue Division, Islamabad and 3 others

Writ Petition No.5857-P of 2018, decided on 26th January, 2022.

Income Tax Ordinance (XLIX of 2001)---

----S.11(2)---Show-cause notice---Tax not paid---Petitioner was income tax assessee, who called in question show-cause notices for tax period November 2013 to March 2018 and July 2013 to October 2013 respectively issued by Deputy Commissioner Inland Revenue---Plea raised by petitioner was that there was no lawful authority or jurisdiction to meddle with matters of adjudication so provided in S.11(2) of Income Tax Ordinance, 2001---Validity---Show-cause notices were issued by Deputy Commissioner Inland Revenue in accordance with law---High Court declined to interfere in the matter---Constitutional petition was dismissed, in circumstances.

The Commissioner Inland Revenue, Zone-III, RTO-II, Lahore v. Messrs Hamza Nasir Wire and others (Civil Petitions Nos.398-L, 584-L, 671-L to 675-L, 774-L, 775-L, 812-L, 815-L, 911-L, 912-L, 913-L, 919-L, 984-L, 985-L, 10054, 11844, 1684-L, 1688-L to 1690-L, 1729-L, 1796-L, 1812-L, 1821-L to 1827-L, 1850-L to 1854-L, 1859-L, 1860-L, 1878-L, 1887-L, 2038-L, 2085-L, 2086-L, 2090- L, 2091-L, 2129-L and 3480 of 2018) fol.

Sheraz Butt for Petitioner.

Qazi Babar Irshad, DAG and Rehmanullah for Respondentss.

2022 P T D 981

[Peshawar High Court]

Before Musarrat Hilali and Syed Arshad Ali, JJ

QASIM SHAH MARBLE FACTORY UMARY, DISTRICT BAJUR through Proprietor

Versus

FEDERATION OF PAKISTAN through Federal Secretary, Finance and Revenue Division, Islamabad and 6 others

Writ Petition No.452-P of 2022 with IR, decided on 3rd March, 2022.

Income Tax Ordinance (XLIX of 2001)---

----Preamble---Notifications SRO No.1212(I)/2018 dated 5-10-2018 & SRO No.1213(I)/2018 dated 5-10-2018---Constitution of Pakistan, Art.199---Factual controversy---Exemption from income tax---Petitioners were industrialists who sought exemption from income tax charged in their electricity bills on the basis of Notifications SRO No.1212(I)/2018 dated 5-10-2018 and SRO No.1213(I)/2018 dated 5-10-2018---Validity---Units of petitioners were established prior to issuance of Notifications SRO No.1212(I)/2018 dated 5-10-2018 and SRO No.1213 (I)/2018 dated 5-10-2018 or later required factual probe---Petitioners did not approach appropriate officers of Inland Revenue for deciding case of their exemptions---High Court, in exercise of Constitutional jurisdiction declined to intervene as essential fact whether the units were established prior to issuance of Notifications SRO No.1212(I)/2018 dated 5-10-2018 and SRO No.1213(I)/2018 dated 5-10-2018 or subsequent required recording of evidence---Constitutional petition was dismissed 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 06 others 2016 PTD 203 ref.

Manzoor Bashir Tangi for Petitioner.

Qazi Babar Irshad, DAG along with Siraj Muhammad Assistant Commissioner and Sharifullah Assistant Director (Legal) for Respondents.

2022 P T D 1477

[Peshawar High Court]

Before Musarrat Hilali and Syed Arshad Ali, JJ

COLLECTOR OF CUSTOMS, MODEL CUSTOMS COLLECTORATE, JAMRUD ROAD, PESHAWAR

Versus

Messrs KHYBER TEA AND FOOD COMPANY and 2 others

Customs Reference No.24-P of 2013, decided on 25th April, 2022.

Customs Act (IV of 1969)---

----S.196---Reference---High Court, jurisdiction of---Question of fact---Reappraisal of evidence---Scope---Question was with regard to import of goods in question---Two forums i.e. Adjudicating Officer and Collector Appeals concurred with department by holding that invoices in question were irrelevant---Customs Appellate Tribunal held the invoices were relevant and declared that goods were legally imported through those documents---Validity---Fact that seized goods were imported against invoices, was determined by Customs Appellate Tribunal as final hierarchy under Customs Act, 1969, for determining question of fact---High Court had very limited jurisdiction under S.196 Customs Act, 1969, and could not interfere with questions of fact determined by the Tribunal on the ground that on reappraisal of available record, a different conclusion could be drawn---High Court was to answer and interpret questions of law raised by any party to proceedings from judgment passed by the Tribunal---High Court declined to interfere in order passed by Customs Appellate Tribunal---Reference was dismissed, in circumstances.

Messrs Zarghoon Zarai Corporation v. Collector of Customs and another 2006 PTD 534; Pak Suzki Motors Co. Ltd., Karachi v. Collector of Customs, Karachi 2006 PTD 2237; Collector of Customs v. Messrs Noman Chughtai 2007 PTD 153; Messrs Ittehad Textile Industries (Pvt.) Ltd. v. Collector of Sales Tax Collectorate of Sales Tax and Central Excise, Faisalabad 2007 PTD 663; Assistant Collector of Customs, Sambrial Dry Port, Sialkot v. Messrs Al-Badar Poultry Farms, Wazirabad 2004 PTD 2683 and Messrs B.P Industries, Karachi and others v. The Additional Collector of Customs, Sales Tax and Central Excise (Adjudication) and another 2008 PTD (Trib.) 36 rel.

Abdul Rauf Rohaila for Petitioner.

Attique-ur-Rehman and Farhat Nawar Lodhi, Advocate Supreme Court for Respondents.

2022 P T D 1496

[Peshawar High Court]

Before Musarrat Hilali and Syed Arshad Ali, JJ

DIRECTOR INTELLIGENCE AND INVESTIGATION, (CUSTOMS), PESHAWAR

Versus

Messrs KHYBER TEA AND FOOD COMPANY, PESHAWAR and 2 others

Customs Reference No.26-P of 2013, decided on 25th April, 2022.

Customs Act (IV of 1969)---

----S.196---Reference---High Court, jurisdiction of---Question of fact---Scope---Question was with regard to import of goods---Validity---Reference before High Court only lay when there was substantial question of law raised for adjudication---Question of fact once determined by Customs Appellate Tribunal could not be re-agitated before High Court to answer a reference in terms of S.196 Customs Act, 1969---High Court declined to interfere in order passed by Customs Appellate Tribunal as amount of taxes and duties was less than one million and Additional Collector as well as Deputy Collector both had jurisdiction in the matter---Reference was disposed of accordingly.

Zarghoon Zarai Corporation v. Collector of Customs and another 2006 PTD 534; Pak Suzuki Motors Co. Ltd., Karachi v. Collector of Customs, Karachi 2006 PTD 2237; Collector of Customs v. Messrs Noman Chugtai 2007 PTD 153; Messrs Ittehad Textile Industries (Pvt.) Ltd. v. Collector of Sales Tax Collectorate of Sales Tax and Central Excise, Faisalabad 2007 PTD 663; Assistant Collector of Customs Sambrial Dry Port, Sialkot v. Messrs Al-Badar Poultry Farms, Wazirabad 2004 PTD 2683; Messrs B.P. Industries, Karachi and others v. The Additional Collector of Customs, Sales Tax and Central Excise (Adjudication) and another 2008 PTD (Trib.) 36 rel.

Abdul Rauf Rohaila for Petitioner.

Attique-ur-Rehman for Respondents.

2022 P T D 1616

[Peshawar High Court]

Before Musarrat Hilali and Syed Arshad Ali, JJ

COLLECTOR OF CUSTOMS, MODEL CUSTOMS COLLECTORATE, PESHAWAR

Versus

Messrs KHYBER TEA AND FOOD COMPANY, PESHAWAR

Customs Reference No.83 of 2011, decided on 25th April, 2022.

Customs Act (IV of 1969)---

----S.196---Reference---High Court, jurisdiction of---Question of fact---Scope---Question was with regard to import of goods in question---Two forums i.e. Adjudicating Officer and Collector Appeals concurred with department by holding that invoices in question were irrelevant---Customs Appellate Tribunal held the invoices as relevant and declared that goods was legally imported against payment of duties---Validity---Such was question of fact which was finally determined by Customs Appellate Tribunal---Reference before High Court lay when there was substantial question of law raised for adjudication---Question of law once determined by Customs Appellate Tribunal could not be re-agitated before High Court as jurisdiction under S.196 of Customs Act, 1969, was limited only to answer question of law---High Court declined to interfere in order passed by Customs Appellate Tribunal---Reference was dismissed, in circumstances.

Messrs Zarghoon Zarai Corporation v. Collector of Customs and another 2006 PTD 534; Pak Suzuki Motors Co. Ltd., Karachi v. Collector of Customs, Karachi 2006 PTD 2237; Collector of Customs v. Messrs Noman Chugtai 2007 PTD 153; Messrs Ittehad Textile Industries (Pvt.) Ltd. v. Collector of Sales Tax Collector of Sales Tax and Central Excise, Faisalabad 2007 PTD 663; Assistant Collector of Customs Sambrial Dry Prt, Sialkot v. Messrs Al-Badar Poultry Farms, Wazirabad 2004 PTD 2683 and Messrs B.P. Industries, Karachi and others v. The Additional Collector of Customs, Sales Tax and Central Excise (Adjudication) and another 2008 PTD (Trib.) 36 rel.

Abdul Rauf Rohaila and Shahid Qayyum Khattak for Petitioner.

Attiq-ur-Rehman for Respondent.

Farhat Nawaz Lodhi, Advocate Supreme Court for Respondents.

2022 P T D 1776

[Peshawar High Court]

Before Lal Jan Khattak and Kamran Hayat Miankhel, JJ

COMMISSIONER INLAND REVENUE, REGIONAL TAX OFFICE, PESHAWAR

Versus

Messrs GADOON TEXTILE MILLS, GADOON AMAZAI SWABI and another

Sales Tax Reference No.09-P of 2017, decided on 24th February, 2022.

Sales Tax Act (VII of 1990)---

----Ss.8(ca), 47 & 73---Refund of sales tax---Tax credit not allowed---Dispute was with regard to tax credit not allowed on the ground that sales tax was not deposited in Government treasury with regard to goods or service---Validity---Two conditions were necessary under Ss. 8 (ca) & 73 of Sales Tax Act, 1990, to claim refusal (i)supplier deposited sales tax in Government treasury and (ii) buyer had deposited through banking channel from his business account amount of sales tax invoices in favour of supplier---Buyer fulfilled his duty as per S.73 of Sales Tax Act, 1990 but supplier did not deposit sales tax amount in government treasury, therefore, buyer was not entitled to a refund of sales tax---Only duty on buyer under S.73 of Sales Tax Act, 1990 was that if payment of amount for transaction exceeding Rupees 50,000/- was made by a cross cheque drawn on a Bank or by cross Bank draft or cross pay order, or any other crossed banking instrument showing transfer of amount of sales tax invoice in favour of supplier from business Bank account of the buyer---Such condition as envisaged under S.73 of Sales Tax Act, 1990 was fully complied with by the buyer but law on the subject was silent that if department had recovered sales tax from supplier that would happen to refund of the buyer---Order of Appellate Tribunal Inland Revenue directing authorities to recover sales tax from supplier and then returned it to buyer was well reasoned---High Court declined to interfere in the order passed by Appellate Tribunal Inland Revenue---Reference was dismissed, in circumstances.

Shahid Qayyum Khattak for Petitioner.

Ishtiaq Ahmad (Junior) for Respondent No.1.

2022 P T D 1932

[Peshawar High Court]

Before Ishtiaq Ibrahim and Syed Arshad Ali, JJ

COMMISSIONER INLAND REVENUE, PESHAWAR

Versus

TRIBAL AREAS ELECTRICITY SUPPLY COMPANY, LTD. PESHAWAR and another

S.T.R No.30-P with I.R and C.M. No.19-P of 2021, decided on 24th May, 2022.

Sales Tax Act (VII of 1990)---

----Ss.11 & 30---Non-payment or short payment of sales tax---Commissioner Inland Revenue authorizing his subordinate Officers of Inland Revenue to exercise their powers and perform their functions as conferred by the Sales Tax Act, 1990 and its subordinate Rules---Scope---Department assailed order passed by Appellate Tribunal whereby Appellate Tribunal allowed the appeals of respondents on jurisdictional issue---Only question which was adjudicated by the Appellate Tribunal was the assumption of jurisdiction under S. 11(2) of the Sales Tax Act, 1990, by subordinate officer of Commissioner Inland Revenue under the delegation of power---Department placed reliance on Commissioner Inland Revenue, Zone-III, RTO-II, Lahore v. Messrs Hamza Nasir Wire, etc reported as 2020 SCMR 1822 wherein it was held that all Officers of Inland Revenue of different grades appointed under S. 30(1) of the Sales Tax Act, 1990, possessed the power to issue show cause notices under S. 11 of the Act---Parties agreed to let the matter be sent to the Appellate Tribunal as entire controversy had yet to be decided by the Tribunal---Impugned orders were set aside and the matter was remanded to the Appellate Tribunal to decide the case afresh on merit.

Qaiser Abbas Bangash for Petitioner.

Hussain Ahmad Sherazi for Respondents.

2022 P T D 1226

[Balochistan High Court]

Before Muhammad Hashim Khan Kakar, J

INDUS MOTORS COMPANY LIMITED

Versus

GOVERNMENT OF BALOCHISTAN, FINANCE DEPARTMENT and 2 others

Constitutional Petition No.625 of 2019, decided on 23rd May, 2022.

(a) Balochistan Sales Tax on Services Act (VI of 2015)---

----Ss.14 & 52---Balochistan Sales Tax Special Procedure (Withholding) Rules, 2018, R. 3---Recovery of the tax not levied or short levied---Special procedure and tax withholding provisions---Responsibility of withholding agent---Scope---Petitioner assailed the issuance of show-cause notice by the Balochistan Revenue Authority---Validity---Officer had issued impugned show cause notice for tax periods of 2016, 2017 and 2018 ignoring the fact that the Balochistan Sales Tax Special Procedure (Withholding) Rules, 2018, were notified on 27th June, 2018---Subsection (3) of S. 14 of Balochistan Sales Tax on Services Act, 2015, which creates a liability on the withholding agent and empowers the authority to personally hold responsible a withholding agent if he fails to withhold sales tax on services was inserted through Balochistan Sales Tax on Services (Amendment) Act, 2019, notified on 15th January, 2019---Again subsection (6) of S. 52 which provides the mechanism for recovery of sales tax on services required to be withheld by a withholding agent in case the withholding agent fails to withhold such sales tax on services was also inserted through Balochistan Sales Tax on Services (Amendment) Act, 2019---Officer had also failed to invoke S. 52(6) of the Balochistan Sales Tax on Services Act, 2015---Officer had demanded total amount of sales tax on services from the petitioner which was payable by the taxpayer---Officer had ignored the fact that the same sum of money was already ordered as recoverable from the taxpayer through orders in original---Letter and spirit of law is that the withholding agent is liable to withhold certain portion of tax payable by a taxpayer---Such tax actually is liability of the taxpayer and the withholding agent just withholds a portion of total liability of the taxpayer---Such tax cannot be recovered simultaneously from the taxpayer as well as withholding agent---Once the taxpayer discharges his tax liability then the withholding agent is only liable to default surcharge under S. 49 of the Balochistan Sales Tax on Services Act, 2015---Impugned show cause notice was declared to be unlawful and void ab initio---Constitutional petition was allowed.

Messrs Riaz Bottlers (Pvt.) Ltd. v. LESCO and others 2010 PTD 1295 ref.

Sui Northern Gas Pipelines v. Deputy Commissioner Inland Revenue and others 2014 PTD 1939 rel.

(b) Balochistan Sales Tax on Services Act (VI of 2015)---

----S.14---Special procedure and tax withholding provisions---Scope---Subsection (3) of S.14 of Balochistan Sales Tax on Services Act, 2015, creates a liability on the withholding agent and empowers the authority to personally hold responsible a withholding agent if he fails to withhold sales tax on services.

(c) Balochistan Sales Tax on Services Act (VI of 2015)---

----S.52---Recovery of the tax not levied or short levied---Scope---Subsection (6) of S.52 of Balochistan Sales Tax on Services Act, 2015, provides the mechanism for recovery of sales tax on services required to be deducted by a withholding agent---If the withholding agent failed to withhold sales tax on services then the concerned officer of the authority may pass an order to determine amount of default and recover the same.

(d) Balochistan Sales Tax on Services Act (VI of 2015)---

----S.14---Balochistan Sales Tax Special Procedure (Withholding) Rules, 2018, R.3---Special procedure and tax withholding provisions---Responsibility of withholding agent---Scope---Withholding agent is required to withhold certain portion or total amount of tax payable by a registered person liable to pay sales tax on service.

(e) Interpretation of statutes---

----Retrospective effect of legislation---Scope---Although the power of the legislature to enact retrospective law is well-recognized, but it is equally well settled that in the absence of any express provision or necessary implication even the laws which have been made retrospectively applicable can neither be applied to the transactions which are past and closed nor can vested rights be taken away or destroyed.

Molasses Trading and Export (Pvt.) Limited v. Federation of Pakistan and others 1992 SCMR 1905 rel.

(f) Interpretation of statutes---

---Retrospective effect of legislation---Scope---Statute, which is procedural in nature, can operate retrospectively unless it affects an existing right on the date of promulgation or causes injustice or prejudice to a substantive right---If it is of such a character that will tend to promote justice without any consequential embarrassment or detriment to any of the parties concerned, the Courts would favourably incline towards giving effect to such procedural statutes retrospectively---If existing rights are affected or the giving of retrospective operation causes inconvenience or injustice, then the Courts will not even in the case of procedural statute favour an interpretation giving retrospective effect to the statute.

Adnan Afzal v. Capt. Sher Afzal PLD 1969 SC 187 rel.

Qazi Umair for Petitioner.

Muhammad Ali Rakhshani, Additional Advocate General for Respondent No.1.

Jam Saka for Respondents Nos.2 and 3.

2022 P T D 1265

[Balochistan High Court]

Before Muhammad Hashim Khan Kakar and Abdul Hameed Baloch, JJ

The COMMISSIONER INLAND REVENUE ZONE-I, REGIONAL TAX OFFICE, QUETTA

Versus

Messrs QUETTA ELECTRIC SUPPLY COMPANY LIMITED, ZARGHOON ROAD, QUETTA

Sales Tax Reference Application No.05 of 2021, decided on 6th June, 2022.

Sales Tax Act (VII of 1990)---

----Ss.11, 33 (5), 34 & 47---Penalty and surcharge, recovery of---Pre-conditions---Authorities sought recovery of penalty and surcharge from taxpayer in exercise of powers under S.11(1) of Income Tax Ordinance 2001---Appellate Tribunal Inland Revenue set aside the order of such recovery---Validity---For imposition of penalty under S.33 of Sales Tax Act, 1990, and default of surcharge under S.34 of Sales Tax Act, 1990, authorities could invoke provisions of S.11(1) of Sales Tax Act, 1990, issue show-cause notice and could pass assessment order, if registered person had either failed to file return by due date or having filed return by due date, had paid an amount which for some miscalculation was less than the amount of tax actually payable---Both the eventualities triggering action under S.11(1) of Sales Tax Act, 1990, were non-existent---High Court declined to interfere in order passed by Appellate Tribunal Inland Revenue as show-cause notice and subsequent order in original passed by Assessing Officer were rightly set aside---Reference was dismissed, in circumstances.

Sohail Ansari, Assisted by Khalid Aziz, Assistant Director, RTO Quetta for Applicant.

Khalid Sultan for Respondent.

2022 P T D 1290

[Balochistan High Court]

Before Muhammad Ejaz Swati and Zaheer-ud-Din Kakar, JJ

COMMISSIONER INLAND REVENUE ZONE-I, REGIONAL TAX OFFICE, QUETTA

Versus

Messrs SAINDAK METALS LTD. QUETTA, TAX PAYER 2006

Income Tax Appeal No.01 of 2015, decided on 8th December, 2021.

Income Tax Ordinance (XLIX of 2001)---

----Ss.120(1)(b), 122(5A) & 133---Amended assessment order---Limitation---Dispute between parties was with regard to amended assessment order filed under S.122 (5A) of Income Tax Ordinance, 2001---Validity---Respondent / taxpayer filed income tax return for year 2006 on 30-12-2006, which deemed to be an assessment in term of S.120(1)(b) of Income Tax Ordinance, 2001---Assessment order could have been amended as per S.122(2) of Income Tax Ordinance, 2001 as stood on 30-12-2006 and its limitation commenced on 01-01-2007---Assessment Order in question could be amended within five years up till 1-1-2012 instead of 30-06-2012---Amendment of assessment order dated 30-06-2012 was filed after expiry of limitation after five years from the date of return, which was barred by time and could not be applicable retrospectively---Reference was dismissed, in circumstances.

2018 PTD 1474; 2019 PTD 1912; Messrs Allied Engineering Services Ltd. v. Commissioner of Income Tax and another 2015 PTD 2562; Commissioner of Income Tax v. Messrs Eli Lilly Pakistan (Pvt.) Ltd. 2009 SCMR 1279; Hakim Ali Zardari v. The State and another PLD 1998 SC 1; Adnan Afzal v. Capt. Sher Afzal PLD 1969 SC 187; Khushi Muhammad through L.Rs. and others v. Mst. Fazal Bibi and others PLD 2016 SC 872 and Additional Commissioner Inland Revenue, Audit Range, Zone-I and others v. Messrs Eden Builders Limited and others 2018 SCMR 991 rel.

Mian Badar-e-Munir, Assistant Attorney General along with Atta Muhammad Nasar, Deputy Commissioner Inland Revenue for Appellant.

Syed Tauqeer Bukhari and Muhammad Riaz Ahmed for Respondent.

2022 P T D 1311

[Balochistan High Court]

Before Abdullah Baloch, J

HABIBULLAH

Versus

The STATE

Customs Appeal No.01 of 2022, decided on 25th April, 2022.

Customs Act (IV of 1969)---

----Ss.2(s) & 156(1)---Smuggling---Offences and penalties---Appreciation of evidence---Benefit of doubt---Non-production of smuggled items before the Court---Non-association of independent witnesses---Effect---Accused was convicted for driving a vehicle containing smuggled goods---Neither the smuggled goods nor the carrier (coach) was produced before the Trial Court, which were required to be produced by the prosecution in support of its version---None of the passengers of the coach nor its conductor were associated as witness by the Investigating Officer---Benefit of such doubt was not extended in favour of the accused by the Trial Court at the time of recording conviction of the accused, for which he was entitled---Impugned judgment suffered from mis-reading, non-reading and mis-appreciation of law and evidence, which was not sustainable---Appeal against conviction was accepted, in circumstances.

Tariq Pervaiz v. The State 1995 SCMR 1345 rel.

Rafiullah Barech for Appellant.

Jamil Bostan, Assistant Attorney General for the State.

2022 P T D 1377

[Balochistan High Court]

Before Muhammad Hashim Khan Kakar and Abdul Hameed Baloch, JJ

The COMMISSIONER INLAND REVENUE ZONE-I, REGIONAL TAX OFFICE, QUETTA

Versus

Messrs HAJVAIRY STEEL INDUSTRIES (PVT.) LTD.

Sales Tax Reference Application No.3 of 2021, decided on 22nd June, 2022.

Sales Tax Act (VII of 1990)---

----Ss.3(1A), (6) & 47---Sales Tax Special Procedure Rules 2007, R.58-H---Sales tax liability---Levy of further tax---Non-obstinate clause---Effect---Dispute was with regard to discharging of sales tax liability by taxpayer under the provisions of R.58-H of Sales Tax Special Procedure Rules, 2007 and it was not required to pay further tax under S.3(1A) of Sales Tax Act, 1990---Validity---Provision of S.3(1A) of Sales Tax Act 1990, only applied where taxable supplies were made to a person who had not obtained registration number and was in addition to subsections mentioned in S.3(1A) of Sales Tax Act, 1990---Powers were conferred under S.3(6) of Sales Tax Act, 1990, to Federal Government or Federal Board of Revenue to levy tax in lieu of S.3(1) of Sales Tax Act, 1990 on any supplies or class of supplies or any goods or class of goods and could also specify mode, manner, or time of payment of such amount of tax--- Provision of S.71 of Sales Tax Act 1990, began with non-obstinate clause and if a procedure was provided by Board of Revenue, then that procedure had to take precedence over other provisions, so provided---As such the same constituted final discharge of sales tax liability on the part of registered person---Respondent / registered person did not pay any sales tax on supply of final products produced by appellant but sales tax liability was discharged in the form of ten and half Rupees per unit of electricity consumed---Appellant was not paying sales tax in terms of S.3(1) of Sales Tax Act, 1990 on taxable supplies made by them---Authorities could not allege that appellant was liable to payment of further tax when appellant did not pay any sales tax under either of subsections of S.3 of Sales Tax Act, 1990---High Court declined to interfere in the order passed by Appellate Tribunal Inland Revenue as there was no legal infirmity in orders in question---Reference was dismissed in circumstances.

Messrs Zak Re-Rolling Mills (Pvt.) Ltd. v. ATIR 2020 PTD 382; Shaheen Steel Furnace Gujranwala v. Government of Pakistan 2009 PTD 722; Messrs Byco Steel Re-rolling Mills (Pvt.) Ltd. v. Federation of Pakistan and others W.P No.448/2016; Digicom Trading (Pvt.) Ltd. v. Federation of Pakistan and others 2016 PTD 648 and Messrs Zak Re-Rolling Mills (Pvt.) Ltd. v. ATIR and others Civil Petition No.2727 of 2019 ref.

Syed Iqbal Shah, DAG assisted by Khalid Aziz, Assistant Director, RTO for Applicant.

Mujeeb Ahmed Hashmi for Respondent.

2022 P T D 1634

[Balochistan High Court]

Before Jamal Khan Mandokhail, CJ and Nazeer Ahmed Langove, J

The COLLECTOR OF CUSTOMS, MODEL CUSTOM COLLECTORATE, QUETTA

Versus

ABDUL RAHIM and another

Custom Reference Application No.51 of 2017, decided on 29th July, 2020.

Customs Rules, 2001---

----R.58---Approval for auction of goods---Scope---Department confiscated twenty one chassis frames for having been smuggled---Collector (Adjudication) ordered for confiscation of the goods as well as the vehicle in which the goods were being smuggled and ordered that the chassis frames be either cut into pieces or their chassis numbers may be removed/defaced/disfigured prior to their disposal in order to prevent their subsequent conversion to used trucks/vehicles---Alleged owner filed appeal before the Appellate Tribunal---Appellate Tribunal vide impugned order accepted the request of the department and observed that auction of the goods was allowed without cutting of chassis frames---Department assailed such order through the instant reference application---Validity---Perusal of impugned order revealed that there was no direction of the Appellate Tribunal with regard to auction or otherwise of the chassis frames---Appellate Tribunal had permitted the department to continue its past practice---Department was to continue or discontinue its past practice---Appellate Tribunal had not directed the department to auction the seized goods---Points raised in the reference were not convincing to interfere in the findings of the Appellate Tribunal----Reference application was dismissed.

Akhlaq Ahmed Shah for Applicant.

Muhammad Rahim Mandokhail and Wali Khan Mandokhail for Private Respondents.

2022 P T D 1844

[Balochistan High Court]

Before Muhammad Hashim Khan Kakar and Abdul Hameed Baloch, JJ

The COMMISSIONER INLAND REVENUE ZONE-I, REGIONAL TAX OFFICE, QUETTA

Versus

Messrs QUETTA ELECTRIC SUPPLY COMPANY LIMITED, QUETTA

Income Tax Reference Application No.02 of 2021, decided on 22nd August, 2022.

(a) Words and phrases---

----"Subsidy"---Object, purpose and scope--- Subsidy is usually provided to a person to give relief from hardship or to support such person in times of economic crisis---Such person may be an individual or an entity e.g. government owned corporation or a limited company---In times of economic crisis government provides bailout packages or subsidies to avoid collapse of such entities---In case of individuals government provides targeted subsidies to provide financial support to people of a certain area, group of income or class of individual involved in specific economic activity---Such subsidies are being provided by government to ordinary consumers as well e.g. subsidies for providing petroleum products, food items etc. at lower than market prices/specified rates.

Advance Law Lexicon 3rd Edition Book 4 page 4524 and Black's Law Dictionary rel.

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

----Ss.113, 133, Second Schedule Part I clause (102A) & Part IV---Regulation of Generation, Transmission and Distribution of Electric Power Act (XL of 1997), S.31(2)---Reference---Minimum tax on income---Subsidy on tariff---Question was with regard to subsidy on tariff as part of turnover, given by respondent taxpayer to its consumers---Validity---Electric supply companies were exempt from minimum tax under S.113 of Income Tax Ordinance 2001 from the date of their creation upto the date of completion of process of corporatization i.e. till the tariff was notified---Since such period had already lapsed hence under Part IV of Second Schedule to Income Tax Ordinance, 2001 no exemption from minimum tax under S.113 of Income Tax Ordinance, 2001 was available to electric supply companies---Amount received / receivable by electric power supply companies from Federal Government on account of difference between lower than NEPRA Tariff rate charged to consumers and rate notified by NEPRA was not subsidy---Such was balance price of electricity which was paid by Government on behalf of electricity consumers to provide relief to such consumers---Electric power supply companies received their full price of electricity sold to consumers partly from consumers and partly from Government---Such total amount constituted gross revenue on account of sale of electricity and such revenue was liable to minimum tax under S. 113 of Income Tax Ordinance, 2001 unless specific exemption was brought into Part IV of the Second Schedule to Income Tax Ordinance, 2001---Appellate Tribunal Inland Revenue erred in holding TDS as subsidy and exempt from minimum tax under S.113 of Income Tax Ordinance, 2001---Appellate Tribunal Inland Revenue also erred in treating TDS as trade discount because trade discount although mentioned on sale invoices was not charged from buyers---In case of electricity bill no such trade discount was mentioned which was not received from consumers---Appellate Tribunal Inland Revenue erroneously referred to Cl. (102A) Part I of the Second Schedule to Income Tax Ordinance, 2001, while discussing exemption from minimum tax under S.113 of Income Tax Ordinance, 2001---Part I of the Second Schedule to Income Tax Ordinance, 2001 provided exemption from total income only and it had no concern with exemption from specific provision which was covered in Part IV of the Second Schedule to Income Tax Ordinance, 2001---Reference was allowed accordingly.

2019 PTCL 731; 2016 PTD 1393; 2010 PTD 1119 and 2006 PTD 2683 ref.

Sohail Ansari for Appellant.

Zahoor Hassan Jamot, Muhammad Ali Kanrani and Hakeemullah for Respondent.

2022 P T D 1889

[Balochistan High Court]

Before Zaheer-ud-Din Kakar and Muhammad Aamir Nawaz Rana, JJ

COMMISSIONER INLAND REVENUE ZONE-I REGIONAL TAX OFFICE, QUETTA

Versus

Messrs BALOCHISTAN ONYX DEVELOPMENT CORPORATION LTD.

Income Tax Appeal No.01 of 2014, decided on 22nd August, 2022.

Income Tax Ordinance (XLIX of 2001)---

----Ss.122 & 133---Audit, selection for---Definite information---Pre-condition---Case of respondent/taxpayer was selected for audit by Commissioner Inland Revenue---Validity---Adjudicating authority i.e. Commissioner Inland Revenue in violation to legal provision as it stood then on 01-07-2009 selected case of respondent / taxpayer for audit taxpayer and subsequently under S.122(1) & (5) of Income Tax Ordinance, 2001 created an additional tax liability---In order to initiate such like proceedings "definite information" was required---Merely on the basis of presumptions and assumptions proposed income was supposed which was against the mandate of S.122(5) of Income Tax Ordinance, 2001---Without any definite information within the scope of S.122(5) of Income Tax Ordinance, 2001 proceedings were initiated and merely on the basis of assumptions the liability was created---High Court declined to interfere in the matter as Appellate Authority and Appellate Tribunal Inland Revenue rightly recorded findings against the decision of adjudicating authority---Reference was dismissed in circumstances.

Messrs Chenone Stores Ltd. v. Federal Board of Revenue 2012 PTD 1815; Shahnawaz's case 2011 PTD 1558 and CIR v. Khan CNG and Filling Station 2013 PTD 884 rel.

Sohail Ansari assisted by Sanaullah Ababki, Additional Attorney General for Applicant.

Sharjeel Haider for Respondent.

2022 P T D 232

[Supreme Court of Pakistan]

Present: Umar Ata Bandial, ACJ and Muhammad Ali Mazhar, J

COMMISSIONER INLAND REVENUE and others

Versus

JAHANGIR KHAN TAREEN and others

Civil Petition No.349-L of 2017, decided on 15th September, 2021.

(Against the Judgment of Lahore High Court, Lahore dated 30.12.2016 passed in W.P. 27535 of 2016)

(a) Income tax---

----Show cause notice---Scope and purpose---Show cause notice was delivered to a person by an authority in order to get the reply back with a reasonable cause as to why a particular action should not be taken against him with regard to the defaulting act---By and large, it was a well-defined and well-structured process to provide the alleged defaulter with a fair chance to respond the allegation and explain his position within reasonable timeframe.

(b) Constitution of Pakistan---

----Art. 199---Show cause notice issued by tax authorities---Show cause notice challenged in Constitutional jurisdiction of the High Court---Maintainability---Court may take up writs to challenge the show-cause notice if it was found to be barred by law or abuse of process of the court or was coram non judice---Where a special law provided legal remedy for the resolution of a dispute, the intention of the legislature in creating such remedy was that the disputes falling within the ambit of such forum be taken only before it for resolution---Bypassing the proper forum was contrary to the intention of the provisions of Art. 199(1) of the Constitution which conferred jurisdiction on the High Court only and only when there was no adequate remedy available under any law---Where adequate forum was fully functional, the High Court must deprecate such tendency at the very initial stage and relegate the parties to seek remedy before the special forum created under the special law to which the controversy related---Abstinence from interference at the stage of issuance of show-cause notice in order to relegate the parties to the proceedings before the concerned authorities must be the normal rule--- Challenge to show cause notices in writ jurisdiction at premature stages and tendency to bypass the remedy provided under the relevant statute was by and large deprecated and disapproved in many dictums laid down in local and foreign judgments in which courts had considered the interference as an act of denouncing and fettering the rights conferred on the statutory functionaries specially constituted for the purpose to initially decide the matter.

Indus Trading and Contracting Company v. Collector of Customs (Preventive) Karachi and others 2016 SCMR 842; Messrs Chaudhri Wire Rope Industries Ltd. v. Sales Tax Officer, Special Circle-I, Lahore 1988 SCMR 1934; Messrs Ocean Pakistan Ltd. v. Federal Board of Revenue, Islamabad and others 2012 PTD 1374; Deputy Commissioner of Income Tax/Wealth Tax, Faisalabad and others v. Messrs Punjab Beverage Company (Pvt.) Ltd. 2007 PTD 1347 = 2008 SCMR 308; Messrs Amin Textile Mills (Pvt.) Ltd. v. Commissioner of Income Tax and 2 others 2000 SCMR 201; Shagufta Begum v. The Income-Tax Officer, Circle-XI, Zone-B, Lahore PLD 1989 SC 360; Khalid Mahmood Ch. and others v. Government of the Punjab through Secretary, Livestock and Dairy Development 2002 SCMR 805; Union of India (UOI) and others v. Vicco Laboratories (Equivalent Citation: 2008 (3) ALLMR (SC) 453; State of Uttar Pradesh v. Brahma Datt Sharma (Equivalent Citation: AIR 1987 SC 943; The Special Director and others v. Muhammad Ghulam Ghouse and others (Equivalent Citation: 2004 (2) ACR 1844 (SC), AIR 2004 SC 1467 and Union of India and others v. Kunisetty Satyanarayana (Equivalent Citation: AIR 2007 SC 906 ref.

(c) Right of Access to Information Act (XXXIV of 2017)---

----Ss. 2(a)(xii) & 5---General Clauses Act (X of 1897), S. 20-A---Constitution of Pakistan, Art. 19-A--- Notifications/Rules/Orders/ Regulations/Circulars issued by the Federal Board of Revenue (FBR)---Publication in Official Gazette---Scope---Incumbent upon the FBR to monitor and ensure that all notifications issued under the law or having force of law should be published in the official Gazette and timely posted at FBR website/portal also---Non-publication of certain notifications in the official Gazette bred and nurtured unnecessary litigation keeping aside the main controversy or nucleus of the case---Supreme Court directed that in future the FBR shall ensure that all such notifications should be published in the official Gazette and simultaneously posted at their website also for general public information and taxpayers.

Sarfraz Ahmad Cheema, Advocate Supreme Court along with Naeem Hassan, Secretary Litigation of FBR for Petitioners.

Shahzad Ata Elahi, Advocate Supreme Court for Respondents.

2022 P T D 434

[Supreme Court of Pakistan]

Present: Umar Ata Bandial, Sajjad Ali Shah and Syed Mansoor Ali Shah, JJ

COMMISSIONER OF INLAND REVENUE

Versus

Messrs MUGHAL BOARD INDUSTRY

Civil Petition No. 1026-L of 2019, decided on 2nd November, 2021.

(Against the order dated 13.02.2019 of the Lahore High Court, Lahore passed in STR No. 8160 of 2019)

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

----S. 34A---Illegally adjusted input tax---Default surcharge and penalties---Amnesty Scheme---Purpose and scope---Purpose of an amnesty scheme is to incentivize payment and collection of stuck-up revenue---Taxpayer who had made voluntary payment before the cut-off date under the amnesty scheme can avail the amnesty scheme.

Plain reading of SRO No. 606(I)/2012 dated 01.06.2012 ("amnesty notification") shows that if the default surcharge and penalties payable by a registered person are outstanding on account of illegally adjusted input tax, the registered person may avail exemption against default surcharge and penalties provided the whole of the principal amount of illegally adjusted input tax is deposited by 25th June, 2012 and any case or complaint filed by the registered person against the department is withdrawn by the said date.

The contention of the (tax) department that the amount of sales tax must be outstanding against the person on 01-06-2012 for the amnesty notification to apply, is not convincing. The spirit and object of the amnesty notification is to incentivize quick recovery of stuck up tax revenue, hence the notification offers that if only the principal amount of illegally adjusted sales tax is deposited by 25th June, 2012 the default surcharge and penalties stand exempted. The importance is of the cut-off date i.e. 25th June, 2012. There appears to be no bar in the notification and no possible disadvantage caused to the department, if the principal amount of sales tax is deposited prior to the date of the amnesty notification. In fact it is advantageous for the department as the stuck up tax revenue has been voluntarily deposited by the taxpayer, which is in line with the scheme of the amnesty being offered by the department. The other condition is the withdrawal of any case or complaint filed by the registered person against the department in this regard. Admittedly, the respondent (tax payer) deposited the principal amount of sales tax before 01-06-2012, and the respondent has not filed any case, etc against the department except the present case, hence the respondent successfully meets the conditions of the amnesty notification and is, therefore, entitled to the benefit of it.

The main purpose of the amnesty scheme is to incentivize payment and collection of stuck up tax revenue and, therefore, what matters is the payment by or before the cut-off date. The government must actually welcome any voluntary payment made by a taxpayer before the cut-off date. In any case, extension of the benefit of the amnesty notification to the tax payer ensures level playing field, creasing out any trace of discrimination amongst taxpayers who have already paid the principal amount of tax before the cut-off date. [p. 438] C

There was no justification to deny the benefit of the amnesty notification to the respondent taxpayer. Petition for leave to appeal was dismissed.

(b) Sales tax---

----Amnesty scheme--- Notification--- Interpretation--- Amnesty notification being beneficial subordinate legislation must be viewed liberally in favour of the taxpayer in order to achieve the solitary fiscal objective of quick recovery of stuck up tax revenue.

Ms. Kausar Parveen, Advocate Supreme Court (video-link from Lahore) along with Naeem Hassan, Secy (Lit.) FBR for Petitioner.

Nemo for Respondent.

2022 P T D 454

[Supreme Court of Pakistan]

Present: Umar Ata Bandial, Sajjad Ali Shah and Munib Akhtar JJ

FAWAD AHMAD MUKHTAR and others

Versus

COMMISSIONER INLAND REVENUE (ZONE-II), REGIONAL TAX OFFICE, MULTAN and another

Civil Appeals Nos. 1521 to 1526 of 2018, decided on 9th February, 2022.

(On appeal against judgment dated 04.11.2013 passed by the Lahore High Court, Multan Bench, Multan in Tax References Nos.55, 58, 61, 62, 64 of 2011 and 48 of 2009)

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

----Ss. 2(19)(a), 4(4), 4(5), 5, 8 & 39---Dividend in specie---Income liable to tax---Scope---Dividend in specie received by the taxpayer is income and taxable under S. 5 of the Income Tax Ordinance, 2001 ('the 2001 Ordinance')---Dividends constitute a separate block of income that is brought to tax in terms of S. 5 of the 2001 Ordinance---Dividends are to be taxed as a separate block of income under S. 5 but if for any reason any particular type, class or category of dividend, or the dividend involved in the facts and circumstances of a particular case, are found not to fall within the scope thereof, such dividend would then be brought to tax as "income from other sources" under S. 39 of the 2001 Ordinance---Either way a dividend is taxable unless exempt or otherwise taken out of the tax net by the application of any provision of the 2001 Ordinance.

Maharaj Kumar Gopal Saran Narain Singh v. Commissioner of Income Tax [1935] 3 ITR 237, [1935] UKPC 29 and Kanga and Palkhiwala's The Law and Practice of Income Tax (10th ed., 2014, pg. 193) ref.

(b) Income tax---

----Each tax year is a separate unit of account and taxation and the law has to be applied as it stood in respect of that tax year alone.

(c) Interpretation of statutes---

----Tax statute---Exemption clause---Retrospective effect---Scope---Exemption clause has a beneficial effect---Simply because a statutory provision has a beneficial effect does not mean that it automatically has, or can have, retrospective effect---Such principle is not sacrosanct; it can be overridden by the legislative will, but that must be done either expressly or shown to be the necessary intendment of the provision sought to be applied retrospectively.

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

----Ss. 5 & 150---Dividends, tax on---Sections 5 & 150 of the Income Tax Ordinance, 2001 ('the 2001 Ordinance')---Distinction---Section 5 speaks of the dividend being "received" by a person from a company, while S. 150 speaks of the dividend being "paid" by the latter---Former is a general expression, bringing to tax all that is received by way of dividend, while the latter is limited to the requirements of S. 150, i.e., requiring a deduction to be made on the dividend paid---Drawing any equivalence between Ss. 5 & 150 is illusory---One relates to the charge of the tax and the other to a mechanism of payment or recovery.

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

----S. 150--- Dividend in specie--- Section 150 of the Income Tax Ordinance, 2001 did not apply to dividend in specie.

Syed Ali Zafar, Advocate Supreme Court for Appellants (in C.As. Nos. 1521 to 1525/2018 via Video-Link, Lahore).

Ch. M. Zafar Iqbal, Advocate Supreme Court and Safaraz Ahmed Cheema, Advocate Supreme Court for Appellants (in C.A. No. 1526/2018 via Video-Link, Lahore).

Safaraz Ahmed Cheema, Advocate Supreme Court and Ch. M. Zafar Iqbal, Advocate Supreme Court for Respondents (in C.As. Nos.1521-1525/2018 via Video-Link, Lahore).

Mansoor Usman Awan, Advocate Supreme Court for Respondents (in C.A. No. 1526/2018).

2022 P T D 683

[Supreme Court of Pakistan]

Present: Maqbool Baqar, Mazhar Alam Khan Miankhel and Qazi Muhammad Amin Ahmed, JJ

NAUBAHAR BOTTLING COMPANY (PVT.) LIMITED and others

Versus

FEDERATION OF PAKISTAN through Revenue Division Ministry of Finance and others

Civil Appeal 1153 of 2015, decided on 20th January, 2022.

(Against judgment dated 15.09.2015 of the Lahore High Court, Lahore passed in I.C.A. No. 363 of 2013)

(a) Judgment---

----Scope---Judgment is an authority only in respect to what it decides, and only with regard to the proposition of law raised, in that case, and therefore point not argued before the Court cannot be considered to have been dealt with by its judgment.

Quinn v. Leathern 1901 Appeal Case 495 at 506; Trustees of the Port of Karachi v. Muhammad Saleem 1994 SCMR 2213 and Mst. Muhammadi and others v. Ghulam Nabi 2007 SCMR 761 ref.

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

----Ss. 2(27) & 3(2)---Federal Excise Act (VII of 2005), S. 12(4)---Aerated water---Determination of value for the purposes of duty---Retail price---Scope---Excise duty in the context of S. 3(2) of the Sales Tax Act, 1990 and S. 12(4) of Federal Excise Act, 2005, cannot be counted towards "retail price"---Law does not permit levy of excise duty on the amount of excise duty, yet to be 'charged', to be included in the "retail price".

Question raised in the present case was whether the retail price as described by subsection (27) of section 2 of the Sales Tax Act, 1990 ("STA, 1990"), and subsection (4) of section 12 of the Federal Excise Act, 2005 ("FEA, 2005"), respectively, includes the amount of excise duty leviable in terms of section 12 of FEA, 2005. A charge which is yet to be levied and realized on something (in the present case that something being "retail price"), cannot possibly be included in/or counted towards that very thing. Law does not permit levy of excise duty on the amount of excise duty, yet to be 'charged', to be included in the "retail price".

Pakistan through Secretary Finance and others v. Messrs Lucky Cement and another 2007 PTD 1656 ref.

There is yet another practical difficulty, rather an impossibility in the way of including excise duty in the retail price, as in terms of section 3 of FEA, 2005 excise duty is charged on "retail price". The same can therefore only be charged after "retail price" has been finally calculated/determined and has become known. Crystallization of "retail price " is therefore an essential prerequisite, and serves as a trigger for levying excise duty. "Retail price" can therefore not include the levy itself and only such duties, charges and taxes which are applicable and already levied on the "retail price" prior to the charge under the FEA, 2005 can be included in the "retail price" for the purpose of such a charge. The word "duties" as employed in section 12(4) of FEA, 2005 cannot therefore be construed as referring to excise duty. [p. 691] C

Charge of excise duty on notional excise duty is clearly illegal and unconstitutional.

PLD 2017 SC 99 and PLD 1976 Kar. 1238 ref.

(c) Taxation---

----Levy/charge/tax, imposition of--- Scope--- Tax, levy or charge can only be imposed under a clear mandate and sanction of law.

PLD 2017 SC 99 ref.

(d) Taxation---

----Levy of tax---Scope---Measure of a tax must have a reasonable nexus with it, the subject matter, and that a tax cannot be levied on the basis of arbitrary valuation.

2015 SCMR 595 ref.

Khalid Anwar, Senior Advocate Supreme Court (through video link from residence) and Syed Rifaqat Hussain Shah, Advocate-on-Record for Appellants.

Sohail Mehmood, D.A.G., Barrister Ahmed Pervaiz, Advocate Supreme Court, Mrs. Kausar Parveen, Advocate Supreme Court, Syed Ghulam Abbas Kazmi, Member (L), Masood Akhter, Chief (L), Naeem Hassan, Secy. (L), Amjad Farooq, Commissioner, Aftab Alam, Commissioner, Sarmad Qureshi, Commissioner and Ch. M. Anwar, Commissioner for Respondents.

2022 P T D 727

[Supreme Court of Pakistan]

Present: Qazi Faez Isa and Yahya Afridi, JJ

COMMISSIONER INLAND REVENUE, LTO, KARACHI

Versus

PACKAGES LIMITED

Civil Petition No. 4-K of 2021, decided on 13th January, 2022.

(Against the order dated 05.11.2020 of the High Court of Sindh at Karachi passed in I.T.R.A. No. 67 of 2015)

Income Tax Ordinance (XXXI of 1979) [since repealed]---

----S. 66A---Show cause notice issued under S. 66A of the Income Tax Ordinance, 1979---Barred by time---Frivolous litigation by tax Department---Before the High Court the Department had relied upon S. 66-A of the Income Tax Ordinance, 1979 ('the 1979 Ordinance') and not S. 66---Under the said S. 66A, a notice could only be issued within a period of four years by an Inspecting Additional Commissioner of income tax from the date of an order passed by the Deputy Commissioner---In the present case the Deputy Commissioner passed his order on 16th March 1998---Subject show cause notice dated 23rd May 2011 was issued more than thirteen years after the said order and as such was time-barred as it was well beyond the prescribed period of four years---Petition for leave to appeal was dismissed with costs in the sum of twenty thousand rupees, and leave was refused with the observations that the Income Tax Department, which was now the Federal Board of Revenue, must act fairly in dealing with taxpayers and to abide by the law governing it; if any benefit accrued to taxpayers under the law, it must not be withheld and the assessee's and its own time and resources should not be needlessly wasted, and the present frivolous litigation also wasted the time of the Tribunal, the High Court and of the Supreme Court; time which would have been better spent in resolving legitimate disputes.

Irfan Mir Halepota, Advocate Supreme Court, Mazhar Ali B. Chohan, Advocate-on-Record and Abdul Wahid, Additional Commissioner for Petitioner.

Ejaz Ahmed Zahid, Advocate Supreme Court and K. A. Wahab, Advocate-on-Record for Respondent.

2022 P T D 747

[Supreme Court of Pakistan]

Present: Umar Ata Bandial, Sajjad Ali Shah and Munib Akhtar, JJ

COMMISSIONER INLAND REVENUE, ZONE-I, LAHORE

Versus

Messrs PAK ELEKTRON LTD.and others

Civil Petition No. 1817-L of 2017, decided on 4th February, 2021.

(Against the judgment dated 24.04.2017 of the Lahore High Court, Lahore passed in STR No. 1 of 2011)

Sales Tax Act (VII of 1990)---

----S. 4---Electricity meters---Equipment eligible for zero rating of sales tax under SRO No. 530(I)/2005 dated 6-6-2005 ('the SRO')---Plea by tax department that electricity meters are consumer durables and are not eligible for classification as equipment and hence not covered by the SRO---Held, that metering equipment can be used for different purposes---In relation to machinery, equipment that measures temperature, speed, pressure etc. are also in the nature of metering equipments---Undeniably power supply is a crucial factor for the operation of plant and machinery, therefore, electricity meters are classifiable as equipment used in the operation of the industrial process at the taxpayer's premises---High Court and the Tribunal had rightly found that electricity meters are equipment eligible for zero rating under the terms of SRO No. 530(I)/2005 dated 6-6-2005---Petition for leave to appeal was dismissed and leave was refused.

Sindh Institute of Urology v. Federation of Pakistan 2017 PTD 603 ref.

2022 P T D 765

[Supreme Court of Pakistan]

Present: Umar Ata Bandial, Sajjad Ali Shah and Munib Akhtar, JJ

CIVIL APPEALS NOS. 717 TO 722 OF 2013

(On appeal from the judgment/order dated 06.10.2011 of the Lahore High Court, Lahore passed in STR's Nos. 107, 105, 106/2011, W.Ps. Nos. 11835/2011, 13170/2011 and 19106 of 2011)

AND

CIVIL APPEAL NO. 1108 OF 2013

(On appeal from the judgment/order dated 21.05.2013 of the Peshawar High Court, Peshawar passed in STR No. 5-P/2012)

ISLAMABAD ELECTRIC SUPPLY COMPANY LTD. (IESCO) and 3 others

Versus

COMMISSIONER INLAND REVENUE ISLAMABAD and others

Civil Appeals Nos. 717 to 722 of 2013 and Civil Appeal No. 1108 of 2013, decided on 15th February, 2021.

Sales Tax Special Procedures Rules, 2007---

----R.58H (as it existed between July 2008 to December 2010)---Sales Tax Act (VII of 1990), S. 7(1)---Output tax of Electricity Distribution Supply companies (DISCOs)---Scope---Appellants (DISCOs) at the relevant time purchased electricity from WAPDA and the Pakistan Electric Power Company Ltd. (PEPCO) and supplied the same to their consumers---Sales tax paid by the appellants on the purchase of electric power was their input tax and that charged by them from the consumers was the output tax---Applicable rate of tax at the relevant time, both on the input tax and the output tax was 17%---In the present case the consumers were steel-melters, steel re-rollers and composite units of steel melting and re-rolling ("the consumers")---As to the sales tax charged by the appellants from these consumers for the supply of electricity, i.e., 17% there was no dispute that this constituted appellants' output tax---Dispute was regarding the amount charged by the appellants from the consumers under R. 58H of the Sales Tax Special Procedures Rules, 2007, which amount also appeared on the electricity bills of the consumers and was so paid by the latter, and was claimed by the appellants to be part of the output tax---Held, that appellants had conflated their own tax payment/liability (insofar as the output tax was concerned) with the tax liability of the consumers; the two were separate and distinct and the mere fact that, for purposes of administrative convenience, the Federal Government had considered it expedient to utilize the mechanisms of, and available through, the appellants (i.e., the electricity bills issued by them) to charge and collect the tax payable by the consumers did not, and could not, alter the position in law---Tax liabilities of the appellants and the consumers were separate and distinct---Amount collected under R. 58H of the Sales Tax Special Procedures Rules, 2007 was not part of the output tax of the appellants---Appeals were dismissed.

Shahbaz Butt, Advocate Supreme Court for Appellants/Petitioners (in C.As. Nos. 717-722 of 2013via Video Link, Lahore).

Nemo for Petitioners (in C.A. No. 1108 of 2013).

Mian Yousaf Umer, Advocate Supreme Court (via Video Link, Lahore), Dr. Farhat Zafar, Advocate Supreme Court, Ghulam Zhoaib, Jally, Advocate Supreme Court and Ibrar Ahmed, Advocate Supreme Court for Respondents.

2022 P T D 831

[Supreme Court of Pakistan]

Present: Qazi Faez Isa and Yahya Afridi, JJ

COMMISSIONER INLAND REVENUE, LAHORE

Versus

The BANK OF PUNJAB, LAHORE

Civil Petitions Nos. 2143-L, 2144-L and 2145-L of 2020, decided on 4th February, 2022.

(Against the order dated 20.10.2020 passed by the Lahore High Court, Lahore in P.T.Rs. Nos. 131, 132 and 133 of 2006)

Income Tax Ordinance (XXXI of 1979) [since repealed]---

----First Sched. Part V, Paras. A & D---Income received by a Bank from declared/distributed dividends by Pakistani companies---Such income was to be taxed at the rate mentioned in paragraph D of Part V, 'Rates of Income Tax for Companies', of the First Schedule to the Income Tax Ordinance, 1979 ('the Ordinance') [as applicable at that time].

If a company was entitled to the benefit of a particular provision of the Income Tax Ordinance, 1979 ('the Ordinance') it could not be denied its benefit.

E.F.U. General Insurance Ltd. v. Federation of Pakistan PLD 1997 SC 700 = 1997 PTD 1693 ref.

The precedent of the case reported as E.F.U. General Insurance Ltd. v. Federation of Pakistan (PLD 1997 SC 700 = 1997 PTD 1693) ('the EFU case') is applicable with regard to dividends declared/ distributed by Pakistani companies in terms of paragraph D of Part V of the First Schedule to the Income Tax Ordinance, 1979 ('the Ordinance') in respect of other companies, including a banking company. And, there is no reason to withhold the same from such companies, including a banking company.

In addition, paragraph A of Part V of the First Schedule of the Ordinance states that the rates mentioned therein would only apply provided, amongst others, paragraph D is not applicable. In the present case paragraph D applies. Such unambiguously clear language leaves no room to countenance another interpretation. And, all the more so when the Supreme Court had already given a clear and emphatic answer in the 'EFU case'. Therefore, the rates mentioned in paragraph A would not be applicable in respect of dividend income which has been declared/distributed by Pakistani companies and the applicable rate of income tax on such dividend income would be the one mentioned in paragraph D.

Ch. Muhammad Shakeel, Advocate Supreme Court for Petitioner.

Dr. Ikram-ul-Haq, Advocate Supreme Court for Respondent (in all cases).

2022 P T D 888

[Supreme Court of Pakistan]

Present: Umar Ata Bandial, Syed Mansoor Ali Shah and Muhammad Ali Mazhar, JJ

COMMISSIONER INLAND REVENUE, ZONE-IV, LAHORE

Versus

Messrs PANTHER SPORTS AND RUBBER INDUSTRIES (PVT.) LTD. and others

Civil Petition No. 1691-L of 2018, decided on 21st September, 2021.

(Against the orders of Lahore High Court, Lahore dated 05.03.2018 passed in W.P. No. 133023 of 2018)

Income Tax Ordinance (XLIX of 2001)---

----Ss. 161(1A), 165(2B) & 174(3)---Income Tax Rules, 2002, Rr. 29(4) & 44(4)---Books of account, documents and records to be maintained for a period of six years---Scope of section 174(3) of the Income Tax Ordinance 2001---Taxpayer is obliged to maintain the record under section 174(3) of the Income Tax Ordinance, 2001 for a period of six years and the taxpayer cannot be compelled to produce the record for a tax year beyond the period of six years as stipulated in section 174(3) of the Ordinance---Supreme Court approved the view expressed by the Lahore High Court in the case reported as Maple Leaf Cement Factory Ltd v. Federal Board of Revenue 2016 PTD 2074.

Section 174 of the Income Tax Ordinance, 2001 ('the Ordinance') creates an obligation on the taxpayer to maintain such accounts, documents and records as prescribed for a period of six years, except in case of pending proceedings, where the obligation of a taxpayer to maintain the record is till the final decision of the proceedings, while the same provision protects the taxpayer from being asked to produce the record beyond the said period. The tax department is under an obligation to be vigilant and efficient enough so as to proceed against a taxpayer within the statutory timeframe provided under section 174(3) of the Ordinance. [pp. 891, 892] A, B & G

In the context of the present case even though there is no specific limitation for issuance of notices under section 161(1A) or 165(2B) of the Ordinance or Rule 44(4) of the Income Tax Rules, 2002 ('the Rules') but these provisions cannot be actualized or given effect to unless the record, available with the taxpayer, is examined and verified by the tax authorities. Since the said provisions of law require taxpayer to maintain record for a period of six years, hence notices beyond a period of six years cannot be given effect to. As the taxpayer is under no legal obligation to maintain tax records after the said statutory period, any such notices demanding the taxpayer to furnish such information are inconsistent with the clear provisions of the Ordinance and hence unlawful.

Even though notices under sections 161(1A), 165(2B) of the Ordinance and Rule 44(4) of the Rules have no prescribed period of limitation, the statutory timeframe kicks in the minute the time period under section 174(3) is exhausted rendering such notices ineffective and unenforceable, attracting no penal consequences for the taxpayer. It is however to be noted that the department is only restricted where it seeks record beyond the statutory period under section 174(3) from the taxpayer but is otherwise free to proceed if the action or proceedings under the Ordinance are based on the record already in possession of the department.

Supreme Court approved the view expressed in the case reported as Maple Leaf Cement Factory Ltd v. Federal Board of Revenue 2016 PTD 2074, whereas the view taken in the case reported as Habib Bank Limited v. Federation of Pakistan 2013 PTD 1659 was disapproved.

Habib Bank Limited v Federation of Pakistan 2013 PTD 1659 disapproved.

Maple Leaf Cement Factory Ltd. v. Federal Board of Revenue 2016 PTD 2074 approved.

Ch. Muhammad Zafar Iqbal, Advocate Supreme Court (video-link - Lahore) along with Naeem Hassan, Secy (Lit.) FBR for Petitioner.

Nemo for Respondents.

2022 P T D 920

[Supreme Court of Pakistan]

Present: Qazi Faez Isa andAmin-ud-Din Khan, JJ

FEDERATION OF PAKISTAN through Secretary Finance, Islamabad and another

Versus

E-MOVERS (PVT.) LIMITED and another

Civil Petition No. 280-K of 2019, decided on 30th December, 2021.

(Against the judgment dated 12.02.2019 of the High Court of Sindh at Karachi passed in Constitution Petitions Nos. D-7687 and 8172 of 2017)

(a) Tracking and Monitoring of Cargo Rules, 2012 [issued under S.R.O. 413(I)/2012, dated 25.04.2012]---

----Rr.4, 6(2), 7(2), 7(3) & 7(4)---Public Procurement Rules, 2004, R. 17---Qualification of suppliers and contractors---Federal Board of Revenue (FBR) awarded contract for tracking and monitoring imported cargo to NLC Construction Solutions (Private) Limited ('NCSPL')---Legality---NCSPL did not possess the requisite licence under the Tracking and Monitoring of Cargo Rules, 2012 ('the Rules'), nor was it compliant with the requirements of the Rules---NCSPL had no experience to track and monitor cargo nor did it have the requisite technical skills---FBR violated the Rules and the Expression of Interest which it had itself made---FBR contravened the bidding procedures and binding legal precedents, expounding on the procurement laws, were also disregarded---NCSPL was brought in through the backdoor without having participated in the bidding process---Material bidding terms were changed, diluted and retailored for NCSPSL and this was done to enable the FBR to award it the contract---FBR was supposed to safeguard the interest of the exchequer and of the citizens but it subverted them to benefit a highly conflicted company.

'Request for Expression of Interest' was published by the Federal Board of Revenue (FBR) inviting companies who could track and monitor imported cargo and ensure that the imposition of applicable customs duties and other taxes were not circumvented, and that the cargo was safely transported without going astray, being removed or pilfered along the way ('the Project'). The interested companies were required to be technically capable of tracking and monitoring cargo on a real-time basis, possessing requisite licences and having the financial capability to undertake the Project. The company which had the requisite technical and technological skills, ability, and financial standing, as determined through a competitive bidding process, was to be awarded the contract to undertake the Project ('the Contract'). The FBR awarded the Contract for the Project to NLC Construction Solutions (Private) Limited ('NCSPL'). The award of Contract to NCSPL was successfully challenged in the High Court, and the Contract was set aside.

'Request for Expression of Interest' was published by the FBR inviting expression of interest from companies licenced under the Tracking and Monitoring of Cargo Rules, 2012 ('the Rules') and possessing requisite technical and financial capabilities to submit their proposals. Thereafter, a 'Letter of Invitation' was issued by the Government of Pakistan, Model Customs Collectorate of Preventive, Custom House, Karachi (hereinafter referred to as 'the first Letter of Invitation'), to two companies fulfilling the requisite criteria, and they were called upon to submit in sealed envelopes their respective technical and financial proposals. However, just seven days after the issuance of the first Letter of Invitation a 'Revised' 'Letter of Invitation' was issued ('the second Invitation Letter'). The second Invitation Letter added NCSPL to the already listed two companies which had already been issued the first Invitation Letter.

Material bidding terms were changed, diluted and retailored for NCSPSL and this was done to enable the FBR to award it the Contract. The FBR is supposed to safeguard the interest of the exchequer and of the citizens but it subverted them to benefit a highly conflicted company.

The NCSPL is stated to be fully owned by the National Logistics Cell ('NLC'). And, NLC itself is owned by Federal Government and is operated by Army personnel. As regards to what NCSPL does, is revealed on its website: 'is a concrete products manufacturing plant including blocks, pavers and kerb stones.' And, that it 'is committed to meet the growing needs of concrete blocks, pavers and kerb stones. Its daily production capacity is one of the biggest in the region. The products are in demand and use of multiple commercial and domestic clients.' NCSPL, a manufacturer of blocks, pavers and kerb stones, and which had no experience in the tracking and monitoring of cargo was awarded the Contract by the FBR, and this was done after the cut-off date for the submission of bids.

The law does not absolve either NCSPL or NLC from the public procurement laws. Rule 17 of the Public Procurement Rules, 2004 does not permit a company, in this case NCSPL, who had not participated in the bidding process, to be invited, and without meeting the stipulated criteria in the Expression of Interest to be awarded the Contract. And, Rule 17 certainly does not permit a company which did not possess requisite technical skills and ability to undertake a project and to award it a contract for the same. The NCSPL was brought in through the proverbial backdoor without having participated in the bidding process. In awarding the Contract to NCSPL also disregarded the legal precedents pertaining to procurement laws.

Shaheen Construction Co. v. Pakistan Defence Officers Housing Authority PLD 2012 Sindh 434 ref.

In the present case the FBR did not plead State security in awarding the contract to NCSPL. However, assuming that this was pleaded then too the award of the contract to NCSPL would have been illegal. State security did not permit the contract awarding agency to disregard the law.

Mujahid Muzaffar v. Federation of Pakistan 2012 SCMR 1651 ref.

The Tracking and Monitoring of Cargo Rules, 2012 ('the Rules') stipulated that no company shall carry out tracking and monitoring of cargo unless it has obtained a licence under these rules, and prescribed the criteria for grant of a licence. The Rules mandated the monitoring and tracking, on real time basis, of containers and vehicles carrying the cargo and required the use of latest technology to prevent the massive loss of revenue and theft. The Rules also spelt out the components of tracking and monitoring that companies seeking licences must have, and the functions that the companies must be able to perform. Nothing was brought on record before the High Court, or even before the Supreme Court, to show that NCSPL fulfilled thecriteria for functions or grant of licence or had the ability to undertake the Project, let alone to do so competently. NCSPL manufactured blocks, pavers and kerb stones, which had no nexus with what was required to be done by the FBR, that is, the tracking and monitoring of cargo. NCSPL had never undertaken any of the Project works, the performance of which it had to establish, and did not have the ability and wherewithal to carry them out.

There was nothing on record before the High Court, nor was any material submitted before the Supreme Court, to show that NSPCL complied with or fulfilled any of the preconditions for obtaining a licence prescribed under Rule 6(2) of the Rules. Rule 7(2) also stipulated additional preconditions for obtaining a licence, but NCSPL did not produce any evidence that it met any of these conditions.

A significant aspect of the present case is that NCSPL would be considered to be the aggrieved party because the Contract awarded to NCSPL was set aside. However, NCSPL did not challenge the judgment of the High Court. Instead the FBR took it upon itself to do so. This is a further indication of complicity between officers of the FBR and NCSPL, and severely undermines the credibility and standing of both.

There is another important aspect that needed to be considered. NCSPL is stated to be a fully owned subsidiary of NLC, and NLC claims to be the single largest transporter of cargo in the country. NLC apparently is the alter ego of the Federal Government therefore NCSPL would constitute NLC's alter ego. This raises the question of whether NLC (an alter ego of the Federal Government) could itself own a company. What is apparent is that granting the Contract to NSCPL, an entity fully owned by NLC, constituted a momentous conflict of interest. The Rules were made to ensure that cargo disembarked at its proper destination and the vehicles carrying it were tracked and monitored throughout their journey, and to ensure that containers were not opened before reaching their destination and cargo removed or pilfered there from. In granting the Contract to the largest transporter of containers in the country, the very purpose of the Rules was negated. And, all the more so when seriously documented allegations were noted against NLC by the Federal Tax Ombudsman.

To hand over the responsibility of the tracking and monitoring of cargo to a fully owned subsidiary of NLC removed the necessary distinction, which had to be maintained, between carrier and the tracking-monitoring company. What the Rules prohibited, the FBR facilitated.

The award of the Contract to NCSPL was an act 'done or taken without lawful authority and of no legal effect' in terms of Article 199(a)(ii) of the Constitution, and as such by exercising its power of judicial review of executive action the High Court could, and was justified, to undo the Contract. Supreme Court observed that the Government is well advised to initiate an inquiry to ascertain the officers of FBR who were responsible and complicit in awarding the Contract to NCSPL, and take appropriate action against them in accordance with law.

Karachi Electric Supply Corporation Limited v. Karachi Electric Supply Corporation Ltd. Labour Union PLD 1967 SC 513 ref.

(b) Administration of justice---

----When the law stipulates that something has to be done in a particular manner that is how it should be done.

(c) Constitution of Pakistan---

----Art. 10A---'Due process'---Scope and meaning---Due process requirement must be met in the determination of rights and obligations---Constitution does not define due process, therefore, it would not be appropriate to limit its scope by defining it, but this does not mean that the due process requirement is a meaningless concept---Rather due process incorporates universally accepted standards of justice and is not dependent upon any law or laws; it is an all encompassing expression which may not be curtailed with reference to particular laws---Due process is to be understood holistically by keeping in mind the entire Constitution, which excludes arbitrary power, authoritarianism and autocratic rule.

Muhammad Khalil Dogar, Advocate Supreme Court and K. A. Wahab, Advocate-on-Record for Petitioners.

Haider Waheed, Advocate Supreme Court and Syed Mahmood Abbas, Advocate-on-Record (absent) for Respondent No. 1.

Respondent No. 2 not represented.

2022 P T D 965

[Supreme Court of Pakistan]

Present: Qazi Faez Isa and Muhammad Ali Mazhar, JJ

COMMISSIONER INLAND REVENUE, LAHORE

Versus

ASIF KAMAL

Civil Petition No. 1148-L of 2021, decided on 16th March, 2022.

(Against the order dated 14.04.2021 of the Lahore High Court, Lahore passed in I.T.R. No. 24782 of 2021)

Income Tax Ordinance (XLIX of 2001)---

----Preamble---Revenue cases---Lack of assistance provided by the counsel and officials of the Federal Board of Revenue and its Inland Revenue department---During the hearing before the Supreme Court, the copies of the show cause notice sent to the tax payer, the audit report, the response of the tax-payer and his tax return were not filed before Court by the officials of the revenue department---Counsel for the department and the senior official of the department present in Court were also unable to answer certain queries raised by the Supreme Court relating to the present case resulting in unnecessary wastage of time of the Court---Supreme Court expressed its dismay in the manner the Federal Board of Revenue and its Inland Revenue department was being run with regard to Court proceedings and observed that in an earlier case it had already directed that when revenue cases are fixed in Court a senior officer from the department should be in attendance along with the relevant file/information to attend to any query that may arise during the course of hearing; that though the Additional Commissioner Inland Revenue was in attendance for the present case but he was not in a position to attend to any of the queries the Court put to him; that the Supreme Court has endeavoured to take up revenue matters at the earliest but is not receiving the requisite assistance; that it was expected the Federal Board of Revenue/Inland Revenue would attend to revenue cases with the seriousness that they deserve and relevant documents are filed, and it is ensured that requisite assistance is rendered when cases are fixed in Court---Petition for leave to appeal was dismissed, and leave was refused with the direction that copy of present order be sent to the Chairman and to all Members of the Federal Board of Revenue and also to the Secretary, Ministry of Finance, Government of Pakistan.

Ch. Muhammad Shakeel, Advocate Supreme Court along with Naveed Ahmed, Additional Commissioner, FBR for Petitioner.

Respondent not represented.

2022 P T D 1030

[Supreme Court of Pakistan]

Present: Qazi Faez Isa and Amin-ud-Din Khan, JJ

The COMMISSIONER INLAND REVENUE, LAHORE and others

Versus

Messrs PEPSI COLA INTERNATIONAL, LAHORE and others

Civil Petitions Nos. 682-L to 684-L and 768-L of 2017, decided on 18th February, 2022.

(Against the judgment dated 19.12.2016 of the Lahore High Court, Lahore passed in Writ Petitions Nos. 24827/12, 10182, 31567/13 and 22891 of 2014)

Sales Tax Act (VII of 1990)---

----Ss. 2(46)(e) & 11---Federal Excise Act (VII of 2005), S. 12(1)---Income Tax Ordinance (XLIX of 2001), S. 122---Constitution of Pakistan, Art. 199---Show cause notices issued under the Sales Tax Act, 1990, the Federal Excise Act, 2005, and the Income Tax Ordinance, 2001---Notices held in abeyance by the High Court in its Constitutional jurisdiction till value/price of concentrate used by tax-payer was determined by a Valuation Committee---Legality---High Court had not decided a factual controversy---Law had provided for determination by a Valuation Committee in cases such as the present when value/price could not be easily ascertained---However, the tax department had arbitrarily determined value, without recourse to the Valuation Committee, and the High Court exercised its constitutional jurisdiction to ensure that the law was followed, and did so by referring the matter for determining value/price to the statutory Valuation Committee.

The show cause notices had conjectured on the value/price of the concentrate used by the respondent-taxpayer. The value was derived on conjectural basis and the High Court held that this did not accord with the law, which envisaged a Valuation Committee under clause (e) of subsection (46) of section 2 of the Sales Tax Act, 1990 and that such Valuation Committee should have determined it. The High Court was correct in holding that clause (a) of subsection (46) of section 2 of the Sales Tax Act did not apply. It is also not correct to state that the High Court had decided a factual controversy. The impugned judgment of the High Court was in accordance with the law and one which had preserved the interest of both sides. The law had provided for determination by a Valuation Committee in cases such as the present when value/price could not be easily ascertained. However, the petitioners-tax department had arbitrarily determined value, without recourse to the Valuation Committee, and the High Court exercised its constitutional jurisdiction to ensure that the law was followed, and did so by referring the matter for determining value/price to the statutory Valuation Committee. The show cause notices issued under the Sales Tax Act, 1990, the Federal Excise Act, 2005 and the Income Tax Ordinance, 2001 were dependent on the correct ascertainment of value/price; the High Court had deferred action, if any, thereon till after the matter had been determined by the Valuation Committee. Petitions for leave to appeal filed by the tax-department were dismissed and leave was refused.

Sarfraz Ahmed Cheema, Advocate Supreme Court, Syed Fayyaz Ahmed Sherazi, Advocate-on-Record (absent) and Naeem Hassan, Secretary (L), FBR for Petitioners (in all cases).

Rashid Anwer, Advocate Supreme Court and Syed Rifaqat Hussain Shah, Advocate-on-Record for Respondent No. 1 (in all cases).

2022 P T D 1054

[Supreme Court of Pakistan]

Present: Umar Ata Bandial and Muhammad Ali Mazhar, JJ

Messrs T & N PAKISTAN PRIVATE LIMITED

Versus

The COLLECTOR CUSTOMS and others

Civil Petition No. 1896-L of 2020, decided on 24th September, 2021.

(Against the Order of Lahore High Court, Lahore dated 16.09.2020 passed in Custom Reference No. 35 of 2013)

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

----S. 19---China-Pakistan Free Trade Area Rules of Origin, 2005 [as notified by S.R.O. No. 1286(I)/2005 dated 24-12-2005], R. 14---Import of "Fiber Manufacturing Plant" from China---Exemption from customs duties under SRO No. 659(I)/2007 dated 30-06-2007 ('the SRO")---Importer failing to produce proper certificate of origin---To avail the benefit of 'S.R.O' in question, the petitioner-importer was required to present Original Certificate of Origin with the given specimen signature of Chinese authorities---Moreover Rule 14 of the China-Pakistan Free Trade Area Rules of Origin, 2005 ('the Rules') provided that a claim that products shall be accepted as eligible for preferential concession shall be supported by a certificate of Origin issued by the government authorities designated by the exporting party and notified to the other party to the agreement in accordance with the Operational Certification Procedures as set out in Attachment-A, which outlined and delineated the procedure on the issuance and verification of the Certificate of Origin (Form-X) and other related administrative matters---Since the petitioner failed to fulfil said mandatory requirements envisioned in the 'S.R.O' and the Rules, his claim for exemption under the 'SRO' was rightly rejected---Even before the High Court, the petitioner was encountered and confronted with the same situation and called upon to show the Original Certificate of Origin but it failed to produce any document---Petition for leave to appeal was dismissed and leave was refused.

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

----S. 196---Reference to High Court---Scope---Factual controversies---Precise intent of remedy of reference provided under section 196 of the Customs Act, 1969 is to resolve and adjudicate only the question of law originating and stemming from the order passed by the Appellate Tribunal---High Court cannot embark upon factual aspects or controversy---High Court while exercising appellate jurisdiction under section 196 of the Customs Act, 1969 is not free to embark upon an unfettered inquiry into factual aspects which have been properly considered and decided by the Tribunal.

Collector of Customs Karachi and others v. Messrs Haji Ismail Co. and others 2015 SCMR 1383; Pakistan State Oil Company Ltd. v. Collector of Custom, E&ST (Adjudication-II) and others 2006 SCMR 425 and Collector of Customs, Port Muhammad Bin Qasim, Karachi v. Messrs Kaghan Ghee Mills (Pvt.) Ltd. 2008 SCMR 1538 ref.

Mia Ashiq Hussain, Advocate Supreme Court (via video link from Lahore) for Petitioner.

Muhammad Khalid Chaudhry, Advocate Supreme Court for Respondents.

2022 P T D 1079

[Supreme Court of Pakistan]

Present: Umar Ata Bandial, C.J., Syed Mansoor Ali Shah andQazi Muhammad Amin Ahmed, JJ

COMMISSIONER OF INLAND REVENUE, LAHORE

Versus

Messrs SARGODHA SPINNING MILLS (PVT.) LTD. FAISALABAD and others

Civil Petition No.757-L of 2021, decided on 3rd February, 2022.

(Against the judgment dated 01.02.2021 of the Lahore High Court, Lahore passed in S.T.R. No. 17 of 2012)

Sales Tax Act (VII of 1990)---

----Ss. 46 & 47---Sales tax Reference to the High Court---Findings of facts determined by the Tribunal/Appellate Tribunal---Interference by the High Court---Tax Tribunal is the final fact finding body---Only "question of law" is to be examined by the (High) Court in a Sales tax Reference.

Tribunal is the final forum for determination of facts in tax matters. The Appellate Tribunal is therefore the final fact-finding body and its findings of facts are conclusive; the High Court cannot disturb them unless it is shown that there was no evidence on which the Appellate Tribunal could arrive at its conclusion and record such findings, or the same are perverse or based on surmises and conjectures. Further, the High Court cannot go behind any finding of fact recorded by the Appellate Tribunal even on such grounds, unless it has been expressly challenged by raising a 'question of law' relating thereto in the application. Without raising a 'question of law' in the terms, like, 'whether there was evidence to support the finding of the Appellate Tribunal on such and such fact', the High Court is bound by the finding of fact recorded by the Tribunal. Thus, in a case, where no question of law is raised to challenge the finding of fact recorded by the Appellate Tribunal as being not supported by any evidence or being perverse, the finding recorded by the Tribunal attains finality.

Messrs Shah Nawaz v. Commissioner of I.T. 1969 SCMR 123; Commissioner of I.T. v. Messrs Smith, Kline and French 1991 SCMR 2374; Commissioner of I.T. v. Messrs Farrokh Chemical 1992 SCMR 523; Ibrahim Ishaq v. Commissioner of I.T. 1993 SCMR 287; Messrs Irum Ghee Mills v. I.T. A.T. 2000 SCMR 1871; Commissioner of I.T. v. Muhammad Ismail & Co. 1986 SCMR 968 and Oriental investment Co. v. Commissioner of I.T. 1972 PTD 181 ref.

The "question of law" must arise from the decision of the Appellate Tribunal and in the absence thereof, any Reference before the High Court is not maintainable.

Messrs Mohammad Akbar v. I.T.A.T. 1972 SCMR 409; Messrs F.M.Y. Industries v. Deputy Commissioner I. T. 2014 SCMR 907; Messrs PTV Corporation Ltd. v. Commissioner Inland Revenue 2017 SCMR 1136 and Messrs Squibb Pakistan v. Commissioner of I.T. 2017 SCMR 1006 ref.

Sarfraz Ahmed Cheema, Advocate Supreme Court and Naeem Hassan, Secretary (Lit.) FBR for Petitioner.

Anis-ur-Rehman, Legal Advisor for Respondents.

2022 P T D 1109

[Supreme Court of Pakistan]

Present: Umar Ata Bandial, Syed Mansoor Ali Shah and Qazi Muhammad Amin Ahmed, JJ

COMMISSIONER OF INCOME TAX (LEGAL)

Versus

Messrs ASKARI BANK LIMITED, RAWALPINDI and others

Civil Petitions Nos.2597 to 2600 of 2020, decided on 1st February, 2022.

(Against the judgment dated 16.07.2020 of the Islamabad High Court, Islamabad passed in I.T.Rs. Nos.24 to 27 of 2009)

Income Tax Ordinance (XLIX of 2001)---

----S. 23---Eligible depreciable asset---Initial allowance, deduction of---Scope---Taxpayer can claim deduction of initial allowance for an eligible depreciable asset (Such as a building) being put to use by the taxpayer for the first time in a tax year, irrespective of the fact that the said building had been in use in the past in the hands of other taxpayers.

Section 23 of the Income Tax Ordinance, 2001 states that "A person who places an eligible depreciable asset into service in Pakistan for the first time in a tax year." It means that the term "first time in a tax year" relates to the first time use of the building by the taxpayer and has no concern with the history of usage of the building prior to it falling in the hands of the taxpayer. The act of placing the eligible depreciable asset into service or use, for the first time in a tax year, is of the taxpayer and it is inconsequential if the same asset/building was earlier put into service or use while it was in the hands of an earlier owner or proprietor. A taxpayer becomes entitled to deduction of initial allowance if he, through his own act, has placed an eligible depreciable asset into service for the first time in a tax year.

The above-mentioned view is fortified from the reading of subsection (5) of section 23 of the Income Tax Ordinance, 2001 which defines "eligible depreciable asset" and specifically excludes a plant or machinery which has been used previously in Pakistan from the definition of "eligible depreciable asset". A previously used building has not been excluded and is therefore an eligible depreciable asset and if put to use by the taxpayer for the first time in the tax year, irrespective of its previous use, the taxpayer is entitled to deduction of initial allowance.

Manzoor Hussain, Advocate Supreme Court for Petitioner.

Muhammad Idrees, Advocate Supreme Court for Respondents.

2022 P T D 1128

[Supreme Court of Pakistan]

Present: Umar Ata Bandial, C.J. and Ayesha A. Malik, J

COMMISSIONER INLAND REVENUE, ZONE-II, REGIONAL TAX OFFICER (RTO), MAYO ROAD, RAWALPINDI and another

Versus

Messrs SARWAQ TRADERS, 216/1-A, ADAMJEE ROAD, RAWALPINDI and another

Civil Petition No. 4599 of 2021, decided on 12th May, 2022.

(Against the order dated 01.06.2021, passed by the Lahore High Court, Rawalpindi Bench, in Sales Tax Reference No.02 of 2013)

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

----S. 45-B(2)--- Appeal before Commissioner Inland Revenue (Appeals)--- Maximum period of 180 days prescribed under section 45-2(B) of the Sales Tax Act, 1990 for deciding the appeal---Such prescribed time period was mandatory---Obligation fixed on the Commissioner (Appeals) by section 45-B(2) of the Act to decide the matter within 180 days is mandatory and not directory---Any decision made beyond the 180 days as prescribed under section 45-B(2) of the Act, is an invalid decision.

In terms of section 45-2(B) of the Sales Tax Act, 1990 ('the Act'), when an appeal is filed, the Commissioner (Appeals) on hearing both the parties has to pass an order with respect to the appeal pending before him. In terms of the first proviso, the Commissioner (Appeals) is mandated to pass the order not later than 120 days from the date of filing of the appeal. In the event that the case cannot be decided in 120 days, section 45-B(2) of the Act gives the Commissioner (Appeals), the authority to extend the 120 days by 60 days, if required, provided that the Commissioner (Appeals) records the reasons, in writing as to why the period of 120 days is being extended. However, the second proviso clarifies that such extended period shall, in no case, exceed 60 days. This means that the total period within which the appeal must be decided is 180 days as by using the words in no case the legislature has limited or restricted the discretion of the Commissioner (Appeals) rendering its compliance mandatory. Accordingly, the intent of the legislature can be seen from the clear use of the language of section 45-B(2) of the Act, where the Commissioner (Appeals) may decide the appeal within 120 days, giving the Commissioner the discretion to decide the case within the given time or to extend the time by justifying the reasons for extension in time. However, the section mandates that the Commissioner (Appeals) shall extend the time no more than 60 days, meaning that a total of no more than 180 days can be consumed to decide an appeal. Consequently, the legislature has prescribed a clear time frame of 180 days for deciding the appeal, by using negative and restrictive language.

The rationale for prescribing a time frame is to ensure that tax matters be resolved at the earliest, within the relevant tax year, so that the taxpayer satisfies its liability and the Department is able to collect revenue, within the relevant tax year. This is important because taxes pay for public goods and services and is one of the main sources of revenue for the State. Consequently, the intent of the legislature is to obligate the Commissioner (Appeals) to decide the appeal within 180 days.

If the Commissioner (Appeals) does not decide the matter within the 180 days as prescribed under section 45-B(2) of the Act, then such a decision made beyond the prescribed period is an invalid decision. This is because the statute requires the appeal to be decided within 180 days, hence, it has to be decided in the prescribed period.

Messrs Mujahid Soap and Chemical Industries (Pvt.) Limited v. Customs Appellate Tribunal, Bench-I, Islamabad and others 2019 SCMR 1735 ref.

(b) Interpretation of statutes---

----Fiscal statute---Provision in a fiscal statute---Whether mandatory or directory nature---Ultimate test to determine whether a provision is mandatory or directory is that of ascertaining the legislative intent---While the use of the word 'shall' is not the sole factor which determines mandatory or directory nature of a provision, it is certainly one of the indicators of legislative intent---Other factors include the presence of penal consequences in case of non-compliance, but perhaps the clearest indicator is the object and purpose of the statute and the provision in question---Court had to garner the real intent of the legislature as expressed in the law itself---Negative language used in a statute where it imposes a statutory duty on a public official means that the provision is mandatory even if no penalty is prescribed for it.

The Collector of Sales Tax, Gujranwala and others v. Messrs Super Asia Mohammad Din and Sons and others 2017 SCMR 1427 and Province of Punjab through Conservator of Forest, Faisalabad and others v. Javed Iqbal 2021 SCMR 328 ref.

Malik Itaat Hussain Awan, Advocate Supreme Court along with Naeem Hussain, Secretary (Lit.), FBR for Petitioners.

Nemo for Respondents.

2022 P T D 1147

[Supreme Court of Pakistan]

Present: Ijaz ul Ahsan, Munib Akhtar and Sayyed Mazahar Ali Akbar Naqvi, JJ

COMMISSIONER INLAND REVENUE, PESHAWAR

Versus

Messrs PAKISTAN TOBACCO COMPANY (LTD.), ISLAMABAD and others

Civil Appeal No. 243 of 2011 and Civil Appeal No. 1136 of 2018, decided on 31st May, 2022.

(On appeal against order dated 23.12.2010 and 05.10.2017 passed by the Peshawar High Court, Peshawar in Custom Reference No.68/2010 with C.Ms. Nos. 29/2010, 108/2010 and Sales Tax Reference No.68-P of 2007)

Sales Tax Act (VII of 1990)---

----Ss. 2(33), 2(39), 2(41), 3(1A) & 3(3)(a)---Sale of Goods Act (III of 1930), Ss. 4 & 19---Constitution of Pakistan, Art. 247 [since omitted]---Taxable supplies made to unregistered persons in erstwhile Provincially Administered Tribal Areas (PATA) and Federally Administered Tribal Areas (FATA) ('the Tribal Areas') [before the 25th Amendment to the Constitution]---Additional sales tax, charging of ---Whether there was any liability for the payment of additional sales tax in terms of section 3(1A) of the Sales Tax Act, 1990 ('Act') in respect of a situation where the person making the taxable supplies was located in Pakistan whereas the recipient of those supplies was located in the erstwhile Tribal Areas---Held, that before the 25th Amendment to the Constitution, federal laws which otherwise applied in the whole of Pakistan nonetheless did not so apply in relation to the Tribal Areas by reason of Article 247 of the Constitution (since omitted)---For a law to apply in the Tribal Areas, there had to be a specific direction in that regard in terms of Article 247(3), and admittedly there was no such direction in relation to the Act at the relevant time---For there to have been a valid levy and charge in terms of section 3(1A), there had to have been a sale of taxable goods in Pakistan---Term "sale" as used in the definition of "supply" in clause (33) of section 2 of the Act could include both a 'sale' and an 'agreement to sell' in terms of the Sale of Goods Act, 1930---Sale between a manufacturer and seller and its dealers had to take place "in Pakistan", in the special sense in which these words were used prior to the 25th Amendment to the Constitution---Simply arguing that the supplier was "in Pakistan" was not enough---Question as to whether the supplies over the relevant tax periods were indeed made "in Pakistan" was essentially one of fact, or at least had significant factual elements---Such aspects had to be properly alleged in any show cause notice issued by the department, and proved or otherwise established from the record---However, in the show cause notices in the present cases there was no such allegation, and when the record was examined there were no relevant factual findings as could result in a conclusion that the supplies over the relevant tax periods were indeed made "in Pakistan"---Although in terms of section 3(3)(a) of the Act the legal liability to pay the tax fell on the person making the taxable supplies---However, the crucial question in the present cases was whether or not the supplies were made "in Pakistan"---Said question was not, as a matter of fact, established from the record and was not even alleged in the show cause notices---Such defect was fatal to the case sought to be made out by the department, and in the absence of any such findings the show cause notices simply could not succeed---Appeals filed by the department were dismissed.

Dr. Farhat Zafar, Advocate Supreme Court and Bahadur Sher Afridi, Additional Commissioner, FBR, Peshawar for Appellant (in both cases).

Farrukh Jawad Panni, Advocate Supreme Court and Ahmed Nawaz Ch., Advocate-on-Record for Respondent No. 1 (in C.A. No.243 of 2011).

Masoor ur Rehman, Advocate Supreme Court and Sh. Mahmood Ahmed, Advocate-on-Record for Respondent No. 1 (in C.A. No. 1136 of 2018).

2022 P T D 1169

[Supreme Court of Pakistan]

Present: Qazi Faez Isa and Yahya Afridi, JJ

COMMISSIONER INLAND REVENUE, LAHORE

Versus

Messrs HNR COMPANY (PVT.) LIMITED, LAHORE

Civil Petitions Nos. 593-L, 594-L and 595-L of 2021, decided on 24th February, 2022.

(Against the order dated 20.01.2021 passed by the Lahore High Court, Lahore in ITR No. 2649 of 2021)

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

----Ss. 120, 121(1)(d) & 122(2) [as they existed prior to the amendments made by Finance Act, 2010]---Best judgment assessment order under section 121(1)(d) of the Income Tax Ordinance, 2001 ("the Ordinance')---Such order cannot be made in cases where deemed assessment order has already been made under section 120 of the Ordinance---In the present case respondent-tax payer had submitted its income tax returns for the Tax Years 2005 and 2006; these returns were deemed to have been accepted under section 120 of the Ordinance and, therefore, section 121 of the Ordinance would not apply---Another additional ground prevented action to be taken against the respondent, which was the 'five years' limitation period provided in section 122(2) of the Ordinance, and since five years had expired action could not be initiated---Respondent had also written to the Deputy Commissioner, Inland Revenue, to identify the 'specific year' but he did not respond to such legitimate query---Instead the Deputy Commissioner, Inland Revenue elected to proceed unilaterally and did so without providing an opportunity of a hearing to the respondent, which was yet another transgression of the law---Petitions for leave to appeal were dismissed and leave was refused.

Commissioner Inland Revenue, Zone-III, RTO Rawalpindi v. Abdullah Khan (Civil Petitions Nos. 526 and 19 other petitions of 2013) ref.

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

----S. 177(10)---Audit---Best judgment assessment---Section 177(10) of the Income Tax Ordinance, 2001---Said section could not be given retrospective effect.

Sarfraz Ahmed Cheema, Advocate Supreme Court, Syed Fayyaz Ahmad Sherazi, Advocate-on-Record (absent) and Naeem Hassan, Secy. (L), FBR for Petitioner (in all cases).

Ms. Sheerin Imran, Advocate Supreme Court and Arshad Ali Ch., Advocate-on-Record (absent) for Respondent (in all cases).

2022 P T D 1467

[Supreme Court of Pakistan]

Present: Umar Ata Bandial, C.J. and Syed Mansoor Ali Shah, J

FARRUKH RAZA SHEIKH

Versus

The APPELLATE TRIBUNAL INLAND REVENUE and others

Civil Petition No. 1417 of 2022, decided on 28th July, 2022.

(Against the judgment of Lahore High Court, Lahore dated 03.03.2022, passed in W.P. No. 55044 of 2021)

(a) Interpretation of statutes---

----Rules made under an Act or Ordinance---Subservient to the parent Act/Ordinance---Rules being subordinate or delegated legislation, are framed under the authority of the parent statute, and are therefore subservient to the primary legislation---Rules cannot contradict, override or add to the clear provisions of the parent statute---Rules are to carry out the purposes of the parent statute and cannot offend, oppose or be inconsistent with the provisions of the parent statute---Any rule, to the extent of any inconsistency with the parent statute is, therefore, ultra vires of the parent statute.

N S Bindra's - Interpretation of Statutes 12th Edition, p.108; Suo Motu Case No. 11 of 2011, PLD 2014 SC 389 and Suo Motu Case No. 13 of 2009 PLD 2011 SC 619 ref.

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

----S. 132(2)---Appellate Tribunal Inland Revenue Rules, 2010, R. 22(1)---Appeal before the Appellate Tribunal (Inland Revenue)---Appeal dismissed in default i.e. due to absence of party without sufficient cause---Rule 22(1) of the Appellate Tribunal Inland Revenue Rules, 2010, vires of---Rule 22(1) of the Appellate Tribunal Inland Revenue Rules, 2010 ("Rules") is ultra vires section 132(2) of the Income Tax Ordinance, 2001 ("Ordinance") to the extent where the Rule allows that the tax appeal before the Appellate Tribunal Inland Revenue ("Tribunal") can also be dismissed in default---Section 132(2) of the Ordinance clearly provides that the Tribunal shall afford an opportunity of hearing to the parties to the appeal and in case of default by any of the party on the date of hearing, the Tribunal may proceed ex-parte to decide the appeal on the basis of available record.

Walayat Flour Mills Lyallpur v. Commissioner of Income-Tax Rawalpindi 1973 PTD 530; Chenniappa Mudaliar v. Commissioner of Income-Tax, (1964) 53 ITR 323 and Income-Tax Commissioner, Madras v. S. Chenniappa AIR 1969 SC 1068 ref.

Ahsan Mehmood, Advocate Supreme Court and Syed Rifaqat Hussain Shah, Advocate-on-Record for Petitioner.

Ch. Muhammad Shakeel, Advocate Supreme Court for Respondents.

2022 P T D 1673

[Supreme Court of Pakistan]

Present: Qazi Faez Isa and Syed Mansoor Ali Shah, JJ

COMMISSIONER INLAND REVENUE, REGIONAL TAX OFFICE, FAISALABAD

Versus

ABDUL HAMEED, LABOUR CONTRACTOR

Civil Petitions Nos. 6309 to 6312 of 2021, decided on 31st August, 2022.

(Against the order dated 15.09.2021 of the Lahore High Court, Lahore passed PTRs Nos. 527 to 530 of 2010)

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

----Ss. 153(1)(b), 153(1)(c) & 153(9) [as relevant at the time of the present case]---'Services', meaning of---Scope---Rendering of labour and carriage services---Whether income from labour and carriage services is liable to fixed tax regime---Held, that definition of 'services' in subsection (9) of section 153 of the Income Tax Ordinance, 2001 is not exhaustive and uses the word 'includes' and then mentions a few services---'Services' mentioned in section 153(9) of the Ordinance are not exhaustive and may include other services, including labour and carriage services---Therefore, to exclude labour and carriage services it would be discriminatory, which is not permissible---In the present case, the taxpayer had entered into a contract for rendering labour and carriage services, which was covered by section 153(1)(b) and also by the exception to section 153(1)(c) of the Ordinance, therefore, it was subject to the final tax regime (erstwhile presumptive tax regime) rather than to the normal tax regime---Petitions for leave to appeal were dismissed and leave was refused

Commissioner of Income Tax/Wealth Tax v. Rehman Enterprises 2008 PTD 1897 and Commissioner Inland Revenue v. Muhammed Ali 2016 PTD 377 endorsed.

Premier Mercantile Services (Pvt.) Ltd. v. C.I.T 2007 PTD 2521 not applicable.

(b) Federal Board of Revenue Act (IV of 2007)---

----Ss.3 & 4---Federal Board of Revenue---Lack of proper record keeping by the Federal Board of Revenue (FBR)---Necessity of maintaining data bank of cases---Supreme Court observed that in not maintaining a data bank of its cases the interest of FBR is jeopardized and the Supreme Court's time is also wasted; that the FBR constitutes the economic and financial backbone of the country but by not maintaining a data bank of its cases the working of its own officers is hampered, and so too that of the tribunals and of the courts; that in the age of technology this lapse is unacceptable---Supreme Court directed that since the FBR remains remiss of its duties a copy of the present order be sent to the Chairman and every Member of the FBR, to the Secretary, Finance Division, Secretary Law and Justice Division and to the Cabinet Secretary, Cabinet Division, Government of Pakistan with the expectation that the noted shortcomings will be attended to with the promptness that they deserve.

Dr. Farhat Zafar, Advocate Supreme Court, Ch. Akhtar Ali, Advocate-on-Record along with Syed Hassan Sardar, Additional Commissioner, FBR and Naeem Hassan, Secretary (Lit), FBR for Petitioner.

Nemo for Respondent.

2022 P T D 1683

[Supreme Court of Pakistan]

Present: Sardar Tariq Masood, Mazhar Alam Khan Miankhel and Amin-ud-Din Khan, JJ

MODEL CUSTOMS COLLECTORATE, ISLAMABAD

Versus

AAMIR MUMTAZ QURESHI

Criminal Petition No. 209 of 2018 and Criminal Miscellaneous Application No. 392 of 2018, decided on 13th July, 2022.

(On appeal against the judgment dated 07.12.2017 by the Islamabad High Court, Islamabad, in Criminal Appeal No. 152 of 2017)

(a) Criminal Procedure Code (V of 1898)---

----Ss. 249-A & 265-K---Power of Magistrate/Court to acquit accused at any stage---Principles.

Under section 249-A, Cr.P.C. the Magistrate is empowered to acquit any accused on two grounds i.e. charge is groundless and there is no probability of conviction, whereas under section 265-K, Cr.P.C., the court during the trial is empowered to acquit an accused, when there is no probability of conviction indicating that when there is no evidence on the record and even there is no remote probability of conviction. If there is remote probability of conviction then the court is required to record the evidence and then decide the case on evidence bought on record during the trial. Application under sections 249-A and 265-K, Cr.P.C. can be filed or taken up for adjudication at any stage of proceeding of trial i.e. even before recording of prosecution evidence or during recording of evidence or when recording of evidence is over.

Although there is no bar for an accused to file an application under 249-A or 265-K, Cr.P.C. at any stage of proceeding of the trial, yet the fact and circumstances of the prosecution case will have to be kept in mind and if there is slight probability of conviction then, instead of deciding the said application, the court should record the evidence and allow the case to be decided on its merits after appraising the evidence available on record.

The State through Advocate-General, Sindh High Court of Karachi v. Raja Abdul Rehman 2005 SCMR 1544; Bashir Ahmad v. Zafar ul Islam PLD 2004 SC 298; Bashir Ahmad v. Zafar­-ul-Islam and others PLD 2004 SC 298; The State through Collector Customs and Excise, Quetta v. Azam Malik and others PLD 2005 SC 686; Muhammad Sharif v. The State PLD 1999 SC 1063 and Ghulam Farooq Tarar v. Rizwan Ahmad and others 2008 SCMR 383 ref.

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

----Ss. 2(s), 8, 70, 156(1) & 157---Foreign Exchange Regulation Act (VII of 1947), S. 8---Criminal Procedure Code (V of 1898), S. 265-K---Smuggling of foreign currency---Acquittal of accused by Trial Court under section 265-K, Cr.P.C.---Legality---Accused was apprehended at the airport and a huge amount of currency, which he was trying to smuggle to a foreign country, was recovered from him---Argument that the accused had filed an application before the State Bank of Pakistan for permission to take away the currency to the foreign country, had no force because mere filing of an application for permission by itself was not sufficient to allow him to smuggle the currency outside the country, until the permission was granted and in the present case admittedly, no permission was ever granted by the State Bank of Pakistan---Plea of accused that he was not aware of the fact that foreign currency amounting to more than US$ 10,000 (US dollars ten thousand) could not be taken away from the country, contradicted his own defence, as on one hand he claimed that he had filed an application for permission to take a huge amount of foreign currency out of the country and on the other hand he was not aware of the fact that he could not take foreign currency beyond a certain limit outside the country---Argument of the accused that he was a Hajj Tour Operator and had not committed any offence of taking away/ smuggling foreign currency from the country, had no force because being a Hajj Tour Operator he had no license to smuggle the foreign currency outside the country---Sufficient material was available on record connecting the accused with the commission of the alleged crime and it was incumbent upon the Trial Court to record the evidence but instead of recording the evidence to prove the guilt or otherwise of the accused, the Trial Court in a slipshod manner, acquitted him under section 265-K Cr.P.C.---If the allegations levelled in the FIR supported by the preliminary evidence were admitted to be true, it could not be said at that stage by the Trial Court that there was no probability of conviction of the accused---In order to ascertain the genuineness of the allegations, the Trial Court ought to have allowed the prosecution to lead evidence---Petition for leave to appeal was converted into an appeal and allowed, orders of the Trial Court and High Court were set aside and the matter was remanded to the Trial Court to record the evidence and decide the case upon the evidence produced before it.

(c) Criminal Procedure Code (V of 1898)---

----Ss. 249-A & 265-K---Acquittal under section 249-A or 265-K, Cr.P.C.---Scope---In appellate or revisional proceedings, the same sanctity cannot be accorded to acquittals at intermediary stages such as under section 249-A or 265-K, Cr.P.C., as available for those recorded and based on full-fledged trial after recording of evidence---In appeal or revision proceedings, the order of acquittal of the accused under section 249-A or section 265-K of the Cr.P.C. would not have the same sanctity as orders of acquittal on merits---Consequently, the principles which are to be observed and applied in setting aside concurrent findings of acquittal or the principle relating to the presumption of double innocence when an accused is acquitted after a full-fledged inquiry and trial, would not be applicable to the acquittals under section 249-A, Cr.P.C. or section 265-K, Cr.P.C.

Mrs. Misbah Gulnar Sharif, Advocate Supreme Court and Syed Rifaqat Hussain Shah, Advocate-on-Record for Petitioner.

Qazi Shehryar Iqbal, Advocate Supreme Court for Respondent along with Respondent in person.

2022 P T D 1727

[Supreme Court of Pakistan]

Present: Qazi Faez Isa and Syed Mansoor Ali Shah, JJ

Messrs KOHINOOR SPINNING MILLS LTD.

Versus

COMMISSIONER INLAND REVENUE

Civil Petition No. 2006 of 2022, decided on 23rd August, 2022.

(Against the order of Lahore High Court, Lahore dated 21.04.2022 passed in PTR No. 209 of 2012)

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

----Ss. 131 & 133---Constitution of Pakistan, Art. 185(3)---Questions of law not raised before the Tribunal or High Court---Supreme Court is not a forum to raise fresh questions of law which have not been examined by the Tribunal or the High Court or do not even arise from the decision of the Tribunal---In numerous cases, a totally new question of law, which has not been raised earlier is agitated before the Supreme Court for the first time without disclosing that it has not been raised earlier---Supreme Court deprecated such practice and observed that the parties must restrict themselves to the questions of law raised and decided by the High Court and desist from introducing a new question of law by giving an impression that the same was not addressed by the forums below.

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

----S. 21(e)---Income from business, computation of---Deductions not allowed---Contributions made by tax-payer company to an unapproved gratuity fund---Section 21(e) of the Income Tax Ordinance, 2001 clearly stipulates that the contributions to an unapproved gratuity fund cannot be deducted while computing the income tax of a person under the head "Income from Business"---Admittedly, in the present case, the gratuity fund has not been approved---Contention of the counsel for the tax-payer that once the contribution is made to a gratuity fund, section 21(e) is not applicable, is an absurd argument and totally negates the purpose and object of the statutory requirement of an approved gratuity fund---If the argument of the counsel were to hold true, the requirement of an approved gratuity fund is rendered totally meaningless, if the taxpayer simply states making the contribution to an unapproved gratuity fund and thereafter seeks deduction from the income from business---Such an interpretation is not only absurd but is also unsustainable in law---Petition for leave to appeal was dismissed and leave was refused.

Faiz Rasool Jalbani, Advocate Supreme Court for Petitioner (video link Lahore).

Ibrar Ahmed, Advocate Supreme Court for Respondent.

2022 P T D 1869

[Supreme Court of Pakistan]

Present: Qazi Faez Isa, Yahya Afridi and Jamal Khan Mandokhail, JJ

Messrs A.J. TRADERS through Proprietor

Versus

COLLECTOR OF CUSTOMS (ADJUDICATION) ISLAMABAD and others

Civil Appeals Nos. 354 to 356 of 2020, decided on 12th October, 2022.

(On appeal from the judgments of the Peshawar High Court, Peshawar dated 08.10.2019 passed in Customs References Nos. 56-P, 57-P and 58-P of 2019)

(a) Import and Export of Precious Metals Jewellery and Gemstones Order, 2013---

----Clauses 4 & 6---Imports and Exports (Control) Act (XXXIX of 1950), S. 3(1)---SRO No. 266(I)/2001 dated 7 May 2001---SRO No. 760(I)/2013 dated 2 September 2013---Import of gold and silver---Appellants (importers) had availed the benefit of S.R.O. No.266(I)/2001 dated 7 May 2001 ('SRO 266') and had imported silver and gold which was required to be used in the manufacture of jewellery and the jewellery manufactured therefrom was to be exported within one hundred and eighty days, but no export took place---Orders-in-original were passed by the Collector of Customs, which were unsuccessfully appealed before the Customs Appellate Tribunal ('the Tribunal')---Thereafter, the appellants filed customs references before the High Court but these too were dismissed---Contention of appellants that SRO 266 was replaced by SRO No.760(I)/2013 dated 2 September 2013 ('SRO 760'), therefore, the obligations incurred under SRO 266, of exporting jewellery manufactured by using the imported silver and gold, was no longer required to be complied with---Validity---Since the benefit of SRO 266 was availed of it had to be complied with---Appeals were dismissed.

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

----S. 194-B---Appeal before Customs Appellate Tribunal---Customs Appellate Tribunal ('Tribunal') not deciding the appeal within sixty days nor extending the period for decision in terms of the first proviso to section 194-B of the Customs Act, 1969---Question as to whether the statutory requirement to decide an appeal, and to do so within a particular time frame, is a mandatory obligation cast on a State functionary and whether non-compliance therewith adversely affects the rights of the taxpayer---Held, that if a taxpayer's appeal is not decided within the stipulated period his appeal cannot be negated and the taxpayer non-suited on this score---To hold otherwise would be eminently unfair and give the State a premium for its own functionary's non-compliance with the law---Legislature in prescribing a period within which an appeal should, or must, be decided obligates the appellate authority---Therefore, if there are any consequences in deciding an appeal beyond the prescribed period the same may only be visited upon the State functionaries, and not on a taxpayer.

Commissioner Inland Revenue v. Messrs Sarwaq Traders 2022 SCMR 1333 = 2022 PTD 1128 disagreed with Collector of Sales Tax v. Super Asia Mohammad Din & Sons 2017 SCMR 1427; WAK Limited v. Collector Central Excise and Sales Tax 2018 SCMR 1474 and Mujahid Soap and Chemical Industries (Pvt.) Ltd. v. Customs Appellate Tribunal 2019 SCMR 1735 ref.

Syed Hamid Ali Shah Bukhari, Advocate Supreme Court and Raja Abdul Ghafoor, Advocate-on-Record for Appellant (in all Appeals).

Abdul Rauf Rohaila, Advocate Supreme Court (Through video link from Peshawar) for Respondents (in all Appeals).

Date of hearing: 12th October, 2022.