PTD 2025 Judgments

2025 P T D (Trib.) 1313

[Anti-Dumping Appellate Tribunal]

Before Mrs. Suraiya Ahmed Butt, Chairman Usman Ahmad Ranjha and

Muhammad Saqib Ayyaz, Members

Messrs TAPE TOWN and others

Versus

NATIONAL TARIFF COMMISSION and another

Appeal No. 674 of 2025, decided on 17th July, 2025.

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

----Ss. 45, 55 & 70---Final determination, initiating / carrying of---Appeal challenging Preliminary Determination Notice having already been filed---Objection was that since the impugned Preliminary Determination Notice had now merged into the Final Determination, the present appeal had become infructuous---Validity---It is an admitted position that the preliminary determination dated 31.01.2025 is valid only for a limited period of four months, as stipulated under S. 45 of the Anti-Dumping Duties Act, 2015 ('the Act 2015')---It is also undisputed that the National Tariff Commission ('the Commission') has since issued its final determination dated 24.05.2025 which is currently under challenge in separate appeals before (this) Anti-Dumping Duties Appellate Tribunal, therefore, the present appeal, being entirely premised on the preliminary determination, has become infructuous and no longer raises a live legal issue under the statutory framework, particularly in the light of the conclusive findings and the retroactive effect of the final determination---Appellate Tribunal is not required to adjudicate matters that have ceased to possess legal significance due to subsequent developments within the same proceedings---Appeal, being infructuous, was dismissed, in circumstances.

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

----Ss. 37, 43, 45 & 55---Preliminary Determination and Final Determination---Structured process---Scope---Objection that since the impugned Preliminary Determination Notice was provisional in nature and had now merged into the Final Determination, the present appeal had become infructuous---Validity---The statutory framework lays down a structured process for anti-dumping investigations, addressing both preliminary and final measures, including their legal effect and duration---The statutory language of the provisions under Ss. 37, 43, 45 and 55 of the Anti-Dumping Duties Act, 2015 ('the Act 2015') unambiguously reflects that provisional anti-dumping measures are temporary in nature, imposed solely to prevent injury during the course of an investigation and valid for a maximum period of four months---Said/such measures are inherently interim, contingent and not intended to extend beyond the transitional phase of the investigation---Crucially, their legal effect is subordinate to, and dependent upon, the Commission's final determination---The legal structure is further clarified / reinforced by S. 55 of the Act, 2015, which governs the retrospective application of definitive anti-dumping duties and delineates the legal consequences of provisional measures once a final determination is issued---Specifically, S. 55(2) provides a critical safeguard that where the definitive duty exceeds the provisional duty, the excess shall not be collected, thereby protecting importers from retrospective financial liability beyond what was provisionally imposed---Conversely, if the definitive duty is lower than the provisional duty, the Commission is obligated to refund the difference within forty-five days---Said statutory limitations affirm that provisional duties are temporary and conditional in nature; they do not give rise to enforceable obligations beyond their limited duration or legal purpose---Moreover, S. 55 of the Act, 2015 underscores the contingent and non-final nature of provisional anti-dumping measures; it functions as a statutory mechanism that links the provisional phase of the investigation with its final outcome, ensuring that provisional actions are subject to confirmation, adjustment, or nullification based on the final determination---Once a final determination is issued, provisional duties no longer have any independent legal effect or force---Present appeal, being entirely premised on the preliminary determination, has become infructuous and no longer raised a live legal issue under the statutory framework, particularly in light of the conclusive findings and the retroactive effect of the final determination---Appellate Tribunal is not required to adjudicate matters that have ceased to possess legal significance due to subsequent developments within the same proceedings---Appeal, being infructuous, was dismissed, in circumstances.

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

----Ss. 45, 55 & 70---Final Determination, initiating / carrying of---Appeal challenging Preliminary Determination Notice having already been filed---Objection that since the impugned Preliminary Determination Notice was provisional in nature and had now merged into the Final Determination, the present appeal had become infructuous---Validity---In the present case, provisional anti-dumping duties were imposed from 01.02.2025 for a period of four months, following the preliminary determination dated 31.01.2025---A final determination was issued on 24.05.2025, imposing definitive anti-dumping duties effective retroactively from 01.02.2025 for a period of five years---Thus, the period covered by the preliminary determination has been fully subsumed within the final determination---Pursuant to S. 55(2) of the Act, 2015, the Commission is not permitted to recover any amount exceeding the provisional duty, even if the final duty is higher; conversely, where the final duty is lower, the Commission is obligated to refund the difference within forty-five days , which reflects the clear legislative intent that provisional duties are temporary and tentative in nature and cannot independently serve as the basis for sustained or enforceable relief once the final determination is issued---Accordingly, the preliminary determination and the associated provisional measures have been superseded and absorbed by the final determination, and therefore no longer retain any operative legal effect---Entertaining the present appeals would not only be procedurally inefficient rather entails duplication and risks legal inconsistency---Both the preliminary and final determinations stem from the same investigation and address substantially the same issues, including dumping, injury, and causation---Proceeding with present appeal would, therefore, be redundant resulting in unnecessary consumption of judicial resources and undermine the integrity of the adjudicatory process---Present appeal, being entirely premised on the preliminary determination, has become infructuous and no longer raises a live legal issue under the statutory framework, particularly in light of the conclusive findings and the retroactive effect of the final determination---Appellate Tribunal is not required to adjudicate matters that have ceased to possess legal significance due to subsequent developments within the same proceedings---Appeal, being infructuous, was dismissed, in circumstances.

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

----Ss. 45 & 70(1)(ii)---Final Determination, initiating / carrying of---Appeal challenging Preliminary Determination Notice having already been filed---Objection that since the impugned Preliminary Determination Notice was provisional in nature and had now merged into the Final Determination, the present appeal had become infructuous---Validity---Section 70(1)(ii) of the Act, 2015 provides a comprehensive and effective remedy against the final determination, enabling the appellants to raise all relevant issues of fact and law, including those raised in relation to the preliminary determination, which ensures that the appellant's rights are preserved and fully addressed at the appropriate stage of the proceedings---Present appeal, being entirely premised on the preliminary determination, has become infructuous, and no longer raises a live legal issue under the statutory framework, particularly in light of the conclusive findings and the retroactive effect of the final determination---Appellate Tribunal is not required to adjudicate matters that have ceased to possess legal significance due to subsequent developments within the same proceedings---Appeal, being infructuous, was dismissed, in circumstances.

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

----Ss. 37, 43, 45 & 55---Final Determination, initiating / carrying of---Appeal challenging Preliminary Determination Notice having already been filed---Provisional / interlocutory orders---Scope---Objection that since the impugned Preliminary Determination Notice was provisional in nature and had now merged into the Final Determination, the present appeal had become infructuous---Validity---Interim, provisional, or interlocutory orders are issued only to aid the final adjudication of a matter and do not survive once a final decision is rendered---Upon conclusion of the proceedings and issuance of the final order, all earlier interim or interlocutory orders lose their legal efficacy and merge into the final determination---Present appeal, being entirely premised on the preliminary determination, has become infructuous, and no longer raise a live legal issue under the statutory framework, particularly in light of the conclusive findings and the retroactive effect of the final determination---Appellate Tribunal is not required to adjudicate matters that have ceased to possess legal significance due to subsequent developments within the same proceedings---Appeal, being infructuous, was dismissed, in circumstances.

2023 SCMR 1247 ref.

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

----S. 70(13)---Final Determination, initiating / carrying of---Appeal challenging Preliminary Determination Notice having already been filed---Contention of the appellants that their right to a second-tier appeal under S. 70(13) of the Anti-Dumping Act, 2015, would be lost if the present appeal was dismissed---Validity---Said contention is misconceived as an order dismissing an appeal as infructuous is itself appealable, and the appellants remain free to pursue all available statutory remedies---Present appeal, being entirely premised on the preliminary determination, has become infructuous, and no longer raise a live legal issue under the statutory framework, particularly in light of the conclusive findings and the retroactive effect of the final determination---Appellate Tribunal is not required to adjudicate matters that have ceased to possess legal significance due to subsequent developments within the same proceedings---Appeal, being infructuous, was dismissed , in circumstances.

Salman Farooq for Appellants.

Azfar Naeem, Senior Legal Advisor for Respondent No. 1.

Saifullah Khan, Ms. Sumaira Kanwal and Rais Mahmood Ali for Private Respondents.

2025 P T D (Trib.) 465

[Customs Appellate Tribunal]

Before Shakil Ahmed Abbasi, Member Judicial-III

Messrs NORTEX CORPORATION

Versus

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

Customs Appeal No.K-1673 of 2023, decided on 10th January, 2024.

Customs Act (IV of 1969)---

----S. 138---SRO 450(I)/2001---Frustrated consignment---Scope---Argument of the appellant / importer was that as the goods were mistakenly shipped by the shipper, the same, being frustrated consignment, may be allowed to be re-exported back to shipper---Validity---From documents submitted by the importer (invoice, description of frustrated cargo, lab report) change of name and address of importer was found---Besides the above, Custom House Lab Report had also confirmed that the found goods were made of Silica instead of Ceramic as declared by the importer---Seller and shipper had also confirmed by submitting an undertaking that the wrong cargo of other buyer had mistakenly been shipped ; hence, they requested for return / re-export of frustrated cargo to shipper---Customs Appellate Tribunal set aside the impugned Order-in-Original and allowed the Appellant / Importer to re-export the consignment to shipper---Appeal was allowed accordingly.

Sallah Uddin Junejo for Appellant.

Zulfiqar Ali Shah, A.O. for Respondents.

2025 P T D (Trib.) 70

[Federal Tax Ombudsman]

Before Dr. Asif Mahmood Jah, Federal Tax Ombudsman

In re: Own Motion Nos.0052 and 0064/OM/2022

Adjustment of Income refunds with Tax Liability

Dated 27-05-20221 R.O. Karachi

OWN Motion Nos.0052 and 0064/OM/2022, decided on 20th September, 2022.

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

----Ss.2(3)(1)(a)(b) & (ii) & 9(1)---Income Tax Ordinance (XLIX of 2001), Ss. 170(3) & (4), 221, 122(9) & 122(5A)---Letter No. 6(43) Rev.Bud/2021/116078-R dated 10.05.2022 issued by the Federal Board of Revenue---Disposal of cases of all individuals/AOP who had adjusted refund claims against admitted tax liability of Tax Years 2016-2021, matter of---Federal Tax Ombudsman, jurisdiction of---Maladministration---Scope---Respondent /Department raised objection regarding bar on jurisdiction of the Office of Federal Tax Ombudsman---Validity---Issue in hand was not of assessment of determination of tax---The taxpayer had outstanding refund claim of previous years far in excess of admitted tax liability clearly visible in respective tax years in IRIS---Determination of refund under S.170 of the Income Tax Ordinance, 2001, for those previous tax years against prescribed period of six months, was pending with the department---Now the Department intended to penalize the taxpayer for not being able to produce refund order which was in fact to be processed by the Department itself---This was a fit case of maladministration to be treated by Federal Tax Ombudsman.

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

----Ss. 2(3)(1)(a)(b) & (ii) & 9(1)---Income Tax Ordinance (XLIX of 2001), Ss. 170(3) & (4), 221, 122(9) & 122(5A)---Letter No. 6(43) Rev.Bud/2021/116078-R dated 10.05.2022 issued by the Federal Board of Revenue---Refund claims, self-adjustment of---Scope---Disposing of cases of all individuals/AOP who had adjusted refund claims against admitted tax liability of Tax years 2016-2021 by the FBR in light of Letter No. 6(43) Rev.Bud/2021/116078-R dated 10.05.2022---Federal Tax Ombudsman initiated investigation of the matter---Argument of the Respondent / Department was that a taxpayer colud not adjust any refund already claimed in previous years until and unless it was determined by the Department under S. 170(4) of the Income Tax Ordinance---In support of said argument, the decision of the Supreme Court judgment dated 05.03.2020 in Civil Petitions 283-L to 286-L of 2018 dated 05.03.2020 had been quoted /referred to---Validity---Said judgment was distinguishable which was with reference to claim of additional payments for delayed refunds (compensation); on the contrary, issue-in-hand was not of said matter---In the present matter, the claim of the taxpayer was his own excess payments of previous tax years for which he had applied to the Department as per law and it was the responsibility of the Department to dispose the applications of refund in terms of Ss. 170(3) & 170(4) of the Income Tax Ordinance---But the Department, instead of complying with the said provisions, kept on sleeping over the refund application of taxpayer for more than prescribed period of sixty days---Taxpayer ,on the other hand, after having failed to get his refunds issued, resorted to claiming of its adjustment in his return in subsequent years for which a separate TAB was provided in return of income through IRIS (This TAB was subsequently removed in income tax return for Tax year 2022 in IRIS)---Thus, all the actions of disposal of refund application of previous years, determination of refund and adjustment of the same against taxpayer's admitted liability in terms of provisions of Ss.170(3) & 170(4) of the Income Tax Ordinance, 2001, was pending with the Department and the Department was asking the taxpayer to produce the evidence for the same---Thus, non-disposal of refund applications of previous years and issuance of show cause notice under S.221 or 122(9)/122(5A) of the Income Tax Ordinance, 2001 without conducting proper desk audit tantamounted to maladministration in terms of S.2(3)(1)(a)(b) &(ii) of the Establishment of Office of Federal Tax Ombudsman Ordinance, 2000---Federal Tax Ombudsman recommended the respondent / FBR to issue clear cut and uniform instructions / clarifications with respect to letter-in-question---No refund adjustment claim can be rejected without taking substantial steps (i.e. conducting detailed desk audit of returns, verifying tax payments from ITMS/IRIS etc., confronting specifically unverified tax deductions/payment setc.)---Federal Tax Ombudsman recommended to dispose of refund applications for previous years on merits as per law after providing opportunity of hearing---Federal Tax Ombudsman disposed of Own Motion Investigation accordingly.

Civil Petitions Nos.283-L to 286-L of 2018 distinguished.

Badruddin Ahmad Quraishi, Advisor Dealing Officer.

2025 P T D (Trib.) 116

[Federal Tax Ombudsman]

Before Dr. Asif Mehmood Jah, Federal Tax Ombudsman

Syed REHMAT ALI SHAH

Versus

The SECRETARY, REVENUE DIVISION, ISLAMABAD

Review Petition in Complaint No.1838/ISB/ST/2022, decided on 13th October, 2022.

(a) Establishment of Office of Faederal Tax Ombudsman Ordinance (XXXV of 2000)---

----Ss.2(3), 9 & 10---Islamabad Capital Territory (Tax on Services) Ordinance (XLII of 2001), S. 3---Higher rate of sales tax applicable in Islamabad Capital Territory (ICT)---Maladministration---Scope---Plea of the Complainant (Pakistan Overseas Employment Promoters Association) was that the higher tax in ICT be attributed as maladministration---Validity---There was no denial of the fact that the rate of sales tax on complainant (overseas employment promotors), applicable in Islamabad Capital Territory (ICT), was discriminatory vis-a-vis the rates, applicable in the provinces of Sindh and Punjab while no tax had been notified by the province of KPK and Balochistan, however, on said account, no act of maladministration could be attributed to FBR or its field formations as they were applying the law i.e. the Islamabad Capital Territory (Tax on Services) Ordinance, 2001, promulgated by the President and amended by Finance Act, 2021---Said discrimination could only be removed by Legislation---Subject plea of the petitioner was earlier received at FTO Secretariat as "Budget Proposal" for Finance Year 2022-23, which was accordingly sent to FBR with recommendations for consideration---Findings of the Federal Tax Ombudsman was that, evidently, no maladministration could be attributed to FBR, however, due to the glaring dichotomy and disparity in the Sales Tax, chargeability rate between the Provinces and ICT was found to be discriminatory, which adversely impacted the ease of doing business and was tantamount to non-provision of a level playing field to the complainant (Pakistan Overseas Employment Promoters Association) in ICT---Recommendations of the Federal Tax Ombudsman were that FBR be advised to remove said disparity as well as discrimination by proposing necessary amendment in the ICT (Tax on Services) Ordinance, 2001, in the next budget proposals for the Finance Bill, 2023-24---Complaint was disposed of accordingly.

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

----Ss.2(3), 9 & 10---Islamabad Capital Territory (Tax on Services) Ordinance (XLII of 2001), S. 3---Emigration Rules, 1979, Sr. No.15---Person selected for employment abroad by Overseas Employment Promoter---Sales tax on service charges (Rs.6000/- per person) in Islamabad Capital Territory (ICT), charging of---Maladministration---Scope---Plea of the complainant (Pakistan Overseas Employment Promoters Association) was that it was to be attributed as maladministration that the charge of Sales Tax only on service charges (Rs.6000/- per person), instead of the entire turnover (which included actual expenses incurred on air ticketing, medical, work permit, levy, visa and documentation of the emigrant)---Validity---Service charges have been elaborated at Sr. No.15 of the Emigration Rules, 1979 (updated 2021), which reads as "(1) person selected for employment abroad by an Overseas Employment Promoter or the Corporation shall deposit a sum of rupees six thousand in case of monthly salary up to twelve hundred US dollars or equivalent to it in any other currency and rupees ten thousand in case of monthly salary equal to twelve hundred and one or more US dollars or equivalent to it in any other currency with a branch of a bank which shall issue a certificate in the form as set out in Form 7"---Punjab Finance Act, 2020 had clarified that a 5% rate of tax was chargeable on the value of service as fixed by the Bureau of Emigration and Overseas Employment, whereas, the ICT (Tax on Services) Ordinance, 2001 vide S. 3(1) determined the scope of tax on the value of the taxable services rendered or provided in ICT and applied 15% rate of tax---This was a major dichotomy of Provincial and Federal Sales Tax Law where the Provinces were charging sales tax on service charges equal to Rs.6,000/- or Rs.10,000/- as the case might be, while the FBR in ICT was charging sales tax on the overall value of taxable services---Findings of the Federal Tax Ombudsman were that, evidently, no maladministration could be attributed to FBR, however, due to the glaring dichotomy and disparity in the applicability of Sales Tax chargeability rate on service charges or value of services respectively was found to be discriminatory, which adversely impacted the ease of doing business and tantamount to non-provision of a level playing field to the complainant (Pakistan Overseas Employment Promoters Association) in ICT---Recommendations of the Federal Tax Ombudsman were that FBR be advised to remove said disparity as well as discrimination by proposing necessary amendments in the ICT (Tax on Services) Ordinance, 2001, in the next budget proposals for the Finance Bill, 2023-24---Complaint was disposed of accordingly.

Dr. Arslan Subuctageeen, Advisor Dealing Officer.

Nisar Ahmad, Registrar Appraising Officer.

Faheem Iqbal, Former Vice Chairman and Shahbaz Zeb Khan, Secretary General, Authorized Representatives.

2025 P T D 194

[Federal Tax Ombudsman]

Before Dr. Asif Mahmood Jah, Federal Tax Ombudsman

Complaint No.0013/OM/2002 : In the matter of

Complaint No.0013/OM/2022, decided on 19th May, 2022.

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

----Ss. 2(3) & 9(1)---Recognized Agricultural Tractor Manufacturers Rules, 2006, [issued vide SRO.363(I)/2012, dated 13.04.2012], Rr. 2 & 4---Delay in sanctioning of long pending refund claims of Tractor Manufacturing Industry (Industry)---Maladministration---Scope---Case of the claimant (Tractor Manufacturer Unit) was that industry pays 17% sales tax to its vendors from whom it purchases parts ; that it is allowed to pass on only 5% Sales Tax to the buyers and FBR has to refund rest 12% to the Tractor Manufacturer; that said differential, in case of the claimant has touched Rs.6 billion, that said scenario left no choice for the Tractor Manufacturer but to suspend operations to save itself from future losses; that Department had not processed/ sanctioned due refund within three days as prescribed under Recognized Agricultural Tractor Manufacturers Rules, 2006, issued vide SRO.363(I)/2012 dated 13.04.2012 ('the Rules/SRO')---Validity---Subject to filing of refund application, pursuant to R. 2 of the Rules / SRO, refund of admissible excess input tax is to be allowed within three days---Subject to Rule 4, Tractor Manufacturer (claimant) is required to file complete refund claim along with requisite supportive documents within fifteen days of sanctioning of refund---In case, any amount already sanctioned and paid is found inadmissible, the same is recoverable within seven days by encashing the bank guarantee to the extent of adjudged liabilities ---It appears that timelines, given in prescribed procedure, are not being followed in letter and spirit while processing/sanctioning refund claims of the Tractor Industry---Delay in processing/sanctioning due refund claims and consequently, delay in transfer of sanctioned amount to Tractor Manufacturers' (claimants') bank accounts, as per timelines, prescribed vide the Rules / SRO, is tantamount to maladministration in terms of S. 2(3) of the Federal Tax Ombudsman Ordinance, 2000---Federal Tax Ombudsman recommended that the FBR shall direct :-(i) all CCIRs, holding jurisdiction over sales tax affairs of Tractor Industry, to strictly comply with timelines, as prescribed vide SRO.363(I)/2012 dated 13.04.2012, while processing due refund claims, as per law; and (ii) report compliance within 45 days---Complaint was disposed of accordingly.

Dr. Sarfraz Ahmad Warraich, Advisor Dealing Officer.

Mrs. Sarwat Tahira Habib, Sr. Advisor Appraising Officer.

Akhtar Ali, Authorized Representative.

2025 P T D (Trib.) 244

[Federal Tax Ombudsman]

Before Dr. Asif Mahmood Jah, Federal Tax Ombudsman

ABDUL HAFEEZ, DIRECTOR and another

Versus

The SECRETARY, REVENUE DIVISION, ISLAMABAD

Complaint No.0807/KHI/ST/2022, decided on 24th May, 2022.

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

----Ss.2(3), 9 & 10---Sales Tax Act (VII of 1990), S. 9---Sales Tax Rules, 2006, Rr. 19, 20, 21 & 22---Credit notes issued to un-registered persons, non-admissibility of---Maladministration---Scope---Complaint filed regarding the issue of admissibility of credit notes issued to un-registered persons---Plea of the complainant was that the online portal for filing tax return (IRIS) allowed the declaration of credit notes issued to unregistered customers in the sales tax return, however, in subsequent month, the IRIS portal had reversed the said credit notes, which reflected incidence of maladministration---Explanation made by the FBR was that such blocking, being a bona fide action, was temporary and aimed at abnormal flow of credit notes as unbridled acceptance of credit notes could trigger a wave of tax fraud as in some cases of Registered Persons an abnormality of huge credit notes against supplies made to unregistered persons, drastically reducing their tax liability, had been observed by FBR---In order to address the hardships caused to the Registered Persons, the FBR had, at first, allowed adjustment of Credit Notes against unregistered buyers in case of the automobile sector; and then at second stage, adjustment through Credit Notes for manufacturer-cum retailers, up to certain limits had been allowed---Federal Board Revenue's detailed reply and actions initiated after the intervention of FTO Secretariat in order to alleviate the grievances of genuine registered persons was fair, cautious and reasonable---Thus, no maladministration was visible---Complaint warranted no further action, which was disposed of.

Muhammad Tanvir Akhtar, Advisor Dealing Officer.

Rafaqat Ali Khan, CA Firm Authorized Representative.

2025 P T D 272

[Federal Tax Ombudsman]

Before Dr. Asif Mahmood Jah, Federal Tax Ombudsman

NAVEED ANJUM

Versus

The SECRETARY, REVENUE DIVISION, ISLAMABAD

Complaint No.2475/ISB/IT/2022, decided on 28th July, 2022.

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

----Ss. 9(1) & 10(4)---Federal Ombudsman Institutional Reforms Act (XIV of 2013), S. 9(1)---Income Tax Ordinance (XLIX of 2001), Ss.170(4) & 236-K---Way of disposing of refund claim by the Federal Board of Revenue---Maladministration---Scope---Refund application of the complainant / Government servant for Tax Year 2018 was rejected on the basis that evidence of tax deduction was not attached with the application, complainant was informed by the Chief Commissioner that his application for refund had already been rejected almost two years ago ;and that since there was no refund application pending, his case could not proceed---Validity---Order having been passed under S.170(4) of the Income Tax Ordinance, 2001 was a classical example of departmental inattention and incompetence as on one hand, (one page )order stated that, "necessary evidence of tax payments is placed on record."---However, in the concluding para of same order the officer opined "that the taxpayer neither furnished any evidence regarding tax deduction manually not attached any evidence in support of refund claimed....... In view of above facts of the case, the refund application is rejected"---Thus, the contradiction and carelessness were more than evident---Said order, under S. 170(4) of the Income Tax Ordinance, 2001 was silent about any opportunity of being heard given to the taxpayer prior to passing rejection order; which act itself contravened the said section which obligated the Department to afford proper opportunity of being heard---In the present case, tax deduction mainly related to S. 236-K of the Income Tax Ordinance, 2002, which was CNIC based and internally verifiable from FBR's portal---Thus, the present case reflected serious incidence of maladministration in terms of S. 2(3)(1)(b)(c) and (ii) of FTO Ordinance, 2000---Federal Tax Ombudsman recommended that FBR be directed to ensure that the concerned Commissioner was to revisit the impugned order and the claim of refund be disposed of as per law after affording proper opportunity of being heard to the complainant---Complaint filed by the taxpayer was disposed of accordingly.

Muhammad Majid Qureshi, Advisor Dealing Officer.

Muhammad Tanvir Akhtar, Advisor Appraisal Officer.

Complainant in person Authorized Representative.

2025 P T D 817

[Federal Tax Ombudsman]

Before Dr. Asif Mahmood Jah, Federal Tax Ombudsman

FAHAD NAJEEB

Versus

The SECRETARY, REVENUE DIVISION, ISLAMABAD

Complaint Nos.1488, 1489, 1491, 1493, 1495, 1496, 1502, 1504, 1505, 1506, 1507, 1509, 1510, 1524, 1525, 1526, 1527, 1528, 1529, 1530 and 1531/PWR/IT/2022, decided on 25th May, 2022.

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

----Ss.2(3)(i), 2(3)(ii) & 10(1)---Income Tax Ordinance (XLIX of 2001), S.153(1)(b)---Deduction of income tax from salary of lecturers of Government educational institution---Maladministration---Grievance of the complainant (lecturer of Government College Bannu, hired by the Directorate of Higher Education Government of KPK Peshawar) was that his salary was not liable to tax---Plea of the respondents/FBR was that college authority had hired the complainant /taxpayer who was providing services in private capacity upon which tax was withheld under S.153(1)(b) of the Income Tax Ordinance, 2001---Validity---Record revealed that in view of prolonged recruitment proceedings at Provincial Public Service Commission , the Directorate of Higher Education Government of KPK Peshawar, had evolved a separate and streamlined mechanism for hiring appointment of lecturers on semester to semester basis ; thus, plea of the respondents / FBR was not justified in alleging that college authority had hired the complainant / taxpayer who was providing services in private capacity---Federal Board of Revenue's treatment of the instant cases under S. 153(1)(b) of the Income Tax Ordinance, 2001, was against the dictates of law and excessive tax deductions from the pay/wages of a hired employee of educational institution, which tantamounts to maladministration in terms of Federal Tax Ombudsman Ordinance, 2000---Said discriminatory, unjust and extra legal treatment of salary cases tantamounts to maladministration in terms of S. 2(3)(i) and (ii) of the Establishment of Office of Federal Tax Ombudsman Ordinance, 2000---Federal Tax Ombudsman recommended / directed FBR to ensure that hired lecturers of government educational institutions were not burdened with excess deductions at withholding stage while issuing necessary clarification for all withholding agents to safeguard employees like complainant against excessive deductions---Complaint was allowed accordingly.

Ziauddin Wazir, Advisor Dealing Officer.

Muhammad Tanvir Akhtar, Advisor for Appraisement.

Nemo. for Authorized Representative.

2025 P T D 473

[High Court (AJ&K]

Before Sadaqat Hussain Raja, CJ and Khalid Rasheed Chaudhary, J

AZAD JAMMU AND KASHMIR TECHNICAL EDUCATION AND VOCATIONAL TRAINING AUTHORITY (TEVTA) through Chairman

Versus

COMMISSIONER INLAND REVENUE AZAD JAMMU AND KASHMIR CAMP OFFICE MIRPUR and another

Writ Petition No.1391 of 2016, decided on 27th September, 2022.

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

----Ss. 114(4) & 122(C)---Furnishing return of income , failure of---Provisional assessment, making of---Proceedings under S. 122(C)---Notice under S.114(4), non-issuance / service of---Scope and effect---Claim of the petitioner / Azad Jammu and Kashmir Technical Education and Vocational Training Authority (TEVTA) is that the respondents /Department did not serve any notice upon it under S.114(4) of Income Tax Ordinance, 2001, and only after issuance and service of notice under S. 114(4), the proceedings under S. 122(C) may be initiated---Validity---According to S. 114(4) of Income Tax Ordinance, 2001, the Commissioner may issue notice in writing, requiring any person, who in the Commissioner's opinion is required to file a return of income but failed to, furnish a return of income for that year within 30 days from the date of service of notice as the Commissioner may allow---Section 114(4) of the Ordinance, 2001 clearly reveals that the Commissioner may by notice in writing require any person who in Commissioner's opinion is required to file a return of income but who has failed to do the same may issue notice to him---Record shows that no notice upon the petitioner under S. 114(4) has been served---Section 122(C) of Income Tax Ordinance, 2001, reveals that said section was omitted by the Finance Act, 2017, however, the instant writ petition was filed on 22.04.2016 and at that time S. 122(C) was in existence---According to S. 122(C), if a person fails to furnish return of income for any tax year, the Commissioner may make a provisional assessment of the taxable income---Under S. 122(C) of Income Tax Ordinance, 2001, before initiating proceedings under S. 122C, proceedings for issuance of notice under S. 114(4) should have been initiated---A provisional assessment under S. 122C has to be made after issuance of notice under S. 114(4) of the Ordinance, 2001---In the present case, respondents / Department did not issue notice under S.114(4) of the Ordinance, 2001, therefore, respondents failed to comply with the provision of law---High Court set-aside impugned proceedings---Writ petition was allowed accordingly.

(b) Azad Jammu and Kashmir Interim Constitution Act (VIII of 1974)---

----Art. 44---Income Tax Ordinance (XLIX of 2001), Ss. 127, 114(4) & 122(C)---Furnishing return of income, failure of---Provisional assessment, making of---Proceedings under S. 122(C) without issuance / service of notice under S. 114(4), assailing of---Writ petition---Maintainability---Claim of the petitioner /Azad Jammu and Kashmir Technical Education and Vocational Training Authority (TEVTA) is that the respondents / Department did not serve any notice upon it under S. 114(4) of Income Tax Ordinance, 2001, and only after issuance and service of notice under S. 114(4), the proceedings under S. 122(C) may be initiated---Validity---Although in S. 127 of the Income Tax Ordinance, 2001, words "except an assessment order under S. 122(C)" have been omitted by the Finance Act, 2017, however, the constitutional petition was filed on 22-06-2016 prior to omission of the these words---Chapter III of the Ordinance, 2001 deals with appeal and S. 127 clearly ousts the jurisdiction of Appellate Forum against any order passed under S. 122(C)---Hence, there is no alternate, adequate, efficacious remedy except to invoke constitutional jurisdiction---Writ petition was allowed accordingly.

Raja Mohammad Hanif Khan for Petitioner.

2025 P T D (Trib.) 127

[Inland Revenue Appellate Tribunal]

Before Sardar M. Ajaz Khan, Judicial Member and Sajid Nazir Malik, Accountant Member

Messrs IMPERIAL SANITATION, RAWALPINDI

Versus

The COMMISSIONER INLAND REVENUE, RTO, RAWALPINDI

S.T.A. No.458/IB/2023, decided on 31st July, 2023.

Sales Tax Act (VII of 1990)---

----Ss.11 & 25---Sales not declared in Sales Tax Returns---Penalty, imposing of---Cash-credits---Taxable supplies---Determination---Assessing Officer issued show-cause notice to taxpayer for not declaring sales in Returns and for evading sales tax---Order in original passed by Assessing Officer was maintained by Commissioner Inland Revenue (Appeals)---Validity---Whenever the Legislature had deemed fit, resort was made to deeming provision by fiction of law---There was no provision in Sales Tax Act, 1990, analogous to the provisions contained in income tax law, whereby discovery of any cash-credits in accounts of taxpayer could be deemed to be supply, taxable supply or amount received on account of taxable activity in furtherance of any business---Taxpayer could be subjected to tax under a provision of law which was unambiguous and clear---In absence of any deeming provision, the Revenue was required to establish that a transaction was within the parameters of taxable supplies or in furtherance of any taxable activity, failing which the sales-tax imposed on the basis of some assumption or presumption not warranted in law was always struck down---Assessing officer did not produce any material to show that amounts in question were in any way linked with taxable supplies or with any taxable activities or presented an amount on account of any business activity---Basis of super structure on wrong foundation was completely illegal and void ab-initio---Appellate Tribunal Inland Revenue set aside the orders passed by Assessing Officer as well as that of Appellate Authority---Appeal was allowed, in circumstances.

2013 PTD 2130; 2018 PTD 4 and Messrs Al-Hilal Motors Stores and others v. The Collector, Sales Tax and Central Excise (East) Karachi and others 2004 PTD 868 ref.

Imran-ul-Haq for Appellant.

Miss Misbah Noureen, DR for Respondent.

2025 P T D (Trib.) 153

[Inland Revenue Appellate Tribunal]

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

Messrs SUI NORTHERN GAS PIPE LINES LIMITED

Versus

COMMISSIONER INLAND REVENUE, LTO, LAHORE

S.T.A. No.2166/LB of 2023, decided on 22nd January, 2024.

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

----S.13, Sixth Schedule, Table-1, Sr. No.151, sub-serials (a) and (b)---Exemption for Federally Administrated Tribal Area/Provincially Administrated Tribal Area (FATA/PATA)---"Or" and "and", to be read conjunctively or disjunctively---Interpretation---Arguments of respondent / Department was that the provisions given in sub-serials (a) and (b) of Sr.No.151 were to be read conjunctively as a single preposition; and that if sub-serials (a) and (b) were read disjunctively, it would lead to a very absurd result; and that the word 'supplies' given in sub-serial (a) if read in isolation it would mean all the supplies were exempted from the charge/levy of sales tax under the Sales Tax Act, 1990 which could not be the intent of legislature; thus, it was only when "supplies" was read conjunctively with sub-serial (b) it came out that the 'supplies' and 'imports' by the industries located in the Tribal Areas were exempted from levy of sales tax---Argument of the appellant / SNGPL was that both the sub-serials operate independently and were separately connected to the phrase "as made till 30th June 2024"---Validity---The word "or" is normally disjunctive and "and" is normally conjunctive, but at times, they are read vice versa to give effect to the manifest intentions of the legislature---Legislative history and the intention of the framers clearly point out that concession to the residents of FATA/PATA in respect of immunity from sales tax on supplies was continued by providing breathing space to them to enter into the tax regime gradually and so they were granted all benefits, in the shape of exemption from all taxes, which were available to them prior to the 25th Amendment to the Constitution---Plain reading of S.No.151 did not support the interpretation made by the Department ---Sr.No.151 is divided into two separate and distinct prepositions enumerated separately as (a) and (b) and are divided by use of semi colon---Semi colons are used to join two related but independent clauses---Thus, the expression "and" used in between the two clauses, should be not read conjunctively---Intent of the legislature was manifestly clear that it decided to continue the concession of exemption on sales tax as on supplies till 30th June 2024 in order to provide some breathing space to the inhabitants of FATA/PATA to merge them into the constitutional state---Appeal filed by registered person (SNGPL) was allowed, in circumstances.

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

----Sixth Schedule, Table-1, Sr. No. 151, sub-serials (a) and (b) [as inserted by Finance Act, 2019, vide Circular No.01 of 2019]---Transposition of exemption under SRO 1212(1)/2018/ following rescindment of SROs 888, 889 and 890(I)/2018---Exemption for Federally Administrated Tribal Area /Provincially Administrated Tribal (FATA/PATA)---The underlined word "Further"---Argument of the Department was that if both sub-serials were read disjunctively it would mean that all kind of supplies were exempt from tax which was against the intent of Legislature---Circular No.01 issued by FBR, while giving explanation for reasons of insertion of S.No.151, clarified that Sr.No.151 was added and it was a transposition of exemption under SRO 1212(I)/2018; it was explained that in transposed form, it allowed further exemption on imports of industrial input including plant and machinery imported by industrial units located within tribal areas---The underlined word "further" was of much relevance, which meant exemption on imports was also granted in addition to exemptions already available under SRO 1212(I)/2018 with respect to supplies within tribal areas---Under the said SRO the Federal Government provided exemption from whole of sales tax by whatever name called as levied under Sales Tax Act, 1990---Hence, the argument of the Department was misconceived---Intent of the legislature was manifestly clear that it decided to continue the concession of exemption on sales tax as on supplies till 30th June 2024 in order to provide some breathing space to the inhabitants of FATA/PATA to merge them into the constitutional state---Appeal filed by registered person (SNGPL) was allowed, in circumstances.

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

----S. 13, Sixth Schedule, Table-1, Sr. No. 151, sub-serials (a) and (b) & Sr. 152 [as inserted by Finance Act, 2019 vide Circular No.01 of 2019]---Transposition of exemption under SRO 1212(I)/2018/ following rescindment of SROs 888, 889 and 890(1)/2018---Exemption for Federally Administrated Tribal Area / Provincially Administrated Tribal Area (FATA/PATA) area---"Supplies" as given in Serial 151 and phrase "as made till 30 June 2024"---Interpretation---Argument of the Department was that supplies of electricity had been specifically exempted vide Serial No.152 and had the legislature intended to exempt supplies of gas it would have also done so specifically---Validity---Contention of the Department was misconceived as provision envisaged in Serial No.151 was to be seen and interpreted according to its language keeping in view the background and history of the legislation---Federal Government had issued different SROs to facilitate the inhabitants of FATA/PATA to bring them within the constitutional sphere phasewise and by providing exemption on supplies as it existed prior to the 25th Constitutional Amendment and Serial No.151 is a transposition of SRO 1212(I)/2018 (now rescinded) which provided exemption from whole of sales tax by whatever name it was---Further, if the legislature in its wisdom had specifically mentioned in Serial No.152 of Table-I Sixth Schedule exemption on supplies of electricity to all consumers that did not mean that rest of all supplies were excluded from exemption specially in the presence of S.No.151 which dealt with 'supplies' also---Thus, the word "supplies" given in sub-serial (a) was an independent provision and had to operate separately by connecting with phrase "as made till 30 June 2024---Appeal filed by registered person (SNGPL) was allowed, in circumstances.

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

----Ss.3 & 13, Sixth Sched., Table I, Sr.No.151, Sub-serials (a) & (b) [as inserted by Finance Act, 2019 vide Circular No.01 of 2019] Transporsition of exemption under SRO 1212(I)/2018 following rescindment of SROs 888, 889 and 890(I)/2018---Post Twenty-Fifth Amendment to the Constitution---Federally Administrated Tribal Area / Provincially Administrated Tribal Area (FATA/PATA)---Exemption---Sales tax on area of FATA / PATA, charging of---Supplies made from outside the territory of FATA/PATA---Argument of the Department was that since appellant /SNGPL had supplied gas from outside the territory of FATA/PATA from Pakistan, therefore, the taxpayer being based in Pakistan had no exemption on its supplies made to erstwhile FATA---Plea of the appellant / SNGPL was that it was incorrect to state that the supplies made by SNGPL were from outside territory of FATA/PATA as the appellant / SNGPL had a wide network having offices, infrastructure and pipelines and supply of gas was made within the territorial bounds of erstwhile FATA/PATA---Held, that the Serial No.151 of Table-I of Sixth Schedule of Sales Tax Act, 1990, had restored the legal position prior to enactment of the Constitution (Twenty-fifth Amendment) Act, 2018 and the appellant was fully entitled to exemption available to supplies to Swat (FATA/PATA ) under S.No.151---Appellate Tribunal Inland Revenue declared Sales Tax (including Further tax and Extra Tax along with default surcharge and penalty) charged on supplies made by the appellant / SNGPL to Swat area (FATA/PATA) as illegal, void ab-initio and without lawful authority---Impugned orders were set aside---Appeal filed by registered person (SNGPL) was allowed, in circumstances.

Cr. A. No.74M of 2016 and Cr. A. No.165 of 2012 ref.

2018 SCMR 939 and 2022 SCMR 1251 distinguished.

Hassan Akhtar for Appellant.

Shah Jahan Khan, LA along with Talib Hussain, DR for Respondent.

2025 P T D (Trib.) 292

[Inland Revenue Appellate Tribunal]

Before Dr. Tauqeer Irtiza, Accountant Member and Aamir Maqsood, Judicial Member MURTAZA A HASSAN

Versus

The COMMISSIONER INLAND REVENUE, ENFORCEMENT II CTO, KARACHI

S.T.A. No.217/KB of 2021, decided on 29th August, 2022.

Sales Tax Act (VII of 1990)---

----Ss. 11 & 25---Suspension and blacklisting of sales tax registration---Scope---Due process, non-observance of---Effect---Appellant (textile mill) was first suspended and later on blacklisted on the basis that it was found non-existent on the available address and the closing stock declared in the returns was also not available---Validity---Reports of physical verification having been conducted twice by the respondents / department had verified the physical existence of the appellant on the given address while online verification of taxpayer's profile was also available on record---Similarly, the right course of action available with the department was to take up the proceedings under S.11(2) of the Sales Tax Act, 1990, before blacklisting and ordering recovery of tax, if any, if the default was proved---However, no such proceedings under S. 25 or S. 11 of Sales Tax Act, 1990 were taken up by the department before blacklisting the appellant---Record revealed that after the blacklisting, the department initiated the recovery proceedings and passed an order under S. 11(2) of the Sales Tax Act, 1990, which order was assailed by the appellant, and the Commissioner (Appeals) annulled the said order of the Assessing Officer, hence no sales tax demand was outstanding against the appellant for the period under question---Thus, there was no reason to keep the status of registered person as blacklisted---Appellate Tribunal Inland Revenue annulled the impugned Blacklisting Order, in circumstances---Appeal, filed by the registered person, was allowed accordingly.

2012 PTD 337 ref.

Faraz Haroon for Appellant.

Qarib Abbas, D.R. for Respondent.

2025 P T D (Trib.) 380

[Inland Revenue Appellate Tribunal]

Before M. Abdullah Khan Kakar, Judicial Member and Dr. Shah Khan, Accountant Member IRFAN ULLAH, IRFAN TRADERS

Versus

The COMMISSIONER INLAND REVENUE, UNIT-41, RANGE-1, (D.I. KHAN ZONE), RTO, PESHAWAR

I.T.A. No.368/PB of 2023, decided on 30th January, 2024.

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

----Ss.39(3), 111, 122(5), 122(9) & 176(1)---Income from other sources---Amount received as a loan/ advance from another person (not being a banking company)---Liability, declaring of---"Receivables"---Scope----Definite information---Receipt of the loan through banking channel, proof of---Fishing inquiry by tax official---Assessing Officer issued notice under S. 176(1) of the Ordinance, 2001 to the taxpayer a requiring him to provide proof of receipt of the loan through banking channel---Taxpayer, through reply, explained / clarified that the declared liability was not a loan acquired but a liability owed to brothers as result of the family settlement about the distribution of inherited property---Taxpayer filed appeal before the Appellate Tribunal Inland Revenue against amended assessment order---Validity---Record showed that Department found the reply submitted by the appellant /taxpayer unsatisfactory, which was made the basis of issuance of notice under S. 122(9) show-causing the appellant / taxpayer about the intended addition of the declared liability in case the appellant / taxpayer failed to prove receipt of the liability through banking channel as required under S. 39(3) of the Ordinance, 2001---The only factor which had been made the basis of the amendment was the fact of the non-declaration of the said liability as "receivables" by the brother of the appellant /taxpayer in its wealth statement for the year---It was clear that before issuance of notice under S. 176(1) of the Ordinance, 2001 to the appellant /taxpayer, the Assessing Officer was not certain and clear in his mind that the liability had been incurred by way of receipt of any loan during the tax year ;that was exactly why he felt the need to verify this through notice under S. 176 issued to the appellant / taxpayer---Had the Assessing Officer been in possession of definite information about the receipt of loan otherwise than through banking channel, he would have not felt the need to issue notice under S. 176 and sought clarification and proof from the appellant / taxpayer in said regard---Thus, the notice under S. 176 was meant to engage in fishing inquiries from the taxpayer which was not allowed in the law---Thus, said aspect negated the finding and treatment of the Assessing Officer---Appellate Tribunal Inland Revenue set-aside impugned order finding that the Assessing Officer had no definite Information within the meaning of S. 122(5) read with S. 39(3) and the notice S. 122(9) and amendment order under Ss.122/39(3)/111 were without any lawful jurisdiction and cause---Appeal, filed by taxpayer, was allowed, in circumstances.

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

----Ss.39(3), 111, 122(5), 122(9) & 176(1)---Income from other sources---Amount received as a loan/ advance from another person (not being a banking company)---Liability, declaring of---"Receivables"---Scope----Definite information---Receipt of the loan through banking channel, proof of---Assessing Officer issued notice under S. 176(1) of the Ordinance, 2001 to the taxpayer requiring him to provide proof of receipt of the loan through banking channel---Taxpayer, through reply, explained / clarified that the declared liability was not a loan acquired but a liability owed to brothers as result of the family settlement about the distribution of inherited property---Taxpayer filed appeal before the Appellate Tribunal Inland Revenue against amended assessment order---Validity---Record transpired that Department found the reply submitted by the appellant /taxpayer unsatisfactory, which was made the basis of issuance of notice under S. 122(9) show-causing the appellant / taxpayer about the intended addition of the declared liability in case the appellant /taxpayer failed to prove receipt of the liability through banking channel as required under S. 39(3) of the Ordinance, 2001---When the appellant / taxpayer informed the Assessing Officer through his reply to notice under S. 176 that the said liability was in fact a liability having arisen as a result of family settlement about distribution of inherited property among brothers, it would have been in the fitness of things to subject this claim of the appellant taxpayer through verification by conducing audit under S. 177 in the case which, however, was not done and the Assessing Officer then proceeded under S.122 read with S. 39(3) before further verifying or rebutting the claim of the appellant / taxpayer---Thus, no definite information had come into possession of the Assessing Officer within the meaning of S.122(5) after the reply of the appellant/ taxpayer to the notice under S. 176 in the case and, therefore, the notice under S.122(9) was not in accordance with the law about what constitutes "definite information"---Thus, said aspect negated the finding and treatment of the Assessing Officer---Appellate Tribunal Inland Revenue set-aside impugned order finding that the Assessing Officer had no definite Information within the meaning of S. 122(5) read with S. 39(3) and the notice under S. 122(9) and amendment order under Ss.122/39(3)/111 were without any lawful jurisdiction and cause---Appeal, filed by taxpayer, was allowed, in circumstances.

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

----Ss.39(3), 111, 122(5), 122(9) &176(1)---Income from other sources---Amount received as a loan/ advance from another person (not being a banking company)---Liability, declaring of---Scope---"Receivables"---Scope----Definite information---Receipt of the loan through banking channel, proof of---Assessing Officer issued notice under S. 176(1) of the Ordinance, 2001 to the taxpayer requiring him to provide proof of receipt of the loan through banking channel---Taxpayer through reply explained / clarified that the declared liability was not a loan acquired but a liability owed to brothers as result of the family settlement about the distribution of inherited property---Taxpayer filed appeal before the Appellate Tribunal Inland Revenue against amended assessment order---Validity---Record transpired that Department found the reply submitted by the appellant /taxpayer unsatisfactory which was made the basis of issuance of notice under S.122(9) show-causing the appellant / taxpayer about the intended addition of the declared liability in case the appellant /taxpayer failed to prove receipt of the liability through banking channel as required under S.39(3) of the Ordinance, 2001---Before asking the appellant/ taxpayer to provide proof / receipt of the liability through banking channel , the Assessing Officer had brought nothing on record to the effect that the said liability was amount of loan actually received during the year and not a liability having arisen as result of family settlement about distribution of inherited property ; when it was so, how could he ask the appellant to prove payment of the receipt through bank when the actual receipt of liability had not been proved by the Assessing Officer nor declared by the appellant / taxpayer as such---The fact that the brother of the appellant/taxpayer had not declared the liability as receivable in his return did not prove the stance of the Assessing Officer either because the same altogether negated the existence of any liability owned to him, what to talk of receipt of the same through banking channel---Thus, said aspect negated the finding and treatment of the Assessing Officer---Appellate Tribunal Inland Revenue set-aside impugned order, finding that the Assessing Officer had no definite information within the meaning of S. 122(5) read with S. 39(3) and the notice under S.122(9) and amendment order under Ss. 122/39(3)/111 were without any lawful jurisdiction and cause---Appeal, filed by taxpayer, was allowed, in circumstances.

Danish Ali Qazi for Appellant.

Ms. Fouzia Iqbal, DR for Respondent.

2025 P T D (Trib.) 418

[Inland Revenue Appellate Tribunal]

Before Mian Tauqeer Aslam, Chairman and Muhammad Tahir, Accountant Member

Messrs INSAF TEXTILE PRINTING INDUSTRIES (PVT.) LIMITED, FAISALABAD

Versus

The COMMISSIONER INLAND REVENUE, CORPORATE ZONE, RTO, FAISALABAD

S.T.A. No.2032/LB of 2021, decided on 22nd January, 2024.

Sales Tax Rules, 2006---

----R. 34(1)(d)---Sales Tax Act (VII of 1990), S.10---SRO No.555(I)/2006 dated 05-06-2006---Refund of sales/input tax---Scope---Appellant / registered person (company engaged in the business of manufacturing of textiles and sales etc.) assailed confirmation of refund rejecting order passed by the assessing authority---Processing officer rejected the claim of the registered person while observing violation of R. 34(1)(d) of the Sales Tax Rules, 2006 ('the Rules, 2006')---Validity---Rules were "subject to the Act" and therefore could not offend or contradict the substantive provision of the Act---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 or add to the clear provision of the parent statute---Rules cannot override the specific provisions of the parent statute---Rules are to carry out the purpose of the Ordinance / Act 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---Thus, there was no lawful justification for processing officer to reject the appellant's refund claim under the preview of R.34(1)(d) of the Sales Tax Rules, 2006---As S. 10(1) of the Sales Tax Act, 1990, clearly indicates that if input tax exceeds the output tax on account of zero rated local supplies or exports made during that tax period, the excess amount of input tax shall be refunded---Further, as per provision of S. 10(3) of the Sales Tax Act, 1990, the show-cause notice and impugned order beyond notified pecuniary jurisdiction and beyond the limit of sixty days had been declared null and void ,therefore, nothing remained tangible on account of impugned show cause notice and order---Each refund claim of the respective claimant/appellant was required to be processed under the relevant procedure as per provisions of S.10 of the Sales Tax Act, 1990---A mechanism for filing of refund claim with the department under the provision of Sales Tax Act, 1990, had been devised whereunder every claim was processed and scrutinized in the light of said procedure/system---Appellate Tribunal set-aside the impugned orders passed by authorities below declaring the same illegal and void ab initio on facts as well as on legal issues---Appeal, filed by the registered person , was accepted.

Muhammad Imran Rashid for Appellant.

Mrs. Haida Sajjad, DR for Respondent.

2025 P T D (Trib.) 540

[Inland Revenue Appellate Tribunal]

Before M.M Akram, Judicial Member and Muhammad Imtiaz, Accountant Members

COMMISSIONER INLAND REVENUE, CORPORATE ZONE, RTO, PESHAWAR

Versus

Messrs G.A. POLYMER (PVT.) LTD.

S.T.As. Nos.123/PB and 124/PB of 2018, decided on 10th July, 2023.

Sales Tax Act (VII of 1990)---

----Ss. 8(1)(a) & 25---SRO 490(I) /2004 dated 12-06-2004---Tax credit, allowance of---Suppression of production---Electricity consumed in labourer's residential colony---Input tax adjustment---Scope---Registered person (company) filed appeal against the order passed by the Commissioner Appeals---Contention of the appellant (registered person) was that the first Appellate Authority (Commissioner Inland Revenue (Appeals) had erred in law in confirming the issue of suppression of production and disallowance of input tax on account of electricity consumed in the labourer's colony---Validity---In support of its contention regarding alleged suppression of production, the Appellant (registered person /company) placed on record certain documents (the copies of invoices, payment proof, bank statements of seller and buyer, challans of withholding sales tax and advance income tax on the subject transaction)---Department / respondent, on confrontation, was unable to refute all the said documents--- Similarly, the disallowance of input tax on electricity consumed in the residential colony of the labourers was not warranted as the input tax paid on electricity bills consumed in the residential colony of the labourer's was to be allowed---Appellate Tribunal Inland Revenue set aside impugned orders passed by the Commissioner (Appeals) on both the account and directed the department to immediately either issue the refund of amount having been recovered from the appellant during the pendency of the present appeal or allow the adjustment of the said amount against the future tax liability of the appellant.---Appeal filed by the registered person (company) was accepted, in circumstances.

The Collector of Sales Tax v. Messrs Matiari Sugar Mills (Special Sales Tax Appeal No.148 of 2005 and Collector Sales Tax and Federal Excise, Peshawar v. Messrs Flying Kraft Paper, Mills (Pvt.) Ltd., 2020 PTD 776 ref.

Ishfaq Ahmad, DR for Appellant (in S.T.A. No.123/PB of 2018).

Danish Ali Qazi for Respondent (in S.T.A. No.123/PB of 2018).

Danish Ali Qazi for Appellant (in S.T.A. No.124/PB of 2018)..

Ishfaq Ahmad, DR for Respondent (in S.T.A. No.124/PB of 2018).

2025 P T D (Trib.) 566

[Inland Revenue Appellate Tribunal]

Before Muhammad Tahir and Tariq Iftikhar Ahmed, Members

Messrs KHADIJA WASEEM BUTT, LAHORE

Versus

The COMMISSIONER INLAND REVENUE, ZONE RTO, LAHORE

I.T.A. No.3276/LB/2019, decided on 28th August, 2024.

Income Tax Ordinance (XLIX of 2001)---

----Ss.122(5A) & 111---Fishing inquiries---Additional Commissioner, powers of---Scope---Additional Commissioner made additions under S.111 of Income Tax Ordinance, 2001, ('the Ordinance, 2001'), on the ground that sources of investment in properties, prize on prize bonds and amnesty had been declared without documentary evidence---Plea of the appellant / taxpayer was that Additional Commissioner was not justified in invoking provisions of S. 122(5A) of the Ordinance, 2001---Validity---Additional Commissioner was not justified in making fishing inquiries nor was he justified in requiring documents while conducting proceedings under S. 122(5A) of the Ordinance, 2001; he could have requested through proper channel sharing with him Amnesty Declarations by the concerned Chief Commissioner who could have obtained them from the Member Operations---In the present case, interestingly, amnesty declared in the wealth statement at Rs.63,000,000/- through Amnesty Declaration of 2019 was accepted whereas amnesty of Rs.200,000,000/- for 2018 was not accepted by the Additional Commissioner when, in fact, both of them were declared in the wealth statement for the Tax Year 2018 which proved that the Additional Commissioner passed the impugned order without application of mind---Appellate Tribunal vacated the impugned order passed by Additional Commissioner under S. 122(5A) of the Ordinance, 2001 being illegal and against the facts of the case---Appeal, filed by the taxpayer, was accepted, in circumstances.

Ahmed Nauman, ITP for Appellant.

Umair Khan, D.R. for Respondent.

2025 P T D (Trib.) 602

[Inland Revenue Appellate Tribunal]

Before Sarfraz Ali Khan, Judicial Member and Rizwan Ahmed Urfi, Accountant Member

Messrs FAISALABAD ELECTRIC SUPPLY COMPANY LTD., FAISALABAD

Versus

The COMMISSIONER INLAND REVENUE, LARGE TAXPAYERS' OFFICE, FAISALABAD

S.T.A. No.09/MB/2022, decided on 25th May, 2022.

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

----Ss. 8(1)(a), (f), (g), (h) & (i) & 11(2)---Tax credit not allowed---Order passed on ground(s) other than those mentioned / confronted through the Show-Cause Notice---Argument of the Department was that, during scrutiny, it found Registered Person( Electricity Supply Company / DISCO ) to have claimed / adjusted inadmissible input tax during four tax periods on purchase of certain items (office equipment, mineral water, travel sets, soaps and sugar)---Registered person filed appeal before the Appellate Tribunal Inland Revenue as the Commissioner maintained Order-in-Original for recovery of amount along with default and penalty---Validity---Record revealed that on the strength of Cls. (a), (f), (g), (h) and (i) of subsection (1) of S. 8 of the Sales Tax Act, 1990, show-cause notice under S. 11(2) of the Sales Tax Act, 1990, was issued in respect of input tax claimed on purchase of certain items (office equipment, mineral water, travel sets, soaps and sugar) from four suppliers, however, as per reply along with sales tax invoices submitted by the appellant(Registered Person / DISCO), the input tax involved was found to be relating to different kinds of items like Chain Pulley Block 3 Ton, Topcon Easy/Auto Station with metallic tripod etc., Shoes, Main Breaker Pipes for pressure gage, Vacuum Pump, etc.---Appellate Tribunal Inland Revenue observed that the impugned order was passed on grounds other than those confronted through the Show-Cause Notice, and was therefore, not maintainable on said score alone---Thus, assessment order as well as appellate order in respect of adjustment of input tax were passed on the basis of wrong assumption and application of law and incorrect appreciation of facts---Appellate Tribunal Inland Revenue set-aside the impugned orders and allowed the appeal, filed by the registered person, in circumstances.

2018 PTD Lah. 253 ref.

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

----Ss. 8(1)(a), (f), (g), (h) & (i) & 11(2)---Tax credit not allowed---Chargeability---Burden of proof---Argument of the Department was that, during scrutiny, it found Registered Person (Electricity Supply Company / DISCO) to have claimed / adjusted inadmissible input tax during four tax periods on purchase of certain items (office equipment, mineral water, travel sets, soaps and sugar)---Registered person filed appeal before the Appellate Tribunal Inland Revenue as the Commissioner maintained Order-in-Original for recovery of amount along with default and penalty---Validity---Inland Officer failed to establish as to how the items purchased by the appellant fell within the categories of goods permanently attached to immovable property, or building material, or goods for personal use etc., or any of the specific category listed in Cls. (a), (f), (g), (h) and (i) of S. 8(1) of the Sales Tax Act, 1990---Initial burden to prove chargeability was on the Department, which did not appear to have been discharged in the present case---While examining details of goods and services provided by the appellant along with the details of utilization in the taxable activities which was placed on the record, Appellate Tribunal Inland Revenue Land that the same did not come within the ambit of said provisions of the Sales Tax Act, 1990, and the Officer Inland Revenue failed to substantiate and correlate the disallowance of input tax with the said provisions of the Sales Tax Act, 1990---Provisions of S.8(1)(a) of the Sales Tax Act, 1990, authorize deduction for all such input tax that relates to goods that contribute directly or indirectly, and even remotely, in furtherance of taxable activity---Thus, assessment order as well as appellate order in respect of adjustment of input tax were passed on the basis of wrong assumption and application of law and incorrect appreciation of facts---Appellate Tribunal Inland Revenue set-aside the impugned orders and allowed the appeal filed by the registered person.

2012 PTCL CL. 475; 2007 PTD 2391; 1999 PTD 2391; 1999 PTD Lah. 2174; 1999 PTD 1892 and 2005 PTD 2012 ref.

Ch. Mumtaz-ul-Hassan for Appellant.

Tariq Bhatti, DR for Respondent.

2025 P T D (Trib.) 638

[Inland Revenue Appellate Tribunal]

Before Muhammad Hashim Khan Kakar, Chairman, Haider Ali Shikoh and Saifullah Khan, Members

Messrs COCA-COLA EXPORT CORPORATION PAKISTAN through Authorized Representative

Versus

COMMISSIONER APPEALS, BALOCHISTAN REVENUE AUTHORITY and another

Sales Tax Appeal No.06 of 2024, decided on 26th April, 2024.

Balochistan Sales Tax on Services Act (VI of 2015)---

----Ss. 2(115), 2(139), 25 & 27(1)---Company having its branch office in Balochistan already registered with Punjab Revenue Authority (PRA)---Registration of such company with Balochistan Revenue Authority, requirement of---Scope---"Place of Business in Balochistan"---"Resident"---Scope---Appellant was a Branch Office (at Balochistan) of the Coca-Cola Export Corporation, USA, being engaged in import etc. of concentrate/syrup, to manufacture aerated beverages; the appellant's head office and manufacturing facility were situated in the Province of Punjab having been registered with the Punjab Revenue Authority (PRA)---Appellant was aggrieved of being compulsory registered by the Balochistan Revenue Authority (BRA /Respondents) on the ground that the appellant had received taxable services in the jurisdiction of Balochistan and withheld tax but failed to get registered with the BRA and to pay the tax deducted to the BRA---Contention of the appellant was that it was not required to get registered with the BRA, being not resident in Balochistan, and having no place of business in Balochistan and already being registered with Punjab Revenue Authority---Grounds taken against the appellant were that it had received services in Balochistan, withheld sales tax on such services and had virtual place of business---Whether the appellant was legally required to get registered with the BRA as service recipient/ withholding agent or not and whether tax withheld from the service providers / advertisers was recoverable by the BRA from the appellant or not ?---Held, that admittedly, the appellant had received services from advertisers, who displayed advertisements of the appellants on the billboards in Balochistan---It was also admitted that the appellant had made payments to such service providers advertisers and also withheld sales tax on services from said service providers / advertisers, however, the appellant had paid such tax to the Punjab Revenue Authority (on the grounds that the appellant was registered with the Punjab Revenue Authority and the appellant was not resident of Balochistan)---On the basis of said admitted facts and definitions of "Place of Business in Balochistan" and "Resident" provided in Ss.2(115) & 2(139) of the Balochistan Sales Tax on Services Act, 2015 ('the Act 2015'), the appellant was required to get registered with the BRA (Respondents) as a company resident of Balochistan if it had place of business in Balochistan, including virtual presence through which it carried on an economic activity---A company being resident of Balochistan was required under S. 25 of the Act 2015 to get registered with BRA failing which the BRA may proceed to compulsorily register it under S. 27 of the Act, 2015---Appellant had conducted economic activity through place of business in Balochistan (having virtual presence), hence it was required to get registered with BRA---Since the appellant had failed to get voluntarily registered under S. 25 of the Act, 2015, the Respondent (Assistant Commissioner) had rightly registered the appellant compulsorily under S.27 of the Act, 2015---No infirmity was found in the impugned orders on the liability of the appellant regarding registration with the BRA---Appellate Tribunal Balochistan Revenue Authority maintained the impugned orders on the issue of registration with the BRA---Appeal, filed by taxpayer, was dismissed in circumstances.

Aimal Khan Kakar for Appellant.

Jam Saka for Respondents.

2025 P T D (Trib.) 811

[Inland Revenue Appellate Tribunal]

Before Tauqeer Aslam, Chairman and Sajid Nazir Malik, Member

Messrs AMIR MAJEED KHAN NIAZI

Versus

The DCIR, RTO, SARGODHA

S.T.As. Nos.396/IB and 397/IB of 2024, decided on 27th September, 2024.

Sales Tax Act (VII of 1990)---

----S. 3---Tax liability, determination of---Assessment of sales tax returns on the basis of income tax returns---Charging section(s) of law---Applicability---Appellant (being a registered person involved in supply of construction material to Gawadar/ Tribal Areas) was aggrieved of concurrent assessment of sales tax returns against it on the basis of income tax returns---Validity---Assessment of sales tax returns on the basis of income tax returns cannot be done---In the present case , the contravention case had purely been made out merely on the basis of information obtained from the income tax returns of the appellant---Tax can be levied only under the authority of law through an express charging provision---There is no concept of enlarging the scope of charging section on the basis of ambiguous and presumptive mechanism which the scheme of the law imposing the tax has not provided---The Revenue while determining the liability upon any person for levying or charging of sales tax under transaction falls within the scope and ambit of charging section and in the case of sales tax, the essential two attributes in any transaction i.e. taxable supply and taxable activity must exist so that the charging section can be triggered---Thus, in any audit or adjudicating proceedings, the ambiguous and presumptive approach by any auditing officer or assessing officer cannot be approved when the aforesaid essential attributes are not forthcoming from the said findings---Indeed, it is settled law that tax cannot be charged and levied unless it falls squarely within the purview of charging provision---Taxing law cannot be extended by implication beyond clear import of language---Appellate Tribunal Inland Revenue quashed / set-aside the impugned orders of the authorities below deeming the same as without assumption of jurisdiction, illegal and void ab-initio, on both factual as well as on legal issues---Appeal, filed by the registered person, was allowed.

M/s. Siddique Enterprises, Faisalabad v. The CIR(A), Faisalabad and others 2013 PTD 2130 Haji Sultan Ahmed v. Chairman, Central Board of Revenue, Islamabad and 5 others 2008 PTD 103 ref.

Muhammad Imran Rashid for Appellant.

Niaz Ahmed, D.R. for Respondent.

2025 P T D (Trib.) 833

[Inland Revenue Appellate Tribunal]

Before Mian Abdul Basit, Judicial Member and Dr. Shah Khan, Accountant Member

Messrs TRADE ZONE INTERNATIONAL, ROHILA MANSION, PESHAWAR

Versus

COMMISSIONER INLAND REVENUE, RTO, PESHAWAR

S.T.A. No.108/PB of 2018, decided on 21st February, 2023.

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

----S. 3---Authority passing order on date not fixed for hearing---Legality---Order-in-original revealed that the same was made on a date when, admittedly, no hearing date was fixed---An order passed on the date for which no hearing date was fixed was illegal.

Commissioner of Income Tax v. Sakhi Contractor and Engineers, Multan 1981 PTD 210 ref.

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

----Ss. 3 & 7---Sales Tax Special Procedure (Withholding) Rules, 2007, R.2(2)---SRO 660/(I)/2007 dated 30-06-2007---Supply record, examining of---Stage---Assertion of the appellant (registered person) was that order-in-original was passed in its absence and even the first appellate proceedings were finalized without inspecting / examining the supply record of the appellant---Validity---Declaration of supplies and payment of due tax in respect of such supplies needed proper scrutinization of record and sales tax returns of the appellant, which at the second appellate forum (Appellate Tribunal Inland Revenue) seemed practically difficult, and assessing officer was the best and appropriate forum for inspecting the record of the appellant---Registered person should be provided proper opportunity to produce evidence in its support to defend the case which, in the present case, was not provided to the appellant at the initial stage of assessment---Perusal of the order of first appellate authority also depicted that the grounds taken by the appellant in respect of declaring the supplies and making payment of tax had not be adjudicated in a legally acceptable manner, which rendered the order flawed---Thus, giving one fair chance to the appellant was appropriate to prove its contention(s) for examination of record and documents of the appellant---Appellate Tribunal Inland Revenue set aside the impugned orders of authorities below and remanded the matter back to the Assessing Officer for making a decision afresh---Appeal filed by registered person , was disposed of accordingly.

Danish Ali Qazi for Appellant.

Dost Muhammad, D.R. for Respondent.

2025 P T D (Trib.) 848

[Inland Revenue Appellate Tribunal]

Before Tauqeer Aslam, Chairman and Sajid Nazir Malik, Member

Messrs MASOOD AHMED KHAN NIAZI CONTRACTOR, SARGODHA

Versus

COMMISSIONER INLAND REVENUE, RTO, SARGODHA

S.T.A. No.830/IB/2023, decided on 22nd January, 2025.

Sales Tax Act (VII of 1990)---

----Ss. 3 & 11---Concealment/suppression of gross sales of supplies, allegation of---Assessment of sales tax---Basis of income tax returns---Proprietary---Tax, charging of---Essential attributes---Appellant (registered person / a contractor) approached Appellate Tribunal against concurrent adverse orders passed against it---Held, that record revealed that the contravention case against the Appellant had purely been made out merely on the basis of information obtained from the income tax returns of the appellant---Hence, the very foundation of the assessment was based on alien consideration, therefore, the edifice built upon had to crumble---A tax can be levied only under the authority of law through an express charging provision---There is no concept of enlarging the scope of charging section on the basis of ambiguous and presumptive mechanism for which the scheme of the law imposing the tax had not provided---The Revenue while determining the liability upon any person for levying or charging of sales tax under transaction falls within the scope and ambit of charging section and in the case of sales tax, the essential two attributes in any transaction i.e., taxable supply and taxable activity must exist so that the charging section can be triggered---Thus, in any audit or adjudicating proceedings, the ambiguous and presumptive approach by any auditing officer or assessing officer cannot be approved when the said essential attributes are not forthcoming from the said findings---Indeed, tax cannot be charged and levied unless it falls squarely within the purview of charging provision---Taxing law cannot be extended by implication beyond clear import of language---Appellate Tribunal Inland Revenue quashed / set-aside the Impugned orders of the authorities below deeming the same as illegal, null and void ab-initio, on both factual and legal issues---Appeal filed by the registered person (contractor) was allowed, in circumstances.

Messrs Siddique Enterprises, Faisalabad v. The CIR(A), Faisalabad and others 2013 PTD 2130 and Messrs Red Co. Enterprises v. Deputy Commissioner Inland Revenue and others (STR No.93-P/2022) ref.

Muhammad Imran Rashid for Appellant.

Niaz Ahmed, D.R. for Respondent.

2025 P T D (Trib.) 856

[Inland Revenue Appellate Tribunal]

Before Zahid Sikandar and Muhammad Tahir, Members

Messrs POWERLINE TRADING COMPANY, FAISALABAD

Versus

COMMISSIONER INLAND REVENUE, RTO, FAISALABAD

S.T.A. No.272/LB/2025 and MA (Stay) No.1382/LB/2025, decided on 21st April, 2025.

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

----Ss. 2(14), 2(37), 3 & 8---Tax fraud---Issuance of fake flying invoices---Input tax illegally claimed---Sales tax return, non-submission of---Due tax, non-depositing of---Mere filing of Annex-C without sales tax return---Scope and effect---Plea of the Appellant (Company / Registered Person) was that sales tax return could not be inadvertently filed---Validity---Record transpired that the Appellant (Company / Registered Person) was charged with non-submission of sales tax return, non-deposit of due tax and issuance of fake/flying invoices to facilitate claim of illegal input tax---Admittedly, the appellant did not submit sales tax return for the tax period under consideration and only Annex-C was filed---Plea of the Appellant / Company was not only unsatisfactory as to how Annex C was filed and sales tax return was forgotten, but also contradictory as before the Commissioner Inland Revenue (Appeals) it was pleaded that due to system error sales tax return could not be filed ; which established that sales tax return was not filed intentionally just to avoid payment of sales tax---Non-submission of sales tax return also confirmed that no input tax was available to the appellant and only paper transactions were executed to facilitate the buyers to adjust illegal input tax without any valid backup---Even certain documents (e.g. invoices, party details etc.) submitted by the Appellant (to establish that transactions were genuine and tax was paid) established that transactions were just paper transactions without any backup---Non-submission of sales tax return and non-deposit of tax was an admitted position and mere filing of Annex-C reflected that the buyers/parties were facilitated to claim illegal input tax---Charge of tax fraud and other violations of provisions of Sales Tax Act, 1990, stood established against the appellant / registered person ; hence, there was no illegality in the original assessment order having been rightly confirmed by the Commissioner Inland Revenue (Appeals)---Appellate Tribunal Inland Revenue maintained impugned orders passed by Authorities below---Appeal, filed by registered person, was dismissed, in circumstances.

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

----Ss.2(14), 2(37), 3 & 8(1)(ca)---Tax fraud---Issuance of fake flying invoices---Input tax illegally claimed---Sales tax return, non-submission of---Due tax, non-depositing of---Mere filing of Annex-C without sales tax return---Section 8(1)(ca) of Sales Tax Act, 1990, clearly denies claim of input tax on goods or services in respect of which sales tax has not been deposited in the government treasury---Claiming of input tax on the basis of fake/flying invoices without depositing any tax in the treasury amounts to robbing the government---In the present case, filing of pro tempore Annex-C for the relevant tax period without sales tax return appeared to be a willful act on the part of the appellant / registered person in the absence of any valid excuse and only paper transaction was done by the appellant to facilitate claim of illegal adjustment of input tax---Said action certainly fell within the ambit of tax fraud as defined in Sales Tax Act, 1990, besides violation of various other provisions as confronted in the Show-Cause Notice---Charge of tax fraud and other violations of provisions of Sales Tax Act, 1990 stood established against the appellant / registered person ; hence, there was no illegality in the original assessment order having been rightly confirmed by the Commissioner Inland Revenue (Appeals)---Appellate Tribunal Inland Revenue maintained impugned orders passed by Authorities below---Appeal, filed by registered person, was dismissed, in circumstances.

Rani Amir Ejaz Kharal for Appellant.

Kazim Bhatti, D.R. for Respondent.

2025 P T D (Trib.) 1211

[Inland Revenue Appellate Tribunal]

Before Tariq Iftikhar Ahmed and Muhammad Tahir, Members

SAEED TAJ DIN, LAHORE

Versus

COMMISSIONER INLAND REVENUE ZONE RTO, LAHORE

I.T.A. No.3263/LB/2024, decided on 30th August, 2024.

Income Tax Ordinance (XLIX of 2001)---

----Ss. 122(5A) & 236K---Deemed Assessment Order erroneous---Issuance of notices through e-mail and not by post (with acknowledgement due)---Taxpayer (a physician) assailed assessment order recorded by the Additional Commissioner Inland Revenue ('the Additional Commissioner')---Validity---In the present case, the Additional Commissioner was not justified in initiating proceedings merely on the ground that the deemed order was erroneous in so far as prejudicial to the interest of revenue as certain discrepancies were found in the wealth statement, when he had failed to point out any discrepancy---Additional Commissioner was also not justified in issuing notices through IRIS without receiving acknowledgment through e-mail and acknowledgement due by post---Additional Commissioner passed the order under S. 122(5A) of the Income Tax Ordinance, 2001 ('the Ordinance, 2001'), without considering voluntary Declaration of Domestic Assets; he also failed to examine the income record of the taxpayer from the FBR Portal which contained information about payment of income tax under S. 236K of the Ordinance, 2001 on purchase of the property, the purchase of which stood duly reconciled with the sources---Thus, the impugned order passed by the Additional Commissioner was illegal and against the facts of the case, therefore, was liable to be vacated---Appellate Tribunal Inland Revenue set-aside the impugned order of the Additional Commissioner---Appeal filed by the taxpayer was allowed.

Ahmad Nauman Sh., ITP for Appellant.

Ali Khalid, DR for Respondent.

2025 P T D (Trib.) 1227

[Inland Revenue Appellate Tribunal]

Before Shafaqat Ali and Zahid Sikandar, Members

ANEES UR REHMAN

Versus

COMMISSIONER INLAND REVENUE, RTO, LAHORE

Income Tax Appeal No.4397/LB of 2023, decided on 23rd June, 2025.

Income Tax Ordinance (XLIX of 2001)---

----Ss. 107, 111(1)(b) & 111(4)(a)---Circular No. 05 of 2021 dated 30.08.2021 issued by Federal Board of Revenue---Memorandum No. EPD 30-04-2021-97865, dated 07th May 2021, issued by the State Bank of Pakistan---Non-resident, declaration of income---Double taxation, avoidance of---International treaty between Pakistan and any other country---Foreign remittances being proof---Scope---Allegation against the Taxpayer/Individual (non-resident) was that he declared foreign remittances in the return, however, e-folder of the return showed no evidence in respect of fulfillment of conditions of subsection (4) of S.111 of the Income Tax Ordinance, 2001 ('the Ordinance, 2001')---Appellant (Taxpayer /overseas Pakistani) filed appeal before the Appellate Tribunal Inland Revenue as the Commissioner Inland Revenue (Appeals) confirmed amended assessment order---Validity---There is a treaty between Pakistan and Germany in respect of avoidance of double taxation with respect to taxes on income ('Treaty-under-consideration')---Article 4 of the Treaty-under-consideration defines the status of resident and as per its sub clause (c), if a person is residing in any of the two countries he shall be deemed to be a resident of the said country in which he is national---Admittedly, appellant is the national of Germany---Record further transpires that an amount of 48,780/-Euros were remitted back to Pakistan in foreign bank account of the taxpayer which were withdrawn from the foreign account bank and subsequently encashed from the money exchange duly approved by the State Bank of Pakistan---Firstly, the taxpayer being a non-resident was not amenable to tax and, even otherwise, the documents (including certificates/receipts of exchange companies) produced by the appellant fully substantiated that foreign remittances were remitted back from Germany to Pakistan through banking channel and was encashed from the money exchange---Federal Board of Revenue has issued a Circular No. 05 of 2021, dated 30.08.2021, clarifying the issue of foreign remittances through Money Services Businesses (MSBs), Exchange Companies (ECs), and Money Transfer Operators (MTOS) on the basis of a Memorandum No. EPD 30-04-2021-97865, dated 07th May 2021, issued by the State Bank of Pakistan---Federal Board of Revenue has accepted the SBP's position of legitimizing remittances via MSBs, Exchange Companies and MTOs equating them with "scheduled banks" as S. 111(4)(a)---Further, the Government of Pakistan always encourages for more and more foreign remittances and the concerned officers should be very careful while charging tax in respect of foreign remittances as the same may discourage overseas Pakistanis if they are subjected to unnecessary taxation---Thus, in the present case, the foreign remittance was brought in Pakistan through banking channel and after withdrawal from the foreign bank account the same was encashed from money exchange dealer duly approved by State Bank of Pakistan; hence, the taxpayer had been subjected to unnecessary taxation especially when there is also a treaty between Germany and Pakistan in respect of Avoidance of Double Taxation with respect to taxes on income---Admittedly taxpayer was a German national---International treaty of avoidance of double taxation between Pakistan with any other country would prevail over provisions of the Ordinance, 2001---Officer Inland Revenue had wrongly made addition in taxpayer's income under S. 111 of the Ordinance, 2001 and charged tax stating that conditions of subsection (4) of S. 111 of the Ordinance, 2001, were not fulfilled as record suggested otherwise and the Commissioner Inland Revenue (Appeals) had also erred in law while confirming the assessment order which was not based on correct appreciation of law and facts of the case---Appellate Tribunal Inland revenue set aside impugned orders passed by the tax authorities below---Appeal, filed by Taxpayer (non-resident), was allowed, in circumstances.

2023 SCMR 1011 ref.

Muhammad Usman Ali, FCA for Appellant.

Imran Saeed, DR for Respondent.

2025 P T D (Trib.) 1244

[Inland Revenue Appellate Tribunal]

Before Shafaqat Ali and Zahid Sikandar, Members

Messrs RUBY STEEL CORPORATION (PVT.) LTD.

Versus

COMMISSIONER INLAND REVENUE, RTO, LAHORE

S.T.A. No.913/LB of 2024, decided on 26th May, 2025.

Sales Tax Act (VII of 1990)---

----S.3(1A)---SRO 648(I)/2013 dated 09.07.2013---SRO 585(I)/2017 dated 01-07-2017---SRO No.1223(I)/2021 dated 17-09-2021---Taxable supplies made by steel sector---Unregistered buyers---Levy of further tax, exemption from---Scope---Kind of supplies relating to "steel sector"---Scope---Appellant (Registered Person / Steel Corporation ) filed appeal against further tax concurrently levied upon their supplies---Submission made by the Department / Respondent was that steel pipes were not covered under steel sector and the observations made by the lower Authorities below were correct that that steel sector referred to steel melters, re-rollers and ship breakers---Validity---It is clear from SRO 648(I)/2013, SRO 585(I)/2017 and SRO 1223(I)/2021 (relevant Notifications) that the Federal Government decided not to charge Further Tax on the given rate against supplies made by certain sectors or against certain items---Serial No.14 added vide SRO 1223(I)/21, while amending SRO 648(I)/2013, clearly exempts supplies made by steel sector---Thus, submissions made by the Department (that steel pipes are not covered under steel sector) is misconceived rather absurd---In general terms, any product which is made up of steel is covered under the steel sector and bifurcating certain products e.g. steel pipes holding them outside the ambit of steel sector just to charge Further Tax is contrary to the exemption given in the relevant Notifications---Further , the observations made by the lower Authorities below (that steel sector refers to steel melters, re-rollers and ship breakers) is highly misconceived as those entities are already added at Sr. No.9 vide SRO 585(I)/2017 and if steel sector only referred to steel melters, re-rollers and ship breakers then there was no need of inserting Sr. No.14 which exempted charge of Further Tax against supplies made by steel sector---The will of the legislature/government is evident from the insertion of Sr. No.14 in the presence of Sr. No.9, therefore, giving any restrictive meaning to steel sector or confining the steel sector to only steel melters, re-rollers and ship breakers would not only defeat the purpose of the relevant Notifications, rather would be totally incorrect interpretation---The tax is to be charged as per the law of the land and if a particular product or sector is given a benefit under any law or notification then that has to be given in its entirety without any hesitation---Even SRO 1223(I)/2021 was issued on 17.09.2021 and supplies confronted in the Show-Cause Notice(as tabulated in the order-in-original) were related to tax periods December 2021 onwards, and were made subsequent to the issuance of the SRO 1223(I)/2021---Both the officers below have misconstrued the term of "steel sector" and charged/upheld Further Sales Tax in the presence of clear exemption given under the relevant Notifications/SROs---Appellate Tribunal Inland Revenue set aside impugned orders passed by the Tax Authorities below being illegal, unlawful and without any basis---Appeal, filed by taxpayer, was allowed, in circumstances.

Hamza Sajid for Appellant.

Imran Saeed, DR for Respondent.

2025 P T D (Trib.) 1264

[Inland Revenue Appellate Tribunal]

Before Aijaz Ahmed Khan and Fakhar-ul-Zaman Akhtar, Members

MUSTAFA AKHUND

Versus

DCIR, ZONE AEOI, UNIT-4, RANGE-B

I.T.A. No. 1483/KB of 2024, decided on 19th September, 2024.

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

----Ss. 111, 116(2), 122 & 176(4)---Wealth statement---Concealment of amount in foreign bank account---Addition made, assailing of---Plea of the appellant (individual taxpayer) is that his late father was a distinguished bureaucrat who, after his stint with the government, served for numerous years in foreign institutions (like Asian Development Bank), however, his father's foreign bank account was revealed to him (appellant) pretty late---Validity---Before the lower forum, appellant statedly failed to produce the relevant documents to substantiate his version with evidence to describe the source and nature of investment in the said bank but before this Appellate Tribunal, the taxpayer has furnished the copies of bank statement of foreign account maintained by his deceased father and other substantial documents, however, to ascertain veracity of its genuineness, it must be scrutinized at the assessment stage to reach at just and fair conclusion---Appellate Tribunal set-aside the impugned order and remanded the case for de novo consideration after providing proper opportunity of hearing to the parties---Appeal was disposed of accordingly.

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

----Ss. 111, 116(2), 122 & 176(4)---Wealth statement---Concealment of amount in foreign bank account---Addition made, assailing of---Ground taken by the appellant is that no separate notice under S. 111 of the Income Tax Ordinance, 2001, was issued before making addition---Held, that as only one issue is involved i.e. addition, therefore, independent notice under S. 111 was not required---Appeal, filed by taxpayer, was disposed of.

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

----Ss. 111, 116(2), 122 & 122-A---Wealth statement---Concealment of amount in foreign bank account---Addition made, assailing of---Submission of the appellant /taxpayer is that after issuance of notice by the Department, it was requested to allow the appellant to revise his wealth statement but same was not considered---Held, that wealth statement cannot be revised after the expiry of five years from the due date of filing of return of income for that tax year, or after issuance of notice the return or wealth statement cannot be revised, therefore, the action of Department is right---Appeal, filed by taxpayer, was disposed of.

Faiz Ahmed for Applicant.

Imran Falak Sher, D.R. for Respondent.

2025 P T D (Trib.) 1357

[Inland Revenue Appellate Tribunal]

Before Mian Tauqeer Aslam, Chairman and Muhammad Jamil Bhatti, Member

ABDUL ALEEM KHAN FOUNDATION

Versus

COMMISIONER INLAND REVENUE, CTO, LAHORE

I.T.A. No. 2880/LB of 2023, decided on 20th December, 2025.

Income Tax Ordinance (XLIX of 2001)---

----Ss. 2(36)(c), 100C, 122(1) & 122(4)---Income Tax Rules, 2002, Rr. 211 to 217---Societies Registration Act (XXI of 1860), Preamble---Non-Profit Organization---Tax credit, claim of---Restrictions / conditions---Scope---Appellant-taxpayer / NPO (having been registered in Pakistan under the Societies Registration Act, 1860, as a Non-Profit Organization) filed appeal against concurrent tax credit disallowing orders passed against it---Whether the tax credit available under S. 100C of the Income Tax Ordinance, 2001, ('the Ordinance, 2001') is subject to any restrictions or conditions?---Validity---From the definition of a Non-Profit Organization (NPO) givenunder S. 2(36)(c) of the Ordinance, 2001, it is clear that it includes welfare institutions established for welfare purposes, formed/registered under any law as an NPO, and approved by the Commissioner of Inland Revenue (CIR) in the prescribed manner, as described in Rr. 211 to 217 of the Income Tax Rules, 2002---It is imperative to mention here that no organization or institution can enjoy the status of an NPO unless it receives approval from the CIR under the provisions of the law---Once an organization is declared an NPO under S. 2(36)(c) of the Ordinance, read with Rr. 211 to 217 of the Income Tax Rules, 2002, it may claim the tax credit under S. 100C of the Ordinance, subject to the fulfillment of certain conditions specified under the said section---From the provisions under S. 100C of the Ordinance 2001 , it is clear that non-profit organizations, trusts, or welfare institutions are entitled to claim the benefit of the tax credit under S. 100C of the Ordinance 2001, subject to the fulfillment of the conditions outlined therein, along with the approval granted by the CIR under S. 2(36) (c) of the Ordinance, read with Rr. 211 to 217 of the Income Tax Rules, 2002---In the present case, pertinently, the Department accepted the taxpayer's status as an NPO for the two Tax Years (2015 and 2017 ) and allowed the tax credit under S. 100C for those years, as evidenced by the respective orders; even, for 2016 ('the tax year under consideration'), the taxpayer's claim for the tax credit under S. 100C of the Ordinance 2001 was accepted in audit proceedings passed under S. 122(1) of the Ordinance, 2001---However, the said claim had been rejected without providing any plausible reasons on record under the impugned order passed under S. 122(4) of the Ordinance, 2001---Nevertheless, the taxpayer had obtained approval under S. 2(36) of the Ordinance, 2001, as evidenced by the relevant letter and the taxpayer's NPO status was officially recognized by the Department---Consequently, the tax credit under S. 100C was granted for Tax Years 2015 and 2017, even, for the tax year under consideration, the taxpayer's claim for the tax credit under S. 100C of the Ordinance 2001 was accepted vide order having been passed under S. 122(1) of the Ordinance, 2001---Undisputably, the taxpayer is a foundation registered under the Societies Registration Act, 1860, and operates in accordance with the provisions of the Societies Act, 1860 as a non-profit organization---Moreover, there is no allegation that the taxpayer has misused the foundation's funds or properties, or that any of its members have benefited from surplus funds or profits accruing to the foundation---Thus, the appellant is legally entitled to the full 100% tax credit under S. 100C of the Ordinance 2001, as no violation has been committed by the appellant that could impede or disqualify the appellant from availing the credit under the law---Documents (including bank statements and certificate issued by Contributor /Donor ) submitted by the Appellant establish that the taxpayer received an amount of Rs. 169,898,000 from its Contributor/Donor as a voluntary contribution/donation through proper banking channels , confirming that the funds were received through proper banking channels---Appellate Tribunal Inland Revenue annulled impugned orders passed by the Authorities below being illegal, without jurisdiction and against the facts of the case, in circumstances---Appeal, filed by taxpayer was allowed, in circumstances.

Mian Zafar Iqbal for Appellant.

Ahmed Sheikh, DR for Respondent.

2025 P T D (Trib) 1448

[Inland Revenue Appellate Tribunal]

Before Zahid Sikandar, and Shafaqat Ali, Members

Messrs NISHAT CHUNIAN LTD. and another

Versus

COMMISSIONER INLAND REVENUE, LTU, LAHORE and another

I.T.As. Nos. 2106/LB and 1978/LB of 2016, decided on 2nd June, 2025.

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

----S. 65B as inserted vide Finance Act, 2010 and subsequently amended through Finance Act, 2012---Tax credit for investment---Words "extension" and "expansion", addition of---Retrospective effect---Scope---Beneficial legislation---Scope---Plea of the taxpayer being that subsequent amendment in S. 65B of the Income Tax Ordinance, 2001 ('the Ordinance 2001') made through Finance Act 2012 whereby words "extension" and "expansion" were added and where tax credit was made allowable (against tax payable including on account of minimum tax and final taxes) carry retrospective effect as a beneficial legislation---Whether beneficial, remedial or curative legislation has a retrospective effect?---Validity---Retroactive legislation , as a general rule, is rightly looked upon with disfavor because of its tendency to be unjust and oppressive; consequently, in the absence of any indication in the statute that the legislature intended for it to operate retroactively, it must not be given retrospective effect---However, where an Act is procedural, declaratory or explanatory or where a statute is passed for the purpose of supplying an obvious omission in a former statute, it is to operate retrospectively, obviously because it does not affect vested rights---The legal position that emerges is that generally beneficial legislation is to be given liberal interpretation, however, for the said legislation to have a retrospective effect, the beneficial legislation must carry curative or remedial content---Therefore, such legislation must either clarify an ambiguity or an omission in the existing law and must, therefore, be explanatory or clarificatory in nature---While beneficial legislation is to be liberally interpreted, in order to advance the beneficent object of the statute, it in no manner means that "beneficial legislation" or "liberal interpretation" necessarily includes or interchangeably means retrospective application of the statute---Unless the legislation is remedial, curative, explanatory or clarificatory, it cannot be interpreted retrospectively merely on the ground that the legislation is generically beneficial in nature---An amendment becomes a part of the original statute and must be read together---While an amendment, being considered as the last expression of the will of the legislature, generally prevails, however, such effect is prospective and would not be given any retroactive construction, overriding effect on prior rights, unless the verbiage of the provision makes such construction necessary---In the present case, there was no ambiguity or anomaly existing in the law, as it stood prior to Finance Act, 2012---Section 65B of the Ordinance 2001 was/ is the section allowing tax credit subject to certain conditions---Amendment in the said S. (65B) vide Finance Act, 2012 simply introduced additions of words "extension" and "expansion" and allowed tax credit against Minimum Tax and payment of tax in Final Tax Regime in S. 65B and that by no means remedy or cure any ambiguity or omission in the law---There is nothing in the language of S. 65B (as amended by Finance Act 2012) to suggest that the amendment is retrospective---The amendment merely enlarges the scope of tax credit to be allowed in case of "extension" and "expansion" (in addition to balancing, modernization and replacement of plot and machinery already installed in an industrial undertaking)---Further, provision under S. 65B provides tax credit to be allowed for the first time on tax payable on account of minimum tax and final taxes payable under the law, which was not in existence in previous tax years; the same being in the nature of a substantive amendment would be prospective, in the absence of any indication to the contrary---Hence, plea of taxpayer to label the given amendments as remedial or curative legislation is misconceived---Thus, the benefit of amendments in S. 65B made through Finance Act, 2012 was not available to the taxpayer / appellant for tax made through Finance Act, 2012 having no retrospective application---Commissioner Inland Revenue (Appeals) rightly held the amendments in S. 65B through Finance Act, 2012 as of prospective having no retrospectivity---Appeal , filed by Taxpayer/ Company, was dismissed.

Commissioner of Income Tax v. Shahnawaz Ltd. and others 1993 SCMR 73; State Bank of Pakistan v. Messrs Faisal Spinning Mills Limited 1997 SCMR 1244; 2014 PTD 320; 2022 PTD 1455; 2019 PTD 381; 2023 SCMR 1407 and Coca Cola Company Case Tax Year 2011's case I.T.As. Nos. 1061 and 1066/LB/2015 ref.

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

----Ss. 20(1), 85 & 108 ---Income Tax Rules, 2002, R. 23---Income from business---Deductions, dis-allowance of---Transactions between associates---Arm's length---Scope---Inadmissible financial charges---Scope---Commissioner Inland Revenue (Appeals) upheld the impugned disallowance by observing that the taxpayer could not rebut the calculation/basis established by the officer and that the taxpayer had not given any calculation to establish that the interest offered for tax at Rs.28,905,058/- was not at arm's length transaction within terms of S. 108 of the Ordinance 2001---Summary of calculation of mark-up submitted by appellant / taxpayer indicates that loan to subsidiary company vary from date to date but assessment order depicts that the Assessing Officer misconceived the calculation of mark up of short term borrowing as per record submitted by the appellant / taxpayer---Appellate Tribunal Inland Revenue set-aside the impugned order and remanded the matter back to the Assessing Officer for reappraisal and decision while directing taxpayer /appellant to submit the complete summary of calculation of mark up to the Assessing Officer to reach out a just conclusion---Appeal, filed by Taxpayer, was disposed of accordingly.

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

----S. 34(3)---Accrual-basis accounting---Scope and effect---Officer Inland Revenue (OIR) disallowed provisional expense being inadmissible as provisions of other benefits and compensated absences and provident funds contributions has been claimed and was included in under the head of salaries---Department filed appeal as the Commissioner Inland Revenue (Appeals) ('the Commissioner-Appeals') deleted the impugned addition---Held, that the Commissioner-Appeals rightly observed that in mercantile system of accounting expenses are to be allowed when it become payable and have been determined with reasonable accuracy---It is a general practice that liability regarding leave encashment, an unavailed leave is calculated at the end of the year and then paid in subsequent year---Record revealed that the addition was made by the OIR without bringing on record any material within terms of S. 34(3) of the Income Tax Ordinance, 2001 ('the Ordinance 2001')---Under provision of S. 34(3) of the Ordinance 2001, an amount shall be payable by a person when all the events that determine liability have occurred and the amount of liability can be determined with reasonable accuracy---Similarly, contribution to recognized provident fund is an admissible expense---Thus, impugned addition was rightly deleted---No case of interference by the Tribunal was made out---Appeal filed by Department was dismissed.

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

----S. 154 & Second Schedule, Pt. IV, Cl. 41AA as inserted through Finance Act, 2012---Exports---Tax, reduction of---Scope---Taxpayer reduced export tax by 50% of tax liability under S. 154 of the Income Tax Ordinance, 2001 ('the Ordinance 2001') within the terms of clause 41AA of Part IV of Second Schedule ('41AA') of the Ordinance 2001---Officer Inland Revenue (OIR) disallowed the claim reduction for the reason that clause 41AA being inserted through Finance Act 2012 having prospective in nature was applicable from the tax year 2013---Taxpayer filed appeal as the Commissioner-Appeals agreed with the findings of OIR---Validity---Law existing in a particular tax year or tax period is applicable for the purpose of determining tax liability---Any change of tax whether lowering or enhancing is substantive in nature and cannot be given retrospective effect---Instant appeal pertains to 2012 whereas clause 41AA was inserted through Finance Act, 2012 which was to be applicable from tax year 2013---No benefit can be given to the taxpayer of the said clause being not available in the statute at the relevant time---The order of the Commissioner-Appeals does not suffer from any legal infirmity and the same is accordingly upheld. Taxpayer's appeal on this issue was rejected.

CIR v. Three Star Rice Factory 2021 PTD 1 ref.

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

----Ss. 129 & 133---First Appellate Tax Authority---Remand, powers of---Scope---Appellate Tribunal Inland Revenue---Powers---It was more appropriate for the Commissioner Inland Revenue (Appeals) ('the Commissioner - Appeals') to conclude the issue-under-consideration there and then as provisions of S. 129 of the Income Tax Ordinance, 2001 ('the Ordinance 2001') does not allow him to pass remand order in respect of assessment orders but he deemed it justified to remit the matter back for verification---No reasoning can be gathered from impugned order which necessitated the Commissioner-Appeals to remand back the issues as after only narrating the submissions of the taxpayer the Commissioner - Appeals straight away made directions to the assessing officer---Secondly, the Commissioner - Appeals does not hold power to remand back the matters pertaining to assessment orders under the provisions of S. 129 of the Ordinance 2001---Remand orders, besides being illegal and unlawful under S. 129 of the Ordinance 2001, in such casual fashion not only add misery to the taxpayer but also burdens the taxation officers of unnecessary litigation---Even otherwise, the Commissioner - Appeals being the first appellate authority is obliged to decide the issues raised before him on merits---The Commissioner - Appeals has escaped from his responsibility of deciding the appeal on merits through a speaking order---The Commissioner - Appeals being the first appellate authority has all the powers to conduct detailed inquiry and investigation of the matter as first appeal is always a continuation of proceedings---Once it is established that remand order is illegal then despite having power to decide the case on merits the best course for Appellate Tribunal Inland Revenue ('Tribunal') is toremit the matter back rather than deciding the same on merits to avail the benefits of views of the lower Authorities---Tribunal annulled/set-side the impugned order being illegal and against the provisions of S. 129 of the Ordinance 2001 and by exercising power of remand available to the Tribunal remitted the matter back to the OIR for re-examination---Appeal was disposed of accordingly.

2023 PTD 758 ref.

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

----Ss. 18, 21(n), 37 & First Sched., Pt. I, Division VII---Income from business---Deductions not allowed---Capital nature of expenses---"Expenses on sale of shares of subsidiary company"---Scope and effect---Officer Inland Revenue (OIR) made addition of the expenses on sale of shares of subsidiary company ('expenses-in-question') holding that the expenses claimed were not wholly and exclusively for business purpose---Department filed appeal as the Commissioner Inland Revenue (Appeals) ('the Commissioner-Appeals') deleted the disallowance holding that expenses incurred on the sale of shares had not been charged against business income---Validity---Taxpayer / Company claimed the expenses-in-question being cost of disposal of shares against the consideration received---Under the head capital gain, the taxpayer / company deducted the cost from the consideration to reach the value of capital gain---Since shares were held for more than one year, hence capital gain was exempt for tax year 2012 given the slab rates prevalent at that time as per Division VII of Part I of First Schedule of the Ordinance 2001---The Commissioner - Appeals rightly deleted the impugned addition under this head which does not warrant any external intervention---Appellate Tribunal Inland Revenue upheld the impugned order on issue-in-hand---Appeal, filed by the Department, was dismissed.

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

----S. 129---Apportionment of expenses, matter of---Remanding the matter---Scope---Taxpayer / Company filed appeal against the remanding order passed by the Commissioner Inland Revenue (Appeals) ('the Commissioner-Appeals---Validity---Record suggests that the apportionment of expenses ('issue-in-question') was duly confronted with details tabulated in the Show Cause Notice/Order-in-Original and in response the taxpayer filed reply which was examined---The Officer Inland revenue (OIR) denied to concede to the taxpayer's contentions and made apportionment of expenses between local sales and export sales---Taxpayer brought his grievance before the Commissioner-Appeals who rather than deciding the appeal on merits casually remanded back the issue to the OIR---Tribunal annulled/set-side the impugned order being illegal and against the provisions of S. 129 of the Income Tax Ordinance, 2001 and by exercising power of remand available to the Tribunal remitted the matter back to the OIR for re-examination---Appeal was disposed of accordingly.

(h) Workers Welfare Fund Ordinance (XXXVI of 1971)---

----Preamble---Income Tax Ordinance (XLIX of 2001), S. 60A---Workers' Welfare Fund, contribution to---Scope and effect---Amendments made to the Workers Welfare Fund Ordinance, 1971 through Finance Act, 2006 and Finance Act, 2008---Department filed appeal as the Commissioner Inland Revenue ('the Commissioner-Appeals') directed that Workers' Welfare Fund (WWF) be charged on the income determined after appeal effect according to Workers Welfare Fund Ordinance, 1971) ('the WWF Ordinance') prior to amendments made through Finance Act, 2006 and 2008---Plea of the department being that the amendments in WWF Ordinance were not finally declared ultra vires and was still part of the statute---Validity---The contributions made to the WWF are not in the nature of tax; hence, the amendment made through Finance Act, 2006 and 2008 are unconstitutional---Since the amendments made in the WWF fund through Finance Act, 2006 and 2008 had been declared unconstitutional by the apex courts therefore the ground of the department does not hold water---The Commissioner-Appeals rightly directed to charge WWF as existed prior to amendments made through Finance Act, 2006 and 2008---No case of interference was made out by the Department---Appeal, filed by the Department, was dismissed.

East Pakistan Chrome Tannery (Pvt) Ltd v. Federation of Pakistan 2011 PTD 2643 and PLD 2017 SC 28 ref.

Sheikh Aqeel Ahmed for Appellants.

Usman Azam Bhatti, DR for Respondent.

2025 P T D 297

[Islamabad High Court]

Before Miangul Hassan Aurangzeb, J

Messrs KHYBER TOBACCO COMPANY LIMITED

Versus

The FEDERAL BOARD OF REVENUE and others

Writ Petition No.1768 of 2022, decided on 20th May, 2022.

Sales Tax Act (VII of 1990)---

----S.40C(2)---Sales Tax Rules, 2006, R.150ZF---Sales Tax General Order No.8 of 2022 dated 18.01.2022---Manufacturer/Importer of Tobacco---Track and Trace System, implementation of---Deadline as per S.T.G.O. dated 18.01.2022 and the addendum dated 26.04.2022---Scope---Petitioner (manufacturer / importer of tobacco having registration with the F.B.R.) agreed to participate in the track and trace initiative and to implement the track and trace system---Petitioner filed constitutional petition for setting-aside of the S.T.G.O. dated 18.01.2022; the addendum dated 26.04.2022 as well as Notice and letter from the F.B.R. to all concerned Chief Commissioners to ensure compliance with the requirements of the said S.T.G.O. dated 18.01.2022---Validity---Deadline for the implementation of the track and trace system was 20.05.2022---Allowing the petitioner to sell tobacco products without the affixation of tax stamps beyond the deadline (20.05.2022) would tantamount to nullifying the S.T.G.O. dated 18.01.2022---Mere fact that the petitioner could not pay to the manufacturer of the tax stamper due to its (petitioner's) accounts being attached by the F.B.R. was not a plausible ground to relieve the petitioner from its contractual obligations to have all the necessary equipment installed at its premises so as to ensure the implementation of the track and trace system by the deadline of 20.05.2022---Even otherwise, the present constitutional petition was instituted (on 19.05.2022) one day prior to deadline for the implementation of the track and trace system for tobacco sector---No plausible explanation was given for the delay in filling of the present constitutional petition given the fact that the extended deadline of date had been imposed through addendum dated 26-04-2022---Constitutional petition, being merit-less, was dismissed in limine, in circumstances.

Usman Jillani for Petitioner.

2025 P T D 451

[Islamabad High Court]

Before Babar Sattar, J

MASUD REZA

Versus

The FEDERATION OF PAKISTAN through President and others

Writ Petition No.2510 of 2017, decided on 22nd March, 2023.

(a) Constitution of Pakistan---

----Art. 199---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), Ss. 2(3)(ii) & 10---Decision passed by the President of Pakistan, assailing of---Constitutional petition---Maintainability---President of Pakistan , on a representation filed by Federal Board of Revenue (FBR), set-aside findings and recommendations of the Federal Tax Ombudsman (FTO) having been passed in favour of taxpayer---Petitioner / taxpayer filed constitutional petition against said decision rendered by the President---Respondent / FBR raised objection to the maintainability of the constitutional petition---Validity---Petitioner had sought judicial review of a decision rendered by the President of Pakistan for being illegal for having been passed in disregard of provisions of the FTO Ordinance---Said order fell within the jurisdiction of judicial review of the High Court---Thus, objection raised by the Respondent /FBR was misconceived.

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

----S. 128(1A)---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), Ss. 2(3)(ii) & 10---Stay order issued by the Commissioner Appeals---Non-compliance of the order by the Department claiming to be not aware of the same---Maladministration--Scope---Grievance of the taxpayer emanated from the refusal of the Department to abide by the stay order issued by the Commissioner Appeals and despite the passage of same (stay) the bank accounts of the petitioner were not detached---Taxpayer filed complainant before the Federal Tax Ombudsman who declared the non-compliance of stay order as maladministration---Plea taken by the FBR was that the Commissioner Inland Revenue was never made aware of a stay order issued by the Commissioner Appeals---Validity---As a matter of practice, the Commissioner Appeals also endorses a copy of any order passed under S. 128(1A) of the Income Tax Ordinance, 2001, to the relevant Commissioner Inland Revenue---For FBR to take such plea/ position (that the Commissioner Inland Revenue was not aware of a stay order) would amount to FBR denying the taxpayers the right to a fair and just tax system---It is the duty of FBR to ensure that the taxpayers are treated justly and fairly during the adjudication process---And it is not for FBR to deny knowledge or dodge service of any orders issued by the Commissioner Appeals and thereby deny any benefit of a stay order issued by the Commissioner Appeals in favor of the taxpayer---Consequently, the denial of knowledge was without merit and would constitute an independent ground for FBR, under the relevant provisions of the Federal Board of Revenue Act, 2007, to take disciplinary action against officials who claimed that they were unaware of the stay order passed by the Commissioner Appeals---High Court set-aside the decision of the President of Pakistan for not being in accordance with law ,and upheld the decision of the FTO, directing the FBR to ensure the re-commendation passed by the FTO to be given effect in accordance with provisions of law---Constitutional petition, filed by the taxpayer, was allowed, in circumstances.

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

----Ss. 2(3)(i), 2(3)(1)(b), 10 & 14(6)---Income Tax Ordinance (XLIX of 2001), Ss. 140 & 128(1A)---Assessing Officer, responsibilities of---Stay order, non-compliance of---Maladministration---Grievance of the taxpayer emanated from the refusal of the Department to abide by the stay order issued by the Commissioner Appeals and despite the passage of same (stay) the bank accounts of the petitioner were not detached---Taxpayer filed complainant before the Federal Tax Ombudsman who declared the non-compliance of stay order as maladministration---Petitioner /taxpayer impugned an order passed by the President of Pakistan, whereby findings and recommendations of the Federal Tax Ombudsman (FTO) were set-aside on a representation filed by respondent/Federal Board of Revenue (FBR)---Validity---Considerations that prevailed with the President of Pakistan were that the Federal Tax Ombudsman ('FTO') had exceeded his authority by interfering with the matter of assessment of tax and interpretation of law; which obviously was not the case---Question of legality of the assessment order passed against the taxpayer had been settled by the Appellate Tribunal Inland Revenue---Question before the FTO was with regard to the maladministration on part of Assessing Officers as defined under S. 2(3)(1) of the Establishment of Office of Federal Tax Ombudsman Ordinance, 2000 ('the FTO Ordinance, 2000')---Finding of the FTO was that the failure or refusal of the relevant tax officials to honor and implement the stay order issued by the Commissioner Appeals was perverse, arbitrary, unjust and oppressive, and that conduct falls within the definition of maladministration under S. 2(3)(1)(b) of the FTO Ordinance, 2000---After reaching such conclusion, the FTO issued recommendations to the Chief Commissioner Inland Revenue to take suitable action against the officials responsible for failure to comply with the order of the Commissioner Appeals---Such recommendations fall within the powers vested in the FTO under S. 14(6) of the FTO Ordinance, 2000---High Court set-aside the decision of the President of Pakistan for not being in accordance with law, and upheld the decision of the FTO, directing the FBR to ensure the re-commendation passed by the FTO was given effect in accordance with provisions of law---Constitutional petition, filed by the taxpayer, was allowed, in circumstances.

Waheed Shahzad Butt for Petitioner.

Adnan Haider Randhawa for Respondents.

2025 P T D 495

[Islamabad High Court]

Before Sardar Ejaz Ishaq Khan, J

FEDERAL BOARD OF REVENUE through Chairman and 3 others

Versus

PRESIDENT OF PAKISTAN, SECRETARIAT (PUBLIC) AIWAN-E-SADDAR, ISLAMABAD and 22 others

Writ Petition No.242 of 2025, decided on 22nd January, 2025.

(a) Interpretation of statutes---

----Series-Qualifier Canon---Applicability---"Series-Qualifier Canon" entails that, in a parallel construction of nouns or verbs in a series, a prepositive or postpositive modifier or qualifier applies to the entire series.

Facebook, Inc. v. Duguid, 141 S. Ct. 1163, 1169 (2021) and Pakistan through Secretary Finance v. Messrs Lucky Cement 2007 SCMR 1367 rel.

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

----S. 9(2)(b)---Federal Tax Ombudsman---Jurisdiction---For excluding jurisdiction of Federal Tax Ombudsman, pursuant to S. 9(2)(b) of Establishment of Office of Federal Tax Ombudsman Ordinance, 2000, matter must be appealable, revisable, or reviewable, for which, ex-facie, an order (or deemed order) of tax authorities should exist.

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

----Second Schedule, Part III, Clause (2)---Circular No. 6 of Federal Board of Revenue, dated 19-07-2013 ('the Circular')---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S.9(2)(b)---Constitution of Pakistan, Art. 199---Constitutional petition---Full time teacher / researcher---Tax exemption---Applicability---Mal-administration---Petitioner / Federal Board of Revenue assailed order passed by Federal Tax Ombudsman whereby complaint of teachers was allowed and denial of 25% tax rebate was declared to be mal-administration as the tax rebate was admissible to complainants---Validity---Explanation was introduced vide Para (d)(iii) of the Circular, which was not there in the text of clause (2) of Part-III of Second Schedule to Income Tax Ordinance, 2001 itself, and had rested on an interpretation that was unwarranted by the text of statutory language of clause (2) of Part-III of Second Schedule to Income Tax Ordinance, 2001---Such limitation could not be read into clause (2) of Part-III of Second Schedule to Income Tax Ordinance, 2001 by FBR---Under concessionary or exemption provisions in a taxing statute, where a taxpayer falls within the exemption, he cannot be denied that exemption based on a supposed intention to the contrary of the Legislature, which, if it were intended, would have been expressed in so many words in the provision itself---Order in question was correct interpretation of section 9(2)(b) of Establishment of the Office of Federal Tax Ombudsman Ordinance, 2000 due to the absence of any order by department that could have been appealable, reviewable, or revisable, within the hierarchy of the department---Misinterpretation of clause (2) of Part-III of Second Schedule to Income Tax Ordinance, 2001 and its denial to complainants, while leaving it admissible to similarly placed teachers in other Provinces, fell squarely within definition of mal-administration---High Court declined interference in concurrent orders assailed by Federal Board of Revenue---Constitutional petition was dismissed, in circumstances.

Facebook, Inc. v. Duguid, 141 S. Ct. 1163, 1169 (2021); Pakistan through Secretary Finance v. Messrs Lucky Cement 2007 SCMR 1367; Oxford University Press v. Commissioner of Income Tax Companies Zone-I, Karachi 2019 SCMR 235; Messrs Gas Master CNG Station v. Federation of Pakistan 2019 PTD 2025 and Shakeel Ahmed Kasana and others v. Federal Tax Ombudsman 2024 PTD 1 ref.

(d) Interpretation of statutes---

----Irrationality and absurdity is not to be attributed to the Legislature.

2025 P T D 521

[Islamabad High Court]

Before Aamer Farooq, J

PAKISTAN INTERNATIONAL AIRLINES CORPORATION LIMITED

Versus

FEDERATION OF PAKISTAN and others

Writ Petition No.2158 of 2020, decided on 18th January, 2022.

Customs Act (IV of 1969)---

----Ss. 83 & 194-A---Clearance for home consumption---Show-cause notice---Outstanding duties---Recovery---Appellate Tribunal Inland Revenue, jurisdiction of---Petitioner / company added aircrafts to its fleet on Dry Lease and in year 2013 had paid duty and taxes---Later on authorities issued show-cause notice for recovery of surcharge for home consumption which was not levied earlier at the time of payment of duty and taxes---Petitioner / company assailed initial order imposing taxes and duties in year 2013---Validity---Orders requiring petitioner / company to make payment of duties and taxes was not assailed, therefore, such order could not be assailed at present stage---Issuance of any declaration by High Court would amount to nullifying those orders, which could not be done when no specific challenge was made to them---Petitioner / company filed appeal before Appellate Tribunal Inland Revenue---Proceedings against petitioner / company were initiated by issuance of show-cause notice for contravention of S. 83(2) of Customs Act, 1969---Appellate Tribunal Inland Revenue derives its jurisdiction from S. 194-A of Customs Act, 1969, and is a forum which can adjudicate matters of facts and law, rather it is the forum which has jurisdiction to examine questions of facts raised before it---Appellate Tribunal Inland Revenue is the forum to determine law where questions of law can be raised at any stage---Plea of no default could also be raised before Appellate Tribunal Inland Revenue as duties and taxes were paid in installments due to decision of Economic Coordination Committee of Federal Cabinet---High Court declined to issue any declaration regarding principal liability, as well as surcharge and direction for refund---Constitutional petition was dismissed, in circumstances.

Messrs Kamalia Sugar Mills Limited, Kamalia v. Superintendent, Intelligence and Investigation (Customs and Central Excise), Regional Office, Lahore and another 2002 PTD 632; Commissioner of Income Tax, Banglore v. B.C. Sirinivasa Setty (1981) 128 ITR 295; Dr. Sher Afghan Khan Niazi v. Ali S. Habib and others 2011 SCMR 1813; The Collector of Customs, Customs House, Lahore and 3 others v. Messrs S.M. Ahmad and Company (Pvt.) Ltd. 1999 SCMR 138; The Murree Brewery Co. Ltd. v. Federation of Pakistan and 2 others PLD 1972 SC 279; Syed Ali Abbas and others v. Vishan Singh and others PLD 1967 SC 294; Lt. Col. Nawabzada Muhammad Amir Khan v. The Controller of Estate Duty PLD 1961 SC 119; Ch. Iftikhar Ahmad v. Chief Secretary Punjab and others 2012 PLC (C.S.) 1470; Corruption in Hajj Arrangements in 2010 PLD 2011 SC 963; Commissioner of Income Tax Legal Division, Lahore and others v. Khurshid Ahmad and others 2016 PTD 1393; Engineer Iqbal Zafar Jhagra and another v. Federation of Pakistan and others 2013 SCMR 1337; Sanofi Aventis Pakistan Limited and others v. Province of Sindh and 2 others PLD 2004 Kar. 69; Abdul Sattar v. Federation of Pakistan and 2 others 2006 PTD 1171; Messrs Mahmood and Company v. Assistant, Collector, Sales Tax (Enforcement and Collection), Shalimar Division, Lahore and 2 others 2005 PTD 72; Sadia Jabbar v. Federation of Pakistan and others 2018 PTD 1746; CIT v. B.C. Srinivasa Setty 1981 128 ITR 294; Sui Northern Gas Pipelines v. Deputy Commissioner Inland Revenue and others 2014 PTD 1939; M/s Pfizer Laboratories Ltd. v. Federation of Pakistan and others PLD 1998 SC 64; Caroline Rehman v. Chairman, Union Council 1985 CLC 2855; Pakistan Medical and Dental Council v. Dr. Raza Muhammad Khan 1992 SCMR 1621; Percy Robinson and others v. Reverend Bashir JIWAN and others PLD 1998 Kar. 189 and Muhammad Shahid v. Station House Officer (PS Preedy) and others 2011 YLR 366 ref.

Anwar Kamal and M. Umer Khan Verdag for Petitioners.

Umer Farooq Malana, Mazhar-ul-Haq Hashmi and Kh. Muhammad Imtiaz, Deputy Attorney General for Respondents.

2025 P T D 544

[Islamabad High Court]

Before Arbab Muhammad Tahir, J

GUARANTEE SALEX THALES JOINT VENTURE

Versus

FEDERATION OF PAKISTAN through Secretary Revenue Division and others

Writ Petition No.4201 of 2018, decided on 11th April, 2023.

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

----Ss.3, 6, 11, 23, 26, 30 & 31---Islamabad Capital Territory (Tax on Services) Ordinance (XLII of 2001), Schedule, Cl. 5---Show-cause notice---Short levy / non-levy of tax---Petitioner / company was rendering contractual / construction services in a project of Civil Aviation Authority---Plea raised by petitioner / company was that Civil Aviation Authority was an organ of Federal Government, therefore, services provided by petitioner / company were exempt from tax in terms of Cl. 5 of Schedule to Islamabad Capital Territory (Tax on Services) Ordinance, 2001---Validity---Petitioner / company was an independent third party contractor i.e. a joint venture---Tax was charged on "services provided" by petitioner / company pursuant to contract---Civil Aviation Authority was a government entity but it was not the "provider of services"---Petitioner / company assailed show cause notice which was not an adverse order---Show-cause notice provided an opportunity to petitioner / company to explain that tax in question could not be imposed---Petitioner / company could raise all grounds before the authorities---High Court declined to interfere in the matter---Constitutional petition was dismissed, in circumstances.

Zaver Petroleum Corporation Limited v. Federation of Pakistan and others 2016 PTD 2332; Sindh Revenue Board through Chairman Government of Sindh and another v. The Civil Aviation Authority of Pakistan through Airport Manager 2017 SCMR 1344; Pakistan Oilfields Ltd. v. Federation of Pakistan and others 2022 PTD 413 and The Commissioner Inland Revenue, Zone-III, RTO-II, Lahore v. Messrs Hamza Nasir Wire and others 2020 SCMR 1822 = 2020 PTD 1790 ref.

Commissioner Inland Revenue and others v. Jahangir Khan Tareen and others 2022 SCMR 92 = 2022 PTD 232 rel.

(b) Constitution of Pakistan---

----Art.199---Constitutional petition---Show-cause notice, assailing of---Principle---Jurisdiction of High Court in matters assailing a show-cause notice is limited to inquiry where show-cause notice (i) is issued without jurisdiction; (ii), is patently illegal; (iii) is issued with premeditation without application of mind for extraneous reasons; (iv) violates fundamental rights; (v) requires interpretation of law ; and (vi) where there is no adequate and efficacious remedy available to the aggrieved person.

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

Ms. Zainab Janjua for Petitioner.

Abdullah Aleem Qureshi, Malik Umair Saleem and Manzoor Hussain for Respondents.

2025 P T D 586

[Islamabad High Court]

Before Miangul Hassan Aurangzeb, J

SHAH ZAMAN

Versus

FEDERATION OF PAKISTAN and others

Writ Petition No.2518 of 2021, decided on 20th May, 2022.

Customs Act (IV of 1969)---

----S.19---Imports and Exports (Control) Act (XXXIX of 1950), S.3(1)---Import Policy Order, 2016---Import Policy Order, 2020---Notification SRO 833(I)/2018, dated 03-07-2018---Constitution of Pakistan, Arts. 91, 199 & 201---Constitutional petition---Exemption from custom duty and taxes---Vintage vehicle, import of---Decision of High Court---Cabinet---Jurisdiction---Petitioner / importer was aggrieved of order passed by authorities not releasing vintage vehicle imported by him---Validity---Notification SRO 833(I)/2018, dated 03-07-2018, was not withdrawn by authorities---After judgment passed by Full Bench of High Court, the Cabinet was assumed to be cognizant of disparity between notification SRO 833(I)/2018, dated 03-07-2018, (which exempted import of vintage or classic cars and jeeps meant for the transport of persons from such customs duty, regulatory duty, additional custom duty, federal excise duty, sales tax and withholding tax as were in excess of the cumulative value of US Dollars 5,000/- per unit) and Import Policy Orders, 2016 and 2020 (which did not permit import of used vehicles that were more than three years old)---Cabinet was cognizant of such disparity and had taken an informed decision not to grant a one-time relaxation in prohibition of import of vintage cars---Cabinet decided not to amend Import Policy Orders so as to make import of vintage cars more than three years old permissible---Provisions of Import Policy Orders, did not violate any provision of Imports and Exports (Control) Act, 1950 or any fundamental right under the Constitution---Constitutional petition was dismissed, in circumstances.

Meena Munawar Khan v. Federation of Pakistan 2021 PTD 407 and Moin Jamal Abbasi v. The Federation of Pakistan 2020 PTD 660 rel.

Badar Iqbal Ch. for Petitioner.

Ch. Muhammad Tahir Mehmood, Assistant Attorney General for Respondent, Waqar A. Sheikh and Rana Muhammad Mehtab for Respondents Nos.3 to 5.

2025 P T D 724

[Islamabad High Court]

Before Miangul Hassan Aurangzeb, J

DAWN CONVERTEC SMC-(PVT.) LTD. and others

Versus

NATIONAL TARIFF COMMISSION and others

C.M.A. No.12 of 2021, decided on 28th January, 2025.

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

----Ss. 2(d), 20, 27, 37, 39, 50 &70(13)---Civil Procedure Code (V of 1908), S.100---Second Appeal---Reappraisal of evidence---Scope---Dumped imports of Duplex Board---Filing of written application against the dumped imports causing material injury to the domestic industry producing Duplex Board---Thorough investigation by the National Tariff Commission (Commission) fulfilling all codal formalities---Final determination and imposition of definitive anti-dumping duty---First appeal was preferred by the applicant before Anti-Dumping Appellate Tribunal, which was dismissed---Contentions of the appellant was that before final determination of imposition of Definitive Anti-dumping Duty other factors of causing injury to the domestic industry were not considered by the Commission and that the final determination taken by the Commission was not within the prescribed time limit---Validity---All the relevant factors were taken into consideration by the Commission before determining the injury to the domestic industry due to the dumped imports---Preliminary determination in terms of S. 37 of the Anti-Dumping Duties Act, 2015, was made by the Commission on 11.05.2017, whereas, the final determination was made on 27.07.2017, thus, the final determination was made within 180 days of the preliminary determination---Section 70(13) of the Anti-Dumping Duties Act, 2015 makes the appellate decision of the Appellate Tribunal appealable to the High Court, which is to entertain the appeal under the said section within the limits prescribed by S. 100, C.P.C., and it is not open to the parties to demand re-appraisal of the evidence by the High Court---There was absolutely no question of law involved in the second appeal for High Court to interfere with the concurrent findings of fact arrived at by the Commission and the Appellate Tribunal on the proper appreciation of the material on the record---Appeal was dismissed, in circumstances.

Bashir Ahmed v. Mst. Taja Begum PLD 2010 SC 906 and Sohail and Company v. Anti-Dumping Appellate Tribunal, Islamabad 2024 PTD 872 rel.

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

----Ss. 20, 29, 39 & 50---Dumped imports of Duplex Board---Filing of written application against the dumped imports causing material injury to the domestic industry producing Duplex Board---Thorough investigation by the National Tariff Commission (Commission) fulfilling all codal formalities---Final determination and imposition of definitive anti-dumping duty---Limitation---Contention of the appellant was that the investigation was not concluded by the Commission within the time as prescribed in S. 29 of the Anti-Dumping Duties Act, 2015---Validity---Investigation was initiated on 30.01.2016 and concluded on 27.07.2017 i.e. within eighteen months, thus, final determination was made within the period prescribed in S. 29 of the Act---Appeal was dismissed.

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

----Ss. 2(d) & 20---Dumped imports of Duplex Board---Domestic industry---Determination---Claim of the appellant was that the respondent was an entity associated with another entity (Merit Packaging Limited) having common directors, which had also imported Duplex Board, thus, respondent could not be categorized as a domestic industry for the purpose of filing of application under S. 20---Validity---Investigation of the Commission revealed that the import of Duplex Board by Merit Packaging Limited was for its own consumption and not in any way for the benefit of respondent/industry---Allegation as to the said entities having common director could not result in a finding that respondent-industry was related to Merit Packaging Limited---Appellate Tribunal held that both entities were independent of each other on different counts---There was no evidence to prove that respondent-industry controlled Merit Packaging Limited or vice versa---Appeal was dismissed.

Asad Ladha for Appellants.

Waqas Amir for Respondent No.1.

Salman Zaheer Khan and Khalil K. Sahibzada for Respondent No.2.

2025 P T D 757

[Islamabad High Court]

Before Muhammad Azam Khan, J

PAK TELECOM MOBILE LIMITED through Authorized Representative

Versus

FEDERAL BOARD OF REVENUE (FBR) through Chairman

Writ Petition No.3422 of 2022, decided on 26th March, 2025.

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

----Ss. 74(1), 177 & 214C & Second Schedule , Cl. 105A [as inserted by Finance Act, 2022]---Insertion of a new amendment under Clause 105A in the Second Schedule ('Clause 105A') of Income Tax Ordinance, 2001 ('the Ordinance, 2001')---Audit proceedings, applicability of---"Tax year"---Scope---"Preceding four tax years"---Scope---Contention of the Petitioner (Pak Telecom Mobile Limited) was that after the insertion of Clause 105A, the Department could not seek audit of the petitioner for the tax year 2018 , as the audit of the petitioner had already been conducted for the tax year 2017, which culminated in the tax year 2021---Validity---Said (new) Clause 105A, was inserted by the Finance Act, 2022, meaning thereby that the audit of an income taxpayer could not be conducted in the tax years 2021, 2020, 2019 and 2018---The said promulgated provision Clause 105A in the Income Tax Ordinance, 2001, was provided under the Chapter of Exemptions from applicability of certain provisions, which reflected that it was a kind of concession or benefit and provided that audit under S. 177 of the Ordinance, 2001 and audit under S. 214C of the Ordinance, 2001 shall not apply to a person whose income tax affairs had been audited in any of the "preceding four tax years" ; which clearly provided that the said exemption or concession was only available if the taxpayer had been audited in any of the preceding four tax years while the word "tax year" was defined under S. 14(1) the Ordinance of 2001---The new amendment referred to "preceding four tax years" and it meant the audit of a particular tax year and not the date or year in which the audit was completed---Therefore, petitioner's selection of audit for tax year 2018 (notwithstanding its completion in the year 2021) would be of the tax year 2018 and not of the tax year 2021 to claim any benefit of Clause 105A---It was immaterial when the audit was completed as it would remain an audit for a particular tax year and it was only that tax year (2017 in the present maner) which was relevant for calculating the period of concession under Clause 105A---The finalization of the audit in a particular tax year was not at all relevant nor was it provided in Clause 105A---Record of the petitioner reflected that the audit for the tax year 2017 was conducted and concluded in the year 2021, meaning thereby that no audit/proceedings under S.177(1) of the Ordinance, 2001 were conducted for any of the preceding four years as per the mandate of S. 105A of the Ordinance, 2001 ; hence, the petitioner could not claim the benefit provided under the new amendment under Clause 105A in the Second Schedule of the Ordinance, 2001 introduced through the Finance Act, 2002---Constitutional petition, filed by taxpayer / company, being merit-less, was dismissed, in circumstances.

Constitution Petition No.D-6280 of 2024 ref.

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

----Ss.177 & 214C & Second Schedule, Cl. 105A [as inserted by Finance Act, 2022]---Insertion of a new amendment under Clause 105A in the Second Schedule ('Clause 105A ') of Income Tax Ordinance , 2001 ('the Ordinance, 2001')---Retrospective effect---Audit proceedings, applicability of---In the absence of any indication of its retrospective operation, the new amendment must not be given retrospective effect---Generally, beneficial legislation is to be given liberal interpretation, however, for the said 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 be explanatory or clarificatory---In the present case, there was no specific wording that the concession shall apply retrospectively hence, it could not be construed by any canon of interpretation that said amendment had a retrospective effect---Consequently, in the absence of any indication in the statute that the legislation intended for it to operate retroactively, it must not be given retrospective effect---In any case, the provisions related to fiscal statutes will be interpreted prospectively, not retrospectively---The impugned notice was issued to the petitioner on 14.01.2022, while the said amendment in the Ordinance, 2001 was enacted with effect from 01.07.2022 ; hence, the petitioner could not be benefited from the new amendment---Constitutional petition, filed by taxpayer / company, being merit-less was dismissed, in circumstances.

M/s RAJBY Industries Karachi and others v. Federation of Pakistan and others 2023 SCMR 1407 ref.

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

----Ss.120, 177 & 214C & Second Schedule , Cl. 105A [as inserted by Finance Act, 2022]---Insertion of a new amendment under Clause 105A in the Second Schedule ('Clause 105A') of Income Tax Ordinance, 2001 ('the Ordinance, 2001')---Audit proceedings---Scope---Power to select for audit through random or parametric balloting is provided under the law---Mere selection for audit does not cause any actionable injury to the taxpayer and the reason and objective for conducting an audit under a scheme of self-assessment is the regime provided by the Income Tax Ordinance, 2001, to check the accuracy, truthfulness, and veracity of the returns filed by the taxpayers---Constitutional petition, filed by taxpayer / company, being merit-less was dismissed, in circumstances.

Commissioner of Inland Revenue, Sialkot v. Allah Din Steel and Rolling Mills 2018 SCMR 1328 ref.

Wasim Abid and Abuzar Salman Khan for Petitioner.

Ali Nawaz Kharal for Respondents.

2025 P T D 773

[Islamabad High Court]

Before Babar Sattar, J

SHAHID HUSSAIN KHAWAJA

Versus

The STATE and another

Criminal Miscellaneous No. 2217-B of 2024, decided on 23rd December, 2024.

Sales Tax Act (VII of 1990)---

----Ss. 2 (37), 11, 33, Table, Column No. 1, Srl. 11, 13 & 37(a)(iv)---Criminal Procedure Code (V of 1898), S. 497---Constitution of Pakistan, Art. 10A---Tax fraud---Bail, grant of---Actus reus and mens rea---Bail bond, quantum of---Due process of law---Compoundable offence---Effect---Accused was bank manager who was arrested in present case for sales tax fraud to the amount of approximately Rs.3.2 billion---Role attributed to accused was of aiding and abetting taxpayer company by opening its accounts in his branch---Validity---Actus reus for an offence under S. 33 is failure of a taxpayer to discharge its tax liability found to be due---There exists no actus reus till after the tax due has been determined through assessment process prescribed under Sales Tax Act, 1990---Question of mens rea can therefore not arise till after the guilty act is found to have transpired---Offenses under S. 33 of Sales Tax Act, 1990 are not thought crimes---Where there is no failure to discharge tax liability as duly determined under Sales Tax Act, 1990 no criminal liability can be imagined or founded---Determination of civil liabilities, as required under Art. 10A of the Constitution must be the product of due process---Such process takes time and bestows on citizen the right of appeal which does not entitle the state to ride roughshod over the Constitutionally guaranteed rights of citizens, including their right to liberty and dignity---Offences mentioned in FIR were compoundable in terms of S. 37A(4) of Sales Tax Act, 1990---Accused was not named in FIR, which alleged that taxpayer was liable for tax fraud for seeking tax credits and/or tax benefits on the basis of fake sales tax invoices---No assessment of tax due by taxpayer was undertaken under S. 11 of Sales Tax Act, 1990---It was prior to determination of such tax liability that pre-trial steps of arrest and detention had been taken by tax department in breach of law---High Court found accused entitled to release on bail, subject to furnishing bail bond for a sum of Rs.100/- (One hundred)---Application was allowed, in circumstances.

Taj International (Pvt.) LTD v. Federal Board of Revenue 2014 PTD 1807 and Directorate of Intelligence and Investigation, FBR in Civil Appeals Nos. 350 to 698 of 2016 rel.

Muhammad Akbar v. The State PLD 1968 SC 281; M. Tufail v. The State 1979 SCMR 437; Talib Hussain v. Angar Gul Khan 1993 SCMR 2177; Seema Fareed v. The State 2008 SCMR 839; State v. Jahangir Akhtar 2018 SCMR 733; Muhammad Akbar v. The State PLD 1968 SC 281; Muhammad Azam v. Muhammad Iqbal PLD 1984 SC 95 and Akhlaq Hussain Kayani v. Zafar Iqbal Kiyani 2010 SCMR 1835 ref.

Muhammad Ahmed Masood for Petitioner.

Razi Ul Haq Qureshi, Deputy Director I&I-IR, Islamabad.

2025 P T D 876

[Islamabad High Court]

Before Mohsin Akhtar Kayani and Sardar Ejaz Ishaq Khan, JJ

MOL PAKISTAN OIL AND GAS through authorized representatives

Versus

FEDERAL BOARD OF REVENUE through Chairman and 5 others

S.T.Rs. Nos. 17 of 2021, 79, 80 and 82 of 2022, decided on 10th April, 2025.

Sales Tax Act (VII of 1990)---

----Ss.2(41) & 3---Customs Act (IV of 1969), First Schedule---SRO 549(I)/2008 dated 11-06-2008, Sr. No. 4(xvii)---Taxable supply---Petroleum---Crude oil---Import and supplies---Zero-rating---'Condensate' as 'crude oil'---Scope---PCT Heading---Scope---Appellate Tribunal Inland Revenue concluded/ concurred with the version of the Department that 'condensate' was not part of the same family of petroleum oils as 'crude oil'---Case of the Applicants (companies engaged in the business of exploration /production/sale of petroleum and natural gas) was that condensate was to be meted out the same treatment of zero-rating because it was also crude oil for the purposes of the PCT heading 2709.0000---Claim of the Department was that the PCT heading was only for identification and, even though PCT 27.09 includes gas condensate and even though SRO 549 identified the zero rated good in question with reference to PCT 27.09, the condensate should nonetheless be excluded---Whether condensate and crude were distinct or the same products?---Held, that the Federal Government could have mentioned petroleum crude oil only while issuing SRO 549(I)/2008 dated 11-06-2008 ('the SRO 549'), but it chose to identify the goods with reference to the PCT heading 2709.0000---Mentioning of the PCT heading necessitated its proper consideration while construing serial No. 4(xvii) in SRO 549 and the preceding expression 'petroleum crude oil' neither could nor ought to be read in isolation without reference to the PCT heading---The department's stance that the PCT heading was only for identification was not persuasive; in identification laid the delineation of what was being identified---If the description in the PCT heading was meant to be ignored, then the reference to the PCT heading in serial No. 4(xvii) would be rendered a surplusage, running counter to the principle that redundancy was not to be ascribed to any provisions in a statutory instrument---The PCT headings are the HS Code (Harmonized System Codes) or PCT Codes (Pakistan Customs Tariff Codes) for the classification of goods ; their very purpose is to identify any given goods under consideration , enabling a globally accepted classification and identification system of goods---The Finance Act, 1994, amended the Customs Act, 1969, to add the 'General Rules for Interpretation' in the First Schedule of PCT headings to the Customs Act, which, under the sub-heading 'Pakistan Rules', read as "For the purposes of "Explanatory Notes to the Harmonized Commodity Description and Coding System" published by World Customs Organization, Brussels, as amended from time to time , shall be considered authentic source of interpretation"---When the Explanatory Notes - being authentic source of interpretation - categorised all crude oils under PCT 27.09, including gas condensate, the Sales Tax Department could not exclude condensate---This claim/argument might have held water if PCT 27.09 was not mentioned in SRO 549, but it was indeed mentioned, that it became an indivisible part of serial No. 4 (xvii), and that PCT 27.09 expressly regarded condensate a "crude oil"---It is common wisdom to interpret and construe technical expressions according to the meaning carried by such expressions in a given trade or industry, and in such case the general principle of giving the words their ordinary dictionary meaning is displaced---The expression "import and supplies thereof" was to be interpreted with reference to the definition of "taxable supply" in S.2(41) of the Sales Tax Act and was to be interpreted disjunctively---Thus, the proposed questions were answered in the affirmative, i.e. in favour of the taxpayers and against the Department---Sales tax reference applications, filed by taxpayer, were allowed.

Messrs V.N. Akiiani & Company v. M.V. Lakatoi Express and 2 others PLD 1994 SC 894; Messrs Usmania Glass Sheet Factory Limited, Chittagong v. Sales Tax Officer, Chittagong PLD 1971 SC 2025 and Commissioner Inland Revenue, Legal Zone, LTU, Lahore v. Messrs Sapphire Dairies (Pvt.) Ltd. 2023 PTD 44 ref.

Abuzar Salman Khan Niazi, Wasim Abid, Sardar Ahmed Jamal Sukhera, Sikander Sukhera, Muhammad Shaheer Roshan Sheikh and Muhammad Saqib Nafees for Applicants.

Osama Shahid and Muhammad Abual Hassan for Respondents.

2025 P T D 1053

[Islamabad High Court]

Before Babar Sattar, J

Messrs RAZ TEXTILES, A PROPRIETORSHIP CONCERN through authorized attorney

Versus

The FEDERATION OF PAKISTAN through the Secretary, Federal Board of Revenue, Islamabad and 3 others

Writ Petition No.285 of 2022, decided on 14th January, 2025.

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

----Ss.32 & 156(1)---False statement, error etc.---Imposing of penalty---Procedure---Confiscation of goods---Collector Customs (Adjudication)---Jurisdiction---Where charge brought against a person is in terms of S. 32(1) of Customs Act, 1969, goods can only be confiscated to the extent that the person is found to have committed an offence punishable in terms of S. 156(1) read together with S. 32 of Customs Act, 1969---For the allegation against an importer that he has committed an offence, the penalty for which includes confiscation of goods, such penalty cannot be imposed until after the person is found guilty of the offence and is so convicted by a Special Judge competent to try the offence under provisions of Customs Act, 1969---Collector Customs (Adjudication) as an executive functionary is clearly vested with no authority to conduct trial and convict an importer for an offence under S. 32(1) read together with S. 156(1) of Customs Act, 1969.

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

----Ss. 32 (2) & 179 (1)---Release of goods---Words "duty and taxes"---Applicability---Income tax and sales tax, assessment of---Custom authorities, jurisdiction of---Scope---Customs authorities are vested with no power and jurisdiction to undertake any assessment of Income Tax and/or Sales Tax in terms of S. 179(1) read with S. 32(2) of Customs Act, 1969, once imported goods have been released and are out of charge---For purposes of S. 32(2) of Customs Act, 1969, when read with S. 179(1) of Customs Act, 1969 power of adjudication for purposes of recovery vested in Customs authorities can be exercised only in case of "recovery of duty and other taxes not levied, short levied or erroneously refunded"---Due to use of the word "and", "duties and taxes" is to be read conjunctively, and power to demand any taxes not levied, short levied or erroneously refunded only exists where customs authorities are primarily adjudicating recovery of customs duty due under Customs Act, 1969---Quantum of advance income tax and sales tax payable at the time of import of goods is not to be assessed per se but only computed, as such demand is contingent on value of goods as determined by customs authorities---Where there has been a short levy or non-levy of customs duty, the computed advance income tax and/or sales tax would also have been short levied to the relevant extent.

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

----Ss. 32 & 179(1)---Constitution of Pakistan, Art. 199---Constitutional petition---False statement, error etc.---Imposing of penalty---Petitioner / importer was aggrieved of seizing of its goods by custom authorities in Islamabad after the same had been released by customs authorities from port of import in Karachi---Validity---There was no jurisdiction vested in DG I&I to seize the goods in Islamabad on the basis that the value of such goods ought to have been ascertained on the basis of some valuation ruling that was not applied while assessing the goods at the port in Karachi---No penal proceedings in terms of S. 32 of Customs Act, 1969 could be undertaken against petitioner / importer on the basis that goods imported by it were assessed and released by custom officials without applying certain valuation ruling--- Additional Collector (Adjudication) Islamabad was vested with no authority to undertake adjudication of advance income tax and/or sales tax purportedly short levied in exercise of powers under S. 179(1) read with S. 32(2) of Customs Act, 1969 where the consignment was out of charge and no demand could be generated for payment of customs duty---Assumption of jurisdiction for such purpose was not backed by law and show cause notice was devoid of legal authority---DG I&I was an intelligence outfit and to the extent it believed misdeclaration of intended purpose of the imported goods might have resulted in short levy of advance income tax and sales tax, there was nothing prohibiting it from sharing the relevant information with FBR and/or relevant Commissioners vested with authority to scrutinize income tax and sales tax affairs of petitioner / importer---High Court quashed seizure report, recovery notice and show cause notice as the same were devoid of legal authority and void ab initio---High Court directed the authorities to release security deposit made by petitioner / importer for release of goods---Constitutional petition was allowed, in circumstances.

Messrs Meerab Enterprises v. The Federation of Pakistan 2021 PTD 1764; Saadat Khan v. Federation of Pakistan 2014 PTD 1615; Shahzad Ahmed Corporation v. Federation of Pakistan 2005 PTD 23; S.T. Enterprises v. Federation of Pakistan 2009 PTD 467; Sadia Jabbar v. Federation of Pakistan 2018 PTD 1746; Messrs Ayesha Impex v. Federation of Pakistan 2012 PTD 1; Gulistan Textile Mills Ltd. v. Federation of Pakistan 2019 PTD 353 and Nestle Pakistan Ltd. v. The Federal Board of Revenue 2023 PTD 527 ref.

Asad Raza Khan for Petitioner.

Ch. Imtiaz Ahmed for Respondents.

Aqeel Akhtar Raja, Assistant Attorney General.

2025 P T D 1354

[Islamabad High Court]

Before Babar Sattar and Sardar Ejaz Ishaq Khan, JJ

Messrs SHALIMAR INTERNATIONAL

Versus

MEMBER JUDICIAL CUSTOMS APPELLATE TRIBUNAL BENCH-II, ISLAMABAD and others

Custom Reference No. 50 of 2018, decided on 14th March, 2023.

Customs Act (IV of 1969)---

----Ss. 32 & 80---Customs Rules 2001, R. 438---SRO 1125(I)/2011 dated 31.12.2011 ('SRO'), Conditions (i) & (iv)---Benefit under SRO, entitlement to---Scope---Commercial importer---Supply to a zero rated-sector---Scope---Condition (i) of the SRO merely provides that the benefit of the SRO would be available to every person engaging in the business of five sectors (i.e. textile, carpets, leather, sports and surgical goods) who is registered as a manufacturer or an importer or an exporter or a wholesaler---In the event that the applicant was a registered manufacturer in one of the five zero-rated sectors mentioned in Condition (i) of the SRO, sales tax at the time of import was to be charged at the rate of zero percent on goods useable as an industrial input---Condition (iv) of the SRO then provided that where a commercial importer imported goods and supplied them a zero rated-sector for industrial use, sales tax at the rate of 2% would be chargeable at import stage along with 1% value addition tax---Given the clear language of Condition (iv) of the SRO, the applicant, as a registered importer importing goods that fall within the domain of textile and were supplied to a zero-rated sector for industrial use, fell within Condition (iv) of the SRO---In other words, the applicant as a registered importer was entitled to the benefit of the SRO, but the benefit that was attracted in the case of the applicant was payment of sales tax of a reduced rate of 2% along within 1% value addition tax at the import stage and not payment of sales tax at the rate of zero percent---Impugned orders were rightly passed by the Collectorate as well as Customs Appellate Tribunal---Thus, the proposed question was answered in favour of respondent / Collectorate and against the applicant / importer---Reference Application, filed by commercial importer, was dismissed in circumstances.

Rashid Mehmood Sindhu for Applicant.

Ms. Anila Jameel Mughal for the Respondents.

Mohammad Adnan Khan, Deputy Director, PCA, Lahore.

2025 P T D 1364

[Islamabad High Court]

Before Babar Sattar, J

Messrs PAKISTAN TELECOMMUNICATION AUTHORITY through Director (Budget and Accounts) and others

Versus

FEDERATION OF PAKISTAN for the purpose of service through Chairman Federal Board of Revenue, Islamabad and 3 others

Writ Petitions Nos. 181 of 2019, 4497 and 4558 of 2022, decided on 18th December, 2024.

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

----Ss. 2(63), 4 & 147---Advance tax---Assessment, collection and adjustment---Scope---Charge is created under S. 4 of Income Tax Ordinance, 2001 on income of taxpayer to discharge advance tax liability---Advance tax is an impost in view of S. 4(6) read together with S. 147 of Income Tax Ordinance, 2001, and squarely falls within the definition of tax under S. 2(63) of Income Tax Ordinance, 2001---Tax authorities are empowered under S. 147(7) of Income Tax Ordinance, 2001 to use collection machinery for purposes of collecting advance tax computed as payable in accordance with Ss. 147(4) and (4B) of Income Tax Ordinance, 2001 subject to filing of any estimate by taxpayer under proviso to S. 147(6) of Income Tax Ordinance, 2001---This reflects that payment of advance tax is not optional but is a liability to be discharged by taxpayer unless the taxpayer falls within the carve-outs provided under Ss. 147(1) and (2) of Income Tax Ordinance, 2001---Merely because liability accrues without assessment of income tax does not make payment of advance tax optional or excludes advance tax from the definition of tax for purposes of S. 2(63) of Income Tax Ordinance, 2001---Fact that loability in relation to advance tax accrues and becomes payable without assessment is then catered for in S. 147(8), (9) and (10) of Income Tax Ordinance, 2001---Advance tax paid in each quarter is treated as a tax credit that is set off against total income tax liability for the tax year as determined once an assessment has taken place after the expiry of tax year and total tax liability for such tax period crystallizes---Advance tax is only a provisional payment to the extent that tax liability of taxpayer for relevant tax year remains to be assessed and the sum paid in the form of advance tax remains adjustable in terms of tax liability as assessed.

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

----Ss. 137, 138, 140 & 147(4), (4B), (5), (5A), (5B), (6) & (7)---Advance tax---Estimate, non-filing of---Effect---Advance tax is income tax and is liable to be paid as and when it becomes due in terms of Ss. 147(5), (5A) and (5B) of Income Tax Ordinance, 2001---In order to effect recovery of such tax liability, tax department is at liberty to employ, in terms of S. 147(7) of Income Tax Ordinance, 2001 the collection and recovery provisions of Income Tax Ordinance, 2001---In an event that a taxpayer does not file estimate under S. 147(6) of Income Tax Ordinance, 2001 and also does not discharge its advance tax liability as computed in accordance with S. 147(4) or (4B) of Income Tax Ordinance, 2001 as applicable or taxpayer files an estimate which is rejected and such order is not stayed and the taxpayer does not comply with such order, tax department can then exercise authority under S. 147(7) of Income Tax Ordinance, 2001 to undertake collection under S. 137 of Income Tax Ordinance, 2001 and if such liability is not voluntarily discharged by tax payer, seek recovery under Ss. 138 and 140 of Income Tax Ordinance, 2001.

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

----Ss. 137, 138, 140 & 147---Constitution of Pakistan, Art. 10A---Advance tax---Recovery---Procedure---Due process of law---Scope---Issuance of notices under Ss. 137 and 138 of Income Tax Ordinance, 2001 are also required as taxpayer may have filed an estimate for purposes of S. 147(6) of Income Tax Ordinance, 2001 which may then have been rejected by tax department in exercise of authority under second proviso of S. 147(6) of Income Tax Ordinance, 2001 or proviso to S. 147(6B) of Income Tax Ordinance, 2001 as applicable, in which case due date for payment of advance tax would have already passed---Tax department initially invites taxpayer to discharge liability to pay advance tax on a voluntary basis under S. 137 of Income Tax Ordinance, 2001 failing which it may notify the taxpayer of its intention to use its coercive powers under S. 138 of Income Tax Ordinance, 2001 to recover advance tax---This is the scheme for collection and recovery of advance tax, which has been incorporated by virtue of S. 147(7) of Income Tax Ordinance, 2001---Any recovery affected without issuing such notices would be in breach of requirements of S. 147(7) of Income Tax Ordinance, 2001 read with Ss. 137 and 138 of Income Tax Ordinance, 2001 and fall foul of taxpayer's right to due process guaranteed by Art. 10A of the Constitution and would be illegal.

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

----Ss. 137, 138, 140 & 147(4), (4B), (5), (5A), (5B), (6) & (7)---Advance tax---Adjustment---Notice of recovery, non-issuance of---Annulment of reassessment order---Coercive measures---Attachment of bank accounts---Petitioner / taxpayer was aggrieved of recovery of tax amount by authorities after attaching its bank account---Validity---Notice under S. 147 of Income Tax Ordinance, 2001 was issued on 01-09-2022 prior to the annulment of reassessment order---No notice under S. 137 of Income Tax Ordinance, 2001 was issued after annulment of reassessment order and notice under S. 138(1) of Income Tax Ordinance, 2001 was also issued on 18-11-2022 after annulment of reassessment order---Tax department coercively affected recovery of advance tax computed on the basis of an annulled reassessment order on 28-11-2022---Such action was taken by tax department in full view of the fact that reassessment order stood annulled---Recovery of advance tax liability computed on basis of annulled reassessment order was colorable exercise of authority that suffered from illegality---High Court declared such recovery notices illegal along with recovery coercively recovered from the petitioner / taxpayer---High Court directed Commissioner Income Tax to process application for refund claimed by petitioner / taxpayer within a period of sixty days and while making such order would also consider if any additional payment for delayed refund was due to the petitioner in terms of S. 171 of Income Tax Ordinance, 2001---Constitutional petition was allowed, in circumstances.

Karachi Port Trust, Karachi v. Commissioner Inland Revenue, Karachi 2011 PTD 1996; Fauji Fertilizer Company Ltd. v. Federation of Pakistan through Secretary, Ministry of Finance, Islamabad and 3 others 2018 PTD 719; Messrs Pakistan LNG Limited v. Federation of Pakistan, through Secretary Revenue Division, Ministry of Finance, Islamabad and 2 others 2022 PTD 1763; Commissioner of Income Tax v. Messrs Habib Sugar Mills Ltd. 1993 PTD 343; Sui Northern Gas Pipelines Limited v. Federation of Pakistan and others 2017 PTD 1774; Haidar Industries through Managing Partner and others v. Federation of Pakistan through Secretary 2016 PTD 2004; Elahi Cotton Mills Limited v. Federation of Pakistan PLD 1997 SC 582; Whitney v. Inland Revenue Commissioners AIR 1926 AC 37; National Power Parks Management Company (Pvt.) Ltd. v. FBR and others 2020 PTD 1001; Nadeem Ahmed Advocate v. Federation of Pakistan 2013 SCMR 1062; The Collector of Sales Tax v. Messrs Super Asia Muhammad Din and Sons 2017 PTD 1756; Gul Taiz Khan Marwat v. Registrar, Peshawar High Court PLD 2021 SC 391; Commissioner of Income Tax v. Khalid Textile Mills 2017 SCMR 813; Chairman Central Board of Revenue v. Messrs Pak-Saudi Fertilizer Ltd. 2001 SCMR 777; Commissioner of Income Tax v. Sethi Flour Mills 2015 PTD 394; Pak-Saudi Fertilizers Limited v. Federation of Pakistan and others 1999 PTD 4061; Lone Cold Storage, Lahore v. Revenue Officers, Lahore Electronic Power Co. and others 2010 PTD 2502; Commissioner (Legal) Inland Revenue v. E.N.I. Pakistan (M) Ltd., Karachi 2011 PTD 476; Messrs Pak Telecom Employees Trust v. Federation of Pakistan and others Writ Petition No. 2426 of 2016 and Messrs First Micro Finance Bank Ltd. v. Federation of Pakistan and others 2023 PTD 1095 ref.

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

Osama Shahid for the Tax Department (in Writ Petition No.181 of 2019).

Ghulam Qasim Bhatti for the Tax Department (in Writ Petitions Nos. 4497 and 4558 of 2022).

Aqeel Akhtar Raja and Raja Muhammad Jawad Arslan, Assistant Attorney General for Respondents.

2025 P T D 1406

[Islamabad High Court]

Before Miangul Hassan Aurangzeb, J

COMMISSIONER INLAND REVENUE (CIR)

Versus

PRESIDENT'S SECRETARIAT (PUBLIC) and others

Writ Petition No. 793 of 2024, decided on 11th March, 2024.

Sales Tax Act (VII of 1990)---

----Ss. 3(9A) & 33(25A), proviso---Retailer to integrate his business with FBR's computerized system, requirement of---First / second default---Penalty, imposition of---Scope---Section 33(25A) of the Sales Tax Act, 1990 (the Act 1990) provides for a penalty of Rs.500,000/- for first default on a person required to integrate his business as stipulated under S. 3(9A) of the Act 1990 and who fails to get himself registered under the Act 1990---Section 3(9A) of the Act 1990 also provides for a penalty of Rs.1,000,000/- for second default after 15 days of the order for first default---In the present case, the penalty of Rs.500,000/- had been paid by respondent in order to have his premises de-sealed, which was done after the notice of first default---The proviso to S. 33(25A) of the Act 1990 provides that if the retailer integrates his business with the FBR's computerized system before the imposition of penalty for second default, the penalty for first default shall be waived by the CIR---It is not the case of petitioner/CIR that respondent as a Tier-1 retailer had not (after the imposition of the said penalty) integrated with the FBR's computerized system---That is why the occasion for the imposition of a penalty for second default did not arise---Thus, no jurisdictional infirmity in the concurrent orders in favour of respondent passed by the FTO and the President of Pakistan had been found---Constitutional petition, filed by Department, was dismissed in limine.

Barrister Sohail Nawaz for Petitioner.

2025 P T D 1439

[Islamabad High Court]

Before Muhammad Azam Khan, J

Messrs AL-UBAID ASSOCIATES through Sole Proprietor

Versus

The FEDERATION OF PAKISTAN through Secretary, Ministry of Law Pakistan

Secretariat, Islamabad and others

Writ Petition No. 4937 of 2018, decided on 13th February, 2025.

(a) Constitution of Pakistan---

----Art. 89(2)(a)(ii)---Legislative power---Ordinance---Extension of time---Principle---Power vested in Houses under Art. 89(2)(a)(ii) of the Constitution is of legislative nature---Such power has been conferred by makers of the Constitution to extend an Ordinance for another term of 120 days and therefore, includes power to extend it retrospectively---Provision of an Ordinance, even if extended by giving it retrospective effect, remains enforced for a total period of 240 days from the date of its promulgation---Act of extending an Ordinance is essentially a legislative power and therefore, it can be exercised at any time after expiry of 120 days and before 240th day from the date of promulgation---This is a legislative power and can be exercised retrospectively.

Commissioner of Income Tax, Karachi v. Eastern Federal Union Insurance Co. PLD 1982 SC 247 and Hassan and others v. Fancy Foundation PLD 1975 SC 1 ref.

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

----Ss. 36, 39 & 70---Constitution of Pakistan, Art. 199---Constitutional petition---Anti-Dumping Duties---Final determination---Alternate and efficacious remedy, availability of---Petitioner assailed notice of final determination and imposition of Anti-Dumping Duties on the goods imported---Validity---In relevant Ss. 36 and 39 of Anti-Dumping Duties Act, 2015, no consequence was provided in case of failure on the part of National Tariff Commission to do the needful within prescribed time---This was mentioned in proviso that needful would be done normally within the time prescribed---Where consequence is not provided regarding doing of something within timeframe, the same is directory and not mandatory---Petitioner had an alternative remedy available under S. 70 of Anti-Dumping Duties Act, 2015 and appeal was with Anti-Dumping Appellate Tribunal against initiation of investigation, preliminary determination or final determination---High Court declined to interfere in the matter---Constitutional petition was dismissed, in circumstances.

Pakistan Steel Mills Corporation v. Muhammad Azeem Katper 2002 SCMR 1023; Federation of Pakistan v. M. Nawaz Khokhar and others PLD 2000 SC 26; Lahore Development Authority through D.G. and others v. Ms. Imrana Tiwana and others 2015 SCMR 1739 nd Ghulam Hassan v. Jamshaid Ali and others 2001 SCMR 1001 ref.

Muhammad Afzal Awan for Petitioner.

Abu Muhammad Azfar for Respondent No. 3.

Saif Ullah Khan for Respondent No. 4.

Raja Zamir ud Din Ahmed and Ms. Asia Batool, A.A.Gs for official Respondents.

2025 P T D 1491

[Islamabad High Court]

Before Babar Sattar and Saman Rafat Imtiaz, JJ

Messrs PAK TELECOM MOBILE LIMITED, ISLAMABAD

Versus

COMMISSIONER INLAND REVENUE, LTU, ISLAMABAD and 2 others

Sales Tax Reference No. 19 of 2019, decided on 4th February, 2025.

(a) Interpretation of statutes---

----Definition given in other statute---Scope---Definition given in orher statute cannot be adopted to interpret meaning of a term that has not been defined in the statute in question---Where a word is not defined in a statute, its ordinary dictionary meaning is to be adopted in relevant context and definition used in another statute cannot be adopted for purposes of interpretation unless the other statute is pari materia to statute in question.

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

----S. 3---Insurance proceeds---Recovery of sales tax---Scope---Insurance proceeds do not constitute taxable supply and are not received in lieu of any taxable supply by an insured person and therefore are not liable to sales tax in terms of S. 3(1)(a) of Sales Tax Act, 1990.

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

----Ss. 3, 33, column 2 of the Table and 47---Reference---Disposal of fixed assets---Sales tax, recovery of---Principle---Penalty, imposing of---Authorities issued show cause notice requiring applicant / taxpayer regarding charging of tax for constituting proceeds from disposal of fixed assets---Validity---Disposal of fixed assets is not liable to sales tax---Penalty in column 2 of Table under S. 33 of Sales Tax Act, 1990, is meant to be imposed after a taxpayer is found liable for an offence provided for in S. 33 of Sales Tax Act, 1990---Additional Commissioner, as a tax official and member of the Executive, cannot find a taxpayer guilty of an offence for purposes of S. 33 of Sales Tax Act, 1990 and proceed to impose the penalty that is attracted in case a person is found guilty of the relevant offence---Authority and jurisdiction to try a person for an offence prescribed in S. 33 of Sales Tax Act, 1990, is vested in Special Judge appointed pursuant to S. 37(c) of Sales Tax Act, 1990---High Court set-aside the orders generating tax demand in terms of S. 3 of Sales Tax Act, 1990, against applicant / taxpayer---Reference was allowed accordingly.

Sunrise Associates v. Government of NCT of Delhi and others (2006) 5 SCC 603; Union of India v. Sri Sarada Mills Limited AIR 1973 SC 281; LIC of India v. Insure Policy Plus Services (Pvt.) Ltd. 2016(2) SCC 507; Coca-Cola Beverages Pakistan Ltd. v. Customs, Excise and Sales Tax Appellate Tribunal 2017 PTD 2380; Collector of Customs, Sales Tax and Central Excise v. Messrs Sanghar Sugar Mills Ltd. Karachi PLD 2007 SC 517; Pak Telecom Mobile Limited v. Federation of Pakistan 2017 PTD 2296; Insure Policy Plus Services (Pvt.) Ltd., v. LIC of India 2007 (109) BOMLR 559; Osborn's Concise Law Dictionary (Sixth Edition); Black's Law Dictionary (Eighth Edition); George J. Couch, Couch on Insurance, § 1.2, at 4-5 (2nd Edition 1984); Corpus Juris Secundum, (Volume 44), § 2, at 73; P. Ramanatha Aiyar's, Advanced Law Lexicon, (Third Edition, 2009); Galloway v. Sehill, Seebohm and Co. Ltd. [1912] 2 K.B. 354; Tudor Heights Ltd. v. United Dominions Corpn. Finance Ltd. [1977] 1 NZLR 532 at 543, SC; Haji Ismail Dossa v. Monopoly Control Authority PLD 1984 Kar. 315; Messrs Attock Refinery Limited v. The Collector of Sales Tax 2021 PTD 1680 and Commissioner Inland Revenue v. Messrs Bestway Cement S.T.R. No. 257 of 2011 ref.

Syed Hasnain Ibrahim Kazmi for Applicant.

2025 P T D 1532

[Islamabad High Court]

Before Babar Sattar, J

ZAHID HUSSAIN through Attorney and another

Versus

NATIONAL TARIFF COMMISSION, GOVERNMENT OF PAKISTAN through Secretary and another

Writ Petition No.3910 of 2023, decided on 13th June, 2025.

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

----S. 58---Constitution of Pakistan, Art. 199---Constitutional petition---Sunset review---Preconditions---National Tariff Commission---Jurisdiction---Petitioners were aggrieved of issuance of notice by National Tariff Commission for sunset review in relation to Anti-Dumping Duty beyond five years---Validity---Relevant trigger for the purposes of a sunset review is impending expiry of Anti-Dumping Duty---It is in the context of approaching expiry of Anti-Dumping Duty that a forward-looking analysis and prospective determination is to be made as to whether the expiry may result in continuation or recurrence of dumping and injury---Such prospective or forward-looking analysis cannot take place once Anti-Dumping Duty stands expired upon completion of its five-year term---Purpose of a sunset review was to prevent dumping and injury where that was likely effect of expiry of Anti-Dumping Duty---Once Anti-Dumping Duty stood expired and had remained expired for a few months, a sunset review no longer remained a useful tool and could not be employed thereafter---High Court declared sunset review notice issued in relation to Anti-Dumping Duty that had already stood expired, as issued without lawful authority and was set-aside---Constitutional petition was allowed, in circumstances.

M/s Hana Clothings v. National Tariff Commission (Appeal No. 518 of 2022); M/s Z.A Corporation v. Federation of Pakistan (Writ Petition No. 80288 of 2023); Province of East Pakistan v. Abdul Hamid Darr 1970 SCMR 558; Khushi Muhammad v. Mst. Fazal Bibi PLD 2016 SC 872; Messrs Super Asia Muhammad Din Sons (Pvt.) Ltd. v. Collector of Sales Tax, Gujranwala 2008 PTD 60; Nagina Silk Mill, Lyallpur v. The Income Tax Officer PLD 1963 SC 322; Collector of Sales Tax v. Super Asia Muhammad Din Sons 2017 SCMR 1427; Messrs Mujahid Soap and Chemical Industries (Pvt.) Ltd. v. Customs Appellate Tribunal, Bench-I, Islamabad and others 2019 SCMR 1735; Muhammad Saleem Bikiya v. Pakistan through Secretary Ministry of Commerce and another 2018 PTD 2026; Sadia Jabbar v. Federation of Pakistan and others PTCL 2014 CL 537; Union of India v. Kumho Petrochemicals Company Ltd. (2017) 8 SCC 307 and Al-Samrez Enterprises v. Federation of Pakistan 1986 SCMR 1917 rel.

Barrister Yousaf Khosa, Barrister Omair Saleem Malik and Barrister Momin Khan Taufiq for Petitioners (in W.Ps. Nos. 3910/2023, 1757/2024 and 1758/2024)

Feisal Hussain Naqvi, Advocate Supreme Court, Ahmad Abdul Rehman and Nasir Mehmood for Petitioner (in W.P No. 3945/2023).

Basil Nabi Malik, Asad Ladha and Muhammad Shakeel Mughal for Petitioner (in W.P No. 4455/2023).

Nazma Perveen Malik and Mr. Ashiq Hussain Tarar for Petitioners (in W.Ps. Nos. 1444, 2384, 2533, 2681, 3221 and 3714 of 2024).

Abdul Moiz Jaferii for Petitioner (in W.P. No. 697/2024).

Waqas Amir and Abu Azfar Naeem for NTC.

Fahad Khan Tareen, Assistant Attorney General.

Saif Ullah Khan, Saeed Hasan Khan, Rais Mehmood Ali and Ayman Asahad for Bulleh Shah Packaging (Pvt.) Ltd.

Dr. Farhat Zafar and Sheikh Anwar-ul-Haq for Respondent Nos. 2 and 3 (in W.P No. 697/2024).

Ch. Muhammad Nawaz, Legal Advisor, FBR for Respondent No.3 (in W.P No. 3945/2023).

2025 P T D 1575

[Islamabad High Court]

Before Muhammad Azam Khan and Inaam Ameen Minhas, JJ

PAKISTAN TELEVISION CORPORATION LIMITED (PTVCL) through Company Secretary

Versus

APPELLATE TRIBUNAL INLAND REVENUE, ISLAMABAD BENCH, ISLAMABAD and 3 others

Federal Excise References Nos.174 and 175 of 2011, decided on 21st May, 2025.

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

----S. 38---State-owned entity, matter of---Alternate Dispute Resolution, referral to---Whether mandatory or not---Federal Excise Reference Applications were filed by Pakistan Television Corporation Limited(Applicant) against order passed by the Appellate Tribunal Inland Revenue---Admittedly, the Applicant is a State-owned entity within the meaning of "The State-owned Enterprises (Governance and Operations Act, 2023) and by operation of law was required to apply to the Board for the appointment of a committee for the resolution of the disputes under S. 38 of the Federal Excise Act, 2005---Any provision of law so far as it exists in a fiscal statute, like Federal Excise Act, 2005, has to be respected and followed---Where a law requires something to be done in a particular manner, it must be done in that manner and not otherwise---It has been made mandatory in the Federal Excise Act, 2005, that State-owned entities have to apply for resolution of the disputes through Alternate Dispute Resolution (ADR)---Said provision of the statute (S. 38 of the Act 2005) laid down a complete mechanism using word 'shall' which have the mandatory application---When the word 'shall' is used in a provision of law, it is to be construed in its ordinary grammatical meaning and normally the use of word 'shall' by the legislature brands a provision as mandatory, especially when an authority is required to do something in a particular manner---Therefore, the use of the word 'shall' is a strong indicator that the provisos in question are mandatory in nature---The 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 the 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---It is the duty of the Court to garner the real intent of the legislature as expressed in the law itself---High Court directed to refer the matter-in-hand to the forum of Alternate Dispute Resolution Committee provided under S. 38 of the Federal Excise Act, 2005, for resolution of the matter---Application was disposed of accordingly.

Haji Abdul Karim and others v. Messrs Florida Builders (Pvt.) Limited PLD 2012 SC 247; Safeer Travels (Pvt.) Ltd. v. Muhammad Khalid Shafi through legal heirs PLD 2007 SC 504; Syed Zia Haider Rizvi and others v. Deputy Commissioner of Wealth Tax, Lahore and others 2011 SCMR 420; Re. Presidential Election, 1974 AIR 1974 SC 1682; Lachmi Narain v. Union of India AIR 1976 SC 714 and Dinesh Chandra Pandey v. High Court of Madhya Pradesh and another (2010) 11 SCC 500 ref.

(b) Judicial review---

----Powers--- Constitution of Pakistan has clearly set out limits for each organ of the State based on seminal principle of trichotomy of powers---Legislature makes the laws, the executives execute it while the judicial branch is entrusted with the duty to interpret it---The judicial branch has no jurisdiction to promulgate laws and, therefore, stringent rules and principles have been laid down in the context of the exercise of the power of judicial review---Burden to prove that promulgated law is invalid is on the person who challenges its vires---The court must lean in favour of upholding the legislation and law should be saved rather than destroyed---The wisdom of the legislature to promulgate a law and to achieve a particular object and purpose cannot be questioned.

Elahi Cotton Mills Ltd. v. Federation of Pakistan PLD 1997 SC 582 ref.

(c) Judicial review

----Fiscal matters---Principles relating to judicial review in respect of fiscal matters stated--- (i) There is a presumption in favour of constitutionality and a law must not be declared unconstitutional unless the statute is placed next to the Constitution and no way can be found in reconciling the two; (ii) Where more than one interpretations is possible, one which would make the law valid and the other void, the Court must prefer the interpretation which favours validity; (iii) A statute must never be declared unconstitutional unless its invalidity is beyond reasonable doubt---A reasonable doubt must be resolved in favour of the statute being valid; (iv) If a case can be decided on other or narrower grounds, the Court will abstain from deciding the constitutional question; (v) The Court will not decide a larger constitutional question than is necessary for the determination of the case; (vi) The Court will not declare a statute unconstitutional on the ground that it violates the spirit of the Constitution unless it also violates the letter of the Constitution; (vii) The Court is not concerned with the wisdom or prudence of the legislation but only with its constitutionality; (viii) The Court will not strike down statutes on principles of republican or democratic government unless those principles are placed beyond legislative encroachment by the Constitution ; (ix) Mala fides will not be attributed to the Legislature.

Lahore Development Authority and others v. Imrana Tiwana and others 2015 SCMR 1739 ref.

(d) Constitution of Pakistan---

----Arts.189 & 201---Judgments passed by High Court(s)---Binding effect---Scope---The decision of one High Court is not binding on other court in terms of Art. 201 of the Constitution---Another High Court may make a different decision---Pakistan, as per Art. 1 of the Constitution , is a federal republic and the territories of Pakistan have been mentioned therein---The High Court of each federating unit is independent, and fortiori that acts independently---There is no constitutional provision that supports the binding effect of the judgment of one High Court upon the other as provision of Art. 201 of the Constitution states so, which is iterated by Art. 189 of the Constitution of Pakistan---While a decision of a High Court is persuasive and may be followed by another High Court, it is not binding on it and another High Court may make a different decision.

Shahtaj Sugar Mills v. Government of Punjab 2924 SCMR 1565 ref.

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

----S. 38---Alternate Dispute Resolution, provision of---Scope---Federal Excise Reference Applications were filed by Pakistan Television Corporation Limited (Applicant) against order passed by the Appellate Tribunal Inland Revenue---Argument was that at the time of initiation of the proceedings, Federal Excise Act, 2005,('the Act, 2005') was not in the field and the provision of S. 38 of the Act, 2005 could not be made applicable retrospectively---Validity---Law or a piece of legislation, executive orders, or notifications that confer right and are beneficial would always be given retrospective effect and those which adversely affect or invade upon vested right cannot be applied with retrospective effect---Since S. 38 of the Act, 2005 does not infringe the right of any party and is beneficial for resolution of the dispute through A.D.R., to make an objection and questioning its applicability with retrospective effect is, therefore, repelled---High Court directed to refer the matter-in-hand to the forum of Alternate Dispute Resolution Committee provided under S. 38 of the Federal Excise Act, 2005, for resolution of the matter---Application was disposed of accordingly.

Hafiz Muhammad Idrees for Applicant.

Barrister Muhammad Usama Rauf for Respondents Nos.2 and 3.

Muhammad Saqib, proxy counsel for Respondent No.4.

2025 P T D 1601

[Islamabad High Court]

Before Babar Sattar and Sardar Ejaz Ishaq Khan, JJ

ROZI KHAN

Versus

The DIRECTOR, DIRECTORATE GENERAL INTELLIGENCE AND INVESTIGATION-CUSTOMS, ISLAMABAD and 4 others

Customs Reference Application No.13 of 2024, decided on 13th May, 2025.

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

----Ss. 2(s) & 179(3), first proviso---Smuggling, matter of---Failure to pass order within stipulated statutory period---Extension, grant of---Scope---Collector of Customs---Powers---Plea of the applicant (seized vehicle owner) was that the Order-in-Original was ultimately passed after five months and twenty three days or so after issuance of SCN---Whether an extension could be granted by the Collector of Customs in terms of S. 179(3) of the Customs Act, 1969, ('the Act, 1969') in a case where S. 2(s) of the Act, 1969 had been invoked---Held: S. 179(3) of the Act, 1969 provides that an order is to be passed within 90 days of the issuance of a Show-Cause Notice, which period may be extended by the Collector for reasons to be recorded in writing for a period not exceeding 60 days; the first proviso to S. 179(3) then provides that in cases wherein the provisions of clause (s) of S. 2 of the Act, 1969 have been invoked, such case shall be decided within a period of thirty days of the issuance of Show Cause Notice---Thus, said proviso is an exception to the rule stated in S. 179(3) in two contexts: one, as opposed to the requirement to render a decision within 90 days of the issuance of the Show-Cause Notice, the first proviso provides that a decision, in a case where S. 2(s) of the Act, 1969 has been invoked, must be rendered within a period of 30 days; and two, while the general rule is that the 90-day period can be extended by the Collector up to a further period of 60 days, by recording reasons in writing, the proviso that regulates the limitation period for rendering a decision in relation to a case where S. 2(s) of the Act, 1969 has been invoked vests no such authority in the Collector to grant any extension---Order-in-Original was void having been issued beyond the period of limitation and could not be acted upon---Once it is declared that the Order-in-Original was barred by limitation and thus void, the question of whether the Customs Department correctly determined that the chassis plate of the confiscated vehicle was cut and welded does not remain a question that is open for adjudication as a factual matter or as a matter of law---High Court set-aside the impugned order of the Customs Appellate Tribunal for not appreciating that the Order-in-Original was barred by limitation and no penal consequences could flow towards the applicant on the basis of such void order, and directed that the vehicle of the applicant be handed over to him forthwith---Customs Reference, filed by owner of seized vehicle, was allowed accordingly.

Pakistan Match Industries and Dr. Muhammad Anwar Kurd v. The State 2011 SCMR 1560; Director General Intelligence and Investigation (Customs), Karachi v. M/s. Chase Up (SCRA No.119 of 2024); Directorate of Intelligence and Investigation Customs v. Ajab Khan 2025 PTD 226; Super Asia Mohammad Din, Messrs Mujahid Soap and Chemical Industries v. Customs Appellate Tribunal 2019 SCMR 1735 and The Collector of Customs v. Israr and others 2021 PTD 501 ref.

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

----Ss. 2(s), 179(3), first proviso & 179(4)---Smuggling, matter of---Failure to pass order within stipulated statutory period---Extension, grant of---Scope---Federal Board of Revenue, powers of---Plea of the applicant (seized vehicle owner) was that the Order-in-Original was ultimately passed after five months and twenty three days or so after issuance of SCN---Whether the Federal Board of Revenue (FBR) is vested with authority to grant an extension in relation to a case where S. 2(s) of the Customs Act, 1969, ('the Act, 1969') has been invoked, while exercising its authority under S. 179(4) of the Act, 1969---Held: The first proviso to S. 179(3) of the Act, 1969 (that, in case of smuggling, order to be passed in 30 days) only creates a carve out to the rule stated in S. 179(3) of the Act 1969; it does not provide a carve out against the rule stated in S. 179(4) of the Act, 1969---Consequently, the proviso doesn't oust the jurisdiction vested in FBR in terms of S.179(4) of the Act, 1969 to grant an extension of time limit in exceptional circumstances---Where the period of limitation prescribed under S. 179(3) of the Act, 1969 stands expired, the FBR is vested with no jurisdiction to bring back the expired period to life by granting an extension which can then be applied retrospectively---In the present case, the limitation period stood expired by the time when an Order-in-Original had not been issued; then, the FBR exercised its discretion under S. 179(4) of the Act, 1969 to grant extension for a period of 120 days---Such extension would apply prospectively with effect from the date when such extension was granted, however, the limitation period prescribed under the first proviso to S. 179(3) of the Act, 1969 already stood expired by almost two months---Therefore, such/said extension was of no avail to the Customs Department to bring the Order-in-Original within the time prescribed under the first proviso to S. 179(3) of the Act, 1969---Once it is decided that the Order-in-Original has been issued beyond the period of limitation, the consequence is that such order is found to be void and unenforceable---High Court set-aside the impugned order of the Customs Appellate Tribunal for not appreciating that the Order-in-Original was barred by limitation and no penal consequences could flow towards the applicant on the basis of such void order, and directed that the vehicle of the applicant be handed over to him forthwith---Customs Reference, filed by owner of seized vehicle, was allowed accordingly

The Collector of Sales Tax, Gujranwala v. Messrs Super Asia Mohammad Din & Sons 2017 SCMR 1427 = 2017 PTD 1756; Messrs Mujahid Soap and Chemical Industries v. Customs Appellate Tribunal 2019 SCMR 1735 and The Collector of Customs v. Israr and others 2021 PTD 501 ref.

(c) Limitation---

----Void order---Applicability---No limitation runs against a void order; and an exception to this general rule is that limitation would run against a void order from the date of knowledge of the individual i.e., a person who is aware of a void order cannot sleep on his rights.

Mst. Rehmat Bibi v. Punnu Khan 1986 SCMR 962; Muhammad Shafi v. Mushtaque Ahmed 1996 SCMR 856; Land Acquisition Collector, Nowshera v. Sarfaraz Khan PLD 2001 SC 514; Chairman Pakistan Agricultural Research Council (PARC), Islamabad v. Dr. Abdul Rashid, Scientific Officer 2005 SCMR 69; Blue Star Spinning Mills Ltd. v. Collector Of Sales Tax 2013 SCMR 587; Chief Engineer, Gujranwala Electric Power Company (GEPCO) v. Khalid Mehmood 2023 SCMR 291 and Kiramat Khan v. IG, Frontier Corps 2023 SCMR 866 ref.

Barrister Ali Hamza Malik for Applicant.

2025 P T D 10

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Mohammad Abdur Rahman, JJ

SURFACTANT CHEMICAL COMPANY (PVT.) LTD. through Authorized Officer

Versus

FEDERATION OF PAKISTAN through Secretary, Ministry of Finance, Islamabad and 5 others

Constitutional Petitions Nos.D-4002 of 2019 along with C.P. No.6074 of 2021 and 774 and 2385 of 2002, decided on 12th September, 2024.

Customs Act (IV of 1969)---

----S. 19---Sales Tax Act (VII of 1990), Sixth Sched., Cl. 133---Notifications SRO 65(I)/2006 dated 05-06-2006 and SRO 474(I)/2016 dated 27-06-2016---Tax exemption---Two HS Codes---Applicability---Petitioner / importer claimed exemption from levy of customs duty in terms of SRO 565(I)/2006 dated 05-06-2006 duly amended vide SRO 474(I)/2016 dated 27-06-2016, as goods imported were fully covered by the exemption as per column No.3 of Table at serial No.3 of amending SRO 474(I)/2016 dated 27-06-2016---Plea raised by petitioner / importer was that two HS Codes were available at serial No. 3 of Table to SRO 474(I)/2016 dated 27-06-2016 therefore, it qualified for such exemption or zero rating of duties---Validity---Provision of Cl. 133 of Sixth Schedule to Sales Tax Act, 1990, was not pari materia with the entry at serial No.3 of Table to SRO 474(I)/2016 dated 27-06-2016---There was no restriction under Cl. 133 of Sixth Schedule to Sales Tax Act, 1990, that manufacturer or formulator was to be approved or recognized by Ministry of National Food Security and Research; rather it was the product i.e. pesticides and active ingredients, which were required to be registered by Department of Plant Protection under Agricultural Pesticides Ordinance, 1971, including stabilizers, emulsifiers and solvents, namely, other surface active agents and non-ionic surface active agents---Petitioner / importer was claiming certain exemption and the principle relating to proper interpretation and application of exemption clauses in fiscal legislation were well settled that onus was upon taxpayer to show that his case had come within the exemption; and if two reasonable interpretations were possible, the one against taxpayer would be adopted---Petitioner / importer failed to fulfil condition as provided in column No.(2) against serial No.3 of SRO 474(I)/2016 dated 27-06-2016, including production of recognition and approval from Ministry of National Food Security and Research---High Court declined to interfere in the matter---Constitutional petition was dismissed, in circumstances.

Surfactant Chemicals Company (Pvt.) Ltd. v. Federation of Pakistan and others 2020 PTD 1985; Federal Board of Revenue v. Surfactant Chemicals Company (Pvt.) Limited Civil Petitions Nos.95-K and 145-K of 2020; Civil Petitions Nos.95-K and 145-K of 2020; Oxford University Press v. Commissioner of Income Tax 2019 SCMR 235; Pakistan Match Industries (Pvt.) Limited v. Assistant Collector Sales Tax 2019 SCMR 906 and Commissioner Inland Revenue v. Kassim Textile Mills (Pvt.) Limited 2013 PTD 1420 ref.

Asad Manzoor Halepota for Petitioner (in all Petitions).

Dr. Shah Nawaz for Respondent No.3. (in C.P. No.D-4002 of 2019).

Khalid Rajpar for Respondent No.3 (in C.P. No.D-774 of 2022).

Ms. Masooda Siraj for Respondent No.4 (in C.P. No.D-774 of 2022).

Kashif Nazeer, Assistant Attorney General for Federation of Pakistan.

2025 P T D 55

[Sindh High Court]

Before Adnan Iqbal Chaudhry, J

K-ELECTRIC LIMITED

Versus

PAKISTAN, through Chairman Federal Board of Revenue and Director General and others

Suit No.320 of 2020, decided on 18th May, 2022.

Income Tax Ordinance (XLIX of 2001)---

----Ss.176, 207, 230(2)(b) & 235B---SRO 115(I)/2015 dated 09-02-2015, vires of---Plaintiff (Electricity Distribution Company) received Notice followed by a Reminder under S. 176 of the Income Tax Ordinance, 2001 ('the Ordinance, 2001') calling upon it to provide party-wise details/date/information in relation to income tax collected and deposited by it from Steel Melters, [re-rollers] or composite units under S. 235B of the Ordinance, 2001 from July 2014 to December 2019---Case set-up by the plaintiff / company was primarily that the conferring powers of Officers Inland Revenue on Officers of the General Intelligence and Investigation (Inland Revenue) ('DG I&I'), vide SRO 115(I)/2015 was ultra vires the Ordinance, 2001, thus the impugned notice under S. 176 of the Ordinance, 2001 issued by the DG I&l was without jurisdiction ; and that it was the Additional Director-III of the DGI&I who had territorial jurisdiction in the matter, whereas the impugned notice simply stated to have been issued by an "Additional Director"---Stance of the Department was that the impugned notice had in fact been issued by the Additional Director-III and the omission of "III" was only a typographical error---Validity---Though S. 176 of the Ordinance, 2001 designated the Commissioner Inland Revenue to issue notice thereunder, the impugned notice was issued by the Additional Director of the DG I&I apparently in exercise of powers conferred by the FBR under SRO 115(I)/2015 dated 09-02-2015 issued under S. 230 of the Ordinance, 2001---Subsection (2)(b) of S. 230 of the Ordinance, 2001 empowers the FBR to "confer the powers of authorities specified in S. 207 upon the Directorate General and its officers"; the authorities specified in S. 207 of the Ordinance, 2001 included the Commissioner Inland Revenue---Regarding relevant issue that SRO 115(I)/2015 dated 09-02-2015 (the SRO) was ultra vires the Ordinance, 2001, the plaintiff had acknowledged that a challenge to the vires of said SRO on a similar ground had been dealt with and rejected by Sindh High Court in case Suit No. 1872/2016 titled Saleem Butt v. Pakistan through Secretary Revenue Division vide judgment dated 31.05.2021 ; to that extent the plaintiff conceded to the judgment in same terms---Therefore, SRO 115(I)/2015 dated 09-02-2015 was not ultra vires the Income Tax Ordinance, 2001---Resultantly, the impugned notice under S. 176 of the Ordinance, 2001, the amending notification dated 24-03-2016 and the transfer/posting notification dated 14-02-2019, all were issued with lawful authority---Name (Tarique Hussain Tunio) of the Additional Director, DG I&I, who issued the impugned notice was mentioned---Relevant jurisdiction order issued by the DGI&I, annexed to the written-statement, showed that the same name person was designated as Additional Director-III---Thus, the omission of "III" was only a typographical error---Both issues were answered in the negative and against the plaintiff---Suit, filed by company, was dismissed.

Saleem Butt v. Pakistan through Secretary Revenue Division Suit No. 1872 of 2016 ref.

Hamza Waheed for Plaintiff.

Bilal Khilji, Assistant Attorney General for Pakistan for Defendants Nos.1 and 2.

Ghulam Asghar Pathan for Defendants Nos.3 to 5.

2025 P T D 96

[Sindh High Court]

Before Muhammad Shafi Siddiqui and Agha Faisal, JJ

The COMMISSIONER INCOME TAX

Versus

KARACHI STOCK EXCHANGE (G) LTD.

Income Tax Cases Nos.233 to 238 of 2001, decided on 3rd May, 2023.

Income Tax Ordinance (XXXI of 1979) [since repealed]---

----S. 2(14) & Second Sched., Clause (93)---Assessee being Stock Exchange---Charitable purposes---"Advancement of any other object of general public utility"---Exemption---Scope and effect---Department approached the High Court against the findings of the Income Tax Appellate Tribunal declaring the income from property of the assessee (Karachi Stock Exchange, now Pakistan Stock Exchange) is exempted from tax under Clause (93) of Second Schedule to Ordinance, 1979 contending that it (respondent) was neither a religious nor a charitable institution---Stance of the respondent (Karachi Stock Exchange, now Pakistan Stock Exchange) was that the revenue-under-question was by way of premium ("Salami") for granting permission to operate from portions (cubicals) of its property in terms of the agreement, separately executed in that regard, thus, the revenue so generated formed part of the capital reserve having exemption under clause (93) of Second Schedule of Income Tax Ordinance, 1979 ('the Ordinance, 1979') as per (last component of) the definition of "charitable purpose "under S.2(14) of Ordinance, 1970 i.e. "advancement of any other object of public utility"---Validity---Second Schedule of the Ordinance, 1979, exempts certain incomes or classes of income or persons or classes of persons enumerated therein from tax subject to the conditions and to the extent specified thereunder---Respondent (Karachi Stock Exchange/Pakistan Stock Exchange) sought exemptions of revenue-in-question under Clause (93) of ibid Second Schedule claiming that it (respondent), which was a company by guarantee, meant no dividends were to be paid to its members and secondly that, as is evident from the Memorandum and Articles of Association, the property of the company was under legal obligation for utilizing its income for the object of the company---Respondent was a commercial organization engaged in business of trading securities; it formed a main commercial hub where facilities for securities trade were being provided wherein members operating therefrom assembled for their financial gains besides other support to cater their financial growth such as outlets of any financial institutions including Bank whose existence was inevitable for such operations from the subject property, on payment of consideration which was strangely called "Salami" by the respondent and sought exemption of such revenue in said regard---Entity of Karachi Stock Exchange/Pakistan Stock Exchange, now or at the relevant time, could neither be equated to have been operating for charitable purposes or for imparting relief to the poor, education or medical issues nor for the advancement of any other object of public utility---As an ancillary cause the benefit may have bubbled over to individuals having interest in security trade through entrusted members and having commercial interest in dealing with trade of securities through the members of the Stock Exchange but to apply such exemption to the revenue generated by respondent was not sufficient to categorize this event/activity of trade as advancement of any other object of public utility, let alone other phrases like for poor, education and medical relief---Primarily, from the specified portions of that building/property the individuals were looking after their own monetary interests and revenue component, so generated, either as a commission in trade of securities or as license fee for operating from a particular portion of that property or rent for occupying the cubical/portions, as in the case of Banks operating on payment of consideration---Thus in no way it can be termed to be an activity to keep the respondent under the umbrella of charitable activity or an act towards "advancement of any other object of general public utility"---Thus, the impugned findings of Income Tax Appellate Tribunal did not subscribe to Clause (93) of the Second Schedule of Income Tax Ordinance, 1979 and the relevant definitions of charitable purposes in terms of S.2(14) of the Ordinance, 1979---Answer to the question proposed was in "negative" i.e. in favour of the appellant department and against the respondent---Resultantly the orders of Commissioner/Deputy Commissioner was maintained---Income Tax Cases, filed by the Department, was allowed.

Pakistan Stock Exchange Limited v. Sindh and others C.P. No.D-3601 of 2018 ref.

Munawar Ali Memon for Appellant.

Abdul Khaliq Khatri for Respondents.

2025 P T D 133

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Mahmood A. Khan, JJ

COLLECTOR OF CUSTOMS, MODEL CUSTOMS COLLECTORATE OF EXPORT

Versus

Messrs ISLAND TEXTILE MILLS LIMITED

Special Customs Reference Application ("SCRA") No.71 of 2016, decided on 22nd February, 2021.

Customs Rules, 2001---

----R. 307-A(2)(d)---SRO 450(I)/2001 dated 18.06.2001---Unaccounted for un-exported goods---SRO 450(I)/2001 dated 18.06.2001 ('the SRO 450'), benefit of---Scope---Duty and Tax Remission (DTRE), facility of---Scope----Department filed Reference against the order passed by the Customs Appellate Tribunal ('the Tribunal')---Submission of the applicant / department was that the respondent (Textile Mill/Factory) had failed to report the incident of fire within time; hence, was not entitled for the benefit of the duty and tax remission---Plea of the respondent was that the incident of fire and damage to the factory was an admitted fact, whereas, the insurance claim was also settled in favour of the petitioner, hence the respondent was entitled for remission of duty and taxes applicable on the damaged goods---Validity---Incident of fire on the relevant dates was not disputed, and the Tribunal had observed that once it had come on record that the goods were destroyed due to fire, then benefit of Rule 307A(2)(d) ought to have been granted---In terms of SRO 450 a person who has been granted the facility of duty and tax remission (DTRE) has to account for all of such goods on which such benefit has been granted, whereas, under this rule the unaccounted goods are dealt with and R. 307A(2) deals with the permission of the Regulatory Collector for disposal of such goods within the prescribed utilization period and Cl. (d) thereof permits destruction of such goods after approval of the Regulatory Collector if the said goods are not fit for consumption or sale---Goods-in-question were, admittedly, never fit for consumption, once they were destroyed in the fire---Regulatory Authority ought to have exercised the discretion conferred upon under the said Rule, as the law permits remission of duty and taxes, whereas, the present case was of an exceptional nature when in December, 2007, an incident happened and the respondent's factory including various other factories were destroyed in riots---Therefore, the impugned order passed by the Tribunal was correct in law and ought not to be interfered with as no cogent reasons had been assigned by the authorities below for refusing to exercise such discretion---Question proposed was answered against the applicant and in favour of the respondent---Reference Application filed by the Department was dismissed, in circumstances.

Iqbal M. Khurram for Applicant.

Imran Iqbal Khan for Respondent.

2025 P T D 143

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Jawad Akbar Sarwana, JJ

RAKESH KESHWANI through Authorised and Constitutional Attorney

Versus

ASSISTANT/DEPUTY COMMISSIONER INLAND REVENUEand others

I.T.R.As. Nos.82 in C.M.A. No.891 and 83 in C.M.A. No.894 of 2024, decided on 14th May, 2024.

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

----S.131---Factual determination in tax matters---Appellate Tribunal Inland Revenue (Tribunal), responsibility / power of---Two different Benches of Tribunal---Same facts / issue---Identical verbatim order, passing of---Effect---Taxpayer filed Reference before the High Court against dismissal of his appeal by the Tribunal (on the point of limitation)---Validity---High Court, at the very outset, had noticed that, in the present case, impugned order from (three /relevant) paragraphs was verbatim same as another order previously passed by another Bench of the Tribunal in another appeal ('previous order of other Bench'), in respect of identical issue (limitation)---In the impugned order of the Tribunal (which incidentally was subsequent to the previous order of other Bench), identical words and facts, even observation relating to issue-in-hand, had been recorded as the ones recorded in previous order of other Bench---Therefore, such act of the Tribunal not only appeared to be very casual, but also depicted negligence in attending to the facts of a particular case---High Court sincerely believed that it was not an outcome of engaging some Artificial Intelligence 'AI' as otherwise there would be a serious question mark as to the accuracy as well as authenticity of such AI judgments, of which lately there was so much of discussion all around---Impugned order which appeared to be more of an unnecessarily hurried "cut and paste" approach---Two different Benches of Tribunal though were dealing with the same issue/fact, but an identical verbatim order was passed as if such order had been passed by the same Bench/Member; in fact, in reality it was not so---It did not appeal to a prudent mind that two different Benches /Members of the Tribunal, though dealing with same issue can pass a verbatim same order, and also commit the same mistake on facts in the same paragraph numbers as had been done by the earlier Bench---Impugned order was not sustainable as during earlier part of the day previous order of other Bench was already set aside, on the basis of which the impugned order had been passed---Thus, High Court set aside the impugned order and remanded the matter to the Tribunal to decide the issue of limitation afresh after calling proper comments and supporting documents from the concerned Commissioner; if the condonation application was granted, then the matter shall also be decided on merits as well---Questions were answered accordingly---Reference Application, was disposed of accordingly.

SCRA No.1234 and 1235 of 2023 ref.

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

----S. 131---Appeal before Appellate Tribunal Inland Revenue, filing of---Limitation, determination of---Tribunal, responsibility / power of---Taxpayer filed Reference against dismissal of appeal by the Appellate Tribunal Inland Revenue ('Tribunal') on the point of limitation---Case of the applicant/taxpayer was that the order of the Commissioner (Appeals) was never received in time, therefore, the Appeal filed before the Tribunal was time barred, but was supported by an application for condonation, which had not been attended to in the impugned order passed by the Tribunal---Observation /reason given by the Tribunal in passing the impugned order was that the Applicant /Taxpayer (then Appellant) had not denied or controverted the service of order through electronic means, whereas, there was no supporting material on record to this effect---Question was whether the Appeal filed by the tax-payer was time barred and whether any case for condonation was made out or not---Held, that record reveals that the Department (the concerned Commissioner ), admittedly, had not filed any objections or comments before the Tribunal---In such an event the observation of the Tribunal did not appear to be factually correct and was not supported by the available record---Tribunal was required to ascertain true facts as to the service of the order or otherwise and only thereafter decide the condonation application in accordance with law---It was incumbent upon the Tribunal to call proper comments and supporting documents from the concerned Commissioner as to the passing of the order by the Commissioner (Appeals) and the authorities below---This exercise would have brought clarity in determination of facts as the Tribunal is the highest authority for factual determination in tax matters---Thus, High Court set aside the impugned order and remanded the matter to the Tribunal to decide the issue of limitation afresh after calling proper comments and supporting documents from the concerned Commissioner; if the condonation application was granted, then the matter shall also be decided on merits as well---Questions were answered accordingly---Reference Application, filed by taxpayer, was disposed of accordingly.

Commissioner Inland Revenue v. RYK Mills Lahore 2023 SCMR 1856; Commissioner Inland Revenue v. Sargodha Spinning Mills, 2022 SCMR 1082; Commissioner Inland Revenue v. MCB Bank Limited 2021 PTD 1367 and Wateen Telecom Limited v Commissioner Inland Revenue 2015 PTD 936 ref.

2025 P T D 174

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Ms. Sana Akram, JJ

Messrs QAZI CARPETS

Versus

The ITO, SERVICE UNIT NO.2, CIRCLE 4, HYDERABAD

I.T.R. No.755 of 2000, decided on 20th November, 2023.

Income Tax Ordinance(XXXI of 1979) [Since repealed]---

----Ss. 55 & 57---Self-Assessment Scheme---Income tax return---Revised return, non-filing of---Scope---Whether writing a letter to the Income Tax Officer (letter-in-question) by taxpayer while making certain corrections in the columns of the Income Tax Form would ipso facto amount to filing a revised return as envisaged under S. 57 of the Ordinance 1979?---Held, that under the prevalent scheme of law at relevant time as stipulated as per the Income Tax Ordinance, 1979 ('the Ordinance, 1979'), the applicant / taxpayer was required to file a return of total income under S. 55 of the Ordinance, 1979, whereas, S.59 of the Ordinance, 1979 deals with Self-Assessment Scheme as may be notified by CBR from time to time---Section 59 of the Ordinance, 1979 further provides that a return of total income furnished under S.55 does not include a return of a total income furnished under said S. 57 of the Ordinance, 1979 which provides a revised return of total income---Perusal of the provision of S. 57 of the Ordinance, 1979 reflects that if a person having furnished a return, discovers any omission or wrong statement therein, he may, without prejudice to any liability incurred by him under any provision of the Ordinance, 1979 or the repealed Act, may furnish a return, at any time before the assessment is made---Assessing Officer while passing his order under S. 61 of the Ordinance, 1979 came to the conclusion that the applicant had filed a revised return which was done after the extended date of filing of return; hence it was not qualified under the Self-Assessment Scheme and was not immune from total audit as well---Though if there is any return which falls within the ambit of S.57 of the Ordinance, 1979, (a revised return or a return which had not been filed in accordance with the Ordinance) it may not qualify under the Self-Assessment Scheme as excluded under S. 59, read with CBR Circular No. 9/1987---In the present case, the applicant / taxpayer had not filed any revised return of its total income which could disqualify its claim under the Self-Assessment Scheme---Applicant had never altered the total amount of income or the tax so payable, and it was only by way of a letter that the applicant approached the Income Tax Officer by stating that the mistake, if at all, was in respect of placing the correct figures in relevant columns---It had no effect on the liability of tax; nor any income was revised upwards or downwards---Income in both the situations was shown as higher by 20% from the income so assessed in the immediate past assessment year; hence, qualified under the Self-Assessment Scheme---Letter-in-question could not be treated as a revision of income or a revised return, without having any direct impact on the total income of the applicant as there was no material on record to treat the said letter or information furnished to the Income Tax Officer, as being a complete revised return falling within the ambit of S. 57 of the Income Tax Ordinance, 1979---Admittedly, the figures shown in the original return as well as in the purported revised return were substantially the same, whereas, the revision was only to the extent of form and not any substance as correctly held by the Commissioner (Appeals)---If there was failure on the part of an assessee to submit documents within a prescribed period of time for availing a Self Assessment Scheme, either due to circumstances beyond his control or for sufficient grounds, this by itself could not be made basis to deprive him of the benefit of the said scheme---In essence, the scheme being initiated for benefit of a taxpayer as well as seeking collection of higher taxes with a minimum increase of 20% of income in favour of the Department, has to be construed liberally and not strictly, or in the manner as had been done in the present case---Thus, proposed questions were answered in negative i.e. in favor of the applicant / taxpayer and against the department---High Court set-aside the order of the Tribunal and the order of the Commissioner (Appeals) stood restored---Reference application, filed by taxpayer, was allowed accordingly.

Commissioner of Income Tax v. Kamruddin Fakhtuddin 2001 PTD 623 ref.

Arshad Siraj for Applicant.

Muhammad Aqeel Qureshi for Respondent.

2025 P T D 226

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Jawad Akbar Sarwana, JJ

The DIRECTOR, DIRECTORATE OF INTELLIGENCE AND INVESTIGATION-CUSTOMS

Versus

AJAB KHAN and another

Special Customs Reference Application No. 811 of 2023, decided on 30th May, 2024.

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

----Ss. 2(s), 16 & 179(3)---Violation of Ss. 2(s) & 16 of the Customs Act, 1969---Allegation of---Order-in-Original passing of---Timeline---Order-in-original was passed after the statutory time line for decision---Contention of the Applicant / Department was that the order-in-original was passed after getting extension from Collector (Adjudication) under S. 179(3) of the Customs Act, 1969 ---Record revealed that Show-Cause Notice in the present matter was adjudicated vide order-in-original in terms of S. 179(3) of the Customs Act, 1969 and the First Proviso thereof---Cases wherein, S. 2(s) of the Customs Act, 1969, has been invoked are to be decided within a period of 30 days from the issuance of Show-Cause Notice---Such period can be extended by the Collector for a maximum period of 60 days for reasons to be recorded---Order-in-Original in the present matter had been passed after 112 days; whereas, in the concluding paragraph of the said order, it had been stated that the Collector (Adjudication) has granted extension---Neither any reasons of the said extension had been mentioned, nor it had been stated that as to when the original period had expired, and when the extension request was made and how much period was extended by the Collector---Maximum period for which the Collector can extend the adjudication proceedings is 60 days, therefore, the order-in-original was required to be passed within a period of 90 days from the date of Show-Cause Notice whereas, admittedly, this time line was not complied within the present case---In the entire order-in-original, nothing had been stated as to any adjournment sought by the respondent / importer, therefore, no such period was to be excluded from this time line---Thus, proposed question was answered in the affirmative against the applicant and in favour of the respondent / importer---Reference Application was dismissed.

Director, Director General Intelligent and Investigation (Customs), Karachi v. Messrs Chase Up (SCRA No. 119 of 2024) ref.

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

----Ss. 2(s), 16 & 179(3)---Violation of Ss. 2(s) & 16 of the Customs Act, 1969---Allegation of---Order-in-original, passing of---Passing of order-in-original within a certain statutory timeline---Mandatory timeline---Order-in-original was passed after 112 days after issuance of Show-Cause Notice after getting extension from Collector (Adjudication) under S.179(3) of the Customs Act, 1969---Argument of the applicant/Collectorate was that such period of limitation was directory and not mandatory---Validity---Wherever the Legislature has provided certain period for passing of an order; then said direction is mandatory and not directory and non-compliance of such a mandatory provision would invalidate the Act---In the present case since adjudication was beyond the timeline prescribed in S. 179(3) of the Customs Act, 1969, therefore, the said decision was invalid---Thus, proposed question was answered in the affirmative against the applicant and in favour of the respondent / importer---Reference Application was dismissed.

Mujahid Soap and Chemical Industries (Pvt.) Ltd., v. Customs Appellate Tribunal 2019 SCMR 1735; The Collector of Sales Tax v. Super Asia Mohammad Din 2017 SCMR 1427; A.J. Traders v. Collector of Customs PLD 2022 SC 817; Director, Director General Intelligence and Investigation (Customs), Karachi v. Messrs Chase Up (SCRA No.119 of 2024) ref.

Pervaiz Ahmed Memon for Applicant.

Sardr Muhamma Ishaque and Amjad Hayat for Respondents.

2025 P T D 248

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Rashida Asad, JJ

ARSHAD ALI KHAN

Versus

FEDERAL BOARD OF REVENUE and others

Constitution Petition No.D-3673 of 2021, decided on 23rd June, 2021.

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

----Ss. 16, 32 & 156(1), Cls. (9), (10-A) & (14)---Constitution of Pakistan, Art. 199---Issuance of Notice by the Customs Authorities, assailing of---Constitutional petition---Maintainability---Though if any notice or order, which is without jurisdiction and has been impugned by way of a constitutional petition, the High Court under Art. 199 of the Constitution can exercise its discretion; however, the said rule is not absolute, but is an exception---Courts do exercise such discretion, but that is subject to the peculiar facts and circumstances involved in a particular case---Petitioner wanted the High Court to act as an adjudicating authority and to decide that whether the petitioner had committed any offence under the Customs Act, 1969, or not---Such exercise, in the present facts, could not be undertaken in the constitutional jurisdiction---Constitutional petition, being premature, was dismissed with costs of Rs.10,000/-, in circumstances.

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

-----Ss. 16, 32 & 156(1), Cls. (9), (10-A) & (14)---Constitution of Pakistan, Art. 199---Issuance of Notice by the Customs Authorities, assailing of---Constitutional petition---Maintainability---No case of abuse of process and / or want of jurisdiction nor of mala fides was manifest---Tendency of impugning Show-Cause Notices directly in constitutional jurisdiction is on an increase without any justifiable cause and instead of responding to the Show-Cause Notice, constitutional jurisdiction of the High Court is being invoked under Art. 199 of the Constitution---Even, after responding to the Show-Cause Notices and joining of proceedings before the Department, petitions had been filed and the Show-Cause Notices had been challenged---No question of jurisdiction had been raised in the constitutional petition---It might be the case of the petitioner that some illegality had been committed by the respondents/Department, but for that alone, the constitutional jurisdiction of the High Court could not be invoked---Constitutional petition, being premature, was dismissed with costs of Rs.10,000/-, in circumstances.

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

----Ss. 16, 32 & 156(1), Cls. (9), (10-A) & (14)---Constitution of Pakistan, Art. 199---Issuance of Notice by the Customs Authorities, assailing of---Constitutional petition---Maintainability---Whether a Show-Cause Notice could be challenged directly before a Court of law---Held, that such tendency to impugn a Show-Cause Notice issued under a taxing law and to casually bypass the remedy as provided under a special law is to be discouraged as it amounts to ruining the statutory norms as meaningless, more so, when the proceedings initiated by the Department do not suffer for want of jurisdiction and mala fides---Special law provides a complete mechanism of appeals up to the level of Special Tribunals and then by way of a reference before the High Courts, and therefore, ultimately such question of law has to come before the High Court for its final adjudication---Ordinarily , a tax payer must respond to such Show-Cause Notice and contest the matter before the departmental hierarchy inasmuch, as firstly, the Department being a specialized forum has been conferred with such powers; and secondly, until a determination (adverse or otherwise) is made---Mere issuance of such a notice by the department cannot be looked into on mere suspicion and apprehension of a tax-payer---Tendency to impugn the show-cause notices issued by the public functionaries under taxing statutes, before the High Court under Art. 199 of the Constitution, and to casually bypass the remedy as may be provided under a special statute is to be discouraged as it tends to render the statutory forums as nugatory---Constitutional petition, being premature, was dismissed with costs of Rs.10,000/-, in circumstances.

Maritime Agencies (Pvt.) Ltd. through Company Secretary v. Assistant Commissioner-II of SRB and 2 others 2015 PTD 160 ref.

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

----Ss. 16, 32 & 156(1), Cls. (9), (10-A) & (14)---Constitution of Pakistan, Art. 199---Issuance of Notice by the Customs Authorities, assailing of---Constitutional petition---Maintainability---In the matters of show-cause, the High Court cannot assume a supervisory role in every situation to pass an interim order with the directions to the authority concerned to proceed but no final order should be passed till decision of the constitutional petition or to suspend the operation of show-cause notice for an unlimited period of time or keep the matters pending for an indefinite period---It does not mean that the show-cause notice cannot be challenged in any situation but its challenge must be sparing and cautious---Constitutional petition, being premature, was dismissed with costs of Rs.10,000/-, in circumstances.

Dr. Seema Irfan and 5 others v. Federation of Pakistan through Secretary and 2 others 2019 PTD 1678 ref.

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

----Ss. 16, 32 & 156(1), Cls. (9), (10-A) & (14)---Constitution of Pakistan, Art. 199---Issuance of Notice by the Customs Authorities, assailing of---Alternate remedy, availability of---Constitutional petition---Maintainability---Ordinarily, the jurisdiction of the High Courts under Art. 199 of the Constitution should not be invoked where alternative forum under a special law, duly empowered to decide the controversy, is available and functioning---Where a special law provides legal remedy for the resolution of a dispute, the intention of the legislature in creating such remedy is that the disputes falling within the ambit of such forum be taken only before it for resolution---The very purpose of creating a special forum is that disputes should reach expeditious resolution headed by quasi judicial or judicial officers who with their specific knowledge, expertise and experience are well equipped to decide controversies relating to a particular subject in the shortest possible time---Constitutional petition, being premature, was dismissed with costs of Rs.10,000/-, in circumstances.

Indus Trading and Contracting Company v. Collector of Customs (Preventive) Karachi and others 2016 SCMR 842 ref.

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

----Ss. 16, 32 & 156(1), Cls. (9), (10-A) & (14)---SRO 577(I)/2006 dated 5.6.2006---Constitution of Pakistan, Art. 199---Diplomatic vehicles, import / sale of---Issuance of Notice by the Customs Authorities, assailing of---Constitutional petition---Maintainability---Even if the vehicle-in-question was originally imported by the Royal Consulate General of Saudi Arabia, as contended, even then the petitioner/ taxpayer failed to explain as to how the same came into possession and ownership of the petitioner in absence of a requisite no objection certificate by the Ministry of Foreign Affairs and so also by the Customs Authorities---Record/documents revealed that the vehicle-in-question was still plying with a number plate issued to the Royal Consulate General of Saudi Arabia---Merely having certain letters purportedly issued by Royal Consulate General of Saudi Arabia stating that vehicle had been sold and could be used by a private person, and without certification of the same from the concerned Ministry of Foreign Affairs, was not sufficient---Policy governing import and sale of diplomatic vehicles under SRO 577(I)/2006 dated 5.6.2006 specifically requires certain permission(s) and no objections, before the vehicle can be sold to and used by a private person; which specifically requires permission from Ministry of Foreign Affairs as well---Since a show-cause had already been issued, therefore, High Court was restrained from giving a definitive opinion in said aspect of the matter---Constitutional petition, being premature, was dismissed with costs of Rs.10,000/-, in circumstances.

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

----Ss. 16, 32 & 156(1), Cls. (9), (10-A) & (14)---Constitution of Pakistan, Art. 199---SRO 577(I)/2006 dated 5.6.2006---Diplomatic vehicles, import / sale of---Issuance of Notice by the Customs Authorities, assailing of---Interim release and custody of the vehicle sought---Constitutional petition---Maintainability---Vehicle-in-question had been seized and the allegation in the Show-Cause Notice might result into an order of outright confiscation of the same; hence the said relief was not only premature but beyond the scope of such proceedings---Constitutional petition, being premature, was dismissed with costs of Rs.10,000/- , in circumstances.

2025 P T D 267

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

Messrs UNITED CARPETS LTD. through Director

Versus

PAKISTAN through Secretary (Revenue Division) Ex-Officio Chairman, Federal Board of Revenue, Islamabad and 2 others

Constitutional Petitions Nos.D-412, D-147, D-278, D-279, D-1411, D-1142, D-3266 of 2021 and D-8009 of 2022, decided on 15th March, 2023.

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

----S.214D 1(a) & (b) [inserted through Finance Act, 2015 and deleted through Finance Act, 2018]---Audit proceedings, selection for---Scope---Petitioners (Taxpayers) filed constitutional petitions assailing impugned notices issued under S. 214D read with S.177 or 122 of the Income Tax Ordinance, 2001 ('the Ordinance, 2001') as being unlawful---Argument of the petitioners was that S. 214(D) was inserted through Finance Act, 2015, but was deleted through Finance Act, 2018, thus, after its omission, no further audit proceedings could continue as in view of the judgment passed in case titled Shah Nawaz (Pvt.) Ltd. v. Pakistan reported as 2011 PTD 1558 ('Shah Nawaz case'), a vested right has accrued to the petitioners---Validity---Provisions under S.214-D of the Income Tax Ordinance, 2001, remained available in the Ordinance till 30.6.2018, therefore, it applies to the period starting from 01.07.2015 to 30.06 2018: the pertinent words used in said S. (214-D) is that a person shall be automatically selected if the person falls within any of the condition(s) so provided in subsection 1(a) & (b) of S.214-D---It is neither a case of accrual of any vested right as to a particular tax-year, nor of selection for audit on the basis of any criterion, and therefore, any reliance placed on the Shah Nawaz case was entirely misconceived---Admittedly, all petitioners failed to meet the threshold of S.214D(1)(a)(b) i.e. either failed to file the returns on the stipulated / extended time, or did not pay the tax determined under S.137; hence, they stood automatically / deemed to have been selected for audit immediately thereon when they defaulted in said terms---Therefore, the period of default would be from 01.07.2015 to 30.6.2018---Undisputedly, all petitioners had defaulted in the said period, hence, they were deemed to have been selected for audit for respective tax-years---Any omission of the provision-in-question from 2018 onwards, would not have any bearing on their selection for audit which became past and closed on their default as per S.214D(1)(a)(b)---In fact, in some of the cases pertaining to Tax year 2015, audit was conducted and responded by the petitioners and thereafter, notices to amend the assessment orders under S. 122(9) had also been issued---No right or vested right had accrued to the petitioners---Constitutional petitions were dismissed, in circumstances.

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

----S.214D 1(a) & (b) [inserted through Finance Act, 2015 and deleted through Finance Act, 2018]---Audit proceedings, selection for---Scope---Petitioners (Taxpayers) filed constitutional petitions assailing impugned notices issued under S. 214D read with 177 or 122 of the Income Tax Ordinance, 2001 ('the Ordinance 2001') as being unlawful on the ground that said S.214D had already been repealed---Validity---There was no question of exercising any power or authority under a repealed or omitted provision inasmuch as the petitioners stood selected for audit by way of a deeming provision and to that extent, it was not in dispute that the petitioners were to be selected for audit in terms thereof as they were covered by the two basic conditions provided in S.214D(1)(a) & (b)---Petitioners had not been selected after omission or deletion of S. 214D but they stood selected automatically---The subsequent action of the Department on the basis of impugned notices was procedural in nature which was under the existing procedure of S.177 of the Ordinance, 2001 (manner in which audit has to be conducted), and thereafter, under S. 122 (amendment of a deemed assessment order)---Both said provisions were very much in existence when impugned notices were issued---Mere narration of facts in the impugned notices as to why they had been selected for audit in terms of S. 214D of the Ordinance, 2001, would not ipso facto mean that any jurisdiction was now being exercised under the said provision which stood omitted---No right or vested right had accrued to the petitioners---Constitutional petitions were dismissed, in circumstances.

Ovais Ali Shah, Maryum Riaz, Fizzah Bucha, Muhammad Mushtaq and Muhammad Aqeel Qureshi for Petitioners.

Muhammad Taseer Khan and Ayaz Sarwar Jamali for Respondents.

Qazi Ayazuddin Qureshi, Assistant Attorney General for Federation of Pakistan.

2025 P T D 279

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

BENISH MEHBOOB

Versus

GOVERNMENT OF PAKISTAN and others

C.P. D-716 of 2023, decided on 28th February, 2023.

Constitution of Pakistan---

----Art.199---Customs Act (IV of 1969), S.2(s)---Constitution petition---Locus standi of petitioner---Person approaching High Court, as petitioner, not a party to previous proceedings---Effect---Customs Appellate Tribunal ('Tribunal') passed an order (setting aside outrightly the confiscation of a smuggled vehicle) accepting version of the appellant before the Tribunal---Petition before the High Court was filed, for implementation of the order passed by the Tribunal, notwithstanding the apparent fact that the petitioner was not the appellant (before the Tribunal) and had no actionable nexus therewith, instead (the petition had been filed) by a lady advocate claiming herself as an attorney of the appellant before the Tribunal---Validity--- High Court observed that the appellant before the Tribunal (namely Adam Khan) was someone else other than the present petitioner and prima facie the only place the petitioner found mention in the Tribunal Order was in the title ostensibly as the attorney of the appellant before the Tribunal---Other documents (like Detention Receipt) releted to the appellant before the Tribunal---Index of the present petition showed the name of appellant before the Tribunal (Adam Khan) to be the petitioner, however, the typed name (Adam Khan) had been crossed out in ink and the name of the petitioner was hand written instead while the affidavits supporting the memorandum of petition and other CMAs had Adam Khan in the title and the same had been sworn by the petitioner, representing herself to be the attorney of the petitioner---Regarding said contradictions / discrepancies / corrections, on confrontation, lady advocate present before the High Court, claiming herself to be attorney of the appellant before the Tribunal, had failed to provide any explanation, whereas she had represented herself to be a practicing advocate of the High Court---Same did not confer any license upon her to act in a manner not befitting to an Officer of the Court---While conscious mischief was reasonably apprehended in the present matter, however, out of compassion the High Court confined findings to the case itself and directed no further proceedings with respect to the petitioner herself---Petitioner before the High Court had failed to demonstrate any locus standi to maintain the present petition---Constitutional petition, along with pending applications, was hereby dismissed in limine, in circumstances.

Petitioner in person.

2025 P T D 288

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Aga Faisal, JJ

The COLLECTOR OF CUSTOMS

Versus

ABDUL NASIR SHAH and another

Special Customs Reference Application No.148 of 2020, decided on 18th February, 2021.

Customs Act (IV of 1969)---

----Ss. 2(s), 168 & 211---Smuggling---Release of goods alleged to be smuggled---Customs Appellate Tribunal, powers of---Scope---Department filed Reference as the cloths (goods-in-question)alleged to be smuggled were ordered to be released by the Customs Appellate Tribunal ('the Tribunal')---Plea of the respondent was that entire record including purchase receipts had been presented, which proved that the goods-in-question were not smuggled ones---Validity---Perusal of the finding of the Tribunal reflected that though the Tribunal had come to a conclusion that the Adjudicating Officer had failed to discuss or record an independent finding to the extent of the respondents' claim, but at the same time, instead of remanding the matter to the adjudicating authority, the appeal had been allowed---This had been done by the Tribunal without even recording its own finding of fact as to the claim of the respondent that he had purchased the goods from open market and was in lawful possession of the same---Moreover, perusal of the order passed by the adjudicating officer, further revealed that various respondents had contested the matter before the said officer, but while passing the Order-in-Original the case of each respondent had not been discussed in any manner---Impugned order passed by the Tribunal had been passed in a cursory and generalized manner and without attending to the case of each respondent, therefore, the proper course which was required to be adopted by the Tribunal was either to record its own finding of fact to the extent of the contesting respondent, or to remand the matter to the adjudicating authority for de novo consideration, which had not been done, thus the impugned order could not be sustained---Proposed questions of law to the extent of the present respondent were answered in favour of the applicant /Department and against respondent---High Court set aside the impugned order and remanded the matter to the adjudicating officer who shall decide the case of the present respondent after examining the material already placed on record with an opportunity of hearing through a reasoned order---Customs Special Reference Application, filed by the Department, was disposed of accordingly.

Khalid Mahmood Rajpar for Applicant.

Muhammad Ishaque for Respondents.

2025 P T D 377

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

The COLLECTOR OF CUSTOMS

Versus

POWER LINK PETROLEUM SERVICES and another

S.C.R No.502 of 2016, decided on 15th March, 2021.

Customs Act (IV of 1969)---

----Ss. 2(s), 156(1)(89) & 187---SRO 499(I)/2009 dated 13-06-2009---Smuggling---Release of confiscated goods---Adjudicating Authority---Powers---Scope---Adjudicating Authority set-aside Show-Cause Notice qua confiscation of petroleum product---Department filed Special Reference Application as the Customs Appellate Tribunal concurred with the order passed by the Adjudicating Authority---Plea of the respondent was that it was dealing in High Speed Diesel (HSD)as an authorized dealer of an Oil Marketing Company (OMC)---Validity---Record revealed that after issuance of Show-Cause Notice , the respondents produced relevant documents regarding the purchase of HSD-in -question and also brought on record verification / letter from the concerned OMC whereby it was confirmed that the respondent was their authorized distributor---Adjudicating Authority then passed the order in favour of the respondent and vacated the Show-Cause Notice---Subsequently, the Department went into appeal and the order of the Adjudicating Authority was set aside---Respondents then appealed the order before the Customs Appellate Tribunal and impugned order was passed---No question of the law arose out of order in question inasmuch as the facts stood determined at the adjudication level, when confirmation was sought from the OMC---No interference by the High Court was made out in its reference jurisdiction---Special Customs Reference Application, filed by the Department, was dismissed, in circumstances.

Shakeel Ahmed for Applicant.

Aamir Ali for Respondent.

2025 P T D 395

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

DIRECTOR, DIRECTORATE I&I-FBR

Versus

MUHAMMAD BILAL

Special Customs Reference Application No.446 of 2019, decided on 4th February, 2021.

Customs Act (IV of 1969)---

----Ss.2(s), 156(1)(8) & 156(1)(89)---Seizure of vehicle due to re-punching of identical chassis number---Smuggling , allegation of---Burden of proof---Factual controversy---Customs Appellate Tribunal, powers of---Department filed Reference Application assailing judgment passed by the Customs Appellate Tribunal ('Tribunal')---Argument of the Applicant / Department was that the respondent had failed to produce any goods declaration and /or import documents to prove that the vehicle-in-question was not a smuggled one---Plea of the respondent was that earlier the trawler carrying 15 vehicles, including vehicle-in-question, was completely burnt in an accident, which fact, having been endorsed by concerned Engineering Company, was thoroughly discussed by the Tribunal---Validity---Findings of the Tribunal revealed that it (Tribunal), after a detailed factual ascertainment and inquiry, had come to a definite conclusion that the vehicle-in-question was owned by the respondent as a subsequent purchaser and the reasons for re-punching of same chassis number as alleged was due to an accident, which was duly reported through an FIR---Record also reflected that Applicant through its representative confirmed the contents of the FIR and the fact that the same vehicle was involved in such accident; hence, mere re-punching of the same / identical chassis number would not ipso facto make it a smuggled Vehicle--- It was further available on the record that the vehicle-in-question was initially sold by the concerned Engineering Company which at the relevant time was the manufacturer and seller of Mazda Trucks, and when approached for re-verification, it responded in favor of the Respondents, claim vide its letter - Said facts on record had not been controverted before the High Court in any manner---Thus, matter was entirely dependent upon factual aspect which had been dealt with properly by the Tribunal; hence no question of law arose out of the impugned judgment passed by the Tribunal---Special Customs Reference Application filed by the Department, being misconceived was dismissed, in circumstance.

2025 P T D 431

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Jawad Akbar Sarwana, JJ

ORIENT ENERGY SYSTEMS (PVT.) LTD. through Authorized Officer

Versus

The ASSISTANT/DEPUTY COMMISSIONER (AUDIT-II) INLAND REVENUE and 3 others

Constitutional Petition No.D-3066 of 2023, decided on 2nd May, 2024.

Income Tax Ordinance (XLIX of 2001)---

----Ss. 4C & 221---Constitution of Pakistan, Art. 199---Departmental proceedings---Orders passed by tax authorities, assailing of---Constitutional petition---Maintainability---Doctrine of election of remedy---Scope---Petitioner/Company filed constitutional petition against order passed under S. 221 of the Income Tax Ordinance, 2001 ('the Ordinance, 2001')---Contention of the petitioner (Company) was that since applicability of S. 4C of the Ordinance 2001 had been decided by the Sindh High Court in the case titled as Shell Pakistan Limited v. Federation of Pakistan reported as 2023 PTD 607 ('the Shell Pakistan case'), hence, the present (constitutional) petition was maintainable---Validity---Admittedly, the petitioner had not challenged vires of S. 4C of the Income Tax Ordinance, 2001, before---Record also showed that the petitioner was given a Show-Cause Notice which was contested and an order under S. 221(1) of the Income Tax Ordinance, 2001, was passed along with certain others orders ; order under S. 124 of the Income Tax Ordinance, 2001, as well as an Appellate Order under S.129 of the Ordinance, 2001, against the petitioner was also passed---Admittedly, the petitioner was planning to avail further remedy in accordance with law---But despite said fact(s), present (constitutional) petition was filed on the basis of the Shell Pakistan case---Said conduct of the petitioner was not appreciable as the petitioner could not avail two different remedies at the same time to seek redressal of its grievance---Petitioner was at liberty to approach the High Court directly by challenging the vires of S. 4C of the Ordinance, 2001 as had been done by various other taxpayers, and if not, then the petitioner could not, in between the departmental proceedings, file a constitutional petition and seek adjudication of the Show-Cause Notices or even orders passed by the Department under its hierarchy---Doctrine of election denotes that the election to commence and follow an available course, from concurrent avenues, vests with a suitor, however, once an option is exercised then the suitor is precluded from re-agitating the same lis in other realms of competent jurisdiction---Thus the contention of the petitioner was misconceived---Constitutional petition, filed by taxpayer, was dismissed with costs.

Trading Corporation of Pakistan v. Dewan Sugar Mills Limited and others PLD 2018 SC 828 ref.

Emadul Hasan for Petitioner.

Ameer Bakhsh Metlo for Respondents.

2025 P T D 459

[Sindh High Court]

Before Muhammad Junaid Ghaffar, J

Messrs ASG METALS LIMITED through Chief Executive Officer (CEO) / Director

Versus

The COMMISSIONER INLAND REVENUE, ZONE-IV and 5 others

Suit No.477 and C.M.A. No.6244 of 2024, decided on 27th June, 2024.

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

----S. 11---Civil Procedure Code (V of 1908), S. 9---Issuance of Show-Cause Notice by Tax Authorities, challenging of----Civil suit before Single Bench of the High Court---Maintainability---Order of the Court, non-compliance of---Effect---Show-Cause Notice was issued to the Registered Person / Company under Ss. 11(2) & 11(3) of the Sales Tax Act, 1990, whereby, it had been alleged that it was liable to pay an amount (of Rs.59,712,503/-) and as to why the same might not be assessed against it---Registered person / Company (plaintiff) has impugned the said Show-Cause Notice by way of filing civil suit before the Single Bench of the High Court against the Tax Authorities (defendants)---High Court directed the plaintiff to deposit 50% of amount being claimed by the defendants in view of the case titled Searle IV Solution (Pvt.) Ltd. v. Federation of Pakistan reported as 2018 SCMR 1444 ('the Searle IV Solution case')---Plaintiff did not comply with said directions/order contenting that since no amount has been calculated by the Tax Authorities , Searle IV Solution case would not apply---Validity---Contention of the plaintiff was misconceived as otherwise it would negate the intent/dicta laid down by the Supreme Court in the Searle IV Solution case---Suit filed by registered person, being non-maintainable, was dismissed.

Searle IV Solution (Pvt.) Ltd. and others v. Federation of Pakistan and others 2018 SCMR 1444 ref.

(b) Civil Courts Ordinance (II of 1962)---

----S. 7---Civil Procedure Code (V of 1908), S. 9---Sales Tax Act (VII of 1990), S. 11---Issuance of Show-Cause Notice by the Tax Authorities, challenging of----Civil suit before the Single Bench of the High Court---Maintainability---Original Civil jurisdiction of High Court, exercising of---Show-Cause Notice was issued to the Registered Person / Company under Ss. 11(2) & 11 (3) of the Sales Tax Act, 1990, whereby, it had been alleged that it was liable to pay an amount (of Rs.59,712,503/-) and as to why the same might not be assessed against it---Registered person / Company (plaintiff) impugned said Show-Cause Notice by way of filing civil suit before the Single Bench of the High Court against the Tax Authorities (defendants)---Defendants raised objection regarding maintainability of civil suit before the Single Bench of the High Court---Plea of the plaintiff was that its suit was maintainable in view of case titled Searle IV Solution (Pvt.) Ltd. v. Federation of Pakistan reported as 2018 SCMR 1444 ('the Searle IV Solution case')---Validity---In (Para 17) of the said judgment / the Searle IV Solution case, it had been observed that "it is directed, that while the Single Bench of the Sindh High Court at Karachi may still take cognizance of any suit arising out of an action/order of the tax authorities/Customs Officers, such jurisdiction must be sparingly exercised by the Single Bench"---Therefore, in view of such position present (Single Bench of High Court) was not required to mandatorily exercise such jurisdiction in tax matters on the Original Side of High Court in terms of S. 9 Civil Procedure Code, 1908 read with S. 7 of the Civil Courts Ordinance, 1962---Suit filed by registered person, being non- maintainable, was dismissed.

Searle IV Solution (Pvt.) Ltd. and others v. Federation of Pakistan and others 2018 SCMR 1444 ref.

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

----S. 11---Civil Procedure Code (V of 1908), S. 9---Issuance of Show Cause Notice by the Tax Authorities, challenging of----Civil suit before the Single Bench of the High Court---Maintainability---Original Civil jurisdiction of High Court---Discretion of the High Court---Scope---Show-Cause Notice was issued to the Registered Person / Company under S. 11(2) & 11(3) of the Sales Tax Act, 1990, whereby, it had been alleged that it was liable to pay an amount (of Rs.59,712,503/-) and as to why the same might not be assessed against it---Registered Person / Company (plaintiff) impugned said Show-Cause Notice by way of filing civil suit before the Single Bench of the High Court against the Tax Authorities (defendants)---Defendants raised objection regarding maintainability of civil suit before the Single Bench of the High Court---Validity---If at all a suit was maintainable, even then a direct challenge to a Show-Cause Notice without availing the remedy before the Adjudicating and the Appellate Authority was deprecated by the Courts---Present (Single Bench of High Court) was not required to decide the controversy in hand, which apparently related to the alleged denial of input tax claimed by the plaintiff, if any, whereas admittedly it was not a case of any jurisdictional defect or the competency of the concerned officer---If at all, even if a legal question was raised, it was not mandatory upon the Court to entertain a Civil Suit in all run of the mill cases; rather, the discretion vested in the Court had to be exercised with restraint and not as a matter of routine---Therefore, a mere show-cause notice by itself is not a ground to invoke Original Civil jurisdiction of High Court, and the plaintiff ought to have approached the defendants (Tax Authorities) for raising all such legal issues---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---Suit filed by registered person, being non- maintainable, was dismissed.

Commissioner Inland Revenue v. Jahangir Khan Tareen 2022 SCMR 92 and Indus Motor Company Limited v. Pakistan Order dated 13.2.2023 in C.P. No. D-5003/2019 ref.

Shaukat Hayat for Plaintiff.

Ghulam Asghar Pathan, Syed Ahsan Ali Shah, Mukesh Kumar Khatri for Defendants along with Mansoor Wisal, DCIR.

2025 P T D 508

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Muhammad Abdur Rahman, JJ

The COLLECTOR OF CUSTOMS through Deputy Collector of Customs Law

Versus

Messrs BILAL METALS PRIVATE, LTD.

Special Customs Reference Application No.638 of 2024, decided on 13th January, 2025.

Customs Act (IV of 1969)---

----Ss.16, 32(1), 79(1), 138, 179 & 196---Import Policy Order, 2022, Para. 5---Customs Appellate Tribunal---Jurisdiction---Permission to re-export---Consignment of respondent / importer consisted of scrap of batteries imported from Bahrain---Authorities confiscated the consignment and also imposed fine on respondent / importer as it contained some scrap of Indian origin which was banned in Pakistan---Customs Appellate Tribunal set aside orders passed by authorities and allowed respondent / importer to re-export the consignment---Validity---Customs Appellate Tribunal erred in setting aside the Order-in-Original and allowing re-export of the goods in question as "Frustrated Cargo" in terms of S.138 of Customs Act, 1969, as the Tribunal was not hearing an appeal filed under S.194A(1)(a) of Customs Act, 1969 against an order of outright confiscation of goods and imposition of penalty by Adjudicating Authority under S.179 of Customs Act, 1969---Order passed by authorities had nothing to do with grant or rejection of an application filed under S.138 of Customs Act, 1969, nor it could have been a matter of appeal so preferred by any of the aggrieved parties---Customs Appellate Tribunal fell in error while exercising such jurisdiction---Consignment in question was of battery scrap of different origins (Korea, U.A.E., Vitenman, China and USA) and was shipped for Bahrain as one consignment---Possibility of shipment of batteries of different origins could not be ruled out, as finally the goods were scrap for all practical and legal purposes---Goods in question, even if they had been released, were not supposed to be directly consumed or sold in market as respondent / importer was running approved industry and was to use battery scrap for extracting lead for its further use in various industries---High Court set aside penalty imposed by the Adjudicating Authority which stood remitted---Reference application was allowed accordingly.

Driveline Motors Ltd. v. Federation of Pakistan and others 2022 PTD 363 distinguished.

BP Exploration Co. (Libya) v. Hunt [1974] 1 WLR 783; affirmed in [1983] 2 AC 352 ref.

Khlil Ullah Jakhro for Applicant.

Ahmed Masood for Respondent.

2025 P T D 538

[Sindh High Court]

Before Agha Faisal, J

SHELL PAKISTAN LTD.

Versus

FEDERATION OF PAKISTAN and others

Constitution Petition No.3378 of 2018, decided on 4th March, 2021.

Sales Tax Rules, 2006---

----R. 12(a)(i)---Sales Tax Act (VII of 1990), S. 21(2)---Sales Tax Registration, suspension of---Show-Cause Notice, non-issuance of---Effect---Admittedly, suspension in the present case was without issuance of any show-cause notice, whereas, the R. 12(a)(i) of the Sales Tax Rules, 2006, purportedly on the basis of which the power of suspension was exercised, without issuance of show-cause notice, already stoods declared ultra-vires by a judgment of the High Court in the case tilted as Saleem Ahmed v. Federation of Pakistan and others (C.P.No. D-8101 of 2017 and others), wherein it was held that R.12(a)(i) of Sales Tax Rules, 2006, to the extent it gives authority to the Commissioner to suspend the sales tax registration of a registered person without prior notice, is ultra vires the Constitution, violative of principle of natural justice and in exercise of authority vested under S. 21(2) of the Sales Tax Act, 1990---High Court set aside impugned order of suspension of Sales Tax Registration---Constitutional petition was allowed accordingly.

Saleem Ahmed v. Federation of Pakistan and others (C.Ps.Nos. D-8101 of 2017 and others) ref.

Ali Almani for Petitioner.

2025 P T D 571

[Sindh High Court]

Before Muhammad Shafi Siddiqui and Agha Faisal, JJ

COLLECTOR OF CUSTOMS through Additional Collector of Customs

Versus

Messrs SINGER PAKISTAN

Special Customs Reference Application No.1236 of 2015 and C.M.A. No.3314 of 2015, decided on 10, September, 2021.

Customs Act (IV of 1969)---

----S. 32 [as amended vide Finance Act, 2014]---Recovery of short levied tax---Powers of Customs Authorities---Scope---Matter relating to Show-Cause Notice issued in the year 2014---Collectorate filed Special Customs Reference Application against the order in favour of importer / respondent---Validity---Subject consignment, as imported by the respondent, pertained to the regime prior to the amendments carried out in S. 32 of the Customs Act, 1969---Main controversy was that whether the Custom Authorities acting as a collecting agent of customs, excise, sales tax, had jurisdiction under the law and accordingly respective Tribunals were operating and functioning in the like manner---Held, that Show-Cause Notice for short levy of the respective taxes under income tax, sales tax and excise etc. were to be independently resurrected in their own regime---Customs at the time of import acted as a collecting agent, however, once the goods had been released then the respective/concerned department would act on their own hierarchy for the recovery of these Taxes---Income Tax Ordinance, 2001, as well as Sales Tax Act, 1990, provide a specific procedure for collection of taxes and have their respective forums for enforcing and recovering the short payment made be the importers---Hence, the recovery of un-collected taxes could not be entrusted upon Customs Officials once the goods had been imported and were out of charge---However, this was a situation prior to the amendment carried out under S. 32 of the Customs Act, 1969, on the basis of which the subject Show-Cause Notice was issued on 21.02.2014, which was issued on the basis of a contravention report of 10.12.2012 regarding concessional rates in income tax at the rate of 3% on the import of raw material---Thus, prior to 2014 before the amendment was carried out in S. 32 of the Customs Act, 1969 ,the object could not have been legitimately carried out---Thus, the proposed moot question was answered in negative i.e. in favour of respondent and against the applicant/Collectorate, leaving the remaining questions, as proposed by the applicant redundant---Special Customs Reference Application, filed by the Collectorate, was dismissed, in circumstances.

Kashif Nazeer for Applicant.

2025 P T D 579

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

TRANS WORLD INTERNATIONAL INC. (TWI)

Versus

CUSTOMS, FEDERAL EXCISE AND SALES TAX TRIBUNAL and others

S.C.R.A No.282 of 2010, decided on 30th January, 2023.

Customs Act (IV of 1969)---

----Ss. 32 & 79---SRO 593(I)/91 dated 30.06.1991, Cl. (v)---Plant and machinery imported for the execution of a contract with the Government---Exemption from income tax---Scope---Company / taxpayer had imported a consignment of television cameras and equipment and filed a home consumption bill of entry, while claiming exemption from duties / taxes; applicant submitted indemnity bond / undertaking stipulating that the applicant would obtain and submit the relevant exemption certificate within fifteen days, however admittedly, none was ever obtained / submitted---During the adjudication proceedings, in a departure from its initial stance, the applicant pleaded qualification for exemption from income tax as per Cl. (v) of SRO 593(I)/91 dated 30.06.1991 ('the SRO 593')---Eventually, the proceedings resulted in an order-in-original against the company/taxpayer---Applicant (Company/Taxpayer) was aggrieved by order passed by the Customs, Federal Excise and Sales Tax Appellate Tribunal ('Tribunal') whereby concurrent judgments / findings against it were maintained---Whether the applicant automatically qualified for exemption from payment of income tax under Cl. (v) of SRO 593---Held, that admittedly, the release of the consignment was sought and obtained by the applicant on the basis of an indemnity bond / undertaking expressing that the pertinent exemption certificate would be obtained and submitted before the revenue authorities within fifteen days---Record revealed that no exemption certificate was ever granted to the applicant and consequently none was ever submitted before the Revenue Authorities ; instead the subsequent course of action was adopted, in contradiction of the indemnity bond / undertaking to claim exemption under SRO 593---Respective adjudication fora did not accept the applicant's claim---Clause (v) of SRO 593 provided for exemption to "persons who import plant or machinery for execution of a contract with the Federal Government or a Provincial Government and produce a certificate from the Government"---Three consecutive fact finding forums had found that the applicant did not qualify under the exemption belatedly claimed---Applicant was unable to demonstrate the import of any plant and machinery in the execution of any contract with the Government and furthermore failed to demonstrate the existence of any pertinent exemption certificate and thus remained unable to persuade the High Court to take any view inconsistent with that maintained by the three consecutive forums of adjudication---Therefore, the question framed for determination was answered in the negative, in favor of the respondent/department and against the applicant---Reference application was dismissed, in circumstances.

Anwar Kashif Mumtaz for Applicant.

Qazi Ayazuddin Qureshi, Assistant Attorney Sindh and Khaleeq Ahmed for Respondents.

2025 P T D 618

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Ms. Sana Akram Minhas, JJ

JAFFER IMAM

Versus

FEDERATION OF PAKISTAN through Secretary Revenue Division and 2 others

Constitutional Petition No.D-4880 of 2022 (and other connected petitions) decided on 24th August, 2023.

Sales Tax Act (VII of 1990)---

----S.3---SRO No. 1222(I)/2021 dated 17.09.2021---SRO No. 509(I)/2013 dated 12.06.2013---Persons who had not obtained Sales Tax Registration---Extra / further tax, levy of---Scope---Petitioners (taxpayers running charitable institutions, hospitals, schools or some other kind of business) impugned SRO No 1222(I)/2021 dated 17.09.2021 superseding an earlier SRO No. 509(I)/2013 dated 12.06.2013) whereby, an extra tax had been levied on the billed amount on supplies of electric power and natural gas to persons having industrial and commercial connection, who had either not obtained Sales Tax Registration or were not on the Active Tax-Payers list---Case of the petitioners was that they were not engaged in any taxable supplies or engaged in making exempt supplies, nor were they required to be registered under the Sales Act, 1990---Validity---Admittedly, the petitioner approached the High Court and availed ad-interim orders, primarily, following the judgment in the case reported as 2018 PTD 1600 titled Al-Zarina Glass Industries v. Federation of Pakistan (Al-Zarina Glass case) wherein the predecessor SRO 509(I)/2013 dated 12.06.2013 was impugned, and the controversy was decided in favour of the tax payers, however, the Civil Appeal (The Chief Commissioner (IR) Region v. M/s Al Zarina Glass Industries) filed by the Department against said judgment had been allowed by the Supreme Court---Thus, there was no reason to entertain any such further ground(s) as primarily the petitioners case was dependent on Al Zarina Glass Industries case leaving no justification to entertain ground(s) as the Supreme Court had now finally decided the issue---Pertinently, the extra tax under S. 3(5) of the Sales Act, 1990, had been levied on supply of electric power and natural gas; which was in addition to the tax levied under S. 3(1) of the Sales Tax Act, 1990---It was not on the activity or business of the Petitioners from which any exemption could be claimed on the ground that they were not engaged in any taxable activity---It is just like a tax on the consumer who avails any service or buys any goods and has to pay such tax---At times, the said tax is neither refundable nor adjustable but this in and of itself is not a ground to declare it as illegal---Constitutional petitions were dismissed, in circumstances.

The Chief Commissioner (IR) Region v. Messrs Al Zarina Glass Industries (Civil Appeal No.920 of 2018) ref.

Commissioner Inland Revenue v. Hajvairy Steel Industries (Pvt.) Limited 2023 SCMR 681 and ZAK Re-Rolling Mills v. Appeals Tribunal Inland Revenue 2020 SCMR 131 distinguished.

Muhammad Tariq Masood, Syed Aijaz Hussain Shirazi, Shams Mohiuddin Ansari, Naeem Suleman, Zafar Hussain, Mian Ashfaq Ahmed, Ehsan Ghulam Malik, Shariq A. Razzak, Manzoor Arain, Riaz Moin Siddiqui, Rehmat Shakil, M. Anjum Khan, Syed Hamza Ahmed Hashmi, Atir Aqeel Ansari, Imran Iqbal Khan, Arshad Hussain Shehzad, Jahanzeb Awan, Shahan Karimi, Rashid Khan Mehar, Abdullah Azzam Naqvi, Mohsin Kadir Shahwani, Adnan Ali Khan Sherwani, Muhammad Taimur Ahmed, Ghulam Akbar Lashari and Waheed Hussain for Petitioners.

Syed Ahsan Ali Shah, Kafeel Ahmed Abbasi, Aamir Ali Shaikh, Zulfiqar Ali Mirjat, Bilal Bhatti, Zohaib, Ameer Bakhsh Metlo, Imran Ahmed Maitlo, Ali Tahir Soomro, Burhan Jagirani, Ghazi Khan Khalil, Ameer Nausherwan Adil, Abdul Hakeem Junejo, Abdul Razzak, Syed Kumail Abbas, Muhammad Shahid, Irfan Mir Halepota and Qaim Ali Memon for Respondents.

G.M. Bhutto, Assistant Attorney General for Federation of Pakistan.

2025 P T D 626

[Sindh High Court]

Before Irfan Saadat Khan and Zulfiqar Ahmad Khan, JJ

COLLECTOR OF CUSTOMS, MODEL COLLECTORATE OF CUSTOMS (PREVENTATIVE), CUSTOM HOUSE, KARACHI

Versus

MEHRAJ and another

Special Customs Reference Application No.459 of 2019, decided on 22nd November, 2022.

Customs Act (IV of 1969)---

----Ss.2(s), 156(1)(8), 156(1)(89), 156(2), 157(2) & 168---SRO 499(I)/2009 dated 13.06.2009---Smuggling---Confiscation of goods / vehicle---Release of goods on payment of redemption fine /penalty---SRO 499(I)/2009, benefit of---Scope---Customs Department filed Reference Application as Customs Appellate Tribunal upheld the Order-in-Original, whereby the diesel was ordered to be confiscated but an option was given to the owner of the bus to redeem the seized bus on payment of redemption fine equivalent to 20% along with personal penalty of Rs.25000---Contention of the Applicant / Department was that the option to redeem the vehicle, which was used for smuggling by the owner himself, could not be given---Validity---Record revealed the bus (vehicle), when intercepted and confiscated , was found containing non-duty paid 6080 liters diesel oil ; and, at the time, the owner himself was driving the said vehicle---It was beyond comprehension that how the owner of the bus, who was driving the same, could be said to be not aware of the fact that the said bus was having secret inbuilt cavities in which smuggled non-duty paid diesel oil was present---When the Customs Officials intercepted and seized the bus, the said owner immediately offered that he was ready to pay the duty and taxes in respect of the smuggled diesel oil---Reading of SRO 499(I)/2009 along with Ss. 181 & 157 of the Customs Act, 1969, left no room for doubt that only in those cases option is available to the owner who is said to be not aware that smuggling is being carried out in his vehicle---However, in present case, it was the owner himself who was driving the bus, hence no leave could be given to the owner on the basis of the fact that he was not aware of the secret inbuilt cavities available in the bus---SRO 499(I)/2009 provides release of the goods on payment of redemption fine and penalty to a registered owner but when it is found that the vehicle is carrying offending goods, the said vehicle is not liable to be released upon payment of fine---Customs Appellate Tribunal was not justified in directing release of the vehicle upon payment of redemption fine---Answer to the question was given in "Negative" i.e. in favour of the Applicant / Department and against the respondent---High Court set-aside impugned order passed by the Customs Appellate Tribunal---Special Customs Reference Application, filed by the Department, was allowed accordingly.

SCRA No.10 of 2020; Civil Petitions Nos.730-K to 760-K of 2020, S.C.R.As. Nos.469 and 955 of 2017 and 139 of 2018; Director Intelligence and Investigation (Customs) v. Nasir Ul Haq and another 2022 PTD 1193; Director, Directorate General Intelligence and Investigation (Customs) and another v. Aurangzaib and others 2021 PTD 1026 and Collector of Customs Karachi v. Niaz Muhammad and another 2022 PTD 1174 ref.

Pervez Ahmed Memon for Applicant.

Nemo for Respondents, despite proper service.

2025 P T D 645

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Jawad Akbar Sarwana, JJ

The COLLECTOR OF CUSTOMS through Additional Collector of Customs

Versus

Messrs ROHAIL ENTERPRISES

Special Custom Reference Application No.1135 and C.M. No.4762 of 2015, decided on 6th May, 2024.

Customs Act (IV of 1969)---

----Ss. 25 & 32---General Rules of Interpretation notified by World Customs Organization---Goods Declaration---Batteries meant for automotive vehicles---PCT Heading, classification of---Examination report supporting the importer---Sound reasoning had been assigned by the Customs Appellate Tribunal to reject the classification determined by the applicant / Department inasmuch as the examination report relied upon by the applicant itself did not support their contention---Such determination of classification appeared to be correct and in accordance with the tariff headings ; HS code 8507.1020 can only be attracted when battery is a lead acid battery used for starting piston engine (normally called automotive battery)---Batteries-in-question were being used for automotive vehicles; they were not lead acid batteries; hence, could not be classified under HS Code 8507.1020 as contended by the applicant / Department---Goods were examined twice by the department and Examination Report clearly reflected that batteries were Automotive Calcium Premium Battery and not lead acid batteries which was the first pre-requisite of classifying it under HS Code 8507.1020---Not all automotive batteries were to be classified in this sub-heading; but only those which were lead acid batteries---First single dash headings (-) in 8507 i.e. 1000 was for lead acid batteries for starting piston engines; second single dash heading (-) in 8507 i.e. 2000 was for other types of lead acid batteries, whereas, thereafter nickel cadmium batteries (8507.3000), nickel iron batteries (8507.4000), nickel metal hydride batteries (8507.5000), lithium iron batteries (8507.6000), and lastly all other types of batteries were to be classified under 8507.8000---Therefore, no exception could be drawn to the finding of the Tribunal which was based on sound and lawful appreciation of the HS codes and its interpretation---Such interpretation of single dash (-) and double dash (--) headings and their bifurcation into sub-headings had been dealt with and interpreted keeping in view the General Rules of Interpretation notified by World Customs Organization (WCO)---Thus, the proposed question was answered in the affirmative i.e. against the applicant / Department and in favour of the respondent / importer---Reference Application, filed by Department, was dismissed.

Collector v. SG Enterprises 2021 PTD 815 ref.

Pervaiz A. Memon for Applicant.

Ahmed Ali Hussain for Respondent.

2025 P T D 656

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Arbab Ali Hakro, JJ

TAHIR NAWAZ

Versus

FEDERATION OF PAKISTAN and others

Constitution Petition No.D-2866 of 2023, decided on 12th June, 2023.

Customs Act (IV of 1969)---

----Ss. 32 & 202---Notice requiring payment of alleged short levy---No Statutory Show-Cause Notice issued---Blocking of the National Tax Number (NTN)---Legality---Petitioner had impugned demand-cum-hearing Notice ('the impugned notice') as well as subsequent blocking of its Tax Number (NTN) by the Customs Department / Respondents pursuant to not responding to the said Notice---Validity---The contents of impugned notice did not specify any provision of any law, under which it had been issued---It appeared that the impugned notice was only a hearing notice and based on this and purportedly, since no response was received, they (respondents) had blocked the NTN of the petitioner---Such a harsh action of the respondents / department was not justifiable and did not find any support from law---Mode and manner in which a recovery can be made is by way of a Show Cause Notice under S. 32 of the Customs Act, 1969, and not otherwise---Besides, mere issuance of such a notice would not suffice to block the NTN of the petitioner---Such recourse, if at all, was only available after an adjudication had been made and recovery modes as provided under S. 202 of the Customs Act, 1969, had been exhausted---Demand notices in absence of statutory Show-Cause Notices were without lawful foundation---In the absence of the pre-requisite Show-Cause Notice no demand notice requiring payment of any alleged short levy could be issued---Said instrument (Show-Cause Notice) was also required to be issued within the statutorily mandated time frame---Thus, in the present case, the impugned notice could not be made basis for blocking the NTN of the petitioner---High Court directed to unblock the NTN immediately, whereas, the respondents were at liberty to proceed strictly in accordance with the provisions of the Customs Act, 1969, including S.32 thereof---Constitutional petition was allowed accordingly.

Assistant Collector Customs and others v. Khyber Electric Lamps and others 2001 SCMR 838; Collector of Customs (Preventive) Karachi v. PSO 2011 SCMR 1279; Lever Brothers Pakistan Limited v. Customs, Sales Tax and Central Excise Appellate Tribunal and another reported as 2005 PTD 2462; Union Sport Playing Cards Company v. Collector of Customs and another 2002 MLD 130; Shoe Planet (Pvt.) Ltd v. Collector of Customs 2021 PTD 875 and Harris Silicones and Glass (Pvt.) Limited v Federation of Pakistan 2022 PTD 1163 ref.

Amjad Hayat for Petitioner.

Zafar Hussain for Respondent No.2.

2025 P T D 695

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Muhammad Abdur Rahman, JJ

COLLECTOR OF CUSTOMS (WEST) through Deputy Collector of Customs, Karachi

Versus

Messrs SEMINAR (PVT.) LIMITED and others

Special Custom Reference Application ("SCRA") No.562 of 2024, decided on 23rd January, 2025.

Customs Act (IV of 1969)---

----Ss.25-A, proviso & 196---Notification SRO 499(I)/2009 dated

13-06-2009---Goods imported, valuation of---Valuation Table---Applicability---Retrieval of invoice---Authorities retrieved invoice of goods imported and imposed redemption fine and penalty upon respondent / importer---Plea raised by authorities was that Customs Appellate Tribunal had set aside fine and penalty in violation of proviso to S. 25-A(2) of Customs Act, 1969---Validity---Link of two invoices in question along with Bill of Lading established that retrieved invoice was the actual invoice showing value on which goods had been sold and was the true transactional value---Mere denial by respondent / importer that the invoice was placed inadvertently was neither correct nor justified---Burden as to the invoice was that of respondent / importer, which had not been discharged fully---Value mentioned on retrieved invoice had to be looked into for assessment purposes and relevant provision dealing with such situation was proviso to S. 25-A(2) of Customs Act, 1969---High Court set aside the order passed by Customs Appellate Tribunal as the assessment should have been made on Valuation Ruling, existence of which was not denied nor was under challenge at any stage of proceedings by way of any revision under S.25-A of Customs Act, 1969---Reference application was allowed, in circumstances.

The Collector of Customs v. Urooj Autos 2022 PTD 1882; The Collector of Customs v. Hasnain Qutbuddin) Special (Special Customs Reference Application No.347 of 2018; Collector of Customs v. M/s NETPAC and others 2023 PTD 710; M/s. Middle East Construction Co., Karachi v. the Collector of Customs, Karachi 2023 SCMR 838; Commissioner of Inland Revenue Lahore v. M/s Sargodha Spinning Mills (Pvt.) Ltd., Faisalabad and others 2022 SCMR 1082; Commissioner of Inland Revenue Lahore v. M/s Sargodha Spinning Mills (Pvt.) Ltd., Faisalabad and others 2022 PTD 1079; Collector of Customs v. M/s Salman Paper Product (Pvt.) Ltd. (SCRA No. 38/2022) and Junaid Traders v. Additional Collector of Customs 2012 SCMR 1876 ref.

Ms. Masooda Siraj along with Javed Hussain for Applicant.

Raj Ali Wahid Kunwar along with Kashif Khan for Respondents.

2025 P T D 740

[Sindh High Court]

Before Irfan Saadat Khan and Zulfiqar Ahmad Khan, JJ

COLLECTOR OF CUSTOMS through Additional Collector of Customs

Versus

Messrs KHALID IMPEX

Special Customs Reference Application No.409 of 2011, decided on 16th November, 2022.

Customs Act (IV of 1969)---

----Ss.32, 79(1) & 80---Customs General Order No. 12 of 2002, dated 15-06-2002---Mis-declaration---Imported goods, classification of---Assessment---Physical examination---Scope---True declaration---Importer, responsibility of---Allegation against the importer / Company was that the items disclosed in the Goods Declaration (GD) were materially different from the goods imported by it---Department filed Reference as the Customs Appellate Tribunal concurred with Collector (Appeals) that the H.S. Code and the rate of duty and taxes were the same, hence, since no loss to the exchequer had been caused, therefore, the imposition of redemption fine/duty were waived---Validity---Neither the Collector (Appeals) nor the Tribunal had said a single word about the fact that the goods declared found out by the Department were materially different from the ones disclosed and declared in the GD electronically filed by the importer / Respondent and the goods detected upon their physical examination---H.S Code of the goods the rate of duty/taxes of the declared goods and the examined goods were the same but the prime question with regard to the incorrect declaration of the goods electronically filed by the Respondent had remained unanswered and uncontroverted---Record revealed that no correspondence was made by the Respondent with the Customs Department or from any argument advanced by them before the fora below that there was no difference in the declaration of goods by the Respondent and the goods as found out by the Department but the main and the prime emphasis of the Respondent had remained that the H.S Code and the duty/taxes had since remained the same, therefore, no adverse inference could be drawn against them---Since, on physical examination, the goods were found to be different from the one declared by the Respondent, therefore, in such circumstances the department was fully justified in drawing adverse inference against the Respondent notwithstanding the fact that H.S Code and the taxes/duties had remained the same---Respondent could not be absolved from the responsibility of making a true declaration of their goods, as provided under S. 79 of the Act, 1969 and from the fact that the goods as declared in the GD electronically filed by them were materially different from the goods found on physical examination in which provisions of S. 32 of the Act, 1969 were fully attracted---A person is guilty of making untrue declaration of its goods, as specifically provided under S. 79 of the Act, 1969, notwithstanding/irrespective of the fact that after final determination H.S Code and the rate of duty/taxes had remained the same and penal action in such circumstances is warranted for untrue declaration coupled with giving incorrect particular of such goods in the description of the goods---Thus, the proposed relevant questions was answered in affirmative i.e. in favour of the Department and against the Respondent/ importer---Special Customs Reference, filed by department, was allowed.

Collector of Customs v. Messrs BNN Enterprises 2022 PTD 1418 ref.

Iqbal M. Khurram for Applicant.

Nemo for Respondent.

2025 P T D 765

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

COLLECTOR OF CUSTOMS through Additional Collector of Customs (Law) MCC-Appraisement (East), Customs House, Karachi

Versus

Messrs ZAHID ALI & COMPANY

Special Customs Reference Applications Nos.727 of 2019 along with 728 to 730, 732 to 735 of 2019, decided on 4th February, 2021.

Customs Act (IV of 1969)---

----Ss. 25 & 25A---Goods declaration---Imported goods---Determination of value---Methodology---Re-assessment, making of---Scope---Appellate Tribunal Inland Revenue ('the Tribunal') set-aside the orders passed by the forums below against the importer (respondent)---Submission of the Applicant / Collectorate was that the Tribunal had ignored the information gathered from (purported) official website (www.icegate.gov.in) which provided the actual transactional value of the goods-in-question---Validity---Section 25-A of the Customs Act, 1969 ('the Act, 1969') confers a power to determine the customs value and starts with a non-obstante clause and provides that notwithstanding the provisions contained in S. 25 of the Act, 1969, the Collector of Customs on his own motion, or the Director of Customs Valuation [on his own motion or] on a reference made to him by any person [or an officer of Customs], may determine the customs value of any goods or category of goods imported into or exported out of Pakistan, after following the methods laid down in S. 25 of the Act, 1969, whichever is applicable---It is clear that the provision of S. 25A of the Act, 1969 would have an overriding effect while applying the values determined under it and it is only the methods of S. 25 of the Act, 1969 which are to be followed; but in no manner any assessment can be made under S.25 of the Act, 1969 when there is a Valuation Ruling under S. 25A of the Act, 1969 already in field---It is not understandable as to how the Applicant / Collectorate through a Show-Cause Notice had made an attempt to reassess the goods under S. 25 of the Act, 1969 by showing intention to accept transactional value of the goods in-question---Notwithstanding this, even the proviso in S. 25-A of the Act, 1969, whereby it is provided that where the value declared in a goods declaration or mentioned in the invoice retrieved from the consignment is higher than the value determined under subsection (1) of S.25-A of the Act, 1969, such higher value shall be the customs value as inserted by way of Finance Act, 2017, whereas, the present case was prior in time---Moreover, it was not a case where the transactional value was available with the department or the value mentioned in the invoice was retrieved from the consignment at the time of making any assessment under S. 25 of the Act, 1969---In the present case , the goods were already released pursuant to a statutory Valuation Ruling and therefore, any information gathered from the website pursuant to which an attempt had been made to make assessment by accepting the transactional value under S. 25 of the Act, 1969 could not be sustained---Admittedly, the Valuation Ruling-in-question was never amended pursuant to such information from the website---Notably, in the Show-Cause Notice there again were vague allegations, whereas, neither the values so made available from the website had been mentioned; nor respondents had been confronted with any such unit value independently, and in a generalized manner, the Show-Cause Notice had been issued---No reason to interfere with the order passed by the Tribunal was made out---Thus, the proposed question was answered in negative i.e. against the Applicant / Department and in favour of the Respondents / importers---Reference Applications were dismissed in limine, in circumstances.

Ghulam Murtaza for Applicant.

Nemo. for Respondent.

2025 P T D 786

[Sindh High Court]

Before Muhammad Junaid Ghaffar, J

Messrs GALAXY IMPEX through Sole Proprietor

Versus

FEDERATION OF PAKISTAN through Secretary Revenue, Islamabad and 2 others

Suit No.606 and C.M. No.8931 of 2024, decided on 27th June, 2024.

Sales Tax Act (VII of 1990)---

----S. 46---Civil Courts Ordinance (II of 1962), S. 7---Civil Procedure Code (V of 1908), S. 9---Suit before Single Bench of the High Court against the tax authorities, filing of---Alternate remedy, availability of---Plaintiff (taxpayer) filed present suit against the suspension of its Sales Tax Registration---Contention of the plaintiff was that despite the issuance of pre-suspension notice no opportunity was provided---Validity---Said contention appeared to be misconceived as the requirement of law had been complied with, whereas, the plaintiff / petitioner ought to have availed further remedy in accordance with law including but not limited to S. 46 of the Sales Tax Act, 1990---High Court has to exercise its original side jurisdiction sparingly and with caution, it may still take cognizance of any suit arising out of an action/order of the tax authorities/Customs Officers, however, such jurisdiction must be sparingly exercised by the Single Bench---High Court is not required to mandatorily exercise such jurisdiction in tax matters on the Original Side of the High Court in terms of S. 9 of Civil Procedure Code, 1908, read with S. 7 of the Civil Courts Ordinance, 1962---Jurisdiction vested in the High Court specially in tax / revenue matters is not to be exercised in every run-of-the-mill case---Thus, the plaintiff ought to have availed the alternate remedy---Suit, being not maintainable and misconceived, was dismissed.

Saleem Ahmed v. Federation of Pakistan 2021 PTD 1813 and Searle IV Solution (Pvt.) Ltd and others v. Federation of Pakistan and others 2018 SCMR 1444 ref.

Danial Muzaffar for Plaintiff.

Kashmif Nazeer, Assistant Attorney General.

2025 P T D 871

[Sindh High Court]

Before Muhammad Shafi Siddiqui and Rashida Asad, JJ

Messrs PAK TERRY MILLS (PVT.) LTD. through Director/CEO

Versus

FEDERATION OF PAKISTAN through Secretary Finance and 5 others

C.P. No.D-3066 of 2024, decided on 21st June, 2024.

Foreign Exchange Regulation Act (VII of 1947)---

----Ss. 12(1) & 23B (4)---Constitution of Pakistan, Art. 10-A---Appeal, filing of---Pre-requisite(s)---Condition to deposit security---Constitutionality---Fundamental right, violation of---Fair trial---Scope---Petitioner-company (Textile Manufacturing Unit) challenged the order passed by Foreign Exchange Regulation Appellate Board to deposit adjudged amount in cash in compliance of S. 23C(4) of Foreign Exchange Regulation Act, 1947 ('the Act, 1947')---Argument of the petitioner was that said requirement was violation of fundamental rights of petitioner especially fair trial---Validity---The petitioner exported goods and was under the obligation to repatriate the outstanding proceeds in foreign exchange, which it failed to do within the stipulated period from the date of shipments---Consequently, the four points as framed by the Adjudicating Officer were adjudged against the petitioner and its directors under the law---The repatriation of the export proceeds was the sole responsibility of accused as foreign exchange was involved---There was no evidence of genuine efforts for the repatriation of the amount, as adjudged by Adjudicating Officer, however, this was subject to outcome of appeal before the Board ; this was contravention of S. 12(1) of the Act, 1947, and was liable to be dealt within the frame work of the Act, 1947--- The failure to repatriate the amount had triggered subsection (4) of S. 23B of the Act, 1947 and the amount was adjudged payable---Article 10-A of the Constitution was in respect of trial and not appeal---Original proceedings were initiated by Adjudicating Officer and no such restrictions were imposed at that point in time; hence requirements of Art. 10-A of the Constitution were not violated---The appeal before the Board was filed under the relevant law which required the appellant to secure the amount by way of deposit of a cash---The law was clear and no interference was required---Appeal, for the purposes of re-appreciating the evidence and record, was considered as continuation of trial but financial restriction for the appellate stage was the lawful / statutory cap as legislated---Appeal was a creation of statute and although right of appeal was a fundamental right but conditions attached could not be deemed to be unconstitutional---If the restriction was considered a violation of fundamental rights then the litigation involving finances would never be secured---Summary chapter trial imposed condition even during trial but was not adjudged a violation of fundamental rights ; so were the cases covered under Financial Institutions (Recovery of Finances) Ordinance, 2001, where leave was inevitable to contest the case---Pre-requisites of appeals, requiring leave, security, or deposits, did not violate the right to fair trial and due process---When legislature could give right of appeal it could attach conditions with such appeal, provided they (conditions) were reasonable; were uniformly applied, and were not excessively onerous---These measures struck a balance between preventing frivolous litigation and ensuring access to justice, thereby upholding the principles of fairness and due process, especially in financial matters---Thus, the fair trial and due process was to be adopted as per the relevant statute/law and Constitution, and not otherwise---Constitutional petition was dismissed in limine.

Seth Nand Lal and another v. State of Haryana and others AIR 1980 SC 2097; Anant Mills Co. Ltd. v. State of Gujarat and others AIR 1975 SC 1234; The Gujarat Agro Industries Co. Ltd. v. Municipal Corporation of City AIR 1999 SC 1818; The Director, Employees State Insurance Health Care and others v. Maruti Suzuki India Limited and others Civil Appeal No.3464 of 2022 arising out of SLP (Civil) No.30369 of 2017 and Searl IV Solution (Pvt.) Ltd. and others v. Federation of Pakistan and others 2018 SCMR 1444 ref.

Kamran Iqbal Bhutta for Petitioner.

2025 P T D 903

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Mohammad Abdur Rahman, JJ

Messrs MARINE SERVICES (PRIVATE) LIMITED through authorized representative

Versus

FEDERAL BOARD OF REVENUE through Secretary and 2 others

Constitutional Petitions Nos.D-1820 and D-1821 of 2024, decided on 6th February, 2025.

Customs Act (IV of 1969)---

----Ss.26-A & 207---Customs Rules, 2001, R. 657---Income Tax Ordinance (XLIX of 2001), S. 177---Audit notice, issuance of---Jurisdiction---Directorate of Post Clearance Audit---Powers---Shipping agents, role of---Scope---Petitioners (shipping agents) assailed legality of audit notices issued by the Assistant Director-Directorate of Post Clearance Audit seeking information from them---Validity---In international trade, the role of a shipping agent in the transportation of cargo is well defined; as is well understood the carrier simply carries the goods on board a vessel on behalf of the Shipper and for the benefit of the Consignee and broadly speaking the role of the carrier is limited to the release the goods into the hands of the person nominated as the Consignee in the Bill of Lading or the House Bill of Lading---A Shipping Agent, acting as an agent of the carrier, therefore, simply assists the Master of the Vessel in terms of services such as port and terminal liaison, port entry and clearance, berth arrangements and crew services, limiting his role in terms of the cargo to the submissions of bills of lading, port documentation and paper work and occasionally to cargo surveys---Thus, summarily, the shipping agent has no responsibility or liability whatsoever in respect of the payment of customs duties---There being no liability to any customs authorities regarding the payment of customs duties, the regulation of Shipping Agents by the Director-Directorate of Post Clearance Audit (Respondent/ Director) would, therefore, not be in terms of ascertaining any duties paid by the shipping agent but rather in the performance of its duties and obligations to the carrier, the release of the goods to the consignee and its statutory obligations to port authorities---Undisputedly, under S. 207 of the Customs Act, 1969 read with R. 657 of the Customs Rules, 2001, the Director / respondent has the power to license each of the petitioners and such regulatory power is limited to "the transaction of any business relating to the entrance or departure of any conveyance or any customs clearance related activity or the import or export of goods or baggage at any customs-station" ('the regulatory powers')---In the present case, notices issued by the Assistant Director-Directorate of Post Clearance Audit (Assistant Director (respondent) clarified that the information being demanded was in respect of the amount of freight charges collected, charges other than freight that were being collected, the gross income of the shipping agent and the amount of money remitted abroad by the shipping agent---Thus, the amount of money being remitted by the shipping agent abroad had no connection with any the regulatory powers and was, therefore, information that went well beyond the regulatory powers of the Director / respondent and the Assistant-Director / respondent and was actually within the regulatory domain of the State Bank of Pakistan---Regarding all the other information demanded, the information being requested, while connected with the regulatory powers did not involve the payment of any duty to the respondent / Director or the respondent / Assistant-Director and rather would be related to the income earned by the shipping agent bringing it within the purview of S. 177 of the Income Tax Ordinance, 2001 and not under S. 26A of the Customs Act, 1969 as such an audit would not be to verify "the correctness of any declaration or document or statement, for determining the liability of any person for duty, taxes, fees, surcharge, fines and penalties"---Assistant -Director (respondent) had, in each of the notices, failed to mention as to how the information sought was required to ensure compliance of "laws administered by customs" inasmuch as the Director (respondent) had failed to mention the nexus as between the information being requested and the laws which they were purportedly ensuring compliance of by the issuance of each of the notices---Thus, for the Director (respondent) to be able to demand such information under the provisions of S. 26A of the Customs Act, 1969 would mandatorily require the respondent / Assistant Director to mention in the audit notice the law of which compliance the respondent /Assistant Director was attempting to ensure and the nexus as between that law and the information being sought---Each of the audit notices failed to state this and, therefore, it was an act in excess of the jurisdiction of the respondent / Director under S. 26A of the Customs Act, 1969 and hence rendered each of the audit notices nothing more than a roving inquiry which was obviously premised in mala fide and could not be sustained---High Court set-aside impugned audit notices being arbitrary, illegal and void---Constitutional petitions, filed by shipping agents, were allowed.

Dr. Shahab Imam for Petitioner.

Kashif Nazeer, Assistant Attorney General for Respondent No.1.

Khalid Mehmood Rajpar for Respondents Nos.2 and 3.

2025 P T D 954

[Sindh High Court]

Before Muhammad Shafi Siddiqui and Jawad Akbar Sarwana, JJ

Messrs MILLENNIUM MALL MANAGEMENT CO. through Authorized Managing Partner

Versus

PAKISTAN through Secretary, Ministry of Defence and 3 others

Constitution Petitions Nos. D-132 of 2019 and 126 other connected petitions as per Annexure "A", decided on 6th January, 2024.

(a) Constitution of Pakistan---

----Art. 70(6) & Fourth Schedule, Part I, Entry No. 50---Federal Legislative List---"Taxes on land and buildings" and "taxes on capital value of assets"---Scope---Both type of taxes are separate subjects/entries---Prior one primarily belongs to Provincial Legislature and the later subject belongs to Federal Legislature.

(b) Constitution of Pakistan---

----Art. 270A---Interpretation of Constitution---Vires of laws---Principle---Supremacy of the Constitution has to be safeguarded---Laws which cannot with stand legislative competence must yield their way to Parliamentary and Constitutional supremacy, and laws after such scrutiny, if found transgressing such mandate, must be seen to have melted down to the frame of the Constitution---Laws made during the period mentioned in Art. 270A of the Constitution, if found violative, must be eclipsed by the supreme law, i.e. the Constitution and it cannot be vice versa---Laws in derogation of such principle are ultra vires.

(c) Cantonments Act (II of 1924)---

----Ss. 60, 80, 106 & 109---Cantonments (Urban Immovable Property Tax and Entertainments Duty) Order (P.O. No. 13 of 1979), Art. 3---Income Tax Ordinance (XLIX of 2001), S. 15A---Constitution of Pakistan, Fourth Sched., Part I, Entry No. 50 [as amended by Eighteenth Amendment to the Constitution]---Federal Legislative List---Property tax, recovery of---Jurisdiction of Cantonment Boards---Tax, utilization of---Petitioners/owners of properties assailed tax demand based on annual rental value of property by respondents/Cantonment Boards---Validity---Taxes on immovable properties had been excluded from the domain of the Federation, the Federal Legislature and consequently respondents/Cantonment Boards could not levy, impose, charge and/or recover such taxes as levied by it on immovable properties from the date of restoration of the Constitution and more particularly after Eighteenth Amendment to the Constitution, either under Cantonments Act, 1924 or under Cantonments (Urban Immovable Property Tax and Entertainments Duty) Order, 1979---Such levy by respondents/Cantonment Boards had been initiated in terms of Cantonments Act, 1924---Laws on the basis of which respondents/ Cantonment Boards were recovering taxes opposed the Constitutional/ Legislative competence and was beyond their legal powers and capacity, which was ultra vires under existing frame of the Constitution on legislative competence---There is no special provision for a tax on annual rental value of immovable property to be utilized as an "expenditure" under Cantonments Act, 1924, thus general provisions of Income Tax Ordinance, 2001 cannot be applied---"Tax" per se on immovable property, under S. 15A of Income Tax Ordinance, 2001 can be utilized or adjusted as "expenditure"---This is a general provision for all levies on property and is not specific to any particular fee or tax and a direct nexus of subject tax can be a misapplication---Power to levy, charge, impose and recover any or all taxes separately on immovable property is an alien object under Cantonment laws in existing frame of the Constitution---Tax on annual rental value of immovable property was a tax and not a fee or any other genre of levy---Respondents/Cantonment Boards had no power to levy tax on immovable property including tax on annual rental value of immovable property---After revival of the Constitution, and Eighteenth Amendment to the Constitution, provisions of Cantonments (Urban Immovable Property Tax and Entertainments Duty) Order, 1979 had no effect on the subject---Subject law to the extent of provision of S. 3 of Cantonments (Urban Immovable Property Tax and Entertainments Duty) Order, 1979 was no longer protected---High Court declared that after Eighteenth Amendment to the Constitution, Entry 50 in Fourth Schedule to the Constitution was amended, consequently Federation and all Cantonment Boards lacked competence, power and jurisdiction to levy, charge, impose and recover any or all taxes on any immovable property, including but not limited to tax on annual rental value of immovable property---High Court further declared that Eighteenth Amendment to the Constitution consequently restored competence and jurisdiction of Province to levy, charge, recover and legislate on subject so identified and to pursue it accordingly---High Court directed that amounts so recovered by Cantonment Boards under subject of tax in question, since Eighteenth Amendment to the Constitution also called for an account---Constitutional petition was allowed accordingly.

I.A. Sharwani and others v. Government of Pakistan through Secretary, Finance Division, Islamabad and others 1991 SCMR 1041; Haider Mukhtar and others v. Government of Punjab and others PLD 2014 Lah. 214; Khalid Mahmood and others v. Federation of Pakistan through Secretary, Ministry of Finance, Islamabad and 74 others PLD 2003 Lah. 629; Federation of Pakistan through the Secretary, Establishment Division, Government of Pakistan, Rawalpindi v. Saeed Ahmad Khan and others PLD 1974 SC 152; Mehmood Khan Achakzai and others v. Federation of Pakistan and others PLD 1997 SC 426; Sargodha Textile Mills v. Federation of Pakistan through Secretary Ministry of Defence, Rawalpindi and 3 others PLD 2004 SC 743; Pakistan through Ministry of Defence v. Province of Punjab PLD 1975 SC 37; Messrs Gulzar Cinema v. Government of Pakistan PLD 1978 Kar. 500; Benazir Bhutto v. Federation of Pakistan PLD 1988 SC 416; Sajjad Hussain v. The State PLD 1989 FST 50; State v. Sajjad Hussain 1993 SCMR 1523; C.P. No.D-4942 of 2022; Zaka Ud Din Malik v. Federation of Pakistan 2023 PTD 268; State Bank of Pakistan v. Federation of Pakistan PLD 2022 Pesh. 46; Ghulam Musfafa Khan's case PLD 1989 SC 26; Mustafa Impex v. Government of Pakistan 2016 PTD 2269; Mst. Nargis Moeen v. Government of Pakistan PLD 2003 Lah. 730; Mst. Sultan Jahan v. Cantonment Board Lahore Cantt. 2007 YLR 1681; Lahore Station Commander v. Col. (R) Muhammad Abbas Malik 2006 CLC 1674; Continental Biscuits Ltd. v. Federation of Pakistan 2011 MLD 1006; Pakistan International Freight of Forwarders Association v. Province of Sindh 2017 PTD 1; Pakistan Mobile Communications Ltd. v. Federation of Pakistan 2022 PTD 266; Cantonment Board's case Civil Appeal No.1363 of 2018; Nirmaljit Singh Hoon v. The State of West Bengal 95 1 SCC 707; Jalkal Vibhag Nagar Nigam v. Pradeshiya Industrial and Investment Corporation AIR 2021 SC 5316; Workers' Welfare Funds, Ministry of Human Resources Development, Islamabad and others v. East Pakistan Chrome Tannery (Pvt.) Ltd. and others PLD 2017 SC 28; Messrs Cherat Cement Co. Ltd., Nowshera and others v. Federation of Pakistan through Ministry of Petroleum and Natural Resources and others PLD 2021 SC 327; Exide Pakistan Limited v. Cantonment Board Clifton 2012 CLC 1124; The Bank of Khyber v. Municipal Corporation Gujrat PLD 2021 Lah. 108; Raj Kumar v. Hyderabad Cantonment Board 2006 MLD 549; Civil Appeal No.1363 of 2018; Cyrus Cowasjee v. KMC PLD 2022 Sindh 106; Commissioner Inland Revenue v. Messrs Wi-Tribe Pakistan Ltd. 2020 SCMR 420; Muhammad Ayaz Khan v. Federation of Pakistan 2020 PTD 2200; Federation of Pakistan v. Durrani Ceramics 2014 SCMR 1630; Azgard Nine v. Government of Pakistan 2013 PTD 1030; Khurshid Soap and Chemical Industries (Pvt.) Ltd. v. Federation of Pakistan PLD 2020 SC 641; Southern Pharmaceuticals and Chemicals v. State of Kerala (1981) 4 SCC 391 and Sreenivasa General Traders v. State of Andhra Pradesh (1983) 4 SCC 353) rel.

Ghulam Musfafa Khan's case PLD 1989 SC 26 distinguished.

(d) Constitution of Pakistan---

----Fourth Sched., Part I, Entry No. 50---Levy of tax---Classification of properties according to their value---Principle---If classification is dependent upon improved facilities, it counts good but purpose could be achieved by one master/regulator i.e. the Province---If classification does not rest on good tests, then it is bound to collapse which creates discrimination and there should be one parameter/yardstick to evaluate---Different properties in an area/common area may have different values notwithstanding the area itself is classified as a category but within that category the value of property/building may vary, depending upon its characteristics to evaluate and measure rental value it may fetch, hence the fact that property situated in a particular local body/ municipality, itself should not form basis of classification---There should be one regulator to deal with evaluation with common tools of evaluations.

(e) Interpretation of statutes---

----Constitutionality of law---Principle---Constitutionality of any law, on the touchstone of any provision of the Constitution, being opposed, could always be challenged and only because such challenge had not been thrown earlier does not amount to an acquiescence and would not be immune from a challenge in future---In enforcing Constitutional frame work, the concept of acquiescence is an alien object.

(f) Cantonments Act (II of 1924)---

----Ss. 60 & 80---Cantonments (Urban Immovable Property Tax and Entertainments Duty) Order (P.O. No. 13 of 1979), Art. 3---Sindh Local Government Act (XLII of 2013), S. 14---Constitution of Pakistan, Fourth Sched., Part I, Entry No. 50 [as amended by Eighteenth Amendment to the Constitution]---Federal Legislative List---Property tax, recovery of---Jurisdiction of Cantonment Boards---Petitioners/owners of properties assailed tax demand based on annual rental value of their properties by respondents/Cantonment Boards---Plea raised by respondent/Cantonment Boards was that annual rental value on immovable properties had devolved upon local Government hence Cantonment Boards as Local Government were also empowered for the same---Validity---Cantonment Boards were excluded under S. 14 of Sindh Local Government Act, 2013, therefore, no power to levy such tax could be derived by respondents/Cantonment Boards from such law, and no powers could be drawn from any Federal law as it was a provincial subject---Constitutional petition was allowed, in circumstances.

(g) Cantonments Act (II of 1924)---

----S. 80---Tax on annual rental value of immovable property---Non-payment---Effect---Tax imposed on immovable property, under S. 80 of Cantonments Act, 1924 runs on the property itself and not on the owner or occupier---As such it is a tax on immovable property and not a tax on a person's income.

Nirmaljit Singh Hoon v. The State of West Bengal 95 1 SCC 707 and Jalkal Vibhag Nagar Nigam v. Pradeshiya Industrial and Investment Corporation AIR 2021 SC 5316 rel.

(h) Cantonments Act (II of 1924)---

----Ss. 60, 80 & 200---Constitution of Pakistan, Fourth Sched., Part I, Entry 50 [as amended by Eighteenth Amendment to the Constitution]---Federal Legislative List---Tax and fee---Distinction---Principle of quid pro quo---Applicability---Petitioners/owners of properties assailed tax demand based on annual rental value of their properties by respondents/ Cantonment Boards---Plea raised by respondent/Cantonment Boards was that they were charging fee under S. 200 of Cantonments Act, 1924---Validity---For imposition of any fee, services under the principle of quid pro quo must be specified in the exhaustive list provided under S. 200 of Cantonments Act, 1924---If a particular fee claimed for a service under the principle of quid pro quo is not provided for under S. 200 of Cantonments Act, 1924, such fee cannot be imposed---Provision of S. 200 of Cantonments Act, 1924 is meant for levying fee, and an exhaustive list of all those levies against which, by applying principle of quid pro quo, a fee could be levied---If any nature of service to claim fee was not mentioned therein then it could not be imposed by respondents/Cantonment Boards at all---Constitutional petition was allowed, in circumstances.

Nirmaljit Singh Hoon v. The State of West Bengal 95 1 SCC 707; Jalkal Vibhag Nagar Nigam v. Pradeshiya Industrial and Investment Corporation AIR 2021 SC 5316; Workers' Welfare Funds, Ministry of Human Resources Development, Islamabad and others v. East Pakistan Chrome Tannery (Pvt.) Ltd. and others PLD 2017 SC 28; Messrs Cherat Cement Co. Ltd., Nowshera and others v. Federation of Pakistan through Ministry of Petroleum and Natural Resources and others PLD 2021 SC 327; Exide Pakistan Limited v. Cantonment Board Clifton 2012 CLC 1124; The Bank of Khyber v. Municipal Corporation Gujrat PLD 2021 Lah. 108 and Raj Kumar v. Hyderabad Cantonment Board 2006 MLD 549 rel.

(i) Cantonments Act (II of 1924)---

----Ss. 106 & 109---Property tax---Cantonment Funds---Principle of quid pro quo---Applicability---Details provided under S. 109 of Cantonments Act, 1924 are neither specific nor exhaustive but rather general in nature---Principle of quid pro quo is applied when specific provision/facility as against such recovery of fee is made---Cantonment Boards have several other services which they are rendering and are also recovering amount which could have a specific purpose---Amount of tax on property recovered as a tax on annual rental value, cannot be equated to be meant for such a purpose---Purpose must be specific and must relate to a levy itself---There may not be a requirement of arithmetic precision but there must be a direct co-relation between them for applying quid pro quo.

Ayan Mustafa Memon assisted by Ali Zuberi, Habibullah Masood, Amna Khalil, Nawaz Khan and Shahreen Chugtai, Khwaja Shamsul Islam along with Imran Taj, Imtiaz Ali Shah and Khalil Awan (in C.P. No. D-2603/2023), Ms. Naheed A. Shahid and Daniyal Ellahi (in C.Ps. Nos. D-71 /2022 and 848/2023), Ali John, Altamash Arab, (in C.P. No. D-6819/2022), Abdul Wajid Wyne, M. Rafi Kamboh (in C.Ps. Nos. D-6396 and 6397 of 2020), Arif Khan, M. Saad Siddiqui and Sahibzada Mubeen (in C.P. No. D-840/2022), 5861/2021, 3246/2021, 2970/2020, 1494/2019), Farhan Zia Abrar, Zain A. Jatoi, Muhammad Mustafa Mumdani (in C.P. No. D-2521/2022), Ghulam Haider Shaikh (in C.P. No. D-1251/2021), (Abid Hussain and Zahid Mehmood (in C.Ps. Nos. D-3170 and 3171 of 2021), Fahad Arif Khilji (in C.Ps. Nos. D-3763 and 3764/2021), Ahmed Mujtaba (in C.P. No. D-3803/ 2022), Naeem Suleman, Arshad Hussain Shehzad, Waseem Farooq, Tauqir Randhawa, Kashan Ahmed, Mian Mushtaq Ahmed (in C.Ps. Nos. D-4306 to 4327 of 2017 and 3532/2018), Hanif Faisal Alam, Hassan Khursheed Hashmi (in C.P. No. D-5521/2022), Salman Mirza and Ahmed Magsi (in C. Ps. Nos. D-132/2019, 3135/2021 and 3359/ 2021), Abdul Qayoom Abbasi, Raja Muhammad Safeer, Syed Maqbool Hussain Shah (in C.P. No. D-2797/2021), Syed Noman Zahid Ali, Arsal Rahat Ali, Mehmood Ali for IBA and Behzad Haider (in C.P. No. D-5459/2022), Ahmed Madni and Peer Ali, in C.P. No. D-446 of 2023), Ms.Sadia Sumera (in C.P. No. D-4184/2022), Ahmed Nizamani (in C.P. No. D-3246/2021), Dr. Rana Khan, Rajesh Kumar (in C.P. No. D-5673/2021), Malik Khushhal Khan in C.Ps. Nos. D-3987/2018 and 946/2022), Muhammad Naved, Fazal Mehmood Sherwani (in C.P. No. D-4159/2020) and Masood Ali for Petitioners.

Abdullah Munshi, Shajeeuddin Siddiqui and Imdad Ali Bhatti for Clifton Cantonment Board (in C.P. No. D-4985/2018, 5391/2018, 3426/ 2018, 5166/2018, 5167/2018, 6506/2020 and 1251/2021), Farooq Hamid Naek assisted by Syed Qaim A. Shah, G.Murtaza Bhanbhro and Saad H. Ammar (in C.P. No. D-132/2019 and 1220/2023) for Respondent No.2), Dr. Farogh Naseem, Ahmed Ali Hussain, S. Zaeem Hyder, Aman Aftab, M. Aizaz Ahmed, Syed Shohrat Hussain Rizvi for

Karachi Cantonment Board, Aqib Hussain, Afnan Saiduzzaman

Siddiqui, Iftikhar Hussain, Zohra Ahmed for CBC (in C.P. No. D-1228/ 2019, 1949/2019 and 946/2022), Dr. Shahab Imam and Syeda Abida Bukhari for CBC (in C.Ps. Nos.D-1220 and 2603/2023), Ashraf Ali Butt, Rehmatunnisa, Sohail H.K. Rana, Ms.Huma F. Bhutto, Fahim Haider Moosvi, Zain A. Soomro for Respondent No.2 (in C.Ps. Nos. D-1661 and 249 of 2021), Akhtar Hussain Shaikh, Syed M. Ghazen, Shahid Ahmed for KW and SC, K, A. Jahangir

(in C.P. No. D-3100/2023) for CBC, Muhammad Aqeel Qureshi

(in C.P. No. D-4606/2020), Shahid Hussain Korejo (in C.P.

No. D-6803/2022) for Respondent No.2, Saqib Soomro and Ahmed Mujtaba (in C.P. No. D-6806/2022) for Respondent No.2, Ameer Ali Soomro (in C.P. No. D-6805/2022) for Respondent No.2, Asif Amin for Respondent No.2 (in C.P. No. D-1333/2021), Fozia M.Murad for Respondent (in C.Ps. Nos. D-132/2019, 3023, 3669, 7318, 7460 of 2015), Talha Abbasi for DHA (in C.P. No. D-4985/2018) for Respondents.

Zeeshan Adhi, Addl. AG, Saifullah and Sandeep Molani, Asst. A.G., Qazi Abdul Hameed Siddiqui, D.A.G., Khaleeq Ahmed, D.A.G., Malik Sadaqat Khan, Addl. Attorney General and Qazi Ayazuddin, Asst. Attorney General.

2025 P T D 1012

[Sindh High Court]

Before Muhammad Junaid Ghaffar, ACJ and Mohammad Abdur Rahman, J

WESTERN FREIGHT SHIPPING (PVT.) LTD. through Authorised Person and 4 others

Versus

FEDERATION OF PAKISTAN through Secretary, Revenue Division and 3 others

Constitution Petition No.D-609 of 2025, decided on 3rd March, 2025.

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

----S.3AA, Chapters XII & XIII---Customs Rules, 2001, Rr. 328, 476, 598 & 638---Tracking and Monitoring of Cargo Rules, 2023, R. 1124---Constitution of Pakistan, Art.199---Afghan Transit Trade---Tracking and monitoring---Discretion, exercise of---Clean hands---Petitioners were licensed custom-bonded carriers / transport operators, who were aggrieved of decision passed by Licensing Committee notifying respondent company for such transportation---Validity---Authorities were required to ensure that transit cargo should reach the destination without any pilferage and for that they were required / authorized to track monitoring of such cargo under Tracking and Monitoring of Cargo Rules, 2023---Petitioners did not challenge provisions of Tracking and Monitoring of Cargo Rules, 2023---Decision taken by the Committee pursuant to R. 1124 of Tracking and Monitoring of Cargo Rules, 2023 was justified and fell within their domain and jurisdiction---It was a matter of exercising discretion to ensure proper transit of cargo in question---High Court in exercise of Constitutional jurisdiction declined to upset exercise of such discretion, which otherwise appeared to be lawful and fully justified---Most of the petitioners had already participated in new procedure, therefore, it was not appropriate for them to approach High Court seeking exercise of discretion in their favor---One, who approaches High Court for exercise of any discretion under Art. 199 of the Constitution, must come with clean hands and be fair with the Court---High Court declined to interfere in the matter as the conduct of petitioners was not in consonance with principles of law and no case for indulgence was made out---Constitutional petition was dismissed, in circumstances.

Federation of Pakistan v. E-Movers (Pvt.) Limited and another 2022 SCMR 1021; Collector of Customs and others v. Sheikh Spinning Mills 1999 SCMR 1402; Messrs Yousaf Enterprises v. Collector 2005 PTD 21; Messrs Mahmood and Company v. Assistant Collector, Sales Tax (Enforcement and Collection), Shalimar Division, Lahore and 2 others 2005 PTD 72; Universal Recycling through Authorized Representative v. Federation of Pakistan through Secretary, Revenue Division/Chairman FBR and 2 others 2024 PTD 754 and Sabir Iqbal v. Cantonment Board Peshawar PLD 2019 SC 189 rel.

(b) Discretion---

----Statutory power, exercise of---Principle---Discretionary statutory power can only be exercised on a ground to achieve an object or purpose that is lawfully within the contemplation of that statute.

Commissioner Inland Revenue v Pakistan Beverage Limited 2018 SCMR 1544 rel.

Khalid Jawed Khan for Petitioners.

Kashif Nazeer, Assistant Attorney General for Respondents Nos.1 and 2.

Muhammad Anas Makhdoom for Respondents Nos.3 and 4.

2025 P T D 1039

[Sindh High Court]

Before Muhammad Shafi Siddiqui, CJ and Jawad Akbar Sarwana, J

TASNEEM ENTERPRISES (PRIVATE) LIMITED through authorized attorney

Versus

NATIONAL TARIFF COMMISSION through Chairman and 4 others

Constitution Petition No.D-4561 of 2024, decided on 28th January, 2025.

(a) Constitution of Pakistan---

----Art. 199---Judicial review---Pre-condition---Before an aggrieved person triggers judicial review, the Constitutional Court must, at the proverbial doorsteps of judicial review, satisfy itself that "no adequate remedy is provided by law" to the petitioner.

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

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

Attock Cement Pakistan Ltd. and others v. Federation of Pakistan and others (C.P. No.D-1590/2023); Messrs Tameer Steel Zone through Authorized Representative v. Government of Pakistan through Federal Secretary Finance and others 2021 PTD 1423; Shaheen Merchant v. Federation of Pakistan/National Tariff Commission and others 2021 PTD 2126 and Mian Azam Waheed and 2 others v. The Collector of Customs through Additional Collector of Customs, Karachi, 2023 SCMR 1247 ref.

Junaid Ahmed and Syed Kawish Hussain Naqvi for Petitioner.

Khaleeq Ahmed and Ms. Wajiha Mehdi, A.A.G for Respondents Nos.1 and 2.

Ms. Tania Alam for Respondent No.3.

Rais Mahmood Ali for Respondents Nos.4 and 5.

2025 P T D 1100

[Sindh High Court (Hyderabad Bench)]

Before Arbab Ali Hakro and Riazat Ali Sahar, JJ

Mirza ASLAM BAIG

Versus

FEDERATION OF PAKISTAN through Minister for Finance and Revenue, Government of Pakistan, Islamabad and 3 others

Constitutional Petition No.D-175 of 2023, decided on 11th April, 2025.

(a) Customs Rules, 2001---

----R. 75(1)(iii)---Constitution of Pakistan, Arts.4(1), 18 & 25---Participation in auction/bidding, denial of---Effect ---Right of livelihood---Right to enter upon any lawful profession or occupation---Equality---Petitioner (a bidder participating regularly in Customs Department's/respondent's auctions) filed constitutional petition against an order restricting him from entering Customs premises and participating in future auctions ('impugned order')---Said restictive order was passed by the respondent due to a complaint filed by petitioner / alleging that an auction of a lot was secretly sold to another bidder at a significantly lower price than his offer---Validity---Petitioner, being a regular and experienced bidder with over two decades of active participation in public auctions conducted by the Customs department, acted well within his legal rights to report what he perceived to be an irregular and unlawful disposal of auction goods ---Legitimate act of lodging a complaint by the petitioner could not, in law or equity, form the basis for depriving him of his right to participate in future auctions, which constituted his sole source of livelihood, and which was against his rights guaranteed under Art. 4(1) of the Constitution---Article 18 of the Constitution further reinforced the petitioner's position by conferring right to enter upon any lawful profession or occupation, and to conduct any lawful trade or business while equality of citizens, as a fundamental right, was guaranteed under Art. 25 of the Constitution---High Court set-aside the impugned restricting order against the petitioner (regular bidder)---Constitutional petition was allowed.

(b) Customs Rules, 2001---

----R. 56(1)---Adverse order passed without hearing the aggrieved person---Audi alteram partem, principle of---Petitioner (a bidder participating regularly in Customs Department's/respondent's auctions) filed constitutional petition against an order restricting him from entering Customs premises and participating in future auctions ('impugned order')---Said impugned order was passed by the respondent due to a complaint filed by petitioner alleging that an auction of a lot was secretly sold to another bidder at a significantly lower price than his offer---Validity---In the present case, the petitioner had been penalized without being afforded the protection of law or fair process---The impugned order contained adverse findings against the petitioner without providing him with a fair hearing or an opportunity to rebut the allegations in a meaningful way---Although the impugned order cited that the petitioner was called for personal hearing but in respect to his complaint it was admitted that no written reply or supporting documents were taken from the petitioner---Such one-sided proceedings failed to meet even the minimum threshold of due process---Importantly, under R. 56(1) of the Customs Rules, 2001 disciplinary action against auctioneers could not be passed without affording opportunity of hearing to auctioneer---Principle of audi alteram partem, i.e. the right to be heard, applied with equal force to regular auction participants, especially where the action led to permanent or indefinite exclusion from auctions---High Court set-aside the impugned restricting order against the petitioner (regular bidder)---Constitutional petition was allowed.

(c) Customs Rules, 2001---

----R. 75(1)(iii)---Participation in auction, denial of---Powers of officers---Scope---Petitioner (a bidder participating regularly in Customs Department's/respondent's auctions) filed constitutional petition against an order restricting him from entering Customs premises and participating in future auctions ('impugned order')---Said impugned order was passed by the respondent due to a complaint filed by petitioner alleging that an auction of a lot was secretly sold to another bidder at a significantly lower price than his offer---Petitioner had permanently been restrained from entry and taking part in next auctions held in future on the basis of powers of the Collector under the provisions of R.75(1)(iii) of the Customs Rules, 2001---However, the said discretionary power under the provisions of R.75(1)(iii) of the Customs Rules, 2001, was not unfettered; it must be read under the agreement with the principles of natural justice, Constitutional protections and the primary requirement of transparency and fairness in administrative actions---High Court set-aside the impugned restricting order against the petitioner (regular bidder)---Constitutional petition was allowed.

(d) Customs Rules, 2001---

----Rr. 58(2), 61(b), 66(i) & 71---Perishable goods, auction of---Procedure, non-observance of---Effect---Petitioner (a bidder participating regularly in Customs Department's/respondent's auctions) filed constitutional petition against an order restricting him from entering Customs premises and participating in future auctions ('impugned order')---Said impugned order was passed by the respondent due to a complaint filed by petitioner alleging that an auction of a lot was secretly sold to another bidder at a significantly lower price than his offer under the umbrella of R. 71 of the Customs Rules, 2001, which permitted the sale of perishable goods through private offers or public auction---Contention of the petitioner was that though goods were perishable yet the lot was awarded opaquely without adherence to the procedural mandates under Rr. 58, 61 & 66 of the Customs Rules, 2001---Validity---Provision of Rr. 58, 61 & 66 of the Customs Rules, 2001, collectively required proper notification, public advertisement and transparent bidding, and none of said Rules permitted discretionary award of auctioned goods behind closed doors or at suppressed prices---The fact that the successful bid i.e. Rs.2,530,000/- was significantly below the petitioner's alleged offer of Rs.4,000,000/- and the sale occurred after the auction was withheld, as alleged due to a stay, pointed toward irregularity and lack of transparency---High Court set-aside the impugned restricting order against the petitioner (regular bidder)---Constitutional petition was allowed.

Babar Ali Kazmi for Petitioner.

Ghulam Abbas Sangi, Assistant Attorney General for Pakistan for Respondent No.1.

Muhammad Nadeem Tagar for Respondents Nos.2 to 4.

Date of hearing: 11th April, 2025.

2025 P T D 1125

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Mohammad Abdur Rahman, JJ

Messrs ARY COMMUNICATIONS LIMITED through Authorized Officer

Versus

FEDERAL BOARD OF REVENUE through Chairman and 2 others

High Court Appeal No.324 of 2024, decided on 13th January, 2025.

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

----Ss. 177 & 227---Specific Relief Act (I of 1877), S. 54---Civil Procedure Code (V of 1908), O. VII, R.11 O.XXXIX, Rr. 1, 2---Law Reforms Ordinance (XII of 1972), S. 3---Intra Court Appeal---Rejecting of plaint---Audit, notice of---Scope---Appellant / plaintiff was aggrieved of rejecting of plaint assailing notice issued by respondent / authorities to conduct audit---Validity---In absence of objection as to the jurisdiction being exercised by the officer concerned who had issued the notices, appellant / plaintiff was required to submit to such notices and contest the same before the hierarchy as provided under Income Tax Ordinance, 2001---There was no question of seeking restraining order against such proceedings---As to grant of injunctive relief appellant / plaintiff could not succeed in getting permanent injunction against notices in question---As to injunction application in question, the same was to be dismissed even if plaint could not have been rejected---Appellant / plaintiff in its suit did not plead mala fide against any particular act of respondents / authorities nor any damages for such act of mala fides had been claimed---Time and again, it was stated in the plaint that act of respondents / authorities was mala fide, illegal and without lawful authority---It was not a case of any lack of jurisdiction on the part of respondents / authorities in issuing notices in question---Infact a mere allegation of any act being illegal is not by itself lack of jurisdiction---Cause of action based on which the suit had been filed by appellant / plaintiff was a notice under S. 177 of Income Tax Ordinance, 2001---Justifiable reasons were mentioned independently in all such notices for different tax years pointing out various discrepancies and shortcomings in the tax returns of appellant / plaintiff---Division Bench of High Court declined to interfere in the order rejecting the plaint under O. VII, R. 11, C.P.C.---Appeal was dismissed, in circumstances.

Commissioner of Inland Revenue, Sialkot and others v. Messrs Allah Din Steel and Rolling Mills and others 2018 SCMR 1328 and Searle IV Solution (Pvt.) Limited and others v. Federation of Pakistan and others 2018 SCMR 1444 rel.

Commissioner of Inland Revenue, Sialkot and others v. Messrs Allah Din Steel and Rolling Mills and others 2018 SCMR 1328; Messrs Zam Zam LPG (Pvt.) Limited through Attorney v. Federation of Pakistan through Secretary/Chairman Revenue Division and 3 others 2023 PTD 649; Atlas Honda Ltd. through Authorized Attorney v. Pakistan through Secretary Revenue and 3 others 2022 PTD 866; Fairdeal Exchange Company (Private) Limited through Director of Company v. Federation of Pakistan through Ministry of Finance and 3 others 2023 PTD 919; Rashid Ahmad and others v. Nazar Hussain and others 2022 SCMR 1842; Abbasia Cooperative Bank (Now Punjab Provincial Cooperative Bank Ltd.) through Manager and another v. Hakeem Hafiz Muhammad Ghaus and 5 others PLD 1997 SC 3; Searle IV Solution (Pvt.) Limited and others v. Federation of Pakistan and others 2018 SCMR 1444; Sophia Com. B.V. through Duly Authorized Officer v. Pakistan through Secretary Revenue and 2 others 2018 PTD 2208; Messrs Pfizer Pakistan Limited v. Deputy Commissioner and others 2016 PTD 1429; Mujahid Oil Refinery (Pvt.) Limited v. Director I&I Inland Revenue and others 2015 PTD 2572; Dr. Seema Irfan v. Federation of Pakistan PLD 2019 Sindh 516; Raja Ali Shan v. Essem Hotel Limited 2007 SCMR 741; Haji Abdul Karim v. Florida Builders (Pvt.) Limited PLD 2012 SC 247; Abdul Rauf and others v. Abdul Hamid Khan and others PLD 1965 SC 671; Muhammad Jamil Asghar v. The Improvement Trust, Rawalpindi PLD 1965 SC 698; Mansab Ali v. Amir and 3 others PLD 1971 SC 124; Messrs K.G. Traders and another v. Deputy Collector of Customs and 4 others PLD 1997 Kar. 541; Messrs Falaknaz Builders v. Karachi Building Control Authority and others 2001 YLR 2542; Messrs Saleem Impex v. Central Board of Revenue through Chairman, Government of Pakistan, Islamabad and 2 other 1999 MLD 1728; Central Board of Revenue through Chairman, Government of Pakistan, Islamabad and 2 others v. Messrs Saleem Impex through Proprietor Muhammad Saleem Qureshi Hyderabad 1999 YLR 190; Messrs Saman Diplomatic Bonded Warehouse Proprietorship Concern v. Federation of Pakistan through Secretary, Ministry of Commerce, Islamabad and 3 others 2003 PTD 409; Federation of Pakistan and others v. Messrs Saman Diplomatic Bonded Warehouse 2004 PTD 1189; Messrs World Trade Corporation v. C.B.R. and others 1999 PTD 2341; Messrs Chemitex Industries Ltd. v. Superintendent of Sales Tax and 3 others 1999 PTD 1184; Arif Majeed Malik and others v. Board of Governors Karachi, Grammer School 2004 CLC 1029; Collectorate of Central Excise, Karachi and another v. Syed Muzakkar Hussain and another 2006 PTD 219; Mian Muhammad Latif v. Province of West Pakistan through the Deputy Commissioner Khairpur and another PLD 1970 SC 180; Hamid Husain v. Government of West Pakistan and others 1974 SCMR 356; Mst Qadri Begum v Province of Sindh 1999 CLC 2023; Pir Sabir Shah v. Federation of Pakistan PLD 1994 SC 738; Federation of Pakistan v. Saeed Ahmad Khan PLD 1974 SC 151; Pfizer Pakistan Ltd. v. Deputy Commissioner and others 2016 PTD 1429 and Pakistan Telecommunication Company Ltd. v. Federation of Pakistan 2016 PTD 1484 ref.

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

----Ss. 177 & 227---Sindh Civil Courts Ordinance (II of 1962), S.7---Civil Procedure Code (V of 1908), S.9---Fiscal matters---Original civil jurisdiction of High Court---Audit notice---Scope---Single Judge of High Court is not required to mandatorily exercise such jurisdiction in fiscal matters on Original Side in terms of S. 9, C.P.C. read with S.7 of Sindh Civil Courts Ordinance, 1962---When matter is of exercising discretion by Court, then the Court is not bound to grant such relief merely because it is otherwise lawful to do so---Even otherwise, if at all a suit is maintainable, even then a direct challenge to audit notice without availing remedy under Income Tax Ordinance, 2001 has been deprecated by the Courts---High Court is not required to decide such controversy which apparently relates to an issue which at best can only be decided by the forum provided under Income Tax Ordinance, 2001.

Abid S. Zuberi for Appellant.

Ameer Baksh Metlo along with Ms. Zakia Khan for Respondent No.2.

2025 P T D 1169

[Sindh High Court]

Before Muhammad Junaid Ghaffar, ACJ and Muhammad Abdur Rehman, J

PREMIER MERCANTILE SERVICES (PVT.) LTD. through Authorized Attorney

Versus

COMMISSIONER INLAND REVENUE

Income Tax Reference Application No.64 of 2012, decided on 28th April, 2025.

Income Tax Ordinance (XLIX of 2001)---

----Ss.21(m), 39, 85, 108 & 133(1)---Reference---Loan to associated company---Salaries---Proof---Fact not assailed by authorities---Applicant / taxpayer contended that amount in question was never an income determined in terms of S. 108 of Income Tax Ordinance, 2001 nor amount of loan given to an associated company could be deemed to be an income without a deeming clause---Validity---If associated concern had borrowed such money, then that associated concern would have paid interest, which could be claimed as an expense---Advanced amount as a loan never resulted in any ownership of property in the name of applicant / taxpayer, which was purchased by associated concern in its own name---This was not even a capital expense---High Court declined to interfere in the order passed by Appellate Tribunal Inland Revenue, as it was justified in setting aside finding of Commissioner (Appeals)---High Court set aside order of Appellate Tribunal Inland Revenue to the extent of salaries, as respondent / authorities had not assailed such finding of Assessing Officer in respect of payment of salaries and wages before the Commissioner (Appeals)---Amount which was not agitated by applicant / taxpayer, was correctly added to its income in terms of S. 21(m) of Income Tax Ordinance, 2001---Reference was dismissed accordingly.

Commissioner of Income Tax, Companies-I, Karachi v. Messrs National Investment Trust Ltd. Karachi 2003 PTD 589; Commissioner of Income Tax, Peshawar Zone, Peshawar v. Messrs Siemen A.G 1991 PTD 488; Judgment dated 04.09.2024 passed in ITRA No. 205 of 2023 (M/s. Elahee Buksh & Company (Pvt.) Ltd. v. the Additional Commissioner (Audit-III) Inland Revenue, Range-A-III, MTO Karachi and 2 others) ref.

Shams Mohiuddin Ansari for Applicant.

Muhammad Aqeel Qureshi for Respondent.

2025 P T D 1206

[Sindh High Court]

Before Muhammad Junaid Ghaffar, ACJ and Mohammad Abdur Rahman, J

The COLLECTOR OF CUSTOMS, KARACHI

Versus

ALLMED LABORATORIES KARACHI and another

Special Customs Reference Applications Nos.358 to 373 and C.M.A. No.1613 of 2024, decided on 18th December, 2024.

Customs Act (IV of 1969)---

----Ss. 32, 80(3), 193 & 195---Goods---Out of charge release of the goods---Goods Declaration, re-assessment of---Procedure---Scope---Goods Declarations (GDs), regarding injections for kidney transplant claiming certain exemption of duties / taxes, were released ; thereafter the Department made re-assessment of the GDs under S. 80(3) of the Customs Act, 1969 ('the Act 1969')---Validity---Post-release verification, in the present case, reflected that powers had been exercised under S. 80(3) of the Act, 1969 after release of the goods and the GDs had been re-assessed, which, admittedly, has been done without issuance of any show cause notice as provided under S.32 of the Act, 1969---Pertinently , in terms of S. 80 (3) of the Act, 1969, powers can only be exercised during checking of Goods Declaration (GD), and not thereafter ; as it is not that said power would continue to be available at all times---Said power stops once the GD has been assessed to duty / taxes and consignment has been released; thereafter, no re-assessment can be made under S. 80(3) of the Act 1969 and the only recourse available is either through a proper Show-Cause Notice under S. 32 of the Act, 1969 or by way of an Appeal in terms of S. 193 of the Act, 1969 and lastly in exceptional circumstances if so permitted, under S. 195 of the Act, 1969---Thus, no jurisdiction or authority was vested in the officer to re-assess the GDs in terms of S. 80(3) of the Act, 1969, after the goods were out of charge and cleared by the Customs Department---Proposed question was answered against the applicant / department and in favor of the respondent / importer---Reference applications were dismissed.

Messrs Harris Silicones and Glass (Pvt.) Ltd. v. Federation of Pakistan 2022 PTD 1163; Assistant Collector Customs and others v. Khyber Electric Lamps and others 2001 SCMR 838; Collector of Customs (Preventive) Karachi v. PSO 2011 SCMR 1279; Lever Brothers Pakistan Limited v. Customs, Sales Tax and Central Excise Appellate Tribunal and another 2005 PTD 2462; Union Sport Playing Cards Company v. Collector of Customs and another 2002 MLD 130 and Shoe Planet (Pvt.) Ltd. v. Collector of Customs (C.P. No.3240-2020) ref.

Muhammad Rizwan Saeed forApplicant.

2025 P T D 1215

[Sindh High Court]

Before Adnan Iqbal Chaudhry, J

Messrs UMAR TEXTILES

Versus

FEDERAL BOARD OF REVENUE and others

Suit No.[-] 83 of 2025, decided on 27th January, 2025.

Sales Tax Act (VII of 1990)---

----Ss. 21(2) & 21(5) [as inserted by the Finance Act, 2024]---Sales Tax Rules, 2006, R. 12---Civil Procedure Code (V of 1908), O. XXIX, Rr. 1 & 2---Issuance of notice by tax Authority---Assailing of notice by filing suit---Temporary injunction, seeking of---Factual controversies---Right of appeal, availability of---Effect---Registered person / Company (plaintiff) filed suit, invoking original jurisdiction of High Court, to challenge a 'pre-suspension notice' issued to plaintiff by the Commissioner-Inland Revenue ('Commissioner') for initiating suspension/blacklisting proceedings ('impugned notice')---Plaintiff prayed for a temporary injunction to restrain the Commissioner from taking coercive action against the plaintiff---For seeking temporary injunction, grounds taken by the petitioner / plaintiff (registered person) included that the impugned notice was without the signature of the Commissioner, which was received when date of hearing had passed, and that the allegation in the impugned notice that the petitioner / plaintiff made purchases from suspended or blacklisted vendors was belied by the tax profile of those vendors which showed that at the relevant time those vendors were not suspended nor blacklisted---Validity---The impugned (pre-suspension ) notice was essentially a notice to show-cause against suspension of sales tax registration---It was a precursor to blacklisting proceedings---By virtue of subsection (5) of S. 21 of the Sales Tax Act, 1990, which had been inserted by the Finance Act, 2024, a remedy was now available to the Plaintiff before the Chief Commissioner in the event an order of suspension was passed against the plaintiff/ petitioner---Excepting a jurisdictional defect, a Court of law did not ordinarily interfere with a show-cause notice issued by a statutory authority lest such interference stifled the exercise of fact-finding and provided an escape from special statutory proceedings and remedies---The grounds urged by petitioner / plaintiff for interference were based on the facts of the case and did not relate to the jurisdiction of the Commissioner in issuing the impugned notice---Said facts had been laid by the petitioner / plaintiff before the Commissioner who had yet to pass any order thereon---The temporary injunction sought in effect required (this/High) Court to determine facts instead of the Commissioner---Petitioner /plaintiff did not bring forth any exception for interfering with the impugned notice---Application for grant of temporary injunction, was dismissed, in circumstances.

Taimur Ali Mirza for Plaintiff.

Nemo. for Defendants.

2025 P T D 1222

[Sindh High Court]

Before Muhammad Junaid Ghaffar, ACJ and Mohammad Abdur Rahman, J

Messrs ROUSCH (PAKISTAN) POWER LIMITED

Versus

The COLLECTOR OF CUSTOMS, MODEL CUSTOMS COLLECTORATE OF PREVENTIVE, CUSTOMS HOUSE, KARACHI and another

Special Customs Reference Application ("SCRA") No.804 of 2017 decided on 11th March, 2025.

Customs Act (IV of 1969)---

----S.18---Goods sent abroad for repair---Re-importation of such goods---Exemption from customs duties---Entitlement---Customs Appellate Tribunal ('Tribunal') concurred that, in view of FBR's letter dated 13.08.2012, the Applicant was not entitled to claim any exemption from duties and surcharge on the re-importation of goods, which were sent abroad for repairs---Validity---Findings of the Tribunal revealed that the Tribunal had merely relied upon FBR's letter dated 13.08.2012 and had not made any effort to give its own reasoning---Record further showed that earlier on 09.08.2012 another letter was issued by the FBR, whereby exemption was extended on the re-importation of goods after repair---From perusal of the said two letters, which were contrary to each other, it reflected that the subsequent letter had on its own inserted words " before commencing of the Project", which appeared to be contrary to the provisions of Clause 13.2 of Article (XIII) of the Implementation Agreement between the Applicant and Government of Pakistan ('Agreement')---Even otherwise, any goods which required repair would naturally be after the commencement of the Project and not prior to that---Clause 13.2 of Article (XIII) of the Agreement stated that the Applicant shall be entitled to export without restriction all items of Plant and Machinery imported by it under Section 13.1 for the purposes of repair or re-furbishment outside Pakistan and to re-import the same without restriction and without payment of Customs Duties and other Surcharges and this Clause did not provide any time limit as stated by the FBR in its letter dated 13.08.2012; till such time the agreement subsisted, the exemption of such goods sent abroad for repair would be admissible---Thus, the proposed question was answered in the affirmative i.e. in favour of the Applicant and against the Respondent /Collectorate---High Court set-aside the impugned judgments of the forums below---Special Customs Reference Application was allowed.

Pervaiz Iqbal Kasi for Applicant.

Muhabbat Hussain Awan for Respondent.

2025 P T D 1324

[Sindh High Court]

Before Muhammad Junaid Ghaffarand Agha Faisal, JJ

MAL PAKISTAN LTD. and others

Versus

FEDERATION OF PAKISTAN and others

Constitutional Petition No. D-1089 of 2016 (and other connected petitions), decided on 15th May, 2023.

Sales Tax Act (VII of 1990)---

----S. 3---Sales Tax Special Procedure Rules, 2007, Rr. 58-S & 58-T---Notification SRO 896(I)/2013 dated 4-10-2013---Delegated legislation---Extra tax, levy of---Estoppel, principle of---Applicability---Petitioners / taxpayers assailed show cause notices issued to them for recovery of 2% extra tax levied on goods so notified in addition to tax already levied---Validity---Certain functions have been delegated by Sales Tax Act, 1990 itself which otherwise are more of procedural in nature as to the effective date and its paraphernalia regarding input adjustment and payment in lieu thereof---Levy of extra tax was not a case of excessive delegation or for that matter, delegation of any legislative functions---By way of SRO 896(I)/2013 dated 4-10-2013, an extra tax of 2% was being collected in terms of S. 3(5) of Sales Tax Act, 1990---Provision of R. 58-T (5) of Sales Tax Special Procedure Rule, 2007 also provided that the specified goods on which extra sales tax was paid in the manner so provided, would be exempted from payment of sales tax on subsequent supplies including those as made by a retailer---This was in fact never an extra tax in essence, rather a mode to facilitate trade merely by making collection of a tax which was to be paid subsequently on supplies or at retail stage---Petitioners / tax-payers were estopped by their conduct as they had been availing such facility---This was never a direct tax upon petitioners / taxpayers but was on the end consumer and was to be made part of cost of goods and value of supply for the purposes of paying sales tax under Sales Tax Act, 1990---Such levy was neither discriminatory being confiscatory in nature and did not imping upon any fundamental rights---Division Bench of High Court declined to interfere in the competence and validity of legislation in question i.e. S. 3(5) of Sales Tax Act, 1990 as well as Rr. 58-S and 58-T of Sales Tax Special Procedure Rule, 2007 introduced by way of an amending SRO 896(I)/2013 dated 4-10-2013---Division Bench of High Court declared the provision of Sales Tax Act, 1990 and SRO 896(I)/2013 dated 4-10-2013 to be validly and competently enacted / issued and were not ultra vires---Constitutional petition was dismissed in circumstances.

2017 CLC 1204; Mustafa Impex v. Government of Pakistan PLD 2016 SC 808; Pakistan Medical and Dental Council v. Muhammad Fahad Malik 2018 SCMR 1956; Government of Sindh v. Dr. Nadeem Rizvi 2020 SCMR 1; Muhammad Fahad Malik v. PMDC PLD 2018 Lahore 75; Eng. Zafar Iqbal Jhagra v. Federation of Pakistan 2013 SCMR 1337; M. Afzal and Son v. Federal Government PLD 1977 Lahore 1327; New Allied Electronics Ind. Ltd v. Federation of Pakistan 2017 PTD 130; Sakrand Sugar Mills Limited v. Federation of Pakistan PTCL 2014 CL 154; Cannon Products Ltd. v. Income Tax Officer PLD 1985 Karachi 572; Province of Sindh v. MQM PLD 2014 SC 531; Jurist Foundation v. Federal Government PLD 2020 SC 1; Director Food v. Madina Flour and General Mills Ltd PLD 2001 SC 1; Human Rights Case No. 14392 of 2013, Shakeel Ahmed v. Federation of Pakistan 2016 PTD 577; Mir Muhammad Khan v. Haider and others PLD 2020 SC 233; Almoiz Industries Ltd v. Federation of Pakistan 2018 PTD 1633; Ziaullah Afridi v. Government of Khyber Pakhtunkhwa PLD 2018 Peshawar 83; Haji Sultan Ahmed v. Chairman CBR 2008 PTD 103; All Pakistan Paramedical Staff v. Federation of Pakistan PLD 2017 Lahore 640; PLD 1983 SC 385; Muhammad Rafiq v. Federation of Pakistan 2014 PTD 1881; Quality Steel Re Rolling Mills v. Federation of Pakistan 2022 PTD 39; Asad Ali v. Federation of Pakistan PLD 1998 SC 161; PLD 2013 SC 829; ZAK Re Rolling Mills v. Appellate Trib 2020 SCMR 131; Tandliawala Sugar Mills v. Federation of Pakistan 2001 SCMR 1398; Pak Telecommunication v. Government of Pakistan 2017 PTD 1359; LDA v. Imrana Tiwana 2015 SCMR 1739; State of M.P. v. Rakesh Kohli 2013 SCMR 34; Elahi Cotton v. Federation of Pakistan PLD 1997 SC 582; Hakimsons Impex v. Federation of Pakistan C.P. 4614 of 2022 SHC; Fecto Belarus Tractors Ltd v. Government of Pakistan PLD 2005 SC 605; Pir Baksh v. Chairman Allotment Committee PLD 1987 SC 145; OGRA v. Midway CNG 2014 SCMR 220; ZaibTun Textile Mills Ltd v. CBR PLD 1983 SC 358; Multiline Associates v. Ardeshir Cowasjee 1995 SCMR 1362; Province of East Pakistan v. Sirajul Haq Patwari PLD 1966 SC 854; Sh. Abdur Rahim, Allah Ditta v. Federation of Pakistan PLD 1988 SC 670; Ravi Spinning's case 1999 SCMR 412; Yousuf Re-Rolling's case PLD 1989 SC 232; Qaiser Brothers's case PLD 1991 SC 884; East West Steamship Company's case PLD 1958 SC (Pak) 41 and R.K. Garg v. Union of India (1981) 4 SCC 675 rel.

For Petitioners

Dr. Muhammad Farogh Naseem, Ameen Bandukda, Fouzia Rasheed, Ahmed Hussain, Ammar Yasser, Naeem Suleman, Arshad Hussain Shehzad, Kashan Ahmed, Asghar Bangush, Tauqir Randhawa, M. Saad Shafiq Siddiqui, Saiyed Younus Saeed, Ajeet Kumar, Nadir Hussain Abro, Raghib Ibrahim Junejo, Fahad Khan, Mushtaque Hussain Qazi, Ghazala Rafiq, Ellahi Buksh Qureshi, Muhammad Arif, Abdul Sattar Silat, Muhammad Arif, Zain A. Jatoi, Muhammad Mustafa Namdani, Syed Arshad Ali, Sagar Ladhani, Shehanshah Hussain, Syed Irshad-ur-Rehman, Abdul Rehman Adeed, Mariam Salahuddin, M. Adeel Awan, Duaa Aryaan and Asadullah, Muhammad Jehangir holding brief for Ismat-un-Nissa.

For Respondents

Shahid Ali Qureshi, Ameer Bakhsh Metlo, Dr. Shah Nawaz, Nusrat Ali Shar, Imran Ahmed Metlo, Abdul Mujeeb Zeeshan, Afsheen Aman, Muhammad Aqeel Qureshi, Khalid Rajpar, Muhammad Khalil Dogar, Nuzhat Shah, Fozia M. Murad, Zohaib Ahmed, Abdul Saim Malik, Muhammad Taseer Khan, Abdul Sami Malik, Muhammad Idress Rahimoon, Qaim Ali Memon, Syed Ahsan Ali Shah, Bilal Memon, Waleed Khanzada, Muhammad Bilal Bhatti, Fayaz Ali Metlo, Farha Naz Qazi, Ashfaq Ali Gilal, Kashif Nazeer, Preetam Das, Jawed Hussain, Irshad Ali Tunio, Sajjad Ali Solangi, Ghulam Rasool Korai, Masooda Siraj, Umer Zd Gul, Khalid Mehmood Siddiqui, M. Rashid Arfi, Ayaz Sarwar Jamali, Mohsin Mithani, Danyal Muzaffar, Syed Shohrat Hussain Rizvi, Pervaiz Ahmad Memon, Bushra Zia for Muhammad Zubair Qureshi.

Qazi Ayazuddin Qureshi and G. M. Bhutto Assistant Attorney Generals.

Kafeel Ahmed Abbasi, Additional Advocate General Sindh.

2025 P T D 1391

[Sindh High Court]

Before Muhammad Junaid Ghaffar, ACJ and Mohammad Abdur Rahman, J

NATIONAL FOOD LIMITED through Authorized Officer

Versus

COLLECTOR OF CUSTOMS MODEL CUSTOMS COLLECTORATE OF PPRAISEMENT-WEST

and another

Special Customs Reference Applications Nos. 1129 to 1135 of 2023, decided on 12th May, 2025.

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

----Ss. 19 & 80---Sales Tax Act (VII of 1990), S. 13 & Sixth Sched. Serial No. 19---Special Economic Zones Act (XX of 2012), S. 37---Exemption from payment of customs duties and sales tax on import of capital goods---Entitlement---'Capital goods', definition of---Prefabricated building structures fall within definition of 'capital goods' and same qualify for exemption---Facts in brevity were that the petitioner while establishing a new food manufacturing plant in the special economic zone (SEZ), imported prefabricated building structures and overhead cranes, claiming exemption from customs duties and sales tax under S. 37 of the Special Economic Zones Act, 2012, read with SRO 41(I)/2009 and Chapter 9917(2) of the Customs Tariff as "Capital Goods"---Customs authorities denied the exemption through an assessment order, which decision was upheld by both the collector (appeals) and the customs appellate tribunal---Petitioner argued that prefabricated buildings qualified as capital goods under the Customs Act, 1969 and existing SROs, relying on the case reported as (2011 PTD 569), where similar exemptions were upheld---Pivotal point for consideration by the High Court was as to "Whether the prefabricated building structures imported by the petitioner for setting up a manufacturing facility in a notified Special Economic Zone (SEZ) qualified as "capital goods" and were therefore entitled to exemption from customs duties and sales tax under S. 37 of the SEZ Act, 2012, read with SRO 41(I)/2009 and Chapter 9917(2) of the Customs Tariff, notwithstanding a contrary interpretation by the Federal Board of Revenue?" ---Held: Insofar as the definition of "Capital Goods" was concerned, it had been interpreted expansively to hold that prefabricated buildings and sheds, so imported, fell within the definition of either machinery, plant, equipment, apparatus or capital goods; and therefore, qualified for exemption under SRO 575(I)/2006---Once it had been held categorically by a Division Bench of the High Court that prefabricated buildings and sheds fell within the definition of plant, equipment, machinery and capital goods, then how could the department or for that matter the Tribunal disagree with such view merely for change in the SRO or classification of goods under some special Chapter (9917) of the Customs Tariff or under the 5th Schedule to the Customs Act---Till such time the definition remained the same, the dicta laid down in the case reported as (2011 PTD 569) was to remain applicable and any deviation thereof, in fact, was contemptuous on the part of the department---Accordingly, this aspect of the matter stood answered and the finding of the Tribunal in this context was not in accordance with the law---Similarly, Tribunal's observations while dealing with Serial No. 19 of the 6th Schedule of the Sales Tax Act, 1990 in respect of exemption of sales tax that the applicant was not a zone developer, but had set-up its industrial unit in special economic zone, hence not entitled for any exemption, was incorrect and without proper appreciation of law and facts---The said provision was pari materia to what had been provided under Special Classification Chapter 9917(2) and therefore, the applicant was not only entitled for exemption of duties on the goods in question being Capital Goods under Chapter 9917(2) read with the Preamble of Part-I of the Fifth Schedule to the Customs Act, 1969; but so also from Sales Tax against Serial No.19 of the Sixth Schedule to the Sales Tax Act, 1990---It was of paramount importance to note that an exemption was also provided under S. 37 of the Special Economic Zones Act, 2012 read with SRO 41(I)/2009 dated 19.01.2009 which was available for establishing projects in SEZ's---Such exemption was provided in terms of S. 19 of the Customs Act, 1969 read with S. 13 of the Sales Tax Act, 1990 on the import of capital equipment (i.e. plant, machinery, equipment and accessories), whereas, in the said notification, it was only machinery, which had been defined and it was silent about as to what was plant, equipment and accessories---In the considered view of the High Court the claim of the applicant for exemption under SRO 41(I)/2009 was also valid by treating the goods in question as capital equipment as provided in the said SRO---The Tribunal's rejection in providing exemption to the petitioner was based on FBR's opinion that prefabricated buildings were not "plant, machinery or equipment---The Tribunal had erred in this regard by placing reliance on the directions of FBR and its interpretation in respect of capital goods viz a viz exemption claimed by the applicant---Reference application was allowed, in circumstances.

Aisha Steel's case 2011 PTD 569 and Messrs Hayat Kimya Pakistan (Pvt.) Ltd. v. Federation of Pakistan and others C.P. No. D-8480 of 2019 ref.

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

----S. 223, 'proviso'---Customs authority exercising quasi-judicial function---Jurisdiction---Interference of Federal Board of Revenue (FBR) in customs authority's judicial discretion---Legality---Any such directions / opinion of FBR are not binding on the officers of the customs performing quasi-judicial functions, at least not on the Tribunal as an Appellate forum---Thus, in all those cases in which customs authority exercises a quasi-judicial function, it is not bound by the instructions and directions or orders of the board which interfere with its judicial discretion.

Assistant Director Intelligence v. B.R. Herman PLD 1992 SC 485 rel.

(c) Interpretation of statutes---

----Interpretation made by Central Board of Revenue regarding any statutory provision---Binding nature---Limits and scope---Any interpretation placed by the Central Board of Revenue on a statutory provision cannot be treated as a pronouncement by a forum competent to adjudicate upon such a question judicially or quasi-judicially---Central Board of Revenue cannot control or curtail judicial adjudication power in the forums provided under the relevant law by giving a particular interpretation to a particular provision of the relevant law.

Central Insurance Company v. The Central Board of Revenue 1993 SCMR 1232 and The Central Board of Revenue v. Sheikh Spinning Mills Ltd. 1999 SCMR 1442 rel.

Hyder Ali Khan along with Hamza Waheed and Sami-ur-Rehman for Applicant (in all SCRAs).

Faheem Raza Khuhro for Respondents (in all SCRAs).

2025 P T D 1410

[Sindh High Court]

Before Agha Faisal and Abdul Mubeen Lakho, JJ

NATIONAL BANK OF PAKISTAN through Authorized Attorney

Versus

FEDERATION OF PAKISTAN through Secretary, Ministry of Finance, Islamabad and 2 others (And connected matters, particularized in the Schedule1 hereto.)

C.P. No. D-713 of 2024 (and other connected Petitions), decided on 20th February, 2025.

(a) Constitution of Pakistan---

----Arts. 77, 260 & Fourth Schedule, Federal Legislative List Serial Nos. 47 & 48---Tax, imposing of---Scope---Tax on income defined in Art. 260 of the Constitution includes a tax in the nature of an excess profits tax or a business profits tax etc.---Fourth Schedule to the Constitution enumerated Federal Legislative List and Entries 47 and 48 thereof befall the taxes on income and on corporations squarely within the exclusive domain of Federal Parliament---Tax to be levied, under Art. 77 of the Constitution is required to be levied for the purposes of Federation by or under the authority of an Act of Parliament---Constitution specifically empowers the Parliament to levy a tax on excess profits upon corporations by or under the authority of sub-Constitutional legislation.

(b) Interpretation of statutes---

----Retrospective effect---Scope---When legislature gives retrospective effect to a law, either by express provision or by necessary implication, no protection can be afforded to vested rights contrary to the law.

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

----S. 99-D---Notification SRO 1588(I) of 2023, dated 21-11-2023---Constitution of Pakistan, Art. 199---Constitutional petition---Windfall tax, vires of---Scope---Petitioner / taxpayer assailed levy of tax on windfall gains---Validity---Tax under Art. 77 of the Constitution is levied under the authority of Parliament---Executive authority of Federation as stipulated under Art. 97 of the Constitution, extends to matters with respect to which the Parliament has the power to make laws; including exercise of rights, authority and jurisdiction---Delegation is contemplated to achieve the object of statute and test to determine validity thereof is to see whether it amounts to abdication of the function of the Legislature---Essential functions of legislature i.e. promulgation, modification, repeal etc. are envisaged to be exercised by the Legislature only---No exercise of such power by Federal Government is manifested from SRO 1588(I) of 2023, dated 21-11-2023---Petitioner / taxpayer under the doctrine of impermissible excessive legislative authority remained unable to be fall within the confines of SRO 1588(I) of 2023, dated 21-11-2023---Petitioner / taxpayer failed to substantiate imposition of windfall tax---Constitutional petition was dismissed, in circumstances.

DCIR v. Digicom Trading C.A. 2019 of 2016; CIR v. Jahangir Khan Tareen 2022 SCMR 92; 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; Pakistan v. Qazi Ziauddin PLD 1962 SC 440; Lt. Col. N M A Khan v. Controller of Estate Duty PLD 1961 SC 119; Usmania Glass v. Sales Tax Officer Chittagong PLD 1971 SC 205; CIT v. Eli Lilly 2009 SCMR 1279; Lahore Development Authority v. Imrana Tiwana 2015 SCMR 1739; Commissioner Inland Revenue v. Mekotex (Private) Limited PLD 2025 SC 1168; Army Welfare Trust Sugar Mills Limited v. Federation of Pakistan 1992 SCMR 1652; Sapphire Textile Mills v. Federation of Pakistan 2021 PTD 971; Hadayatullah v. Pakistan 2022 SCMR 1691; Hakimsons Impex v. Federation of Pakistan 2024 PTD 451 / PLD 2024 Sindh 132; Impex v. Government of Pakistan PLD 2016 SC 808; Zaibtun Textile Mills Limited v. Central Board of Revenue PLD 1983 SC 358; Elahi Cotton Mills Limited v. Federation of Pakistan PLD 1997 SC 582 and Shahtaj Sugar Mills v. Government of Pakistan 2024 SCMR 1656 rel.

Muhammad Farogh Naseem, Khalid Jawed Khan, Qazi Umair Ali, Lubna Pervez, Mariam Salahuddin, Shahrukh Farogh Naseem, Sagar Ladhani, Abdul Rehman Adeed, Saima Anjum, Pooja Kalpana, M. Umer Akhund, Uzair Qadir Shoro, Syed Muhammad Aijaz and Muhammad Imran Khan for Petitioners.

Shahzaib Masud, Ahmed Mujtaba and Saqib Soomro for the Federal Board of Revenue.

Zia-ul-Haq Makhdoom and Mirza Nasar Ahmed, Additional Attorney General for Respondents.

Kashif Nazeer and Alizeh Bashir, Assistant Attorney Generals for Respondents.

2025 P T D 1433

[Sindh High Court]

Before Muhammad Junaid Ghaffar, CJ and Muhammad Abdur Rahman, J

Messrs AL MASOOM PRODUCTS

Versus

COMMISSIONER (APPEAL-VI) INLAND REVENUE

Income Tax Reference Applications Nos. 342, 343 and C.M.A. No. 2523 of 2024, decided on 10th December, 2024.

General Clauses Act ( X of 1897)---

----S. 24A---Income Tax Ordinance (XLIX of 2001), Ss. 126A & 127 [as amended vide Finance Act, 2024]---Order passed by tax authorities---Reasoning, absence of---Effect---Commissioner Inland Revenue (Appeals) being final appellate authority /forum---Powers and obligations---Record reveals that while passing both the impugned judgments, neither any reasoning has been assigned nor the law has been referred to by the tax authorities---Tax authorities are required to act in a judicious manner with fair and justifiably reasoned orders as S. 24A of General Clauses Act, 1897, reiterates the principle that statutory power is to be exercised reasonably, fairly, justly and the advancement of the purposes of the enactment and further clarifies that an executive authority must give reasons for its decision and any action by such authority which is violative of the said principle is liable to be struck down---Pertinently, pursuant to the Finance Act, 2024 and thereafter through Finance Amendment Act, 2024, such orders of the Commissioner (Appeals) are now assailable by way of Reference Application under S. 133 of the Income Tax Ordinance, 2001, before High Court to consider not only a question of law but also the questions of fact, however, the same has only burdened the High Court(s) with more and more tax matters---Officers of the Department, including the Commissioner (Appeals), as a matter of routine are passing orders in a slipshod manner without even discussing the law or facts of a particular case---Instead, the entire response / grounds are reproduced in their orders and then the contention is rejected by way of compendious / brief orders---In the present case, both the officers below have failed to give any reasoning; nor have determined any questions of law or even facts, based on which High Court can answer the proposed questions; which nullifies the idea of providing a direct Reference before High Court against orders of Commissioner (Appeals) as instead of reducing litigation, it has increased the pendency of tax matters---Such orders are being remanded to the assessing officers starting a fresh round of cumbersome proceedings and is not helping the Court or the litigants, including the tax department, in any manner, for swift disposal of like matters---It is high time for FBR and its Legal Division(s) to look into this and issue instructions as well as educate / train the concerned Officers in the adjudication and appellate hierarchy to pass well-reasoned orders in line with S. 24A of the General Clause Act, 1897, after taking into consideration all factual as well as legal aspects of a case so that the High Court(s) can answer the proposed questions of law and facts in an apt manner while exercising its Reference jurisdiction under S. 133 of the Income Tax Ordinance, 2001---High Court set-aside the impugned orders passed by the Commissioner (Appeals) as well as the Assessing Officer and the matter was remanded to the original Authority, who would decide the same with a reasoned and a speaking order---Reference applications were allowed accordingly.

Muhammad Amin, Muhammad Bashir Limited v. Government of Pakistan 2015 SCMR 630; Muhammad Ashraf Tiwana v. Pakistan 2013 SCMR 1159; Government of Pakistan v. Farheen Rashid 2011 SCMR 1; Habibullah Bhutto v. Collector of Customs 2011 SCMR 1504; Fashihuddin Khan v. Government of Punjab 2010 SCMR 1778 and United Woolen Mills Limited Workers Union v. United Woolen Mills Limited 2010 SCMR 1475 ref.

Syed Amin-u-Din holds brief for Zia Ahmed for Applicant.

2025 P T D 1483

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Mohammad Abdur Rahman, JJ

MUKESH KUMAR

Versus

APPELLATE TRIBUNAL INLAND REVENUE and others

Income Tax Reference Application No. 274 of 2024, decided on 3rd December, 2024.

Income Tax Ordinance (XLIX of 2001)---

----Ss. 221 & 133---Dismissal of Rectification Application by the Appellate Tribunal Inland Revenue, challenge to---Reference Application before the High Court---Maintainability---Whether a Reference Application is maintainable against dismissal of a Rectification Application by the Appellate Tribunal Inland Revenue ('Tribunal')---Held: In the present case, Reference Application is directed against dismissal of a Rectification Application and not against the main order of the Appellate Tribunal Inland Revenue, whereby the Appeal of the Applicant was dismissed---An order of rectification is not an order disposing of an appeal against which a Reference could be maintained, as Reference Application can be filed against order passed by the Tribunal which has disposed an appeal---Thus, present Reference Application against dismissal of a Rectification Application is not maintainable---Reference Application was dismissed in limine, in circumstances.

The Collector of Customs, Model Customs Collectorate, Port Muhammad Bin Qasim, Karachi v. Messrs Pacific Oil Mills (Pvt.) Limited and another 2023 PTD 1268 ref.

2025 P T D 1519

[Sindh High Court]

Before Muhammad Junaid Ghaffar, ACJ and Muhammad Abdur Rahman, J

Messrs NEW ERA FABRICS through authorized attorney

Versus

APPELLATE TRIBUNAL INLAND REVENUE and 2 others

Special Sales T.R.A. No.160 of 2024, decided on 16th April, 2025.

Sales Tax Act (VII of 1990)---

----Ss.11, 26, 33 & 47---Reference---Imposing of maximum penalty---Non-filing of sales tax returns---Element of mens rea, absence of---Effect---Petitioner / taxpayer was aggrieved of show cause notice issued by authorities under S. 11(1) of Sales Tax Act, 1990 with regard to imposing of penalty for alleged violation of non-filing of certain sales tax returns---Validity---When there was violation of S. 26 of Sales Tax Act, 1990 only then provision of S. 33 (1) of Sales Tax Act, 1990 was relevant---No separate show-cause notice for violation of S. 26 of Sales Tax Act, 1990 was issued---There was no corresponding amendment in S. 33 of Sales Tax Act, 1990 therefore, general principle of law i.e. for imposition of penalty an element of mens rea must be present was attracted---There was no apparent element of mens rea on the part of applicant / taxpayer in non-filing of its sales tax returns for period in question---There was no short levied amount of sale tax determined against applicant / taxpayer, therefore, maximum penalty so imposed could not be sustained---High Court set aside orders passed by the forums below---Reference was allowed, in circumstances.

Haris Trading Co. v. Deputy Collector of Customs, Export 2021 PTD 1901; Messrs Khatri Brothers v. Federation of Pakistan and 3 others 2014 PTD 966; Commissioner (Legal Division) v. Pakistan Services Limited 2023 PTD 773; Pakistan International Airlines Corporation v. Collector of Customs (Preventive), Karachi Special Customs Appeal No. 30 of 2004; Commissioner Inland Revenue v. Byco Petroleum Pakistan Ltd. (C.P. No.122-K of 2022); Pakistan through the Secretary, Ministry of Finance, Rawalpindi and others v. Hardcastle Waud (Pakistan) Ltd., Karachi PLD 1967 SC 1; D.G. Khan Cement Company Ltd., The Federation of Pakistan and others 2004 SCMR 456; Deputy Collector of Customs v. ICI Pakistan 2006 SCMR 626; Coca Cola Beverages Ltd. v. Customs and Excise Appellate Tribunal 2017 PTD 2380; Shamroz Khan v. Muhammad Amin PLD 1978 SC 89 and G.M. Pakistan Railways v. Muhammad Rafique 2013 SCMR 372 rel.

Taimoor Ahmed Qureshi for Applicant.

Barrister Syed Ahsan Ali Shah for Respondent.

2025 P T D 1570

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Muhammad Abdur Rahman, JJ

Messrs TEC STYLE EMPORIUM and another

Versus

FEDERATION OF PAKISTAN and another

Constitution Petitions Nos.594 and 729 of 2024, decided on 7th August, 2024.

(a) Customs Rules, 2001---

----R.75---Imported consignment of goods, auctioning of---Delay in filing of Goods Declaration by importer due to dispute regarding exemption of sales tax---Goods Declaration filed after payment of duties and taxes---Custom authorities auctioning the imported goods while the importer was agitating the matter of exemption of sales tax before the authorities---Legality---Cancellation of auction---Scope---Auction proceedings could be cancelled before delivery of goods to the auction purchaser---Two constitutional petitions were filed concerning the same consignment of goods; one by the importer seeking restraining of the auction and one by auction purchaser seeking delivery of goods---The importer faced a delay in filing the Goods Declaration due to a pending dispute over exemption of sales tax and auction of goods was conducted during the pendency of this dispute, and the importer after resolution of dispute had paid the disputed amount---The auction purchaser contended that he had acquired vested rights post-auction and was unjustly denied delivery---Primary issue for determination before the High Court was as to "Whether the auction conducted by customs authorities was lawful despite the importer's pending sales tax exemption dispute causing delay in filing of Goods Declaration, and whether the importer's subsequent payment of duties entitled him to reclaim the goods over the auction purchaser who deposited the bid amount?"---Held: Despite the auction purchaser being a successful bidder it was not disputed that the importer of the goods had filed its 'Goods Declaration' which could only be filed after payment of duty and taxes in advance as per its own calculation---The exemption claimed by the importer in respect of sales tax was denied and the matter was being persuaded by the importer before the respondent authorities for grant of such exemption---In the meantime, the customs collectorate on its own auctioned the goods, which was not in accordance with law as the importer was already agitating its case in respect of the goods and the exemption so claimed---Rule 75 of Customs Rules, 2001 clearly provided and empowered the collector to reject any auction proceedings before delivery of the goods---In the present case, admittedly the goods were not delivered as physical delivery of the goods was not given to the auction purchaser and the language of Sub-Rule (2) of R. 75 required "delivery of goods" which meant the physical delivery and not constructive delivery provided on a delivery order---Auction ought to be cancelled and the goods be delivered to the importer who had already filed a Goods Declaration and had also paid the duties and taxes as assessed---Auction proceedings stood cancelled---Moreover, since the auction of goods was conducted by fetching almost half of the total value of the goods, serious doubts were casted upon the entire auction process---Constitutional petition filed by the auction purchaser was dismissed and the one filed by the importer was allowed, in circumstances.

(b) Auction---

----Auction proceedings---Auctioning of goods at a throwaway price---Legality---Where the goods have been auctioned by the customs authorities at almost half of the total value of goods, serious doubts arise upon the sanctity of the auction and the entire process which led to such auction---When it is clear that good have been sold for less than its declared value, the Court would not be denuded of its jurisdiction to set aside such sale/auction on account of inadequacy of price alone---When auction proceedings are tainted with serious lapses causing prejudice to the owner of goods, the Courts can always take notice of it.

Muhammad Khalil v. Messrs Faisal M.B. Corporation 2019 SCMR 321 and Lanvin Traders v. Presiding Officer Banking Court No.2 2013 SCMR 1419 rel.

Rana Sakhavat Ali along with sole proprietor Khawaja Sohail Ahmed for Petitioner (in C.P. No.D-594 of 2024).

Imran Iqbal Khan and Aneela Zia for Petitioner (in C.P. No.D-729 of 2024).

Kashif Nazeer, Assistant Attorney General for Respondent No.1.

Sardar Zafar Hussain, Agha Shahid Majeed Khan, Arshad Majeed and Muhammad Zakir along with Tariq Aziz, Assistant Collector for Respondent No.2.

2025 P T D 1586

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Muhammad Abdur Rahman, JJ

M.A. FLOUR MILLS (PVT.) LIMITED

Versus

FEDERATION OF PAKISTAN and others

Constitution Petition No.D-4323 of 2022, decided on 7th August, 2024.

Sales Tax Act (VII of 1990)---

----Ss.3 & 6---Customs Act (IV of 1969), Ss. 30 & 31-A---Payment of sales tax---Rate at the time of Letter of Credit was 10% which was subsequently enhanced at the time of Goods Declaration---Legality---Enhanced rate, applicability of---Scope---Case of the petitioner was that when the letter of credit was established in respect of the goods in question, 10% sales tax was leviable, whereas, when the goods arrived and a Goods Declaration was filed, the said rate was enhanced from 10% to 17% therefore petitioner contended that it was liable to pay 10% sales tax instead of 17% as claimed by the authorities---Validity---Provisions of S. 6 (1) & (1A) of the Sales Tax Act, 1990, made it clear that notwithstanding the opening of Letter of Credit, the rate of sales tax would be the one, which was applicable at the time of filing of a Goods Declaration as provided under S. 30 of the Customs Act, 1969 read with Ss. 3 & 6 of the Sales Tax Act, 1990---Section 6(1) was incorporated in the year 2002 to undo the effect of judgment of the Supreme Court of Pakistan reported as 1986 SCMR 1917, whereby, it was held by the Supreme Court that if a binding contract was concluded between the importer and the exporter or steps were taken by creating a vested right to the then existing notification granting exemption, the same could not be taken away and destroyed in modification of the earlier one---However, the effect of this judgment was undone by insertion of S. 31A of the Customs Act, 1969, and a subsequent challenge to its vires had remained unsuccessful in the case reported as 1993 SCMR 1905---Therefore, no case for indulgence of the High Court was made out---Amount secured, if any, pursuant to the ad-interim order passed by the High Court was directed to be paid / credited to the account of the concerned Collectorate---Petition was dismissed, in circumstances.

Molasses Trading and Export (Pvt.) Limited v. Federation of Pakistan and others 1993 SCMR 1905 and Fecto Belarus Tractors Limited v. Pakistan through Ministry of Finance Economic Affairs 2001 PTD 1829 rel.

Abdul Rahim Lakhani for Petitioner.

Kashif Nazeer, Assistant Attorney General for Respondent No.1.

Muhammad Khalil Dogar for Respondents Nos.3 and 4.

2025 P T D 1609

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Mohammad Abdur Rahman, JJ

Messrs FAZLEE SONS (PVT.) LTD.

Versus

FEDERATION OF PAKISTAN and others

Constitution Petition No.D-6280 of 2024 and C.M.As Nos.27995 of 2024, 1021 of 2025, decided on 20th January, 2025.

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

----Ss. 2(68), 74, 177(1), 214C & Second Schedule, Pt. IV, Clause (105A)---Audit proceedings, exemption from---"Tax year"---Scope---"Preceding four tax years"---Scope---Taxpayer's audit for Tax Year 2018 had been completed on 28.06.2024---Taxpayer assailed notice for conducting audit for Tax Year 2023 (impugned notice )---Plea of the petitioner / taxpayer was that the impugned notice was illegal as the petitioner was entitled to the benefit conferred vide clause (105A) of the Second Schedule, (Part IV) of the Income Tax Ordinance, 2001 ('the Ordinance 2001') ; hence the petitioner could only be audited for future tax year(s) after 28.06.2028---Validity---Clause (105A) of the Second Schedule - (Part IV) of the Income Tax Ordinance, 2001 ('Clause (105A)') was provided under the chapter of exemptions from applicability of certain provisions---Clause (105A) reflected that it was a kind of concession or benefit and provided that Ss. 177 & 214C of the Ordinance 2001 shall not apply to a person whose income tax affairs had been audited in any of the "preceding four tax years" ; it was clearly provided that said exemption or concession was only available, if the taxpayer had been audited in any of the preceding four tax years---The use of the word "tax year" was of pivotal importance ; it did not refer to a date on which audit had been completed (as contended by the petitioner)---In the present matter, the petitioner was selected for audit for tax year 2018 and such audit had been completed on 28.06.2024; which would not mean that the period of preceding "four tax years " must be calculated from said date (28.06.2024)--- It was the audit of a particular tax year (2018) and not the date or year (2024) in which the audit was completed; which could never be the intention of said provision because otherwise use of the words "tax year" would become redundant---Redundancy cannot be attributed to the legislature---If the contention of the petitioner was accepted as correct, then there was no requirement to mention the words "preceding four tax years" and instead use of the words "preceding four years" would have sufficed---It was also of relevance to note that tax-year had been defined in S.2(68) read with S. 74 of the Income Tax Ordinance, 2001, that it shall be a period of twelve months ending on the 30th day of June and shall, subject to subsection (3) be denoted by the calendar year in which the said date falls---Therefore, petitioner's selection of audit for tax year 2018 (notwithstanding its completion in 2024) would be of tax year 2018 and not of tax year 2024 to claim any benefit of Clause 105A---It was immaterial as to when the audit was completed as it will remain an audit for a particular tax year, and it was only that tax year (2018 in the present matter) which was relevant for calculating the period of concession under Clause 105A, i.e. next audit could be done in respect of tax-year 2023 which was exactly what the respondents / department had done by issuing the impugned notice---The reference to a tax year in clause 105A was not without any rationale; rather it specified it ;otherwise, use of the word "calendar year" would have sufficed---Therefore, said difference had an important bearing on as to when the next audit was to be done--- The concession was that audit was to be done once in four years, whereas petitioners contends that it could only be done in 2028, meaning thereby it could only be done after 10 years ; said contention was bereft of any valid or justifiable logic and if accepted, would defeat the intent of the legislature---Resultantly, by this interpretation an audit could first be prolonged by the taxpayer (as was the case in hand as selection of audit for 2018 was made in 2022, and the petitioner never responded and finally in 2024 the amended assessment order was passed) and then once it was done belatedly, a protection could be claimed in terms of Clause 105A---Said approach would in fact defeat the very purpose of audit, notwithstanding the exemption so provided under clause 105A---Constitutional Petition, being misconceived and non-maintainable, was dismissed in limine.

Collector of Customs v. Mega Tech (Pvt.) (Ltd.) 2005 SCMR 1166 and Pakistan Telecommunication Employees Trust v. Federation of Pakistan PLD 2017 SC 718 ref.

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

----S. 177(1) & Second Schedule, Pt. IV ,Clause (105A)---Circular dated 21.07.2022 issued by FBR---Audit proceedings , exemption of---"Tax year"---Scope---"preceding four tax years"---Scope---Taxpayer's audit for Tax Year 2018 had been completed on 28.06.2024---Taxpayer assailed notice for conducting audit for Tax Year 2023 (impugned notice)---Petitioner / taxpayer placed reliance on Circular dated 21.07.2022 issued by FBR, whereby, an example was given that if an audit of a taxpayer for tax-year 2017 had been finalized in tax year 2022, then the said taxpayer could only be audited again after four tax years i.e. in tax year 2027"---Held, that the plea /reliance was devoid of any rationale or logic and was in conflict with the main provision of law; hence, liable to be discarded---The finalization of the audit in a particular tax year was not at all relevant nor it was provided in clause 105A--- The completion of the audit of a previous tax year was in a calendar year and that had no relevance insofar as the selection for audit for the next tax years was concerned---Any interpretation BY CBR / FBR was not binding even otherwise on adjudicating officers and were certainly not binding on this Court in any manner---It was only when they were in conformity with the law, that Courts may accept such an interpretation---Constitutional petition, being misconceived and non-maintainable, was dismissed in limine.

CBR v. Sheikh Spinning Mills Ltd. 1999 SCMR 1442 and Central Insurance Co. v. CBR 1993 SCMR 1232 ref.

2025 P T D 1

[Lahore High Court]

Before Shams Mehmood Mirza and Abid Hussain Chattha, JJ

FAIZA BASIR SYED

Versus

CUSTOMS APPELLATE TRIBUNAL and 4 others

Custom Reference No.29685 of 2022, heard on 11th September, 2024.

Customs Act (IV of 1969)---

----Ss. 196 & 202---Customs Recovery Rules, 1992, Rr. 7 & 8---Reference---Recovery of customs duty---Liability of directors of importer company---Applicant / director of importer company was aggrieved of attachment of her house to seek recovery of outstanding duties and taxes for goods imported by respondent / company---Validity---At the relevant time Customs Recovery Rules, 1992 did not contain any provision intended to impose liability on directors for payment of taxes and duties owned by importer company or to bring into the net the transaction for transfer of property in dispute or to declare applicant / director and her mother as defaulter---Applicant / director when confronted with proclamation of attachment of her property, rightly filed application for becoming party to appeal of company in order to support its case against order-in-original---Customs Appellate Tribunal having allowed application of petitioner / director was required to adjudicate upon her claim which it in fact did through its order by rejecting the same on merits---Petitioner / director rightly filed reference before High Court---High Court decided all the questions in affirmative in favour of applicant / director---Reference was allowed, in circumstances.

H.M. Extraction Ghee and Oil Industries (Pvt.) Limited v. Federal Board of Revenue 2019 SCMR 1081 ref.

Uzair Karamat Bhandari, Ali Uzair Bhandari and Imran Iqbal for Applicant.

Rana Mehtab for Respondent No.5.

2025 P T D 16

[Lahore High Court (Multan Bench)]

Before Shahid Karim, J

Messrs MEHR DASTGIR LEATHER AND FOOTWEAR INDUSTRIES (PVT.) LIMITED

Versus

FEDERATION OF PAKISTAN through Secretary Ministry of Finance and others

Writ Petition No.15793 of 2022, heard on 11th September, 2024.

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

----Ss. 11(2) & 74---Condonation of time limit by the Federal Board of Revenue---Petitioner/company filed constitutional petition against action under S. 11(2) of the Sales Tax Act, 1990 ('the Act, 1990') whereby it was alleged that it had claimed a refund which was not admissible under the Act, 1990---Case of the petitioner/company was that the Show-Cause Notice, issued by the Department /Respondent , envisaged the same dispute which had already been decided by the courts up to the Supreme Court of Pakistan--- Department/Respondents, relying on certain documents, contended that impugned-action had been taken after approval from FBR for condonation of time limit under S. 74 of the Act, 1990 after due process/communication commencing from a letter addressed by the Assistant Commissioner Inland Revenue on 26.04.2022 and culminating into approval letter dated 01-07-2022 by the FBR with certain terms ('FBR Approval Letter)---Validity---Federal Board of Revenue Approval Letter revealed that the time limit was condoned up to 29.08.2022 and obviously the proceedings in the Show-Cause Notice which was issued on 22.08.2022 were not finalized by that/said date--- Hence, proceedings beyond the condonation of time limit up to 29.08.2022 were ultra vires and beyond the jurisdiction of the officer issuing the Show-Cause Notice---The very basis on which Show-Cause Notice had been triggered was the exercise of power conferred under S.74 of the Act, 1990 by FBR whereby time limit was condoned up to 29.08.2022 for finalization of assessment proceedings---High Court struck down / quashed the Impugned Show-Cause Notices directing the Respondents / Department to process the refund claims of the petitioner/company within the next three months---Constitutional petition was allowed, in circumstances.

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

----Ss. 11(2) & 74---Constitution of Pakistan, Art. 199---Constitution petition---Assessment / recovery of tax not levied/ short levied---Condonation of time limit by the Federal Board of Revenue--- Scope --- Petitioner/company filed constitutional petition against action under S.11(2) of the Sales Tax Act, 1990 ('the Act, 1990') whereby it was alleged that it had claimed a refund which was not admissible under the Act 1990---Case of the petitioner/company was that the Show-Cause Notice, issued by the Department /Respondent, envisaged the same dispute which had already been decided by the courts up to the Supreme Court of Pakistan--- Department /Respondents, relaying on certain documents, contended that impugned-action had been taken after approval from FBR for condonation of time limit under S. 74 of the Act, 1990 after due process/communication commencing from a letter addressed by the Assistant Commissioner Inland Revenue on 26.04.2022 and culminating into approval letter dated 01-07-2022 by the FBR with certain terms ('FBR Approval Letter)---Validity--- Section 74 of the Act, 1990 grants power to the Board to permit an act or thing to be done within such period or time as it may be considered appropriate---This condonation applies where any time or period has been specified under any provision of the Act or rules within which any application is to be made or any of the act or thing is to be done--- The condonation may under peculiar circumstances permit such act or thing to be done within an extended period of time--- Quite clearly, this provision does not apply to an action being taken under S. 11 (now repealed) which relates to assessment of tax and recovery of tax not levied or short levied or erroneously refunded---The action against the petitioner/company was being taken under S.11(2) of the Act, 1990 and alleged that the petitioner-company had claimed a refund which was not admissible under the Act---There have to be reasonable and rational grounds which should compel the Board to make an order in the nature of the one envisaged by S. 74 of the Act, 1990---No guidelines or parameters have been mentioned in S.74 of the Act, 1990 and the least that FBR should do is to provide reasons for extending the limitation period---There cannot be unbridled reversal of statutory period of limitation as legal rights have come to accrue in the registered person---There were no reasonable grounds mentioned in the letter of condonation by FBR which would give power to the officer to issue a Show-Cause Notice after almost 15 years--- High Court struck down / quashed the Impugned Show-Cause Notices directing the Respondents/ Department to process the refund claims of the petitioner/company within the next three months---Constitutional petition was allowed, in circumstances.

Federal Board of Revenue through Chairman, Islamabad and others v. Abdul Ghani and another 2021 SCMR 1154 ref.

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

----S.74--- Condonation of time-limit--- Powers---Under S. 74 of the Sales Tax Act, 1990 exercise of power or a request made by an officer of Inland Revenue is not automatic---Reasonable cause has to be spelt out both in the application as well as in the permission granted on that application---It is not enough for FBR to simply condone the time limit and this must be supported by reasons and on the basis of documents which would show that there were circumstances beyond the control of officers of Inland Revenue at the relevant time which constrained them from taking action under the normal time limit.

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

----Ss. 11(2) & 74---Condonation of time limit by the Federal Board of Revenue--- Scope--- Petitioner/company filed constitutional petition against action under S.11(2) of the Sales Tax Act, 1990 ('the Act, 1990') whereby it was alleged that it had claimed a refund which was not admissible under the Act, 1990---Case of the petitioner/company was that the Show-Cause Notice, issued by the Department /Respondent, envisaged the same dispute which had already been decided by the courts up to the Supreme Court of Pakistan--- Validity--- Record revealed that there were no reasonable grounds mentioned in the letter of condonation by FBR which would give power to the officer to issue a Show-Cause Notice after almost 15 years---In the meantime, rights had come to vest in the petitioner/company which could not be upset by issuance of Show-Cause Notice---Issuance of show cause notice clearly smacked of mala fide as refund claim of the petitioner / company had been delayed and instead of doing so, petitioner/company had been served with a frivolous and vicious Show-Cause Notice---High Court struck down / quashed the Impugned Show-Cause Notices directing the Respondents/ Department to process the refund claims of the petitioner/company within the next three months---Constitutional petition is allowed, in circumstances.

M. Sohail Iqbal Bhatti for Petitioner.

Mohammad Sulaman Bhatti for Respondent-Department.

2025 P T D 35

[Lahore High Court]

Before Muhammad Sajid Mehmood Sethi and Asim Hafeez, JJ

COMMISSIONER INLAND REVENUE

Versus

Messrs STANDARD ICE AND COLD STORAGE, LAHORE

P.T.R. No.634 of 2010, decided on 7th March, 2022.

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

----Ss. 70, 34(5) & Second Schedule, Part-IV, Cls. (3A) [enacted through Finance Act, 2004]---BPD Circular No.29 dated 15.10.2002 issued by State Bank of Pakistan---Circular No.14 of 2004 dated 17.07.2004 issued by (the then) Central Board of Revenue---Benefits under clause (3A) of Part-IV of Second Schedule to the Income Tax Ordinance, 2001---Applicability of---Retrospective effect---Scope---Deemed assessment order of S. 120 of the Income Tax Ordinance, 2001 ('the Ordinance, 2001') was reviewed by the Taxation Officer invoking S. 221 of the Ordinance, 2001, and addition was made by the Taxation Officer treating amount of loan as income, waived under State Bank's Amnesty Scheme in lieu of irrecoverable loans / debts while denying benefit of Clause-3A of Part-IV of Second Schedule to the Income Tax Ordinance, 2001---Taxpayer's first appeal was allowed and the addition was deleted---Department filed Reference application against judgment passed by Appellate Tribunal Inland Revenue ('Tribunal'), whereby its appeal was dismissed while affirming order of the deletion of addition passed by Commissioner (IT/WT)-Appeals---Plea of the applicant / department was that extending the benefit of Clause 3A to the taxpayer against Tax year 2004, without appreciating that Clause (3A) was inserted through Finance Act, 2004, was wrong as that the Legislative intent could not be stretched otherwise to extend retrospective effect to Clause (3A)---It was the case of the applicant department that waiver of loan, by the ZTBL under State Bank of Pakistan Banking Policy Department's Circular No.29 dated 15.10.2002 (BPD Circular No.29), had to be treated as income of the taxpayer and no benefit could be extended or claimed in the garb of Clause (3A), which was not applicable retrospectively to the Tax year 2004---Validity---Clause (3A) ousts applicability of subsection (5) of Ss.34 & 70 of the Ordinance, 2001 and extends benefit(s), derived by way of waiver of debt(s) by the Banks, under State Bank's BPD Circular No.29 dated 15.10.2002 ('BPD Circular No.29')---Purpose of BPD Circular No.29 was to facilitate recovery of irrecoverable-cum-non-performing loans against payment of FSV of the properties / securities, determined according to the mechanism provided under the BPD Circular---It was a one-time opportunity, having cut-off date of 14.04.2003 - which was extended later, but still such extension had no consequence with respect to the issue-at-hand---Such benefit was available and effective from the date of BPD Circular No.29, i.e., 15.10.2002 and applicability whereof could not be denied for the purposes of Tax Year 2004---Clause (3A) was impregnated with retrospectivity, and any construction contrary to such plain and textual interpretation would render it superfluous---Reference to the date of effectiveness of BPD Circular, i.e., 25.10.2002 was a clear indication, let alone an explicit declaration---It is absurd to construe Clause (3A) in a manner as suggested by the department - to apply it prospectively and extend benefit to one set of debtors - post Finance Act 2004 - and deny benefit to other taxpayers, both benefactors of BPD Circular 29 - a distinctive class of persons---Clause (3A) possessed all the features and attributes of a curative, declaratory and beneficial enactment, affirming the spirit of the BPD Circular---Retrospectivity of Clause (3A) stood endorsed in terms of the clarification made, by the then CBR, through Circular No.14 of 2004 dated 17.07.2004 - reference to which was made in the order of CIT(A)---In these circumstances, mere insertion of Clause (3A) through Finance Act, 2004, would not make its application prospective, denuding it of its curative and declaratory character---Retrospective effect to Clause (3A), in view of the facts and circumstances of the present case, could not be denied---Question of law was answered in the affirmative and decided against the department, declaring that Clause (3A) was declaratory and had retrospective effect---Reference application , filed by the Department , was dismissed, in circumstances.

The Commissioner of Income Tax, New Delhi v. Ram Kishan Dass [2019] 413 ITR 337 (SC) and Messrs Khurdistan Trading Company (Partnership, firm) through Authorized Attorney v. Commissioner Inland Revenue 2014 PTD 339 ref.

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

----Ss.18(1)(d), Explanation to, 70, 34(5) & Second Schedule , Part-IV, Cl. (3A) [enacted through Finance Act, 2004]---BPD Circular No.29 dated 15.10.2002 issued by State Bank of Pakistan---Circular No.14 of 2004 dated 17.07.2004 issued by (the then) Central Board of Revenue---Benefits under clause (3A) of Part-IV of Second Schedule to the Income Tax Ordinance, 2001---Applicability---Retrospective effect---Scope---Deemed assessment order of S. 120 of the Income Tax Ordinance, 2001 ('the Ordinance, 2001') was reviewed by the Taxation Officer invoking S. 221 of the Ordinance, 2001, and addition was made by the Taxation Officer treating amount of loan as income, waived under State Bank's Amnesty Scheme in lieu of irrecoverable loans / debts while denying benefit of Clause-3A of Part-IV of Second Schedule to the Income Tax Ordinance, 2001---Taxpayer's first appeal was allowed, and addition was deleted---Department filed Reference Application against judgment passed by Appellate Tribunal Inland Revenue ('Tribunal'), whereby its appeal was dismissed while affirming order of the deletion of addition passed by Commissioner (IT/WT)-Appeals---Plea of the Applicant / Department was that extending the benefit of Clause 3A to the taxpayer against Tax Year 2004, without appreciating that Clause (3A), was inserted through Finance Act, 2004, was wrong as that Legislative intent could not be stretched otherwise to extend retrospective effect to Clause (3A)---It was the case of the applicant Department that waiver of loan, by the ZTBL under State Bank of Pakistan Banking Policy Department's Circular No.29 dated 15.10.2002 (BPD Circular No.29), had to be treated as income of the taxpayer and no benefit could be extended or claimed in the garb of Clause (3A), which was not attracted retrospectively, to the Tax Year 2004---Validity---There was another aspect of the matter; Clause (3A) was deleted through Finance Act, 2008---And lately such benefit, drawn by way of waiver of profit on debt or the debt itself under State Bank of Pakistan Banking Policy Department's Circular No.29 dated 15.10.2002, was declared as income upon adding Explanation to clause (d) subsection (1) of S. 18 of the Ordinance, 2001, by virtue of Finance Act, 2011---In the wake of deletion of Clause (3A), through Finance Act, 2008 and addition of Explanation to clause (d), it was evident that no exemption, in terms of subsection (5) of Ss. 34 & 70 of the Ordinance, 2001, thereafter was available, but such benefit could not be denied from the date of the effectiveness of BPD Circular No.29 till deletion of Clause (3A)---Taxpayer, in the present case, was fully covered---Question of law was answered in the affirmative and decided against the Department, declaring that Clause (3A) was declaratory and had retrospective effect---Reference application , filed by the Department, was dismissed, in circumstances.

Ali Asad Gondal for Applicant Department.

2025 P T D 51

[Lahore High Court]

Before Muhammad Sajid Mehmood Sethi and Asim Hafeez, JJ

COMMISSIONER INLAND REVENUE, FAISALABAD

Versus

Messrs BE BE JAN FIBRES (PVT.) LTD., FAISALABAD

P.T.R. No.156 of 2011, decided on 16th March, 2022.

Income Tax Ordinance (XXXI of 1979) [since repealed]---

----S. 107AA---Income Tax Ordinance (XLIX of 2001), S. 239(15)---Section 107AA of Income Tax Ordinance, 1979, interpretation of---Promulgation of subsection (15) of S. 239 of the Income Tax Ordinance, 2001, effect of---Requirements of investment and installation to be fulfilled up to 30.06.2002---Tax credit under S. 107 AA of the Income Tax Ordinance, 1979, claim of---Department filed Reference Applications against the dismissal orders of Appellate Tribunal Inland Revenue ('the Tribunal') maintaining determination of Commissioner Income Tax (Appeals) that investment had to be made before cut-off date (30th June 2002 ) and not the installation---Case of the applicant / department was that in terms of S.107AA of Income tax Ordinance, 1979 ('the repealed Ordinance'), tax credit was only claimable provided the plant and machinery, acquired upon investing funds, was installed before the 30th day of June 2002 as legislative intent was reaffirmed through subsection (15) of S. 239 of Income Tax Ordinance, 2001 ('the Ordinance, 2001'),and since the taxpayer had not installed the machinery till cut-off date, therefore, no credit could be claimed for the Tax years 2004 and 2005---Argument of the taxpayer was that admissibility of tax credit was subject to the requirement of investing funds for acquisition of plant and machinery, before 30th June 2002, and not to ensure the installation of the machinery, and question of installation of machinery had relevance for the purposes of income year, in which adjustment of tax credit against the tax payable was claimed---Validity---As per S. 239(15) of the Ordinance 2001, S.107AA of the repealed Ordinance shall continue to apply until the 30th day of June 2002 while S. 107AA of the repealed Ordinance unequivocally suggests the "requirement of investing any amount(s), in the purchase of plant and machinery for installation, at any time, between the first day of July 2000 and 30th June 2002, in an industrial undertaking, set-up in Pakistan and owned by the assessee"---Condition precedent for being eligible for the tax credit was investment made within the timelines prescribed, and entitlement for the adjustment, for a particular income year, was dependent upon installation of plant and machinery---The expression "for installation" limits the purpose of investment ensuring that plant and machinery was installed and not offered for sale or lease---There is difference between being eligible and claim entitlement in respect thereof---Subsection (15) of S. 239 had not altered the situation to the disadvantage of the taxpayer nor could said provision of law be construed to take away eligibility to tax credit accrued, upon investment before 30th June 2002---Subsection (15) of S. 239 actually supported S. 107 AA of the repealed Ordinance by affirming cut-off date of 30.06.2002---Subsections (2) and (3) of S. 107 AA of the repealed Ordinance provides timing and mechanism for claiming tax credit which have nothing to contribute for the purposes of determining eligibility for tax credit---Thus, the Appellate Tribunal had rightly interpreted S. 107 AA of the repealed Ordinance in the context of subsection (15) of S. 239 of the Ordinance, 2001, while CIT (Appeals) had aptly determined timing of adjustment, appreciating factum of installation of machinery that investment had to be made before 30th June 2002 and not the installation---Question was answered in the negative and decided against the department---Reference applications, filed by the department, were dismissed, in circumstances.

Amjad Hussain Malik and Ijaz Mehmood Chaudhry for Applicant.

2025 P T D 58

[Lahore High Court (Rawalpindi Bench)]

Before Mirza Viqas Rauf and Jawad Hassan, JJ

COMMISSIONER INLAND REVENUE

Versus

MASOOD-UL-HASSAN and others

Income Tax References Nos.01, 02 and 04 of 2019, decided on 20th May, 2024.

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

----Ss.131 & 133---Determination of controversy---Appellate Tribunal Inland Revenue, jurisdiction of---Advisory jurisdiction of High Court in Reference Application---Scope---Department filed Reference Application as the assessments made by the concerned Commissioner Inland Revenue (BTB) ['the Commissioner-in-question'] was cancelled by the Appellate Tribunal Inland Revenue ('Appellate Tribunal') on the ground that the Commissioner-in-question had no jurisdiction in the cases of existing taxpayers---Validity---Appellate Tribunal is the last fact finding forum in hierarchy of taxation laws, therefore, it is bound to discharge its functions diligently---Any opinion, on law, by the Appellate Tribunal would lose credence for consideration by High Court in advisory jurisdiction, if findings of fact arrived at by it are not trustworthy---In the present matter/case of Respondent /taxpayer, the Appellate Tribunal has failed to properly consider jurisdiction vested with the Commissioner-in-question vide an order (dated 20.08.2014)---Order (dated 20.08.2014) issued by the Chief Commissioner spoke loud and clear on aspect of jurisdiction, which order had not been gone through by Appellate Tribunal---As such, impugned order passed by the Appellate Tribunal, being outcome of non- reading and misreading of record, was not sustainable in the eye of law---Reference Applications were decided in favour of the Applicant.

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

----Ss.2(13), 207, 208 & 209---Commissioner---Jurisdiction---Section 209 of the Income Tax Ordinance, 2001 ('the Ordinance, 2001') deals with the jurisdiction of Income Tax Authorities while jurisdiction of Income Tax Authorities is defined under S.207 of the Ordinance, 2001 and their appointments under S.208 of the Ordinance, 2001---Section 209(1) of the Ordinance, 2001 empowers the Chief Commissioners, the Commissioners and the Commissioners (Appeals) to perform and exercise powers as assigned to them in respect of persons or classes of areas on the directions of the Board ;while proviso to S.209 of the Ordinance, 2001 empowers both the FBR and the Chief Commissioner to transfer jurisdiction in respect of cases or persons from one Commissioner to another---Definition of the term 'Commissioner' as provided under S. 2(13) of the Ordinance, 2001 postulates that 'Commissioner' means a person appointed as Commissioner Inland Revenue under S. 208 and includes any other authority.

Chenab Flour and General Mills v. Federation of Pakistan and others PLD 2021 Lah. 343 ref.

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

----Ss.122 & 209---Tax authority---Jurisdiction---Department filed Reference Application as the assessments made under S. 122(1) of the Income Tax Ordinance, 2001 ('the Ordinance, 2001') by the concerned Commissioner Inland Revenue (BTB) ['the Commissioner-in-question'] was cancelled by the Appellate Tribunal Inland Revenue ('the Tribunal') on the ground that the Commissioner-in-question had no jurisdiction in the cases of existing taxpayers---Submission of the applicant-department was that the Tribunal had passed the impugned order ignoring the jurisdiction of Commissioner-in-question [Inland Revenue (BTB) Rawalpindi] vested in him specifically by the Chief Commissioner in terms of S. 209(1) of the Ordinance, 2001 vide an order dated 20.08.2014 ('Chief Commissioner's order') having been issued in said regard---Validity---Vide Chief Commissioner's order, he (Chief Commissioner) transferred jurisdiction in respect of respondent/taxpayer from relevant/earlier Additional Commissioner Inland Revenue (Audit and Enforcement) to the Commissioner-in-question---No prejudice was caused to respondent/taxpayer in connection with question of jurisdiction in light of the Chief Commissioner's order vesting jurisdiction to the Commissioner-in-question---Chief Commissioner 's order spoke loud and clear on aspect of jurisdiction, which order had not been gone through by Appellate Tribunal---As such, impugned order passed by the Appellate Tribunal, being outcome of non-reading and misreading of record, was not sustainable in the eye of law---Reference Applications were decided in favour of the Applicant.

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

----Ss.122 & 209---Forum of first instance---Jurisdiction---Objection to such jurisdiction not taken---Effect---Department filed Reference Application as the assessments made under S. 122(1) of the Income Tax Ordinance, 2001 ('the Ordinance 2001'), by the concerned Commissioner Inland Revenue (BTB) ['the Commissioner-in-question'] was cancelled by the Appellate Tribunal Inland Revenue ('the Tribunal') on the ground that the Commissioner-in-question had no jurisdiction in the cases of existing taxpayers---Validity---Record revealed the fact that the respondent/taxpayer had not taken the objection with regard to jurisdiction of Commissioner-in-question at the time of filing reply to show-cause notice or at time of filing appeal before the concerned Commissioner of Inland Revenue (Appeals)---As no objection to the jurisdiction of a Court or Tribunal was taken in the forum of first instance, it could not be raised either in appeal or in revision---Impugned order passed by the Appellate Tribunal, being outcome of non- reading and misreading of record, was not sustainable in the eye of law---Reference Applications were decided in favour of the applicant.

Ch. Manzoor Hussain for Applicant.

Sh. Istadamet Ali and Junaid Hassan Sheikh for Respondents.

2025 P T D 77

[Lahore High Court]

Before Muhammad Sajid Mehmood Sethi and Asim Hafeez, JJ

Messrs KOT ADDU POWER COMPANY LIMITED

Versus

COMMISSIONER INLAND REVENUE, REGIONAL TAX OFFICER, MULTAN and others

I.T.R. No.224 of 2015, decided on 25th May, 2022.

Income Tax Ordinance (XLIX of 2001)---

----Ss.122(5A), 133 & 221---Reference---Recalling of order---Rectification of order---Principle of "mistake apparent from the record"---Applicability---Taxpayer was aggrieved of order passed by Appellate Tribunal Inland Revenue, recalling its earlier order in exercise of powers of rectification---Plea raised by taxpayer was that such rectification of order tantamount to reviewing of earlier order---Validity---In the instant case jurisdictional Courts (High Courts and Supreme Court) had decided issue of jurisdiction of Additional Commissioner, in the wake of delegation of authority by Commissioner, under S.122(5A) of Income Tax Ordinance, 2001---Such order escaped attention of Appellate Tribunal Inland Revenue when original order was passed---Exercise of rectification jurisdiction by Appellate Tribunal Inland Revenue was valid, in accordance with the law and within the scope of "mistake apparent from the record"---Appellate Tribunal Inland Revenue was justified to allow applications upon identifying mistake apparent from the record, in wake of existing judicial pronouncements by Constitutional Courts where issue of jurisdiction had been decided conclusively---High Court answered questions in favour of respondent / authorities and against taxpayer---Reference application was dismissed, in circumstances.

Commissioner of Income Tax, Karachi v. Abdul Ghani 2007 PTD 967; Commissioner of Income-tax Company's II, Karachi v. Messrs National Food Laboratories 1992 SCMR 687; 2003 SCMR 401; Commissioner of Income Tax, Peshawar v. Messrs Gul Cooking Oil and Vegetable Ghee (Pvt.) Ltd. and 6 others 2008 PTD 169; Commissioner of Income Tax and another v. Messrs Pakistan Petroleum Ltd. and 2 others 2012 PTD 501; Pakistan Tobbaco Company Ltd., Islamabad v. Additional Commissioner (Unit-II), Taxation Officer, Large Tax Payers Unit, Islamabad 2013 PTD 747; Commissioner of Income Tax, Karachi v. Messrs Shadman Cotton Mills Ltd., Karachi through Director 2008 SCMR 204; Islamuddin and 3 others v. The Income-tax Officer and 4 others 2000 PTD 306; Commissioner of Income Tax/ Wealth Tax, Multan v. Messrs Move (Pvt.) Ltd., Multan 2013 PTD 2040; The Commissioner Inland Revenue, Ltu, Lahore v. Kohnoor Energy Ltd., Lahore 2019 PTD (Trib.) 1953; Messrs Nishat Talkies, Karachi v. The Income Tax Officer and others 1989 PTD 513; Income Tax Officer, Central Circle II, Karachi and another v. Cement Agencies Ltd. PLD 1969 SC 322; Commissioner of Income Tax v. Messrs Bashir Jamil and Brothers Ltd. 2002 PTD 557; Commissioner Inland Revenue (Zone-III), L.T.LU., Islamabad v. Messrs Oil and Gas Development Co. Ltd. 2016 PTD 2727; M/s Nishat Chunian Ltd. v. Province of Punjab and others W.P. No.177 of 2008 and Fawad Ahmed v. Election Appellate Tribunal, Rawalpindi and others PLD 2018 Lah. 742 distinguished.

Messrs Hong Kong Chinese Restaurant, Main Boulevard Gulberg, Lahore v. Assistant Commissioner of Income Tax, Circle 6, Lahore and another 2002 PTD 1878 and Pak Arab Refinery Limited v. Commissioner of Income Tax / Wealth Tax (Appeals), Zone-I, Lahore PTR No.545 of 2006 ref.

Pakistan Tobbaco Company Ltd., Islamabad v. Additional Commissioner (Unit-II), Taxation Officer, Large Tax Payers Unit, Islamabad 2013 PTD 747; Commissioner of Income Tax, Karachi v. Messrs Shadman Cotton Mills Ltd., Karachi through Director 2008 SCMR 204; Commissioner of Income Tax/ Wealth Tax, Multan v. Messrs Move (Pvt.) Ltd., Multan 2013 PTD 2040; The Commissioner Inland Revenue, Ltu, Lahore v. Kohnoor Energy Ltd., Lahore 2019 PTD (Trib.) 1953; Messrs Nishat Talkies, Karachi v. The Income Tax Officer and others 1989 PTD 513; Income Tax Officer, Central Circle II, Karachi and another v. Cement Agencies Ltd. PLD 1969 SC 322; Commissioner of Income Tax v. Messrs Bashir Jamil and Brothers Ltd. 2002 PTD 557; Commissioner Inland Revenue (Zone-III), L.T.LU., Islamabad v. Messrs Oil and Gas Development Co. Ltd. 2016 PTD 2727; M/s Nishat Chunian Ltd. v. Province of Punjab and others W.P. No.177 of 2008; Fawad Ahmed v. Election Appellate Tribunal, Rawalpindi and others PLD 2018 Lah. 742; Pak Arab Refinery Limited v. Commissioner of Income Tax / Wealth Tax (Appeals), Zone-I, Lahore 2010 PTD (Trib.) 2254; Pakistan Mobile Communication Ltd. v. Commissioner of Income Tax Audit Division and 5 others 2010 PTD 1506; Civil Appeals bearing Nos.1664-1665 of 2009 vide order of 11-9-2009; Assistant Commissioner, Income Tax, Rajkot v. Saurashtra Kutch Stock Exchange Ltd." [2008]305 ITR 227(SC) = (2008)14 SCC 171; M.K. Venkatachalam, I.T.O. and another v. Bombay Dyeing and Mfg. Co. Ltd. AIR 1958 SC 875; Honda Siel Power Products Ltd. v. Commissioner of Income Tax, Delhi [2007]295 ITR 466(SC) = 2007 12 SCC 596; Haryana State Co-Operative Supply and Marketing Federation Ltd. v. Commissioner of Income Tax [2016] 389 ITR 266 (P&H); Pakistan Medical and Dental Council v. Muhammad Fahad Malik 2018 SCMR 1956; Messrs Mustafa Impex, Karachi v. The Government of Pakistan through Secretary Finance, Islamabad and others PLD 2016 SC 808; Mir Muhammad Khan and 2 others v. Haider and others PLD 2020 SC 233 and Abbasi Enterprises Unilever Distributor, Haripur and another v. Collector of Sales Tax and Federal Excise, Peshawar and others 2020 PTD 147 rel.

Shahbaz Butt, Khurram Shahbaz Butt, M. Ahsan Mehmood, Asad Abbas Raza, M. Usman Zia and M. Ibrahim Hassan for Appellants

Ch. Muhammad Shakeel, Abdullah Raza, Shahzad Ahmad Cheema, Imran Rasool, Zain ul Abidin Bukhari, Abdul Qaddus Mughal, Nadir Ali Sherazi and M. Yasir Khan for Respondents.

2025 P T D 101

[Lahore High Court]

Before Muhammad Sajid Mehmood Sethi and Asim Hafeez, JJ

COMMISSIONER INLAND REVENUE, SIALKOT

versus

Messrs CHAUDHRY STEEL MILLS S.I.E., DASKA

P.T.R. No.335 of 2013, (and other connected P.T.Rs.) decided on 27th April, 2022.

Income Tax Ordinance (XLIX of 2001)---

----Ss. 120, 122, 113 & 221---Assessment, amendment of---Rectification---Scope---"Mistake apparent on record"---Scope---Record showed that respondent-taxpayer filed income tax return for the tax year 2011 (by declaring sales at Rs.232,823,500/-, net income as Rs.90610/- and tax paid as Rs.23,645/-,) which was taken as deemed assessment in terms of S. 120 of Income Tax Ordinance, 2001 ('the Ordinance, 2001')---Subsequently, minimum tax as per S. 113 read with Part-III of Second Schedule to the Ordinance, 2001 was charged by invoking provisions of S. 221 of the Ordinance, 2001, taking it as a mistake apparent on the face of record---Undeniably, income tax return for the Tax Year 2011 was an assessment order as per S.120(1), therefore, the Commissioner by virtue of and in exercise of the powers contained in Ss. 120(1A), 121, 122(1), (4), (5) & (5A) and 177 of the Ordinance, 2001, subject to the conditions prescribed, can amend or further amend the original assessment instead of invoking provision of S. 221 which only prescribes procedure for rectification of a mistake in an order, which is apparent from the record, and the circumstances under which such exercise can be done---Provision of S. 221, thus, neither creates nor takes away any right or privilege in or from anyone, it rather provides for rectification of mistake(s) apparent from the record---Essential condition for exercise of such power is that the mistake should be apparent on the face of record; mistake which may be seen floating on the surface and does not require investigation or further evidence---The mistake should be so obvious that on mere reading of the order, it may immediately strike on the face of it---Where an officer exercising such power enters into the controversy, investigates into the matter, reassesses the evidence or takes into consideration additional evidence and on that basis interprets the provision of law and forms an opinion different from the order, then it will not amount to 'rectification' of the order---Any mistake which is not patent and obvious on the record, cannot be termed to be an order which can be corrected by exercising power under S. 221 of the Ordinance, 2001---If the return is complete in terms of S. 114(2), the same is taken as deemed assessment order within the contemplation of S. 120(1), on the day the return was furnished---However, when the return is not complete, the Commissioner shall issue notice to taxpayer confronting deficiencies in terms of S. 120(3) and if requirements of notice are satisfied, the return is treated as complete and provisions of S. 120(1) shall apply accordingly---Commissioner is also empowered to amend an assessment order treated as issued under S. 120 or 121, under S. 122(1) and in case of revised return, under S. 122(3)---Commissioner is also authorized to further amend the amended assessment order under subsections (4), (5) & (5A) of S. 122, as per conditions enumerated therein---Careful reading of Ss. 120, 122 and 221 of the Ordinance, 2001 makes it very clear that the powers under these provisions are not overlapping rather are independent clearly intended to operate within their respective compass---Section 221 of the Ordinance, 2001 relates to the rectification of mistakes which are apparent from the face of record---Words used in the said provision are very specific and purposeful "any order passed by him" and does not include an order which is deemed to have been issued by the Commissioner by fiction of law which is the case for assessment orders under S. 120 of the Ordinance, 2001---Words "an assessment order treated as issued under S. 120" used in S. 122(1) of the Ordinance, 2001 are clearly distinguishable from the words used in S. 221 of the Ordinance, 2001 which says "any order passed by him"---Act of passing of formal order by any Officer of Inland Revenue presupposes an application of mind and in most cases adjudication on merits after hearing the parties---Thus, there is a marked distinction between the deemed order and the order passed by the authority after fully applying its mind and giving proper opportunity of being heard to the person---Every word used in a statute has to be given effect to and no word or provisions of a statute is to be treated as surplus and redundant---Thus, rectification is permissible only to "amend any order passed by him" and not the order treated to have been issued under S. 120 of the Ordinance, 2001 because the deemed order does not amount to an order passed by the authority---Had it been the intention of the legislature, it would have become necessary to introduce the specific provisions or amendment with certain words to cater, for the eventuality of deemed order in S. 221 that a deemed order under S. 120 can be amended in case of a mistake apparent from record---Expression "subject to this section" used in subsection (1) of S. 122 ibid further restricts that the deemed order treated to have been issued under S. 120 can only be amended under the said section---Under the law, the tax liability of an assessee in the process of rectification cannot be altered on the basis of a consideration, which was not part of the original proceedings and the concept of rectification of mistake to correct the error committed in the assessment order, which is found floating on the surface of the record, may not be beyond the assessment already made---Such mistake should be apparent from the record i.e. floating on the surface and consequently there should not be any controversies or investigation into the matter or reassessment of any evidence in order to decide whether or not such mistake needs to be rectified---Powers under S. 221 are quite limited to the extent of mistakes apparent from record since there are other provisions of law which deal with the authority of department officials with regard to reopening of assessment, revision etc. in cases where the department is of the view that certain income had escaped from the chargeability of tax, but for exercising powers under S. 221 of the Ordinance, 2001, there must be a mistake apparently floating on the surface which is so obvious to strike one's mind without entering into long drawn process of reasoning, detailed deliberation etc.---Expression "mistake apparent on record" must be the error or mistake so manifest and clear which, if permitted to remain on record, might have material effect on the case, however, an error of fact or law, having direct nexus with the question of determination of rights of parties, affecting their substantial rights or causing prejudice to their interest, is not a mistake apparent on the record to be rectified under S.156 of Income Tax Ordinance, 1979; and that the mistake must be of the nature, which is floating on the surface of record and must not involve, an elaborate discussion or detailed probe or process of determination---Thus, proposed questions were answered against the applicant-department and in favour of respondent-taxpayer---Reference application, filed by Department was dismissed.

Commissioner of Income-Tax Company's II, Karachi v. Messrs National Food Laboratories 1992 SCMR 687; Commissioner of Income Tax and another v. Messrs Pakistan Petroleum Ltd. and 2 others 2012 SCMR 371; The Taxation Officer / Deputy Commissioner of Income Tax, Lahore v. Messrs Rupafil Ltd. and others 2018 SCMR 1131; Islamuddin and 3 others v. The Income-Tax Officer and 4 others 2000 PTD 306; Commissioner Income Tax v. Gulf Edible Oils (Pvt.) Ltd. 2006 PTD 2854; Messrs State Life Insurance Corporation of Pakistan, Karachi v. The Commissioner Income Tax, COS.III, Karachi and others 2021 PTD 913; East and West Steambship Co. v. Queensland Insurance Co. Ltd. PLD 1963 SC 395; Jalal Muhammad Shah v. Federation of Pakistan PLD 1999 SC 395; Commissioner Inland Revenue, Zone-I v. Messrs Siemens Pakistan Engg. Co. Ltd. 2017 PTD 903 and Commissioner of Income Tax, Karachi v. Messrs Shadman Cotton Mills Ltd., Karachi through Director 2008 PTD 253 ref.

Messrs Saindak Metals Ltd. through Managing Director v. Chairman, Federal Board of Revenue and 3 others 2017 PTD 2227 distinguished.

Raja Sikandar Khan and Sohail Zahid Butt for Applicant.

Mudassar Shujauddin and Malik Bashir Ahmad Khalid for Respondent.

2025 P T D 121

[Lahore High Court]

Before Muhammad Sajid Mehmood Sethi and Asim Hafeez, JJ

COMMISSIONER INLAND REVENUE, LEGAL ZONE-LTO, LAHORE

Versus

Messrs RASOOL NAWAZ SUGAR MILLS, LTD.

S.T.R. No.77498 of 2022, decided on 26th September, 2023.

Sales Tax Act (VII of 1990)---

----Ss. 2(34), 11, 33, 34 & 47---Reference---Recovery proceedings---Delay in filing of tax return and deposit of tax due---Penalty and default surcharge, imposing of---Principle---Authorities initiated recovery proceedings against respondent / taxpayer for filing delayed tax returns and payment of tax due---Appellate Tribunal Inland Revenue set aside imposition of penalty and default surcharge on the ground that liability on account of principal amount of tax stood discharged voluntarily prior to initiation of proceedings under S. 11(1) of Sales Tax Act, 1990---Validity---Even if upon filing of return after due date no tax, as defined in terms of S. 2(34) of Sales Tax Act, 1990 and subject to the context, was payable, still penalty and default surcharge could be ordered and claimed---Restrictive interpretation of scope of "order of assessment of tax" would nullify disciplined compliance envisaged in law and otherwise would render Ss. 33 & 34 of Sales Tax Act, 1990 as redundant---Such redundancy was to be avoided upon harmonized reading of applicable provisions---Division Bench of High Court set aside order of Appellate Tribunal Inland Revenue as the same was legally defective---Division Bench of High Court remanded the matter to Appellate Tribunal Inland Revenue for de novo determination on appeal of respondent / taxpayer afresh, after affording opportunity of hearing to parties---Reference was allowed accordingly.

Commissioner Inland Revenue v. Madina Cotton Ginners and Oil Mills 2016 PTD 643; Messrs Attock Refinery Limited and others v. The Collector of Sales Tax and others 2021 PTD 1680; Messrs Punjab Small Industries, Rawalpindi v. Deputy Collector Adjudication and others 2021 PTD 871; Dhan Fibers Ltd. v. Central Board of Revenue, Islamabad and others 2006 PTD 2683 and The Commissioner Inland Revenue Zone-I, Regional Tax 643 Office, Quetta v. Messrs Quetta Electric Supply Company Limited, Zarghoon Road, Quetta 2022 PTD 1265 ref.

Syed Zain-ul-Abidein Bokhari for the Applicant-department.

2025 P T D 137

[Lahore High Court (Rawalpindi Bench)]

Before Muhammad Sajid Mehmood Sethi and Jawad Hassan, JJ

COMMISSIONER INLAND REVENUE, DISTRICT ZONE, REGIONAL TAX OFFICE, RAWALPINDI

Versus

Sh. IKRAM ELLAHI and 2 others

I.T.R. No.10 of 2018, heard on 4th September, 2024.

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

----Ss. 131 & 133---Reference application, filing of---Assailing findings of Appellate Tribunal Inland Revenue---Relevant question not proposed before the High Court---Department filed Reference Application as the Appellate Tribunal Inland Revenue ('the Tribunal'), while vacating orders of both the authorities below, deleted the addition made by the Assessing Officer under S. 111(1)(d) of the Income Tax Ordinance, 2001 ("issue-in-hand")---Validity---Memo of instant reference application, undeniably, revealed that findings of Appellate Tribunal were not assailed through instant Reference Application by proposing any question(s) on issue-in-hand---When certain observations on some issue / question are not challenged in a Reference Application before the High Court, it clearly signifies that such observations have attained finality---In the present case, question regarding retrospective application of S.111(1)(d) of the Ordinance 2001, was not available for adjudication---The finality of such decisions establishes vested rights, thereby reinforcing the need for diligence in addressing legal matters within the prescribed timelines---Reference Application, filed by the Department, was dismissed, in circumstances.

Commissioner Inland Revenue v. Messrs Pak Arab Pipe Line Company Ltd. 2014 PTD 982; Messrs Azad Kashmir Logging and SAW Mills Corporation (AKLASC), Muzaffarabad v. Commissioner Income Tax, Inland Revenue, Muzaffarabad 2017 PTD 1058 and The Commissioner of Income Tax v. Messrs Fauji Foundation 2021 PTD 1951 ref.

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

----S.111(1)(d) [as inserted through the Finance Act, 2011]---Retrospective effect, lack of---Department filed Reference Application as the Appellate Tribunal Inland Revenue ('the Tribunal'), while vacating orders of both the authorities below, deleted the addition made by the Assessing Officer under S. 111(1)(d) of the Income Tax Ordinance, 2001---Validity---Section 111(1)(d) of the Income Tax Ordinance, 2001, was inserted through the Finance Act, 2011 with prospective effect and came into force w.e.f. 01.07.2011---Whereas the present matter pertained to tax year 2010, thus, no retrospectivity can be given to it---As a basic principle of interpretation of statutes, tax statutes operate prospectively unless clearly indicated by the legislature, therefore, retrospectivity cannot be presumed---A statute or any amendment thereto ordinarily operates prospectively unless, by express enactment or necessary intendment, retrospective operation has been given to it---Refence Application, filed by the Department , was dismissed , in circumstances.

Commissioner Inland Revenue, Lahore v. Messrs Millat Tractors Limited, Lahore and others 2024 SCMR 700 and Sardar Sher Bahadar Khan and others v. Election Commission of Pakistan through Secretary, Election Commission, Islamabad and others PLD 2018 SC 97 ref.

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

----Ss.111(1)(b), 111(1)(d) & 122(5)---Concealed income---Suppression of sales, allegation of---"Chargeable to tax"---Scope---Show-Cause Notice, issuance of---Department filed Reference Application as the Appellate Tribunal Inland Revenue ('the Tribunal'), while vacating orders of both the authorities below, deleted the addition made by the Assessing Officer under S.111(1)(d) of the Income Tax Ordinance, 2001 ('the Ordinance 2001')---Argument of the Applicant / Department was that show-cause notice should have been issued under S. 111(1)(b) of the Ordinance, 2001 instead of S. 111(1)(d) of the Ordinance, 2001--Validity---Dispute-in-hand i.e. suppression of sales came within the ambit of S. 111(1)(d) of the Ordinance, 2001---Clause (d) of S. 111(1) of the Ordinance, 2001 confers a power on the Commissioner to bring to tax unearthed income i.e. income which was concealed by either suppression of sales or production or any amount chargeable to tax---Words "chargeable to tax" apply to the entirety of sub-clause (i) i.e. also to the suppressed production and / or sales---If "any amount" can be brought within the scope of sub-clause (i) only if, and to the extent, that it is "chargeable to tax" (i.e. constitutes "income" properly so called), then production and sales must be given the same treatment---Thus, it is only production or sales chargeable to tax that can be brought within the ambit of cl. (d) to S. 111(1) of the Ordinance, 2001---Taxpayer is exposed to the same tax liability in respect of the income that has escaped assessment, or has been suppressed i.e. taxpayer is liable to tax on the "net" amount, or "income" properly so called---Answer to the purposed question was in affirmative i.e. against applicant-department and in favour of respondent-taxpayer---Reference Application, filed by the Department, was dismissed, in circumstances.

Commissioner Inland Revenue, Zone-II, Regional Tax Office, (RTO) Lahore v. Mian Liaqat Ali Proprietor, Liaqat Hospital, House No.6, Street No.6, Lal Pul, Panj Pir Road, Mughalpura, Lahore 2023 SCMR 534 ref.

Sh. Anwar-ul-Haq and Sh. Ikram Elahi for Applicant.

Ch. Imran-ul-Haq for Respondents.

2025 P T D 148

[Lahore High Court]

Before Abid Aziz Sheikh and Sultan Tanvir Ahmad, JJ

Messrs FATIMA SUGAR MILLS LIMITED through Chief Financial Officer

Versus

APPELLATE TRIBUNAL, INLAND REVENUE, LAHORE and 3 others

Income Tax Reference No.112167 of 2017, decided on 8th October, 2024.

Sales Tax Act (VII of 1990)---

----Ss. 2(47) & 2(28)---Sales Tax Rules, 2006, Chapt-1, R.4---Income Tax Ordinance (XLIX of 2001), Ss. 236G & 236H [inserted through Finance Act, 2013] & Sched. I, Pt. IV, Div. XIV---"Whole-seller" and "retailer"---Scope---Treating a person as "retailer" merely on account of non-registration as "wholesaler"---Sugar Mill (being a manufacturer) was served (in year 2015) with Show-Cause Notice relating tax-year to 2014 ('the notice') on the basis of the then newly inserted Ss. 236G & 236H, with the allegations that it failed to collect tax on sales made to its wholesalers / retailers ('recipients') at the rate of 0.5% of the gross amount of sales---Notice culminated into order-in-original, concluding that sales made to unregistered persons are to be treated as supply to retailer , which findings were maintained by the Appellate Tribunal Inland Revenue---Applicant / Sugar Mill assailed findings/orders passed by two fora contending that a person could only be treated as wholesaler if he had been authorized to act as an agent for sale and that unregistered persons/buyers must be treated as retailers and cannot be treated as wholesalers---Validity---Various recipients (the 'recipients') of supplies of the applicant were treated as "retailer" on account of failure to register as "wholesaler"---The requirement to register as "wholesaler" or "retailer" depending upon their particular activity was separately given in Chapt. I of the Sales Tax Rules, 2006 ('Rules')---Two forums below, relying on the provisions of Ss. 2(47) & 2(28) of the Sales Tax Act, 1990, as well as R. 4 of the Sales Tax Rules, 2006, reached the conclusion that the recipients were to be considered as "retailers" and applicant was required to collect 0.5% tax under S. 236H of the Ordinance, 2001---Word "wholesale" has specific commercial meaning of buying goods and selling them in large quantities to traders who then sell the goods in smaller quantities---Even otherwise, a plain reading of provisions under Ss. 2(47) & 2(28 ) of the Sales Tax Act, 1990, as well as R. 4 of the Sales Tax Rules, 2006, reflects that legislature envisaged "wholesalers" and "retailers" as two distinct persons depending on their characteristics of business and quantity of the commodities they deal with as well as the category of the recipients of such supplies---"Retailer" as per the then S.2(28) of the Act, 1990, is a person supplying goods to general public for consumption purposes or end-consumers; the proviso to the same further clarified the position even if someone combines the business of retail with some other nature of business---The consequences, if any person fails to register himself as "wholesaler" or "retailer", as the case may be, were given in the Ordinance, 2001 at the relevant time, which were also ignored by the assessing officer---Supplies to a person having "wholesaler" status when it failed to register had result of collection at higher rate of 0.2% as provided in Division XIV, Pt. IV of Sched. I of the Ordinance, 2001---Treating a person as "retailer" merely on account of non-registration as "wholesaler", without first assuming an exercise of ascertaining his actual status is unsafe---Thus, the proposed questions were answered in affirmative and in favour of the applicant and against the Department---High Court set-aside the impugned orders passed by the Appellate Tribunal Inland Revenue, and the case was remanded to the assessing officer to ascertain the actual position or status of the recipients---Reference Application, filed by Sugar Mill (Manufacturer), was disposed of accordingly.

Olympia Industries (Pvt.) Ltd., Lahore v. Assistant Collector, Central Excise and Sales Tax, Sheikhupura Division, Lahore and 2 others 2002 PTD 776 ref.

Salman Zaheer Khan for Applicant.

2025 P T D 166

[Lahore High Court]

Before Muhammad Sajid Mehmood Sethi and Asim Hafeez, JJ

The COMMISSIONER INLAND REVENUE, ZONE-I, GUJRANWALA

Versus

Messrs GUJRANWALA ELECTRIC POWER COMPANY (GEPCO), GUJRANWALA

P.T.R. No.112 of 2011, decided on 16th March, 2022.

Income Tax Ordinance (XLIX of 2001)---

----Ss. 53 & 113, Second. Sched., Pt-IV, Clause (11)(xvi) & Second Sched. Pt- III, Cl. (5) [as inserted through SRO No.171(I)/2008 dated 21.02.2008 ('SRO 171)]---Extending benefit and curing mischief of accumulated liabilities of Power Distribution Companies (DISCOs)---Retrospective effect---Scope---Department filed Reference as the Appellate Tribunal approved retrospective operation of Cl. (5) of Part-III of the Second Schedule of Income Tax Ordinance, 2001, ('Clause (5)') and extended its benefit for Tax Year 2007 to Taxpayer (DISCO)---Contention of the Applicant/Department was that "Clause (5)" came into effect on 21.02.2008 and was not applicable to Tax Year 2007 from 01.07.2006 to 30.06.2007 as the exemption allowed had to be construed strictly---Stance of the taxpayer (DISCO) was that sub-clause (xvi) of clause (11) of Part-IV of Second Schedule to the Ordinance, 2001, extended exemption to corporatized entities-including taxpayer - from the provision of minimum tax, relating to receipts of sales of electricity, from date of their creation to the date of completion of the process of corporatization, being the date of notification of tariff as the tariff was notified on 24.02.2007 while the SRO No.171(I)/2008 dated 21.02.2008 was introduced to alleviate hardships encountered by the corporatized entities, which had the effect to extend exemption till the year 2013---Validity ---Clause (11) (xvi) of Part-IV of the Second Schedule to the Ordinance, 2001, extended exemption to corporatized entities - including taxpayer - from the provisions of minimum tax, relating to receipts of sales of electricity, from date of their creation to the date of completion of the process of corporatization, which corporatization would be deemed completed till the tariff was notified---Clause (11) (xvi) was omitted through Finance Act, 2008---Clause (5) of Part-III of the Second Schedule to the Ordinance, 2001, was added through SRO No.171(I)/2008 dated 21.02.2008---Taxpayer e-filed return of income for Tax Year 2007 on 12.01.2008, wherein turnover was computed from 24.02.2007 - date of notification of tariff - to 30.06.2007 and purchase price / cost was excluded for the purposes of computing minimum tax, which became deemed assessment order---Later, notice was issued under S. 122 (5A) of the Ordinance, 2001 and in response thereto, taxpayer defended exclusion of the purchase price by pleading retrospective application of clause (5) - SRO No.171(1)/2008 dated 21.02.2008, which defence was rejected and assessment was amended---Amended assessment was upheld by the First Appellate Forum, before being annulled by the Appellate Tribunal---Clause (5) was added in Part-III of the Second Schedule - earlier clause (11) was part of Part-IV of the Second Schedule to the Ordinance, 2001---It is pertinent to mention that Clause (11A) was added to Part-IV of the Second Schedule through Finance Act 2009, wherein sub-clause (xv) was pari materia to sub-clause (xvi) of erstwhile Clause (11)---Section 53 of the Ordinance provides exemptions and tax concessions---Clause (c) of subsection (1) of S. 53 envisages reduction in the tax liability, subject to the conditions and extent thereof specified---Preamble of Part-III replicates spirit of clause (c) of subsection (1) of S. 53---Intention was to reduce the tax liability of corporatized entities, including the taxpayer---SRO No.171(I)/2008 dated 21.02.2008 was promulgated in exercise of powers under subsection (2) of S. 53 of the Ordinance 2001, which per se depicts the object / purpose of Clause (5)---Omission of Clause (11), along with sub-clause (xvi), of Part-IV of Second Schedule through Finance Act 2008 had to be reconciled with the concurrent omission of Section 113 of the Ordinance, also through the Finance Act, 2008---And re-enactment of Clause (11A) of Part-IV of Second Schedule coincided with the re-admission of S.113 of the Ordinance, 2001, both through Finance Act, 2009---Clause (11) of Part-IV of Second Schedule and Clause (5) of Part-III of Second Schedule intended to reduce the liability by excluding the component of purchase price of electricity from the turnover, liable to minimum tax---Clause (5) of Part-IV of Second Schedule assumed accumulation / build-up of liability with respect to corporatized entities, which upon notification of tariff were not entitled to claim exemption, for the purposes of turnover, subject to minimum tax---There is no rational justification to treat Clause (5) of Part-III of Second Schedule having prospective effect, when the intention was to reduce liability - accrued at the time of promulgation of SRO under reference---Reduction in the tax liability, as the object of Part-III suggests existence of liability, in the same manner as exemption inherently acknowledges chargeability and liability of tax---Retrospectivity of Clause (5) is inherently inbuilt, and any contrary construction would nullify the object / purposes thereof---In terms of Clause (5) exclusion of component of purchase price of electricity from the turnover, liable to minimum tax, was granted till the year 2013---High Court found no rational basis to exclude the period, for the purposes of exemption, from notification of the tariff till 21.02.2008---The exclusion was beneficial, intended to remedy the effect of inclusion of purchase price of electricity as component of turnover, liable to minimum tax---Significance of including Clause (5) to Part-III has its own significance, which cannot be ignored---High Court did not find any justification to construe Clause (5) in a manner that benefit thereof was denied to those corporatized entities, in respect whereof tariff was notified before 21.02.2008; such segregation amongst similar class of persons - corporatized entities - was another factor contributing to the retrospective operation of Clause (5)---Superior Court have upheld retrospective application / implementation of such legislative instrument, which exhibited curative and remedial character - intended to address the mischief of accrued liabilities, as in the present case---Appellate Tribunal had not committed any illegality, while passing the order under reference---Thus, proposed questions were answered in the affirmative i.e., against the Department---Reference Application, filed by the Department, was dismissed.

Messrs Army Welfare Sugar Mills Ltd. and others v. Federation of Pakistan and others 1992 SCMR 1652; Commissioner of Income Tax v. Shahnawaz Ltd. and others 1993 SCMR 73 and Anoud Power Generation Limited and others v. Federation of Pakistan and others PLD 2001 SC 340 ref.

Mian Yousaf Umar for Applicant.

2025 P T D 199

[Lahore High Court]

Before Abid Aziz Sheikh and Muzamil Akhtar Shabir, JJ

D.G. KHAN CEMENT COMPANY LIMITED and others

Versus

The FEDERAL BOARD OF REVENUE and others

Writ Petition No.15880 of 2021, heard on 27th April, 2022.

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

----Ss. 25 & 72-B---Income Tax Ordinance (XLIX of 2001), Ss. 177 & 214-C---Constitution of Pakistan, Art. 199---Constitutional petition---Audit---Powers, exercise of---Directions of Federal Board of Revenue---Effect---Petitioner company was aggrieved of proceedings initiated in terms of S. 25 of Sales Tax Act, 1990 and S. 177 of Income Tax Ordinance, 2001 in the wake of Federal Board of Revenue instructions/directions issued to Chief Commissioner and other field formations---Validity---These are independent power of audit of the Commissioner and FBR with separate methodology enumerated in law---Commissioner, under S. 177 of Income Tax Ordinance, 2001 and S. 25 of Sales Tax Act, 1990 is required to apply his independent mind to each taxpayer's individual case and if he decides to select a taxpayer for audit, he must give mindful and legitimate reasons arising out from record---On the other hand, purpose of S. 214-C of Income Tax Ordinance, 2001 and S. 72-B of Sales Tax Act, 1990, is to ensure general compliance of law by taxpayers---Federal Board of Revenue under S. 214-C of Income Tax Ordinance, 2001 and S. 72-B of Sales Tax Act, 1990 may select a person for audit through random parametric ballot---There was no room in S. 214-C of Income Tax Ordinance, 2001 or S.72-B of Sales Tax Act, 1990 for FBR to direct Commissioner to select assessee for audit under S. 177 of Income Tax Ordinance, 2001 or S. 25 of Sales Tax Act, 1990---Such direction amounted to usurping independent power of Commissioner under S.177 of Income Tax Ordinance, 2001 and S. 25 of Sales Tax Act, 1990---Federal Board of Revenue interfered in independent statutory duty and discretion of Commissioners under S. 177 of Income Tax Ordinance, 2001 and S. 25 of Sales Tax Act, 1990---Federal Board of Revenue not only gave directives to initiate sector wise audit across the board but also gave the authorities time lines for various steps commencing from selection for audit till passing of assessment orders---Such time line interfered with independent power of Commissioners, who might or might not have selected individual tax payers for audit on the basis of their income tax or sales tax returns on individual basis---Division Bench of High Court declared that income tax and sales tax audit proceedings initiated on the basis of directives issued by FBR were without lawful authority and of no legal effect---Commissioner concerned was not precluded from exercising his/her independent authority under S. 177 of Income Tax Ordinance, 2001 and S. 25 of Sales Tax Act, 1990 to proceed afresh in individual cases strictly in accordance with law---Constitutional petition was allowed accordingly.

Messrs Chenone Stores Ltd. through Executive Director (Finance Accounts) v. Federal Board of Revenue through Chairman and 2 others 2012 PTD 1815; Pakistan Telecommunications Company Ltd. v. Federation of Pakistan 2016 PTD 1484 and The Federal Board of Revenue and others v. Messrs Chenone Stores Ltd. 2018 PTD 208 ref.

Messrs Pakistan Tobacco Company Limited v. Federation of Pakistan and others (W.P. No.272/2021); Collector of Customs, Islamabad v. Messrs Askari Cement (Pvt.) Ltd. and others 2020 SCMR 649; Messrs Sufi Steel Industries (Pvt.) Ltd. v. Federation of Pakistan and others 2018 PTD 378; Federal Bank for Cooperatives, Islamabad v. Ehsan Muhammad 2004 SCMR 130; Javid Akhtar v. Punjab Authority 1997 CLC 1168; Taj Muhammad v. Town Committee, Fateh Jang through Chairman and 3 others 1994 CLC 2214; Messrs Central Insurance Co. and others v. The Central Board of Revenue, Islamabad and others 1993 SCMR 1232; Wazir Ali Industries Ltd. v. Federation of Pakistan and others (C.P. No.4729 of 2021) and Atlas Honda Ltd. vs. Pakistan and others (C.P. No.D-5107/2021) rel.

(b) Discretion---

----Exercise of---Principle---While exercising discretion, the authority has to maintain independence and impartiality---Authority upon whom discretionary power has been conferred, cannot act at the dictates of a higher and other authority---When discretion is conferred upon the authority, it is that authority alone which has to exercise discretion by its own independent mind after taking into consideration all relevant factors and the object of conferring such a discretion---Such authority should not be influenced by improper motive or improper purpose and must not allow its personal interest and beliefs to influence it in the exercise of its statutory powers, but must exercise such powers impartially and should not pre-judge the case---Even the higher authority cannot provide any guideline or direction to the authority under the statute, to act in a particular manner---Quasi-judicial authority cannot afford to act on the direction of a superior officer or authority---Once a discretion is vested with a certain authority, it alone should exercise that discretion vested under the statute and if it acts in accordance with "the direction or any compliance with some higher authorities instruction" it would be a case of failure to exercise discretion altogether.

2019 SCMR 1; Mayzone Pak International v. Additional Secretary, Government of Pakistan 2002 CLC 388; Joint Action Committee of Air Line Pilots Association of India (Alphai) and others v. Director General of Civil Aviation and other 2011(5) SCC 435; Breen v. Amalgamated Engineering Union (1971) 2 QB 175 and Principles of Judicial Review 1999 Edition, page 240 rel.

(c) Qanun-e-Shahadat (10 of 1984)---

----Art. 114---Estoppel, principle of---Applicability---Once an authority takes a particular plea of defence in one High Court, then that authority is bound by that plea and cannot be allowed to take an altogether different stance in another provincial High Court in similar matters---Principle of "estoppel" is applicable in such like situation.

Imtiaz Rashid Siddiqui, Raza Imtiaz Siddiqui, Shehryar Kasuri, Humzah Sheikh, Mansoor Usman Awan, Barrister Hamza Shehram Sarwar, Umair Ahmad, Malik Muhammad Aslam, Mian Shahzeb Qudoos, Shahzad Ata Elahi, Salman Zaheer Khan, Usman Ali Virk, Ch. Muhammad Ali, Musadiq Islam, Shahbaz Butt, Asad Abbas Raza, M. Ahsan Mahmood, M. Usman Zia, Ibraheem Hassan, M. Yaqoob Sukhera, Mudassir Aftab, Ali Sibtain Fazli, Hasham Ahmad Khan, Abad ur Rehman, Ilyas Zafar, Syed Nasir Ali Gilani, Naeem Munawar, Ch. Waseem Ahsan, Abad ur Rehman, Muhammad Aslam Sheikh, Muhammad Naeem, Tanzil ur Rehman Hotiana, Zahid Ateeq Ch., M. Ahsan Awan, Mudassar Shujauddin, Muhammad Ijaz Ali Bhatti, Basharat Ali Awan, Nafees Abid, Ms. Iqra Riaz, Asghar Leghari, Ali Javed, Muhammad Ajmal Khan, Zulfiqar Khan, Umer Wahab, Rana Usman Habib Khan, Muhammad Ahsan Nawaz, Noureen Fouzia, Ahmad Fareed Bhedal on behalf of Muhammad Yahya Johar, Advocate/L.A. for CIR, Malik Muhammad Ali Awan, Muqadam Mansha, Rana M. Afzal, Hassan Kamran Bashir, Sikander Ali, Rai Amer Ijaz Kharal, Muhammad Nasir Khan and Hammad ul Hassan Hanjra for Appellants.

Ahmed Pervaiz, Ahtasham Mukhtar, Saffi ul Hassan, Malik Khalid Shafique, AAG-PK, Sarfraz Ahmad Cheema, Liaqat Ali Chaudhry, Amir Wakeel Butt, Adeel Shahid Karim, Anas Sheikh, Shahid Sarwar Chahil, Mrs. Kausar Parveen, Usman Asghar Virk, Shahzad Ahmad Cheema, Malik Abdullah Raza, Ms. Riaz Begum, Muhammad Asif, Kashif Ali Zain, Naeem Khan, Shaigan Ijaz Chadhar, Mian Yusuf Umar, Zain ur Abidein Bokhari, L.A. for I.R./CIR, Ibrar Ahmad, Syed Ali Moinuddin Gillani, Falak Sher Khan, Imran Hayee Khan, Director Law FBR and Dr. Ishtiaq Ahmad, CIR, LTO, Lahore, Departmental Representatives for Respondents.

2025 P T D 255

[Lahore High Court (Rawalpindi Bench)]

Before Jawad Hassan, J

PAK GULF CONSTRUCTION (PVT.) LIMITED

Versus

GOVERNMENT OF PUNJAB and others

Writ Petition No.169 of 2024, decided on 13th June, 2024.

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

----Ss. 25 & 27 & Preamble---Constitution of Pakistan, Art. 1---Company rendering taxable service in Islamabad Capital Territory registered with Punjab Revenue Authority (PRA)---Registration with PRA---Scope---Stance of the petitioner is that it is not rendering services in the Province of Punjab rather its entire business is in Islamabad Territory, thus, it cannot be forced to register with the PRA---Validity---If Preamble of the Punjab Sales Tax on Services Act, 2012 ('the Act, 2012') is read with the provisions of S. 25(1)(a) of the Act, 2012, it will clarify that the Act, 2012 has been introduced by the legislature for levy of tax, in expedient manners, on the services (i) provided, (ii) rendered, (iii) initiated, (iv) originated, (v) executed, (vi) received or (vii) consumed in the Punjab, and a person is required to be registered under this Act if he or she provides any taxable service from his or her office or place of business in the Punjab---Under Art. 1 of the Constitution, Pakistan consists of four Provinces and one capital territory i.e. Islamabad Capital Territory---Punjab Regulation Authority is controlled by the Province of Punjab while Capital Territory comes within the administrative mechanism of the Federal Government, therefore, the stance taken by the petitioner has some force---However, since under S. 29(2) of the Act, 2012 if a person does not satisfy with the requirements for registration specified in S.25 of the Act, 2012, he may make an application to the Commissioner in this regard---High Court transmitted copy of present writ petition to respondent / Commissioner who will consider it as a representation of the petitioner and decide the same after hearing all concerned, including the Petitioner, and examine the entire record, strictly as per relevant provisions of the Act, 2012 specifically S. 29(2), through a speaking order, within four weeks from the receipt of certified copy of present order---In the meanwhile, under the doctrine of stopgap arrangement developed by the High Court the respondents (PRA) are restrained from taking any coercive measures against the petitioner, till decision of its representation---Constitutional petition was disposed of accordingly.

Shell Pakistan Limited v. Government of Punjab and others 2020 PTD 1607 and Shaheen Merchant v. Federation of Pakistan/National Tariff Commission and others 2021 PTD 2126 ref.

Hafiz Muhammad Idrees, Advocate Supreme Court on behalf of the Petitioner along with Hassan Askari Kazmi and Muhammad Bilal for Petitioner.

Abid Aziz Rajori, Assistant Advocate General, Punjab.

Hassan Kamran Bashir, Advocate Supreme Court on behalf of Respondent/PRA and along with Abdul Wakeel and Muhammad Hassan.

2025 P T D 274

[Lahore High Court]

Before Raheel Kamran, J

MUHAMMAD ZUBAIR

Versus

FEDERATION OF PAKISTAN and others

Writ Petitions Nos.50303, 50310, 50600 and 49857 of 2024, decided on 25th October, 2024.

Income Tax Ordinance (XLIX of 2001)---

----Ss. 131(5) & 131(10)---Grant of stay by Appellate Tribunal Inland Revenue ('Tribunal')---Imposition of condition---Discretion of the High Court / Tribunal---Scope---Tribunal though granted the petitioners / taxpayers stay against recovery of impugned tax demand for a specific period (from 15 to 30 days) yet subject to payment of certain percentage (5%, 10%, 25%) out of relevant total tax demand within five days or so ('impugned conditions')---Taxpayers assailed impugned conditions before the High Court---Plea of the petitioner / taxpayer was that the Appellate Tribunal Inland Revenue ('the Tribunal'), being first independent forum, must state reasons for imposing any condition qua any injunctive order passed by it or else the object and purpose of appeal would stand negated as S. 131(5) of the Income Tax Ordinance, 2001, ('the Ordinance 2001') did not visualize any condition for grant of stay and the discretion exercised by the Appellate Tribunal for imposed conditions was unlawful---Plea of the respondents/Department was that the Tribunal was possessed of discretionary power to stay recovery of any tax due by virtue of any order being assailed, subject to restrictions or limitations and that the impugned conditions depicted only reasonable exercise of judicial discretion---Validity---Appellate Tribunal is the first extra-departmental/independent forum for deciding the disputes vis-à-vis tax liability under the Ordinance 2001--- Historically, in acknowledgment of the principle of unrestricted access to justice, the High Courts had been granting stay against recovery of any tax demanded by the concerned revenue authorities till decision of appeal before at least one extra-departmental forum---The federal legislature had by and large manifestly adhered to the same principle while enacting subsection (5) of S.131 of the Ordinance, 2001---Under the provisions of subsection (5) of S. 131 of the Ordinance, 2001, authority of the Appellate Tribunal to grant stay, during pendency of appeal before it, was not conditioned by the requirement of deposit or payment of certain amount of tax determined by the forum below---In that way, the said provisions are quite distinct /distinguishable from subsection (10) of S. 133 of the Ordinance, 2001 which restricts or limits the authority of the High Court to stay recovery of tax, while a Tax Reference is pending, subject to deposit with the assessing authority of not less than 30% of the tax determined by the Appellate Tribunal---No doubt, in the scheme of S. 131 of the Ordinance, 2001, that authority of the Appellate Tribunal to stay recovery of tax, during pendency of an appeal is discretionary, however, to ensure unrestricted access to justice and fair determination of tax liability before the first extra-departmental/independent forum, such discretion ordinarily should be exercised to stay recovery of the tax impugned except for the tax liability admitted or not challenged by the appellant or the one determined on the basis of binding precedent of the High Court or the Supreme Court on any issue raised in the appeal---Impugned conditions in the orders assailed in these petitions had been imposed by the Appellate Tribunal in a slipshod manner that hardly showed application of mind on part of the Appellate Tribunal, therefore, the same were manifestly arbitrary and of no legal effect---High Court set-aside the impugned conditions qua deposit of certain amounts of tax while directing the Appellate Tribunal Inland Revenue to decide appeals of the petitioners within 30 days from the receipt of certified copy of the judgment---Constitutional petitions, filed by taxpayers, were allowed accordingly.

Messrs Pak Saudi Fertilizers v. Federation of Pakistan and others 2002 PTD 679; Z. N. Exporters (Pvt.) Ltd. v. Collector of Sales Tax 2003 PTD 1746; Brothers Engineering (Pvt.) Ltd. v. Appellate Tribunal Sales Tax 2003 PTD 1836; Messrs Fauji Oil Terminal and Distribution Company Ltd v. Pakistan through Secretary Revenue Division and 2 others 2012 PTD 1762 and Messrs Islamabad Electric Supply Company Limited v. Additional Commissioner Inland Revenue and others 2024 PTD 30 ref.

Arsalan Saleem Chaudhry and Barrister Asfandyar Khan Tareen for Petitioner (W.P. No.50303 of 2024).

Muhammad Ajmal Khan, Muhammad Nadeem Sheikh, Rana Usman Habib Khan and Azeem Ullah Virk for Petitioner (in W.P. No.50600 of 2024 and W.P. No.50310 of 2024).

Malik Asif Rafique Rajwana for Petitioner (in W.P. No.49857 of 2024).

Muhammad Hamza Sheikh, Assistant Attorney General.

Barrister Shahjahan Khan for Respondents/Inland Revenue.

2025 P T D 282

[Lahore High Court]

Before Shahid Jamil Khan, J

SARDAR WASEEM ILYAS

Versus

FEDERATION OF PAKISTAN and others

Writ Petition No.71690 of 2023, heard on 7th December, 2023.

Income Tax Ordinance (XLIX of 2001)---

----Ss.138, 139, 140 & 227---Constitution of Pakistan, Art.199---Constitutional petition---Recovery of tax out of property and through arrest of taxpayer-Collection of tax in the case of private companies and associations of persons---Recovery of tax from persons holding money on behalf of a taxpayer---Issuance of notice of demand against petitioner being the Director of the company---Petitioner assailed the notice of recovery of tax issued by the income tax authorities on the grounds of non-mentioning of necessary details of demand and reasons of non-recoverability of the demand from the company in the notice---Validity---Notice under S.140 of the Ordinance did not disclose any detail of creating or shifting the demand enforceable against the petitioner---Prior proceedings under S.138 were sine qua non for invoking the provisions of S.140---Any notice and in particular, notice for recovery, must contain necessary details like assessment, its finality under the law, consequent demand, and in case of coercive measures, the details of earlier notice to which taxpayer did not respond---Notice under S.140, addressed to a third party, must also contain the same details to justify that the ultimate coercive measure is inevitable---Forceful withdrawal of an amount from personal and business account, in absence of due process, was infringement of fundamental rights under Art.23 of the Constitution, besides having negative impact on taxpayer's business and business activities in general---Provisions of S.140 should have been invoked, when Commissioner believed that the taxpayer may run away with the demand, which would become irrecoverable forever---Issuance of notice of recovery against an active taxpayer amounts to robbery without following due process---Till the time it is incorporated in the Rules, the Commissioner should not invoke the provisions of S.140 without seeking prior approval from FBR---Recovery under S.140, without complying with the command of Arts.10A & 19A of the Constitution and that too by ignoring the statutory procedure and law was a misconduct, proceedable under the service laws---Protection under S.227 of the Ordinance was only for actions in good faith and FBR under its subsection (2) could always recommend for disciplinary proceeding for infringing fundamental rights or for non-compliance of judgments by superior Courts---Constitutional petition was allowed with a direction to return the amount recovered from the petitioner illegally.

Sultan Muhammad Khan v. Deputy Commissioner Inland Revenue and 3 others 2015 PTD 458; Messrs Huawei Technologies Pakistan (Pvt.) Limited v. Commissioner Inland Revenue and others 2016 PTD 1799; Mst. Fouzia Razzak v. Federal Board of Revenue and others 2021 PTD 162; Messrs Pakistan LNG Limited through Authorized Representative v. Federation of Pakistan, through Secretary Revenue Division, Ministry of Finance, Islamabad and 2 others 2022 PTD 1763 and Mubashir Yameen v. Assistant/Deputy Commissioner Inland Revenue, RTO, Rawalpindi and others 2023 PTD 146 rel.

Rana Muhammad Afzal for Petitioner.

Syed Sajjad Haider Rizvi, Assistant Attorney General for Federation.

Muhammad Bilal Munir, Malik Abdullah Raza, Hassan Safdar Khan, Dr. Shazia Gull, Commissioner Inland Revenue, Syeda Lubna Shah, Deputy Commissioner, Inland Revenue and Akhtar Suraj ADCIR, Lahore for Respondents.

2025 P T D 313

[Lahore High Court]

Before Sultan Tanvir Ahmad, Shahid Karim and Anwaar Hussain, JJ

Mrs. SHEHLA TARIQ SAIGOL

Versus

FEDERATION OF PAKISTAN through Secretary Finance and 3 others

I.C.A. No.13108 of 2023 (and other connected Appeals), decided on 26th June, 2024.

Per Sultan Tanvir Ahmed, J., as Referee Judge; on difference of opinion between Shahid Karim and Anwaar Hussain, JJ., of Division Bench of High Court hearing Intra Court Appeals, who reached different conclusions on issues pertaining to Constitutionality of section 8 (2)(b) of Finance Act, 2022 regarding imposing of Capital Value Tax on resident individuals on their foreign assets by the Federal Legislature.

(a) Finance Act (IV of 2022)---

----S. 8(2)(b)---Foreign Assets (Declaration and Repatriation) Act (XXX of 2018) Ss. 3 & 8---Constitution of Pakistan, Arts. 141 & Fourth Schedule, Entry No. 51---Foreign assets of resident individuals---Levy on immovable property---Federal Legislature, competency of---Appellants / resident individuals were aggrieved of levy of Capital Value Tax on their foreign assets---Plea raised by appellants / resident individuals was that Federal Government was not competent to impose such tax---Validity---Parliament has power to make laws given in Federal Legislative List as well as the matters pertaining to such areas which are not included in any Province---Parliament under Art. 141 of the Constitution has power to make laws having extra-territorial operation for whole or any part of Pakistan and Provinces can make laws within their territorial limits---When it is not within the competence of any of the Province to impose tax in connection with a subject-matter, on account of its restriction of territorial limits, then the Parliament has competence in such regard---Provincial Legislature can tax immovable property which is located within its territories---Suitable laws exist or have been made by relevant Provincial Legislative authorities in such regard---Tax in question is to be paid by resident individuals on their foreign assets, as defined in S.8(13)(c) of Finance Act, 2022, when such assets have aggregate value exceeding rupees one hundred million---Provision of S.8(2)(b) of Finance Act, 2022 refers to assets, which fall within the territorial limits of Provinces---Appellants were seeking complete escape from the tax, by adopting incorrect approach towards Arts. 141 and 142 of the Constitution and also by misinterpreting Entry-50 of Fourth Schedule to the Constitution as to competence of the Parliament to legislate---Referee Judge was in consonance with the view adopted by Anwaar Hussain, J. and dismissed the Intra Court Appeal.

Messrs S. M. Yusuf & Bros v. (1) Mirza Muhammad Mehdi Pooya and (2) Amanullah Kirmani PLD 1965 SC 15; Ranjana Prakash and others v. The Divisional Manager and another AIR 2012 SCW 848; Mst. Bibi Fatima v. Muhammad Sarwar 2022 SCMR 870; Province of Sindh through Chief Secretary and others v. M.Q.M. through Deputy Convener and others PLD 2014 SC 531; Messrs Sui Southern Gas Company Ltd. and others v. Federation of Pakistan and others 2018 SCMR 802; Government of Sindh through Secretary Health Department and others v. Dr. Nadeem Rizvi and others 2020 SCMR 1; Muslim Commercial Bank Limited v. Muhammad Anwar Mandokhel and others 2024 SCMR 298 and Messrs Ellahi Cotton Mills Ltd. and others v. Federation of Pakistan through Secretary Ministry of Finance, Islamabad and 06 others PLD 1997 SC 582 rel.

Per Shahid Karim, J.:-

(b) Finance Act (IV of 2022)---

----S. 8(2)(b)---Constitution of Pakistan, Arts. 141 & Fourth Schedule, Entry No. 51---Foreign assets of resident individuals---Levy on immovable property---Federal Legislature, competency of---Words "not including taxes on immovable property" in Entry-50 of Fourth Schedule to the Constitution---Applicability---Appellants / resident individuals were aggrieved of levy of Capital Value Tax on their foreign assets---Plea raised by appellants / resident individuals was that Federal Government was not competent to impose such tax---Validity---Words "not including taxes on immovable property" in Entry 50 of Fourth Schedule to the Constitution had relevance and nexus to the first clause of the Entry-50 and had excluded Capital Value Tax and its imposition on immovable property---Provision of S.8 (2)(b) of Finance Act, 2022 imposed Capital Value Tax on foreign assets, which included other assets apart from immovable property---Scheme of Entry-50 of Fourth Schedule to the Constitution is that there is an enumeration of a subject matter out of which an exception has been carved out---Part of tax in Entry-50 of Fourth Schedule to the Constitution, is for Provincial Assembly to impose---Reference to a genre of tax on one entry of Fourth Schedule to the Constitution is to the same tax throughout and not to two or more different taxes---Conclusion of Judge in Chambers of High Court would imply that there were two different taxes amalgamated in Entry-50 of Fourth Schedule to the Constitution one was the CVT on assets and the other was taxes on immovable property, which was perverse and irrational---Judgment of Judge in Chambers of High Court to the extent it upheld the levy of S.8 (2)(b) of Finance Act, 2022 was set aside---Provision of S.8 (2)(b) of Finance Act, 2022 was struck down as the same was un-Constitutional---Authorities were directed to refund the tax recovered under S.8 (2)(b) of Finance Act, 2022---Intra Court Appeal was allowed accordingly.

Jennings v. Kelly [1940] AC 206 at 229; Bennion, Baily and Norbury on Statutory interpretation (Eighth edition); Muhammad Osman Gull and others v. Federation of Pakistan and others (2023) 127 Tax 511 (H.C. Lah); Oxford Dictionary of Finance (third edition); Words and Phrases, Permanent Edition, Volume 6; PLD 1989 Kar. 15 = 1989 PTD 488; Federal Land Bank of St. Paul v. Bismarck Lumber Co. 314 US 95, 100 (1941) and Hirjina & Co. v. Islamic Republic of Pakistan and another 1993 SCMR 1342 rel.

(c) Constitution of Pakistan---

----Art. 201---Judgment of High Court---Doctrine of precedent---Scope---Doctrine of precedent requires that judgment of a coordinate High Court of a different Province on the same issue must be followed unless it is irrational or perverse in its reasoning---More so because Striking down of a provision in a law which applies across Pakistan by one High Court of a Province would give rise to an unsavory situation if not followed by a High Court of another Province particularly in matters of taxation.

Per Anwaar Hussain, J.:-

(d) Foreign Assets (Declaration and Repatriation) Act (XXX of 2018)---

----Ss. 3 & 8---Foreign asset---Existence of foreign asset or income outside Pakistan is recognized under Foreign Assets (Declaration and Repatriation) Act, 2018---Consequence of Ss. 3 & 8 of Foreign Assets (Declaration and Repatriation) Act, 2018 is that the compliance thereof represents payment of tax under Income Tax Ordinance, 2001, for all past years and any proceeding under any law for the time being in force, before income tax authorities or any other authority which could have been initiated with respect to such assets put to rest as past and closed transaction---No restriction has been provided under Foreign Assets (Declaration and Repatriation) Act, 2018 that such assets are immune to any further taxation as and when the Legislature imposes the same in accordance with law.

(e) Civil Procedure Code (V of 1908)---

----O.XLI, R.33---Appellate jurisdiction---Party not present before Court---Scope---High Court under the provisions of O. XLI, R. 33, C.P.C. can exercise appellate powers in favour of all or any of the respondents or parties though such respondents or parties may not have filed any appeal or objection.

Central Government of Pakistan and others v. Suleman Khan and others PLD 1992 SC 590 and North-West Frontier Province Government, Peshawar through Collector, Abbottabad and another v. Abdul Ghafoor Khan through legal heirs and 2 others PLD 1993 SC 418 rel.

(f) Appeal---

----Powers of Appellate Court---Scope---Appeal is continuation of suit (lis) and Appellate Court is vested with all power and jurisdiction vested in Trial Court.

(g) Interpretation of Constitution---

----Federal Constitution---Scope---Pakistan is a federation with four provinces as federating units---There is division of power at central and provincial level---Federal Constitution establishes a dual polity with the union at the center and provinces at the peripheries and each of them is granted sovereign powers to exercise in fields assigned to them under the Constitution.

(h) Constitution of Pakistan---

----Fourth Sched.---Entries in Legislative Lists---Scope---Entries in Legislative Lists should be given broad and liberal interpretation---Such entries are not source of legislative power but fields of legislative heads.

Messrs Khurshid Soap and Chemical Industries (Pvt.) Ltd. through Sheikh Muhammad Ilyas and others v. Federation of Pakistan through Ministry of Petroleum and Natural Resources and others PLD 2020 SC 641; LPG Association of Pakistan through Chairman v. Federation of Pakistan through Secretary, Ministry of Petroleum and Natural Resources, Islamabad and others 2021 CLD 214 and KESC and others v. N.I.R.C. and others 2015 PLC 1 rel.

(i) Interpretation of statutes---

----Duty of Court---Principle---Court's duty to act decisively to end a patently un-Constitutional legislation is no less important than the Court's duty to lean in favour of Constitutionality of a statute.

Dr. Mobashir Hassan and others v. Federation of Pakistan and others PLD 2010 SC 265 rel.

(j) Finance Act (IV of 2022)---

----S. 8(2)(b)---Foreign Assets (Declaration and Repatriation) Act (XXX of 2018), Ss. 3 & 8---Constitution of Pakistan, Arts. 141 & Fourth Schedule, Entry No.50---Law Reforms Ordinance (XII of 1972), S. 3---Intra Court Appeal---Capital Value Tax---Foreign asset---Imposing of tax---Federal Government---Competence---Petitioners / taxpayers were aggrieved of imposing of taxes on their foreign assets---Validity---Federal Legislature is vested with legislative competence to tax capital value of asset with the exception relating to immovable property---Capital value of immovable property falls with the provincial legislative competence and it has been circumscribed by territorial limits of provinces and immovable property not falling within territorial confines of province ipso facto is not susceptible to any provincial legislation---Provision of Art. 141 of the Constitution vesting legislative competence in Federal Legislature to make laws having extra-territorial application comes into play---There is no ambiguity and / or conflict inter se Art.141 of the Constitution and Entry- 50 of Fourth Schedule to the Constitution, as it is the finish-line of the exception in Entry-50 which gives way to the starting line of Art.141 of the Constitution---In Entry-50 of the Fourth Schedule to the Constitution, the Parliament has been given power to legislate in respect of taxes on capital value of assets---To limit such power, particularly when Provincial Legislature is clearly not competent to legislate in respect of the same (to the extent of foreign immovable properties) would amount to placing the narrowest and the most restrictive interpretation on Entry-50 of Fourth Schedule to the Constitution which runs contrary to the scheme of the Constitution and principles of Constitutional interpretation enunciated by Courts of the country----Power to levy Capital Value Tax under Entry-50 of Fourth Schedule to the Constitution did not vest with Provinces in relation to foreign immovable properties owned by residents but with the Federal Legislature---Intra Court Appeal was dismissed, in circumstances.

Messrs Sui Southern Gas Company Ltd. and others v. Federation of Pakistan and others 2018 SCMR 802; Government of Sindh through Secretary Health Department and others v. Dr. Nadeem Rizvi and others 2020 SCMR 1; Zaka Ud Din Malik v. Federation of Pakistan and others 2023 PTD 268; Union of Indian v. Harbhajan Singh Dhilon AIR 1972 SC 1061; Daman Singh and others v. State of Punjab and others AIR 1985 SC 973; Sunrise Associates v. Government of NCT of Delhi and others (2006) 5 SCC 603 and Irfan Hussain Halai and others v. Federation of Pakistan and others C.P. No.4942 of 2022 rel.

Raja Hamza Anwar, Ali Talib, Hammad Amin, Muhammad Shabbir Hussain, Malik Ahsan Mahmood, Faisal Rasheed Ghouri, Ahsan Bashir, Shehraz Alam Mannoo, Mehwish Alam Elahi, Khalid Bashir, Danish K. Mannoo, Jahangir Khan Mannoo, Omer Iqbal Khawaja, Ibrahim Haroon, Muhammad Muqaddam Sukhera, Muhammad Mansha Sukhera, Zeeshan Asif, Ali Sibtain Fazli, Hasham Ahmad Khan, Abad-ur-Rehman, Muhammad Umer Tariq Gill, Isa Ahmad Jalil, Kairan Hussain Mir, Barrister Saif ul Hassan, Barrister Muhammad Abubakar, Ch. Wasim Akram, Malik Nadir Ali Sherazi, Muhammad Usman, Wasim Ahmad Malik, Iftikhar Nawaz Gujjar, Hafiz Tanveer Nasir, Syed Nawazish Hussain, Barrister Shehryar Kasuri, Jamshid Alam, Muhammad Usama, Ghias Ahmad, Tariq Rashid, Malik Tanvir Ahmad Awan, Shahbaz Butt, Asif Imran Awan, Malik Bashir Ahmad Khalid, M. A. Rizwan Kamboh, Syed Naveed A. Andrabi and Sharjeel Tareef for Appellants.

Asad Ali Bajwa, Deputy Attorney General, Haroon-ul-Rasheed Mir, Muhammad Nasim Saqlain and Muhammad Mansoor Ali Sial, Assistant Attorney Generals for Respondent No.1.

Barrister Ahmad Pervaiz, Syed Muhammad Ijaz, Muhammad Imran Khan, Fahim Khadim, Qaisar Mahmood Sra, Shahraiz Khan Gill, Naeem Khan, Muhammad Danish Zuberi, Barrister Ali Umrao, Barrister Scheherozade Sheeryar. Jawad H. Tarar, Asif Ahad, Mohsin Majeed, Ch. Muhammad Yasin Zahid, Ch. Muhammad Ashfaq Bhullar, Rana Muhammad Afzal, Syed Muhammad Baqir Ali, Ikhlaq Ahmad, Anas Irtiza Awan, Ms. Humaira Bashir, Malik Abdullah Raza, Shahzad Ahmad Cheema, Ibrar Ahmed, Muhammad Bilal Munir, Omer Habib Khan, Falak Sher Khan and Shahzad Ahmad Cheema for Respondents Nos.2 and 3.

Salman Asif Warraich, Assistant Advocate General for Respondent No.4.

2025 P T D 386

[Lahore High Court]

Before Muhammad Sajid Mehmood Sethi and Asim Hafeez, JJ

The COMMISSIONER OF INLAND REVENUE, LEGAL DIVISION, RTO, LAHORE

Versus

Messrs WIRE PRODUCTS (PVT.) LIMITED, LAHORE

P.T.R. No.196 of 2010, decided on 2nd June, 2022.

Income Tax Ordinance (XXXI of 1979) [Since repealed]---

----Ss.22, 23 & 30(2), Cls. (b)---Set-off of losses---Pre-commencement expenses---Income for the purpose of adjustment of loss, classification of---Scope---Contention of the applicant / department was that no commercial business was conducted by the taxpayer during the Income year 2001-2002, therefore, and no question for assessment of gains and profits arose for determining income from business as trial production and expenses incurred thereupon were pre-commencement expenses, and classifiable as capital expense and were required to be capitalized as cost of the project, so interest income was 'Income from other sources' in terms of clause (b) of subsection (2) of S. 30 of the Income Tax Ordinance, 1979 ('the Ordinance, 1979')---Plea of the taxpayer/respondent was that the project was established, and trial-production had commenced, and the expense incurred for payment of electricity and gas consumed was operating expense - coming in the ambit of revenue expense - and had to be accounted for the purposes of assessing income, and the consequent loss had to be adjusted against the interest income, with balance loss to be carried forward to next year, as in terms of section 34 of the Ordinance, 1979, income from one head could be employed for adjusting loss, accrued under other head of income---Validity---It was not the case of the taxpayer that commercial production was carried out - it was noted by the CIR (Appeals) that no business was conducted during period under consideration and the expenses incurred were of pre-commencement nature and had to be capitalized---No income / loss under the head Income from business was declared---Mere carrying out of trial production would not be construed to the effect that business was established, for the purposes of Ss. 22 & 23 of the Ordinance, 1979 - gains and profits to be earned from the income of the business, whereby no commercial production was carried out, was distinct from the interest income in the present case---In present case, there was no evidence that commercial production was carried out or any business, for the purposes of computing any income/loss---Expenses so incurred were pre-commencement expenses - and not construable as loss for allowing adjustment against interest income---Thus, the Appellate Tribunal erred in law while allowing adjustment of alleged pre-operative expenses, guised / claimed as loss - not otherwise covered within the ambit of S. 22 or 23 of the Ordinance, 1979 - against interest income, which for all intent and purposes, in the context of the facts of the case, was the income from other sources---Thus, S. 34 of the Ordinance, 1979 had no relevance and applicability---It was evident that for attracting S. 34, ibid, taxpayer must sustain a loss - as consequence of business undertaken for gains and profits - and no such loss was calculable in present case---Expenses incurred for trial production being in the nature of pre-operative expenditure, were not classifiable as loss--- No question of adjustment of income from one head against another head of income arose in present case---Question of law was answered in the negative i.e. decided in favour of the department and against the taxpayer declaring impugned order passed by the Appellate Tribunal as illegal and erroneous---Reference Application, filed by the Department, was allowed.

Commissioner of Income-Tax. v. L. and T. Mcneil Ltd. [1993] 202 ITR 662 and Tuticorin Alkali Chemicals and Fertilizers Ltd. v. Commissioner of Income Tax [1997] 227 ITR 172 = 1998 PTD 900 ref.

Lucky Cement Ltd. v. Commissioner Income Tax, Zone Companies, Circle-5, Peshawar 2015 PTD 2210; Commissioner of Income Tax, Companies Zone-I, Lahore v. Messrs Grays Leasing Company Limited 2005 PTD 2093; UCH Power (Pvt.) Ltd. and others v. Income Tax Appellate Tribunal and others 2010 PTD 1809 and C.I.T. CO., Zone-I, Lahore v. Messrs Gulistan Power Generation Ltd., Lahore 2017 PTD 844 distinguished.

Imran Rasool for Applicant.

2025 P T D 424

[Lahore High Court]

Before Jawad Hassan, J

D.G. KHAN CEMENT COMPANY LIMITED and others

Versus

FEDERAL BOARD OF REVENUE and others

Writ Petition No.52043 of 2021, decided on 24th January, 2023.

Sales Tax Act (VII of 1990)---

----Ss. 7, 8 & 11(2)---Federal Board of Revenue Act (IV of 2007), Ss.4(1) (a) & 4(1) (k)---Adjustment/refund of input tax, exclusion of---Taxable activity/supply of the registered person---Scope---Petitioner/Company assailed Show-Cause Notice/Notice issued by FBR / Respondent under S. 11(2) of the Sales Tax Act, 1990 (the "1990 Act") relying on the case Nishat Mills Limited v. Federation of Pakistan and others (2020 PTD 1641), in which the Assessing / Adjudicating Officer was directed to interpret Ss. 8(1)(h) & (i) of the Sales Tax Act, 1990, on case to case basis after determining facts of each case without prejudice---Whether the inputs had been utilized for the purpose of taxable supplies or not---Held, that provisions of S. 8 of Sales Tax Act, 1990 manifest that the exclusion of adjustment/refund of input tax does not have a nexus with the taxable activity/supply of the registered person and parameters regarding adjustment of input tax are given in subsections (a) to (m) of the S. 8 of the Act, 1990---Mechanism provided in S. 8 will be read together with the provisions contained in Ss. 2 & 7 of Act 1990 when such kind of exercise regarding input tax is carried out by the competent authority---Scope of impermissibility concerning the adjustment of input tax with reference to the scope of the word "purpose" and/or "direct use" in production or manufacture of taxable goods/supplies has already been distinguished by a Division Bench of (Lahore) High Court---Then the only point involved in the matter is whether the inputs have been utilized for the purpose of taxable supplies or not and stance of the petitioners is that the items, on which input tax has been claimed by them, can only be used or have been used for the industrial establishment of the petitioner/Company---Federal Board of Revenue (FBR) in terms of Ss. 4(1) (a) & (k) of the Federal Board of Revenue Act, 2007, has to act in implementing the provisions of all fiscal laws, by (i) taking appropriate action; (ii) making policy; and (iii) issuing rules and regulations or guidelines in a clear, transparent, effective and expedient manner---Federal Board of Revenue (FBR) as a regulatory body has to deal with all the tax related affairs under relevant provisions of the 2007 Act---Petitioner in response to show-cause notice has specifically made request, after few days, to the respondents to visit manufacturing unit by deputing a team but this exercise has not been done so far---Notably, the issue-in-hand (whether the inputs have been utilized for the purpose of taxable supplies or not) can only be conveniently resolved if an on-site/physical verification of the utilized inputs of Petitioner No.1 is made, which is also the statutory mandate of Sales Tax Act, 1990, and even otherwise there is no harm in law if such exercise is done for the entire satisfaction of both the petitioner and the revenue hierarchy, before a final decision is rendered---Thus, respondents are directed to decide the matter after constitution of a team of the qualified/expert persons to attain an on-site/physical verification clarifying the fact whether the items, on which input tax has been claimed by petitioner has been done strictly as per provision of the Act or not and adjudicating authority will finally adjudicate the matter after taking into consideration the legal points, relevant provisions of Sales Tax Act, 1990, and the Federal Board of Revenue Act, 2007 as well as the judgment passed in Nishat Mills Limited case, within the prescribed period provided under the law---Constitutional petition was disposed of accordingly.

Reliance Commodities (Private) Ltd. v. Federation of Pakistan and others PLD 2020 Lah. 632 = 2020 PTD 1464; Coca-Cola Beverages Pakistan Ld. v. Customs, Excise and Sales Tax Appellate Tribunal and others 2017 PTD 2380; Chenab Flour and General Mills and others v. Federation of Pakistan through Secretary Revenue Division and others PLD 2021 Lah. 343; Ramzan Sugar Mills Limited v. Federal Board of Revenue and others 2021 PTD 1321 and Nishat Mills Limited v. Federation of Pakistan and others 2020 PTD 1641 ref.

Raza Imtiaz Siddiqui for Petitioner along with Miss Sibgha Saqib and Barrister Fasih-ur-Rehman.

Muhammad Yahya Johar, Advocate Supreme Court/Legal Advisor for Respondent-FBR.

2025 P T D 490

[Lahore High Court]

Before Abid Aziz Sheikh, J

AMIR KHAN and another

Versus

ADDITIONAL COLLECTOR OF CUSTOMS (ADJUDICATION) and 2 others

Writ Petition No.44573 of 2024, heard on 29th January, 2025.

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

----Ss.179 & 193---'Functus officio', doctrine of---Judicial or quasi-judicial authority---Passing of order---Alteration/modification---Scope--Adjudicating Authority of the Customs issued Corrigendum ('impugned Corrigendum'), which purportedly modified the Order-in-Original substantively altering the same (order-in-original), enhancing individual personal penalties imposed upon the petitioners from Rs.10,000/- to a total amount of Rs.7,922,048/=---Validity---Record incontrovertibly demonstrated that the order-in-original was passed by the respondent acting as an Adjudicating Authority under S. 179 of the Customs Act, 1969, and the sole and exclusive remedy available to any party aggrieved by said order was an appeal under S. 193 of the Customs Act, 1969, before the Collector Customs (Appeals)---Critically, the respondent had no suo-motu power to modify the order-in-original, enhancing the personal penalties from Rs.10,000/- each to an aggregate amount of Rs.7,922,048/-, particularly in absence of any application from the aggrieved party requesting such modification---Once the matter was adjudicated upon, the respondent became functus officio with respect to the Order-in-Original, and unless and until the matter was remanded to the respondent by the Appellate Authority or any other higher forum, the order-in-original could not be unilaterally modified---The 'judicial' or 'quasi-judicial authorities' cannot change its determination in an adjudication after signing 'judgment', 'order' and 'decree' as the doctrine of 'functus officio' comes in the way---Expression 'functus officio' means that having fulfilled the functions, discharged the duties, discharged the office, or the purpose having been accomplished, there remains no further force or authority with the 'judicial' or 'quasi-judicial Authorities'---High Court set-aside the impugned Corrigendum, as the same was without lawful authority and of no legal effect whatsoever from its purported inception---Constitutional petition was allowed, in circumstances.

Kh. Muhammad Fazil v. Mumtaz Munnawar Khan Niazi (deceased) through L.Rs. and another 2024 SCMR 1059; Anees-ur-Rehman v. Messrs Faysal Bank Limited through Manager 2020 CLD 473; Iqbal Pervaiz and others v. Harsan and others 2018 SCMR 359; Muhammad Wahid and another v. Nasrullah and another 2016 SCMR 179; Shujat Ali v. Muhammad Riasat and others PLD 2006 SC 140; Muhammad Anwar v. Saeed Akhtar and others PLD 2004 SC 911 and Bank Al Habib Limited through Branch Manager v. Abu Bakar Textile Mills through Managing Partner and 8 others 2016 CLD 454 ref.

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

----Ss. 179 & 194-B (2)---Order passed by Customs Authority, rectifying of ---Scope---Adjudicating Authority of the Customs (respondent) issued Corrigendum ('impugned Corrigendum'), which purportedly modified the Order-in-Original substantively altering the same (order-in-original), enhancing individual personal penalties imposed upon the petitioners from Rs.10,000/- to a total amount of Rs.7,922,048/=---Validity---Section 179 of the Customs Act, 1969, reveals no provision for conferring upon the Adjudicating Authority of the Customs (respondent) the power to rectify Order-in-Original, rather such power vests exclusively in the Customs Appellate Tribunal under S.194-B (2) of the Customs Act, 1969, and same is also exercisable only upon a mistake apparent on record being duly brought before the Tribunal by a party to an appeal---Consequently, the impugned Corrigendum was manifestly ultra vires the relevant provision of the Customs Act, 1969---High Court set-aside the impugned Corrigendum, being without lawful authority and of no legal effect whatsoever from its purported inception---Constitutional petition was allowed, in circumstances.

Hassan Raza Shakir for Petitioners.

Nadeem Mahmood Mian and Huriya Fatima for Respondents.

Ms. Deeba Tasnim Anwar, Assistant Attorney-General for Pakistan along with Syed Babar Ali, Inspector (Customs).

2025 P T D 502

[Lahore High Court]

Before Shams Mehmood Mirza, J

HONDA ATLAS CAR (PAKISTAN) LIMITED

Versus

FEDERAL BOARD OF REVENUE and others

Writ Petitions Nos.38459 and 49337 of 2021, decided on 7th November, 2024.

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

----Ss.122(5), 122(5A), 122(9) & 177---Ongoing proceedings of amendment of assessment---Audit, selection for---Parallel proceedings---Scope---Taxpayer assailed notices showing its selection for audit under S. 177 of the Income Tax Ordinance, 2001 ('the Ordinance, 2001') contenting that in the presence of proceedings for amendment of its assessment the parallel proceedings for tax audit could take place---Argument of the petitioner /taxpayer was that its selection for audit must pass the rationality test laid down in the case titled Raza Motor Industries v. Federation of Pakistan reported as 2022 PTD 19 ('Raza Motor case')---Validity---Contents of impugned notices revealed that reasons set out in the same (notices) for selection of petitioner for audit had no nexus with the proceedings that were initiated for amendment in the assessments and orders passed thereon---Audit under S. 177 of the Ordinance, 2001 falls in the jurisdiction and authority of the Commissioner, that is, to select the case of a taxpayer and the Legislature has granted considerable flexibility and discretion to the Commissioner to call for the record and documents from the taxpayer without confining it by any specified criteria except requiring him to give reasons for summoning the record/documents---Under S.177 of the Ordinance 2001, the Commissioner is required to grant a further right of hearing at the culmination of audit to the taxpayer seeking its explanations on the issues that surfaced during the audit and that even after the amendment of the assessment multiple rights of appeal/reference are available to the taxpayer---Concept of audit requires pinpointing of non-compliant trends, defects in system, ambiguities in practice and law and selection and conduct of audit is not necessarily detrimental to the interests of the taxpayer---Taxpayer's duty to make correct declarations in the tax returns under the self-assessment regime must be balanced against the right of the Revenue to audit---In case, the taxpayer satisfies the authorities that the tax returns submitted by him are truthful, reliable and supported by the necessary documentation, it may not culminate in further proceedings or in an amendment in the returns and enhanced tax liability may not be the outcome---This is so because mere selection for audit by itself is not a complete process, but is the beginning of a process which may or may not culminate in revision of assessment, enhanced tax liability or other adverse legal consequences---Even otherwise, the Commissioner is merely seeking the records / documents from the taxpayer by providing him reasons which at the pre-audit stage cannot be assailed before a Court of law---Petitioner's contention/ argument (that its selection for audit must pass the rationality test laid down in the 'Raza Motor case') had no force---No ground for interference by the High Court was made out---Constitutional petition was dismissed.

Raza Motors Industries v. Federation of Pakistan and others 2022 PTD 19; The Federal Board of Revenue and others v. Messrs 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 ref.

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

----Ss. 122(5), 122(5A), 122(9) & 177 [as amended through Finance Act, 2009 and Finance Act, 2010]---Audit---Selection for multiple years---Scope---Taxpayer assailed notices showing its selection for audit under S. 177 of the Income Tax Ordinance, 2001 ('the Ordinance, 2001')---Argument of the petitioner /taxpayer was that as per Circular dated 05.10.2009 issued by the Federal Board of Revenue, there was no warrant under S. 177 of the Ordinance, 2001 for selection of audit of a taxpayer for multiple years---Validity---Text of S. 177 of the Ordinance, 2001 does not lay down any impediment on the authority of the Commissioner to select the case of a taxpayer for multiple years---All that the provisions in S. 177 require from the Commissioner is to record reasons in writing for calling for record/documents and those reasons are to be communicated to the taxpayer---If these conditions are fulfilled, the Commissioner can select a taxpayer for multiple years---Thus, reliance placed by the petitioner on Circular-in-question is of no help to it---Petitioner ignored the amendments made in S. 177 through Finance Act, 2009 and Finance Act, 2010---Section 177(7) visualizes a situation where audit in a particular year has already taken place and audit for subsequent year would require furnishing of reasonable grounds---This provision is not applicable to selection of audit for multiple years---In the present case, the Commissioner had furnished reasons for calling for record/documents for conducting audit in each of the notice which fulfilled the conditions laid down in the proviso to section 177---No ground for interference by the High Court was made out---Constitutional petition was dismissed.

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

----Ss. 122(5), 122(5A), 122(9) & 177---Ongoing proceedings of amendment of assessment---Audit, selection for---Sectoral audit drive---Taxpayer assailed notices showing its selection for audit under S. 177 of the Income Tax Ordinance, 2001 ('the Ordinance, 2001') contenting that the impugned notices were part of sectoral audit---Validity---Notices impugned did not contain anything that would suggest that it was part of a sectoral audit drive authorized by the Federal Board of Revenue---In each of the notice reasons had been given for selecting the case of the petitioner for audit thereby satisfying the requirements of S. 177 of the Ordinance, 2001---No ground for interference by the High Court was made out---Constitutional petition was dismissed.

Waqas Ahmad Mir, Hammad Hussain and Ali Hussain Gillani for Petitioner (in W.P. No.38459 of 2021).

Basharat Ali Awan for Petitioner (in W.P. No.49337 of 2021).

Syed Zain ul Abedeen for Respondent/FBR (in W.P. No.49337 of 2021).

Ahmed Pervaiz for Respondent/FBR (in W.P. No.38459 of 2021).

2025 P T D 530

[Lahore High Court]

Before Shams Mehmood Mirza, J

DEFENCE HOUSING AUTHORITY

Versus

The FEDERAL BOARD OF REVENUE and others

Writ Petition No.54097 of 2024, decided on 24th September, 2024.

(a) Interpretation of statutes---

----Fiscal laws---Retrospective effect---Scope---Taxing statute must use clear and unambiguous language imposing tax obligations---One has to look merely at what is clearly said and there is no room for any intendment---There is no presumption as to a tax and nothing is to be read in and nothing is to be implied and one has to look fairly at the language used.

West Pakistan and others v. Messrs Jabees Limited PLD 1991 SC 870; Zila Council Jehlum through District Coordination Officer v. Messrs Pakistan Tobacco Company Ltd. and others PLD 2016 SC 398 and Chairman Federal Board of Revenue, Islamabad v. Messrs Al-Technique Corporation of Pakistan Ltd. and others PLD 2017 SC 99 rel.

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

----Ss. 100BA, 236C, 236K, Tenth Schedule, R. 1-A and proviso [inserted through Finance Act, 2024]---Constitution of Pakistan, Art.199---Constitutional petition---Retrospective effect---Petitioner authority was aggrieved of retrospective operation given to S. 100BA read with R.1-A of Tenth Schedule to Income Tax Ordinance, 2001---Validity---Legislature in categorical terms did not express its intention to apply proviso to R. 1-A of Tenth Schedule to Income Tax Ordinance, 2001, to returns filed in past three years to make taxpayers who were in default, liable for tax on the rates mentioned in Tenth Schedule to Income Tax Ordinance, 2001---Retrospective effect could not be given to proviso to R. 1-A of Tenth Schedule to Income Tax Ordinance, 2001, so as to destroy or impair past and closed or concluded transactions---High Court advised Federal Board of Revenue to constitute a body of experts for rendering opinion on future legislation / notifications in light of legal and Constitutional principles, in order to avoid such legislation which would be struck down---High Court further advised Federal Board of Revenue to hire services of expert draftsmen to frame legislation / notifications in a manner that ordinary public would understand---Constitutional petition was allowed, in circumstances.

CIT, Delhi v. Vatika Township P Ltd. (2015) 1 SCC 1; The Govinddas v. Income Tax Officer AIR 1977 SC 552; Saeed v. Minister for Immigration and Citizenship (2010) 241 CLR 252 and Bropho v. Western Australia (1990) 171 CLR 1 rel.

Imtiaz Rashid Siddique, Barrister Shehryar Kasuri and Raza Imtiaz Siddique for Petitioners.

Sheraz Zaka, Assistant Attorney General.

2025 P T D 552

[Lahore High Court]

Before Muhammad Sajid Mehmood Sethi and Shahid Jamil Khan, JJ

COMMISSIONER INLAND REVENUE, LAHORE

Versus

Messrs ARCO PLASTICS (PVT.) LIMITED LAHORE

S.T.R. No.68393 of 2017, decided on 21st June, 2018.

Sales Tax Act (VII of 1990)---

----S. 8-B---Input tax adjustment---100% input tax instead of 90%, adjustment of---Procedural lapse or otherwise---10% excess input tax adjusted, recovery of---Department filed Reference Application as Appellate Tribunal Inland Revenue held recovery of excess amount from the taxpayer as not justified---Validity---Record revealed that respondent/taxpayer adjusted 100% input tax instead of 90% in violation of S. 8-B of the Sales Tax Act, 1990---Admittedly, respondent-taxpayer had deposited its total tax liability---Applicant/ Department was seeking recovery of said 10% excess input tax adjustment amount---Even if the said amount was paid, that would be part of carried forward amount and ultimately, respondent / taxpayer would be entitled to claim input tax adjustment of the said amount as well at the end of the year---Hence, the claim of 100% tax adjustment was only a procedural lapse---Thus, recovery of said amount from respondent / taxpayer was not justified---Answer of the High Court to the proposed question was in negative i.e. against Applicant / Department and in favour of respondent-taxpayer subject to payment of penalty and default surcharge as per order-in-original---Reference application, filed by the Department, was disposed of accordingly.

Commissioner Inland Revenue v. M/s. Malik Enterprises 2021 PTD 945 ref.

Barrister Pirzada Aurang Zaib for Applicant.

2025 P T D 562

[Lahore High Court]

Before Shahid Karim and Abid Hussain Chattha, JJ

FAYSAL BANK LTD.

Versus

The DEPUTY COMMISSIONER OF INCOME TAX and others

I.T.As. Nos.215, 216 and 218 of 2000, decided on 5th December, 2022.

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

----S. 23(1)(x)---Deductions---Bad debts---Scope---On the basis of the standard accounting principles, a debt becomes irrecoverable when it is written off and so the entitlement regarding deduction for bad debts is, to the extent of irrecoverable loans, determined as such under the regulatory framework governing financial institutions---Thus, it would be a matter to be determined on a case to case basis whether the deduction for bad debts was allowable to a particular taxpayer/financial institution or not---Such issue is required to be determined under the (repealed) Income Tax Ordinance, 1979, by the concerned Deputy Commissioner being the competent Officer---Deputy Commissioner is to determine whether deduction for bad debts is to be allowed to a particular taxpayer individually on the basis of the treatment that has been given by the taxpayer/financial institution in its books of account---High Court , therefore, remitted the present case for the necessary determination regarding irrecoverability of a loan to the concerned Deputy Commissioner---Appeal was disposed of accordingly.

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

----S. 23(1). Cl.V---Deductions---Bad debts---Scope---Income from lease rentals---Depreciation, calculation of---Deduction of other allowances---Scope---Argument of the Department was that depreciation must be calculated after reducing the income from lease rentals by deducting other allowances---Validity---In Cl. V of S. 23(1) of Income Tax Ordinance, 1979, the word "income" is not to be to read as "net income" as this would be adding words to a provision which is not permissible as there is no intendment in taxation laws---In fact, the expression "income from lease rentals only" has to be taken in its ordinary connotation and it signifies simply that depreciation on assets given on lease shall be allowed against any income from lease rentals---Term "income" in this clause has not been used in the isolated sense that it has been defined in the Income Tax Ordinance, 1979---Thus, argument of the Department was misconceived---Question of law to said extent was decided in favour of the appellant and against the respondents / Department---High Court set-aside impugned order passed by Appellate Tribunal---Appeal filed by financial institution was allowed.

Naveed A. Andrabi, Syed M. Ijaz Mansoor Beg, Hamza Rauf for Appellant (in I.T.As. Nos.215, 216 of 2000 and Respondents (in I.T.A. No.218 of 2000).

Liaquat Ali Ch., Shahzad Ahmad Cheema, Malik Abdullah Raza and Raheel Ahmad Khan for Respondents (in I.T.As. Nos.215, 216 of 2000 and Appellant (in I.T.A. No.218 of 2000).

2025 P T D 569

[Lahore High Court]

Before Asim Hafeez and Shahid Karim, JJ

COMMISSIONER INLAND REVENUE

Versus

MUHAMMAD ZUBAIR ALAMGIR and others

P.T.R. No.520 of 2012, decided on 19th December, 2023.

Income Tax Ordinance (XLIX of 2001)---

----S. 130---Appellate Tribunal Inland Revenue, jurisdiction of---Adjudication of matter-in-issue---Passing judgment without giving reasons---Effect---Department filed Reference contending that the Appellate Tribunal Inland Revenue (ATIR) dismissed their appeal in a mechanical way and failed to consider the applicability and scope of various/relevant provisions of Income Tax Ordinance, 2001, in the context of issue-in-question(gains bagged through sale of properties)---Validity---Relevant/operative paragraph of the impugned order showed that the ATIR abdicated its jurisdiction and allowed appeal simplicitor while referring to an earlier order having been previously passed by it (ATIR) ,without extending reasons to establish alleged similarity of facts / causes giving "considered opinion that the ATIR had already decided the same issue of two members of AOP through a very well-reasoned and speaking order---Thus, impugned order was devoid of plausible reasoning and patently ambiguous; no explanation was found to understand the meaning or rational of the expression "two members of AOP"---Evidently, effect of various provisions of law, in the context of allegations, was not dilated upon, let alone considered---ATIR was required to consider the scope of various sections of the Income Tax Ordinance, 2001---Fair and proper adjudication of matter-in-issue was missing---High Court set aside the impugned order passed by the Tribunal and remanded the matter for decision afresh on the Appeal of the taxpayer---Reference application, filed by Department, was allowed accordingly.

2025 P T D 614

[Lahore High Court (Rawalpindi Bench)]

Before Jawad Hassan, J

Messrs NATIONAL LOGISTICS CELL

Versus

ASSISTANT/DEPUTY COMMISSIONER and others

Writ Petition No.2613 of 2024, decided on 12th September, 2024.

Income Tax Ordinance (XLIX of 2001)---

----S.134A(1)---Constitution of Pakistan, Art. 199---Constitutional petition---Alternative Dispute Resolution---Committee not established---Effect---Petitioner / taxpayer company in its earlier petition was directed by High Court to get its dispute settled through Alternative Dispute Resolution Committee---Authorities did not establish Alternative Dispute Resolution Committee and dispute of petitioner / taxpayer company was not decided within the period fixed by High Court in earlier petition---Effect---High Court directed Federal Government to establish necessary Committee of Alternative Dispute Resolution as per provision of S. 134A(1) of Income Tax Ordinance, 2001, on immediate basis so that litigants would not suffer and tendency of overburdening Court with unnecessary litigation was curtailed---High Court restrained the authorities from adopting coercive measures against petitioner / taxpayer company as Committee of Alternative Dispute Resolution had not been established and there was no forum to get dispute resolved by way of mediation---Constitutional petition was disposed of accordingly.

Shell Pakistan Limited v. Government of Punjab and others 2020 PTD 1607; Shaheen Merchant v. Federation of Pakistan/National Tariff Commission and others 2021 PTD 2126; Federation of Pakistan and others v. Attock Petroleum Ltd. Islamabad 2007 SCMR 1095; Commissioner Inland Revenue v. Messrs RYK Mills 2023 SCMR 1856; Province of Punjab through Secretary G&W, Lahore and others v. Messrs Maroon Construction Company, Government Contractor and others 2024 SCMR 947; Strategic Plans Division and another v. Punjab Revenue Authority and others PLD 2024 Lah. 545; Faisal Zafar and another v. Siraj-ud-Din and 4 others 2024 CLD 1; Netherlands Financierings Maatschanpij Voor Ontwikkelingslanden N.V. (F.M.O) v. Morgah Valley Limited and SECP PLD 2024 Lah. 315; Sohail Nisar v. Nadeem Nisar and others 2024 LHC 1435; Messrs U.IG. (Pvt.) Limited through Director and 3 others v. Muhammad Imran Qureshi 2011 CLC 758 and Shehzad Arshad v. Pervez Arshad and 2 others 2024 CLD 1121 rel.

Syed Tanseer Bukhari for Petitioner.

2025 P T D 631

[Lahore High Court]

Before Ahmad Nadeem Arshad, J

Messrs SITARA DILDAR FUELS (PRIVATE) LIMITED through Chief Executive Officer

Versus

FEDERATION OF PAKISTAN through Secretary Finance and 3 others

Writ Petition No.14535 of 2024, heard on 7th May, 2024.

Income Tax Ordinance (XLIX of 2001)---

----Ss. 133 & 138(1) & 140---General Clauses Act (X of 1897), S. 9---Appeal before Appellate Tribunal Inland Revenue---Grant of stay---Period of stay---Computation---Contention of the Petitioner / tax-payer was that the respondent / Department , prior to the expiry of period of stay order dated 31.01.2023 granted by the Appellate Tribunal Inland Revenue ('Tribunal'), issued impugned notice on 01.03.2024 under S.140 of the Income Tax Ordinance, 2001, for recovery of demand of tax, whereas, the Bank in compliance of notice dated 01.03.2024 transferred an amount of Rs.1,678,0814 in favour of respondent / Department---Validity---Section 9 of the General Clauses Act, 1897, prescribes a method of computation of the period of limitation, which excludes the date from which any act has been ordered to be performed as well as the last date upto which the act can be performed---Applicability of said section is not only limited to statutes and notification but is also applied while computing the period of limitation as fixed by any judgment, decree or order---When S. 9 of the General Clauses Act, 1897, is pressed in service in computing the period of 30-days, the day on which the order was passed will be excluded and it will be reckoned from the date succeeding the date of order---In the present case , the injunctive order was passed on 31.01.2024 whereby the operation of the impugned notice was stayed for a period of 30-days ; by excluding the day on which the order was passed, such period started on 01.02.2024---Month of February 2024 comprised of 29 days, hence, the order dated 31.01.2024 was to expire on 01.03.2024 but before that the respondent/ Department issued the impugned notice dated 01.03.2024 for recovery of impugned demand of income tax to the Bank for attachment of the bank account of the petitioner upon which the Bank also transferred amount of Rs. 1,678,081 in favour of respondent---Petitioner applied for extension of stay which was strongly opposed by the respondents / Department but the Tribunal while granting an opportunity of hearing extended the already granted stay for a further period of 30-days vide order dated 29.02.2024---Thus, the stay order dated 31.01.2024 and extended stay order dated 29.02.2024 were in field on 01.03.2024 when the impugned notice was issued, but bank account of the petitioner was blocked and an amount of Rs.1,678,081/- was transferred in favour of respondent---In these circumstances, this act of the respondent / Department was illegal, unlawful and ultra-vires and was not sustainable in the eyes of law---High Court set-aside the impugned notice dated 01.03.2024 as well as the action of respondents / Department qua attachment of the bank account of the petitioner and respondents were directed to refund the amount of Rs.1,678,081/- deducted from the bank account of the petitioner, however, Appellate Tribunal Inland Revenue, being the competent Authority, would decide the fate of the demand-in-question in appeal filed by the petitioner pending before it---Constitutional petition, filed by tax-payer, was allowed accordingly.

Balochistan's case 2002 SCMR 1903 and Messrs Malik Muhammad Nawaz Haji Aziz Ahmad, Commission Agents Chakwal v. Syed Mehmood Hussain 1997 SCMR 264 ref.

Ch. Muhammad Shakeel for Petitioner.

Ch. Imtiaz Elahi, Deputy Attorney General for Pakistan for Respondent No.1.

Barrister Ahtasham Mukhtar for Respondent No.3.

2025 P T D 653

[Lahore High Court]

Before Shams Mehmood Mirza, J

FAISAL AHMAD and 2 others

Versus

FEDERAL BOARD OF REVENUE through Chairman and others

Writ Petition No.32407 of 2024, decided on 23rd September, 2024.

Income Tax Ordinance (XLIX of 2001)---

----Ss. 111 & 122---Unexplained income or assets---Amendment of an assessment---Notices under Ss. 111 & 122 of the Income Tax Ordinance, 2001, simultaneous issuance of---Scope and effect---Definite information---Adjudication under S.111 prior to proceedings under S.122(5)---Contention of the petitioners / taxpayers was that the proceedings under S. 111 of the Income Tax Ordinance, 2001 ('the Ordinance, 2001') for making determination regarding "definite information" was required to take place prior to the initiation of the proceedings under S. 122(5) of the Ordinance, 2001---Held, that in the case titled Commissioner Inland Revenue v. Messrs Millat Tractors Limited reported as 2024 SCMR 700, the Supreme Court of Pakistan stated that the notices under Ss. 111 & 122 of the Ordinance, 2001 can simultaneously be issued but adjudication under S. 111 of the Ordinance, 2001 must take place in the first instance for forming of an opinion that would constitute "definite information" which shall form basis for initiation of proceedings under S. 122(5) of the Ordinance, 2001---Respondents / Department undertook that the law laid down by the Supreme Court in the said case shall be complied with in its letter and spirit---As per the undertaking given by the respondents the proceedings under S. 111 of the Ordinance, 2001 shall be taken up and finalized before initiation of proceedings under S. 122 of the Ordinance, 2001---Constitutional petition was dismissed accordingly.

Commissioner Inland Revenue v. Messrs Millat Tractors Limited 2024 SCMR 700 ref.

Imtiaz Rasheed Siddique and Raza Imtiaz Siddique for Petitioners.

Ahmad Pervaiz for Respondents/FBR.

2025 P T D 659

[Lahore High Court]

Before Shams Mehmood Mirza, J

SHAKARGANJ FOOD PRODUCTS LIMITED and another

Versus

FEDERAL BOARD OF REVENUE and others

Writ Petition No.50616 of 2024, decided on 4th September, 2024.

Sales Tax Act (VII of 1990)---

----Ss. 10 & 26---Clause 6 of the digital sales tax returns i.e. "credit brought forward from previous tax year", modifying/amending of---Scope---Unilateral action of the Department---Notice(s), issuing of---Pre-requisites---Petitioners (registered persons) assailed Notices before the High Court---Question as to whether the respondents/Department could unilaterally modify/amend the tax return of the petitioners without issuing any prior Show-Cause Notice to them---Argument of the respondents / Department was that the amounts for which the petitioners ought to have claimed refund in terms of S. 10(1) of the Sales Tax Act, 1990 and the amounts which they could have brought forward as credit in terms of the first proviso to S. 10(1) of the Sales Tax Act, 1990 were mentioned in the notices impugned as the petitioners had wrongly reflected the amounts in Cl. 6 which could not be brought forward---Validity---Petitioners were deprived of the due process to which they were entitled as notices-in-question did not depict the provision of law under which they had been issued---Similarly, the provision of law under which action was required to be taken against the petitioners was also absent in the notices-in-question---Petitioners ought to know the action that was proposed to be taken against them and the notices to be issued to the petitioners must make full disclosure of the provisions of the Sales Tax Act, 1990, that were attracted to the case enabling them to counter the same---Impugned action of the respondents in unilaterally amending/modifying the tax returns could not sustain---Same was the case with the impugned notices---High Court struck down the impugned notices declaring the action of the respondents in making amendments/modifications in the tax return of the petitioner relating to Cl. 6 to be without lawful authority and of no legal effect, however, the respondents were at liberty to issue a proper Show-Cause Notice to proceed with the inquiry relating to the amounts mentioned in Cl. 6 of the tax returns---Constitutional petition, filed by registered persons, was allowed accordingly.

Imtiaz Rasheed and Raza Imtiaz for Petitioners.

Sheraz Zaka, Assistant Attorney General.

Ahmed Pervaiz for Respondent/FBR.

2025 P T D 682

[Lahore (Rawalpindi Bench)]

Before Mirza Viqas Rauf, J

Messrs MADNI PAPER MART through Proprietor Irshad Ahmad and another

Versus

FEDERATION OF PAKISTAN through Secretary Commerce and 2 others

Writ Petition No. 3965 of 2023, decided on 5th July, 2024.

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

----Ss. 58 & 64---Constitution of Pakistan, Art. 199---Anti-dumping duties, matter of---Territorial jurisdiction of Islamabad High Court---Scope---Constitutional petition was filed before the Lahore High Court calling in question an order passed by the National Tariff Commission, Government of Pakistan, ('Commission') whereby the Commission decided to initiate sunset review---Validity---Court/Tribunal has to make sure that it has jurisdiction to ponder upon an issue-in-question---Jurisdiction cannot be vested to the court with the consent of the parties or at their whims unless it is so equipped under the law---In order to give effect in Pakistan to the provisions of Article VI of the General Agreement on Tariffs and Trade, 1994, and to the Agreement on implementation thereof and to amend and consolidate the law relating to imposition of anti-dumping duties to offset, etc. such dumping, Anti-Dumping Duties Act, 2015 ('the Act, 2015'), was promulgated---Any person aggrieved or interested from the initiation of investigation or preliminary determination or even final determination can prefer an appeal before the Anti-Dumping Appellate Tribunal Pakistan ('Tribunal') constituted by the Federal Government in terms of S. 64 of the Act, 2015---In the present case, upon an application moved by a domestic industry (respondent), investigation was started by the Commission; in furtherance of which preliminary determination was made which later on matured into final determination---Feeling offended from the final determination a large number of exporters preferred their appeals before the Tribunal along with two importers, which were directly related to the petitioners being their importers---Tribunal proceeded to dismiss all but two appeals, which (two appeals) were remanded to the Commission for decision a fresh---Due to one reason or the other the Commission could not conduct the proceedings and instead after passing considerable period issued the impugned notification for sunset review---Thus, undoubtedly, the impugned notice was an offshoot of the proceedings which earlier not only came up in appeal before the Tribunal but the Islamabad High Court, Islamabad, also---In such a case exercise of Constitutional jurisdiction by (Lahore High) Court under Art. 199 of the Constitution would amount to launching parallel proceedings, which would certainly result into overlapping and conflicting judgments---Moreover, not only the Commission but the Tribunal were established at Islamabad---Even otherwise, as an outcome of sunset review the matter would again become the subject of appeal before the Tribunal---Thus, the Lahore High Court had no territorial jurisdiction to entertain the matter-inhand---Petition was returned to the petitioner for institution of the same before Court of competent jurisdiction (Islamabad High Court)----Constitutional petition was disposed of accordingly.

Izhar Alam Farooqi, Advocate v. Sheikh Abdul Sattar Lasi and others 2008 SCMR 240; Syed Muhammad Hussain Shah v. Abdul Qayyum and others 2011 SCMR 743; Pir Sabir Shah v. Shad Muhammad Khan, Member Provincial Assembly, N.-.W.F.P. and another PLD 1995 SC 66; Hassan Shahjehan v. FPSC through Cahirman and others PLD 2017 Lahore 665 and Taufiq Asif and others v. General (Retd.) Pervez Musharraf and others PLD 2024 SC 610 ref.

Shafqat Mehmood Chohan and Adnan Ahmed Paracha for Petitioners.

Tahir Raheel Awan, Assistant Attorney General Pakistan.

Waqas Amir for Respondent No. 2, Saif Ullah Khan and Rais Mehmood Ali for Respondent No.3.

2025 P T D 717

[Lahore High Court]

Before Raheel Kamran, J

Messrs AL-QADIR SEED CORPORATION (PVT.) LTD. through Director

Versus

FEDERATION OF PAKISTAN through Secretary Revenue Division and others

Writ Petition No.81167 of 2024, heard on 17th March, 2025.

Income Tax Ordinance (XLIX of 2001)---

----Ss. 114(6) & 177---Self-assessment of tax---Revision period for correction---Audit proceedings initiated before expiry of 60 days period revision---Legality---Taxpayer / company assailed initiation of audit proceedings when the 60-days period for revision had not elapsed---Validity---Section 114(6) of the Income Tax Ordinance, 2001 ('the Ordinance, 2001'), explicitly grants a taxpayer the right to revise a return within 60 days of its filing if any omission or wrong statement is discovered---Said provision (under S. 114(6) of the Ordinance, 2001) confers a substantive right upon taxpayers to correct errors or omissions in their returns without penalty provided the revised return is filed within the stipulated time---The proviso to S. 114(6) of the Ordinance, 2001 further clarifies that no approval from the Commissioner is required if the revised return is filed within the 60-days period ; which underscores the legislative intent to provide taxpayers with a clear opportunity to rectify mistakes within the specified timeframe---Self-assessment of tax is the salient and most distinguishable feature of the Ordinance, 2001---Section 114(6) of the Ordinance, 2001 is a substantive provision intended to facilitate voluntary compliance and correction of errors, whereas S. 177 of the Ordinance, 2001 provides enforcement mechanism---No overriding effect has been given under S. 177(1) of the Ordinance, 2001 above the provisions of S. 114 of the Ordinance, 2001 including subsection (2) thereof, as such the same is to be construed harmoniously with other provisions of the Ordinance, 2001 including S. 114(6) which confers right upon taxpayers to revise return with 60-days---The issuance of notice under S. 177(1) of the Ordinance, 2001 initiating audit before the expiry of 60-days period under S. 14(6) of the Ordinance, 2001 cannot be countenanced for that would undermine the right of a taxpayer to revise the return and benefit from self-assessment besides rendering S. 114(6) of the Ordinance, 2001 practically redundant and superfluous---There is a presumption under law against attributing redundancy to legislative expression much less a provision of law that confers substantive right in favour of a taxpayer--Taxpayer has a right to revise his return and no provision of law restricts his right to file the revised return---Thus, 60-days period is a statutory safeguard for taxpayers and any action that undermines this right is unlawful---In the present case, the respondents / Department actions in issuing the impugned notices before the lapse of the 60-days period depicted misuse of authority under S. 177(1) of the Ordinance, 2001---The statutory framework of the Ordinance, 2001 envisions a harmonious balance between the taxpayer's right to revise a return and the tax authorities' power to conduct audits---By prematurely initiating audit proceedings, the respondents disrupted this balance and rendered the petitioner's right under S. 114(6) of the Ordinance, 2001 ineffective; which was also clear violation of the principles of fairness and due process---High Court set-aside the impugned notices declaring the same to have been issued without lawful authority and in violation of the petitioner's statutory right under S. 114(6) of the Ordinance, 2001---Constitutional petition, filed by taxpayer, was allowed accordingly.

Collector of Sales Tax And Central Excise (Enforcement) and another v. Messrs Mega Tech (Pvt.) Ltd. 2005 PTD 1933; Messrs Pakistan Television Corporation Limited v. Commissioner Inland Revenue (Legal), LTU, Islamabad and others 2017 PTD 1372; Messrs Master Foam (Pvt.) Ltd. and 7 others v. Government of Pakistan through Secretary, Ministry of Finance and others 2005 PTD 1537 and Commissioner Inland Revenue, Faisalabad v. Messrs Zahid Jee Fabrics Limited 2021 PTD 1705 ref.

Ch. Qamar uz Zaman and Arif Munir for Petitioner.

M. Umer Tariq Gill, Assistant Attorney General, Pakistan for Respondent No.1.

Syed Zain ul Abideen Bokhari for Respondents Nos.2 to 5-department.

2025 P T D 746

[Lahore High Court]

Before Muhammad Sajid Mehmood Sethi and Rasaal Hasan Syed, JJ

SABIR PRESS CALENDAR through Managing Partner

Versus

COMMISSIONER INLAND REVENUE, CHENAB ZONE, REGIONAL TAX OFFICE, FAISALABAD and 3 others

S.T.R. No.73619 of 2024, heard on 11th December, 2024.

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

----S. 3---Suppression / concealment in sales tax record---Allegations raised in Show-Cause Notice---Order passed beyond the allegation in show-cause notice---Certain aspects controverted by the taxpayer---Effect---Further inquiry, requirement of---Scope---During interim scrutiny of monthly sales tax record, on account of certain discrepancies found in the results declared by the Taxpayer / Association of Persons (AOP), a Show-Cause Notice was issued, which culminated in passing of order-in-original against the taxpayer, which was maintained upto Appellate Tribunal Inland Revenue ('the Tribunal')---Submission of the applicant / taxpayer was that the fora below had travelled beyond the allegations voiced and raised in the Show-Cause Notice whereas substantial grounds were raised by it in response to allegations mentioned in Show-Cause Notice---Validity---Where, in response to a Show-Cause Notice, the taxpayer raises substantial grounds or presents significant factual aspects not covered in the initial notice and which therefore require further inquiry or verification by the Department, a fresh or supplementary Show-Cause Notice should be issued to the taxpayer, if necessary, after conducting such further inquiry---No determination can be made regarding these new grounds or facts unless the taxpayer is given the opportunity to respond to any deficiencies or misrepresentations found in relation thereto, with such issues specifically alleged in a fresh or supplementary Show-Cause Notice---Therefore, it would be appropriate that, instead of proceeding under the original Show-Cause Notice, a fresh or supplementary notice be issued to the taxpayer in light of the defence presented---In light of the grounds or facts raised in the taxpayer's defence, which were unknown to the tax authorities and thus not part of the original Show-Cause Notice, no further action should be taken under the initial notice---Any adjudication on these grounds would be legally unsustainable, rendering the entire process redundant---Charges or allegations in a Show-Cause Notice must be specific, otherwise, the taxpayer would be prejudiced and denied the right to a fair trial---Adjudicating Authority must confine the proceedings to the specific charges and allegations clearly stated in the Show-Cause Notice---Adjudicating a charge or allegation not addressed in the notice would not be legally valid---In the present case, after the taxpayer's response to the Show-Cause Notice, the new situation that emerged should have been addressed through a fresh Show-Cause Notice, but this was not done---Rationale for not exceeding the scope of the Show-Cause Notice is that the aggrieved party must be given the chance to present their case; otherwise, this would violate the principles of natural justice, as the aggrieved party would not be aware of the new grounds or factual elements and would not be able to properly defend itself before the concerned authority---Reference Application, filed by taxpayer , was allowed.

Commissioner Inland Revenue v. Messrs RYK Mills 2023 SCMR 1856; Commissioner Inland Revenue, Chenab Zone, RTO, Faisalabad v. Messrs Rose Food Industries, Faisalabad and another 2023 SCMR 2070; Hyderabad Chamber of Commerce and Industry (HCCI) through duly authorized person v. Ministry of Commerce Government of Pakistan through Directorate General of Trade Organization and 4 others PLD 2024 Isl. 350; Ramlala v. State of U.P. and others 2023 SCC OnLine (All) 2479; Associated Switch Gears and Projects v. State of U.P. and others 2024:AHC:12780 and The Board of High School and Intermediate Education, U.P. v. Kunari Chitra Srivastava (1970) 1 SCC 121 ref.

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

----S. 24-A---Sales Tax Act (VII of 1990), S. 3---Suppression / concealment in sales tax record---Allegations raised in Show-Cause Notice---Certain aspects of Show-Cause Notice controverted by the taxpayer---Effect---Speaking order, passing of---Order-in-Original against the taxpayer / Association of Persons (AOP) was maintained upto Appellate Tribunal Inland Revenue ('Appellate Tribunal')---Validity---Record revealed that the Appellate Tribunal had not independently addressed the material aspect of the matter---As a result, the impugned order passed by the Appellate Tribunal failed to meet the requirements of a speaking order as contemplated under S. 24-A of the General Clauses Act, 1897---It was obligatory for the Appellate Tribunal to examine the case with proper application of mind and to provide reasons in support of the impugned order---However, such reasoning was conspicuously absent in the present case, rendering the impugned order unsustainable in the eyes of the law---Reference Application, filed by taxpayer, was allowed.

Pakistan Water and Power Development Authority (WAPDA), WAPDA House, Lahore v. The Commissioner Inland Revenue and others 2022 SCMR 824 ref.

Shahbaz Butt for Applicant.

Shahid Sarwar Chahil for Respondents.

2025 P T D 780

[Lahore High Court]

Before Muhammad Sajid Mehmood Sethi, J

Messrs MADINA STEEL MILLS

Versus

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

Writ Petition No.17285 of 2025, heard on 9th April 2025.

(a) Maxim---

----Actus curiae neminem gravabit---Meaning---An act of Court or any authority must not cause prejudice to any individual.

Sherin and 4 others v. Fazal Muhammad and 4 others 1995 SCMR 584; The State v. Asif Adil and others 1997 SCMR 209; Sajawal Khan v. Wali Muhammad and others 2002 SCMR 134; Jawad Mir Muhammadi and others v. Haroon Mirza PLD 2007 SC 472; Zulifqar and others v. Shahdat Khan PLD 2007 SC 582; Homoeo Dr. Asma Noreen Syed v. Government of the Punjab through its Secretary Health, Department and others 2022 SCMR 1546 and Mian Shehzad-ud-Din and 4 others v. Member, Board of Revenue S&E Chief Settlement Commissioner, Board of Revenue, Punjab, Lahore and another 2002 YLR 3755 rel.

(b) Constitution of Pakistan---

----Art. 25---Maxim 'ubieadem ratio, ibi idem jus'---Applicability---Where there is same reason, there is same law---Justice demands consistent treatment of similarly situated individuals.

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

----Ss. 21 & 73---Sales Tax Rules, 2006, R. 12---Constitution of Pakistan, Art. 25---Constitutional petition---Principle of legitimate expectation---Applicability---De-registration, blacklisting and suspension of registration---Equal treatment of law---Petitioner / registered person was aggrieved of suspension of its registration number, despite providing documents including payment evidence under S. 73 of Sales Tax Act, 1990, and transportation records---Plea raised by petitioner / registered person was that in a similar situation registration of another company was restored---Validity---When tax authorities treat similarly situated taxpayers differently, particularly in assessment or adjustment of tax liabilities, such conduct may amount to a violation of guarantee provided under Art. 25 of the Constitution---Disparate treatment accorded to petitioner / registered person, as compared to other company, raised serious Constitutional concerns---If both taxpayers were placed in substantially similar circumstances, yet received materially different treatment from tax authorities, such inconsistency could reflect arbitrary and discriminatory exercise of administrative discretion, thereby undermining the rule of law---Administrative discretion must be exercised fairly, consistently and without arbitrariness or caprice---Principle of legitimate expectation further reinforced such notion, as taxpayers in comparable circumstances reasonably expected similar treatment from revenue authorities---High Court set aside order passed by authorities against petitioner / registered person as the same was illegal, and without lawful authority---High Court directed tax authorities to extend similar treatment to petitioner / registered person which was given to the other similarly placed entity---Constitutional petition was allowed accordingly.

Woolwich Equitable Building Society v. Inland Revenue Commissioners [1993] A.C. 70; Misbah Masood v. Principal Government College For Women 1997 MLD 2397; Tara Chand and others v. Karachi Water and Sewerage Board, Karachi and others 2005 PLC (C.S.) 368; Quetta Development Authority through Director General v. Abdul Basit and others 2021 SCMR 1313 and E.P. Royappa v. State of Tamil Nadu 1974 SCR (2) 348 rel.

(d) Administration of justice---

----Discretion, exercise of---Scope---Exercise of discretion must be grounded in reason and fairness.

Council of Civil Service Unions v. Minister for the Civil Service (1985) AC 374 rel.

Farrukh Ilyas Cheema for Petitioner.

Muhammad Zain Qazi, Assistant Attorney General and Muhammad Saad Bin Ghazi, Assistant Advocate General and Bilal Munir for Respondents.

2025 P T D 789

[Lahore High Court (Rawalpindi Bench)]

Before Jawad Hassan and Sultan Tanvir Ahmad, JJ

ATTOCK REFINERY LIMITED

Versus

FEDERATION OF PAKISTAN and others

Intra Court Appeal No.92 of 2020, decided on 27th January, 2025.

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

----S. 31(A)---Sales Tax (VII of 1990), Ss. 6(1) & 6(1)(A)---Constitution of Pakistan, Art. 199---Striking down of a legislative enactment sought---Constitutional jurisdiction of the High Court, to strike down a legislative enactment---Scope---Vires of S. 31(A) of the Customs Act, 1969 and Ss. 6(1) & 6(1)(A) of the Sales Tax Act, 1990 ('the vires under-challenge') were challenged by invoking constitutional jurisdiction of the High Court, however, Single Judge (of the High Court), instead of deciding the vires-under-challenge, referred the matter to the respondents (Collector of Customs)---Plea of the appellant was that the respondents /Collectors of Customs had no jurisdiction to interfere with vires of law---Validity---By way of impugned order that the Single Judge in Chamber, instead of deciding the vires under challenge, referred the matter to the respondents (Collector of Customs) who had no jurisdiction to interfere with vires of law---Where any orders or judgments are passed by any Court or authority who has no jurisdiction or is barred to exercise such jurisdiction, such orders or judgments are deemed to have been passed illegally and in such circumstances the High Courts are justified in exercising its constitutional jurisdiction to rectify the same---In the present matter, Single Judge of the High Court, instead of deciding vires under challenge in light of the guidelines / principles to strike down or to declare void a legislative enactment, referred the matter to the respondents (Collectors of Customs), who had no jurisdiction or authority to interpret the vires of any law which was the core function of the higher Courts---High Court set-aside the impugned order ; consequently, constitutional petition would be deemed to be pending before the Single Judge and was to be decided afresh as per law---Intra Court Appeal was allowed accordingly.

Abdul Majeed Khan through L.Rs. and others v. Ms. Maheen Begum and others 2014 SCMR 1524; Muhammad Ayub and another v. The Member (Judicial-III), BOR, Punjab, Lahore and others 2021 MLD 2110; Lahore Development Authority through DG and others v. Ms. Imrana Tiwana and others 2015 SCMR 1739; Dr. Mobashir Hassan and others v. Federation of Pakistan and others PLD 2010 SC 265; Federation of Pakistan through Secretary, Ministry of Finance and others v. Haji Muhammad Sadiq and others PLD 2007 SC 133; Watan Party through President v. Federation of Pakistan through Cabinet Committee of Privatization, Islamabad and others PLD 2006 SC 697; Pakistan Lawyers Forum and others v. Federation of Pakistan and others PLD 2005 SC 719; Yousaf Ali v. Muhammad Aslam Zia and 2 others PLD 1958 SC 104; Engineer Iqbal Zafar Jhagra and another v. Federation of Pakistan and others 2013 SCMR 1337 and Messrs Master Foam (Pvt.) Ltd. and 7 others v. Government of Pakistan through Secretary, Ministry of Finance and others 2005 PTD 1537 ref.

(b) Law, vires of---

----Legislative enactment---Power to strike down / declare void a legislative enactment---Guidelines and principles (i) There is a presumption in favour of constitutionality and a law must not be declared unconstitutional unless the statute is placed next to the Constitution and no way can be found in reconciling the two; (ii) Where more than one interpretation is possible, one of which would make the law valid and the other void, the Court must prefer the interpretation which favours validity; (iii) a statute must never be declared unconstitutional unless its invalidity is beyond reasonable doubt; a reasonable doubt must be resolved in favour of the statute being valid; (iv) If a case can be decided on other or narrower grounds, the Court will abstain from deciding the constitutional question; (v) The Court will not decide a larger constitutional question than is necessary for the determination of the case; (vi) The Court will not declare a statute unconstitutional on the ground that it violates the spirit of the Constitution unless it also violates the letter of the Constitution; (vii) The Court is not concerned with the wisdom or prudence of the legislation but only with its constitutionality; (viii) The Court will not strike down statutes on principles of republican or democratic government unless those principles are placed beyond legislative encroachment by the Constitution; (ix) Mala fides will not be attributed to the legislature.

Lahore Development Authority through DG and others v. Ms. Imrana Tiwana and others 2015 SCMR 1739; Dr. Mobashir Hassan and others v. Federation of Pakistan and others PLD 2010 SC 265; Federation of Pakistan through Secretary, Ministry of Finance and others v. Haji Muhammad Sadiq and others PLD 2007 SC 133; Watan Party through President v. Federation of Pakistan through Cabinet Committee of Privatization, Islamabad and others PLD 2006 SC 697; Pakistan Lawyers Forum and others v. Federation of Pakistan and others PLD 2005 SC 719; Yousaf Ali v. Muhammad Aslam Zia and 2 others PLD 1958 SC 104; Engineer Iqbal Zafar Jhagra and another v. Federation of Pakistan and others 2013 SCMR 1337 and Messrs Master Foam (Pvt.) Ltd. and 7 others v. Government of Pakistan through Secretary, Ministry of Finance and others 2005 PTD 1537 ref.

Barrister Sirdar Ahmed Jamal Sukhera, Advocate Supreme Court for Appellant.

Sajid Ilyas Bhatti, Additional Attorney General with Tahir Raheel Awan, Assistant Attorney General-XIX for Respondent No.1.

Yousaf Khan, S.O. I.R. Legal, RTO, Rawalpindi.

2025 P T D 853

[Lahore High Court]

Before Shahid Karim and Muhammad Sajid Mehmood Sethi, JJ

COMMISSIONER INLAND REVENUE, ZONE-I, RTO, FAISALABAD

Versus

Messrs FAISALABAD ELECTRIC SUPPLY COMPANY (FESCO) LTD., FAISALABAD

I.T.R. No.145 of 2016, heard on 10th February, 2025.

Income Tax Ordinance (XLIX of 2001)---

----Ss. 56(1) & 57(4)---Bank deposits of Electricity Distribution Company relating to electricity bills---Profit on such bank deposits---Whether "business income " or "income from other sources"---Department filed Reference against order passed by Appellate Tribunal Inland Revenue in favour of taxpayer/Faisalabad Electricity Supply Company (FESCO)---Validity---Record showed that respondent/ taxpayer (FESCO) declared its net profit as Rs.518,960,129 and a business loss as Rs.23,143,963,041/----However, the Assessing Officer identified the profit from bank deposits at Rs. 368,960,129/-, accrued on deposits of electricity bills through the banks and classified it as "income from other sources", charging it to tax---In cases where the dispute concerns whether the income should be classified as "business income" or "income from other sources", a thorough examination of the facts is necessary; which includes assessing the objectives of the assessee-company, its functions and its memorandum of association or foundational documents---Once the primary business activities and functions are verified, they must be evaluated in relation to the declared objectives---Additionally, the assessee's actual operations, tax returns, and treatment of income should be analyzed to determine the appropriate classification of the income---Respondent-taxpayer (FESCO) was not authorized to carry on any business other than the distribution of electricity; therefore, all income earned by it was considered "business income" and could not be classified as "income from other sources", especially since the income tax return did not show it as such---Assessing Officer had not appreciated the fact that the bank deposits were also business income, being entirely dependent on and incidental to its operations---Accumulated unadjusted depreciation allowance carried forward from year to year should be treated as an admissible expense for the current year in terms of subsection (4) of S. 57 of the Income Tax Ordinance, 2001 ('the Ordinance, 2001') and adjusted against income assessable under any other head under S.56(1) of the Ordinance 2001---The depreciation admissible for a tax year should include the depreciation calculated for that year plus the amount of unabsorbed depreciation from the preceding year and the income loss from business for the tax year can only be determined after deducting admissible depreciation---Thus, the proposed question was decided against the applicant-department and in favour of respondent/taxpayer (FESCO)---Reference Application, filed by Department, was dismissed.

Commissioner of Income Tax, Companies Zone, Islamabad v. Messrs Fauji Foundation Limited 2023 SCMR 1694 ref.

Commissioner of Income Tax v. Messrs Khairul Hayat Amin and Co. Ltd. 2000 PTD 363 distinguished.

Ch. Muhammad Zafar Iqbal, Legal Advisor for Applicant.

Mian Ashiq Hussain for Respondent.

2025 P T D 860

[Lahore High Court (Rawalpindi Bench)]

Before Jawad Hassan, J

Mian MUHAMMAD AKRAM

Versus

FEDERATION OF PAKISTAN and others

Writ Petition No.2420 of 2024, decided on 6th March, 2025.

Income Tax Ordinance (XLIX of 2001)---

----Ss. 126A, 127 & 130 [as amended vide Tax Laws (Amendment) Act, 2024]---Constitution of Pakistan, Arts. 4, 10-A & 37(d)---Appellate procedure---Modifications brought in through the Tax Laws (Amendment) Act, 2024---Doctrine of textualism---One forum of appeal taken away---Said amendments / modifications were assailed before the High Court---Held, that Federal Board of Revenue (the "FBR"), as a regulatory body, dealing with all the tax related affairs, is vested with the main goal of tax collection in the country---But now the impugned amendment had placed an extraordinary burden on the High Court---Orders passed by the Commissioners (Appeals) are often sketchy, lacking reasoning and suffer from serious (various) deficiencies, which ultimately results in litigation before the High Court---Due to the deficiencies, the High Court is frequently compelled to remand cases back to the Commissioners (Appeals) for fresh adjudication in accordance with the law---This situation is consuming the valuable time of the High Court, leading to an increase in the backlog of Tax References, thereby adversely affecting the hearing and disposal of other cases---Moreover, the FBR faces no financial barrier in filing Tax References, as it is exempt from paying court fees, whereas an ordinary litigant is required to pay Rs. 50,000 per reference, which results in a clear discrimination against the citizens of Pakistan, depriving them of equal access to justice, which infringes the fundamental rights of public guaranteed under Arts. 4, 10-A & 37(d) of the Constitution---Appellate Tribunal Inland Revenue, being established under a specific law and/or an adjudicating forum, is created with the mandate to decide the appeal/matter within a specific timeframe---Article 37(d) of the Constitution states in equivocal terms that it is the utmost duty of the State to ensure inexpensive and expeditious justice, while the impugned amendment was taking away jurisdiction of one appellate forum hitting the mandate of the Art.37(d) of the Constitution---Thus, the impugned amendment was clogging the arteries of judicial system, obstructing the dispensation of justice and causing undue delays in other cases---Doctrine of Textualism envisages a method of statutory interpretation that a statute should be interpreted according to its plain meaning and not according to the intent of the legislature, the statutory purpose or the legislative history---Thus, Director General, FBR, was directed to appear before the High Court with a detailed reply explaining the background, rationale, policy, objectives and reasons for introducing such amendment, who shall also clarify how this amendment was causing delay in the administration of justice by the High Court, affecting the rights of the public---Petition was adjourned listed.

Chenab Flour and General Mills and others v. Federation of Pakistan through Secretary Revenue Division and others PLD 2021 Lah. 343; Ramzan Sugar Mills Limited v. Federal Board of Revenue and others 2021 PTD 1321; Shaheen Merchant v. Federation of Pakistan/National Tariff Commission and others 2021 PTD 2126; Rizwan Ali Sayal v. Federation of Pakistan and others PLD 2024 Lah. 54 = 2024 PTD 32 and Service Global Footwear Limited and another v. Federation of Pakistan and others PLD 2023 Lah. 471 ref.

Zahid Shafiq and Faisal Rasheed for Petitioners.

Sajid Ilyas Bhatti, Additional Attorney General with Arshad Mahmood Malik, Assistant Attorney General.

Barrister Raja Hashim Javed, Assistant Advocate-General.

2025 P T D 864

[Lahore High Court]

Before Jawad Hassan, J

FAUJI CEMENT COMPANY LIMITED

Versus

GOVERNMENT OF PUNJAB and others

Writ Petition No.2838 of 2024, heard on 4th March, 2025.

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

----Ss. 52, 14 & 14A [as inserted through Punjab Finance Act, 2017]---Constitution of Pakistan, Arts. 4 & 10-A---Withholding agent---Show-Cause Notice issued under S. 52 of the Punjab Sales Tax on Services Act, 2012---Stance of the petitioner-company was that since it was a withholding agent and not covered within the definition of a taxpayer, therefore, it should first be dealt with under the provisions of S. 14 of Punjab Sales Tax on Services Act ('the Act, 2012'), thus, the impugned show-cause notice was liable to be set-aside---Held, that in the present case, the Authority had straightway invoked the provisions of S. 52(3) of Act, 2012 before fulfilling the mandatory requirement of issuing a notice in terms of S.52(1) of the Act, 2012---Moreover, relevant paragraph (No.3) of the impugned show-cause notice only mentioned that "various services were obtained which were taxable as per provisions of Second Schedule of the Act, 2012 and scrutiny of the petitioner's taxpayer profile shows that it failed to clear its due tax liability" which was not a valid reason to bind the petitioner to deposit the due amounts of Punjab Sales Tax in lieu of the taxable services---Provisions of S. 14 of the Act, 2012 as well as S. 14A of the Act, 2012 clarify that subsection (2) of S. 14 of the Act, 2012 discusses the powers of the Authority in connection with a withholding agent whereas S. 14A(2) of the Act, 2012 describes a special procedure for collection and payment of tax in respect of any service(s)---However, in the present case, without first meeting the mandatory requirements of said provisions, straightway notice under S. 52 of the Act, 2012 had been issued to the petitioner---A taxpayer has certain rights while the Federal Board of Revenue functions under provisions of the fiscal laws prevailing in Pakistan---The concerned authority, while issuing the impugned show-cause notice, had ignored the principle of fair trial and due process as envisaged under Art. 10-A of the Constitution---Article 4 of the Constitution clearly states that it is an inalienable right of every citizen to be treated in accordance with law and no action detrimental to his/her life, liberty, reputation or property shall be taken except as per law---No public functionary/authority is allowed, under the Constitution, to act in a manner infringing upon fundamental rights or exceeding statutory limits---A statute should be interpreted according to its plain meaning and not as per the intent of the legislature, the statutory purpose or the legislative history---Thus, the notice under S.52 of the Act, 2012 was not maintainable when clear provisions of S. 14 of the Act, 2012 had been provided---Section 14 and S. 14A [which was inserted on 15.06.2017 through Punjab Finance Act, 2017, to provide further clarification] were given under Chapter II (Scope of Tax) as such, these two sections, being special provisions, were to be first invoked by concerned authority because the same were main sections of the law/Act, and not ancillary or auxiliary sections---But when compared to S. 52 of the Act, 2012, it comes under Chapter VIII of the Act (Offences and Penalties), which was not a direct provision to issue the impugned show-cause notice, thus, the same could not be straightaway invoked---Thus, stance of the petitioner had some legal force---High Court set-aside the impugned show-cause notice and remitted the matter to the Respondent /Additional Commissioner, Punjab Revenue Authority, Rawalpindi, who would consider it as a representation of the petitioner and decide the same, after providing proper hearing to all concerned including the petitioner, strictly as per relevant provisions of the Act [specifically Ss. 14 & 14A], through a speaking order---Constitutional petition was allowed accordingly.

Rahat Café, Rawalpindi v. Government of Punjab through Secretary Finance and others 2024 PTD 898; Reliance Commodities (Private) Ltd. v. Federation of Pakistan and others PLD 2020 Lah. 632 = 2020 PTD 1464; Chenab Flour and General Mills v. Federation of Pakistan and others PLD 2021 Lah. 343; Federal Government Employees Housing Authority through Director General, Islamabad v. Ednan Syed and others PLD 2025 SC 11 and Service Global Footwear Limited and another v. Federation of Pakistan and others PLD 2023 Lah. 471 ref.

Hafiz Muhammad Idris, Advocate Supreme Court with Hassan Askari Kazmi and Hafiz Muhammad Tanveer Nasir for Petitioners.

Barrister Raja Hashim Javaid with Ms. Rahat Farooq Raja, Assistant Advocates General.

Zeeshan Zafar Hashmi on behalf of the Punjab Revenue Authority with Ms. Nadia Murad, Legal Officer.

Arshad Mahmood Malik, Assistant Attorney General along with Barrister Zoopash Khan for Respondents.

Mujtaba-ul-Hussan, Civil Judge / Research Officer for Research Assistance.

2025 P T D 893

[Lahore High Court]

Before Shams Mehmood Mirza and Abid Hussain Chattha, JJ

MANZUR-UL-HAQ

Versus

FEDERATION OF PAKISTAN through Secretary Finance and 3 others

I.C.A. No.155 of 2024, decided on 27th February, 2025.

(a) Interpretation of statutes---

----Fiscal laws---Amendment---Retrospective effect---Principle---Where an amendment is brought about in a fiscal statute it should not be given retrospective construction by applying it to past transactions, unless intention is expressed with irresistible clearness---Permissive basis for such legislative action is the fact that taxation is neither a penalty imposed on taxpayer nor a liability which he assumes by contract---It is but a way of apportioning the cost of government among those who in some measure are privileged to enjoy its benefits and must bear its burdens.

The Commissioner Inland Revenue v. Mekotex (Pvt.) Limited and others PLD 2024 SC 1168 and Welch v. Henry 305 U.S. 134 (1938) rel.

(b) Interpretation of statutes---

----Proviso---Scope---Proviso may be an exception to the main provision but it cannot be inconsistent to such an extent that it nullifies what is intended by the main provision.

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

----Ss. 37A & First Schedule, Division VII, Part-I---Intra Court Appeal---Securities, acquiring of---Change in law---Retrospective effect---Scope---Appellant / taxpayer was aggrieved of rate of capital gain tax imposed on disposal of securities held by him---Appellant / taxpayer contended that rates specified in the Table in Division VII, Part I of First Schedule to Income Tax Ordinance, 2001 at the time of acquisition of securities were applicable---Validity---Notwithstanding the changes brought about in Division VII, Part I of First Schedule to Income Tax Ordinance, 2001, the legislature through Finance Act, 2024 again revived 0% rate of tax on disposal of securities acquired between 01-07-2022 and 30-06-2024 where holding period exceeded six years---Disposal of securities acquired before 01-07-2013 were again held liable to 0% tax as per second proviso to Division VII, Part I of First Schedule to Income Tax Ordinance, 2001---Amendments so made had completely nullified the effect of offending proviso added to Division VII, Part I of First Schedule to Income Tax Ordinance, 2001 through Finance Act, 2022---This lent credence to the allegation of discrimination by appellant / taxpayer---In view of amendments made in Division VII, Part I of First Schedule to Income Tax Ordinance, 2001 up to year 2021 and in year 2024, there did not appear to be any rational basis for giving a different treatment to the disposal of securities acquired before 01-07-2013 through amendments made in Division VII, Part I of First Schedule to Income Tax Ordinance, 2001 through Finance Act, 2022---Offending proviso to Division VII, Part I of First Schedule to Income Tax Ordinance, 2001 which had the effect of nullifying the Table and which on textual plane could only be construed as an independent provision stipulating a new tax, could not be inserted in Division VII, Part I of First Schedule to Income Tax Ordinance, 2001 for burdening appellant / taxpayer with 12.5% tax on capital gain on disposal of securities---The right that had come to vest in appellant / taxpayer for application of 0% tax could not be taken away by proviso to Division VII, Part I of First Schedule to Income Tax Ordinance, 2001---Division Bench of High Court directed Federal Board of Revenue to constitute a Policy Board consisting of experts to render advice on future legislation keeping in view legal and Constitutional principles interpreted and settled by the Courts in order to avoid such legislation being struck down---Division Bench of High Court set aside judgment passed by Judge in Chambers of High Court and constitutional petition filed by appellant / taxpayer was allowed---Division Bench of High Court declared that proviso added to Division VII, Part I of First Schedule to Income Tax Ordinance, 2001 through Finance Act, 2022 was inoperative on the right of appellant / taxpayer to be applied 0% tax on capital gain arising on the disposal of securities from 01-07-2022 till January 2023---Intra Court Appeal was allowed, in circumstances.

Mian Ashiq Hussain, Muhammad Arshad and Muhammad Rameez Arshad for Appellant.

Ahmad Pervez for Respondents.

2025 P T D 932

[Lahore High Court (Rawalpindi Bench)]

Before Mirza Viqas Rauf, Jawad Hassan and Asim Hafeez, JJ

RUKSHANDA ASAD

Versus

COMMISSIONER INLAND REVENUE and others

S.T.R. No.41 of 2024, decided on 29th April, 2025.

Income Tax Ordinance (XLIX of 2001)---

----Ss.133, Explanation to [as amended through Tax Laws (Amendment) Act, 2024]---Sales Tax Act (VII of 1990), S. 47---Remedy of appeal, availability of---Scope---Date of commencement of Tax Laws (Amendment) Act, 2024, determination of---Remedy of appeal, being a substantial-cum-vested right, when available at the commencement of the lis, would continue to be available throughout the career of the litigation, till same is concluded upon exhausting the remedies available in the statute, at the commencement of the lis or during its pendency, unless the amending or repealing Act, as the case may be, either expressly or by necessary implication / intendment curtails remedy of appeal---In the present matter, no effort was required for ascertaining status of availability or otherwise of the remedy of appeal by necessary implication / intendment, when the Explanation inserted through Finance Act, 2024 sufficiently addressed the question, conspicuously and explicitly---In terms of the Explanation to S.133 of the Income Tax Ordinance, 2001, remedy of filing of reference application, subject to the limits of pecuniary jurisdiction prescribed, is available against the order of the Commissioner (Appeals) communicated after the date of commencement of Tax Laws (Amendment) Act, 2024 ('the Amendment Act'), notwithstanding pendency of the proceedings before the Commissioner (Appeals), prior to the commencement of the Amendment Act---For the purposes of present controversy the Amendment Act shall commence from the date of commencement of the Amendment Act, when assent was extended by the President, which was 3rd of May, 2024---Thus, the issues-in-hand stood settled---Pertinently, the determination qua date of commencement of the Amendment Act and issue of availability of remedy of reference application is also valid for the purposes of remedy in terms of S. 47 of the Sales Tax Act, 1990, for the reason that subsection (2) of S. 47 of the Sales Tax Act, 1990, makes application of the provisions of S. 133 of the Income Tax Ordinance, 2001 and rules made thereunder, mutatis mutandis, to the reference application under the Sales Tax Act, 1990---Determination of the issue through present order was without prejudice to the individual grievances of the applicants, which may be raised in the context of their respective reference application(s) and facts involved---High Court directed that Reference applications shall be placed before respective Division Benches, assigned with the task of hearing Tax Reference Application(s)---References were disposed of.

Muhammad Ishaq v. The State PLD 1956 SC 256 and Idrees Ahmad and others v. Hafiz Fida Ahmad Khan and 4 others PLD 1985 SC 376 ref.

Muhammad Mohsin Nazir for Applicant.

Hafiz Muhammad Idrees for Applicant (S.T.R No.21 of 2024).

2025 P T D 1001

[Lahore High Court (Rawalpindi Bench)]

Before Jawad Hassan and Malik Javid Iqbal Wains, JJ

Sheikh NASEEM AKHTAR

Versus

COMMISSIONER INLAND REVENUE (LEGAL) and others

I.T.R. No.01 of 2017, decided on 3rd March, 2025.

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

----Ss.2(22A) & 133---Sales Tax Act (VII of 1990), S.3---Tax/Fiscal statues---Retrospective effect---Principle---Tax year pertaining to 2015---Amendment in statute brought in the year 2017---'Fast Moving Consumer Goods', definition of---Subsequent amendment in definition excluding 'durable goods'---The question that arose for determination before the High Court was as to "whether, under the Income Tax Ordinance, 2001, a taxpayer engaged in the wholesale distribution of table glassware was entitled to the reduced minimum tax rate of 0.2% applicable to 'Fast Moving Consumer Goods' for tax year 2015, and whether the subsequent exclusion of durable goods from the definition of 'Fast Moving Consumer Goods' through the Finance Act, 2017, could be applied retrospectively to deprive the taxpayer of such benefit"---Facts in brevity were that the applicant was engaged in the wholesale business of kitchen/table glassware a net filed its tax return for the year 2015 under S. 120 of the Income Tax Ordinance, 2001 (the "Ordinance 2001")---The tax department issued a notice under S.122(5A), alleging that the return was erroneous and prejudicial to revenue interest due to incorrect application of the minimum tax rate under S. 113 of the "Ordinance, 2001"---The department contended that glassware, being durable goods, was excluded from the benefit of reduced tax rates for 'Fast Moving Consumer Goods'---The applicant argued that the reduced rate (0.2%) was applicable instead of the standard 1%, claiming that the definition of 'Fast Moving Consumer Goods' in 2015 did not exclude durable goods, and that subsequent amendments through the Finance Act, 2017 should not be applied retrospectively---Held: Each tax year was a separate unit of account and taxation, therefore, the definition of 'Fast Moving Consumer Goods' would apply as it stood in tax year 2015 prior to introduction of subsequent definitions which, of course, did not carry retrospective effect---Retrospective effect to legislation could only be given if it appeared beneficial for any person---An attempt on part of respondent department to bring the case of applicant within the 'exclusion ambit' of the amended definition clause of "Fast Moving Consumer Goods" was simply meant to deprive him of the benefit of the reduced tax rate---It was also meant to create a new liability and to disturb past and closed transaction---The plea of retrospective effect of the amendment, taken by the respondent department was therefore repelled---Regarding the question as to whether table glassware should be subject to the same sales tax criteria as held in the case reported as 2018 PTD 1582, particularly in cases where distributors of table glassware were required to pay a higher sales tax than those dealing in electronic appliances it was very clear that Art. 25 of the Constitution guaranteed equal protection of the law and prohibited arbitrary discrimination between similarly situated persons---Therefore, imposing a higher sales tax on distributors of table glassware than on electronic appliances created an unwarranted tax disparity, violating the principle of uniformity in taxation---No rational distinction existed between table glassware and electronic appliances that would have justified placing a higher tax burden on distributors of glassware while giving preferential treatment to electronics distributors---Distributors of table glassware were entitled to the same sales tax criteria as distributors of electronic appliances---The imposition of a higher sales tax on glassware distributors was unjustified and inconsistent with the principles of fiscal equity, constitutional rights, and fair market competition---The applicant / taxpayer was dealing in 'consumers goods' and thus he was liable to pay 0.2% minimum tax of the total turnover for tax year 2015---Reference application was accepted and decided against the respondent-Department.

Fawad Ahmad Mukhtar and others v. Commissioner Inland Revenue (Zone-II), Regional Tax Office, Multan and another 2022 PTD 454; The Collector of Sales Tax and Central Excise, Ltu, Karachi v. Messrs Pak Suzuki Co. Ltd., Karachi 2016 PTD 867 and Messrs Elahi Cotton Mills Ltd. and others v. Federation of Pakistan through Secretary Ministry of Finance, Islamabad and 6 others PLD 1997 SC 582 rel.

Commissioner Inland Revenue v. Messrs Haier Pakistan (Pvt.) Ltd. 2018 PTD 1582; Commissioner Inland Revenue v. Muhammad Aslam 2019 PTD 381; Commission of the European Communities v. French Republic (C-481/98) and Messrs D.G. Khan Cement Co. Ltd. v. Federation of Pakistan 2008 PTD 425 ref.

(b) Interpretation of statutes---

----Fiscal statutes---Fiscal neutrality principles---Scope---Fiscal laws must conform to the principles of fairness, reasonableness, and equal treatment and discriminatory tax policies must have a clear and rational basis---The principle of fiscal neutrality, recognized in both domestic and international taxation jurisprudence, dictates that goods or services serving similar economic functions should not be taxed differently without a justified legal or economic reason---Discriminatory tax policies that distort fair competition among similar goods violate fiscal neutrality principles.

Messrs Elahi Cotton Mills Ltd. and others v. Federation of Pakistan through Secretary Ministry of Finance, Islamabad and 6 others PLD 1997 SC 582 rel.

Commission of the European Communities v. French Republic (C-481/98) ref.

(c) Interpretation of statutes---

----Tax and fiscal statutes---Retrospective effect---Principle---Retrospective effect to legislation can only be given if it appeared beneficial for any person.

Zahid Shafique for Applicant.

Malik Itaat Hussain Awan for Respondents along with Yousaf Khan, Staff Officer, I.R. (Legal) (Hqrs), R.T.O., Rawalpindi.

2025 P T D 1025

[Lahore High Court (Rawalpindi Bench)]

Before Jawad Hassan, J

Messrs EJAZ BROTHERS

Versus

FEDERATION OF PAKISTAN, NATIONAL TARIFF COMMISSION and others

Writ Petitions Nos.1695 and 3196 of 2024, decided on 6th May, 2025.

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

----S. 63---Anti-circumvention investigation and anti-dumping investigations---Distinction---Anti-dumping investigations and anti-circumvention proceedings are both trade remedies, but they address different issues related to unfair trade practices---Anti-dumping investigations focus on whether a foreign exporter is selling goods in a foreign market at prices below their cost of production or below a comparable price in the exporter's home market, potentially harming domestic industries---Whereas anti-circumvention proceedings, on the other hand, investigate whether measures against dumping or subsidies are being circumvented, meaning thereby the product is being imported in a way that evades the original anti-dumping or countervailing duty---In essence, the anti-dumping investigations are about preventing unfair pricing practices, while anti-circumvention proceedings are about ensuring that existing anti-dumping measures are not bypassed through various methods---The word "anti-circumvention" has been defined in Blacks' Law Dictionary, as "Any act of fraud whereby a person is reduced to a deed by decreet" whereas anti-circumvention measures have been defined under S. 63 of the Anti-Dumping Duties Act, 2015 ('the Act, 2015') which deals with the mechanism for final review of anti-dumping duties and outlines the procedure for handling the termination of anti-dumping duties; object whereof is to empower the National Tariff Commission (NTC) to investigate and address practices where exporters or importers attempt to evade imposed anti-dumping duties and includes actions such as change in pattern of trade, process or work for which there is insufficient due cause or economic justification e.g. slight modifications of products, misclassification or routing goods through third countries to avoid imposed duties.

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

----S. 63(4)---Anti-circumvention investigation, initiation of---Issuance of notice, assailing of---Petitioners (importers of two side coated bleach board) assailed notices regarding initiation of an anti-circumvention investigation by the National Tariff Commission (NTC/ Respondent) on an application from Paper and Board Mills /Respondents being manufacturers of coated bleached paperboard---Allegation levelled by Paper and Board Mills /Respondents ('domestic industry') was that Chinese exporters were circumventing the anti-dumping duties through product modification, which undermined the remedial effects of the anti-dumping duties in terms of quantities and prices of the domestic like product--- Validity---Contents of the impugned notice made it clear that only the interested parties were invited to make comments known to the NTC and to submit any information or documents and so far NTC had not imposed any anti-dumping duty rather initiated the investigation of circumvention against the exporters on dumped imports of one side coated bleached paper board through slight modification of the product by applying coating of less than 20 grm of any substance such as starch, clay or calcium carbonate etc on the other side and declaring it as two side coated bleached paper board---Through the impugned notice, a chance had been given to the interested parties to appear and produce evidence / material and no adverse order had been passed---Constitutional petition, filed by importers, was dismissed, in circumstances.

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

----S. 63---Constitution of Pakistan, Art. 199---Initiation of anti-circumvention investigation, assailing of---Constitutional jurisdiction of the High Court, invoking of---Scope---Petitioners (importers of two side coated bleach board) filed constitutional petition assailing Notices regarding initiation of an anti-circumvention investigation by the National Tariff Commission (NTC / Respondent) on an application from Paper and Board Mills / Respondents being manufacturers of coated bleached paperboard---Allegation levelled by Paper and Board Mills /Respondents ('domestic industry') was that Chinese exporters were circumventing the anti-dumping duties through product modification, which undermined the remedial effects of the anti-dumping duties in terms of quantities and prices of the domestic like product---Validity---Petitioners had raised disputed question of facts and factual controversy which could not be decided in the constitutional jurisdiction as this/High Court could not enter into factual realm or embark upon an exercise to determine the controvertial questions of facts---The resolution of such like issues was left to be decided by the proper forum prescribed by a law i.e. NTC which had only invited all interested parties to submit their reply/comments or evidence---Indulgence in such exercise would have effect of preempting and enforcing upon jurisdiction lawfully vested in the competent Courts---High Court is not to resolve disputed questions of fact in exercise of constitutional jurisdiction under Art. 199 of the Constitution---Since through the impugned notice, a chance had been given to the interested parties to appear and produce evidence / material and no adverse order had been passed, therefore, constitutional petition, being non-maintainable, was dismissed, in circumstances.

Raja Tanveer Safdar v. Mrs. Tehmina Yasmeen and others 2024 PLC (C.S.) 957 and Waqar Ahmed and others v. The Federation of Pakistan through Cabinet Secretariat, Establishment Division, Islamabad and others 2024 SCMR 1877 ref.

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

----Ss. 63 (4) & 70---Anti-Dumping Duties Rules, 2022, R. 30---Constitution of Pakistan, Art. 199---Initiation of anti-circumvention investigation, assailing of---Right of appeal, availability of---Constitutional petition---Maintainability---Petitioners (importers of two side coated bleach board) filed constitutional petition assailing Notices regarding initiation of an anti-circumvention investigation by the National Tariff Commission (NTC/ Respondent) on an application from Paper and Board Mills /Respondents being manufacturers of coated bleached paperboard---Allegation levelled by Paper and Board Mills / Respondents ('domestic industry') was that Chinese exporters were circumventing the anti-dumping duties through product modification, which undermined the remedial effects of the anti-dumping duties in terms of quantities and prices of the domestic like product---Validity---Present investigation was at a preliminary stage and the NTC had only determined on prima facie basis that circumvention was being done---Once the NTC passed the determination, the aggrieved parties would have the remedy to file an appeal before the Tribunal under S. 70 of the Anti-Dumping Duties Rules, 2022 ('the Rules, 2022')---Furthermore, the investigation was under process and the NTC had not reached to any conclusion---If the petitioners think that the Respondents (domestic industry) had mala fide intentions, they may submit their views/comments with evidence before the NTC during the investigation---Since through the impugned notice, a chance had been given to the interested parties to appear and produce evidence / material and no adverse order had been passed, therefore, constitutional petition, being non-maintainable, was dismissed, in circumstances.

Messrs Sadiq Poultary (Pvt.) Ltd. v. Federation of Pakistan and others PLD 2025 Lah. 57 ref.

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

----Ss. 63(4)---Anti-Dumping Duties Rules, 2022, Rr. 23 & 25---Constitution of Pakistan, Art. 199---Anti-circumvention investigation---Show-Cause Notice, challenging of---Constitutional petition---Principles regarding challenging of show-cause notices in writ jurisdiction of the High Court stated.

i. Show-cause notice is not an adverse order unless it could be clearly shown to the satisfaction of the Court that it has been issued by an authority not vested with jurisdiction or it was issued for mala fide reasons ;

ii. The exception relating to want of jurisdiction does not include every jurisdictional error. A wrong exercise of jurisdiction or interpretation of the law cannot be treated as want of jurisdiction;

iii. Constitutional jurisdiction is exercised if the Court is satisfied that the person is an 'aggrieved party' within the context of Article 199 of the Constitution and no adequate remedy is provided by law. If adequate statutory remedies are provided under the relevant statute, it is to be taken into consideration while exercising discretion under Art. 199 of the Constitution:

iv. By passing or circumventing statutory forums is to be discouraged ;

v. The approach should be to advance the object and purpose of a statute and every effort is to be made to uphold the sanctity of the legislative intent rather defeating it.

Strategic Plans Division and another v. Punjab Revenue Authority and others PLD 2024 Lah. 545 ref.

(f) ----Ss.2(d) & 63 (4)---Anti-Dumping Duties Rules, 2022, Rr. 23 & 25---Anti-circumvention investigation , initiation of---Scope---Domestic industry , rights of---Petitioners (importers of two side coated bleach board) assailed notices regarding initiation of an anti-circumvention investigation by the National Tariff Commission (NTC/ Respondent) on an application from Paper and Board Mills / Respondents being manufacturers of coated bleached paperboard---Allegation levelled by Paper and Board Mills /Respondents ('domestic industry') was that Chinese exporters were circumventing the anti-dumping duties through product modification, which undermined the remedial effects of the anti-dumping duties in terms of quantities and prices of the domestic like product---Validity---Impugned notice was neither issued against the petitioners nor any of the Association rather it was a general notice issued by the NTC under S. 63 of the Anti-Dumping Duties Act, 2015, ('the Act, 2015') for initiation of investigation for the protection of manufacturing industry---Pertinently, the impugned notice issued by the NTC being a 'Regulator' clearly mentioned the initiation of investigation as it was prima facie established that Chinese exporters were evading anti-dumping duties on one-side coated bleached paperboard by making minor changes, i.e. coating both sides and labeling it as a different product and despite this modification the product's core characteristics and use remained the same---Said tactic appeared to undermine the intended impact of the anti-dumping duties, prompting the NTC to launch an anti-circumvention investigation under S. 63 of the Act 2015---The word prima facie used in the impugned notice did not mean that the NTC was pinpointing the Petitioners who were neither a domestic industry in terms of S. 2(d) of the Act, 2015 nor they had locus standi to challenge the same at present stage---Furthermore NTC was only inviting the interested parties to present their views/comments on such anti-dumping circumvention that were known to the NTC---Since through the impugned notice, a chance had been given to the interested parties to appear and produce evidence / material and no adverse order had been passed, therefore, constitutional petition was dismissed, in circumstances.

Shaheen Merchant v. Federation of Pakistan/National Tariff Commission and others 2021 PTD 2126; Tasneem Enterprises (Private) Limited v. National Tariff Commission and 4 others (Constitution Petition No.D-4261 of 2024) and Niaz Ahmad v. Federation of Pakistan through Secretary Commerce and Industry, Islamabad and others (W.P.No.3396-P of 2024) ref.

Shafqat Mehmood Chohan, Advocate Supreme Court with Wasi Ullah Surrani for Petitioner.

Barrister Zain Mansoor and Naila Rubbab, Assistant Attorney Generals on behalf of Respondent No.1.

Barrister Raja Hashim Javed, Assistant Advocate General with Ms. Talat Nisar for the Federation.

Waqas Amir and Azfar Naeem for Respondent No.2.

Saif Ullah Khan and Rais Mahmood Ali for Respondents Nos.3 and 5.

2025 P T D 1074

[Lahore High Court (Multan Bench)]

Before Asim Hafeez and Anwaar Hussain, JJ

The COMMISSIONER INLAND REVENUE LEGAL ZONE, LARGE TAXPAYER OFFICE, MULTAN

Versus

Messrs USMAN TRADE LINKER, MULTAN

S.T.R. No.69 of 2022, decided on 14th October, 2024.

Sales Tax Act (VII of 1990)---

----S. 25(2)---Access to record, documents etc.---Audit, conducting of---Condition of "once a year"---"Year"---Scope---Department filed reference against the order of Appellate Tribunal Inland Revenue which had declared that audit, covering period from July 2016 to December 2017 - spreading over eighteen months, was beyond the jurisdiction of the Officer of Inland Revenue and contrary to the mandate of subsection (2) of S. 25 of the Sales Tax Act, 1990---Validity---In terms of subsection (2) of S. 25 of the Sales Tax Act, 1990 ('the Act 1990'), audit may be conducted but once in a year---However, no identification / explanation was given in the order of the Appellate Tribunal that how the expression 'year' was construed or interpreted ; whether the expression 'year' was construed to mean a 'Calendar Year' or a 'Financial Year'---If it was construed as 'Calendar Year' then period of audit from 07/2016 to 12/2016 was within last six months of 'Calendar Year, i.e., 2016 ; and the period of audit from 01/2017 to 12/2017 could be treated as full one 'Calendar Year', i.e., 2017---And if expression 'year' was construed as 'Financial Year' then period from 07/2016 to 06/2017 could be treated as one 'Financial Year' and period of audit from 07/2017 to 12/2017 be treated as first six months of contempreneous 'Financial Year'---Factual determination, in said context, was missing and this conundrum could be addressed by ascertaining actual intent of the department, inferrable from the record, or upon examining past practice, conventionally adopted, relevant to the context---Even otherwise, Appellate Tribunal patently erred in exercise of jurisdiction in rejecting the audit in entirety, instead of determining the period of validity, in the context of time-limitations prescribed under subsection (2) of S. 25 of the Act, 1990---Even otherwise, under sales tax regime tax period means a period of one month, or such period as notified accordingly---Expression 'year' was not defined in the Act 1990---Evidently, matter required re-determination and it was deemed appropriate to remand the matter to the Appellate Tribunal, which shall decide the appeal of the registered person / respondent afresh, in the light of answer to the question recorded---Sales Tax Reference, filed by the Department , was disposed of accordingly.

Faisalabad Electric Supply Company Ltd. (FESCO) v. Federation of Pakistan through Secretary, Finance, Islamabad and others 2019 PTD 1780 distinguished.

Muhammad Suleman Bhatti for Applicant/department.

2025 P T D 1095

[Lahore High Court]

Before Shahid Karim and Muhammad Sajid Mehmood Sethi, JJ

COMMISSIONER INLAND REVENUE, ZONE-VIII, REGIONAL TAX OFFICE-II, LAHORE

Versus

Messrs SIKA PAINT INDUSTRIES (PVT.) LTD.

S.T.Rs. Nos.256 of 2015 and 73779 of 2022, heard on 18th February, 2025.

Sales Tax Act (VII of 1990)---

----Ss. 38-A & 40---Criminal Procedure Code (V of 1898), Ss. 96, 98, 99-A, 100 & 103---Search of documents, items etc.---Officer of Inland Revenue---Powers---Section 40 of Sales Tax Act, 1990 authorizes an Officer of Inland Revenue to enter a place, after obtaining a warrant from a Magistrate, to search any documents or items, that in his opinion may be useful or relevant to any proceedings under Sales Tax Act, 1990---The use of word "shall" in subsection (2) of S. 40 of the Sales Tax Act, 1990, makes the procedure outlined in the Criminal Procedure Code, 1898 as mandatory---Provisions of S. 103, Cr.P.C., require that a search be conducted in the presence of two or more respectable inhabitants of the locality, which was not done in the present case---In the present case, relevant recovery memo did not contain signatures of any witnesses; which established that no witnesses were associated with the seizure of record and / or preparation of the seizure memo---Provisions of Section 40 of the Sales Tax Act, 1990 had not been complied with by the department in letter and spirit while conducting raid and seizing the documents---All searches made under the Sales Tax Act, 1990 were to be carried out in accordance with the provisions of the Code of Criminal Procedure, 1898---Procedure regarding search had been provided in Ss. 96, 98, 99-A & 100 of the Cr.P.C. whereby firstly, a search warrant is to be obtained from the Illaqa Magistrate when search of the premises is to be conducted---In accordance with S. 103 of the Cr.P.C., it is mandatory to involve two or more respectable inhabitants of the locality in which the place to be searched is situated to attend and witness the search and a list of all articles taken into possession shall be prepared and a copy thereof shall be delivered there and then---It was evident from the record that there had been a clear departure from the compliance of the procedure and law qua the impugned action, therefore, the so-called recoveries could not be used against the respondent---Section 38-A (inserted through the Finance Act, 2004), S. 40 (substituted through the Finance Act, 2004) and S. 40-A (omitted by the Finance Act, 2006) were meant to curtail and monitor the unlimited and unbridled powers of the sales tax authorities, which was resulting in undue harassment and humiliation of taxpayers---No doubt, tax officials are empowered under the law and are duty bound to check tax evasion but, it is always to be kept in mind that the evasion of taxes and duties is a contravention of law, which cannot be eradicated through commission of another illegality and contravention of law---An illegality can be checked by adherence to the dictates and requirements of law only---Applicant-department had failed to pinpoint any illegality or legal infirmity in the impugned order passed by Appellate Tribunal Inland Revenue---Thus, proposed question was answered in affirmative i.e. decided against the applicant-department---Reference application, filed by department, was dismissed.

Federation of Pakistan through Secretary, Ministry of Finance, Federal Secretariat, Islamabad and 4 others v. Messrs Master Enterprises (Pvt.) Ltd. through Managing Director 2003 PTD 1034; A.R.K. Textiles through Proprietor v. Federation of Pakistan through Ministry of Finance, Islamabad and 4 others 2006 PTD 494; Naimat alias Chacha Katta v. Summary Military Court No.2, Lahore and another PLD 1979 Lah. 279; Chairman, Central Board of Revenue and others v. Messrs Haq Cotton Mills (Pvt.) Ltd. Burewala 2007 SCMR 1039 and M/s. N. P. Water Proof Textile Mills (Pvt.) Ltd., Karachi v. Federation of Pakistan and another 2004 PTD 2952 ref.

Collector of Sales Tax and others v. Messrs Medora of London Ltd. and another 2005 PTD 2234 distinguished.

Liaquat Ali Ch., Shahid Sarwar Chahil and Akhtar Monga for Applicant (in STR No.256 of 2015).

Malik Abdullah Raza for Applicant (in STR No.73779 of 2022).

Barrister Shehryar Kasuri, Raza Imtiaz Siddiqui and Haider Aziz Sheikh for Respondent.

2025 P T D 1109

[Lahore High Court (Multan Bench)]

Before Asim Hafeez and Anwaar Hussain, JJ

The COMMISSIONER INLAND REVENUE, LEGAL ZONE, LTO, MULTAN

Versus

Messrs AN TEXTILE MILLS LTD. SHEIKHUPURA ROAD, FAISALABAD

S.T.R. No.34 of 2023, decided on 17th October, 2024.

Sales Tax Act (VII of 1990)---

----Ss. 2(25), proviso to, Ss.3(1A) 8(1)(m) & 73(4)---Persons liable to be registered---Scope and extent---Input tax, deduction of---Further tax---Scope---Benefit under S. 73(4) of the Sales Tax Act, 1990---Scope---Appellate Tribunal recorded findings to the effect that supplier / respondent, had paid further tax against the supplies made to persons not registered, who had not obtained registration number in terms of S.3(1A) of the Sales Tax Act, 1990---Validity---If recipients of supplies, who had not obtained registration number, were treated as not registered persons for the purposes of further tax, how could they be treated as deemed registered person for the purposes of subsection (4) of S. 73 of the Sales Tax Act , 1990---It was axiomatic that on one hand respondent had paid further tax qua the supplies made to person, without registration number, and on the other, benefit was claimed simultaneously qua the supplies to person not registered---Subsection (4) of S. 73 of the Sales Tax Act, 1990 contemplates and extends specific / exclusive benefit to the registered person, upon allowing claim of input tax qua taxable supplies when made within the limits prescribed, which benefit, by any stretch of imagination, cannot be doled out to non-registered recipient by banking upon S. 2(25) of the Sales Tax Act, 1990, which section cannot be construed contrary to the subject and context of subsection (4) of section 73 of the Act, 1990---Thus, in case of inconsistency between S. 2(25) of the Sales Tax Act, 1990 and subsection (4) of S. 73 of the Act, 1990, latter provision of the law would prevail---Subsection (4) of S. 73 of the Sales Tax Act, 1990 cannot be rendered repugnant by extending preference to the definition / interpretation clause---Even otherwise, the proviso to S.2(25) of the Sales Tax Act, 1990 envisaged benefit for potentially registerable person and such benefit cannot be extended or claimed by the registered person---Subsection (4) of S. 73 of the Sales Tax Act, 1990 is a special provision, dealing with specific situation and providing special concession / benefit, and effect thereof cannot be invalidated in the context of general provisions---Reference to S.8(1)(m) of the Sales Tax Act, 1990 by Appellate Tribunal was misplaced, which provision specifically dealt with input goods, attributable to the supplies---Thus, Appellate Tribunal misconstrued scope, extent and distinctiveness of subsection (4) of S. 73 of the Sales Tax Act , 1990, which erred in law while extending unwarranted preference to S. 2(25) of the Sales Tax Act , 1990, which construction and treatment constituted an illegality---Thus, proposed questions were answered in negative---Reference application was decided in favour of applicant / department.

Muhammad Sulaman Bhatti for applicant-department.

2025 P T D 1149

[Lahore High Court]

Before Abid Aziz Sheikh and Sultan Tanvir Ahmad, JJ

COMMISSIONER INLAND REVENUE, SIALKOT

Versus

AIR SIAL LIMITED, SIALKOT

I.T.R. No.56081 of 2022, decided on 7th October, 2024.

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

----Ss.18, 25, 39(1)(c) & 133---Reference---Profit on debt---Deposit of surplus funds---Pre-commencement expenditure---Authorities claimed that income from pre-commencement expenses was lawfully disallowed and amortized---Authorities further claimed that income on account of profit on debt was not income from business---Validity---Primary object and purpose of respondent / taxpayer company was to carry on and operate air transport service and not to derive any profit on debt as required under S. 18(2) of Income Tax Ordinance, 2001---For the purpose to achieve such object respondent / taxpayer company was authorized to invest surplus money of the company in shares, stocks or securities of any company, debentures, debenture stocks or in any investments, short term and long term participation, term finance certificates or any other government or semi-government securities---Respondent / taxpayer company was specifically not allowed to indulge in non-banking finance business, banking or an investment company or any such business---Respondent / taxpayer company was incorporated on 06-06-2016 though certificate of commencement of business was issued on 26-08-2016, however, date of actual commencement of business was 20-12-2020, when first sales tax return was filed---Profit in question accrued on surplus money from year 2017 to 2020 and was before commencement of respondent's / taxpayer's company business---Profit on surplus fund amount to income from other sources and expenses were covered under the head of pre-commencement expenses under S. 25(5) of Income Tax Ordinance, 2001---Assessing Officer lawfully disallowed and amortized expenses against interest on income under the relevant provision of Income Tax Ordinance, 2001---Reference was disposed of accordingly.

The Commissioner of Income Tax v. Messrs Fauji Foundation 2021 PTD 1951; Commissioner of Income Tax, East Pakistan Dacca v. The Liquidator Khulna Bagerhat Railway Company Limited, Ahmadabad PLD 1962 SC 128 and Qudrat Ullah v. Additional District Judge, Renala Khurd District Okara and others PLD 2024 SC 581 rel.

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

----S. 25(5)---Word "including"---Scope---Word "include" is normally used as expression of enlargement and implies that something also falls within the word which was beyond its general organic meaning in the interpretation clauses in order to enlarge the meaning of the words or phrases occurring in the body of the statute.

Lucky Cement Ltd. v. Commissioner Income Tax, Zone Companies Circle, Peshawar 2015 PTD 2210 rel.

Raja Sikandar Khan for Petitioner.

Barrister Muhammad Abubakar, Ch. M. Waseem Akram and Malik Nadir Ali Sherazi for Respondent.

2025 P T D 1159

[Lahore High Court]

Before Sultan Tanvir Ahmad, J

Messrs GB SECURITY SERVICES (PVT.) LIMITED

Versus

The FEDERATION OF PAKISTAN and 4 others

Writ Petition No.13433 of 2023 (and other connected petitions), heard on 28th April, 2025.

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

----Ss. 2(33), 3, 6(3) & 7 [as introduced through the Punjab Finance Act, 2014]---Constitution of Pakistan, Art. 70(4), Fourth Schedule, Entry No. 49---Persons providing service for security purposes---Payment to Security personnel etc.---Whether tax leviable---Whether tax on entire invoice amount or not---"Gross amount"---Scope---Petitioners/ registered persons were providing service for security purposes ('service providers') at the sites described in the related agreements to the recipients of the services ('recipients of service')---Claim of the respondents-authorities was that the tax was leviable on the entire invoice amount including salaries or other allowances ('the salaries') that were paid by the service providers to security personnel, labour and manpower (the individuals)---Validity---Provisions of Punjab Sales Tax on Services Act, 2012 ('the Act, 2012') clearly reflect that for a service to be taxable, it must be an economic activity of the service providers conducted as a business, profession, or trade, whether or not for profit---The words "gross amount" in S. 7 of the Act, 2012 were introduced, through the Punjab Finance Act, 2014 to clarify that tax is to be levied on the amount that includes all the taxes or duties, Federal or Provincial besides sales tax on services---The words "gross amount of" if given construction to include the salaries results into redundancy of S. 6(3) of the Act, 2012---No provision of an enactment can be treated as redundant or surplus and should be given its meaning and effect---Courts should avoid any interpretation of an enactment or rules that flouts common sense and results into absurdity and the Court should always give effect to the same by interpreting it in the manner that is in accordance with the judicially presumed Parliamentary concern for common sense and justice---The Courts should also avoid clash of seemingly contradicting provisions and must harmonize the contradictory provisions by interpreting not only the provisions but also the wisdom of the legislature in order to give effect to both the provisions---Thus, respondents-authorities while demanding tax on the salaries of the individuals had also overlooked that while interpreting a taxing statute, one had to look into the words of the statute and then to interpret it in the light of what is expressed in the relevant provision as well as its surrounding provisions---What is not expressed cannot be implied---There is no room of import or imputing something in a fiscal statute---At the same time, when more than one interpretation is fairly and reasonably possible then one which leads to manifest absurdity or injustice must be avoided---The power to tax service is derived by the Province from Entry No. 49 of Fourth Schedule, under Art. 70(4) of the Constitution---Federal Government has exclusive power to legislate with respect to the federal legislation list and the Provinces can only make laws, which are not enumerated in the said list --The exception in the said entry permits the respondent-authorities to impose the sales tax purely on services---Thus, only the quantum and component of service is taxable and not the amount being reimbursed by the recipient as salaries of the individuals to the service providers---Constitutional petitions were allowed accordingly.

Sindh Revenue Board through Secretary Government of Sindh, Karachi and others v. Messrs Quick Food Industries (Pvt.) Limited and others 2023 SCMR 1776; Ahsan Khan v. Government of the Punjab and others 2023 CLC 825; Muhammad Ahsan Ullah Khan and others v. Muhammad Sami Ullah Khan and others PLD 1964 (W.P.) Lahore 101; Maryon-Wilson's Will Trusts, Blofield v. St. Hill 1966 M.No. 4666 1968 Ch. 268; Messrs Gas Masters CNG Station v. Federation of Pakistan and others 2019 PTD 25; Allied Bank Limited v. The Commissioner of Income Tax, Lahore and others 2023 SCMR 1166; Messrs Saadullah Khan and Brothers (SKB) v. Appellate Tribunal of Inland Revenue and others 2019 PTD 776; Mrs. Naila Naeem Younus and others v. Messrs Indus Services Limited through Chief Executive and others 2022 SCMR 1171 and Sami Pharmaceuticals (Pvt.) Ltd. v. Province of Sindh and others (C.P No. 5220-2017) ref.

Barrister Muhammad Hamza Akhtar and Syed Hasnain Abbas for Petitioner.

Muhammad Nasim Saqlain, Assistant Attorney General for Respondent No.1.

Salman Asif Warraich, Assistant Advocate General for Respondent No.2.

Sajid Ijaz Hotiana, Tanzeel-ur-Rehman, Ali Javaid Bajwa, Abubakar Attique and Muhammad Nouman Yahya, Legal Advisors of Punjab Revenue Authority for Respondents No.3 to 5.

Khurram Shahbaz Butt, Amicus Curiae.

2025 P T D 1217

[Lahore High Court]

Before Khalid Ishaq, J

BASHIR AHMED

Versus

FEDERATION OF PAKISTAN through Secretary Finance, Islamabad and 4 others

Writ Petition No.45219 of 2023, decided on 17th April, 2025.

Income Tax Ordinance (XLIX of 2001)---

----Ss. 182 & 209---Large Taxpayers' Office---Jurisdiction, determination of---Petitioner, being Chief Executive Officer of Faisalabad Electric Supply Company (FESCO), filed constitutional petition calling into question order passed under S. 182 of the Income Tax Ordinance, 2001 ('the Ordinance, 2001') by the Commissioner Inland Revenue, Large Taxpayers Office, Faisalabad (respondent No.3) whereby he had been awarded a penalty in his personal capacity i.e. Chief Executive Officer of FESCO ('the Impugned Order')---Submission of the petitioner was that in view of Federal Board of Revenues (FBR) own notification FESCO fell under the jurisdiction of LTO, Multan---Validity---The fact that the automated system of the FRR did not recognize and entertain the appeal of the petitioner was enough to hold the (present) constitutional petition maintainable and the petitioner could not be left remediless---Even otherwise, the serious question of jurisdiction was involved as to the authority and powers to issue the Show-Cause Notice-in-question (dated 16.06.2023) and the impugned order passed on the basis thereon, therefore, the petitioner had rightfully invoked the constitutional jurisdiction of the High Court---Record (including the documents appended by both sides) clearly led to an ineluctable conclusion that the petitioner was caught within the mischiefs of confusion of jurisdiction of the relevant LTOs created by FBR without there being any default, malice or wrong doing attributable to the petitioner--- During the pendency of the present petition, FESCO also approached FBR by means of a representation under the provisions contained in the Federal Board of Revenue Act, 2007, in order to lay its grievance qua the overlapping and conflicting claims of jurisdictions by two offices of FBR, however, no definite findings were handed down owing to the pendency of the present petition---The reliance of the respondents Nos. 3 and 5 on a notification/circular dated 03.10.2019 was apparently in contradiction with subsequent circulars/orders dated 12.10.2020 (relied upon by the petitioner) and dated 01.07.2021 (relied upon by learned counsel for respondent No.4)---Considering the petitioner's unrefuted claim that no loss or evasion of revenue was involved in the case, which claim was also substantiated from the Show-Cause Notice and impugned order, the treatment meted out to the petitioner was untenable under the law---However, in order to streamline the question of jurisdiction of the relevant RTOs qua FESCO and for further verification qua possibility of any loss or evasion of the revenue, the intervention and a definite finding by the FBR was inevitable---High Court set-aside the impugned order, and the matter (present petition) was transmitted to the Chairman FBR as a representation under the provisions contained in Federal Board of Revenue Act, 2007, who shall hear the petitioner as well as concerned LTOs and pass a speaking order for final determination of the controversy qua the jurisdiction in clear terms---Constitutional petition, filed by Chief Executive Officer of Faisalabad Electric Supply Company, was allowed accordingly.

Mian Ashiq Hussain for Petitioner.

Qamar Hanif, Assistant Attorney General.

Abdul Muqtadir Khan for Respondents Nos.3 and 5.

2025 P T D 1300

[Lahore High Court (Multan Bench)]

Before Muzamil Akhtar Shabir, J

RELIANCE WEAVING MILLS LIMITED

Versus

FEDERAL BOARD OF REVENUE (FBR) through Chairman and others

Writ Petition No. 15377 of 2024, decided on 15th November, 2024.

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

----S. 48---Constitution of Pakistan, Arts. 10-A & 199---Reference application already filed by registered person---Notice of recovery, assailing of---Constitutional jurisdiction---Scope---Alternate remedy, availability /availing of---Effect---Case of the petitioner was that the Sales Tax Reference is still pending before High Court and due to grudge of filing of Sales Tax Reference, Impugned Notices have been sent for recovery---Impugned Notices have been challenged by the petitioner (Registered Person) through Constitutional petition seeking suspension of recovery notices/proceedings during pendency of the said STR---Whether the High Court while exercising its constitutional jurisdiction should stay the recovery notices issued to the petitioner during the pendency of Sales Tax Reference before High Court---Held: It is not disputed that access to justice is a fundamental right and an essential feature of the said right is that there should be adjudication of grievance by an independent tribunal before a person can be proceeded against under the law ensuring essential ingredients (there should be an independent, impartial court, a fair and public hearing, right of counsel, right to information of the offence charged for with an opportunity to cross examine witnesses and an opportunity to produce evidence) of right of fair trial in reference to Art. 10-A of the Constitution---It is also pertinent that assessment orders as such do not have touch of finality unless all the forums are exhausted in which such orders can be challenged, so that the orders take the shape of final decisions---The legislature when it provides a hierarchy of tribunals for the determination of a dispute is really providing one complete procedure for such determination, proceedings before different tribunals are only steps in such procedure---Order passed in original proceedings is not final unless it crosses all the forums set up under that law in which it can be challenged and the order of the last forum would become final---An assessee is entitled to adjudication in respect of his disputed tax liabilities by at least one independent forum outside hierarchy of the respondent department and the appellate tribunal in taxation matters is the first independent forum---Thus, stay order against recovery of demand of tax cannot be issued by High Court in its constitutional jurisdiction, when the Tax Reference has already been filed before High Court---Consequently, constitutional petition at this stage is not entertainable/maintainable due to equally efficacious alternate remedy available to petitioner under the law---Constitutional petition, filed by Registered Person, having been withdrawn, was disposed of.

Mehram Ali and others v. Federation of Pakistan and others PLD 1998 SC 1445; Jawad S. Khawaja and another v. Federation of Pakistan and others PLD 2024 SC 337; Central Board of Revenue and others v. Chanda Motors 1993 SCMR 39; Caltex Oil (Pakistan) Ltd. v. Collector, Central Excise and Sales Tax and others 2005 PTD 480 = 2006 SCMR 1519; Messrs Islamabad Electric Supply Company Limited v. Additional Commissioner Inland Revenue and others 2024 PTD 30; Pakistan Oil Fields Ltd. through Authorised Attorney and General Manager v. Federation of Pakistan through Secretary Revenue and 2 others 2016 PTD 1590 = PLD 2016 Islamabad 76; Messrs Magna Processing Industries (Pvt.) Ltd., Faisalabad through Chief Executive v. Federation of Pakistan through Secretary and others 2014 PTD 841; Messrs Niagara Mills (Pvt.) Ltd. through Chief Executive v. Federation of Pakistan through Secretary Revenue, and others 2014 CLD 1253 and Messrs Dawood Textile Printing Industries (Pvt.) Ltd., Faisalabad through Chief Executive v. Federation of Pakistan through Secretary, Revenue Division, F.B.R. and others 2009 PTD 1220 ref.

Messrs Pak Saudi Fertilizers Ltd. v. Federation of Pakistan and others 2002 PTD 679; Messrs Islamabad Electric Supply Company Limited v. Additional Commissioner Inland Revenue and others 2024 PTD 30; Messrs Pakistan Housing Foundation v. The Commissioner Inland Revenue Appeal and others 2022 PTD 1263; Messrs Kamal Ltd. through Director v. Federation of Pakistan through Chairman and 2 others 2017 PTD 243; Messrs Magna Processing Industries (Pvt.) Ltd., Faisalabad through Chief Executive v. Federation of Pakistan through Secretary and others 2014 PTD 841; Messrs Niagara Mills (Pvt.) Ltd. through Chief Executive v. Federation of Pakistan through Secretary Revenue, and others 2014 CLD 1253; Messrs Dawood Textile Printing Industries (Pvt.) Ltd., Faisalabad through Chief Executive v. Federation of Pakistan through Secretary, Revenue Division, F.B.R. and others 2009 PTD 1220; Sun-Rise Bottling Company (Pvt.) Ltd. through Chief Executive v. Federation of Pakistan and 4 others 2006 PTD 535; Brothers Engineering (Pvt.) Ltd. v. Appellate Tribunal Sales Tax 2003 PTD 1836; Z.N. Exports (Pvt.) Ltd. v. Collector of Sales Tax 2003 PTD 1746; Agri Force Chemicals v. Federation of Pakistan and others 2016 PTD 1070; Messrs Aidy Vee & Co. (Pvt.) Ltd. through Director v. Taxation Office of Income Tax, Lahore and 4 others 2009 PTD 1715 and Messrs Ibrahim Fibers Limited through Secretary v. Commissioner of Income Tax (Audit), Large Taxpayer Unit, Lahore and 3 others 2009 PTD 2006 distinguished.

(b) Constitution of Pakistan---

----199---Sales Tax Act (VII of 1990), S. 48---Reference application already filed by Registered Person---Notice of recovery, assailing of---Constitutional jurisdiction---Scope---Powers of the High Court to convert one type of proceeding into another type of proceeding and decide it itself---Case of the petitioner is that the Sales Tax Reference is still pending before High Court and due to grudge of filing of STR, Impugned Notices have been sent for recovery---Impugned Notices have been challenged by the petitioner (Registered Person) through filing constitutional petition seeking suspension of recovery notices / proceedings during pendency of the said STR---Plea of the petitioner was that the High Court while exercising its jurisdiction may convert present petition into Reference Application and decide it itself---Validity---Though High Court can always convert one type of proceeding into another type of proceeding and decide itself, yet subject to the rider that it has jurisdiction over the issue, subject matter of the dispute and if jurisdiction is not vested in High Court to decide then refer the same to the competent authority, forum, officer or court for its decision on merits---Thus, despite the power vested in High Court to convert present constitution petition into a reference application / petition, it is not a plausible/ feasible option in the present case for the reason that a reference application has already been filed by the petitioner prior to the filing of this constitution petition and the Division Bench of High Court, that has to hear the said reference application, enjoys full powers to grant relief prayed for by the petitioner---Although High Court may in appropriate cases exercise its constitutional jurisdiction despite availability of alternate remedy, yet that jurisdiction is to be exercised by keeping in view the question whether equally efficacious remedy is available to the petitioner or not---In the present case, it is apparent that equally efficacious alternate remedy is available to the petitioner which right has also been exercised by the petitioner by filing a reference application before High Court, which is still pending, and consequently it would not be appropriate for High Court to exercise constitutional jurisdiction at this stage for the reason that where a thing is required to be done in a particular manner then it should be done in that manner as required by the statute otherwise such act will be illegal and without jurisdiction---Petitioner has not made any attempt to get his reference application and the stay application fixed for hearing before approaching High Court for redress of grievance through the instant constitution petition---Moreover, High Court in its constitutional jurisdiction is not in a position to give direction to the learned Division Bench of High Court to entertain and decide the reference application already pending before it for the reason that the same would amount to High Court entertaining constitutional petition against itself which jurisdiction has specifically been excluded by Art. 199 of the Constitution and High Court cannot exercise its writ jurisdiction against itself---Consequently, present constitutional petition, at this stage is not entertainable / maintainable due to equally efficacious alternate remedy available to petitioner, under the law---Constitutional petition, filed by Registered Person, having been withdrawn, is disposed of.

Hafsa Habib Qureshi and others v. Amir Hamza and others PLD 2024 SC 780; Muhammad Salman v. Naveed Anjum and others 2021 SCMR 1675; Government of Punjab v. Sanosh Sultan PLD 1995 SC 541; Raunaq Ali v. Chief Settlement Commissioner PLD 1973 SC 236; Commissioner Inland Revenue, Large Taxpayers Office, Islamabad v. Pakistan Oilfields Ltd., Rawalpindi and others 2024 PTD 1085 SC = 2024 SCMR 853; Muhammad Hanif Abbasi v. Imran Khan Niazi and others PLD 2018 SC 189; Federal Board of Revenue v. Dewan Salman Fiber Ltd. and others 2023 SCMR 1871; Gul Taiz Khan Marwat v. The Registrar, Peshawar High Court, Peshawar and others PLD 2021 SC 391; Chief Justice of Pakistan Iftikhar Muhammad Chaudhry v. President of Pakistan through Secretary and others PLD 2010 SC 61; Muhammad Iqbal and others v. Lahore High Court through Registrar and others 2010 SCMR 632 and Muhammad Shafi and another v. Attaullah and others 1984 SCMR 1124 ref.

Tanveer Hussain Ansari and Abdul Sattar for Petitioner.

Malik Muhammad Bakhsh Khaki, Assistant Advocate General, Punjab for Respondents.

2025 P T D 1337

[Lahore High Court (Rawalpindi Bench)]

Before Rasaal Hasan Syedand Mirza Viqas Rauf, JJ

COMMISSIONER INLAND REVENUE, CANTT ZONE, REGIONAL TAX OFFICE, RAWALPINDI

Versus

LAL FAQEER and another

Income Tax Reference No. 109 of 2024, heard on 2nd June, 2025.

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

----Ss. 111, 122 & 133---Unexplained income or assets, allegation of---Assessment order passed based on no response by taxpayer---Amendment of assessments---Essence and prerequisites---Initiating and concluding proceedings under S. 111 of the Income Tax Ordinance 2001 (the Ordinance) before taking any steps under S. 122 of the Ordinance, requirement of---Scope---Proceedings under S. 111 are mandatory and sine qua non before any action under S. 122 of the Ordinance---Brief facts were that the Commissioner Inland Revenue filed a reference application under S. 133 of the Income Tax Ordinance, 2001, challenging the order of the Commissioner (Appeals-I) who had annulled an earlier assessment order passed by the Deputy Commissioner Inland Revenue---Original order was based on definite information that the respondent taxpayer had acquired immovable properties worth Rs. 33 million while declaring a taxable income of only Rs. 1.25 million---Show-cause notice was issued under Ss. 122(9) and 111(1)(b) of the Ordinance, but due to the taxpayer's non-response, a tax demand of over Rs. 11 million was raised---Appellate authority allowed the taxpayer's appeal, leading the department to file the reference---Legal point for determination before the High Court was as to "Whether proceedings under S. 122(9) of the Income Tax Ordinance, 2001, for amendment of assessment could be validly initiated without the prior initiation and culmination of proceedings under S. 111 of the Ordinance?"---Held: The proceedings under S. 122(9) of the Ordinance could not be launched unless the proceedings under S. 111 of the Ordinance were initiated and completed---Before taking any steps in terms of S. 122(9) of the Ordinance, the requirement of S. 111 of the Ordinance was mandatory---As a result, the present appeal failed and questions of law raised therein were answered accordingly.

Commissioner Inland Revenue, Lahore v. Messrs Millat Tractors Limited, Lahore and others 2024 SCMR 700 rel.

Engineer Jameel Ahmad Malik v. Shaukat Aziz and 6 others 2007 CLC 1192; Mst. Hira Rehman v. Chancellor, Government College University, Lahore and 2 others 2011 CLC 377 and Muhammad Hanif and 2 others v. Muhammad Sadiq and 14 others 2019 MLD 846 ref.

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

----Ss.111 & 122---Unexplained income or assets---Amendment of assessments---Whether proceedings under S. 122 of the Income Tax Ordinance 2001 (the Ordinance) for amendment of assessment can be initiated without the prior initiation and culmination of proceedings under S. 111 of the Ordinance---Initiation and culmination of proceedings under S. 111 of the Ordinance before taking any action under S. 122 of the Ordinance---Significance, object and scope---From the bare perusal of S. 111 of the Ordinance it becomes clear that whenever the department has any information resulting into an impression or understanding that grounds in S. 111(1)(a to d) relating to unexplained income or assets are attracted, calling explanation from the taxpayer becomes necessary, as till that stage, information available with the department is mere information---If any explanation offered by the taxpayer is not satisfactory in response thereto, in the opinion of the Commissioner, the said liability becomes unexplained income and is to be added to the income of the taxpayer chargeable to tax---However, if the explanation offered seems to be satisfactory, the said proceedings can be dropped and no further action is then warranted---The prime object of the above noted provision of law is to provide an opportunity of explanation to the taxpayer to contest the allegations confronted to him with regard to any of the grounds mentioned in S. 111 (a to d) where-after an opinion is to be formed by the commissioner on the basis of said information, if any---Whereas, from the bare reading of S. 122 of the Ordinance, it becomes obvious that the commissioner has been empowered to amend an assessment order, treated as issued under S. 120 or 121 of the Ordinance by making such alterations or additions, as the Commissioner considers necessary---However, under S. 122(5) of the Ordinance, an assessment order in respect of a tax year, or an assessment year, shall only be amended under subsection (1) and an amended assessment for that year shall only be further amended under subsection (4) where, on the basis of definite information acquired from an audit or otherwise, the Commissioner is satisfied that any of the grounds in the said provisions are sufficient enough to make amendments---Section 122(8) of the Ordinance provides what constitutes definite information for the purposes of this provision---On the other hand, subsection (9) of S. 122 of the Ordinance stipulates that no assessment shall be amended, or further amended, under this section unless the taxpayer has been provided with an opportunity of being heard---From the joint analysis of both the above provisions of law (i.e. Ss. 111 and 122), it becomes crystal clear that initiation and culmination of the proceedings under S. 111 of the Ordinance are sine qua non before taking any action in terms of S. 122 of the Ordinance to amend the assessment on the basis of proceedings undertaken under S. 111 of the Ordinance.

Commissioner Inland Revenue, Lahore v. Messrs Millat Tractors Limited, Lahore and others 2024 SCMR 700 rel.

Manzoor Hussain along with Yousaf Khan, S.O. I.R. Legal (HQ) RTO, Rawalpindi for Appellant.

Respondent No. 1 in person.

2025 P T D 1429

[Lahore High Court (Rawalpindi Bench)]

Before Jawad Hassan and Sardar Akbar Ali, JJ

Messrs ALI SHER TRADERS

Versus

COMMISSIONER INLAND REVENUE and others

S.T.R. No. 05 of 2025, decided on 3rd June, 2025.

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

----S. 47---Sales Tax Reference, filing of---Limitation---Scope---Condonation of delay---Sufficient cause / reason, absence of---Effect---Application seeking condonation of delay in filing reference application was filed by Registered Person/Company (Applicant) while assailing order passed by the Appellate Tribunal Inland Revenue ('Tribunal')---Ground taken by the Applicant was that though the impugned order was served on its (Applicant's)authorized representative after ten days of passing by the Tribunal but the same was handed over to the Applicant after a month or so, thus, period of limitation starts from said communication instead of date of serving to representative---Validity---Period of limitation for filing the reference application under S. 47 of the Sales Tax Act, 1990, ('the Act 1990 ') is thirty (30) days from the communication of the order of the Appellate Tribunal or the Commissioner (Appeals), as the case may be---In the present case, the (instant) reference application was filed with a delay of as many as 16 days, whereas the same was to be filed within thirty days---Ground urged by the Applicant through (present) application is vague and unpersuasive as the applicant has merely annexed an affidavit executed by his authorized representative, who personally received the impugned order; it is further noted that the said (impugned) order was subsequently provided to the applicant (after about month of passing of the same), pursuant to his contact and request---Said sequence of events clearly establishes that the passing of the impugned order was within the knowledge of the Applicant---Pertinently, the authorized representative of the Applicant, being a registered tax practitioner, was well aware of the statutory period of limitation for filing a tax reference under S. 47 of the Act, 1990 which prescribes a specific time frame for instituting reference application but despite receiving the impugned order, he could provide the same to the applicant himself on or before the expiry of limitation, but instead of handing over the same, he kept it with him for almost sixteen days, without any solid explanation or reason---In case of time barred proceedings, defaulting party must explain the delay of each day caused in preferring valid proceedings in accordance with law---In the present case, no sufficient cause is pleaded even in the instant application, so the Applicant deserves no leniency---Law helps the vigilant and not the indolent---Application for condonation of delay, filed by Registered Person, was dismissed---Reference application, being barred by time, was dismissed, in circumstances.

State Bank of Pakistan through Governor and another v. Imtiaz Ali Khan and others 2012 SCMR 280; Lahore Development Authority v. Mst. Sharifan Bibi and another PLD 2010 SC 705; Rehmat Din and others v. Mirza Nasir Abbas and others 2007 SCMR 1560; Muhammad Nawaz and others v. The State 2004 SCMR 945; Nazakat Ali v. WAPDA through Manager and others 2004 SCMR 145 and Aftab Iqbal Khan Khichi and another v. Messrs United Distributors Pakistan Ltd. Karachi 1999 SCMR 1326 ref.

(b) Limitation---

----Principles---Law of limitation provides an element of certainty in the conduct of human affair---Thus, statutes of limitation and prescriptions are statutes of peace and repose---In order to avoid the difficulty and errors that necessarily result from lapse of time, the presumption of coincidence of fact and right is rightly accepted as final after a certain number of years---Whoever wishes to dispute said presumption must do so, within that period; otherwise his rights, if any, will be forfeited as a penalty for his neglect---In other words, the law of limitation is a law which is designed to impose quietus on legal dissensions and conflicts---Limitation requires that persons must come to Court and take recourse to legal remedies with due diligence---Question of limitation cannot be termed as mere technicality---Importantly, with the afflux of time certain rights do accrue in favour of the adversary which cannot be taken away in a slipshod manner---Object for framing the law for the purpose of regulating the limitation was to push the parties to file their respective claims within the stipulated period---Time period provided for filing the proceedings in terms of suit, appeal, review, revision petition or any application cannot be lightly ignored or brushed aside---Question of limitation is as important as jurisdiction of the Court.

Zahid Shafiq for Applicant.

Malik Itaat Hussain Awan for Respondents.

2025 P T D 1509

[Lahore High Court (Rawalpindi Bench)]

Before Jawad Hassan and Malik Javid Iqbal Wains, JJ

COMMISSIONER INLAND REVENUE (CANTT. ZONE) REGIONAL TAX OFFICE, RAWALPINDI

Versus

Messrs D-WATSON, CHAKLALA SCHEME-III, RAWALPINDI and another

Sales Tax Reference No.07 of 2022, decided on 3rd July, 2025.

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

----Ss.2(43A), 3(9A), 40(c) & 11---Failure of registered person to integrate a retail outlet fully or partially with the FBR's Computerized System for real-time reporting, offence of---Provision for recovery of tax shortfalls under S. 11 of the Act, 1990, applicability of---Imposition of penalty for violations exclusively covered under other specific provisions of Sales Tax Act, 1990---Whether penalties and default surcharge for non-integration can be imposed under S. 11 of the Sales Tax Act, 1990, or must be confined to the specific penal mechanism under S. 33 of the Act, 1990?---The Commissioner Inland Revenue(the CIR) sought to impose penalties and default surcharge on Tier-1 retailers for failing to fully integrate their retail outlets with the FBR's computerized POS system---The Department relied on S. 11 of the Sales Tax Act, 1990 as the jurisdictional basis to issue show-cause notices and recover such penalties---The Registered Persons challenged this and the Appellate Tribunal set aside the penalty orders---High Court was then called upon to decide as to "whether S. 11 (a machinery provision dealing with recovery of tax shortfalls) could legally be invoked to impose penalties for regulatory breaches under Ss. 2(43A), 3(9A), 40C read with Serial Nos. 24 and 25 of S. 33 (which specifically prescribed penalties for non-integration)?"---Held: While S. 33 of the Act, 1990 governed the creation of liability for specified offences, it did not itself supply the procedural means for recovering such penalty from the Registered Person, if there was no simultaneous tax shortfall---Any proceedings for penalty under serial No.24 or 25 was to be rooted in the express penalty provisions, and the recovery was to follow the adjudication process prescribed by the Act, 1990 or other relevant enabling provisions, but could not default to S. 11 of the Act, 1990 in the absence of a short levied tax---Although S. 33 of the Act, 1990, prescribed various offences and their corresponding penalties, it did not itself provide any independent procedural mechanism for the issuance, adjudication, or recovery of such penalties---Therefore, in the absence of such procedure, reliance could not be placed on a general provision like S. 11 of the Act 1990, which was confined to tax assessment and recovery, to fill that gap by implication---In the present case, the respondents' alleged failure to fully or partially integrate their retail outlet did not, ipso facto, result in a quantifiable shortfall of sales tax that could be brought within the ambit of S. 11 of the Act, 1990---Instead, this default constituted an independent regulatory offence for which a specific penalty was prescribed under Serial Nos.24 and 25 of S. 33 of the Act, 1990---Reliance on S. 11 of the Act, 1990 as the sole jurisdictional basis for issuing a show cause notice to impose penalty and default surcharge for partial or complete non-integration under Ss.2(43A), 3(9A), and 40C of the Act, 1990 was misconceived in law and contrary to the statutory framework---Such action was ultra vires the express scheme of the Act, 1990, which required that the prescribed penalty for these specific regulatory breaches be imposed strictly under the enabling provisions of S. 33 of the Act, 1990, following due process and in accordance with the procedure established by law---Accordingly, the show-cause notice and the consequential order passed pursuant thereto had rightly been set-aside to the extent that they sought to impose penalty and default surcharge solely by invoking S. 11 of the Act, 1990 for violations that were required to be prosecuted exclusively under the specific penal provisions of S. 33 of the Act, 1990---Consequently, the order of the Appellate Tribunal Inland Revenue was upheld to this extent having correctly appreciated the statutory distinction and the limits of jurisdiction prescribed under the Act, 1990---Present reference applications were decided against the applicant department.

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

----Ss.2(43A), 3(9A), 40(c) &11---Failure to integrate a retail outlet fully or partially with the FBR's Computerized System for real-time reporting, offence of---Provision for recovery of tax shortfalls under S. 11 of the Act, 1990, applicability of---Imposition of penalty for violations exclusively covered under other specific provisions of same statute---Legality and scope---Section 11 of the Act, 1990 is a machinery provision and its statutory object is to empower the Officer of Inland Revenue to detect, assess, and recover any tax, which has either escaped assessment, has not been paid, or has been erroneously refunded---The operative words are "tax not levied or short-levied or erroneously refunded" demonstrating that its entire scope is tethered to the quantification and recovery of a shortfall in tax revenue---The legislative intent of S. 11 of the Act, 1990 is clear from its text, it addresses tax revenue shortfall and its recovery, not regulatory penalties imposed for stands alone statutory breaches unrelated to any deficit in the tax payable---The said provision is silent regarding the creation of offences or the independent imposition of penalties for regulatory breaches that do not necessarily result in a quantifiable tax default---Its scope is not punitive but compensatory and restorative in nature, to protect the exchequer from actual revenue loss---Conversely, the offences for failure to integrate a retail outlet fully or partially with the Board's Computerized System for real-time reporting are distinctly prescribed under Ss. 2(43A), 3(9A) & 40C of the Act, 1990, while the penal consequences for such breaches are codified under S. 33 of the Act, 1990, particularly at Serial Nos. 24 and 25 further observed that the Table appended to S. 33 of the Act, 1990 including inter alia Serial Nos.24 and 25, prescribes various statutory offences along with the corresponding penalties for each specific breach---These provisions clearly adopt a specific general legislative framework, the specific provision, i.e., S. 33 of the "Act" defines the nature of the offence and stipulates the quantum of penalty or default surcharge applicable thereto---However, the Act, 1990 is conspicuously silent on any detailed procedure for the assessment, computation, or recovery of such penalties where no ascertainable tax shortfall is determined---Section 33 of the Act, 1990 by its design, is declaratory in nature---It creates liability, but does not itself furnish a procedural machinery for quantification or recovery---This structural distinction is well entrenched in the jurisprudence that machinery provisions must operate within the express confines of the substantive charging provisions they support---Any attempt to expand a machinery provision, such as S. 11 of the Act, 1990 to cover penalties for purely regulatory defaults (as described at Serial Nos.24 and 25, or similar entries in the Table amounts to reading into the statute a jurisdiction, which the Legislature has not conferred.

(c) Interpretation of statutes---

----Fiscal/tax statutes---Penal provisions---Applicability and scope---Where a fiscal statute provides a penal consequence for breach of a statutory duty, such penal consequence must be enforced strictly within the four corners of the enabling provision---Where a special provision exists, it overrides the general provision to the extent of any overlap, a principle that applies with even greater force where penal consequences are involved---Tax statutes, particularly those prescribing penalties or default surcharges, must be construed strictly---Penal provisions cannot be broadened by administrative construction or implication---It is incumbent upon the department to establish clear statutory authority for each element of any penalty imposed, and an officer must demonstrate precise adherence to the express language of the statute to justify the levy of any penalty or surcharge---Where the legislature has created a distinct penalty for a regulatory contravention without linking it to an ascertainable tax shortfall, the penalty must be enforced strictly under the special provision, not by resorting to a general recovery mechanism intended for unpaid tax.

Government of Punjab through Secretary Irrigation and Power and another v. Kunjah Textile Mills Ltd. and others 2025 SCMR 239 rel.

Syed Muhammad Abbas, Malik Ittat Hussain Awan, Barrister Muhammad Ibrahim Khan, Dr. G.M. Chaudhry, Manzoor Hussain along with Yousaf Khan, S.O. I.R. (Hqrs) R.T.O., Rawalpindi for Applicant.

Atif Waheed, Ch. Imran-ul-Haq, Muhammad Musawar Gill, Zahid Shafiq and Mehmood Subhani, Bilal-ud-Din Butt, Raja Basit Iqbal, Qazi Hafee-ur-Rehman, Ameer-ul-Azeem and Umair Mehmood for Respondent No.1.

2025 P T D 1549

[Lahore High Court]

Before Abid Aziz Sheikh, J

Messrs PAK HYGIENIC INDUSTRIES

Versus

FEDERATION OF PAKISTAN and others

Writ Petition No.75402 of 2023, decided on 29th November, 2023.

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

----Ss.38 & 40---Raid, search warrant, access to and seizure of business records by FBR---Issuance of search warrant---Precondition of pending proceedings---Scope---The challenge in the present Constitutional petition concerned the legality of the raid, search, and seizure of the petitioner's business records conducted by Inland Revenue authorities under Ss. 38 & 40 of the Sales Tax Act, 1990---The main issue before the High Court was whether, in the absence of any pending proceedings under the Act, 1990, the authorities were justified in obtaining and executing a search warrant and taking custody of the petitioner's documents, or whether such action exceeded the lawful scope of powers conferred under the Act, 1990---Held: In the present case, admittedly the impugned order and the search warrant in question were issued in pursuance of the desk audit analysis highlighting concealment of sales but there were no proceedings pending under the Act, 1990 for which the documents could be useful or relevant, which was a precondition under S. 40 of the Act, 1990 for issuance of search warrant---When there were no proceedings pending under the Act, 1990, the provision of S. 40 of the Act for search could not be invoked---The desk audit analysis could at best be treated as inquiry or investigation but did not amount to proceedings under the Act, therefore, the provision of S. 40 of the Act could not be invoked in the impugned order or search warrant, therefore, to that extent the impugned order and search warrant were not sustainable---Indeed the respondents could neither invoke the provisions of S.40 of the Act nor they could compel production of any record or documents that were not in plain sight or had not been voluntarily made available, however, perusal of the copy of Resumption Memo (appended with reply), showed that same had been duly stamped by the petitioner, as required under S. 38(1) of the Act---Though the petitioner in the present petition had challenged the impugned order and impugned search warrant claiming that the respondent No.4 along with officials and policemen entered its business premises and took away the record but it was nowhere specifically pleaded that said record was not in plain sight or was forcibly taken into custody by respondents---On the other hand, the respondents in their reply though defended the impugned order and search warrant on legal plane yet nowhere stated that the record was made available voluntarily for inspection and taken into custody on request---This being a factual dispute could not be decided in the Constitutional petition, therefore, the respondents were directed to return the data and record as per Resumption Memo to the petitioner after retaining the duplicate copies thereof---Constitutional petition was partially allowed, in circumstances.

Pakistan Chipboard (Pvt.) Ltd. through Chief Executive Officer v. Federation of Pakistan and others 2015 PTD 1520 ref.

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

----Ss.38 & 40---Search warrant, access and seizure of business records by FBR---Legality and scope---Plain reading of S. 38(1) of the Act, 1990 shows that any officer, authorized by the Commissioner Inland Revenue, shall have free excess to the business or manufacturing premises, registered office or any other place where any stock, business record or documents required under this Act are kept or maintained belonging to the registered person or a person liable for registration or whose business activities are covered under this Act or who may be required for any inquiry or investigation in any tax fraud---Under S. 38 of the Act, 1990, an officer authorized may inspect and also take into custody the record mentioned therein, as he may deem fit, against a signed receipt---Purpose of visit, in terms of S. 38 of the Act, is to see whether proper record under the Act, relevant Rules and Regulations is maintained or not, and the authorized officer in this regard must produce the copy of authorization before commencing the inspection and visit must be confined to inspect the record and documents that are in plain sight or voluntarily made available for inspection by the persons present at the premises on request, and consequently only such record can be taken into custody within the meaning of S. 38 of the Act---Whereas under S. 40 of the Act, 1990, where any officer of Inland Revenue has reason to believe that any document or things which in his opinion, may be useful for, or relevant to any proceedings under this Act are kept in any place, he may, after obtaining warrant from Magistrate, enter that place or cause a search to be made at any time.

Ghulam Hussain v. Federation of Pakistan through Ministry of Finance, Islamabad and 5 others 2021 PTD 1379; Messrs Apple Paper Products (Pvt.) Ltd. Through Director Chief Executive Officer v. Federation of Pakistan through Chairman and 2 others 2019 PTD 787; Agha Steel Industries Ltd. through Authorized Company Secretary and another v. Directorate of Intelligence and Investigation through Director and 2 others 2019 PTD 2119; Messrs Iqbal and Sons through Authorized Representative v. Federation of Pakistan through Secretary and 3 others 2017 PTD 590; Messrs Stylo Shoes through Managing Partner and another v. Deputy Director and others 2013 PTD 1780; Z & J Hygienic Products (Pvt.) Ltd. v. Collector Sales Tax (2011) 103 TAX 281; A.M.Z. Spinning and Weaving Mills (Pvt.) Ltd. through Manager Finance v. Federation of Pakistan through Secretary, Revenue Division/Ex-Officio Chairman, C.B.R., Islamabad and 2 others 2009 PTD 1083; Messrs Food Consults (Pvt.) Ltd., Lahore and others v. Collector (Central Excise and Sales Tax), Lahore and 2 others 2004 PTD 1731; Messrs Ihsan Yousaf Textile Mills (Pvt.) Ltd., Faisalabad v. Federation of Pakistan through Ministry of Finance, Islamabad and 4 others 2003 PTD 2037 and Director Intelligence and Investigation v. M/s BIOCOS International and 5 others PLJ 2020 Lah. 1 ref.

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

----Ss.40 & 40-A---Search warrant, access and seizure of business records by FBR---Legality and scope---As per the language employed in Ss. 40 & 40A of the Act 1990, the requirement of law appears to be that where an officer of sales tax has reason to believe that any document or things, which in his opinion may be relevant to any proceedings under the Act, are concealed or kept in any place and there is a danger of removal of such documents or records, he may, after obtaining warrant from Magistrate, enter that place and cause a search to be made at any time and the search authorized shall be carried out strictly in accordance with relevant provisions of the Code of Criminal Procedure, 1898.

Collector of Sales Tax and Central Excise (Enforcement) and another v. Messrs Mega Tech (Pvt.) Ltd. 2005 PTD 1933 rel.

Muhammad Ajmal Khan, Omer Wahab and Azeem Ullah Virk for Petitioner.

Mrs. Kausar Parveen, Advocate/Legal Advisor along with Muhammad Ayaz Nawaz, Deputy Commissioner, Inland Revenue Zone-V, RTO, Lahore for Respondents.

2025 P T D 1596

[Lahore High Court (Rawalpindi) Bench]

Before Jawad Hassan and Sardar Akbar Ali, JJ

PAKISTAN RAILWAY ADVISORY AND CONSULTANCY SERVICES

Versus

ASSISTANT COMMISSIONER and others

I.T.R. No.54 of 2025, decided on 25th June, 2025.

Income Tax Ordinance (XLIX of 2001)---

----Ss. 133, 134A(2), 134A(11) & 134A(5), second proviso---State-Owned Enterprise (SOE) aggrieved of an order passed by Commissioner-Appeals---Appellate remedies, availing of---Whether an appeal before the Appellate Tribunal, or a Reference before the High Court---Held: Reference Application was filed by Pakistan Railways Advisory and Consultancy Services, a State-Owned Enterprise (SOE), as Appellate Tribunal Inland Revenue ('the Appellate Tribunal') proceeded to dispose of appeals of the applicant/SOE, against the order passed by Commissioner-Appeals, being not maintainable---Validity--- Second proviso to subsection (2) of S. 134A ('the proviso-under-examination') of the Income Tax Ordinance ('the Ordinance 2001') explicitly recognizes the right of a SOE to avail appellate remedies in appropriate forums; it stipulates that the SOE is legally competent to file an appeal before the Appellate Tribunal, or to file a reference before the High Court, or to submit a petition for leave to appeal before the Supreme Court of Pakistan, as the circumstances may warrant, however, said right is specifically exercisable in situations where subsection (11) of S. 134 of the Ordinance, 2001 is attracted--- In other words, the appellate remedies provided in the proviso-under-examination are contingent upon the applicability of subsection (11) of S. 134A of the Ordinance 2001, which is the triggering provision that confers the jurisdictional foundation for such proceedings---The phrase "as the case may be" signifies that the remedy to be pursued by the SOE depends upon the forum appropriate to the stage and nature of the dispute and the selection of the appellate forum must be in strict accordance with the statutory hierarchy and remedies provided under the law---In short, the proviso-under-examination safeguards the right of appeal subject to the condition that the case falls within the ambit of subsection (11) of S. 134A of the Ordinance 2001, thereby ensuring that such proceedings are not initiated arbitrarily but in accordance with the statutory framework---Legislative scheme, as reflected from a conjoint reading of the proviso-under-examination and subsection (11) of S. 134 of the Ordinance, 2001, envisages a structured dispute resolution mechanism with a defined timeline and mandates that where the Committee, constituted under subsection (5) of S. 134A of the Ordinance, 2001, fails to render its decision within a statutory period of sixty (60) days, the Federal Board of Revenue ('Board') is duty-bound to dissolve the Committee through a written order---Upon such dissolution, the authority to adjudicate the dispute is transferred to the court of law or the relevant appellate forum where the matter is already pending or subsequently pursued under litigation---The proviso-under-examination further supplements said procedure by safeguarding the appellate rights of a SOE; it provides that in cases where said subsection (11) applies, that is, where the Committee stands dissolved due to inaction, the SOE retains an unequivocal right to file an appeal before the Appellate Tribunal, or to submit a reference to the High Court, or to file a petition for leave to appeal before the Supreme Court, as may be appropriate to the stage of the proceedings---The expression "as the case may be" indicates that the choice of the appellate forum must strictly correspond with the statutory stage of the case and the forum designated by the applicable procedural laws---When a statute or procedural framework prescribes a sequence of remedies, the parties are bound to exhaust such remedies in the order in which they are provided---The scheme of the law does not permit a party to bypass the statutory sequence or to approach a higher forum without first availing the remedy before the subordinate or initial forum---The proviso-under-examination evidently prescribes a sequence by first approaching the Appellate Tribunal, then to the High Court in a tax reference in terms of S. 133 of the Ordinance 2001 and then to the Supreme Court where subsection (11) of S. 134A of is applicable---In the present case, admittedly, the Committee, appointed under subsection (5) of S. 134A of the Ordinance, 2001, had failed to decide the matter within prescribed time, thus, the proviso-under-examination (i.e. second proviso to subsection (2) of S. 134A of the Ordinance, 2001) was squarely applicable as the applicant/SEO challenged the order of the Commissioner-Appeals before the Appellate Tribunal which was the next higher forum for deciding the issue keeping in view the sequence of hierarchy and procedure applicable in terms of the proviso-under-examination---Thus, the appeals of the applicant / SEO before the Appellate Tribunal were maintainable---High Court set- aside the impugned order passed by Appellate Tribunal; as a sequel, the appeal preferred by the applicant / SEO would be deemed to be pending before the Appellate Tribunal, which would decide the same afresh---Reference Application, filed by State-Owned Enterprise, was allowed accordingly.

Messrs National Logistics Cell v. Assistant/Deputy Commissioner and others 2025 PTD 614 ref.

Agha Mujeeb Ahmed Khan for Applicant.

2025 P T D 23

[Peshawar High Court]

Before Abdul Shakoor and Syed Arshad Ali, JJ

COMMISSIONER INLAND REVENUE, CORPORATE ZONE, PESHAWAR

Versus

Messrs WASIM SHARIF INDUSTRIES (PVT.) LTD.

T.R. No.29-P of 2022, decided on 12th September, 2023.

(a) Interpretation of statutes---

----Fiscal laws---Charging of tax---Principle---No tax can be levied against a person beyond the scope of a charging section and it has to be construed and applied strictly---Before taxing any person, it must be shown that he falls within the ambit of charging section by clear words used therein---If a case does not fall within the four corners of the charging section, no tax can be imposed by inference, analogy, or by trying to probe into intention of the Legislature.

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

----Ss. 3, 7, 34A & Second Sched.---Sales Tax Act (VII of 1990), S.7---Reference---Federal Excise Duty, levy of---Ghee and Cooking oil---Authorities were aggrieved of order passed by Appellate Tribunal Inland Revenue setting aside show cause notice issued to respondents / taxpayers to recover Federal Excise Duty---Validity---Levy and collection of Federal Excise Duty on Ghee and Oil sector placed in Second Schedule to Federal Excise Act, 2005, were recoverable in the manner and mode as provided under Sales Tax Act, 1990---Intention of law maker by inserting S.7 in Federal Excise Act, 2005 where input adjustment had already been provided was aimed to allow to assessee all adjustment even admissible to it under the regime provided under Sales Tax Act, 1990, including input adjustment of sales tax on all purchases made by a registered person during taxable/economic activities---Through S.7 to Federal Excise Act, 2005 by reference the beneficial regime of input adjustment as provided under S.7 of Sales Tax Act, 1990 was borrowed which was also a machinery provision relating to adjustment of input tax---Findings of both the forum relating to liability of respondents to pay Federal Excise Duty were not based on correct principles as stated above---Assessing officer passed order of assessment ignoring essential legal and factual aspects of the case whereas Appellate Tribunal Inland Revenue straightaway annulled assessment order ignoring the fact that during period in question, respondents/taxpayers were subject to impost of Federal Excise Duty---High Court set aside order passed by Appellate Tribunal Inland Revenue as well as assessment in question and remanded the matter to assessing officer for assessment afresh---Reference was disposed of accordingly.

Messrs Taj Vegetable Oil Processing Unit, Skhako Dargai, Malakand Agency v. The Government of Pakistan through Federal Secretary Finance and Revenue Division, Islamabad and others (Writ Petition No. 4495-P/2017 decided on 10.03.2020); Commissioner of Wealth tax v. Sharwan Kumar Swarup & Sons 1995 ECR 425 SC; W.H. Cockerline & Company v. The Commissioner of Inland Revenue (16) TC 1 at 19, Halsbury's Law of England (Fourth Edn. Vol. 23, Para 29); Understanding Statutes, Canons of Construction first edition by S.M. Zafar and Nagpur Improvement Trust v. Amrik Singh and others AIR 2002 SC 3499 ref.

Rahmanullah and Sharif Ullah, Assistant Director (Legal) for Petitioner.

Shumail Ahmad Butt, Qazi Shehzad Iqbal, Saad Ali Qazi and Ms. Khoshnuma for Respondents.

2025 P T D 301

[Peshawar High Court]

Before Syed Arshad Ali and Dr. Khurshid Iqbal, JJ

Messrs IMTIAZ TEXTILE BARA, DISTRICT KHYBER and others

Versus

The FEDERATION OF PAKISTAN through Federal Secretary, Finance and Revenue Division, Islamabad and others

Writ Petitions Nos. 3433-P, 3394-P, 3431-P, 3445-P, 3464-P, 3469-P, 3470-P and 3475-P of 2024, decided on 12th July, 2024.

(a) Tax---

----Taxing statute---Interpretation---In any taxing statute, there are three stages; firstly, the imposition or creation of the very tax or levy known as the 'charge'; the provision which deals with the latter is called the charging section---Secondly, the quantification of the tax of levy which is called 'assessment' and thirdly, the recovery of the levy or tax is called collection---Latter two are the machinery provisions, which are contained in the machinery sections of the statute.

M.Y. Electronic Industries (Pvt.) Ltd. v. Government of Pakistan 1998 SCMR 1404 ref.

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

----Sixth Schedule, Entry No. 151, first proviso [as amended vide Finance Act, 2024]---Amendment in law---Applicable retrospectively---Goods imported by registered persons having business activities in erstwhile FATA ('importers')---Post-dated cheque as a security instrument provided by importers---Post-dated cheque as a security instrument substituted by the pay-order vide amendment---Whether the goods which were already imported by the petitioners before the said amendment, and said goods had reached territorial water of Pakistan would be subject to the new mechanism /amendment i.e. the petitioners would be required to provide pay order instead of post-dated cheque for release of the said goods or the said goods would be released on payment of post-dated cheque?---Held, that Finance Act, 2024 neither affects the charging section nor the machinery section of the Sales Tax Act, 1990, however, it has only substantially changed the condition of the exemption prior to the Finance Act, 2024---One of the conditions in order to avail the said exemption is that against the imported goods the petitioners were required to provide the post-dated cheque as a security instrument which was substituted by the pay order---This substitution is indeed a temporary financial burden upon the importers---Finance Act, 2024, does not give any impression that it applies to any transaction which has taken place prior to 1st July, 2024---However, whether the goods of any of the petitioners has been manifested or otherwise, or the goods have reached the territorial water of Pakistan before 1st July, 2024, cannot be determined by the High Court ; so the matter is left to the respective Collectorate of the respondents to determine the same---Thus, High Court held / declared that the amendment made in Entry No. 151 through Finance Act, 2024, would not be applicable to those imports of the petitioners whereby they had imported their input/goods which had reached the territorial water of Pakistan/the goods were manifested prior to 1st July, 2024---Constitutional petitions were allowed accordingly.

Al-Samrez Enterprise v. The Federation of Pakistan 1986 SCMR 1917 ref.

(c) Interpretation of statutes---

----Amendment in law---Applicable retrospectively---Scope---General presumption is that a statute does not have retrospective effect---Legislation should not be treated as changing the substantive law in relation to events taking place prior to legislation coming into force unless such a construction is expressly or by necessary implication required by the language of the Act---No statute shall be construed so as to have a retrospective operation unless its language is such plainly to require such construction.

Wainwright v. Home Office [2002] QB 1334, 1345F; Gustavson Drilling (1964) Ltd. v. Minister of National Revenue [1977] 1 SCR 271 and Collector of Central Excise and Land Customs and 3 others v. Azizuddin Industries Ltd., Chittagong PLD 1970 SC 439 ref.

(d) Interpretation of statutes---

----Amendment in law---Applicable retrospectively---Although the Legislature can legislate prospectively and retrospectively, such power is subject to certain constitutional and judicially recognized restrictions---According to the canons of construction, every statute including amendatory statutes is prima facie prospective, based on the principle of nova constitutio futuris formam imponere debet, non praeteritis (which means 'a new law ought to regulate what is to follow, not the past'; unless it is given retrospective effect either expressly or by necessary implication---In other words, a statute is not to be applied retrospectively in the absence of express enactment or necessary intendment, especially where the statute is to affect vested rights, past and closed transactions or facts or events that have already occurred---This principle (s) is attracted to fiscal statutes which have to be construed strictly, for they tend to impose liability and are therefore burdensome (as opposed to beneficial legislation)---Furthermore, it is not only the wording/text of the statute which is to be considered in isolation; it has to be examined holistically by considering several factors such as, the dominant intention of the legislature which is to be gathered from the language used, the object indicated or the mischief meant to be cured, the nature of rights affected, and the circumstances under which the statute is passed.

Zila Council Jehlum through District Coordination Officer v. Messrs Pakistan Tobacco Company Ltd. and others PLD 2016 SC 398 and Member (Taxes) Board of Revenue Punjab, Lahore and others v. Qaisar Abbas and others 2019 SCMR 446 ref.

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

----S. 30---Sales Tax Act (VII of 1990), Sixth Schedule, Entry No. 151, first proviso [as amended vide Finance Act, 2024]---Amendment in law---Applicable retrospectively---Goods imported by registered persons having business activities in erstwhile FATA ('importers')---Post-dated cheque as a security instrument to be provided by importers---Post-dated cheque as, a security instrument substituted by pay-order vide amendment---Whether the goods which were already imported by the petitioners before the said amendment, and said goods had reached territorial water of Pakistan would be subject to the new mechanism /amendment and the petitioners would be required to provide pay order instead of post-dated cheque for release of the said goods or the said goods would be released on payment of post-dated cheque?---Plea of the respondents / department was that S. 30 of the Customs Act, 1969 envisages for determination of the rate of duty on the day when the goods declaration is manifested---Validity---Said assertion is out of context because the present cases do not deal with any change in the rate of duty---Rate of duty is always provided in the charging section and the impugned amendment has neither affected any charging or even machinery provision of the Sales Tax Act, 1990, therefore, S. 30 of the Customs Tax Act, 1969, even otherwise has no application to the present cases---However, whether the goods of any of the petitioners have been manifested or otherwise, or the goods have reached the territorial water of Pakistan before 1st July, 2024, cannot be determined by the High Court ; so the matter is left to the respective Collectorate of the respondents to determine the same---Thus, High Court held / declare that the amendment made in Entry No. 151 through Finance Act, 2024 would not be applicable to those imports of the petitioners whereby they had imported their input/goods which had reached the territorial water of Pakistan/the goods were manifested prior to 1st July, 2024---Constitutional petitions were allowed accordingly.

Shumail Ahmad Butt for Petitioners.

Rahat Ali Khan Nahaqi, Assistant Attorney General, Rehmanullah along with Sharifullah, Assistant Director (Legal) for Respondents.

2025 P T D 399

[Peshawar High Court]

Before Ijaz Anwar and Syed Arshad Ali, JJ

Messrs TAJ VEGETABLE OIL PROCESSING UNIT (PVT.) LTD. and others

Versus

FEDERATION OF PAKISTAN through Federal Secretary Finance and Revenue Division, Islamabad and others

Writ Petition No.3509-P of 2024 with C.M. No.1419-P of 2024, decided on 31st October, 2024.

Sales Tax Act (VII of 1990)---

----Ss. 3, 7 & Sixth Schedule, Entry No.151---Constitution of Pakistan, Arts. 23, 24 & 25---Business Operating in erstwhile trial areas---Exemption from sales tax---Sales tax regime, modification in---Condition of depositing payment order---Legality---Petitioners / companies were aggrieved of imposing condition of deposit of payment order as security against import of raw material to the value of amount of leviable duties and taxes---Validity---Imposition of condition, providing payment order at the time of clearance of goods for an amount equivalent to sales tax was negation of exemption, which was granted to petitioners / companies keeping in view their geographical locations as well as business activities---Petitioners/ companies, consuming raw materials imported through concessionary regime, were not liable to pay any tax---Petitioners / companies were not prohibited from selling their product outside erstwhile tribal area on payment of sales tax---Such activities were subject to assessment regime, as provided under Sales Tax Act, 1990---Condition of payment order, equal to amount of sales tax at the time of import would revert the exemption into payment of sales tax regime as provided under S. 3 of Sales Tax Act, 1990 and its adjustment as provided under S. 7 of Sales Tax Act, 1990 with the slight modification that, instead of input tax (in cash), the form would be changed to payment order---High Court declared that demand of payment order from business community belonging to erstwhile tribal areas was unreasonable condition depriving them to utilize their money for business activities which otherwise would also offend mandate of Arts. 23 & 24 of the Constitution---High Court further declared that amendment in Entry No. 151 of Sixth Schedule to Sales Tax Act, 1990 did not qualify test of reasonableness, as it was discriminatory and ultra vires the mandates of Arts. 18, 23, 24 & 25 of the Constitution---High Court in exercise of Constitutional jurisdiction struck down amendment in question and allowed petitioners to import raw material and machinery etc. against providing postdated cheques equal to the amount of sales tax---High Court directed the authorities to return instruments of payment orders already deposited with them against postdated cheques provided by petitioners---Constitutional petition was allowed accordingly.

Messrs Taj Packages Company (Pvt.) Ltd. through Manager v. The Government of Pakistan through Federal Secretary Finance and Revenue Division and 6 others 2016 PTD 203; Pakistan through Chairman, FBR and others v. Hazrat Hussain 2018 SCMR 939; Commissioner Income Tax, Peshawar v. M/s. Gul Cooking Oil and Vegetable Ghee (Pvt.) Ltd. 2008 PTD 169; Whitney v. IR Commissioners (1926) 10 TC 88; The Commissioner, Inland Revenue, Karachi v. Messrs Attock Cement Pakistan Limited, Karachi 2023 SCMR 279; H.M. Extraction Ghee and Oil Industries (Pvt.) Ltd. and another v. Federal Board of Revenue and another 2019 SCMR 1081; Prag Ice Mills v. Union of India AIR 1978 SC 1296 and Mohammad Imran v. Province of Sindh 2019 SCMR 1753 ref.

Issac Ali Qazi for Petitioners.

Sanaullah, DAG, Barrister Sarwar Muzaffar Shah, Ishtiaq Ahmad (Junior), Hassan Naeem Saber, Ehtisham-ud-Din, Hafiz Ahsaan Ahmad Khokhar, Aimal Khan Barkandi along with Sharifullah, Assistant Director (Legal) for Respondents.

2025 P T D 433

[Peshawar High Court]

Before Syed Arshad Ali, J

Messrs NORTHERN BOTTLING COMPANY (PVT.) LTD.

Versus

The APPELLATE TRIBUNAL INLAND REVENUE, PESHAWAR and others

Sales Tax Reference No.22-P of 2023, decided on 10th March, 2023.

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

----S. 3---Federal Excise Duty---Scope---Such duty is an indirect tax, incident whereof is to be passed on to the consumer.

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

----S.34-A & First Schedule, Table-I, Serial No. 5---Khyber Pakhtunkhwa General Clauses Act (VI of 1956), S.24---Notification CEGO No. 4 of 2002 dated 15-06-2002---Reference---Taxable supply---Vires of CEGO notification---Raw material of soft drinks---Taxpayer company was aggrieved of demand raised by authorities declaring sale of soft drink through machine as taxable---Validity---Subject matter was specified 'excisable goods' and 'excisable services' as provided in First Schedule to Federal Excise Act, 2005---Taxing event was when 'excisable goods' were produced or manufactured or when 'excisable services' were provided or rendered; the person liable to pay tax was who produced or manufactured 'excisable goods' or the one who provided or rendered 'excisable services'---Extent of liability that was the rate of excise duty was specified in First Schedule to Federal Excise Act, 2005---It was only when the first two essential conditions were fulfilled that the excise duty at the rate specified under Federal Excise Act, 2005 would be chargeable to the person who manufactured 'excisable goods' or the person who provided 'excisable services'---Two different rates of duties were provided under law relating to payment of excise duty on sale of concentrate vis-a-vis aerated water containing added sugar or other sweetening matters of flavoreds in First Schedule to Federal Excise Act, 2005---Keeping in view the two different rates, Federal Board of Revenue in its own wisdom had allowed bottling factories to pay excise duties as per the rates applicable to concentrate or avail the second option---There was no inconsistency in the scheme procedure and mechanism of levying duties on concentrated vis-a-vis aerated water---Provisions of notification CEGO No. 4 of 2002 dated 15-06-2002 were alive under the mandate of S. 24 of Khyber Pakhtunkhwa General Clauses Act, 1956 and were enforceable on repeal of Central Excise Act, 1944, through re-enacted Federal Excise Act, 2005 and would continue so unless it was rescinded or recalled by appropriate and competent forum under the scheme of re-enacted Federal Excise Act, 2005---Reference was answered in affirmative, in circumstances.

Messrs Pakistan WAPDA Foundation v. The Collector of Custom, Sales Tax Lahore and others 2023 SCMR 79 rel.

Barriter Hassaan Akhtar and Ishtiaq Ahmed (Sr.) for Petitioners.

2025 P T D 556

[Peshawar High Court]

Before Abdul Shakoor and Syed Arshad Ali, JJ

Messrs RED CO. ENTERPRISES

Versus

DEPUTY COMMISSIONER INLAND REVENUE and another

Sales Tax Reference No.93-P of 2022, decided on 18th October, 2023.

(a) Interpretation of statutes---

----Fiscal laws---Charging provision---Interpretation---Tax can be levied only under the authority of law through an express charging provision---There is no concept of enlarging scope of charging section on the basis of ambiguous and presumptive mechanism which the scheme of law imposing tax has not provided.

The Commissioner, Inland Revenue, Karachi v. Messrs Attock Cement Pakistan Limited, Karachi 2023 SCMR 279; Chairman, Federal Board of Revenue, Islamabad v. Messrs Al-Technique Corporation of Pakistan Ltd., and others PLD 2017 SC 99 and Commissioner Inland Revenue, Gujranwala v. S.K. Steel Casting, Gunjranwala 2019 PTD 1493 rel.

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

----Ss. 3, 22, 25 & 47---Sale tax, charging of---Reliance on income tax returns---Scope---Petitioner / registered person was aggrieved of charging of sales tax on the basis of tax returns filed before income tax authorities---Validity---Comprehensive machinery for determination of the tax liability of a registered person has been provided, which may include audit of its/his account/record in terms of S. 25 read with S. 22 of Sales Tax Act, 1990---Authorities under Sales Tax Act, 1990 may requisition record of income tax---If any discrepancy is found between income tax record and sales tax record maintained under two different regimes, then it is lawful for authorities under Sales Tax Act, 1990 to conduct audit of record maintained by registered person under S. 22 of Sales Tax Act, 1990---In certain cases authorities may under integrated system consult record of person with whom registered person has business relations---In the present case Assessing Officer while determining tax liability of petitioner entirely board its findings on the information relating to turnover of the petitioner in the income tax return, therefore, it was not lawful for Assessing Officer to have determined liability of petitioner/registered person under Sales Tax Act, 1990 on the basis of information received from income tax department/income tax returns---High Court set aside orders of fora below as very foundation of assessment was based on alien consideration and edifice built upon had to crumble---Tax reference was answered in positive.

Haji Sultan Ahmed v. Chairman, Central Board of Revenue, Islamabad and 5 others 2008 PTD 103; Messrs Al-Hilal Motors Stores and others v. The Collector, Sales Tax and Central Excise (East) Karachi and others 2004 PTD 868 and Muhammad Siddique and others v. Deputy Collector Excise and Taxation, Sales Tax Officer, Mirpur and others 1990 PTD 1088 rel.

Ishtiaq Ahmed (Senior) for Petitioner.

Ms. Nazish Muzaffar for Respondent.

2025 P T D 596

[Peshawar High Court]

Before Abdul Shakoor and Syed Arshad Ali, JJ

COLLECTOR OF CUSTOMS, MODEL CUSTOMS COLLECTORATE, PESHAWAR

Versus

Messrs DEANS INDUSTRIES, INDUSTRIAL ESTATE, PESHAWAR

Customs Reference No.40-P of 2018, decided on 6th June, 2023.

Customs Act (IV of 1969)---

----Ss.32(2)(2A), 156(1)(14) & 179(3)---Adjudicating Authority deciding a matter---Timeline provided under S. 179 of the Customs Act, 1969, non-observance of---Order-in-original to deposit the short payment of duty/taxes was set-aside by the Customs Tribunal allowing appeal preferred by the respondent---Validity---Record /Order sheet reveals that after issuance of Show-Cause Notice the case was heard on ten dates of hearing spanning seven months , and the judgment was announced after more than two and half months of last date of hearing---Adjudicating Officer had unnecessarily prolonged the matter without obtaining the requisite approval from the competent authority for extension in time, therefore, it is evident that the proceedings could not be completed within the timeline as provided under S. 179(3) of the Customs Act, 1969---Thus, the order-in-original was passed in violation of law i.e. beyond the time prescribed under S. 179 of the Act, hence, the impugned decision passed by adjudicating officer is invalid, therefore, the findings of the Customs Tribunal do not call for any interference---Resultantly, the proposed question is answered in negative i.e. against the applicant / Collectorate---Special Custom Reference, filed by Collectorate, was dismissed, in circumstances.

Messrs Mujahid Soap and Chemical Industries (Pvt.) Ltd. v. Customs Appellate Tribunal, Bench-I, Islamabad and others 2019 SCMR 1735 ref.

Abdur Rauf Rohaila for Petitioner.

Qazi Danish Ali for Respondent.

2025 P T D 650

[Peshawar High Court]

Before Syed Arshad Ali and Syed Mudasser Ameer, JJ

COMMISSIONER OF INLAND REVENUE, REGIONAL TAX OFFICE, PESHAWAR

Versus

Messrs SWAT CERAMICS COMPANY (PVT.) LTD., SHAIDU NOWSHERA

Tax Reference No.22-P of 2013, decided on 4th February, 2025.

Income Tax Ordinance (XLIX of 2001)---

----Ss.153(1) & 153(1)(c)---Payment of club membership fee---Deduction of tax---Section 153 of the Income Tax Ordinance, 2001, applicability of---Doctrine of mutuality---Department proceeded against the taxpayer /company for its failure to deduct tax from an amount paid to Defence Housing Authority Country and Golf Club ('the DHA Club') as membership fee on the ground that such payment falls within the ambit of S. 153(1)(c) of the Ordinance, 2001, being a payment made for/against services---Stance of the taxpayer was that since the nature of the payment of fee paid on account of acquiring the DHA Club membership does not fall under any category of payment specified in S. 153(1) of the Ordinance, 2001, therefore, it is not required to deduct any tax---Department filed reference against the order of Appellate Tribunal Inland Revenue passed in favour of taxpayer---Validity---Under the doctrine of mutuality no one can make profit out of oneself ;the accrual to member's club from amounts received from its members in respect of providing activities / service cannot be considered to be income as profit of the Club, and its members are exempt from ambit of tax---Thus, the decision of the Inland Revenue Appellate Tribunal was correct and the proposed questions of law were answered in the negative i.e. against the applicant / Department---Reference Application, filed by the department, was dismissed.

Karachi Golf Club (Pvt.) Ltd. v. Province of Sindh and others 2021 PTD 558 and Sindh Club v. CIT, South Zone Karachi 2021 PTD 658 ref.

Ghulam Shoib Jally for Appellant.

Issa Ali Qazi for Respondent.

2025 P T D 662

[Peshawar High Court]

Before Abdul Shakoor and Syed Arshad Ali, JJ

COMMISSIONER INLAND REVENUE CORPORATE ZONE, REGIONAL TAX OFFICE, PESHAWAR

Versus

Messrs AL-HAJ STEEL FOUNDARY, DISTRICT KHYBER

S.T.R. No.76-P of 2022, decided on 25th May, 2023.

Sales Tax Act (VII of 1990)---

----Ss. 21, 47 & Sixth Schedule, Entry No. 151---Sales Tax Rules, 2006, Chapter I, R. 12---Reference---Blacklisting---Object, purpose and scope---Authorities were aggrieved of order passed by Appellate Tribunal Inland Revenue setting aside order passed by respondent / registered person---Validity---Provision of S. 21(2) of Sales Tax Act, 1990 only envisages for deregistration of blacklisting and suspension of registration of a registered person only when the Commissioner is satisfied that a registered person is found to have issued fake invoice or has otherwise committed tax fraud---Commissioner may blacklist such a person or suspend his registration in accordance with the procedure as provided under R. 12 of Sales Tax Rules, 2006---None of these attributes were available in the present case to attract cancellation/suspension of registration as provided under S. 2l of Sales Tax Act, 1990---Action of Commissioner Inland Revenue prima-facie appeared to a be based on incorrect appreciation of law i.e. failure of respondents / registered persons to provide consumption certificate as required under Entry No.151 of Sixth Schedule to Sales Tax Act, 1990---High Court declined to interfere in order passed by Appellate Tribunal Inland Revenue as the order passed by Commissioner Inland Revenue was based on alien consideration and decision of the Tribunal was based on correct appreciation of law---High Court answered all questions in negative---Reference 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 and Pakistan through Chairman, FBR and others v. Hazrat Hussain 2018 SCMR 939 ref.

Barrister Qurat-ul-Ain along with Sharifullah, Assistant Director for Petitioner.

Mufariq Shah for Respondent.

2025 P T D 708

[Peshawar High Court]

Before Arshad Ali and Wiqar Ahmad, JJ

RAFI ULLAH and others

Versus

LIAQAT and others

C.P. Nos.6552-P, C.Rs. Nos. 1057-P of 2024, 830-P of 2011, 380-A of 2012, W.Ps. Nos. 1418-P of 2022 with IR; 2124-P of 2021 with IR; 272-B of 2024, Income Tax Reference No.86-P of 2024 and Criminal Appeal No.142-B of 2023, decided on 13th February, 2025.

Income Tax Ordinance (XLIX of 2001)---

----Ss. 126-A, 129 (4) & 133(1)---General Clauses Act (X of 1897), S.6---Forum of appeal---Pecuniary jurisdiction---Continuing operation of repealed law---Principle---Dispute was with regard to determination of forum of appeal regarding matters where value of assessment of tax or refund of tax did not exceed Rupees 20 million---Held: Principle of continuing operation of a repealed law can only be applied where Legislature does not give the amending Act retrospective effect---Where Legislature gives retrospective effect to provisions of amending Act by express words or necessary intendment, then principle enshrined in S.6 of General Clauses Act, 1897 does not apply and express intention of Legislature in new enactment has to be given effect---High Court declared that cases where value of tax or refund, as the case may be, was less than Rupees 20 million, appeal against order would lie to Commissioner Appeals, and in cases exceeding such amount, appeal would lie to Appellate Tribunal Inland Revenue, if the order had been communicated to affected parties after the date of commencement of Finance Act, 2024---High Court further declared that appeals having assessment value of tax, or refund of tax, as the case may be, pending before Commissioner appeals on 31-12-2024, stood transferred to Appellate Tribunal Inland Revenue by operation of law and were supposed to be decided by the Tribunal; that appeals having value of Rupees 20 million or less and pending before Appellate Tribunal Inland Revenue on or before 31-12-2024 would continue to be decided by Appellate Tribunal Inland Revenue; that reference against order of Commissioner Appeals filed on communication of the order after commencement of Tax Law (Amendment) Act, 2024 would be entertainable by High Court and would be decided in accordance with amended law; that all cases pending before High Court or sent back to Appellate Tribunal Inland Revenue would be dealt in accordance with the declaration made by High Court---High Court directed the parties to approach Appellate Tribunal Inland Revenue for seeking sending back of those tax references which had been filed before High Court after Tax Law (Amendment) Act, 2024 and were sent to Appellate Tribunal Inland Revenue for re-transfer to High Court in accordance with the declaration so made by High Court, and Appellate Tribunal Inland Revenue would be at liberty to send back the cases, despite the earlier directions of High Court in those cases---Reference was disposed of accordingly.

Manzoor Ali and 39 others v. United Bank Limited through President 2005 SCMR 1785 and Badshah Gul Wazir v. Government of Khyber Pakhtunkhwa through Chief Secretary and others 2015 SCMR 43 rel.

Ghulam Shoaib Jally for Petitioner.

2025 P T D 827

[Peshawar High Court]

Before Abdul Shakoor and Syed Arshad Ali, JJ

COMMISSIONER INLAND REVENUE (MARDAN ZONE), MARDAN

Versus

Messrs BASHER'S CNG FILLING STATION NOWSHERA and another

S.T.R. No.38-P of 2022, decided on 4th October, 2023.

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

----Ss.3, 3(8) & 3B----Sales Tax Special Procedure Rules, 2007, R.20---SRO 236(I)/2014 dated 31.03.2014---Sales tax from the CNG sector, charging of---Scope---Sui Northern Gas Pipelines Limited ('SNGPL'), responsibility of---Scope---Department filed reference as the Appellate Tribunal Inland Revenue set-aside concurrent impugned orders---Concurrent adverse orders were passed by the Department against the Respondent (CNG Filling Station ) on the observation that the Sui Northern Gas Pipelines Limited ('SNGPL') was charging sales tax at the rate more than actual rate of CNG in the Nowshera Region so short charging sales tax by SNGPL was recoverable from CNG stations---Validity---For collection of sales tax from CNG Sector, keeping in view provisions of Ss. 3 & 3(8) of the Sales Tax Act, 1990, as well as mechanism and guidelines provided under R. 20 of the Sales Tax Special Procedure Rules, 2007 and SRO 236(I)/2014 dated 31.03.2014 respectively, it could be said that the value of supply of the CNG consumer was linked to the " total value added cost " notified by the Oil and Gas Regulatory Authority (OGRA) from time to time and accordingly it was the responsibility of the SNGPL to charge sales tax from the CNG sector against the rates notified by the OGRA---Thus, the impugned order passed by the Tribunal, accepting the appeal of respondent (CNG Station), was according to law---Resultantly, the questions of law were answered against the Department /Applicant---Reference Application, filed by department, was dismissed, in circumstances.

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

----Ss.3 & 30---Sales tax, charging of---Scope---Officer---Jurisdiction---Department filed reference as the Appellate Tribunal Inland Revenue set-aside concurrent impugned orders---Concurrent adverse orders were passed by the Department against the Respondent (CNG Filling Station) on the observation that the Sui Northern Gas Pipelines Limited ('SNGPL') was charging sales tax at the rate more than actual rate of CNG in the Nowshera Region so short charging sales tax by SNGPL was recoverable from CNG stations---Validity---In the present case, the Assessing Officer had relied upon the information provided by the Director General Audit Inland Revenue Receipts ("DGAIRR") through its audit and had not undertaken any independent proceedings/audit and it had been settled that the DGAIRR did not fall within the categories of the officers as provided under S. 30 of the Sales Act, 1990---Since the DGAIRR did not fall within the categories of the officers as provided under S. 30 of the Sales Tax Act, 1990, therefore, on the basis of its audit report unless the revenue conducted an independent audit no assessment order could be passed--- Thus, the order of the Assessing Officer was not tenable on the said two premises---Impugned order passed by the Tribunal, accepting the appeal of respondent (CNG station), was according to law---Resultantly, the questions of law were answered against the Department/Applicant---Reference Application, filed by department, was dismissed, in circumstances.

Messrs Makk Beverages (Pvt.) Ltd.'s case 2010 PTD 1355 ref.

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

----Ss.3, 3(8) & 3B----Sales Tax Special Procedure Rules, 2007, R.20---SRO 236(I)/2014 dated 31.03.2014---Sales tax from the CNG Sector, charging of---Scope---Provision of S. 3B of the Sales Tax Act, 1990---Applicability---Department filed reference as the Appellate Tribunal Inland Revenue set-aside concurrent impugned orders---Concurrent adverse orders were passed by the Department against the Respondent (CNG Filling Station) on the observation that the Sui Northern Gas Pipelines Limited ('SNGPL') was charging of sales tax at the rate more than actual rate of CNG in the Nowshera Region so short charging sales tax by SNGPL was recoverable from CNG stations---Validity---Assessing Officer had invoked the provision of S. 3B of the Sales Tax Act, 1990, however, the said provision of law was not applicable to the present case as it had never been the case that the respondent had collected any tax from the consumer in excess of the actual payable---Therefore, the findings of the Assessing Officer on this score were also erroneous---Thus, the impugned order passed by the Tribunal, accepting the appeal of respondent (CNG station), was according to law---Resultantly, the questions of law were answered against the Department/Applicant---Reference Application, filed by department, was dismissed, in circumstances.

Ishtiaq Ahmad (Junior) for Petitioner.

Danish Ali Qazi for Respondents.

2025 P T D 883

[Peshawar High Court]

Before Ijaz Anwar and Syed Arshad Ali, JJ

COMMISSIONER OF INLAND REVENUE PESHAWAR ZONE, REGIONAL TAX OFFICE, PESHAWAR

Versus

MISS SHABNAM RIAZ

Tax Reference No.17-P of 2022, decided on 5th November, 2024.

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

----Ss. 218(1) & 218(2), clause (d) [as introduced through Finance Act, 2018]---Income Tax Rules, 2002, R. 74---Service of notice and other documents---Modes---Electronic Service of assessment order---Propriety---Electronic service for purpose of filing appeal against assessment order---Scope---Appellate Tribunal Inland Revenue ('Tribunal') concluded in favour of taxpayer that the electronic mode of service provided in S. 218(1)(d) of the Income Tax Ordinance, 2001 ('the Ordinance, 2001') was a secondary method of service and that the limitation period started only upon receiving an attested copy---Whether the service of assessment order upon the assessee in any of the modes under S. 218 of the Ordinance, 2001 could be treated as a proper service upon the assessee in respect of the period limitation for the purpose of appeal?---Held, that service on the individual electronically in the prescribed manner as in clause (d) in Ss. 218[1] & 218[2] was introduced through Finance Act, 2018---Notably, after sub-clause (c) in both [subsection (1) as well as subsection (2)] punctuation (;) and (or) were also inserted---For construction of S. 218 of the Ordinance, 2001, principles of statutory interpretation and effect of punctuation in the Statutes denotes that the word "or" was a disjunctive and it gaves an alternative impression, indicating independent alternatives that were sufficient in themselves, reflecting the legislative intent to treat each mode of service as valid and effective ; which was further reinforced by the punctuation used in S. 218, where semi-colons separate clauses (a), (b), and (c), while clause (d) was preceded by both a semi-colon and the word "or"---Thus, while drawing the distinction between these clauses, the Tribunal wrongly concluded that the electronic mode of service provided in S. 218(1)(d) was a secondary method of service---Punctuation may lend support to statutory interpretation but cannot override the clear legislative intent or the plain meaning of the text---Provisions of S. 218 of Ordinance, 2001 establish that service of orders/judgments via any mode, when completed in the prescribed manner, is sufficient service upon the taxpayer of the Ordinance 2001---Rule 74 of the Rules, 2002 complements this by deeming electronic service valid if confirmation receipt is obtained---The Tribunal recognized electronic service as sufficient, yet its stance (that the limitation period started only upon receiving an attested copy) created inconsistency---Such an approach could undermine the legislative intent of modernizing and streamlining service methods---The interpretation of the Tribunal failed to align with the legislative framework, as it overlooked the intent behind recognizing electronic service as an independent and efficient method, thereby causing unnecessary procedural delays contrary to the law's purpose---In the present case, the Appellate Tribunal Inland Revenue ('Tribunal') had erred in condoning the delay for filing the appeal, as it failed to adequately apply the statutory framework that clearly defined the commencement of the limitation period---By not strictly adhering to the service requirements stipulated under S. 218 of Ordinance, 2001, the Tribunal's decision undermined the legislative intent of ensuring timely appeals and introduced inconsistency in the procedural timeline, leading to unnecessary procedural leniency that was not supported by the provisions of the Ordinance, 2001---Thus, the proposed question was answered in affirmative ; consequently, High Court set-aside the impugned order passed by the Tribunal---Tax Reference Application, filed by Department , was allowed.

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

----Ss.127(5) & 218---Electronic service of assessment order---Propriety---Electronic service for purpose of filing appeal against assessment order---Scope---The language of the provisions of S.127(5) of Income Tax Ordinance, 2001 ('the Ordinance, 2001') explicitly defines the limitation period for filing an appeal, leaving no room for alternative interpretation due to the clarity of the statutory wording---Moreover, the use of the word "shall" following "appeal" conveys a mandatory obligation, requiring the aggrieved party to file the appeal within the prescribed statutory timeframe---Consequently, the appellant bears the burden of demonstrating valid and sufficient reasons to justify any request for condonation of delay, in line with established principles of statutory interpretation and procedural fairness---Therefore, the limitation period for filing an appeal against assessment order under S. 127(5) of the Ordinance 2001 begins from the date the assessee receives the assessment order through any of the prescribed modes of service---Said interpretation stems from the explicit language of S. 127(5)(a) of the Ordinance 2001, which ties the commencement of the limitation period to the "date of service of the notice of demand " for cases involving assessments or penalties, and in other cases, to the date on which the order to be appealed against is served---The repeated reference to "service" in both instances underscores that the limitation period hinges on the proper and timely service of the relevant documents, as governed by S. 218 of the Ordinance, 2001 , which details the modes and manner of service---In the present case, the Appellate Tribunal Inland Revenue ('Tribunal') had erred in condoning the delay for filing the appeal, as it failed to adequately apply the statutory framework that clearly defines the commencement of the limitation period---By not strictly adhering to the service requirements stipulated under S. 218 of Ordinance, 2001, the Tribunal's decision undermined the legislative intent of ensuring timely appeals and introduced inconsistency in the procedural timeline, leading to unnecessary procedural leniency that was not supported by the provisions of the Ordinance, 2001---Thus, the proposed question was answered in affirmative ; consequently , High Court set-aside the impugned order passed by the Tribunal---Tax Reference Application , filed by Department, was allowed.

Ghulam Shoaib Jally along with Siraj Muhammad, Assistant Commissioner-IR for Petitioner.

Ghulam Haroon for Respondents.

2025 P T D 914

[Peshawar High Court]

Before Abdul Shakoor and Syed Arshad Ali, JJ

Messrs M.K. STEEL MILLS

Versus

COLLECTOR OF CUSTOMS, MCC CUSTOMS HOUSE, PESHAWAR and others

Writ Petition No.2350-P of 2022, decided on 17th May, 2023.

Sales Tax Act (VII of 1990)---

----Ss. 2(37), 11, 37-A & Sixth Schedule, Entry No.151---Criminal proceedings---Tax fraud---Scope---Tax refund---Security instrument---Encashment---Petitioners / importers were aggrieved of registration of FIR against them by authorities for not providing consumption certificates in terms of Entry No. 151 in Sixth Schedule to Sales Tax Act, 1990---Validity---Prosecution can be launched under S. 37-A of Sales Tax Act, 1990 against taxpayer by competent authority who, on the basis of material evidence, has reasons to believe that taxpayer has committed tax fraud or any offence warranting prosecution under Sales Tax Act, 1990---Phrase "tax fraud" is defined under S. 2(37) of Sales Tax Act, 1990 which means that registered person with dishonest intention falsifies sales tax invoices to avoid payment of duties and taxes to make a false claim of refund---Petitioners / importers under concessionary regime did not provide consumption certificate and authorities were at liberty to retain security instrument i.e. post-dated cheque, which were enforceable only when liability of petitioners / importers, if any, had been determined under S. 11 of Sales Tax Act, 1990---Before determination of the liability, in view of dispensation, authorities had illegally and without lawful authority presented security cheques, which were provided by petitioners / importers in terms of Entry No.151 in Sixth Schedule to Sales Tax Act, 1990 for presentation to bank---Launching of criminal prosecution on the basis of dishonouring of security cheques was pre-mature and without lawful authority---Authorities acted in excess of their authority, therefore, registrations of FIRs, were not sustainable in the eyes of law---Letters/refusal to provide consumption certificates were annulled by Appellate Tribunal Inland Revenue in many other cases---High Court quashed the FIRs registered against petitioners / importers, however authorities were at liberty to conduct audit of petitioners / importers in terms of S. 25 of Sales Tax Act, 1990---High Court directed the authorities that if any discrepancy was pointed out relating to sale of goods in tariff area, the matter could be adjudicated against petitioners / importers under S. 11 of Sales Tax Act, 1990 and relevant provisions of Income Tax Ordinance, 2001---Constitutional petition was allowed accordingly.

Shahnaz Begum v. Hon'ble Judge of the High Court of Sindh and Baluchistan PLD 1971 SC 677; Anwar Ahmad Khan v. The State 1996 SCMR 24; Raja Rustam Ali Khan v. Muhammad Hanif 1997 SCMR 2008; Choudhary Shah Muhammad, Inspector v. Mst. Ramzan Bibi 1998 SCMR 2415; Akhlaq Hussain Kayani v. Zafar Iqbal Kiyani and others 2010 SCMR 1835; Muhammad Akbar v. State PLD 1968 SC 281; Messrs Taj Packages Company (Pvt.) Ltd. through Manager v. The Government of Pakistan through Federal Secretary Finance and Revenue Division and 6 others 2016 PTD 203; Pakistan through Chairman, FBR and others v. Hanat Hussain 2018 SCMR 939; Taj Packages Company (Pvt.) Ltd. and others v. Federal Board of Revenue and others 2014 PTD 1807 and Ghulam Sarwar Zardari v. Piyar Ali alias Piraro and another 2010 SCMR 624 rel.

Issac Ali Qazi, Mufariq Shah and Abdur Rahim Jadoon for Petitioners.

Sanaullah D.A.G., Abbas Bakhtiar, Ishtiaq Ahmad (Junior), Neelam A. Khan and Sabahat Ali Bukhari for Respondents.

2025 P T D 945

[Peshawar High Court]

Before Shakeel Ahmad and Syed Arshad Ali, JJ

Dr. SHAH ALAM KHAN, PROFESSOR AND CHAIRMAN DEPARTMENT OF PLANT PROTECTION/PRESIDENT AGRICULTURAL UNIVERSITY TEACHER ASSOCIATION, UNIVERSITY OF AGRICULTURE PESHAWAR and another

Versus

VICE-CHANCELLOR UNIVERSITY OF AGRICULTURE PESHAWAR and others

Writ Petition No.87-P/2022 with IR with COC No.518-P/2022, decided on 29th January, 2024.

Khyber Pakhtunkhwa Universities Act (X of 2012)---

----Ss.2 (n), 2(y) & 8---Income Tax Ordinance (XLIX of 2001), Second Schedule, Part-III, Clause (2)---Tax rebate, recovery of---Teacher and officer---Petitioners were full time faculty members, who had been availing tax rebate under Clause (2) in Part-III of Second Schedule to Income Tax Ordinance, 2001, applicable to full time teachers---Grievance of petitioners was that university authorities in view of letters issued by University Syndicate had asked for recovery of such tax rebate---Validity---Faculty of Khyber Pakhtunkhwa University were being assigned administrative post and as a result of such statutory dispensation, their academic and research work had never been compromised---Federal Board of Revenue wrongly held that petitioners while working against additional administrative post were not entitled to income tax rebate---Tax laws are to be construed strictly and any ambiguity is to be interpreted in favour of taxpayer---Neither finding of Public Accounts Committee (PAC) nor decision of Syndicate directing for recovery of amount which petitioners had received as a tax rebate were in accordance with law---University administration failed to pursue their legal remedy before the hierarchy established under Income Tax Ordinance, 2001 whereby amount was illegally withdrawn by Federal Board of Revenue from the account of University---High Court in exercise of Constitutional jurisdiction declared letters in question as without lawful authority and any amount so deducted from petitioners pursuant to letters in question was to be refunded to them---Constitutional petition was allowed, in circumstances.

Messrs Rajby Industries Karachi and others v. Federation of Pakistan and others 2023 SCMR 1407 rel.

Syed Aziz-ud-Din Kakakhel for Petitioners.

Rahat Ali Khan Nahqi, Assistant Attorney General and Muhammad Zafar Khan Tahirkheli for Respondents.

2025 P T D 1078

[Peshawar High Court]

Before Ijaz Anwar and Syed Arshad Ali, JJ

COLLECTOR OF CUSTOMS, PESHAWAR

Versus

Syed AFTAB-UL-HASSAN

Custom Reference No.59-P of 2019, decided on 21st August, 2024.

Customs Act (IV of 1969)---

----S. 196---Sales Tax Act (VII of 1990), Ss. 33 & 34---Reference---Maintainability---Necessary party---Signatures on Reference---Principle---Penalty imposed by authorities was set aside by Customs Appellate Tribunal on the ground that raw material after conversion into finished goods had already been exported---Respondent / taxpayer assailed the Reference on the plea that liability was against Company whereas Reference was filed against director of Company---Respondent / taxpayer also raised objection against Reference which was not even signed by Collector Customs---Validity---Vakalatnama available on record clearly suggested that the Reference was filed on the instruction of Collector Customs by the counsel representing the Department, however, it was only signed by the counsel but at belated stage---Even if the Collector had failed to sign memo. of Reference but had consented to filing of Reference the same would be in accordance with law provided the counsel representing Department not only had signed the Reference in time but had presented the same before Court within the time stipulated by the law---Appeal was filed by the director and not by the Company, therefore, the company was not a necessary party as the matter only related to adjudication of certain questions of law which arose out of the judgment of Customs Appellate Tribunal---High Court overruled the objection raised by respondent / taxpayer---High Court declined to interfere in the judgment passed by Customs Appellate Tribunal as the Reference filed by authorities was barred by limitation---Reference was dismissed, in circumstances.

PLD 2020 SC 736; PLD 2010 Lah. 666; KPRA v. Legacy Pharmaceutical (Pvt.) Limited, Peshawar 2023 PTD 56; CIR, Faisalabad v. Engineers Associated Precast (Pvt.) Ltd. 2023 PTD 393 and The Director of Customs Valuation v. Hanna Dairies 2023 PTD 68 ref.

The Collector of Customs v. Dream Garments 2021 PTD 1042 distinguished.

Director, Directorate-General of Intelligence and Investigation v. Messrs Al-Faiz Industries (Pvt.) Limited 2006 SCMR 129 rel.

Mukhtar Ahmad Maneri for Petitioner.

Barrister Syed Mudassir Ameer for Respondent.

2025 P T D 1113

[Peshawar High Court]

Before Syed Arshad Ali and Syed Mudasser Ameer, JJ

DIRECTOR GENERAL KHYBER PAKHTUNKHWA REVENUE AUTHORITY, PESHAWAR

Versus

Messrs BEE LINE, PESHAWAR

Sales Tax References Nos.95-P to 102 of 2022, decided on 6th February, 2025.

(a) Limitation---

----Fiscal laws---Principle of limitation is a crucial component of tax law, designed to ensure certainty, finality, and procedural discipline in legal proceedings---Limitation prescribes statutory time frame within which legal actions, including tax assessments and recovery proceedings must be initiated---Primary objective of limitation laws is to prevent undue delay, eliminate uncertainty and protect taxpayers from indefinite exposure to liability---Principle of limitation in tax law serves as a critical safeguard against arbitrary and indefinite proceedings, ensuring procedural fairness and adherence to statutory mandates---Interpretation of limitation provisions depends on legislative intent and statutory language---Where tax statutes prescribe a definitive time frame using prohibitive or restrictive language, such provisions are deemed mandatory, rendering any action beyond the prescribed period invalid---Such approach prevents tax authorities from exercising unfettered discretion in initiating or concluding proceedings outside the statutory framework.

(b) Khyber Pakhtunkhwa Sales Tax on Services Act (XIX of 2022)---

----S. 71---Khyber Pakhtunkhwa Finance Act (XXI of 2013), Ss. 40 & 68---Reference---Tax and assessment---Limitation---Adjournment period---Time frame---Dispute was with regard to exclusion of period attributed to taxpayer by seeking adjournments---Validity---Statutory provisions governing exclusion of time due to adjournments sought by taxpayer, are enshrined in Ss. 40(4) & 68(5) of Khyber Pakhtunkhwa Finance Act, 2013---Both provisions share similar language in principle but a fundamental distinction exists: provision of S. 68(5) of Finance Act, 2013 explicitly imposes a maximum cap of thirty days on exclusion of time due to such adjournments, whereas provision of S.40(4) of Khyber Pakhtunkhwa Finance Act, 2013 does not prescribe any such limitation---Such distinction is pivotal in determining correct computation of limitation period in each case---Appellate Tribunal Khyber Pakhtunkhwa Revenue Authority, while interpreting provisions of Ss. 40 & 68 of Khyber Pakhtunkhwa Finance Act, 2013, failed to consider that Show Cause Notices issued to taxpayer stemmed from audit, which fell within the ambit of S.40 of Khyber Pakhtunkhwa Finance Act, 2013, rather than S.68 of Khyber Pakhtunkhwa Finance Act, 2013---By applying thirty-day cap on the exclusion of time due to adjournments obtained by taxpayers, the Tribunal had misinterpreted the law---Correct legal approach required the Tribunal to assess the matter under S.40 of Khyber Pakhtunkhwa Finance Act, 2013 wherein no such cap was prescribed, and the period consumed due to adjournments sought by taxpayers was to be excluded in its entirety---Reasoning of Appellate Tribunal Khyber Pakhtunkhwa Revenue Authority was flawed as it improperly applied statutory cap to S.40 of Khyber Pakhtunkhwa Finance Act, 2013 to adjudication that was only applicable under S.68 of Khyber Pakhtunkhwa Finance Act, 2013, thereby rendering its decision legally unsustainable---High Court remanded the matter to Appellate Tribunal Khyber Pakhtunkhwa Revenue Authority for reconsideration, as the assessment was made within the prescribed limitation period---High Court directed Appellate Tribunal Khyber Pakhtunkhwa Revenue Authority to re-evaluate the case while duly accounting for all relevant documentation in computing the limitation period in accordance with the applicable provisions of Khyber Pakhtunkhwa Finance Act, 2013, and where found to be in time, proceed to decide the cases on merit---Reference was allowed in circumstances.

Messrs Tri-Star Industries (Pvt.) Ltd. v. Trisa Burstenfabrik AG Triengen and another 2023 SCMR 1502 and Commissioner Inland Revenue, Zone-II, Regional Tax Office (RTO), Mayo Road, Rawalpindi and another v. Messrs Sarwaq Traders, Adamjee Road, Rawalpindi 2022 SCMR 1333 rel.

Barrister Atif Rahim Burki for Petitioner.

Imran Javed, Shahid Jan and Nadia Gul for Respondent.

2025 P T D 1249

[Peshawar High Court]

Before Ijaz Anwar and Syed Arshad Ali, JJ

Dr. MUSA KALIM, ASSOCIATE PROFESSOR PEDIATRICS LADY READING HOSPITAL-MTI, PESHAWAR

Versus

GOVERNMENT OF KHYBER PAKHTUNKHWA through Chief Secretary Civil Secretariat, Peshawar and others

Writ Petition No.72-P of 2021 with IR, decided on 20th November, 2024.

(a) Interpretation of statutes---

----Fiscal taxation laws---Authority seeking to impose a tax must first establish that the individual is liable to taxation through clear language of the statute.

Muhammad Uneeb Ahmed v. Federation of Pakistan through Secretary, Ministry of Science and Technology, Islamabad and others 2019 MLD 1347; Mir Shabbir Ali Khan Bijarini and 3 others v. Federation of Pakistan and others PLD 2018 Sindh 603; National Electric Power Regulatory Authority v. Faisalabad Electric Supply Company Limited 2016 SCMR 550; Sunbiz Private Limited (7 News TV Pakistan) through Abbas Ali Khan v. Federation of Pakistan through Secretary Ministry of Information and 3 others 2018 YLR 1785; Ahmad Mehmood v. Government of Punjab through Chief Secretary and others PLD 2019 Lah. 206; Whitney v. IR Commissioners (1926) 10 TC 88 and H.M. Extraction Ghee and Oil Industries (Pvt.) Ltd. and another v. Federal Board of Revenue and another 2019 SCMR 1081 rel.

(b) Khyber Pakhtunkhwa Professions, Trades and Callings Tax Rules, 1991---

----R.10---Khyber Pakhtunkhwa Medical Teaching Institutions Reforms Act (IV of 2015), S. 3---Professional tax---Deduction at source---Quantum of tax---Petitioners were aggrieved of deduction / withholding of professional tax directly from their salaries and had also assailed quantum of the tax so deducted---Validity---Professional tax is not tax on income but a tax on profession---Wisdom of Legislation quantifying tax cannot be substituted by High Court, which is otherwise not confiscatory---Two different modes were provided under R. 10 of Khyber Pakhtunkhwa Professions, Trades and Callings Tax Rules, 1991, for deduction / withholding of advanced tax; one from civil servant and the other from the person who were in employment of companies or statutory bodies---One petitioner was an employee of Khyber Pakhtunkhwa Medical Teaching Institutions, whereas the other two were civil servants---Petitioners were liable to impost of professional tax and the same had been rightly recovered from their salaries in the manner as provided under Khyber Pakhtunkhwa Professions, Trades and Callings Tax Rules, 1991---Constitutional petition was allowed accordingly.

Province of Punjab through Secretary, Excise and Taxation. Government of Punjab and others v. Sargodha Textile Mills Ltd., Sargodha and others PLD 2005 SC 988; Pearl Continental Hotel and another v. Government of N.W.F.P. and others PLD 2010 SC 1004; Collector of Customs, Sales Tax and Central Now Federal Excise Quetta v. Messrs Haji Mehmood Essa Co. and another 2017 SCMR 884; Shahtaj Sugar Mills Ltd. and others v. Government of Pakistan through Secretary Finance and others 2024 SCMR 1656; Black's Law Dictionary (Ninth Edition), page 1329; Concise Oxford English Dictionary (Eleventh Revised Edition), page 1145; Black's Law Dictionary (Ninth Edition), page 1629; Concise Oxford English Dictionary (Eleventh Revised Edition), page 199 and Black's Law Dictionary (Eighth Edition), page 566 rel.

(c) Words and Phrases---

----Profession---Meaning.

Employees State Insurance Corporation cum Medical Officers Association v. Employees State Insurance Corporation and another AIR 2014 SC 1259 rel.

Qazi Jawad Ehsanullah for Petitioner.

Adnan Ali, A.A.G. along with Yasir Ali for Respondents.

2025 P T D 1424

[Peshawar High Court (Abbotabad Bench]

Before Muhammad Ijaz Khan and Muhammad Faheem Wali, JJ

COLLECTOR CUSTOMS and another

Versus

Messrs CHINIOT ENTERPRISES (PVT) LIMITED

Tax Reference No. 14-A of 2016, decided on 3rd April, 2024.

Federal Excise Act (VII of 2005)---

----S. 11---Customs Act (IV of 1969), Ss.19A & 33, 'proviso'---Excess paid Federal Excise Duty (FED)---Refund, claim for---Entitlement---Excess paid duty passing onto the consumer, incidence of---Effect---Refund of excess duty not admissible if incidence has passed on to consumer---Scope---Refund justified where the excess duty was not passed on to the consumer---Collector Customs challenged the decision of the Customs Appellate Tribunal, which had upheld the refund of 1% excess Federal Excise Duty (FED) to respondent---The respondent imported edible oil and was charged 17% FED during a period when the applicable rate was 16%---The collector had denied the refund, arguing the burden had been passed to the consumer---However, the respondent proved through sales records that product prices remained unchanged, hence the burden was not transferred---Validity---Only controversy between the parties was as to "whether the excess recovered FED was refundable to respondent or not?"---Held: Careful perusal of S. 11 of Federal Excise Act, 2005 (the Act, 2005) revealed that the refund claim for excess payable/paid duty was not admissible if the incidence of such excess paid duty had passed on to the consumer---The petitioners took the stance that under S. 19A of the Customs Act, 1969, it would be presumed that the incidence had been shifted to consumer---Presumption under S. 19A ibid only prevailed when the person paying duty had failed to prove that the incidence of excess paid duty was not passed on to buyer---In the present case, the situation was, however, different---The Collectorate of Customs (Appeals), Islamabad, during hearing of appeal, required the respondents to produce their Sales Tax Register for the month of relevant period wherein it was found that the sale price of the final product was not enhanced by them---Accordingly, it was rightly held by the Collectorate of Customs (Appeals) that the respondent had not passed on the excess paid duty to consumer---In the present case, there was no proof that the excess paid duty was passed on to the buyer, rather it was proved that the duty was recovered on raw material before manufacturing of final product and it was paid by the manufacturer himself and the rates were not enhanced as a consequence of payment of such excess duty---Secondly the proviso to S. 33 of the Customs Act, 1969 would become redundant when the refunds becomes due in consequence of any decision by the appropriate officer of Customs or Board, or the Appellate Tribunal or the Court---Refund in question became due upon order passed by the Collectorate of Customs (Appeals), Islamabad, as such benefit could not be claimed by the petitioners under Proviso to S. 33 of the Customs Act, 1969---Excess duty recovered by the petitioners from respondents was refundable because its burden was not passed on to intermediary or end consumer---Present tax reference was dismissed, in circumstances.

Collector of Customs Appraisement, Collectorate, Customs House Karachi v. Messrs Gul Rehman, Proprietor Messrs G.Kin Enterprises, Ghazali Street, Nasir Road, Sialkot 2017 SCMR 339 rel.

Syed Waqas Naqvi for Petitioners.

Hassan Idrees Mufti for Respondent.

2025 P T D 1465

[Peshawar High Court]

Before Abdul Shakoor and Syed Arshad Ali, JJ

Messrs GADOON TEXTILE MILLS LIMITED and others

Versus

FEDERATION OF PAKISTAN and 2 others

Writ Petitions Nos. 6127-P of 2019, 415-P, 443-P, 457-P and 5627-P of 2020, decided on 7th September, 2023.

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

----S. 65B [as amended by Finance Act, 2019]---Constitution of Pakistan, Art. 199---Constitutional petition---Tax credit---Vires of amendment---Retrospective effect---Applicability---Petitioners/taxpayers had assailed Constitutionality of amendment in S. 65B of Income Tax Ordinance, 2001---Validity---Tax credit once earned under a legal dispensation is a coin in the pocket/hands of taxpayer which can be adjusted against tax assessed against tax payer as per law allowing such adjustment---Legislation in question did not give any impression that it had either affected vested rights of petitioners/taxpayers nor was retrospectively applicable---High Court declined to interfere in Legislation in question as the same had been passed by a competent legislation having prospective effect except in the following manner:

(i) Petitioners/taxpayers' companies who had made investment in the manner and mode as provided under S. 65B(1) of Income Tax Ordinance, 2001 and had installed machinery and equipment in their industrial undertaking by or prior to 30-06-2018 were entitled to a tax credit of 10% for the tax year in which plant and machinery was installed and were also entitled for carrying forward the tax credit for the following two tax years @ of 10% of their investment in the manner and mode as provided under un-amended S. 65B of Income Tax Ordinance, 2001.

(ii) Petitioners / taxpayers' companies who had invested any amount in terms of section 65B (1) of Income Tax Ordinance, 2001, though could not install plant and machinery by 30-06-2018 were still be entitled to tax credit @ of l0% of their investment provided before 30-06-2018 as they had purchased the machinery and executed a binding contract with the manufacturer followed by establishment of LCs and had installed machinery and equipment etc. before 30-06-2021---Constitutional petition was disposed of accordingly.

Sapphire Textile Mills Ltd v. Federation of Pakistan and others C.P. D-8233 of 2019; Gulshan Spinning Mills Ltd and others v. Government of Pakistan and others 2005 PTD 259; Mollasis Trading and Export (Pvt) Limited v. Federation of Pakistan and others 1993 SCMR 1905; Shahnawaz (Pvt) Limited v. Pakistan through the Secretary Mintstry of Finance and others 2011 PTD 1558; Pak Elektron Limited and others v. Federal Board of Revenue and others 2018 PTD 778; Zila Council Jhelum through DCO v. Messrs Pakistan Tobacco Company Ltd and others PLD 2016 SC 398; Al-Samrez Enterprise v. The Federation of Pakistan 1986 SCMR 1917; Province of East Pakistan v. Sharafatulah and 87 others PLD 1970 SC 514; Al-Tech Engineers and Manufacturers v. Federation of Pakistan and others 2017 SCMR 673; Messrs Elahi Cotton Mills Ltd and others v. Federation of Pakistan through Secretary Messrs Finance and 6 others PLD 1997 SC 582; H.M. Extraction Ghee and Oil Industries (Pvt) Ltd and another v. Federal Board of Revenue and another 2019 SCMR 1081; Whitney v. IR Commissioners (1926) 10 TC 88; Commissioner of Income Tax Kanpur v. Upper Doab Sugar Mills (1978) All LJ 128; Wainwright v. Home Office [2002] QB 1334, 1345F; Gustavson Drilling (1964) Ltd v. Minister of National Revenue [1977] 1 SCR 271; Collector of Central Excise and Land Customs and 3 others v. Azizuddin lndustries Ltd, Chittagong PLD 1970 SC 439; Al-Samrez Enterprise v. Federation of Pakistan 1986 SCMR 1917; Member (Taxes) Board of Revenue Punjab, Lahore and others v. Qaisar Abbas and others 2019 SCMR 446; The Central Provinces Manganese v. The State of Maharashtra 1972 29 STC 74 Bom; Vishwas Bajirao Patil v. The State of Maharashtra AIR 2019 Bom 311; Nabi Ahmed and another v. Home Secretary, Government of West Pakistan, Lahore and 4 others PLD 1969 SC 599; Zaman Cement Company (Pvt) Ltd. v. Central Board of Revenue and others 2002 SCMR 312; Asadullah Mangi and others v. Pakistan International Airlines Corporation and others 2005 SCMR 445 and State of M.P. v. Rakesh Kohli and others 2013 SCMR 34 ref.

(b) Interpretation of statutes---

----Retrospective effect---Principle---Statute is not to be applied retrospectively in absence of express enactment or necessary intendment, especially where statute is to affect vested rights, past and closed transactions or facts or events that have already occurred---Such principle is attracted to fiscal statutes which have to be construed strictly, for they tend to impose liability and are therefore burdensome (as opposed to beneficial legislation)---It is not only the wording/text of the statute which is to be considered in isolation---Courts are not to examine simpliciter whether such law has a retrospective effect or not, rather it has to be examined holistically by considering several factors such as, the dominant intention of the Legislature which is to be gathered from the language used, the object indicated or the mischief meant to be cured, the nature of rights affected, and the circumstances under which the statute is passed.

Zila Council Jehlum through District Coordination Officer v. Messrs Pakistan Tobacco Company Ltd and others PLD 2016 SC 398 rel.

Salman Akram Raja and Qazi Ghulam Dastagir for Petitioners.

Sanaullah DAG, Rehmanullah and Mukhtar Ahmad Maneri along with Siraj Muhammad, Assistant Commissioner Inland Revenue for Respondents.

2025 P T D 43

[Balochistan High Court]

Before Muhammad Hashim Khan Kakar, CJ and Muhammad Aamir Nawaz Rana, J

The COMMISSIONER INLAND REVENUE ZONE-I, REGIONAL TAX OFFICE, QUETTA

Versus

Messrs RAZA UR REHMAN AND BROTHERS and another

Sales Tax Reference Application No.21 of 2024, decided on 31st October, 2024.

Sales Tax Act (VII of 1990)---

----Ss. 3, 11, 47, Third & Sixth Scheds.---Reference---Recovery of dues---Supply of exempted goods---Determination---Authorities were aggrieved of order passed by Appellate Tribunal Inland Revenue determining that supplies made by respondent / taxpayer fell under Sixth Sched. to Sales Tax Act, 1990, which were exempted food items---Validity---Appellate Tribunal Inland Revenue just reproduced contention of respondent / taxpayer and had endorsed the same without any corroborative documents brought on record or giving any categorical findings---Such findings of Appellate Tribunal Inland Revenue were not sustainable in view of sales tax returns for relevant tax periods---If entire supplies of respondent / taxpayer were covered under Third and Sixth Sched. of Sales Tax Act, 1990 and there was no other supplies, then respondent / taxpayer could not claim input tax---High Court set aside all orders in question and matter was remanded to concerned official holding lawful jurisdiction for re-examining facts and to provide an adequate opportunity of being heard to respondent / taxpayer---Reference was disposed of accordingly.

1990 PTD 1088 and 2004 PTD 868 ref.

Barrister Iftikhar Raza and Munawar Kasi for Applicant.

Abdul Musawir Kasi and Muhammad Umer Dogar for Respondent No.1.

2025 P T D 65

[Balochistan High Court]

Before Muhammad Ejaz Swati, ACJ and Sardar Ahmed Haleemi, J

COLLECTOR, COLLECTORATE OF CUSTOMS (ENFORCEMENT), KHUZDAR, CAMP OFFICE AT CUSTOMS HOUSE, GADDANI

Versus

MUHAMMAD ALI and another

Special Custom Reference Application No.99 of 2024, decided on 30th August, 2024.

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

----Ss. 2(s), 15, 16, 157 & 181, provisos to the Explanation [as added vide Finance Act, 1992]---SRO 499(I)/2009 dated 13-06-2009---Smuggled goods---Conveyance---"Liable to confiscation"---Scope---Confiscated smuggled goods/vehicle, release of---Payment of fine---Collectorate filed Reference Application against order passed by the Customs Appellate Tribunal whereby vehicle/container was released against payment of 20% redemption fine---Validity---Section 157(2) of the Customs Act, 1969, stipulates that "a conveyance used in the removal of any goods liable to confiscation under the Act such as smuggled goods shall also be liable to be confiscation"---Expression "liable to confiscation" in said S. 157(2) cannot be equated with "shall be confiscated"---On the other hand, S. 181 of the Act, 1969 envisages that whenever an order for the confiscation of goods has to be passed under the Act, 1969, the officer concerned before passing the confiscation order may give the owner of the goods an option to pay fine in lieu of the said confiscation---However, through Finance Act, 1992, two provisos were added to the Explanation to S.181 of the Act, 1969---The first proviso has empowered the Federal Board of Revenue (Board) to specify the goods or class of goods where such options shall not be given---Second provision further empowered the Board to fix the amount of fine which in lieu of confiscation shall be imposed on any goods and class of goods imported in violation of provision of S. 15 or notification issued under S. 16 of the Act, 1969---Board had under the said proviso to the Explanation of S. 181 of the Act, 1969 issued various order/SRO's expressly prohibiting inter alia the release of confiscated smuggled goods/vehicle on payment of exemption fine and fixing the fine to be imposed in lieu of confiscation---Reference Application , filed by the Collectorate, was dismissed.

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

----Ss. 2(s), 15, 16, 157 & 181---SRO 499(I)/2009 dated 13-06-2009---Smuggled goods---Conveyance---Confiscated smuggled goods/vehicle, release of---Payment of fine---Collectorate filed Reference Application against order passed by the Customs Appellate Tribunal whereby vehicle/container was released against payment of 20% redemption fine---Validity---Contention of the Applicant/Collectorate, relying on clause (b) of SRO 499(I)/2009 dated 13-06-2009, was that the smuggled goods were found in a cavity specifically designed inside the container---Validity---Though clause (b) of the SRO 499(I)/2009 dated 13-06-2009 prohibits the release of vehicle where smuggled goods were found in secret/false cavity, however in the present case, the Show-Cause Notice issued to the owner of the goods merely stated that goods were found in a cavity along with front side of the container behind the shoppers, instead of secret/false cavity---But in the order-in-original a cavity specifically designed inside the container had been imported which was contrary to the Show-Cause Notice, therefore, the Appellate Tribunal observed that "Neither the seized vehicle possessed false/ secret cavity nor was used for offending goods"---Reference Application, filed by the Collectorate, was dismissed.

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

----Ss. 196, 2(s), 15, 16, 157 & 181---SRO 499(I)/2009 dated

13-06-2009---Factual controversies---Tribunal, powers of---Collectorate filed Reference Application against order of Customs Appellate Tribunal contenting that the smuggled goods were found in a cavity specifically designed inside the container---Validity---Appellate Tribunal, which is final fact finding authority, observed that "neither the seized vehicle possessed false / secret cavity nor was used for offending goods"---It was not permissible to take into consideration such factual aspects in reference under S.196 of the Customs Act, 1969---Reference Application, filed by the Collectorate, was dismissed.

Messrs T&N Pakistan Private Limited v. The Collector Customs and others 2022 SCMR 1119 ref.

Raja Jawad Mehmood for Applicant.

2025 P T D 112

[Balochistan High Court]

Before Muhammad Kamran Khan Mulakhail and Shaukat Ali Rakhshani, JJ

COLLECTOR, MODEL CUSTOMS COLLECTORATE, CUSTOM HOUSE, GAWADAR AT GADDANI

Versus

Messrs BYCO PETROLEUM PAKISTAN LIMITED and another

Special Customs Reference Application No.02 of 2020, decided on 30th August, 2024.

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

----Ss. 18, 25, 32(1), 32(3A) & 195---Assessment conducted by Authority---Re-opening---Scope---Petroleum Company imported furnace oil in an oil tanker which was partially empty and, considering "dead freight" for the empty space, paid the charges whereof Goods Declaration (GD) was made as per the assessment made by the Appropriate Officer of Customs, however, during audit, an Audit Officer, Director General Audit Customs and Petroleum, raised objection, on his own, on the value determined by the Appropriate Officer on the ground that the GD failed to represent the correct amount of freight---Stance of the importer (Petroleum Company) was that show-cause notice issued by an officer not competent to adjudicate the matter cannot reopen the order of assessment under S. 195 of the Customs Act, 1969, and that only the Collector Customs is the competent officer to exercise such powers---Department/Collectorate filed Reference against judgment passed by Customs Appellate Tribunal whereby the Order-in-Original (to pay duty and taxes amounting to Rs. 2,481,696 in terms of Ss. 32(1) & 32(3A) of the Customs Act, 1969) rendered by Additional Collector of Customs (Adjudication) was set-aside while accepting the appeal of (Importer /Petroleum Company)---Validity---Record revealed that respondent being an importer, undeniably, chartered a vessel "Shalimar" whereof he signed an agreement to import crude oil from UAE , which was destined to CRL, offshore Petroleum Jetty, Pakistan-QGDN---Freight charge per metric ranged from US$ 14.M tons (with average of US$ 9.M ton), which consignment was formally imported and cleared vide relevant GD---Audit Officer, Director General Audit Customs and Petroleum Lahore, during audit, found a discrepancy in the GD that the freight included in the consignment was about US$ 3 per metric tons which was low and was not in accordance with the general marker practice, thus, resulted in short-realization of revenue, amounting to Rs 2,481,696---Additional Collector (Adjudication), Quetta, while holding the show-cause Notice to be in accordance with law / record, directed respondent (importer) to pay such arrears in terms of Ss. 32(1) & 32 (3A) of the Customs Act, 1969---Tanker wherein petroleum product was loaded was partially empty, whereof dead freight was, undeniably, paid---Admittedly, respondent (importer) had paid duty on the furnace oil which was imported and declaration was made thereof and charges of dead freight were paid, thus, neither the case of respondent /importer squared within the purview of S. 18 nor under S. 25 of the Customs Act, 1969, as such Show-Cause Notice issued by the concerned Additional Collector Customs without any legal justification---Reference was answered in negative i.e. against the Applicant / Collectorate.

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

----S. 195---Customs authorities---Powers---Factual controversy---Any error in the assessment, which is disputed by the adversarial parties, obviously requires a thorough probe and inquiry which exercise cannot be the done by the High Court while adjudicating a Reference because it exclusively falls either in the domain of Additional Collector, Customs, during adjudication or by the Appellate Tribunal, which is the final and ultimate authority to determine error in assessment of duty or any disparity in the rate of freight or any other factual controversy.

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

----Ss. 79, 80 & 195---Assessment conducted by competent authority, re-opening of---Scope---Since the competent authority had assessed the duty and charges as contemplated under Ss. 79 & 80 of Customs Act, 1969, which order was not assailed in appeal under S. 193 of the Customs Act, 1969, thus, Audit Officer was not competent to reopen the case on his own, except by a Collector Customs under S. 195 of the Customs Act, 1969 and that too within a period of two years only, thus, the Customs Authority had become functus officio to reopen the case---Reference was answered in negative.

Collector of Customs, Model Customs Collectorate, Quetta v Messrs Al-Habib Enterprises and Engineering 2019 PTD 1712 ref.

Raja Jawad Mehmood for Applicant.

Dr. Pervaiz and Tahir Kaleem for Respondents.

2025 P T D 373

[Balochistan High Court]

Before Muhammad Ejaz Swati and Sardar Ahmed Haleemi, JJ

COLLECTOR, COLLECTORATE OF CUSTOMS (ENFORCEMENT) KHUZDAR CAMP OFFICE AT CUSTOM HOUSE GADDANI

Versus

ATTAULLAH and others

Special Customs References Applications (K) Nos.03 and 04 of 2024, decided on 5th December, 2024.

Customs Act (VI of 1969)---

----Ss. 196, 2(s), 16 & 156(1), (8), (89)---Factual controversy---High Court powers of---Seizure of smuggled goods / vehicle---Collectorate of Customs filed Reference against judgment passed against it by Customs Appellate Tribunal (Tribunal)---Validity---Record reveals that the Adjudicating Authority of Customs has not disputed the Goods Declaration (GD) but rejected the plea of the claimant that GD did not match with the seized truck---Said findings of the Seizing Authority were based on assumption as no reference of any other admissible documents in said respect was given---Tribunal in (relevant two paragraphs of) impugned judgment has not only explained about the excess item but also explained the reason regarding the different number of the truck by going through the documentary evidence which judgment reflects that throughout the proceedings only factual questions with regard to excess of their items and difference of truck number was involved which have been properly decided by the Tribunal---Section 196 of the Customs Act, 1969, envisages that it is the Tribunal which is the forum meant for determining factual aspects---High Court under S. 196 of the Customs Act, 1969, is confined to consider the question of law---Applicant instead of making its case on law point emphasized the whole case on factual controversy without reference to any separate / admitted documents and could not point out any jurisdictional defect in the impugned judgment, warranting any interference by the High Court---Special Customs Reference filed by the Collectorate was dismissed.

Messrs F.M.Y. Industries Ltd. v. Deputy Commissioner Income Tax and another 2014 SCMR 907; 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; Collector of Customs, Port Muhammad Bin Qasim, Karachi v. Messrs Kaghan Ghee Mills (Pvt.) Ltd. 2008 SCMR 1538 and Messrs T&N Pakistan Private Limited v. The Collector Customs and others 2022 SCMR 1119 ref.

Raja Jawad Mehmood for Applicant.

2025 P T D 480

[Balochistan High Court]

Before Muhammad Hashim Khan Kakar, CJ and Shoukat Ali Rakhshani, J

QUETTA CHAMBERS OF COMMERCE AND INDUSTRY through representative and others

Versus

FEDERATION OF PAKISTAN through Secretary Revenue, Islamabad and others

C.Ps. Nos.2058 of 2022 and 958 of 2023, decided on 31st May, 2024.

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

----S. 7E---Constitution of Pakistan, Art. 199 & Fourth Schedule, Federal Legislative List, Entry No.50 [as amended by Eighteenth Amendment to the Constitution]---Constitutional petition---Tax on deemed income from immovable property---Vires of provision of S. 7E of Income Tax Ordinance, 2001---Tax on immovable properties---Scope---Petitioner / Quetta Chamber of Commerce and Industry assailed provision of S. 7E of Income Tax Ordinance, 2001 on the ground that it was ultra vires the Constitution---Validity---All powers to impose taxes on immovable properties, including power to tax capital gain on immovable properties fell in the domain of the Provinces and not of the Federation---Provision of S. 7E of Income Tax Ordinance, 2001 was beyond the competence of Federation as provided in Federal Legislative List---As it fells in the legislative competence of the Provinces, therefore, provision of S. 7E of Income Tax Ordinance, 2001 was encroachment of Federation on the legislative process of the Provinces---There was neither any economic transaction nor any accrual / arising of any amount which may be deemed as income---In case of S. 7E of Income Tax Ordinance, 2001 there was no 'Economic Transaction' or event that could give rise to an amount that could be treated as income---Deeming wais based on mere ownership of immovable property with no economic projection thereon---In absence of any economic transaction, taxing immovable properties in the hands of owners through legal fiction of deeming was irrational---High Court declared provision of S. 7E of Income Tax Ordinance, 2001 ultra virus the Constitution---Constitutional petition was allowed, in circumstances.

Elahi Cotton Mills Limited's case PLD 1997 SC 582 ref.

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

----S. 7E---Constitution of Pakistan, Arts. 23, 24 & 25---Tax on deemed income from immovable property---Property rights and equality of citizens---Provision of S. 7E of Income Tax Ordinance, 2001 was imposed on immovable properties which did not generate income or which were not used in economic activity---Citizens may be deprived of immovable property for paying taxes on such immovable properties whereon no income was earned / accrued and citizens may ultimately be forced to dispose of immovable properties to pay such tax---Provision of S. 7E of Income Tax Ordinance, 2001 was confiscatory in nature and was violative of Arts. 23 & 24 of the Constitution---Exceptions to some persons like owners of agriculture land, farm houses or those belonging to certain classes of persons had been provided under S. 7E of Income Tax Ordinance, 2001---Only those owners of immobile properties and those properties which were not allowed such exemptions, were liable to tax under S. 7E of Income Tax Ordinance, 2001---Provision of S. 7E of Income Tax Ordinance, 2001 was discriminatory and violative of Art. 25 of the Constitution.

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

----S. 7E---Tax on deemed income from immovable property---Double taxation, principle of---Applicability---Citizens were required under the provision of S. 7E of Income Tax Ordinance, 2001 to pay income tax on holding immovable properties earlier created through income on which, tax had already been paid or source of investment thereof had already been explained---Imposing income tax on such properties tantamount to double taxation of assets / income of the citizen.

Pervaiz Khan, Syed Mohibullah and Nasrullah Kakar for Petitioners (in C.P. No.2058 of 2022).

Khushal Khan Kasi, Assistant Attorney General for Respondent No.1. (in C.P. No.2058 of 2022).

Barrister Iftikhar Raza, assisted by Rehmatullah Durrani, Commissioner Inland Revenue, Quetta (in C.P. No.2058 of 2022).

Amanullah Kanrani and Kamal Siddiqui, Amici Curiae (in C.P. No.2058 of 2022).

Usama Zaheer for Petitioner in person (in C.P. No.958 of 2023).

Khushal Khan Kasi, Assistant Attorney General for Respondents Nos.1 to 4 (in C.P. No.958 of 2023).

Zahoor Ahmed Baloch, Additional Advocate General (AAG) assisted by Barrister Iftikhar Raza and Rehmatullah Durrani, Commissioner Inland Revenue, Quetta for Respondent No.5 (in C.P. No.958 of 2023).

Amanullah Kanrani and Kamal Siddiqui, Amici Curiae (in C.P. No.958 of 2023).

2025 P T D 842

[Balochistan High Court]

Before Muhammad Hashim Khan Kakar, Chairman and Haider Ali Shikoh and Saifullah Khan, Members

BONANZA GARMENT INDUSTRIES PRIVATE LIMITED, KARACHI

Versus

ASSISTANT COMMISSIONER, QUETTA

Sales Tax Appeal No.50 of 2024, decided on 19th December, 2024.

Balochistan Sales Tax on Services Act (VI of 2015)---

----Ss. 2(115), 2(139), 25 & 52(6)---Balochistan Sales Tax Special Procedure (Withholding) Rules, 2018, Rr. 1 & 1(3)---Company having its head office in Sindh---Services availed by such company in the territorial jurisdiction of Balochistan---"Place of business in Balochistan" and "resident"---Scope---Appellant (a manufacturer of wearing apparels having registered office at Karachi had received taxable services in the territorial jurisdiction of Balochistan and also withheld sales tax on services---Plea of the Balochistan Revenue Authority (BRA), while passing concurrent adverse orders against the Appellant, was that the Appellant failed to pay said withheld sales tax to the BRA, which was recoverable---Stance of the appellant was that sales tax on services was withheld by the head office, hence, the same was paid to the Sindh Revenue Board (SRB)---Whether the appellant was legally required to pay tax withheld on advertisement services availed in the territorial jurisdiction of Balochistan to the BRA; and whether tax withheld from the service providers/ advertisers was recoverable by the BRA from the appellant ?---Held, that it was an admitted fact that the appellant had received services from advertisers who displayed advertisements of the appellant on the billboards in Balochistan---It was also admitted that the appellant had made payments to such service providers/advertisers and also withheld sales tax on services form said service providers/advertisers---However, the appellant had paid such tax to the SRB on the grounds that the appellant was registered with the SRB and the appellant was not resident of Balochistan---Appellant was held to be required to pay tax withheld sales tax to the BRA in light of said admitted facts and definitions of "place of business in Balochistan" and "resident" as provided in Ss. 2(115) & 2(139) of Balochistan Sales Tax on Services Act, 2015 ('the Act, 2015'), as well as Rr. 1 & 1(3) of the Balochistan Sales Tax Special Procedure (Withholding) Rules, 2018---But, pertinently said definitions when read together provided that a company was resident of Balochistan if it had place of business in Balochistan including virtual presence through which it carried on an economic activity---The appellant being resident of Balochistan was required under S. 25 of the Act, 2015 to get registered with BRA to withhold tax on services availed in Balochistan and pay the same to BRA---However, the appellant had paid tax withheld to the SRB on the grounds that payments to service providers were made by the appellant's head office located at Karachi---Record revealed that the appellant had opted not to appear before the Assistant Commissioner during adjudication of order-in-original which resulted in passing of a non-speaking ex-parte order---The Assistant Commissioner on his part had also failed to discuss said relevant provisions of law---Further, the order-in-original was silent regarding service providers of the appellant and filing of the returns ; because in both the scenarios implications would be different for the appellant---Appellate Tribunal, while vacating both the impugned orders, remanded, the matter back to the Assistant Commissioner Balochistan Revenue Authority to re-examine the case afresh and to come up with a speaking order after providing proper opportunity of being heard to the appellant---Appeal, filed by Service provider, was disposed of accordingly.

Abdul Basir for Appellant.

Jam Saka Dashti and Sarmad Ahmed for Respondent.

2025 P T D 936

[Balochistan High Court]

Before Muhammad Ejaz Swati, ACJ and Muhammad Aamir Nawaz Rana, J

COMMISSIONER INLAND REVENUE ZONE-I, REGIONAL TAX OFFICE, QUETTA

Versus

KHALID HUSSAIN and another

Income Tax Reference Application No.03 of 2023, decided on 21st March, 2025.

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

----Ss. 111(1) (a), (b), (c) & (d), & 122(9)---Unexplained income or assets---Amendment in assessment---Addition made---Separate specific/ formal notice, non-issuing of---Effect---Section 111 of the Ordinance, 2001 empowers tax authorities to question any unexplained investment, expenditure or concealed income enumerated in S. 111 (1) (1)(a) to (d), while first proviso to S. 111 provides that if a taxpayer claims an amount as agriculture income this explanation shall be accepted only to the extent of the agricultural income worked back on the basis of agricultural income tax paid under the relevant provincial law---In case the taxpayer failed to render any explanation or the explanation offered by the taxpayer is not satisfactory in the opinion of Commissioner, the said liabilities become chargeable to tax---All this exercise naturally called from a taxpayer by issuing a specific notice under S. 111 of the Ordinance, 2001, while S.122 of the Ordinance, 2001 relates to amendment of deemed assessment and allows the Commissioner Inland Revenue to amend a tax assessment if the acquired definite information indicates that income declared by taxpayer is incorrect or incomplete---Such amendment must be based on concrete evidence and follow due process---Pertinently, in respect of issuance of specific notice to the taxpayer under S. 111 of the Ordinance, 2001 an explanation was added in S. 111 pursuant to Finance Act, 2021, whereby it was clarified that a separate notice under this Section is not required to be issued if the explanation regarding nature and source of amount enumerated has been confronted to the taxpayer through a notice under subsection (9) of S. 122 of the Ordinance, 2001---The explanation was further substituted through the Finance Act, 2022 whereby it was also clarified that a separate notice is not required to be issued if the explanation enumerated in S. 111 (1) (a) to (d) of the Ordinance, 2001 had been confronted to taxpayer through a notice under subsection (9) of S. 122 (9) of the Ordinance, 2001---The proceeding under S.111 of the Ordinance, 2001 regarding unexplained income must be concluded before initiating action under S. 122 of the Ordinance, 2001 which pertains to the amendment of assessment of the Ordinance, 2001, which sequence ensures due process and taxpayer rights---The law allows the taxpayer an opportunity to revise returns and voluntarily pay tax under S. 114 (6A) of the Ordinance, 2001 before a notice under S.122 (9) of the Ordinance, 2001 is issued, thereby avoiding penalties under S. 182 of the Ordinance, 2001---Even after introduction of an explanation in 2021, to S. 111(1) of the Ordinance, 2001 the procedural hierarchy remains unchanged i.e. the tax department must conclude the S.111 proceedings before invoking S. 122(9) of the Ordinance, 2001 ; which ensures procedural fairness and prevents arbitrary or premature taxation---In the present case, the taxpayer's return for the year 2018 was amended by the Department without concluding/completing the proceedings under S. 111 of the Ordinance, 2001---As a result, the proceedings under S. 122 of the Ordinance, 2001 would be considered invalid and without legal sanctity---Thus, proposed question was answered against the Department---Income Tax Reference, filed by the Department, was dismissed, in circumstances .

Commissioner Inland Revenue T.R.O Faisalabad v. Faqir Hussain and another 2019 PTD 1828; Commissioner Inland Revenue Zone Bahawalpur, Regional Tax Office, Bahawalpur v. Messrs Bashir Ahmed through legal heirs 2021 SCMR 1290; Commissioner Inland Revenue, Zone-I, Regional Tax Office, Sukkur v. Messrs Ranipur CNG Station, Ranipur 2017 PTD 1839; Commissioner Inland Revenue, Lahore v. Messrs Millat Tractors Limited, Lahore and others 2024 SCMR 700 and Commissioner Inland Revenue, Lahore v. Messrs Millat Tractors Limited, Lahore and others 2024 SCMR 700 ref.

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

----Ss. 41 &111(1), proviso to---Agricultural tax, non-payment of---Tax charged, sustainability of---Scope---Agricultural tax a Provincial matter---Whether the tax charged under S. 111 of Income Tax Ordinance, 2001 ('the Ordinance, 2001') for non-payment of agricultural tax would sustain if the agricultural tax is paid during proceedings of the appeal before the Appellate Tribunal Inland Revenue---Held, that S. 111 of the Ordinance, 2001, inter alia, envisaged explanation of source of any income or asset to the satisfaction of the Commissioner concerned, however, the proviso to subsection (1) of S. 111 of the Ordinance, 2001 makes it obligatory by using the word shall to accept the explanation, if agricultural tax paid under the relevant provision of law for the amount credited or the investment made, money or valuable articles owned or funds from which the expenditures was made, by way of agricultural income, such explanation shall be accepted to the extent of the agricultural income worked back on the basis of agricultural income tax paid under the relevant provincial law---In the present case, the taxpayer has shown agricultural income in return for tax year 2018--- The Applicant/Department issued notice on 18.01.2021 under S. 122(9)(5A) of the Ordinance, 2001 in absence of proof for payment of provincial agricultural tax---The taxpayer produced relevant challan dated 10.05.2023 for agriculture tax of the year 2018 (of Rs.1572010/-) in favour of Deputy Commissioner Quetta before the Appellate Tribunal Inland Revenue which was not disputed by the Applicant/Department by way of filing counter affidavit---It is clear that the taxation of agricultural income is not a matter under the Ordinance, 2001 ; which is a Provincial matter and its collection and consequence of delayed payment/nonpayment are to be governed by the Provincial law, and such delay of payment and its consequence are not subject matter of the Ordinance, 2001---Moreover, agricultural income driven by a person shall be exempt from tax under S. 41 of the Ordinance, 2001---The matter during proceedings cannot be taken to be past and closed transaction, therefore, if agricultural tax is paid during appeal before Appellate Tribunal Inland Revenue ; it nullifies the effect of S. 111 of the Ordinance, 2001 and the assessment under this provision can no longer be sustained---Said distinction safeguards taxpayer from being penalized under an incorrect unwarranted legal frame work and reinforces the principle that Provincial law exclusively govern agricultural income taxation---Thus proposed question was answered against the Department---Income Tax Reference, filed by the Department, was dismissed, in circumstances.

Barrister Iftikhar Raza Khan Applicant.

Ms. Riffat Naeem Ja for Respondent No.1.

2025 P T D 1562

[Balochistan High Court]

Before Muhammad Najam-ud-Din Mengal and Muhammad Kamran Khan Mulakhail, JJ

COLLECTOR OF CUSTOMS, through Additional Collector of Customs, MCC Gawadar, Custom, Gaddani

Versus

Messrs MEHBOOB STEEL PIPE INDUSTRY and another

Special Custom Reference Application No.50 of 2018, decided on 23rd June, 2025.

Customs Act (IV of 1969)---

----Ss.194-C(4), 98 & 196---Customs Rules, 2001, Rr. 350(4), 350(7), 352(6) & 352(10)---Special Custom Reference Application---Pecuniary jurisdiction of Chairman or other Member of the Tribunal, authorized by the Chairman, sitting singly and deciding a case---Scope---Dispute over failure of the respondent firm to dispose of or export or pay duties and taxes of goods within the prescribed 02 years of their in-bonding in contravention of Rr. 350(4) & 352(6) of Customs Rules, 2001(Rules)---Respondent-firm preferred an appeal challenging the orders for recovery of surcharge under S. 98 of the Customs Act, 1969, (Act) read with Rr. 350(7) and 352(6) of Rules for the defaulted warehouse period and for payment of leviable sales tax on disposal/sale of wastage if not paid already in terms of R. 352(10) of Rules---Such appeal was disposed of by the Member (Technical-III) sitting singly---Contention of the appellant was that in any matter involving customs duties and taxes exceeding five millions rupees a Member of the Appellate Tribunal while sitting singly had no pecuniary jurisdiction to adjudicate upon such matter---Validity---Section 194-C(4) of the Customs Act, 1969 clearly vests jurisdiction in a Single Member only where the amount in dispute is within the limit of Rs.5 million, which is jurisdiction condition precedent and its non-observance renders the proceedings coram non judice---When a statutory Tribunal acts in breach of jurisdictional limits prescribed by law, its orders are void and liable to be set aside---Single Member of the Appellate Tribunal had travelled beyond its access, while deciding a matter, which exceeded the limit of Rs.5 million, thus, the impugned judgment passed by the Single Member of the Customs Appellate Tribunal was declared to be without lawful authority and of no legal effect and the same was set aside---Special Custom Reference Application was allowed, in circumstances.

Collector of Customs, Customs House, Karachi v. Syed Rehan Ahmed 2017 SCMR 152 rel.

Raja Jawad Mehmood for Appellant.

Tariq Asad, Assistant Attorney General.

Imran Iqbal Khan for Respondents.

2025 P T D 180

[Supreme Court of Pakistan]

Present: Yahya Afridi, Syed Hasan Azhar Rizvi and Shahid Waheed, JJ

The COMMISSIONER INLAND REVENUE, LEGAL ZONE, LARGE TAXPAYERS OFFICE, LAHORE and another

Versus

Messrs MAYFAIR SPINNING MILLS LTD. and others

Civil Appeals Nos. 947 of 2002, 980, 981 and 982 of 2007 and 224 of 2010 and Civil Petition No. 246 of 2009, decided on 12th November, 2024.

(Against the judgment dated 04.12.2001, passed by the Lahore High Court, Rawalpindi Bench, in C.A. No.66 of 1999; the judgment dated 29.11.2006, passed by High Court of Sindh, Karachi in S.S.T.R.As. Nos.142 and 172 of 2005; the judgment dated 25.03.2008, passed by the High Court of Sindh, Karachi in S.S.T.R.A. No.58 of 2007; and the judgment dated 28.11.2008, passed by the High Court of Sindh, Karachi in S.S.T.R.A. No.350 of 2007).

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

----Ss. 7(1), 10 & 66---Taxable supplies---Input tax, adjustment of---Whether input tax deduction can be made under section 7 of the Sales Tax Act, 1990 in respect of goods which got destroyed by fire and which do not remain available for making taxable supplies----Contention of appellant-tax authority that the right to seek adjustment or refund is available only when the goods on which input tax was paid are used in further taxable activities for making taxable supplies, and not when those goods are consumed or destroyed---Validity---For a registered person to avail himself of the beneficial adjustment of input tax against output tax, section 7 of the Sales Tax Act, 1990 [as it was at the relevant time of the present case], mandates the following conditions: firstly, the input tax paid on purchases of inputs or raw materials must be intended for the purpose of making taxable supplies; secondly, the input tax paid must be for producing taxable supplies, irrespective of whether those taxable supplies have actually been made or are to be made in the future; thirdly, the input tax paid in a tax period is to be deducted from the output tax due for the same tax period and not against any future tax period---Words "taxable supplies made, or to be made" in section 7 do not limit the scope of the correlation between the purchase of the input/raw material and the actual manufacture or production of taxable supplies, that is the making of taxable supplies---Instead, they expressly expand its legal ambit to include input/raw materials intended for use in future for making taxable supplies---This explicit legislative intent to encompass future taxable supplies cannot be overlooked---In such circumstances, a registered person need not wait for the raw material, on which input tax has been paid, to be actually consumed in the manufacturing process before availing the adjustment against output tax---This interpretation aligns with sound commercial and manufacturing reasoning---There is no express requirement that the raw material, for which input tax is paid, must be actually used during the same tax period to qualify for adjustment---Denying such adjustment solely because the raw material has not been consumed during the same tax period contradicts the legislative intent---Section 8(1)(a) of the Sales Tax Act, 1990, which deals with scenarios in which input tax cannot be reclaimed or deducted, does not apply to cases where input/raw materials have been lost through fire.

(b) Tax---

----Exemption notification/Statutory Regulatory Order (SRO)---Vested rights created under an earlier notification cannot be retrospectively nullified by a subsequent notification---Demanding repayment of benefits already accrued to and availed of by taxpayers, by virtue of changes introduced through SROs, would adversely affect their vested rights and undo transactions that are past and closed, which cannot be done through subordinate legislation without specific authorization by primary legislation.

Al Samrez Enterprise v. Federation of Pakistan 1986 SCMR 1917; Commissioner Inland Revenue v. Mekotex (Pvt.) Ltd. 2024 SCP 316; Federation of Pakistan v. Shaukat Ali Mian PLD 1999 SC 1026; Army Welfare Sugar Mills Limited v. Federation of Pakistan 1992 SCMR 1652; Molasses Trading v. Federation of Pakistan 1993 SCMR 1905 and Super Engineering v. Commissioner Inland Revenue 2019 SCMR 1111 ref.

Ch. Muhammad Zafar Iqbal, Advocate Supreme Court assisted by Muhammad Abdul Hassan, Advocate for Appellants (in C.A. No.947 of 2002)

Muhammad Siddique Mirza, Advocate Supreme Court for Appellants (in C.As. Nos.980-982 of 2007).

Raja Muhammad Iqbal, Advocate Supreme Court for Appellants (in C.A. No.224 of 2010 and C.P. No. 246 of 2009).

Salman Akram Raja, Advocate Supreme Court along with Malik Ahsan Mahmood, Advocate Supreme Court and Malik Ghulam Sabir, Advocate High Court for Respondents (in C.A. No. 947 of 2002).

Dr. Muhammad Farough Naseem, Advocate Supreme Court (via video link from Karachi) for Respondents.

Syed Naveed Amjad Andrabi, Advocate Supreme Court for Respondents (in C.A. No.224 of 2010).

Nemo for Respondents (in C.A. No.246 of 2009).

Malik Javed Iqbal Wains, Additional Attorney General for Pakistan for the Federation of Pakistan.

Zubair Khan, Additional Commissioner, CTO, Lahore (via video link from Lahore) for the Department.

2025 P T D 231

[Supreme Court of Pakistan]

Present: Jamal Khan Mandokhail, Syed Hasan Azhar Rizvi and Musarrat Hilali, JJ

AHMAD SIKANDER

Versus

COMMISSIONER INLAND REVENUE, AEOI ZONE, LAHORE

C.R.P. No. 870 of 2023 in C.P.L.A. No. 2166-L of 2023, decided on 15th March, 2024.

(For review of this Court's order dated 08.08.2023 passed in C.P. No. 2166-L of 2023).

Per Jamal Khan Mandokhail, J.; Musarrat Hilali, J. agreeing; Syed Hasan Azhar Rizvi, J. dissenting. [Majority view]

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

----Ss. 111(1)(b) & 122(9)---Constitution of Pakistan, Art. 188---Review petition---Bank account maintained in a foreign country not disclosed in wealth statement---Proper opportunity of hearing to be provided to the tax payer---Scope---Petitioner (tax payer) was charged to tax under section 111(1)(b) of the Income Tax Ordinance, 2001 ('the Ordinance') by the Assessment Officer---Appeal filed by the petitioner before the Commissioner Inland Revenue was dismissed---Aggrieved, the petitioner filed the ITA before the Appellate Tribunal Inland Revenue which was allowed, and against the said order, the respondent (department) filed Income Tax Reference before the High Court which was allowed---Finally the petitioner filed civil petition before the Supreme Court which was dismissed, hence the present review petition---Contentions of petitioner were that he had submitted his returns with all the necessary details and nothing was concealed; that all the necessary documents including the foreign income and assets statement along with the bank statement and foreign loan documents were e-filed which were available at e-Portal of E-FBR; that all these documents were supplied to the respondent through post as well, but the same were not considered by the fora below; that even otherwise, copies of the relevant documents were to be obtained from London, which could not be obtained in time on account of Covid-19 restrictions; that immediately upon receiving the documents they were produced before the Tribunal in order to substantiate his stance; that such documents were not new evidence, rather the same were in support of the information already available at e-Portal, but the High Court had ignored the factum of availability of these documents at e-Portal and had wrongly considered them as fresh ones; that while arguing the matter before the Supreme Court, the petitioner tried his best to highlight all these facts and to establish that the High Court had erred in law by considering the documents as new evidence, but no proper opportunity was provided to him by the Supreme Court---Validity---[Per Jamal Khan Mandokhail, J. [Majority view]: High Court while deciding the Reference declared that the documents provided to the Tribunal were new evidence---Petitioner had raised all legal and factual grounds in his petition before the Supreme Court, but it seems that the grounds urged by the petitioner escaped the attention of the Supreme Court while deciding the civil petition---Petitioner claimed that the findings of the fora below raised serious questions of law and facts, therefore, reappraisal of the record was necessary in the best interest of justice, but the needful was not done by the Supreme Court at the time of hearing his petition---This raised sufficient reasons to accept the contentions of the petitioner---Even otherwise, no prejudice would be caused to the respondent (department), if an opportunity of hearing was provided to the petitioner---Review petition was allowed; and the order under review passed by the Supreme Court was re-called with the direction that Civil Petition shall be restored to its original number and be fixed for hearing]---[Per Syed Hasan Azhar Rizvi, J. [Minority view]: Petitioner had not raised any ground as envisaged under Rule 1 of Order XXVI of the Supreme Court Rules, 1980 read with Order XLVII of the Code of Civil Procedure---Petitioner had failed to establish that he had discovered any new and important matter which after the exercise of due diligence was not within his knowledge or could not be brought to the notice of the Court at the time of passing of the order or judgment---After a careful examination of the leave refusing order in the Civil Petition, as well as that judgment of the High Court, no compelling reasons were found to entertain the present review petition---High Court had diligently addressed all issues raised thoroughly and decided the case on the basis of facts and grounds---All pleas raised in present review petition had already been addressed by the High Court and were duly considered by the Supreme Court while passing the order under review---Moreover petitioner had failed to establish any mistake or error apparent on the face of the record warranting a review---Review petition was dismissed.]

Per Syed Hasan Azhar Rizvi, J.; dissenting with Jamal Khan Mandokhail, J. [Minority view]

(b) Supreme Court Rules, 1980---

----O.XXVI, R.1---Constitution of Pakistan, Art. 188---Review, power of---Grounds---Mistake or error apparent on the face of record---Meaning---One of the grounds to exercise the power of review is when some mistake or error apparent on the face of record is found---An error on the face of record must be such an error which must strike one on mere looking at the record and would not require any in-depth process of reasoning on the points where there may conceivably be two opinions---Thus an error which is required to be detected by a process of reasoning can hardly be said to be an error on the face of the record---Error apparent on the face of the proceedings is an error which is based on clear ignorance or disregard of the provisions of law---Any order or decision or judgment cannot be corrected merely because it is erroneous in law or on the ground that a different view could have been taken by the court/tribunal on a point of fact or law.

Ghulam Murtaza v. Abdul Salam Shah 2010 SCMR 1883; Commissioner Inland Revenue Z-III, Corporate Regional Tax Office, Tax House, Karachi and another v. Messrs MSC Switzerland Geneva and others 2023 SCMR 1011; State of West Bengal and others v. Kamal Sengupta and another (2008) 8 SCC 612 and Parsion Devi and others v. Sumitri Devi and others (1997) 8 SCC 715 ref.

(c) Supreme Court Rules, 1980---

----O.XXVI, R.1---Constitution of Pakistan, Art. 188---Civil Procedure Code (V of 1908), O. XLVII, R.1---Review, power of---Scope---Grounds taken at appellate stage---Under the garb of filing a review petition, a party cannot be permitted to repeat old and overruled arguments for reopening the conclusions arrived at in a judgment---Power of review is not to be confused with the appellate power which enables the Superior Court to correct errors committed by a subordinate Court---Hence, if an argument has been advanced by the party in the appellate forum then the same cannot be argued at the review stage---While exercising the review jurisdiction, the Review Court does not sit in appeal over its own order---Review proceedings are distinct from appeal and have to be strictly confined to the scope and ambit of Order XLVII, Rule 1, C.P.C.---In exercise of review jurisdiction, the Court cannot reappreciate the evidence to arrive at a different conclusion even if two views are possible in a matter.

Pakistan International Airlines Karachi v. Inayat Rasool 2004 SCMR 1737; Nook Hassan Awan v. Muhammad Ashraf 2001 SCMR 367; Kalsoom Malik and others v. Assistant Commissioner and others 1996 SCMR 710; Abdul Majeed and another v. Chief Settlement Commissioner and others 1980 SCMR 504; Shanti Conductors (P) Ltd. v. Assam SEB (2020) 2 SCC 677; Ghulam Murtaza v. Abdul Salam Shah 2010 SCMR 1883 and Kerala State Electricity Board v. Hitech Electrothermics and Hydropower Ltd. and others AIR 2005 SC 43 ref.

Sh. Muhammad Akram, Advocate Supreme Court for Petitioner (via video link from Lahore).

Ch. Muhammad Zafar Iqbal, Advocate Supreme Court for the State.

2025 P T D 260

[Supreme Court of Pakistan]

Present: Syed Mansoor Ali Shah, Jamal Khan Mandokhail and Athar Minallah JJ

ADDITIONAL COLLECTOR OF CUSTOMS, MODEL CUSTOMS COLLECTORATE OF APPRAISEMENT (WEST), CUSTOM HOUSE, KARACHI

Versus

Messrs K.S. SULEMANJI ESMAILJI AND SONS (PVT.) LTD. KARACHI

Civil Appeals Nos.799 to 824 of 2015, decided on 18th January, 2024.

(Against the judgment dated 22.12.2014 of the High Court of Sindh, Karachi passed in Special Customs Reference Applications Nos.8 to 33 of 2011).

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

----S. 33 & First Sched.---Classification of imported goods---Correct PCT Heading, determination of---Domain of Classification Committee---Scope---Respondent-company had imported twenty-six consignments described as "BOPP" Printed Laminated Packaging Film (Metalized)---Assessment was completed and the goods were given out of customs charge on the basis of the respondent-company's own declarations---PCT Headings attracting customs duty at the rate of 25% were also declared by the respondent-company---Belatedly, the respondent-company filed an application for refund of customs duty under section 33 of the Customs Act, 1969 on the ground that at the time of clearing the goods customs duties were paid through error because the correct H.S. Code was not declared, and that instead of 20% the customs duties were paid at the rate of 25%---On the request of the respondent-company the matter was referred to the Classification Committee constituted by the Federal Board of Revenue---Classification Committee issued a comprehensive classification ruling and determined that the imported goods fell under PCT Heading 3920.2040 which attracted customs duty at the rate of 25%---Classification Committee had sent samples to the Customs House Laboratory for analysis and after subjecting them to tests a report was accordingly submitted---Committee, in the light of the test analysis report and the physical attributes of the samples, had concluded that 'Biaxially Oriented Polypropylene film (BOPP) fell under one of the four PCT Headings i.e. 3920.2010, 3920.2020, 3920.2030 and 2920.2040---Committee further concluded that the composition of the imported goods described in the test report rendered all the aforementioned headings to merit equal consideration---Committee considered the three sub-rules of Rule 3 of the General Rules for Interpretation to the First Schedule to the Customs Act, 1969 ("Rules for Interpretation") in order to make a determination and the reasoning was recorded in the classification ruling---Rule 3(a) was excluded because none of the headings was most specific---Rule 3(b) was not attracted because all the headings merited equal consideration---As a consequence the determination was made by applying Rule 3(c) and on that basis PCT Heading 3920.2040 was determined since it was the heading which was last in numerical order among those which equally merited consideration---Committee had correctly determined PCT Heading 3920.2040 because it occurred last in the numerical order among those headings which merited equal consideration---Determination made by Committee was in accordance with the correct appreciation of the Rules of Interpretation and it did not suffer from any infirmity---Appellate Tribunal had made its own determination and that too without considering the test report and the classification ruling of the Committee---Tribunal had also not sought any technical assistance from the Committee or the Board---High Court also did not appreciate that the Committee had interpreted the Rules of Interpretation in accordance with the Explanatory Notes and other documents---Rules of Interpretation, particularly Rule 3(c), had not been properly appreciated and thus misinterpreted---Determination made by the Classification Committee did not suffer from any legal infirmity nor was found to be in violation of the Rules of Interpretation read with the Explanatory Notes---Appeals were allowed, judgments of the Tribunal and the High Court were set-aside, and consequently, the Order in Original whereby the refund application of respondent-company was rejected stood restored.

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

----S. 18 & First Sched.---Classification of imported goods---Correct PCT Heading, determination of---Classification Committee, power of---Scope---Classification of goods is one of the most basic functions of the procedure in the context of import or export of goods---It is a specialised job and technical in nature---It essentially requires expertise and taking of multiple factors into consideration e.g. examining the goods, all the relevant documents, understanding the classification aids and technical literature etc.---Classification Committee constituted by the Federal Board of Revenue includes experts who possess the skills, knowledge and experience in respect of classification of goods in conformity with the Harmonised Commodity Description and Coding System ('Harmonised System')---Classification Committee and its classification rulings, therefore, have crucial importance---There is a presumption of regularity attached to its proceedings and findings regarding classification of goods---This presumption, however, is rebuttable if it can be demonstrably shown that the findings are arbitrary, fanciful and in violation of the General Rules for Interpretation to the First Schedule to the Customs Act, 1969 ("Rules for Interpretation"), the Explanatory Notes and other relevant guidelines or principles relating to classification of goods under the Harmonised System---Appellate Tribunal nor the High Court can substitute the findings of the Classification Committee unless they can be shown to be arbitrary, fanciful or in violation to the applicable rules and principles of interpretation.

Raja Muhammad Iqbal, Advocate Supreme Court along with Ch. M. Javed, Chief (L), FBR and Nayyar Shafiq, Chief (Tariff) for Appellant.

Farhat Nawaz Lodhi, Advocate Supreme Court for Respondent.

2025 P T D 574

[Supreme Court of Pakistan]

Present: Munib Akhtar, Athar Minallah and Shahid Waheed, JJ

Messrs CHAWALA FOOTWEAR, LAHORE

Versus

COMMISSIONER INLAND REVENUE, LAHORE and others

C.A. No. 16 of 2022, decided on 14th January, 2025.

(Against the judgment dated 26.04.2017 passed by the Lahore High Court, Lahore in ITR No. 13 of 2015).

Income Tax Ordinance (XLIX of 2001)---

----S.161---Income Tax Rules, 2022, R. 43---Withholding tax, non-deduction of---Show cause notice---Fishing inquiry, principle of---Applicability---Appellant/taxpayer was aggrieved of show cause notice issued by authorities to initiate proceedings for not deducting withholding tax---Validity---If a taxpayer fails to collect or deduct tax from payments made during a tax year, such inaction is deemed as a default under section 161 of Income Tax Ordinance, 2001---Point that sets into motion the machinery of section 161 of Income Tax Ordinance, 2001 to determine tax liability is the failure to either collect tax or deduct it---Show-cause notice highlighted discrepancies in valuation of imports and specified categories under which tax was applicable---This indicated that there was careful consideration of any failures to deduct tax, along with an assessment of underlying bases and amounts involved, therefore, the notice was not simply a fishing expedition---Supreme Court declined to interfere in the judgment passed by High Court as demand created against appellant/taxpayer was well-founded---Appeal was dismissed.

Commissioner Inland Revenue Zone-I, LTU v. MCB Bank Limited 2021 SCMR 1325 and Messrs. Bilz (Pvt.) Ltd. v. Deputy Commissioner of Income-Tax, Multan and another 2002 PTD 1 = PLD 2002 SC 353 ref.

Ch. Mumtaz ul Hassan, Advocate Supreme Court for Appellant (via video link from Branch Registry Lahore).

Ahmad Pervaiz, Advocate Supreme Court for Respondents (via video link from Branch Registry Lahore).

2025 P T D 582

[Supreme Court of Pakistan]

Present: Yahya Afridi, CJ and Muhammad Shafi Siddiqui, J

COMMISSIONER INLAND REVENUE, (SPECIAL ZONE FOR BUILDERS AND DEVELOPERS) REGIONAL TAX OFFICE, ISLAMABAD

Versus

Messrs KHUDADAD HEIGHTS, ISLAMABAD

Civil Petition No. 862 of 2024, decided on 27th February, 2025.

(Against the judgment dated 18.11.2023 of the Islamabad High Court, Islamabad passed in I.T.R. No. 60 of 2015).

Income Tax Ordinance (XLIX of 2001)---

----S.122---Constitution of Pakistan, Art. 185 (3)---Re-assessment---Definite information---Credit entries in bank record---Re-assessment of net worth of respondent/taxpayer was set aside by Appellate Tribunal Inland Revenue and the order was maintained by High Court---Validity---Re-assessment proceedings were triggered on the basis of bank statement of respondent/taxpayer---All transactions in bank account did not necessarily demonstrate income of respondent/taxpayer, unless it was established that statements and/or entries therein had disclosed information of income which was 'definite'---Banking instrument could not be applied as one having 'definite information'---Neither Commissioner nor Appellate Tribunal Inland Revenue and High Court were of the view that all credit entries in statement of account disclosed income of respondent/taxpayer hence it did not constitute 'definite information'---Appellate Tribunal Inland Revenue was the last fact finding forum and such question could neither be raised in reference jurisdiction of High Court nor before Supreme Court---Supreme Court declined to interfere with judgment of High Court---Petition for leave to appeal was dismissed and leave to appeal was refused.

Commissioner Inland Revenue Zone-I RTO, Rawalpindi v. Messrs Khan CNG Filling Station, Rawalpindi and others 2017 SCMR 1414 and Commissioner Inland Revenue, RTO, Bahawalpur v. Messrs Bashir Ahmed (deceased) through L.Rs 2021 SCMR 1290 ref.

Dr. Farhat Zafar, Advocate Supreme Court and Dr. Ishtiaq Ahmed Khan, Director-General (Law), FBR for Petitioner.

Nemo for Respondent.

2025 P T D 608

[Supreme Court of Pakistan]

Present: Munib Akhtar, Athar Minallah and Syed Hasan Azhar Rizvi, JJ

BASHIR AHMAD

Versus

DIRECTOR, DIRECTORATE OF INTELLIGENCE AND INVESTIGATION (CUSTOMS), FBR, PESHAWAR and another

Civil Petition No. 2330 of 2023, decided on 12th September, 2024.

(Against the judgment dated 15.02.2024 of the Peshawar High Court, Peshawar passed in Customs Reference No.36-P of 2021).

Customs Act (IV of 1969)---

----Ss.17, 181, 194-A & 196---Notification SRO 499 (I)/2009, dated

13-06-2009---Constitution of Pakistan, Art. 185(3)---Transporting smuggled goods---Confiscation of vehicle---Option to pay fine---Aggrieved person---Scope---Petitioner was driver of vehicle which was confiscated by authorities for transporting smuggled goods---Owner of vehicle did not come forward, instead the petitioner sought release of vehicle against payment of fine---Validity---Vehicle was seized in year 2020 and it was outrightly confiscated---Before insertion of proviso to Section 157(2) of Customs Act, 1969 it remained effective for a short period and was omitted through Finance Act, 2022---Proviso inserted in section 157 of Customs Act, 1969 generally explained the extent of confiscation and did not in any manner affect, limit or interfere with the powers conferred on Federal Board of Revenue under Section 181 of Customs Act, 1969---In the context of giving an option to release goods in lieu of payment of fine, provisions of Sections 157 & 181 were independent of each other and the former could not be construed as having an overriding effect on the latter---Inserted and then omitted proviso was not relevant or attracted in the matter, as the vehicle was found carrying smuggled goods and was used exclusively for transportation thereof, which was covered under clause (b) of Preamble to Notification SRO 499(I)/2009, dated 13-06-2009 and the option contemplated under section 181 of Customs Act, 1969 could not have been given for its release---Aggrieved person is the one whose legal right have been invaded, or whose pecuniary interest is directly and adversely affected---Expression aggrieved refers to a substantial grievance, denial of some personal pecuniary or property rights, or imposition upon a party for burden or obligation---Statutory right of appeal provided under Section 194A of Customs Act, 1969 is confined to an aggrieved person or an officer of customs---Petitioner was not owner of vehicle, nor had the latter sought benefit under section 181 of Customs Act, 1969---Petitioner was neither authorized nor was acting as a lawful attorney on behalf of owner of vehicle---Supreme Court declined to interfere in the orders of confiscation of vehicle in question---Petition for leave to appeal was dismissed and leave to appeal was refused.

Collector of Customs, Peshawar v. Wali Khan and others 2017 SCMR 585; Director-General, Intelligence and Investigation-FBR v. Sher Andaz and others 2010 SCMR 1746 and Director, Directorate-General of Intelligence and Investigation and others v. Al-Faiz Industries (Pvt.) Ltd. and others 2006 SCMR 129 ref.

Naveed Akhtar, Advocate Supreme Court for Petitioner (via video link from Peshawar).

Shahid Qayyum, Advocate Supreme Court for Respondents (via video link from Peshawar).

2025 P T D 622

[Supreme Court of Pakistan]

Present: Yahya Afridi, CJ, Muhammad Shafi Siddiqui and Miangul Hassan Aurangzeb, JJ

COMMISSIONER INLAND REVENUE, CORPORATE ZONE, RTO PESHAWAR

Versus

Messrs FLYING KRAFT PAPER MILLS (PVT.) LIMITED, CHARSADDA and another

(On appeal from the judgment dated 11.03.2020 of the Islamabad High Court, Islamabad passed in S.T.R. No. 14 of 2008).

COMMISSIONER INLAND REVENUE, LEGAL LTO, KARACHI

Versus

MATIARI SUGAR MILLS, KARACHI

(Against the judgment dated 04.02.2021 of the High Court of Sindh, Karachi passed in Special Sales Tax Appeal No. 148 of 2005].

Civil Appeal No. 316 of 2022 and Civil Petition No. 483-K of 2021, decided on 26th February, 2025.

Sales Tax Act (VII of 1990)---

----S.7---Input tax, adjustment of---Electricity and gas supply bills---Residential colony of industrial unit---Authorities were aggrieved of adjustment of input tax against supply of electricity and gas to residential colony for workers established in factory premises---Validity---Residential colony of factory for the convenience of workers was provided within factory premises for unrestrained factory work---Entire premises was registered as one manufacturing premises---Had it been objected, the entire premises would not have been registered as one manufacturing unit---Supreme Court declined to interfere in conclusion drawn by Appellate Tribunal Inland Revenue as well as by High Court, as it was based on admission of facts regarding residential colony existing within registered factory premises---Petition for leave to appeal was dismissed and leave to appeal was refused.

Sheikhoo Sugar Mills Ltd. and others v. Government of Pakistan and others 2001 SCMR 1376 = 2001 PTD 2097 rel.

Dr. Farhat Zafar, Advocate Supreme Court, Dr. Ishtiaq Ahmed Khan, Director-General, Law, FBR and Sharif Ullah, AD, Legal for Appellant (in C.A. No. 316 of 2022).

Isaac Ali Qazi, Advocate Supreme Court for Respondents (in C.A. No. 316 of 2022).

Irfan Mir Halepota, Advocate Supreme Court, Mrs. Abida Parveen Channar, Advocate-on-Record, Sharjeel Ahmed, Addl. Commissioner, FBR for Petitioner (in C.P. No. 483-K of 2021) (via video link from Karachi).

Nemo for Respondent (in C.P. No. 483-K of 2021).

2025 P T D 635

[Supreme Court of Pakistan]

Present: Munib Akhtar, Athar Minallah and Shahid Waheed, JJ

COMMISSIONER INLAND REVENUE, LAHORE

Versus

Messrs EAGLE CABLES (Pvt.) LTD., LAHORE

C.P.L.A No. 2400-L of 2022, decided on 16th January, 2025.

(Against the judgment dated 12.04.2022 passed by the Lahore High Court, Lahore in S.T.R. No. 5 of 2014).

Sales Tax Act (VII of 1990)---

----Ss.7, 8(1)(d), 21, 47 & 73---Input tax adjustment---Invoices---Proof---Subsequent blacklisting of suppliers---Authorities denied adjustment of input tax on the ground that invoices relied upon by respondent/taxpayer were issued by the suppliers who had later been blacklisted---Validity---Authorities failed to provide any concrete evidence indicating that invoices were issued to respondent / taxpayer during any period of suspension or blacklisting---At the time purchases were made, the suppliers involved were neither blacklisted nor inactive---Payments for such purchases were processed through legitimate banking channels, adhering to procedures delineated in section 73 of Sales Tax Act, 1990---If a transaction was conducted while the suppliers were active and duly registered, invoices issued were not automatically invalidated by a subsequent blacklisting or suspension of the suppliers---Denial of refunds could not be justified solely based on lateral blacklisting of a supplier---All purchases according to Section 21(3) of Sales Tax Act, 1990 including the respondent / taxpayer, who procured goods before suppliers' registration were suspended or they were blacklisted, and who complied with the conditions outlined in section 73 of Sales Tax Act, 1990 were entitled to claim an adjustment of input tax---Demand raised by the Deputy Commissioner of Inland Revenue was unjustified, and as such it was rightly set aside by subsequent higher forums that reviewed the matter, affirming position of respondent/taxpayer---Petition for leave to appeal was dismissed and leave was refused.

Ch. Muhammad Zafar Iqbal, Advocate Supreme Court for Petitioner.

Nemo for Respondent.

2025 P T D 753

[Supreme Court of Pakistan]

Present: Munib Akhtar, Athar Minallah and Shahid Waheed, JJ

COMMISSIONER INLAND REVENUE, LAHORE

Versus

Messrs AZAM TEXTILE MILLS LIMITED, LAHORE

C.P.L.A. No. 1369-L of 2022, decided on 15th January, 2025.

(Against the order dated 16.03.2022 passed by the Lahore High Court, Lahore in P.T.R. No.260 of 2012).

(a) Sale of Goods Act (III of 1930)---

----S. 4---Sale---Connotation---Sale occurs when ownership of goods is transferred to buyer and payment for such goods has been made---Payment must take the form of money, commonly referred to as price of goods---If ownership of goods is exchanged for anything other than money, such transaction cannot be classified as a sale; instead, it would be considered an exchange or barter.

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

----Ss. 112(1), 153(7)(iii), 169 & 177---Amended assessment---Transfer of raw material---Pre-conditions of sale---Taxation officer interpreted transaction concerning transfer of raw materials as a sale and assessed the same under section 169 of Income Tax Ordinance, 2001---Order of Appellate Tribunal Inland Revenue, setting aside amended assessment was maintained by High Court---Validity---Sale of goods as elucidated by section 153 (7) (iii) of Income Tax Ordinance, 2001 encompasses any transaction in which goods are sold, irrespective of whether payment is made in cash or on credit, and is applicable regardless of the existence of a formal written contract---According to such definition, it is mandated that a sale must involve receipt of consideration, which can be either cash or credit---There was absence of such critical element of consideration with respect to transactions in question---Transactions documented in ledgers merely represented a straightforward transfer of raw materials from one entity to another and was devoid of any characteristics of a sale---Tax obligations outlined in section 153 of Income Tax Ordinance, 2001 did not pertain to transfer of raw materials to sister concern---Supreme Court declined to interfere in the judgment passed by High Court---Petition for leave to appeal was dismissed and leave was refused.

Ahmad Pervaiz, Advocate Supreme Court for Petitioner (via video link from Branch Registry Lahore).

Nemo for Respondent.

2025 P T D 795

[Supreme Court of Pakistan]

Present: Yahya Afridi, CJ, Irfan Saadat Khan and Muhammad Shafi Siddiqui, JJ

The INTELLIGENCE OFFICER, DIRECTORATE OF INTELLIGENCE AND INVESTIGATION, FBR and others

Versus

ABDUL KARIM and others

Civil Appeals Nos. 1088, 1231 to 1236 of 2013, 142-K of 2015, 938 of 2018 and 453 to 466 of 2022, decided on 17th April, 2025.

(On appeal from the judgment dated 27.05.2013 of the Peshawar High Court, Peshawar passed in Civil Revision No. 1211 of 2011).

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

----Ss. 2 (s), 156 (1) (89) & 211 (2)---Notification SRO 491(I)/85, dated 23-05-1985---Smuggled vehicles---Possession---Lawful excuse, plea of---Authorities were aggrieved of order passed by High Court in exercise of Reference jurisdiction pertaining to confiscation of vehicles in question which were alleged to be smuggled---Validity---Condition precedent for Section 156(1)(89) of Customs Act, 1969 to apply, is that goods in question should be smuggled, in terms of Section 2(s) of Customs Act, 1969, read with applicable notification thereunder---Vehicles in question could be considered smuggled if either (i) at the relevant time, the applicable notification in terms of Section 2(s)(ii) of Customs Act, 1969 included vehicles, or (ii) in terms of Section 2(s)(iii) of Customs Act, 1969 the vehicles were brought in by any route other than a route declared under Section 9 or 10 of Customs Act, 1969 or from any place other than the customs station---In cases of registered vehicles, if at the time the vehicle was intercepted, more than 3 years had elapsed for cases prior to Finance Act, 2007 and 5 years for cases thereafter, the defence of "lawful excuse" was indefeasible---It was reasonable to assume that if a vehicle stood registered, the government was presumed to have exercised due care and diligence with respect to its obligation to see whatever duties and taxes as payable to the government before a vehicle could be registered, stood paid---Vehicles in question were registered, which registration was duly verified, and they were presumed to have been brought lawfully; after completion of notified period in case of used vehicles also---Without any proof it could not be said that a person (last owner) was involved in registration of vehicle knowing fully well that no duties and taxes, as required under the law, were paid, and that therefore the vehicle was fraudulently registered, and the vehicle could be seized from him on his failure to produce documents of import and payment of duties and taxes thereon, and even beyond the period of three years or five years, as the case would be, as required under Section 211(2) of Customs Act, 1969---In most of the cases since first registration, the vehicles had changed many owners on the strength of registration book and no adverse inference could be drawn for the ultimate bona fide owners unless otherwise proved by the authorities, in which exercise they had failed---Verified registration book and official record was enough for bona fide presumption that a valid title existed---Vehicles in question were those which were either auctioned or were brought into Pakistan and were registered through a statutory process and the auction papers or registration papers of some other vehicles were not being used fraudulently---Where it was established that chassis/engine numbers had been tampered with after auction or registration to match the description of auctioned or registered vehicle, the lawful excuse was not available---Supreme Court declined to interfere in the orders passed by High Court as the questions had been answered cumulatively---Appeal was dismissed.

Commissioner Inland Revenue v. Panther Sports 2022 SCMR 1135 rel.

(b) Interpretation of statutes---

----Pari materia provisions---Interpretation---Principle---Where two provisions are pari materia, by applying doctrine of statutory construction, there cannot be a different interpretation for them.

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

----S. 156 (1)(89)---Expression "lawful excuse"---Scope---Lawful excuse is an expression that is of wider import and (carries) lesser degree of burden than lawful authority---For proving a lawful excuse, which falls short of lawful authority, it is the excuse put forward by accused, rather than handling smuggled goods, that must be shown to be lawful.

PLD 1955 PC 29 rel.

Mrs. Misbah Gulnar Sharif, Advocate Supreme Court for Appellants (in C.A. No. 1088 of 2013).

M. D. Shehzad Feroze, Advocate Supreme Court, Syed Rifaqat Hussain Shah, Advocate-on-Record and Shabbir Hussain, Superintendent Customs for Appellants (in C.As. Nos. 1231, 1233 and 1234 of 2013).

Dr. Farhat Zafar, Advocate Supreme Court and Moin-ud-Din Ahmed Wani, Collector (Enforcement), Karachi for Appellants (in C.As. Nos. 1232, 1235 and 1236 of 2013).

Raja Muhammad Iqbal, Advocate Supreme Court and Moin-ud-Din Ahmed Wani, Collector (Enforcement), Karachi for Appellants (in C.As. Nos. 142-K of 2015 and 462-463 of 2022).

Kafeel Ahmed, Advocate Supreme Court for Appellants (in C.A. No. 938 of 2018) (via video-link from Karachi).

Akhtar Hussain, Senior Advocate Supreme Court and K. A. Wahab, Advocate Supreme Court for Appellants (in C.As. Nos. 453-461 and 464-466 of 2022) (both via video-link from Karachi).

Masood Ahmed, Director, Intelligence and Investigation, Customs, Imran Afzal, Additional Director and Shaheer Ahmed, ETO/E&T, Department for Appellant (department) (via video-link from Karachi).

M. Younas Thaheem, Advocate Supreme Court for Respondent No. 2 (in C.A. No. 458 of 2022).

Ex-parte for all other Respondents.

Sirdar Ahmed Jamal Sukhera, Advocate Supreme Court Amicus Curiae.

2025 P T D 823

[Supreme Court of Pakistan]

Present: Yahya Afridi, CJ Muhammad Shafi Siddiqui and Shakeel Ahmad, JJ

Messrs PAYONEER INC., through authorized officer

Versus

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

Civil Petition No. 4177 of 2024, decided on 9th April, 2025.

(Against the judgment dated 20.06.2024 of the Islamabad High Court, Islamabad passed in Writ Petition No. 1670 of 2021).

Income Tax Ordinance (XLIX of 2001)---

----S. 114---Constitution of Pakistan, Arts. 185(3) & 199---Constitutional jurisdiction---Alternate and efficacious remedy---National Tax Number, issuance of---Tax non-resident, plea of---Petitioner/company was aggrieved of notice issued by tax authorities after issuing National Tax Number---High Court in exercise of Constitutional jurisdiction declined to interfere in the notice issued by authorities---Validity---Registration alone under Income Tax Ordinance, 2001 or issuance of National Tax Number does not qualify as a coercive action against any entity---No prior notice before registration would have made any difference---Supreme Court declined to interfere in judgment of High Court in Constitutional petition, which was directly assailed before Supreme Court without exhausting remedy of Intra Court Appeal---Only under exceptional circumstances, to be adjudged by Supreme Court itself, such indulgence could be extended which did not exist in the present case---Petition for leave to appeal was dismissed and leave to appeal was refused.

Commissioner Inland Revenue (Legal Division), LTU, Islamabad v. Messrs Geofizyka Krakow Pakistan Limited 2017 PTD 1526; Metropole Cinema's case 2014 SCMR 649 and Hub Power Company Ltd.'s case PLD 2023 SC 207 rel.

Jahanzeb Awan, Advocate Supreme Court for Petitioner.

Imtiaz Ahmed, Advocate Supreme Court and Syed Rifaqat Hussain Shah, Advocate-on-Record for the Respondents.

2025 P T D 837

[Supreme Court of Pakistan]

Present: Yahya Afridi, CJ and Irfan Saadat Khan, J

MUHAMMAD FAISAL Prop., F.A.Traders, Lahore

Versus

COMMISSIONER INLAND REVENUE, ZONE-II, RTO-II, LAHORE

Civil Petition No. 2100 of 2024, decided on 4th March, 2025.

(Against the order dated 27.02.2024 passed by Lahore High Court, Lahore in I.T.R. No. 41034 of 2017).

Income Tax Ordinance (XLIX of 2001)---

----Ss. 114 & 133---Limitation Act (IX of 1908), Ss. 3 & 5---Constitution of Pakistan, Art. 185(3)---Reference to High Court---Limitation---Office objection---Condonation of delay---Petitioner/tax-payer was aggrieved of order passed by High Court on tax reference of authorities, which was filed beyond the time frame given by office of High Court---Validity---If objections raised by office of High Court were not removed within the time specified by the office and in the meantime limitation for filing appeal stood expired, such appeal would be rendered as time barred---Limitation is not a mere technicality, as once limitation expires a vested right is created in favour of other side by operation of law which cannot be taken away lightly---High Court had passed the order on merits of the case but failed to discuss averments of application with regard to limitation by specifying whether the same was allowed or rejected---High Court should have decided such objection of limitation as a preliminary issue---Supreme Court set aside the order passed by High Court and remanded the matter for decision afresh on application for condonation of delay---Petition for leave to appeal was disposed of.

Asad Ali and 9 others v. The Bank of Punjab and others PLD 2020 SC 736; Abdul Jabbar Shahid and others v. National Bank of Pakistan and others PLD 2019 Lahore 76; Abdul Hafeez Abbasi and others v. Managing Director, Pakistan International Airlines Corporation, Karachi and others 2002 SCMR 1034 and Collectors of Customs E & S.T. and Sales Tax v. Pakistan State Oil Company Ltd 2005 SCMR 1636 rel.

Hassan Kamran Bashir, Advocate Supreme Court for Petitioner.

Mrs. Kausar Parveen, Advocate Supreme Court and Dr. Ishtiaq Ahmed Khan, DG (Law) FBR for Respondent.

2025 P T D 1023

[Supreme Court of Pakistan]

Present: Yahya Afridi, CJ, Muhammad Shafi Siddiqui and Shakeel Ahmad, JJ

SURFACTANT CHEMICALS COMPANY (PVT.) LIMITED, KARACHI

Versus

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

Civil Petitions Nos. 5029 to 5032 of 2024, decided on 18th April, 2025.

(Against the orders/judgments dated 12.09.2024 of the High Court of Sindh, Karachi passed in Const. P. No. D-4002 of 2019, Const. P. No. D-6074 of 2021 and Const. Ps. Nos. 774 and 2385 of 2022).

Customs Act (IV of 1969)---

----S. 19---Notification S.R.O. 565(I)/ 2006, dated 05-06-2006 and S.R.O 474(I)/2016, dated 24-06-2016---Customs duty---Exemption---Duty in excess of zero percent---Applicability---Petitioner/importer was aggrieved of imposition of import duty on chemical imported---Validity---Treatment of goods disclosed in S.R.O. 565(I)/2006, dated 05-06-2006 were subject to fulfillment of certain obligations---Amended S.R.O. 474(I)/2016, dated 24-06-2016 itself put petitioner/importer under obligations to provide its qualification in order to fectch exemption which was only available for manufacturing or formulation of agricultural pesticides by manufacturers and formulators and that could only be recognized and approved by the Ministry of National Food Security and Research---Column (2) of S.R.O. had restricted and prescribed a condition and treatment of goods of column (3) in terms of exemption of customs duty could only be if condition prescribed in Column (2) was met---Petitioner/importer was neither recognized nor approved by the Ministry of National Food Security and Research either as manufacturer or formulator of Agricultural pesticides---If petitioner/importer had chosen to protect any such alleged right which claimed to have been violated by the S.R.O., the petitioner/importer was at liberty and if any such right was exercised, it should be dealt with in accordance with the law, and permission as such was not required---Petition for leave to appeal was dismissed and leave to appeal was refused.

Taimur Aslam Khan, Advocate Supreme Court and Syed Rifaqat Hussain Shah, Advocate-on-Record for Petitioner (in all cases).

Dr. Farhat Zafar, Advocate Supreme Court for Respondent (FBR) (in C.Ps. Nos. 5029, 5031-5032 of 2024).

Nemo for Respondents (in C.P. No. 5030 of 2024).

2025 P T D 1072

[Supreme Court of Pakistan]

Present: Munib Akhtar, Ayesha A. Malik and Aqeel Ahmed Abbasi, JJ

COMMISSIONER INLAND REVENUE, CORPORATE ZONE, REGIONAL TAX OFFICE, FAISALABAD

Versus

Messrs NATIONAL PUBLIC WELFARE SOCIETY, JINNAH COLONY, FAISALABAD and another

Civil Petition No. 687-L of 2024, decided on 23rd April, 2025.

(Against order dated 31.01.2024 passed by the Lahore High Court, Lahore in I.T.R. No. 77169 of 2022).

Income Tax Ordinance (XLIX of 2001)---

----Ss. 2(36), 122 & 237(1)---Income Tax Rules, 2002, R. 214---Notification SRO No. 754 (I)/2016, dated 15-08-2016---Welfare society---Tax credit---Nature of amendment---Authorities issued notice for tax recovery to respondent / taxpayer on the ground that it did not have valid approval in its favour for claiming tax credits---Validity---Provision of Rule 214 of Income Tax Rules, 2002 was to apply for subsequent three years---Such amendment was to apply prospectively as the words subsequent three years did not suggest that the amendment was to apply retrospectively---Notification SRO No. 754 (I)/2016, dated 15-08-2016 did not contain any provision which could suggest that the notification would apply retrospectively---Approval obtained by respondent / taxpayer in year 2007 was valid and it did not expire in year 2010, on account of notification SRO No. 754 (I)/2016, dated 15-08-2016---Retrospective application of law cannot be made unless specifically provided for, particularly in tax cases---Notification SRO No. 754 (I)/2016, was issued on 15-08-2016, the period of three years was to be counted subsequent thereto which meant that the approval granted would expire in August 2019---Supreme Court declined to interfere in the matter as the respondent / taxpayer had relevant approval necessary for claiming tax credit for the tax year 2019 and was entitled to it---Petition for leave to appeal was dismissed and leave to appeal was refused.

Commissioner Inland Revenue v. Millat Tractors Ltd. 2024 SCMR 700 rel.

Mrs. Kausar Parveen, Advocate Supreme Court for Petitioner.

M. Amir Sohail, Advocate Supreme Court for Respondents.

2025 P T D 1179

[Supreme Court of Pakistan]

Present: Munib Akhtar, Irfan Saadat Khan, Muhammad Shafi Siddiqui, Shakeel Ahmad and Miangul Hassan Aurangzeb, JJ

Messrs WAK LIMITED MULTAN ROAD, LAHORE and others

Versus

COLLECTOR CENTRAL EXCISE AND SALES TAX, LAHORE (NOW COMMISSIONER INLAND REVENUE, LTU, LAHORE) and others

C.As. Nos. 634 to 636, 1290 to 1295 of 2018, 1424 to 1430 of 2019, 1388 to 1392 of 2017, 57, 852, 1128 of 2020, C.P.L.As. Nos. 2286-L, 2298-L, 2299-L, 2065-L of 2017, C.As. Nos. 436, 1693 of 2021, C.P.L.As. Nos. 1604-L, 1411-L of 2022, C.A. No. 1486 of 2021, C.P.L.As. Nos. 1397-L, 770-L, 1285-L of 2022, C.As. Nos. 732 of 2012, 394 of 2013, 399, 712 of 2013, C.P.L.As. Nos. 5107, 592-P of 2023, 2473-L and 2474-L of 2022, C.M.As. Nos. 1917-L, 1918-L, 1919-L, 966-L and 964-L of 2015, C.R.Ps. Nos. 153, 154 of 2017 and C.M.A. No. 5471 of 2019, decided on 14th May, 2025.

(On appeal against judgment dated 24.08.201, 16.01.2017, 18.01.2017, 19.01.2017, 12.02.2015, 12.02.2015, 03.04.2019, 20.11.2014, 23.11.2015, 08.05.2017, 12.06.2017, 14.06.2017, 30.05.2017, 24.05.2017, 26.01.2021, 07.03.2022, 09.03.2022, 08.12.2020, 09.03.2022, 24.01.2022, 01.03.2022, 06.06.2012, 05.04.2012, 05.04.2012, 05.02.2012, 17.10.2023, 11.05.2023 and 22.03.2022 passed by the Lahore High Court, Lahore, Lahore High Court Bahawalpur Bench Bahawalpur, Lahore High Court, Multan Bench, Multan, Islamabad High Court, Islamabad, Peshawar High Court, Peshawar in STR No. 33 of 2005, ETR No. 1 of 2005 and STRs Nos. 10 of 2006, 01/2011/BWP, 02/2011/BWP, 02/2013/BWP, 03/2013/BWP, 03/2016/BWP, STR No.169/2012, 10/2011, 165/2013, 96/2013, 82/2012, , 23/2012, 24/2012, 14/2008, 21/2009, 185/2011, 116/2007, 127/2007, 42/2011, 01/2008, 212/2015, 81/2013, 126/2013, 78/2014, 32435/2017, 22/2012, 4925/2021, 157/2012, 77/2013, 173/2011, 36459/2021, 79765/2021, Customs Reference No. 29033/2019, Sales Tax References Nos. 73/2010, 101/2010, 75/2011, 13/2011, 11/2014, 23-P/2022, ETR No. 05/2011 and STR No.88/2011.)

C.M.As.1917-L, 1918-L, 1919-L, 966-L and 964-L /2015

(Stay in C.As. Nos. 1388, 1389, 1390, 1391 and 1392 of 2017).

C.R.Ps. 153 and 154/2017

(For review of judgment dated 31.03.2017 passed by this Court in C.A. No. 399 of 2013 and C.A. No. 682 of 2008.)

C.M.A. 5471/2019

(Permission to file and argue) in C.R.P.Nil/2019 in C.A. No. 219 of 2011

(a) Interpretation of statutes---

----Word "shall"---Scope---Generally Courts have more readily concluded that in appropriate circumstances a "shall" is to be read as "may" (i.e., that the provision seemingly mandatory was in actuality directory) rather than the other way round.

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

----S. 74---Condonation of time limit---Scope---Matter was referred to Larger Bench of Supreme Court to consider whether judgment of three member Bench of Supreme Court given in case titled Collector of Sales Tax, Gujranwala and others v. Super Asia Mohammad Din and others, reported as 2017 SCMR 1427, 2017 PTD 1756 ('Super Asia Case') was correct---Validity---Double layer of protection accorded to the taxpayer shields him from unmeritorious claims and bogus show cause notices, which may be issued by concerned officer to harass and intimidate the former and/or for ulterior motives and purposes---Conclusion that the relevant provisions are mandatory help in ensuring that it is only a genuine case, based on substance and having (objectively) a reasonable prospect of success, of alleged non- or short payment of tax that is opened against the taxpayer---It is a bogus and false claim that concerned officer would wish to keep pending, for it to be as it were a Damocles' sword hanging over the taxpayer---Time bound closure of cases would help in reducing cases being brought for non-genuine reasons and purposes---For if the show cause notice is based on firm grounds and for lawful purposes then (subject of course to whatever reply the taxpayer may give thereto) it would be in the interest of the State (as represented by the adjudicating authority) to decide the same as expeditiously as possible, which would be well within the generous time periods allowed by the statute, as held in 'Super Asia Case'---If, in the end, a case is not made out then equally a responsible officer acting lawfully and truly motivated by public interest would wish to bring proceedings to a close as quickly as possible, which would again be within the time periods set out in the relevant provisions---Multi-layered protection, by way of mandatory periods of limitation, is not just well within the legislative power; it is the intent that is expressed in the relevant provisions, as rightly held in 'Super Asia Case'---Larger Bench of Supreme Court affirmed the decision of Supreme Court in case titled Collector of Sales Tax, Gujranwala and others v. Super Asia Mohammad Din and others, reported as 2017 SCMR 1427, 2017 PTD 1756, as it had correctly stated the law on all points.

Collector of Sales Tax, Gujranwala and others v. Super Asia Mohammad Din and others 2017 SCMR 1427; 2017 PTD 1756; Wak Limited v. Collector Central Excise and Sales Tax and others 2018 SCMR 1474; Abbasi Enterprises Unilever Distributor Haripur v. Collector of Sales Tax and Federal Excise Duty 2019 SCMR 1989; Commissioner Inland Revenue and others v. Sarwaq Traders and others 2025 SCMR 341; A.J. Traders v. Collector of Customs and others PLD 2022 SC 817; Mujahid Soap and Chemical Industries Ltd. v. Customs Appellate Tribunal 2019 SCMR 1735; Commissioner Inland Revenue and another v. Sarwaq Traders and another 2022 SCMR 1333; 2022 PTD 1128; Federal Land Commission through Chairman v. Rais Habib Ahmed and others PLD 2011 SC 842 and Commissioner Inland Revenue v. Yasmeen Bano and others 2020 SCMR 1120 ref.

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

----S. 74---Condonation of time limit---Period of extension---Scope---Like all statutory powers the one conferred by Section 74 of Sales Tax Act, 1990 has to be exercised objectively---What is the period of extension appropriate in a given case or class of cases is not to be determined subjectively by Federal Board of Revenue but objectively and in accordance with settled principles of law.

(d) Discretion---

----Statutory discretion---Applicability---Statutory discretion is to be exercised by the authority or officer on which it is conferred; most fundamentally, it must be exercised reasonably.

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

----S. 74---Condonation of time limit---Period of extension---Exercise of discretion---Principle---Provision of Section 74 of Sales Tax Act, 1990 does not confer an open-ended power in such regard---Federal Board of Revenue cannot, on the basis of its own subjective assessment, grant an extension for however long a period it thinks fit---Matter must, and if it comes before a Court, certainly has to be looked at objectively---If the period is excessive (in the sense that it is not "appropriate" within the frame of the section) it may be declared to be unlawful and quashed.

For the Private Parties

Ali Sibtain Fazli, Advocate Supreme Court (in C.As. Nos. 634-636 of 2018).

Ch. Hafeezullah Yaqoob, Advocate Supreme Court (in C.A. No. 1291 of 2018).

Dl. Muhammad Khan Alizai, Advocate Supreme Court (in C.A. Nos. 1292-1294 of 2018).

M. Ajmal Khan, Advocate Supreme Court (via video-link, Lahore) (in C.As. Nos. 1426 of 2019 and 1486 of 2021).

Munawar-us-Salam, Advocate Supreme Court (via video-ink, Lahore).

M. Shoaib Rashid, Advocate Supreme Court (via video-link, Lahore) (in C.A. No. 1128 of 2020).

Ijaz Ahmed Awan, Advocate Supreme Court (via video-link, Lahore) (in C.As. Nos. 1388-1392 of 2017).

Syed Naveed Amjad Indrabi, Advocate Supreme Court (in C.R.P. No. 154 of 2017).

For Commissioner Inland / FBR

Mrs. Kausar Parveen, Advocate Supreme Court (in C.As. Nos. 634-636 of 2018 and C.A. No. 1292 of 2018, 1428 of 2019, C.P.L.As. Nos. 2298-L, 2299-L of 2017, 2065-L of 2017 and 770-L of 2022).

Ch. Muhammad Zafar Iqbal, Advocate Supreme Court (in C.As. Nos. 1290, 1293, 1294, 1295 of 2018 and C.As. Nos. 1388-1392 of 2017, 712 of 2013, C.P.L.As. Nos. 1411-L of 2022, 1285-L of 2022 and 2286-L of 2017).

Abdul Razzaq Raja, Advocate Supreme Court (in C.A. No. 57 of 2020 and C.M.A. No. 5471 of 2021).

Dr. Farhat Zafar, Advocate Supreme Court (in C.A. No. 732 of 2012).

Mian Yousaf Umar, Advocate Supreme Court (via video-link, Lahore) (in C.As. Nos. 1424/2019, 1429/2019, 1430/2019, 852/2020, 436/2021 and C.P.L.A. No. 1604-L/2022).

Malik Qamar Afzal, Advocate Supreme Court (in C.P. No. 5107/2023).

Sarfraz Ahmed Cheema, Advocate Supreme Court (via video-link, Lahore) (in C.As. Nos. 1425/2019 and 1128/2020).

Ahmed Pervez, Advocate Supreme Court (via video-link, Lahore) (in C.A. No. 1693/2021).

Yahya, Advocate Supreme Court (via video-link, Lahore) (in C.A. No. 1291/2018).

M. Saeed Tahir, Advocate Supreme Court (via video-link, Lahore) (in C.A. No. 1486/2021).

Waqar A. Sh., Advocate Supreme Court (via video-link, Lahore) (in C.As. Nos. 1426 and 1427/2019).

Izhar ul Haq, Advocate Supreme Court (in C.R.Ps. Nos. 153-154/17, C.As. Nos. 394/2013 and 399/2013).

Ms. Saba Saeed, Advocate Supreme Court (in C.P.L.As. Nos. 1397-L/2022, 2473-2474-L/2022).

Ishtiaq Ahmad, Advocate Supreme Court (in C.P. No. 592-P/2023) (via video-link, Peshawar).

Dr. Ishtiaq, DG (Law), FBR.

2025 P T D1230

[Supreme Court of Pakistan]

Present: Yahya Afridi, CJ, Muhammad Shafi Siddiqui and Miangul Hassan Aurangzeb, JJ

C.A. No. 743 of 2014

Messrs KASSIM TEXTILE MILLS (PVT.) LIMITED

Versus

COMMISSIONER INLAND REVENUE, KARACHI

(Against judgment dated 07.05.2013 of the High Court of Sindh, Karachi passed in I.T.R.A. No. 132 of 2011).

C.P.L.A. No. 10-L of 2017

COMMISSIONER INLAND REVENUE, LAHORE

Versus

Messrs EDUCATIONAL EXCELLENCE LIMITED, LAHORE

(Against order dated 18.10.2016 of the Lahore High Court, Lahore passed in I.T.R. No. 255 of 2016).

C.M.A. No. 13838 of 2021 in C.P.L.A. No. 10-L of 2017

COMMISSIONER INLAND REVENUE, LAHORE

Versus

Messrs EDUCATIONAL EXCELLENCE LIMITED, LAHORE

(Application for impleadment)

C.A. No. 1954 of 2019

DUBAI ISLAMIC BANK PAKISTAN LIMITED, KARACHI

Versus

PAKISTAN through Secretary Revenue and Ex Officio Chairman, Federal Board of Revenue, Islamabad and others

(Against order dated 16.08.2019 of the High Court of Sindh, Karachi passed in C.P. No. D-5264 of 2019).

C.A. No. 404 of 2020

ENGRO POLYMER AND CHEMICALS LIMITED, KARACHI

Versus

PAKISTAN through Secretary Revenue and Ex Officio Chairman, Federal Board of Revenue, Islamabad and others

(Against order dated 06.02.2020 of the High Court of Sindh, Karachi passed in C.P. No.D-769 of 2020).

C.P.L.A. No. 3688-L of 2019

FEDERAL BOARD OF REVENUE through Member (Legal), Islamabad and others

Versus

Messrs FOOD CONSULTS (PVT.) LIMITED, LAHORE and others

(Against order dated 09,10.2019 of the Lahore High Court, Lahore passed in W. P. No. 136592 of 2018).

C.P.L.A. No. 3689-L of 2019

FEDERAL BOARD OF REVENUE through Member (Legal), Islamabad and others

Versus

Messrs PANTHER TYRES LIMITED and others

(Against order dated 09.10.2019 of the Lahore High Court, Lahore passed in W.P. No. 170401 of 2018).

C.P.L.A. No. 746-L of 2021

COMMISSIONER INLAND REVENUE, LAHORE

Versus

Messrs BIG FEED (PRIVATE) LIMITED, LAHORE

(Against order dated 11.02.2021 of the Lahore High Court, Lahore passed in I.T.R. No. 8992 of 2021).

C.P.L.A. No. 3503 of 2022

COMMISSIONER INLAND REVENUE, LEGAL ZONE, ISLAMABAD and others

Versus

Messrs PAKISTAN TOBACCO COMPANY LIMITED, ISLAMABAD and others

(Against judgment dated 26.05.2022 of the Islamabad High Court, Islamabad passed in I.T.R. No. 45 of 2014).

Civil Appeal No.743 of 2014 and Civil Petition No.10-L of 2017, Civil Miscellaneous Application No. 13838 of 2021 in Civil Petition No.10-L of 2017, Civil Appeals No. 1954 of 2019 and 404 of 2020, Civil Petitions Nos. 3688-L of 2019, 3689-L of 2019, 746-L of 2021 and 3503 of 2022, decided on 2nd May, 2025.

(a) Interpretation of statutes---

----Literal rule---Legislation---Powers of Court---Where words of statute are clear and unambiguous, provision should be given its plain and normal meaning, without adding or rejecting any words---Departure from literal rule, by making structural changes or substituting words in a clear statutory provision, under the guise of interpretation will pose a great risk as the changes may not be what the Legislature intended or desired---Court cannot recast or reframe legislation, as it has no power to legislate---Court cannot add words to a statute or read words into it which are not there unless principles of interpretation of statute require otherwise---Legislature means what it says and says what it means---It is the obligation of Courts of law to further clear intendment of Legislature and not to frustrate it by ignoring the same---Legislative wisdom cannot be replaced by the Judge's views.

Star Textile Mills Ltd. v. Government of Sindh 2002 SCMR 356; Province of the Punjab v. Muhammad Aslam 2004 SCMR 1649 and Allied Bank Limited v. Commissioner of Income Tax 2023 SCMR 1166 rel.

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

----Ss. 113, 120, 122 (5A) & First Schedule Part I, Division II---Circular No. 17 / 2004, dated 17-07-2004, issued by Federal Board of Revenue---Tax incentives---Payment of minimum tax---Carry forward tax credit---Appellant / taxpayer company was aggrieved of tax incentives and payment of minimum tax---High Court maintained the order passed by Appellate Tribunal Inland Revenue declaring that expression "actual tax payable" in Section 113(2)(c) of Income Tax Ordinance, 2001 meant that tax payable under Part I, Division II in First Schedule to Income Tax Ordinance, 2001 could be zero or otherwise, and that the excess amount of minimum tax which was paid over and above zero tax payable due to assessed losses for the years 2007 and 2008 was available for adjustment against appellant's / taxpayer's tax liability for the succeeding tax year---Validity---Verbiage of Circular No. 17 / 2004, dated 17-07-2004, issued by Federal Board of Revenue was unambiguous and clear as that of Section 113(2)(c) of Income Tax Ordinance, 2001---First sentence of Section 113(2)(c) of Income Tax Ordinance, 2001 is a clarification as to the persons who are required to pay minimum tax---Mandate of Section 113(1) of Income Tax Ordinance, 2001 that loss incurring companies and companies whose tax on income is assessed less than 0.5% of its declared turnover are to pay minimum tax---Circular No. 17 / 2004, dated 17-07-2004, issued by Federal Board of Revenue states that profit yielding companies paying [minimum] tax [which is] more than turnover tax do not get credit for their contribution to national exchequer [in the form of minimum tax] during the years of loss or lower income---This simply is a statement as to the state of affairs prevailing before insertion of Section 113(2)(c) of Income Tax Ordinance, 2001 through Finance Act, 2004---Prior to such insertion, benefit of credit in the form of carry forward for adjustment against tax liability in subsequent tax years was not available to persons paying minimum tax under Section 113(1) of Income Tax Ordinance, 2001---Circular No. 17 / 2004, dated 17-07-2004, issued by Federal Board of Revenue does not state that benefit of such carry forward would also be available to companies paying minimum tax but having no tax payable due to losses---Circular No. 17 / 2004, dated 17-07-2004, issued by FBR also does not state that law had been amended to allow facility of carry forward of minimum tax on turnover for next five years to those companies paying minimum tax but having no tax payable due to losses---Even otherwise, circulars issued by FBR do not and cannot override explicit language of statute---Supreme Court declined to interfere in concurrent judgments passed by two Courts below---Appeal was dismissed.

Messrs Pakistan Television Corporation v. Commissioner Inland Revenue 2017 SCMR 1136; B.P. Biscuit Factory Ltd. v. Wealth Tax Officer 1996 SCMR 1470; Molasses Trading and Export (Pvt.) Limited v. Federation of Pakistan 1993 SCMR 1905; Zila Council Sialkot v. Abdul Ghani PLD 2004 SC 425; Messrs Hirjani & Co. (Pakistan) Ltd. v. Commissioner Sales Tax 1971 SCMR 128; Star Textile Ltd. v. Government of Sindh 2002 SCMR 356; The Chief Land Commissioner v. Ghulam Hyder Shah 1988 SCMR 715 and Star Textile Ltd. v. Government of Sindh 2002 SCMR 356 rel.

Muhammad Makhdoom Ali Khan, Senior Advocate Supreme Court assisted by Saad Mumtaz Hashmi, Advocate Supreme Court, Tariq Aziz, Advocate-on-Record, Syed Rifaqat Hussain Shah, Advocate-on-Record and Sh. Mehmood Ahmad, Advocate-on-Record for Appellants (in C.As. Nos. 743 of 2014, 1954 of 2019 and 404 of 2020).

Muhammad Yahya, Advocate Supreme Court for Petitioner (via video link (Lahore)) (in C.P.L.As. Nos. 10-L of 2017 and 3689-L of 2019).

Ibrar Ahmed, Advocate Supreme Court for Petitioners (via video link (Lahore)) in C.P.L.As. Nos. 3688-L of 2019 and 746-L of 2021).

Dr. Farhat Zafar, Advocate Supreme Court for Petitioner (in C.P.L.A. No. 3503 of 2022).

Dr. Ikram ul Haq, Advocate Supreme Court for Applicants (via video link (Lahore)) (in C.M.A. No. 13838 of 2021).

Munawar Ali Memon, Advocate Supreme Court and Mrs. Abida Parveen Channar, Advocate-on-Record for Respondents (via video link (Karachi)) (in C.A. No. 743 of 2014).

Dr. Farhat Zafar, Advocate Supreme Court for Respondents (in C.A. No. 1954 of 2019).

Riaz Hussain Azam, Advocate Supreme Court for Respondents (in C.A. No. 404 of 2020).

Nemo for Respondents (in C.P.L.As. Nos. 10-L of 2017, 3688-L of 2019, 3689-L of 2019, 746-L of 2021 and 3503 of 2022).

Dr. Ishtiaq Ahmed Khan, Director General (Law), FBR, Islamabad.

Ms. Kiran Masood, Additional Commissioner, FBR, Lahore (via video link (Lahore)).

2025 P T D 1270

[Supreme Court of Pakistan]

Present: Shahid Waheed, Irfan Saadat Khan and Aqeel Ahmed Abbasi, JJ

DIRECTORATE OF INTELLIGENCE AND INVESTIGATION-FBR, through Director and others---Petitioners

Versus

TAJ INTERNATIONAL (PVT.) LTD. and others---Respondents

Civil Appeals Nos. 350 to 698 of 2016, 424, 511, 512, 673, 1183 and 1184 of 2020, Civil Petition Leave to Appeal No. 1066 of 2018, Criminal Appeal No. 177 of 2019 and C.M.A. No. 12231 of 2021 in Civil Appeal No. 673 of 2020, decided on 4th December, 2024.

(Against the judgments/order dated 19.09.2013, 20.03.2014, 02.04.2015, 07.04.2015, 16.03.2015, 26.07.2016, 18.10.2017 and 11.12.2018 of the Lahore High Court, Lahore, High Court of Sindh, Karachi, Peshawar High Court, Peshawar and Islamabad High Court, Islamabad passed in Writ Petitions Nos. 5047/2012, 17743/2012, 11294/2012, 27865/2011, 21612/2012, 873/2011, 28231/2012, 10852/ 2012, 11297/2012, 10698/2012, 2726/2011, 18221/2012, 10456/2012, 9652/2012, 11519/2012, 22738/2011, 11455/2012, 7918/2012, 6743/ 2012, 20298/2011, 18058/2011,27422/2011, 26489/2011, 9020/2011, 12384/2012, 10908/2011, 7029/2011, 18029/2012, 10330/2012, 8256/ 2011, 9654/2012, 11268/2012, 27863/2011, 21725/2011, 15927/2011, 417/2012, 9736/2012, 5634/2012, 6794/2012, 25182/2011, 11746/2012, 12568/2011, 27864/2011, 9048/2012, 20261/2012, 10838/2012, 14436/ 2011, 9324/2012, 11555/2012, 418/2012, 11030/2012, 20160/2012, 9616/ 2012, 11745/2012, 5048/2012, 21611/2012, 15791/2012, 10688/2012, 7188/2012, 8695/2011, 17106/2012, 9936/2012, 26855/2011, 5381/ 2012, 25622/2012, 9017/2012, 9017/2012, 8402/2012, 10246/2012, 26857/2011, 25623/2012, 9655/2011, 9107/2012, 10499/2012, 9653/ 2012, 15281/2012, 17286/2012, 11921/2012, 9570/2012, 8257/2011, 15660/2012, 15470/2012, 9104/2012, 14136/2012, 11922/2012, 9354/ 2011, 13991/2012, 29671/2011, 15179/2012, 6391/2012, 18098/2012, 10330/2012, 9019/2011, 6848/2011, 10331/2012, 10331/2012, 16754/ 2012, 16997/2012, 887/2012, 6878/2013, 5300/2012, 9086/2012, 5334/ 2014, 7802/2011, 7895/2011, 8190/2012, 21449/2013, 9742/2012, 9742/2012, 11665/2012, 11021/2012, 21884/2013, 7686/2011, 21671/ 2012, 8568/2012, 10674/2011, 13721/2011, 9047/2012, 9087/2012, 13721/2011, 9651/2012, 11298/2012, 12159/2011, 18521/2011, 5885/ 2012, 22737/2011, 6572/2013, 15471/2012, 22075/2012, 10598/2012, 19218/2012, 8926/2011, 7670/2012, 20657/2012, 17332/2012, 26554/ 2010, 3173/2012, 19219/2012, 7877/2012, 20297/2011, 10341/2012, 6001/2012, 8740/2012, 13969/2012, 7917/2012, 24736/ 2012, 24736/2012, 11923/2012, 17447/2012, 9614/2012, 19673/2012, 20658/2012, 8271/2012, 6547/2013, 5246/2013, 5139/2013, 9041/2011, 19862/2011, 31741/2012, 8359/2011, 9157/2012, 9355/2013, 8226/ 2012, 9500/2012, 14205/2012, 20657/2012, 22447/2012, 8786/2012, 17447/2012, 8191/2012, 20657/2012, 11268/2012, 7648/2012, 19674/ 2012, 11300/2012, 11744/2012, 8848/2012, 11027/2012, 15251/2012, 8494/2012, 20922/2012, 8492/2012, 20674/2012, 9506/2012, 8943/ 2012, 9047/2012, 7658/2012, 9872/2012, 9512/2012, 8270/2012, 9504/ 2012, 7514/2012, 9503/2012, 9505/2012, 9505/2012, 12631/2012, 9113/2012, 9616/2012, 9615/2012, 9876/2012, 17918/2012, 26440/ 2012, 11137/2012, 14874/2012, 13838/2012, 11138/2012, 9166/2012, 6572/2013, 11544/2012, 888/2013, 888/2013, 13426/2012, 367/2013, 14784/2012, 14784/2012, 13805/2013, 368/2013, 5450/2013, 9255/ 2012, 16622/2011, 9486/2012, 16328/2012, 13577/2012, 27742/2012, 9158/2012, 11020/2012, 16810/12, 16811/12, 16812/12, 16813/12, 7657/2012, 10926/2012, 14784/2012, 17815/2012, 18758/2012, 25801/ 2012, 5109/2013, 5138/2013, 6412/2013, 8994/2012, 12461/2012, 22571/2012, 6572/2013, 20452/2013, 17589/2012, 5450/2013, 132/ 2013, 7074/2013, 22231/2013, Const. P.D-2273/2011, C.P.D-814/2012, 21438/2013, 21440/2013, 21440/2013, 26815/2012, 9920/2012, 22594/ 2012, 29753/2012, 21439/2013, 9873/2012, 12160/2011, 29411/2012, 18015/2011, 27352/2012, 11296/2012, 8154/2011, 1082/2012, 29563/ 2012, 11666/2012, 7406/2011, 20004/2012, 16607/2011, 9656/2011, 58/2013, 26568/2010, 109/2013, 22908/2013, 9045/2012, 11359/2011, 15800/2012, 2941/2012, 1110/2013, 9219/2011, 12493/2012, 20092/ 2012, 7056/2013, 29603/2012, 28912/2012, 8647/2011, 27866/2011, 110/2013, 23251/2010, 5333/2012, 9018/2011, 28142/2012, 26856/ 2011, 57/2013, 11256/2011, 12153/2011, 4580/2011, 9118/2011, 711/2013, 2145/2013, 5049/2012, 4478/2010, 2379/2012, 1985/2012, 19644/2011, 1043/2012, 11343/ 2011, 61/2013, 21441/2013, 4439/2010, 29751/2012, 11972/2012, 23402/ 2012, 29582/2011, 19107/2011, 59/2013, 27266/2011, 27803/2012, 10498/2012, 13031/2012, 1686/ 2012, 60/2013, 9423/2012, 7695/2012, 13657/2011, 8015/2012, 12670/ 2012, 4440/2010, 4440/2010, 26814/ 2012, 21770/2013, 17671/2013, 10935/2012, 26555/2010, 27578/2012, 24686/2011, 29653/2012, 6795/ 2012, 26769/2010, 12104/2012, 1879/ 2013, 6230/2012, 1076/2012, 1400/2011, 7315/2013, 34364/2015, 33510/ 2015, 45696/2017 and Cr.A.134/2017).

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

----Ss. 3, 11 & 37-A---Recovery of sales tax---Power to arrest and prosecute---Principle---Authorities were aggrieved of quashing of FIRs by High Court registered against respondents/taxpayer for initiating criminal proceedings without determination of tax liabilities---Validity---Criminal penalties are linked with "tax loss" or "amount of tax involved and tax due"---Instead of providing for imprisonment or fine (ordinarily a certain sum of money) or both as punishment, "fine" under Sales Tax Act, 1990 requires taxpayer to pay the "tax loss" or "amount of tax involved and tax due," thereby indirectly criminalizing, recovery of "tax due"---Measure of sentence is linked with "amount or loss of tax involved and tax due" and prima facie, cannot be imposed unless there is some determination or duly assessed tax liability of sales tax due through the processes of assessment for adjudication as per law---Such linkage, uses the tool of imposition of penalty as a mode of recovery of tax---Criminalization under Sales Tax Act, 1990 goes beyond the pale of retribution and deterrence and is principally focused on recovery of tax---Without investigative audit or issuance of show cause notice or providing opportunity to explain the matters, registration of FIR, initiation of criminal proceeding and arrest of registered person was without jurisdiction and lawful authority---Prosecution was to follow adjudication and assessment of tax under section 11 of Sales Tax Act, 1990 therefore, pre-trial steps including arrest and detention could not be given effect to unless tax liability of taxpayer was determined in accordance with law---Supreme Court declined to interfere in judgments/orders passed by High Court---Appeal was dismissed.

Pakistan Accumulator (Pvt.) Ltd. v. Federation of Pakistan Writ Petition No.1076-P of 2012; Taj International (Pvt.) Ltd. v. FBR 2014 PTD 1807; Directorate of Intelligence and Investigation, FBR v. Naeem Ahmed Siddiqui Criminal Appeal No. 177 of 2019; Messrs F. M. Textile and others v. FBR 2017 PTD 1875; Taj International (Pvt.) Ltd. v. FBR and others 2014 PTD 1807; Waseem Ahmed and another v. Federation of Pakistan 2014 PTD 1734; D. G. Khan Cement Company Ltd. and others v. Federation of Pakistan and others 2004 SCMR 456 and Waqar Zafar Bakhtawari and 6 others v. Haji Mazhar Hussain Shah and others PLD 2018 SC 81 rel.

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

----Ss. 33 & 37-A---Constitution of Pakistan, Arts. 4 & 10A---Recovery of sales tax---Criminal proceedings, initiation of---Pre-requisites---Two pre requisites for invoking provisions of sections 33 and 37-A of Sales Tax Act, 1990 are: dependence of fine on the "amount or loss of tax involved" and window of compoundability which is available to taxpayer, who can pay the "amount of tax due along with such default surcharge and penalty as determined under the provisions of Sales Tax Act, 1990"---If such purpose is simple retribution and deterrence, then there is no need to make the fine dependent with the amount or loss of tax involved---If fine under criminal prosecution is to be dependent with amount or loss of tax, such a criminal construct must be prefaced with mandatory requirement of assessment of tax through civil adjudication provided under section 11 of Sales Tax Act, 1990---This precondition is the minimum Constitutional requirement to ensure fair trial and due process under Articles 4 and 10-A of the Constitution.

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

----Ss. 2(37), 3, 11, 33 & 37A---Assessment of tax---Offences and penalties---Criminal proceedings---Principle---Perusal of Section 37A of Sales Tax Act, 1990 shows that if such provisions are allowed to be invoked independently without any reference to the other relevant provisions of Sales Tax Act, 1990 including section 2(37) "tax fraud", section 3 "Scope of Tax", section 11 "Assessment of tax" and section 33 "Offences and Penalties", the same would be in violation of substantial provisions relating to charge of sales tax and assessment of sales tax, as it would give unbridled powers to officials of sales tax to initiate criminal prosecution against a registered person or any person within the supply chain, including registration of FIR and arrest, even without creating a lawful demand under the law---Such interpretation in respect of provisions of section 37-A of Sales Tax Act, 1990 would make the provisions of Sales Tax Act, 1990 redundant, whereas, redundancy cannot be attributed to legislation.

Zaheer Ahmed v. Directorate General of Intelligence and Investigation-IR and 4 others 2015 PTD 349 and Collector of Sales Tax and Central Excise (Enforcement) and another v. Messrs Mega Tech (Pvt.) Ltd. 2005 SCMR 1166 rel.

(d) Tax---

----Imposing of tax---Principle---Under modern democratic system of Government, which is run by elected representative of people under their respective Constitutions, unbridled powers and authority to impose tax arbitrarily, without having any rationale or reasonableness, is now being regulated under the Constitutional restraints, whereby taxes are to be imposed reasonably, without discrimination and in such a manner that those may not encroach upon fundamental rights of a person as guaranteed under the Constitution.

For the Appellant(s)/Petitioner(s)/Applicant(s)

Salman Akram Raja, Advocate Supreme Court

along with Dr. Ishtiaq Ahmed Khan, DG (Law) FBR

Aqeel A. Sidduqui, DG I&I-IR

Ch. Muhammad Zafar Iqbal, Advocate Supreme Court

Muhammad Umer Riaz, Advocate Supreme Court

(via video link from Lahore)

Izhar ul Haq, Advocate Supreme Court

(via video link from Lahore)

Dr. Farhat Zafar, Advocate Supreme Court

(in C.A. No. 600/16)

For the Respondent(s)

Syed Ali Zafar, Advocate Supreme Court

Nadeem Mehmood Mian, Advocate Supreme Court

assisted by Huriya Fatima, Advocate High Court

Sh. Zafar ul Islam, ASC along with

Tanveer Ahmad, Advocate Supreme Court

Ch. Ishtiaq Ahmad, Advocate Supreme Court

Muhammad Idris, Advocate Supreme Court

Syed Rifaqat Hussain Shah, Advocate-on-Record

Sh. Mehmood Ahmad, Advocate-on-Record

Ali Sibtain Fazli, Advocate Supreme Court

along with Hasham Ahmad, Advocate Supreme Court

(associated by Isa Ahmed, Advocate)

Abdul Bari Rashid, Advocate Supreme Court

Ch. Munir Sadiq, Advocate Supreme Court

Dr. Farhat Zafar Advocate Supreme Court

Babar Bilak, ASC and

Syed Tauqeer Bukhari, Advocate Supreme Court

Muhammad Munir Paracha Advocate Supreme Court

Qazi Isaac Ali, Advocate Supreme Court

For the Respondent(s) through Branch Registry Lahore

Imtiaz Rashid Siddiqui, Advocate Supreme Court

along with Shehryar Kasuri, Advocate Supreme Court

Shahbaz Butt, Advocate Supreme Court

Shahid Baig, Advocate Supreme Court

Haroon Duggal, Advocate Supreme Court

Saood Nasrullah, Advocate Supreme Court

Ch. Muhammad Ali, Advocate Supreme Court

Tahir Munir Malik, Advocate Supreme Court

Ibrar Ahmad Advocate Supreme Court

Rana Munir Hussain, Advocate Supreme Court

Muhammad Ajmal Khan, Advocate Supreme Court

Mian Ashiq Hussain, Advocate Supreme Court

Ms. Tabinda Islam, Advocate Supreme Court

Hassan Kamran Bashir, Advocate Supreme Court

Assisted by:

Ms. Zainab Bashir, Judicial Law Clerk, Supreme Court of Pakistan.

2025 P T D 1525

[Supreme Court of Pakistan]

Present: Munib Akhtar, Ayesha A. Malik and Aqeel Ahmed Abbasi, JJ

COMMISSIONER INLAND REVENUE, LAHORE

Versus

Messrs EDUCATIONAL SERVICES (PRIVATE) LIMITED, LAHORE

C.P.L.A. No. 109-L of 2024, decided on 24th April, 2025.

(Against judgment dated 21.11.2023 passed by the Lahore High Court, Lahore in S.T.R. No. 30 of 2015).

Federal Excise Act (VII of 2005)---

----Ss. 2(8d), 3, 12(12a), 34A, 40 & First Schedule, Table II---Federal Excise Rules, 2005, Rr. 2(mb) & 43A---Term "franchise"---Liability to pay duty---Determination---Respondent/taxpayer entered into various franchise agreements and was providing dutiable services, as set out in Table II of First Schedule to Federal Excise Act, 2005---Appellate Tribunal Inland Revenue held that in the relevant year 2012, it was the franchisee(s) who had to pay duty under Federal Excise Act, 2005 and the order was maintained by High Court---Validity---On a proper reading and application of Section 3 of Federal Excise Act, 2005 and Rule 43A of Federal Excise Rules, 2005, the liability to pay excise duty lay on the franchiser (respondent tax payer)---Supreme Court set aside order passed by High Court and the relevant question was answered in affirmative, in favor of authorities---Appeal was allowed.

Ahmed Pervaiz, Advocate Supreme Court for Petitioner.

Imtiaz Rashid Siddiqui, Advocate Supreme Court for Respondent.

2025 P T D 1558

[Supreme Court of Pakistan]

Present: Yahya Afridi, CJ, Muhammad Shafi Siddiqui and Miangul Hassan Aurangzeb, JJ

The COMMISSIONER OF INLAND REVENUE, PESHAWAR ---Petitioner

Versus

Messrs SUFI TAHIR NADEEM ---Respondent

Civil Petitions Nos. 885 to 887 of 2024, decided on 24th June, 2025.

(Against the judgment dated 22.11.2023 of the Peshawar High Court, Peshawar passed in Tax Reference Nos. 22-P to 24-P of 2019).

Income Tax Ordinance (XLIX of 2001)---

----Ss. 2(13AB), 113, 122(5) & 177---Consumer goods---Turnover---Determination---Amendment of assessment---Tax liability, demand of---Fast Moving Consumer Goods (FMCG)---Packing material---Authorities revised the assessment of respondent / taxpayer considering packing material as consumer goods for the use of end user---Validity---Products in question were primarily used as a material for packing other products for various consumer goods and were not typically sold directly to consumers as a stand-alone product---Consumer could buy products packed in such films but would not typically purchase goods in question---Subject goods in their form as described in orders of lower fora were utilizable predominantly by end consumers---These were not directly considered as consumer items but had formed a key component for many consumer products and were meant primarily for an industrial / commercial use---Fast Moving Consumer Goods were those which were supplied in retail market as per "their" daily demand and did not qualify to form part of definition provided in section 2 (13AB) and (22A) of Income Tax Ordinance, 2001---Insertion of phase 'durable' which excludes such product was additionally applied for tax return in question---All such products described as durable were excluded via Finance Act, 2017---Supreme Court set aside judgment passed by High Court---Appeal was allowed.

Ghulam Shoaib Jally, Advocate Supreme Court and Dr. Ishtiaq Ahmed Khan, Director-General (Law), FBR for Petitioner (in all cases).

Muhammad Tariq, Advocate Supreme Court for Respondent (in all cases) (via video-link from Peshawar).

2025 P T D 1590

[Supreme Court of Pakistan]

Present: Munib Akhtar and Aqeel Ahmed Abbasi, JJ

COMMISSIONER INLAND REVENUE

Versus

Messrs MUSTAFA ENTERPRISES and another

Civil Petition No. 2336 of 2025, decided on 30th June, 2025.

(Against the order dated 26.03.2025 passed by the Lahore High Court, Rawalpindi Bench in S.T.R. No. 8 of 2024).

Sales Tax Act (VII of 1990)---

----Ss. 2(37), 6, 7, 8, 22, 23, 26 & 73---Input tax, claim of---Issuance of fake/ flying invoices, allegation of---Proof---Allegation was that the registered person /company did not purchase any coal from the local suppliers but unlawfully claimed input tax on the basis of fake/ flying invoices issued by dubious suppliers, therefore, causing loss to the national exchequer--- Order of the Appellate Tribunal Inland Revenue in favour of registered person was concurred with by the High Court---Validity---Pertinently, the proceedings in the matter were initiated pursuant to issuance of Show-Cause Notice wherein the respondents were not confronted with any invoices, the value of which was above Rs. 50,000/---No material or evidence whatsoever was provided to substantiate the allegation to the effect that the suppliers as mentioned in the Show Cause Notice were blacklisted during the tax period under consideration---In the present case, Show-Cause Notice and the Order-in-Original were passed on vague and frivolous allegations and certain conclusions had been made on mere presumptions only, whereas, no material or evidence had been produced to substantiate the same---Notably, while passing the Order-in-Original, the Assistant Commissioner Inland Revenue exceeded his jurisdiction while travelling beyond the very premises, whereas the respondents were never confronted with the allegations made in the Show-Cause Notice or entries as reflected in the bank statement which were subsequently furnished by the respondents, showing the details of the total amount and the particulars of suppliers from whom purchases were made---While initiating the proceedings against the respondents, there was no material or evidence available on record to make out a case against the respondents of illegal or inadmissible claim of input tax adjustment, whereas the entire proceedings and the Order-in-Original passed in the present case was based on presumptions, whereas no inquiry or verification was made by the Department in respect of alleged fake/flying invoices---Thus, the Tribunal and the High Court were justified to set aside both the Order-in-Original and the Order-in-Appeal, while recording concurrent findings on facts which did not suffer from any illegality or error---Petition for leave to appeal, filed by Department, was dismissed, in circumstances.

Commissioner Inland Revenue Zone-IV, Large Taxpayer Unit, Karachi v. Messrs Al-Abid Silk Mills Limited A-39, Manghopir Road, Site Karrachi 2023 SCMR 1797 ref.

Malik Itaat Hussain Shah, Advocate Supreme Court, Syed Rafaqat Hussain Shah, Advocate-on-Record along with Kamran Ullah, Additional Commissioner along with Yousaf Khan, S.O. for Petitioners.

Nemo for Respondents.