Landmark Judgments -Federal Tax Ombudsman

1

Index FEDERAL TAX OMBUDSMAN Judgments of the Supreme Court and High Court’s of Pakistan S.

Citation

No

Relevant

Page

Section (FTO Ordinance) Hafiz Muhammad Arif Dar v. ITO

01

NO: CP 788YEAR: 1984 DECIDED ON 07/11/1988

2(3)

02

2(3)

05

9

33

2(3)

38

2(3); 9

46

32

48

2(3)

54

CITATION: DTPSC0147; 60TAX52; 1989PTD485; 1990PTCL755 [The FTO forum offers an effective alternate remedy for

taxpayer’s against dept'l excess] CIT v. Media Network and others 02

NO: WPs 4320 4786 YEAR: 2003 DECIDED ON 28/02/2006 CITATION: DTPSC0270; 94TAX293; 2006PTD2502; 2007PTCL12006PLD787 [AUDI ALTERAM PARTEM - No one to be condemned

unheard] Eastern Leather Company Ltd. V. Federation of Pakistan 03

NO: WP 5893 YEAR: 2003 DECIDED ON 28/10/2003 CITATION: DTPHC1659; VOL7/12TF52 [Jurisdiction vested in the President – and by implication, the FTOis quasi judicial and not administrative – The petitioner cannot be condemned unheard] Suleman Spinning Mills Limited v. IACIT Lahore

04

NO: WP 20218YEAR: 2002

DECIDED ON 27/02/2003

CITATION: DTPHC1624; 88TAX147; 2003PTD1343; [ Federal Tax Ombudsman holding action of revenue in nonrecovery of Govt. funds as maladministration, recommended reference to Legal Advisor for prosecution proceedings against them ] Farid Ullah Khan v. Federal Tax Ombudsman 05

NO: ICA 51 YEAR: 2005 DECIDED ON 01/02/2005 CITATION: DTPHC1738; 2005PTD1797; [Maladministration in the Central Board Revenue or any of its establishment can be taken notice of by Federal Tax Ombudsman] Sahib Jee v. RCIT

06

NO: WP 11983YEAR: 2005 DECIDED ON 20/03/2009 CITATION: DTPHC2041; 100TAX274; 2009PTD955; [No extension in time permissible for filing representation before President against FTO’s order] Lone Cold Storage v. Revenue Officer LESCO

07

NO: WP 7754 YEAR: 2010 DECIDED ON 15/07/2010 CITATION: DTPHC2104; 103TAX5; 2010PTD2502 2011PTCL305; [Whether order where Court has not been properly assisted and main legal questions have not been raised, deliberated or

2 discussed does not constitute binding precedent -- Held yes]

08

Muhammad Saleem V Federal Tax Ombudsman etc.

9;14;2(3);29

75

10(3)

79

16

82

No: WP 11545-2012

[The FTO exercises concurrent jurisdiction without restraint in deciding complaints u/s 9 of FTO ord – Maladministration is a condition precedent for exercise of jurisdiction by the FTO] 09

[When ‘special circumstances’ exist (such as involvement in bribery and corruption), any delay in filing complaint before FTO stands condoned].

10

IN THE ISLAMABAD HIGH COURT WP No. 1238 OF 2013 1. When invoking jurisdiction u/s 16 of FTO Ordinance, the FTO exercises powers of a judge of the Supreme Court of Pakistan and the High Court is not competent to hear a writ petition challenging FTO's jurisdiction u/s 16. Any such writ must be filed before the Supreme Court. 2. No writ petition lies against a SCN.

SUPREME COURT OF PAKISTAN --------------------------------------------------------------------------Hafiz Muhammad Arif Dar v. ITO NO: CP

788YEAR: 1984 DECIDED ON 07/11/1988

CITATION: DTPSC0147; 60TAX52; 1989PTD485; 1990PTCL755 --------------------------------------------------------------------------Constitution of Pakistan, 1973 -- Section 65 -- Article 199 -Writ jurisdiction -- Alternate remedy -- Relief -- Assessee filed appeal before A.A.C. against the

order of

additional

assessment made by

the Income Tax

Officer -- During appeal assessee filed writ petition which was dismissed as

3 the petitioner had already availed alternate adequate remedy -- Relief refused by the High Court -- Whether according to technicalities of procedural nature - Held yes -Constitutional jurisdiction of High Court -- Grant of relief -- Alternate adequate remedy -- Where a remedy by way of appeal was available, no relief could be granted to the petitioner under article 199 -- If petitioner was not allowed any relief by the departmental authorities (despite the observations by the

Supreme

Court),

it

would

not

mean

that

the

petitioner

would

have

no

immediate remedy at all against the highhandedness of the

department --

Petitioner

and

could,

among

other

reliefs,

file

a

complaint

grievane

application before the Federal Ombudsman, who could also provide effective redres,

and

provide

the

alternate

effective

and

adequate

remedy

to

the

petitioner in such cases ----------------------------------------------------------------------------

IN THE SUPREME COURT OF PAKISTAN} HAFIZ MUHAMMAD ARIF DAR v. INCOME TAX OFFICER Present: MUHAMMAD AFZAL ZULLAH and JAVAID IQBAL, JJ. Civil Petition No. 788 of 1984, decided on 7-11-1988. (On appeal from the judgment and order of the Lahore High Court, Lahore passed in Writ Petition No. 2382 of 1984, dated 30-5-1984). Syed Fayyaz Hussain Qadri, Advocate (absent) and S. Abid Nawaz, Advocate-onRecord, for the Petitioner. Nemo for Respondent. Date of hearing: 7-11-1988. --------------------------------------------------------------------------ORDER {Order of the Court was passed by MUHAMMAD AFZAL ZULLAH, J.}.---Writ Petition against an Income-tax Assessment by Income Tax Officer was dismissed by the High Court by the following short order: ``The

petitioner

is

aggrieved

with

the

order

of

additional

assessment made in pursuance of the provisions of Section 65 of the Income Tax Ordinance by an Income Tax Officer. He has already filed an appeal before the Appellate Assistant Commissioner. As he had already availed of the alternate remedy this writ petition is dismissed in limine.''

4 Leave to appeal having been sought, this Court passed interim orders on 23rd July, 1984, 29th July, 1984, 9th August, 1984, 12th August , 1984, 16th August, 1984, 21st August, 1984, 28th August, 1984 and 29th August, 1984. They are very instructive in so far as the attitude of respondent department is concerned. They are, therefore, reproduced below:-``23-7-1984: Notice to the A.G. for the 29th of this month 29-7-1984: Adjourned to the 5th of August, 1984, to enable the petitioner to produce the person from whom he had purchased the shop

which

has

been

made

the

basis

of

enhancement

of

the

assessment. 9-8-1984:

Hafiz

Muhammad

Arif

Dar

petitioner

has

been

assessed to Rs. 1,93,000 as his income on the ground that he had enough money to purchase a shop on the Sarwar Road in Cantt. and on investigation the relevant Income-tax

Lahore Inspector

found that the vendors were fictitious persons and that this had been done to avoid levy of income-tax. I

required the

petitioner to produce the vendors namely

Muhammad Ashfaq

son of Haji Sardar Muhammad and Muhammad

Mushtaq son of

Ibrahim, so as to ascertain whether the

finding of the

Income-tax Inspector that the vendors were

fictitious, was

correct. The petitioner has produced both the above-noted vendors

whose

identity has been verified through their Identity Cards which bear their photographs. Prima facie, it appears that

the report of

the Income-tax Inspector, is wholly incorrect. Mr. M.Z. Khalil, Advocate, appeared on behalf of Mr. Muhammad Ilyas, Standing Counsel for the Income-tax Department to

submit

that he (Mr. Ilyas) has left for U.S.A. and the case may therefore be adjourned to a date after the vacations. Petitioners counsel, however, submits that in view of the

fact

that the allegation against the petitioner has been facie proved to be incorrect, the case may not be Let

notice

month,

who

be

issued

may

to

appear

respondent

through

a

for

adjourned.

the

counsel

prima

12th

engaged

of by

this the

Department alongwith the relevant Inspector who had submitted the report on which action was taken against the petitioner. No

action

shall

be

taken

against

the

petitioner

in

meanwhile. Mr. M.Z. Khalil, Advocate is directed to advise

the the

respondent of the proceedings before this Court. 12-8-1984 : No one has turned for the respondent. Adjourned to the 16th of this month. 16-8-1984 : The matter was adjourned to be taken up at 1-30 Learned

counsel

for

the

petitioner

is

present

petitioner. Learned counsel for the respondent is, absent. The case is, therefore, adjourned to

alongwith

p.m. the

however, 21-8-1984.

5 21-8-1984 : An official of the Cantonment Board be ordered to bring the latest PTI Form pertaining to property No. 326-Sarwar Road Sadar, Lahore, on the next date of hearing, in order to enable this Court to ascertain the annual rent at

which the said

property is assessed. To come up on 28-8-1984. 28-8-1984

:

Adjourned

to

tomorrow

(29-8-1984)

to

enable

the

Inspector of the Cantonment Board to explain how the value of the place in question was calculated to be Rs. 1,50,000 when

the

monthly rent of the house was Rs. 100 per month. 29-8-1984:

On

instructions

from

the

I.T.O.

the

learned

counsel for the respondent submitted that the tax had been levied according

to

the

value

of

the

property

as

calculated

Cantonment Board. However, I find that the property in

by

the

question

is assessed by The Cantonment Board at Rs. 100 per month and as such the value of Rs. 1,50,000 as determined

appears to be

excessive and arbitrary. It would have been appropriate if, for fixing the vaue of the property, the Cantonment Board had followed the formula of ``10 years rent'', as done by the Wealth Tax Dept. In this view of the matter the recovery of the tax amount is stayed till the decision of the main petition.'' It is possible that in view of the aforequoted observations redress might have already been provided to the petitioner. One of the conditions for grant of relief in writ jurisdiction of the High Court is that the petitioner before it should not have any alternative adequate remedy. In this case, a remedy by way of appeal, as mentioned in the impugned order, was such remedy. Therefore, it is correct that no relief could be granted to the petitioner under Article 199 of the Constitution. But that does not mean that, in case the petitioner has not been allowed any relief by the departmental authorities (despite the observations by the Supreme Court)

the

petitioner

would

highhandedness of the

have

no

immediate

remedy

at

all

against

the

department.

Amongst others he can file a complaint and grievance application before the Federal Ombudsman, who can provide

effective redress, in

a case like the

present one. That forum has several attributes of a Court in many aspects of its powers. It can also move in a matter promptly whenever so needed. At the same

time

it

does

not

suffer

from

some

of

the

handicaps,

due

to

the

technicalities of procedural nature, which operate as impediments or thwart such like action by the Courts. For example the limitation of non-availability of an alternate remedy in this case for the High Court under Art, 199 of the Constitution, is not applicable to the said forum. Besides, the same being quasi-judicial it is also headed by a Judge of the Supreme Court; with similar powers to punish for contempt. In this context therefore, it can be safely concluded, that it can provide the alternate effective and adequate remedy to the petitioner also.

6

With the foregoing observations and remarks, leave to appeal is refused in the circumstances of this case, due to the technical hurdle faced by the petitioner in the High Court. He may file a complaint before the Ombudsman. Leave refused. SUPREME COURT OF PAKISTAN ----------------------------------------------------------------CIT v. Media Network and others NO: WPs 4320 4786

YEAR: 2003 DECIDED ON 28/02/2006

CITATION: DTPSC0270 ; 94TAX293 ; 2006PTD2502 ; 2007PTCL12006PLD787 ----------------------------------------------------------------Income Tax Ordinance, 1979 -- Sections 4A, 55, 59, 59(1A), 59(3),62, 63 -C.B.R. Circular No. 7 of 2002, dated 15th June, 2002 -C.B.R. Letter No. 7(7) Self Assessment /2002, dated 17-12-2002 -Self Assessment Scheme, (2002-2003), paras. 9 and 10 -Constitution of Pakistan, 1973 -- Articles 25, 185 -Law Procedure Ordinance, 1972 -- Section 3 – Words and phrases -- Word ``any'' -- Definition, amplitude and meaning -Whether

word

``any''

according

to

stroud's

Judicial

Dictionary

exclude

limitations and qualifications and, therefore, ``any order'' would include both interim as well as final order -- Held yes -- Whether word ``any'' used in context of section 59 of Income Tax Ordinance, 1979 was word of expansion indicative of width and amplitude sufficient to bring within scope and ambit of words it governed and that could possibly be included in them -- Held yes -Appeal to Supreme Court -- Self Assessment -- Issuance of policy guidelines by C.B.R. to all Regional Commissioners of Income Tax -- Selection of case for total audit -- Commissioner of Income Tax -- Selection of cases for total audit -- Quashment of judgments by High Court -- Appeal against -- Principle of audi alteram partem -- Canons of natural justice -- Departure -- Validity -- Whether no prejudice was shown to have been caused for respondents on account of nonspecification of percentage of cases to be selected by C.B.R. through computer balloting or by Regional Commissioners and as such paragraph 9 and 10 of scheme could not be said to be ultra vires of provisions of section 59 or any other provision

of

ordinance

--

Held

yes

–

Whether

discretion

of

Regional

Commissioners in selecting cases for total audit was restricted and they could select only those revenue potential cases where there was evidence, information or reason to believe that true particulars of income had been suppressed –Held yes -- Whether objections as to non-publication of guidelines in official gazette is concerned, there was no statutory obligation on part of C.B.R. to have published guidelines in official gazette because they were in nature of administrative

instructions

meant

for

internal

consumption

of

Regional

Commissioners issued in aid of carrying out purpose of Self-Assessment Scheme - Held yes -- Whether rules of natural justice are not inflexible, they yield to and change with exigencies of different situations and do not apply in same

7 manner to situations which are not alike -- Held yes – Whether opportunity of hearing was not required to be afforded by Commissioners to respondents at preliminary stage of making proposals for recommendations of their cases to Regional Commissioners for total audit -- Held yes – Self Assessment Scheme -- Filing of income tax return under the

scheme --

Scope -- Assessee was not under statutory obligation to file his return of total income for any year in terms of provisions of Section 59 of Income Tax Ordinance,

1979

under

Self

Assessment

Scheme

--

Person

who

otherwise

was

required to file a normal return under Section 55 of Income Tax Ordinance, 1979, was given option to file his return under Section 59 of Income Tax Ordinance, 1979, for its acceptance in accordance with the provisions of Self Assessment

Scheme

made

by

Central

Board

of

Revenue

for

that

year-Deputy

Commissioner of Income Tax would then assess, by order in writing, the total income of the assessee on the basis of such return and determine the tax payable on the basis of such assessment – Self Assessment Scheme -- Total audit -- Selection of case -- Procedure -- By non-obstante clause of Section 59(1-A) of Income Tax Ordinance, 1979, it was provided that Central Board of Revenue or any authority subordinate to it, if so authorized by Central Board of Revenue could select out of returns, any cases or class of oases or persons or class of persons howsoever determined for assessment

under

Section

62

of

Income

Tax

Ordinance,

1979,

and

Deputy

Commissioner would proceed to make the assessment under that section or if the circumstances so warranted, under Section 63 of Income Tax Ordinance, 1979, accordingly -- In such situation, the procedure provided under

S.62 or S.63

of Income Tax Ordinance, 1979, as the case might be, would be followed by the Deputy Commissioner – Total

audit

--

Procedure

--

For

total

audit,

under

paragraph

9

of

Self

Assessment Scheme, (2002-2003), twenty per cent. returns were to be selected, through computer ballot which might be random or parametric as deemed fit by Central Board of Revenue or/and by Regional Commissioners of Income Tax on the recommendations

of

the

Commissioners

concerned

in

the

light

of

guidelines

issued by Central Board of Revenue in that behalf -- Assessing Officer would make necessary adjustments under Section 59(3) of Income Tax Ordinance, 1979, if so required, after givinga notice in writing to the assessee and considering his explanation if any -- Cases selected for total audit would be scrutinized in detail, under paragraph 10 of Self Assessment Scheme, (2002-2003), including field audit by departmental

officers or by professional auditors

authorized under Section 4-A of Income Tax Ordinance, 1979, by utilizing the information collected from available sources for determining income of the taxpayer and tax payable thereon by observing the procedure of paragraphs 9 and 10 of the Scheme -- No limitation or restriction was imposed by Section 59(1-A) of Income Tax Ordinance, 1979, as "any cases or classes of cases or person or class of persons" could be selected for the purpose of total audit –

8 Words and phrases -- `Any' -- Connotation -- Word ``any'' has diversity of meaning

and

may

be

employed

to

indicate

``all''

or

``every''

as

well

as

``some'' or ``one'' -- Meaning of word ``any'' in a given statute depends upon the context and subject matter of the statute – Total audit -- Selection of cases -- Non-specification of percentage of cases to

be

selected

for

total

audit

--

Assessment Scheme, (2002-2003), were

Returns

of

assessees

filed

under

Self

selected for total audit -- Plea raised

by assessees was that Central Board of Revenue did not specify percentage of cases to be selected for total audit and paragraphs 9 and 10 of Self Assessment Scheme, (2002-2003), were ultra vires the provisions of Section 59 of Income Tax Ordinance, 1979 -- Validity -- No exception could be taken to the selection of cases of assessees in respect of their returns filed under Self Assessment Scheme,(2002-2003) -- Final selection of case or cases were made by Regional Commissioners of Income Tax, after affording fair and adequate opportunity of hearing to assessees, who were issued

show cause notices and their replies

to the same were duly considered -- For total audit, under Self Assessment Scheme, (2002-2003), maximum of 20% of returns filed by assessees could be selected -- Percentage of selected cases through computer ballot or by Regional Commissioners of Income Tax was not squarely laid down with precision -- No prejudice was shown to

have been caused to assessees on account of non-

specification of percentage of cases to be selected by Central Board of Revenue through computer balloting or by Regional Commissioners -- Paragraphs 9 and 10 of the Self Assessment Scheme were not ultra vires the provisions of Section 59 or any other provision of Income Tax Ordinance, 1979 – Selection of cases for total audit -- Policy guidelines -- Scope -- Policy guidelines were administrative in nature meant for internal consumption of Income Tax functionaries, which did not create any rights nor did they impose any obligations -- Such instructions did not take away any vested right of assessees and did not govern the adjudicatory proceedings of quasi-judicial nature -- Guidelines were not, in any way, extraneous, irrelevant or unfair to the object to be achieved by the process of

selection of cases for

total audit -Total audit -- Selection of cases -- Reasonable classification --Non-issuance of policy guidelines before promulgation of Self Assessment Scheme, (20022003), -- Assessees were aggrieved of their selection of cases for total audit, by Regional Commissioners of Income Tax -- Such order passed by Income Tax Authorities, was set aside by High Court -- Plea raised by the authorities was that policy guidelines had not become invalid for the reason of not having been issued either before or

contemporaneously with the promulgation of Self

Assessment Scheme -- Validity -- Held, there was no requirement of Section 59 of Income Tax Ordinance, 1979, or any other provision of the Ordinance or rule for issuance of guidelines either before or along with the Scheme -- Very object of the provisions of Section 59(1-A) of Income Tax Ordinance, 1979, would have been frustrated if income tax payers were informed, before hand, of the categories of cases or persons which would be selected for total audit --

9 If that was done, the possibility of tax evasion under the scheme at the massive scale could not be ruled out -- Assessees were required to file their true returns under the Scheme as far as possible -- Previous publication of the guidelines would have been a hay-day for all the tax evaders as they would be knowing

before

hand

that

their

cases

were

not

scrutinized -- As long as the income tax four

corners

of

Section

59

of

Income

going

to

be

selected

or

Authorities acted within the Tax

Ordinance,

1979,

and

the

Self

Assessment Scheme and did not abuse their power or authority, the objection as to the provisional or/and final selection of cases for total audit was not sustainable -- Guidelines for selection of cases by Regional Commissioners would not suffer from any taint of invalidity merely because certain categories had been identified for total audit based on reasonable classification, which was not violative of Article 25 of the Constitution -- No requirement of law existed for issuance of guidelines by Central Board of Revenue, side by side with the announcement of the Scheme as they were to follow the Scheme after its announcement and not to precede it -- Judgment passed by High Court was set aside -- Appeal was allowed by the Supreme Court -Policy

guidelines

--

Non-publication

in

official

Gazette

--

Effect

--

No

statutory obligation on the part of Central Board of Revenue to have published the

guidelines

administrative

in

official

instructions

Gazette

--

meant

for

Such

guidelines

internal

were

in

consumption

of

nature

of

Regional

Commissioners issued in aid of carrying out purpose of Self Assessment Scheme - Policy guidelines did not enjoy the status of statutory rules, which were required to be notified through .publication in

official Gazette –

Notification -- Publication of notification in official Gazette -- Principle -Held,

it

all

depends

on

the

nature

and

context

of

statute

whether

the

provisions requiring publication of a notification in official gazette would be construed as directory only or mandatory, so as to invalidate a notification or instructions on account of non-publication in official Gazette, Natural justice, principles of -- Preliminary inquiries or --

Opportunity

inflexible,

of

which

hearing-Principles-Rules yield

to

and

change

with

of

natural

the

investigations justice

exigencies

of

are

not

different

situations -- Such rules do not apply in the same manner to situations which are not alike-Said rules are not cast in a rigid mould nor can they be put in a legal strait-jacket; these are not immutable but flexible and can be adopted and modified by the statutes -- Need to act in an emergency may also exclude at least a prior hearing or where a

decision affects so many people that a

hearing would be impracticable -- In some cases there may be collective right of hearing or to be consulted although not necessarily a hearing in individual cases -- Depending upon the facts and circumstances of each case, there is no mandatory requirement of natural justice that in every case the other side must be given a notice before preliminary steps are taken -- It might suffice if reasonable

opportunity of hearing is granted to a person before an adverse

action or decision is taken against him -- However, it is not possible to lay down an absolute rule of universal application governing all situations as to

10 the exclusion or otherwise of the audi alteram partem rule during the course of preliminary inquiries or investigations -Total

audit

--

Selection

of

cases

--

Principles

of

natural

justice

--

Applicability -- Assessees were aggrieved of non-providing of opportunity of hearing to them, before finalizing their cases for total audit -- Validity – Opportunity of hearing was not required to be afforded by Commissioners to the assessees at preliminary stage of making proposals or

recommendations of

their cases to Regional Commissioners for total audit -- Before final selection of cases, the policy guidelines seemed to have been faithfully observed by the Regional

Commissioners

of

Income

Tax,

who

were

required

to

confront

the

assessees with the material, provide them due opportunity of being heard and communicate them the basis of their proposed selection -- In none of the cases, any

allegation

Regional

of

personal

Commissioners

or

bias, other

mala

fide

officers

or

of

other

Income

unfair Tax

treatment

Department

by

were

specifically levelled or substantiated by the assessees-No exception could be taken

to

the

selection

of

the

cases

of

assessees

by

Regional

Commissioners made after due process of law -Direct

appeal

to

Supreme

Court

--

Non-filing

of

Intra-Court

Appeal

--

Principles -- Ordinarily, Supreme Court insists the petitioner or appellant to avail the remedy of Intra – Court Appeal, in the first instance; however, this is a rule of practice for regulating the exercise of discretion which does not oust or abridge the Constitutional jurisdiction of Supreme Court -- Supreme Court, in certain exceptional circumstances can

entertain petitions, or as the

case may be, direct appeals even where the remedy of Intra -- Court Appeal under Section 3 of Law Reforms Ordinance, 1972, has not been availed by a party – No prejudice caused on account of non-specification of the percentage of cases to

be

selected

by

C.B.R.

through

computer

balloting

or

by

the

Regional

Commissioners, paragraphs 9, 10 of the Circular No. 7 of 2002, dated 15th June, 2002 (Self Assessment Scheme for the Assessmenr year 2002-2003) is not ultra vires the provisions of section 59 – The procedure of selection of cases for total audit as provided paragraphs 9 and 10 of the Circular No. 7 of 2002, dated 15th June, 2002 (Self Assessment Scheme for the Assessment year 2002-2003) was not nullified or whittled down by the policy guidelines issued vide C.B.R. Letter No. 7(7) S. Asstt/2002, dated 17-12-2002 -Guidelines issued vide C.B.R. Letter No. 7(7) S. Asstt/2002, dated 17-12-2002 were administrative in nature meant for the internal consumption of the Income Tax functionaries which did not create any rights nor did they impose any obligations –

11 Instructions issued vide C.B.R. Letter No. 7(7) S.Asstt/2002, dated 17-12-2002 had not taken away any vested right of the assessees and would not govern the adjudicatory proceedings of quasi-judicial in nature – It could not be said that the guidelines issued vide C.B.R. Letter No. 7(7) S.Asstt/2002,

dated

17-12-2002

were,

in

any

way,

extraneous

irrelevant

or

unfair to the object to be achived by the process of selection of cases for total audit -Supreme Court in certain exceptional circumstances can entertain petitions, or as the case may be, direct appeals even where the remedy of Intea-Court appeal under section 3 of the Law Reforms Ordinance, 1972 has not been availed by a party – An assessee was not under any statutory obligation to file his return of total income for any year in terms of provisions of section 59 -There was no limitation or restriction

imposed by section

59(1-A) of the

Ordinance as ``any cases or classes of cases or person or class of persons'' could be selected for the purpose of total audit -Issuance of guidelines by C.B.R. were to follow the Self Assessment Scheme after its announcement and not to precede it – There was no statutory obligation on the part of the C.B.R. to publish the guidelines in the official Gazette as they were in the nature of administrative instructions in aid of carrying out the Self-Aassessment Scheme – Opportunity of hearing was not required to be afforded by at preliminary stage of making proposals or

Commissioners

recommendations of their

cases to the Regional Commissioners for total audit – Publication of Notification in official Gazette depends on nature and context of statute – Natural Justice -- The rules of natural justice are not inflexible -Words and phrases -- ``Any'' -- ``Any order'' -- ``Any law'' -----------------------------------------------------------------IN THE SUPREME COURT OF PAKISTAN COMMISSIONER OF INCOME TAX and others v. Messrs MEDIA NETWORK and others Present: IFTIKHAR MUHAMMAD CHAUDHRY, C.J., FAQIR MUHAMMAD KHOKHAR and MIAN SHAKIRULLAH JAN, JJ Civil Appeals Nos.233 to 315 of 2004

12 On appeal from the judgment and order of the Lahore High Court, Lahore, dated 24-9-2003, passed in W.Ps. Nos. 4320, 4786, 5320, 5033, 6786, 4551, 5397, 4648, 4407, 6843, 4055, 7764, 6344, 6827, 6797, 6477, 6883, 5975, 5978, 5973, 7235, 5976, 6641, 6342, 7228, 10328, 5977, 7238, 5317, 4691, 4144, 7026, 4546, 4654, 4651, 4545, 4877, 6523, 4054, 7293, 4861, 4358, 4583, 5396, 4874, 7022, 5318, 5717. 4470, 4699, 4429, 5376, 5461, 4056, 4954, 5368, 4582, 929, 6971, 4862, 4319, 4875, 6230, 4682, 4639, 4476, 6521, 4700, 16879, 16003, 6370, 16079, 12338, 15374, 6490, 4688, 6345, 9016, 6478, 4683, 6343, 5974 and 9015 of 2003) Civil Appeals Nos.833 to 848 of 2004 ------------------------------------REGIONAL COMMISSIONER OF INCOME TAX and others v. M. YOUSAF ACADEMY QUICK FILL CNG. and others (On appeal from judgments dated 10-6-2004, 31-3-2004, 4-5-2004, 12-4-2004, 106-2004, 13-11-2003, 19-11-2003, 19-11-2003, 17-11-2003, 29-1-2004, 18-11-2003, 29-1-2004, 24-9-2003, 26-2-2004, 26-2-2004, 17-3-2004, passed by the Lahore High Court, Lahore in W. Ps. Nos. 11719, 14047, 11306, 15467 of

2002, 15942,

16002, 16000, 16081, 8899, 16197, 12124, 6808, 17875, 17876 of 2003, 618 of 2004 and 17056 of 2005). Civil Appeals Nos. 1041 to 1046 of 2004 --------------------------------------REGIONAL COMMISSIONER OF INCOME TAX and others v. SADAQAT RAHIM and others On appeal from judgment and order of the Lahore High Court, Lahore dated 10-102003, 10-10-2003, 1-4-2004, 2-4-2004, 24-9-2003, 31-5-2004, 24-9-2003, passed in W. Ps. Nos. 13516, 13517 of 2003, 3632, 616 of 2004 and 16540 & 9979 of 2003). Civil Appeals Nos. 1211 to 1214 of 2005 --------------------------------------COMMISSIONER OF INCOME TAX and others v. Messrs Haji MUHAMMAD TANVIR and others (On appeal from the judgments and orders of the Lahore High Court, Lahore dated 24-9-2003,

5-8-2003, 31-3-2004,

29-6-2005,

4721/2003, 66/2004 and W.P. No.11614/2005).

passed

in

W.Ps.

Nos.

4653/2003,

13 Civil Appeals Nos. 1641 and 1704 of 2005 ---------------------------------------REGIONAL COMMISSIONER OF INCOME-TAX and others v. Messrs MIAN COLD STORAGE MEWA MANDI, SIALKOT and others (On appeal from the judgments and orders of the Lahore High Court, Lahore dated 7-9-2005 and 29-9-2005, in W.Ps. Nos. 11847/2005 and 11948/2005). Civil Appeals Nos. 233 to 315, 833 to 848, 1041 to 1046 of 2004, 1211 to 1214, 1641 and 1704 of 2005, decided on 28th February, 2006. Makhdoom Ali Khan, Attorney General for Pakistan, Muhammad Ilyas Khan, Senior Advocate Supreme Court, Muhammad Aslam Chatha, Advocate-on-Record, assisted by Shahid Jamil Khan, Advocate, Khurram M. Hashmi, Advocate and Danish Zuberi for Appellants. Shahid Hamid, Senior Advocate Supreme Court for Respondents (in C.A. No. 1046 of 2004). Shahbaz Butt, Advocate Supreme Court for Respondents (in C.As. Nos.233, 241, 243, 256, 261, 271, 274, 275, 279, 283, 286, 293, 296, 301, 304 of 2004). Siraj-ud-Din Khalid, Advocate Supreme Court for Respondents (in C. As. Nos. 238 of 2004 and 1212 of 2005). Muhammad Iqbal Hashimi, Advocate Supreme Court for Respondents (in C. As. Nos.248 to 251, 256, 259, 303 and 1041 of 2004). Mian Ashiq Hussain, Advocate Supreme Court for Respondents (in C. As. Nos.262, 265, 266 to 269, 294, 298, 835, 844 of 2004 and 1214 of 2005). Muhammad Qamar-uz-Zaman, Advocate Supreme Court for Respondents (in C. A. No. 263 of 2004). Muhammad Naeem Shah, Advocate Supreme Court for Respondents (in C. As. Nos. 276, 288, 315 of 2004 and 1213 of 2005). Dr. Ilyas Zafar, Advocate Supreme Court for Respondents (in

C. As. Nos. 841

and 843 of 2004). M.S. Khattak, Advocate-on-Record for Respondents (in C.As. Nos.248 to 251, 259, 303 of 2004). Raja

Abdul

Ghafoor,

Advocate-on-Record

for

Respondents

2004). Dates of hearing: 27th and 28th February, 2006.

(in

C.A.

No.263

of

14

--------------------------------------------------------------------------JUDGMENT FAQIR MUHAMMAD KHOKHAR, J.-The Central Board of Revenue (C.B.R.) announced Self-Assessment Scheme for the assessment year 2002-2003 through Circular No.7 of 2002, dated 15-6-2002 in exercise of powers under section 59 of the Income Tax Ordinance, No.XXXI of 1979 (since repealed) (hereinafter referred to as the Ordinance). The last date for filing the returns for non-company cases was fixed as 30-9-2002 (subsequently extended to 15-10-2002) and for company cases 31-12-2002. Thereafter, the Board issued policy guidelines to all the Regional Commissioners of Income Tax vide letter, dated 17-12-2002 for selection of cases for total audit with the direction to finalise the process by 10-1-2003. By letter, dated 31-1-2003, the C.B.R. informed the Regional Commissioners that in view of a small number of returns of companies, the holding of ballot for selection of 20% cases

out of each category was not logical. Therefore, they

were directed to select the returns for audit up to 20% at their own level under para. 9(2)(ii) of the Scheme and the guidelines, dated 17-12-2002. 2. The respondents, who were individual firms and companies limited by shares filed their returns under the Scheme for the year, 2002-2003, Their cases were selected

by

the

recommendations

concerned of

Regional

Commissioners

of

Commissioners the

Income

of

Income

Tax

after

Tax

on

the

following

the

procedure laid down in the scheme and the policy guidelines, dated

17-

12-2002. The respondents felt aggrieved and filed writ petitions in the Lahore High Court Lahore,

which were allowed,

by the impugned

selection of their

cases by the Regional

judgments and the

Commissioners of

Income Tax was

quashed. Hence, these appeals under Article 185 of the Constitution of Islamic Republic of Pakistan, by leave of the Court. 3. Mr. Makhdoom Ali Khan, the learned Attorney General for Pakistan submitted that Self-Assessment Scheme as announced on 15-6-2003 by Circular Letter No.7 and the policy guidelines issued by the Board vide letter, dated 17-12-2003 were not ultra vires any of the provisions of the Constitution and the law. They were issued in conformity with letter and spirit of section 59 (1-A) of the Ordinance and section 177 of the Income Tax Ordinance, 2001. There was no violation of the principles of natural justice. It was further contended that during the preliminary stage of the process of selection of cases through inhouse mechanism in the light of the scheme and the guidelines, the respondents were not entitled to any show-cause notice or hearing as no adverse decision had

yet

been

taken.

However,

they

were

issued

notices

by

the

Regional

Commissioners before making a final selection. He referred to a Textbook titled Administrative Law by Sir William Wade Ninth Edition pages 547-548. He also relied on the cases of R V. Saskatchewan College of Physicians and Surgeons et al, ex parte Samuel (1966) 58 Dominion Law Reports (D.L.R.) (2nd) 622 at pages 638-640), Parry Jones v. Law Society (1969) 1 Ch Division 1 at pages 8 and 10), Norwest Hoist Ltd. v. Secretary of State for Trade (1978) 1 Ch. D 201), Christopher John Moran v. Lloyd's (1981) 1 Lloyd's Law Reports (Volume-1) 423

15 at page 427) and Rees and others v. Crane (1994) 1 All E.R. 833 at P.P. 842845), in support of his submission that hearing was not required to be afforded at preliminary stage of investigation or inquiry when no adverse action was taken. Under section 59 of the Ordinance, once a case was selected for total audit, the normal process as contemplated by section 62 was to take place. In any case, even under the guidelines, dated 17-12-2002 a definite, fair and reasonable procedure had been provided for to enable an income tax assessees to place his point of view before the final selection of a case. The discretion of the Regional Commissioners of the Income Tax and the Commissioner's of Income Tax

had

been

further

curtailed

by

the

C.B.R.

through

the

scheme

and

the

guidelines. 4.

It

was

further

argued

that

it

would

have

certainly

created

more

complications including the evasion of income tax if the guidelines were made known either simultaneously with, or immediately after, the announcement of the Self-Assessment Scheme. In such a case, all the assessees would have known before hand as to who were going to be selected or left out. A prior warning would have produced undesirable results detrimental to the Revenue and the public interest. The course adopted by the C.B.R. had resulted in minimizing the evasion of the income tax as everybody could expect that his case might be scrutinized. If the C.B.R. had Mentified the classes or categories of cases or persons and laid down guidelines before, the very purpose of provisions of section

59

of

1979

Ordinance

and

the

Self-Assessment

Scheme

announced

thereunder would have been defeated. The guidelines issued by the C.B.R. vide circular

letter, dated 17-12-2002 did not contravene the provisions of

section 59(1-A) of the Ordinance or the Self-Assessment Scheme. The guidelines could not be considered to be an amendment to the Self-Assessment Scheme as originally

announced

on

15-6-2002.

The

Self-Assessment

Scheme

and

the

guidelines issued by letters, dated 17-12-2002 and 22-3-2003 were valid in all respects. 5. It was next contended by the learned Attorney General that although certain appeals of the appellants were barred by limitation but the delay ought to be condoned

by

this

Court

for

the

grounds

stated

in

the

applications

for

condonation of delay and in view of the law laid down in the cases of Ch. Manzoor Elahi v. Federation of Pakistan and others (PLD 1975 SC 66 (100), Mehreen Zaibun Nisa v. Land Commissioner, Multan and

others (PLD 1975 SC

397) at P. 413), Fazal Ilahi and others v. P.T.C. and others (2001 SCMR 768) at P. 770) and Sheikh Muhammad Rashid v. Majid Nizami, Editor-in-Chief, The Nation and Nawa-e-Waqt, Lahore and another (PLD 2002 SC 514) at P.521). 6. It was further argued that in view of the substantial questions of law of public importance involved in these cases, failure to avail the alternate remedy of Intra-Court Appeal under section 3 of the Law Reforms Ordinance, 1972 was not an absolute bar for invoking the constitutional jurisdiction of this Court. He referred to the case of 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). It was emphasized that mala fide against

16 a public functionary was not to be assumed but the same was required to be proved through positive evidence and material. The case of The Federation of Pakistan

through

Secretary

Establishment

Division,

Government

of

Pakistan,

Rawalpindi v. Saeed Ahmad Khan and others (PLD 1974 SC 151) was referred. 7. On merits, it was stated by the learned Attorney General that the selection of the cases of the respondents was made after issuance of show-cause notices and receipt of

the replies of the

assessees who were afforded reasonable

opportunity of hearing. The learned Attorney General referred to the case of Muhammad

Asghar

357)(Lahore)

in

and

others

that

the

v.

Income

selection

of

Tax

Officer

cases

for

and

others

scrutiny

Authorities could not be objected to as the assessees were

by

(1986

PTD

Income

Tax

required to file

true income tax returns under the Self-Assessment Scheme. The guidelines laid down an intelligible criteria with specificity which could not be said to be capricious

or

arbitrary.

The

respondents

were

disentitled

constitutional jurisdiction of the High Court of

the

Constitution

availability

of

of

Islamic

adequate

Republic

remedies

of

provided

to

invoke

the

conferred by Article 199 Pakistan by

the

in

the

Income

presence

Tax

of

Ordinance.

Reliance was placed on the cases of Al-Ahram Builders (Pvt.) Ltd. v. Income Tax Appellate Tribunal (1993 SCMR 29),-Khalid Mehmood v. Collector of Customs, Customs House, Lahore (1999 SCMR 1881) at P. 1887). It was lastly submitted that in cases in which notices had not been issued, the same would be issued by the relevant authorities before making a final selection for proceeding further in accordance with law. 8. On the other hand, Mr. Shahid Hamid, Senior Advocate Supreme Court, the learned counsel for the respondent (in Civil Appeal No. 1046/2004) submitted that the appeal filed by the appellants was hopelessly barred by the time and no sufficient cause was shown in their application for condonation of delay. He referred to the cases of Muhammad Hussain and others v. Muhammad and others (2000 SCMR 367) and Ali Muhammad through Legal Heirs and others v. Chief Settlement Commissioner and others (2001 SCMR 1822) to impress upon that the delay in filing an appeal could not be condoned merely because some connected appeals filed within time were to be heard on merits. It was next contended that the remedy of Intra-Court Appeal provided by section 3 of the Law Reforms Ordinance, 1972, against the impugned judgment, passed by a learned Single Judge

in

Chambers

of

the

Lahore

appellants in these cases.

High

Court

had

not

been

invoked

by

the

Therefore, a petition or an appeal before this

Court under Article 185 of the Constitution was not competent in view of the law laid down by this Court in the case of Imtiaz Ali Malik v. Mst. Surrya Begum and others (1979 SCMR 22). 9. He further argued that the guidelines issued by the C.B.R. were over-broad and went beyond the scope of section 59(1-A). They were ex facie discriminatory in

nature

and

were

also

capable

of

arbitrary

application.

They

conferred

uncanalised power on the Regional Commissioners and the Commissioners of Income Tax to pick and choose. There was no method to ascertain as to how many cases were to be selected for computer balloting by the C.B.R. or by the Regional

17 Commissioners discretion

had

on

the

been

recommendations conferred

on

of

them.

the He

Commissioners.

pointed

out

that

An in

unfettered the

Self-

Assessment Scheme for the year, 1998-99 a provision was made to outsource the selected cases for audit purpose under sections 4 and 4-A of the Ordinance and the C.B.R. was required to specify classes/categories of cases for special audit through a separate circular. However for the assessment years 2002-2003, the assessees were entrapped

through the Self-Assessment Scheme and the

guidelines. The conduct of the C.B.R. was unconscionable, non-transparent and discriminatory in nature. 10. Mr. Siraj-ud-Din Khalid, Advocate Supreme Court, learned counsel for the respondents (in C.As. No.238 of 2004 and 1212 of 2005), adopted the arguments advanced by Mr. Shahid Hamid, Senior Advocate Supreme Court and further stated that the appeals were also liable to be dismissed on the point of limitation as no sufficient cause was shown for condonation of delay. 11. Mian Ashiq Hussain, Advocate Supreme Court, the learned counsel for the respondents (in Civil Appeals No.262, 265, 266, 269, 294, 298, 835, 844/2004 and 1214/2005) highlighted the history of the Self-Assessment Scheme in a chronological order. He submitted that selection of cases through random ballot as well as by the Regional Commissioners of Income Tax was not only against the basic concept and purpose of the scheme but the same also suffered from the vice of uncertainty. Para-9 of the Scheme was not clear as to the exclusion of cases from the Scheme on the basis of computer balloting and the ratio out of total of 20% of cases which were to be selected by the Regional Commissioners of Income Tax. No justification was spelt out by the C.B.R. while issuing the letter,

dated

31st

January,

2003

permitting

the

Regional

Commissioners

to

select such cases at their own level. A long arm was given to the Revenue Officers to take advantage of the ambiguity of the Scheme as to'the percentage to be allocated for computer balloting and Regional Commissioners of Income Tax. It was argued that the guidelines were required to be issued either before or at least simultaneously with the announcement of the Scheme so that the assessees were not kept in dark to. Exercise their option for the Scheme or otherwise before the period provided under section 59(4) of the Ordinance had run out. It was very unfair on the part of the C.B.R. to adopt a mechanism of laying a bobby trap for the assessees. The C.B.R. was not expected to be secretive in the matter of identifying each category of cases to be selected for total audit or scrutiny till the last date of submission of returns. It would have been just and 'fair that the guidelines were made known to the assessee well in time and not to hold them back for considerable period even after filing of the returns. It was not the intention of law to give wide discretion to the C.B.R. to issue the guidelines as contemplated in para. 9(a)(2) of the Scheme at its sweet will

whenever it thought fit. It was

further urged that Assessing Officer had no discretion but to make assessment under section 59(1) of Ordinance, 1979, in accordance with the returns once the requirements of the Scheme was satisfied. The guidelines, dated 17-12-2002 were in the nature of a bill of attainder i.e. pains and penalties and the net was so widened that no taxpayer could feel safe even if all the codal formalities

18 were fulfilled. The parameters laid down by the guidelines were exhaustive in nature as if those were an independent Scheme. The hunt for cases involving ``Revenue Potential'' would give a licence and unbridled discretion to the Commissioners/Regional Commissioner of Income Tax to pick and choose anyone on unreasonable grounds. The guidelines could be invoked in a selective manner without providing any intelligible differentia and the same were hit by the equality

clauses

laid

down

by

Article

25

of

the

Constitution

of

Islamic

Republic of Pakistan, 1973. Reliance was placed on the case of Messrs Novitas International v. Income Tax Officer (Films Circle) and others (1991 PTD 968). It was lastly submitted that exclusion of cases from benefit of the scheme by itself amounted to an adverse order which could not be done without affording adequate opportunity of hearing by the relevant authorities during the process of selection of cases by the Commissioners and Regional Commissioners of Income Tax. 12.

Mr.

M.

Naeem

Shah,

Advocate

Supreme

Court,

learned

counsel

for

the

respondents (in Civil Appeals No.276, 288, 315/2004) submitted that Circular No.7 of 2002, dated 15-6-2002 and the guidelines, dated 17-12-2002 issued by the C.B.R. purportedly under section 59 of the Ordinance, 1979, were violative of Article 4 of the Constitution and the principles of natural justice. It was an inalienable right of every citizen to enjoy

the protection of law and no

action detrimental to reputation or property of any person could be taken except in accordance with law. He argued that under the provisions of section 59(1) once a return filed under the Scheme qualified for acceptance, the Deputy Commissioner of Income Tax was under an obligation to assess the total income of

the

assessee

on

the

basis

of

such

return

and

to

pass

an

order

of

determination of the tax accordingly. 13. Dr. Ilyas respondents

Zafar,

(in

Civil

Advocate Supreme Appeals

No.841

Court, the learned and

843/2004)

counsel for the

submitted

that

the

guidelines issued by the Board were required to be published in the official Gazette as required by section 165 of the Ordinance where-under the C.B.R. was empowered, by notification in the official Gazette, to make rules and prescribe the manner and the procedure by which the income,

profits and gains liable to

tax and the tax payable under the Ordinance, would be determined in the cases of persons to whom section 59 was applicable. Since the guidelines, dated (?) therefore, they were not enforceable at law. It was next contended that the guidelines vested the Income Tax Authorities with the powers of reopening the cases for total audit in an arbitrary manner and without recording any reasons. Therefore,

those

were

invalid

ineffective

for

non-compliance

of

the

requirements of section 24-A of the General Clauses Act, 1897, where under every authority, officer or person making any order or issuing any direction in exercise of powers conferred by or under any law was required to give reasons for

such

an

order

or

direction.

The

guidelines

also

ran

counter

to

and

nullified the effect of section 59 ibid and those were an encroachment of quasi-judicial functions of the Income-tax Authorities. Reliance was placed on .the case of Messrs H.M. Abdullah v. Income Tax

Officer Circle v. Karachi

and 2 others (1993 SCMR 1195) in which it was held that the C.B.R. exercising

19 administrative instructions

control

to

the

or

supervision

Assessing

could

Officer,

not

give

Appellate

any

directions

Assistant

or

Commissioners,

Income Tax Appellate Tribunal or the Commissioners of Income Tax vested with quasi judicial powers. He also made a reference to the case of Messrs Central Insurance Company and others v. Central Board of Revenue and others (1993 SCMR 1232) wherein it was held that

although the C.B.R. had administrative

control over the functionaries discharging their functions under the Ordinance, but it did not figure in the hierarchy of the forums provided for adjudication of

cases

of

assessees

as

to

the

income-tax.

It

was

further

held

therein

assessees as to the income-tax. It was further held therein that interpretation placed by the C.B.R. on a statutory provision could not be treated as a pronouncement by a forum competent to adjudicate upon such a question judicial or quasi-judicial. Therefore, it was contended that the C.B.R. could not issue any directions of the nature which would interfere with the judicial or quasijudicial

adjudicatory

functions

entrusted to

various

functionaries

under

a

statute. 14. Messrs Muhammad Iqbal Hashmi, Advocate Supreme Court, and Shahbaz Butt, Advocate Supreme Court, the learned counsel for the respondents (in Civil Appeals No.248-251, 256, 259, 303, 1014/2004) and (Civil Appeals No.233, 241, 243, 256, 261, 271, 274, 275, 279, 283, 286, 293, 296, 301, 304 of 2004) submitted that the C.B.R. was not empowered to issue guidelines having the effect of modification of the Scheme already announced by it or date for scrutiny of cases for total audit

to extend the

unilaterally.

15. We have heard the learned Attorney General for Pakistan and the learned counsel for the respondents at length. Section 55 of the Ordinance required the filing of Income Tax return by every person whose total income or the total income of any other person in respect of which he was assessable for any income year exceeded the maximum amount which was not chargeable to tax under the Ordinance or who had been charged to tax for any of the four income tax years immediately preceding the said income year. Section 59 of the Ordinance made a provision for self-assessment of the income tax as under:-59. Self-assessment: (1) Where the return of total income for any income year furnished by the assessee (not being a public company or

a

company

engaged

in

the

business

of

banking

leasing

and

modaraba), under section 55 qualifies for acceptance in accordance with the provisions of a scheme of self assessment made by the Central Board of Revenue for that year or under any instructions or

orders

issued

thereunder

the

(Deputy

Commissioner)

shall

assess, by an order in writing, the total income of the assessee on the basis of such return and determine the tax payable on the basis of such assessment (Explanation: For the removal of doubt it is hereby that a return of total income furnished under not include a return of total income 57)

declared

section 55 does

furnished under section

20 (1-A) Notwithstanding anything contained in subsection (1),

the

Central

Board

of

Revenue

or

any

authority

subordinate to it if so authorized by the Central Board of Revenue in this behalf, may in accordance with a scheme subsection (1), select out of returns subsection any cases or classes of

referred to in

referred to in that cases or persons or classes

of persons howsoever determined, for assessment under section 62, and the (Deputy Commissioner) shall proceed to make the assessment under that section or, if the circumstances so warrant, under section 63 accordingly). (1-B) (2) (3)

In

(assessing

the

total

income

and

determining

the

tax

payable under subsection (1)) (Deputy Commissioner) may make such adjustments as may be necessary, including any adjustment under sections 34, 35, 36, 37, 38, 50, 53 or 54, the rules made under section 165, the First Schedule and the Third Schedule. (4) No order under subsection (1) shall be made in any cases after the thirtieth day of June of the financial year next following the income year in respect of which a return of total income has been furnished under section 55: (Provided that if such order is not passed by such date, the acknowledgement issued under section 55A in respect of the return of total income shall be deemed to be the and notice of demand referred to in 16.

However,

section

59-A

of

the

Ordinance

assessment order

section 85)

laid

down

that

if

the

Deputy

Commissioner was satisfied without requiring the presence of the assessee or the production by him of any evidence that a return furnished under section 55 was correct and complete, he would by an order in writing assess the total income of the assessee and determine the tax payable on the basis of such return. It was further provided therein that the provisions of subsection (3) of section 59 would apply to an assessment and determination under section 59-A as they applied to an assessment and determination under section 59. 17. The C.B.R. by Circular No.7 of 200*2 (Income Tax), on 15th June, 2002 announced the Self-Assessment Scheme (S.A.S.) for the Assessment year 2002-2003 under

section

59

of

the

Ordinance.

Paragraphs

1.1,

9

and

10

thereof

are

reproduced below for the sake of convenience:1.1 All returns filed by taxpayers, other than those that are ineligible

under

para.

7

of

this

Scheme,

shall

qualify

for

acceptance subject to the fulfilment of the following conditions, namely:-

21

(a) tax has been fully paid under section 54 of the Ordinance

and

proof of such payment is attached with the return; (b) Return of income for the assessment year 2002-2003 has filed

under

section

55

of

the

Ordinance,

within

due

been date

as

defined in this Scheme; (c) Returns of Public Limited companies quoted stock exchange, where tax payable on the income declared is equal to or more than the tax payable on the income last declared or assessed, whichever is higher; (d) Returns of other Companies where tax payable on the income declared is higher by ten percent (10%) or more compared to the tax payable on the income last declared or

assessed,

whichever is higher; (e) Returns of Registered Firms of Professionals not liable to pay Super Tax under clause (2B) of para (A) of Part-IV of 1st Schedule to the Ordinance, where the tax computed, under Part-II of the 1st Schedule to the Ordinance, on income declared is higher by twenty per cent. (20%) as compared to the similar tax computed on the income last declared or assessed, whichever is higher; and (f) Return of Persons not being Companies or Registered Firms of Professionals, as indicated in sub-paras (c) (d) & (e) above, where tax payable to income declare is higher by cent. (20%) or more as compared to the tax

twenty per payable on the

income last declared or assessed, whichever is higher; (9) SELECTION OF CASES FOR AUDIT: --------------------------------(a)

From

amongst

the

returns

filed

under

the

Self-Assessment

Scheme (excluding salary and only property income cases), twenty per cent. (20%) returns may be selected for total audit in the following manner:(i) through computer ballot which may be random or parametric, as deemed fit by C.B.R. (ii)

by

Regional

recommendations

of

Commissioners Commissioners

of

Income

concerned,

in

Tax the

on

the

light

of

guidelines issued by the Central Board of Revenue in this behalf. (b) Returns qualifying for self-assessment shall be expeditiously processed either manually, or through

computer, after the

22 selection of cases for total audit. The Assessing Officer shall make necessary adjustments under section 59(3) of the Ordinance, if so required, after giving a notice in writing to the assessee and considering his explanation, if any, These adjustments may include add-backs on account of:(i)

expenses claimed which are legally inadmissible;

(ii)

any sum(s) deemed to be income under the Ordinance; and

(iii) adding agricultural income to the chargeable income for rate purposes in terms of Proviso to Clause (1), Part-1 of the Second Schedule to" the Ordinance. (10) PROCESSING OF CASES SELECTED FOR AUDIT. -------------------------------------------The

cases

detail,

selected

including

professional

for

total

audit,

field

audit

by

auditors

shall

be

departmental

authorized

under

scrutinized officers

section

4A

or of

in by the

Ordinance. The investigation and assessment proceedings shall be monitored and completed under guidance of supervisory officers within the meaning of section 7 of the Ordinance. Information collected from available sources shall be utilized for determining income of the taxpayer and tax payable thereon. 18. The C.B.R. Islamabad vide Letter No.7(7) S. Asstt/2002, dated 17-12-2002 issued policy guidelines to all the Regional Commissioners of Income Tax for selection of cases for total audit under para-9 (a)(ii) of the Self-Assessment. Scheme for the assessment year 2002-2003 Paragraphs 2, 3 and 4 thereof, being relevant, read as under:``(2)

In

order

to

fulfil

the

above

obligation

of

the

Scheme

regarding issuance of the guidelines, it has been decided that the Resit shall select only those revenue potential cases, where there is an evidence, information or reasons to believe that the true particulars of income have been suppressed. Such

selection may

be based upon factors including an evident decline in income and disparity

in

expenses

on

utilities

vis-a-vis

income

declared.

Besides, cases of taxpayers acquiring new assets or incurring a liability of Rs.50,000 or more through a non-institutional loan, as declared in their wealth

statements or where Department is

otherwise in the knowledge of some investments made by them, also need to be considered for selection, it is felt that sources of such acquisition/investment require detailed examination. In order to identify such cases the tax profiles of survey and Registration may also be consulted.

23 (3) Further, the RCsIT may poee recall that last year a number of taxpayers

lodged

complaints

before

he

learned

Federal

Tax

Ombudsman that their cases were selected on frivolous grounds. This time it must be ensured that selection is based on material evidences taxpayers.

and

a

fair

Before

and

making

just a

treatment

final

is

accorded

selection,

the

to

RCsIT

all must

confront the assessees, provide them due opportunity of being heard and must indicate the basis of their proposed selection in the notices to be communicated to them. (4) Board would like to further add that powers to set apart cases for

total

audit

must

not

be

indiscriminately

used

and

be

restricted to only those revenue potential cases where there is a sound basis. Board desires that the process of selection of cases for total audit must be finalized by 10th of January, 2003 and thereafter be favoured with Zone-wise list of cases so selected. It may be reiterated that selection of cases for total audit must be carried out in a judicious and transparent manner.'' By

another

directive,

dated

22-3-2003,

the

C.B.R.

extended

final

date

of

selection of non-company cases for total audit up to 31-3-2003 in order to allow sufficient time to the taxpayers to submit their replies to the show cause notices to the Regional Commissioners of Income Tax. The same date was also extended in respect of company cases. 19. A number of issues have been raised by both sides with regard to the validity and scope ofthe Circular No.7 of 2002, dated 15-6-2002 and policy guidelines, dated 17-12-2002 of the C.B.R. together with extension in fixing dates for completion of total audit of cases. An assessee was not under any statutory obligation to file his return of total income for any year in terms of provisions of section 59 under the Self-Assessment was

otherwise

required

to

file

a

normal

return

Scheme. A person who under

section

55

of

the

Ordinance was given the option to file his return under section 59 for its acceptance in accordance with the provisions of self-assessment scheme made by the C.B.R. for that year, The Deputy Commissioner of Income Tax would then assess, by an order in writing, the total income of the assessee on the basis of such return and determine the tax payable on the basis of such assessment. By non-obstante clause of section 59 (1-A) it was provided that the C.B.R. or any authority subordinate to it if so authorized by the C.B.R. could select out of returns any cases or class of cases or persons or class of persons howsoever determined for assessment under section 62 and the Deputy Commissioner would proceed to make the assessment under that section or if the circumstances so warranted, under section 63 accordingly. In such a situation, the procedure provided under section 62 or section 63, as the case might be, would be allowed by the Deputy Commissioner. Under paragraph 9 of the scheme, 20% returns were to be selected for total audit through computer ballot which may be random of parametric as deemed fit by the C.B.R. or and by Regional of Income Tax on the recommendations of the

Commissioners

Commissioners concerned in

24 the light of the guidelines issued by the C.B.R. in that behalf. The Assessing Officer would make necessary adjustments under section 59(3) of the Ordinance, if

so

required,

after

giving

a

notice

in

writing

to

the

assessee

and

considering his explanation C if any. Paragraph 10 of the Scheme further laid down that the cases selected for total audit would be scrutinized in detail including field audit by departmental officers or by professional auditors authorized under section

4-A of the Ordinance by utilizing the information

collected from available sources of determining income of the taxpayer and tax payable thereon by observing the procedure of paragraph 9 and 10. There was no limitation or restriction imposed by section 59(1-A) of the Ordinance as "any cases or classes of cases or person or class of persons" could be selected for the purpose of total audit. 20. The word `any' used in subsection (1-A) of section 59 of the Ordinance was not without significance. In the case of Ch. Zahoor Ellahi M.N.A. v. The State (PLD 1977 SC 273) the import of the word `any' was considered in the context of section 13(1)(b) of the Defence of Pakistan Ordinance (XXX of 1971) whereunder it was provided that.... ``no Court would have authority to revise such order or sentence..... or to transfer any case from a Special Tribunals.... or have any jurisdiction of any kind in

respect of any proceedings in a Special

Tribunal.'' It was held that word `any' was of very wide amplitude and was defined in Stroud's Judicial Dictionary as a word which excluded limitations or qualifications and, therefore, "any order" would include both interim as well as final orders. Similarly, in N.-W.F.P. v. Muhammad Irshad (PLD 1995 SC 281), this Court took the view that the expression `any law' was used to enlarge the amplitude of the term to which it was attached and there seemed to be no reason why expression 'any law' occurring in Article 8(1) of the

Constitution

would be so narrowly construed as to exclude from its purview a regulation which possessed the efficacy of law in a part of Pakistan. In Inam-ur-Rehman v. Federation of Pakistan (1992 SCMR 563) (at page 587) it has been stated that the term 'any' according to the Black's Law Dictionary (Fifth Edition) page 86 means "one out of many; an indefinite number; one

indiscriminately of

whatsoever kind or quantity. The word "any" has a diversity of meaning and may be employed to indicate "all" or "every" D as well as "some" or "one" and its meaning in a given statute depends upon the context and the subject-matter of the statute. In M. Amjad v, Commissioner of Income Tax and 2 others (1992 PTD 513), it was held by a learned Division Bench of the High Court of Sindh that the word `any' used in the context of section 59 of the Ordinance was a word of expansion indicative of width and amplitude sufficient to bring within the scope and ambit of the words it governed, all that could possibly be included in them. 21. Therefore, no exception could be taken to the selection of cases of the respondents in respect of their returns filed under the Self-Assessment Scheme. It goes without saying that final selection of a case or cases had been made by the Regional Commissioner of Income Tax after affording fair and adequate opportunity

of

hearing

to

the

assessees/respondents

who

were

issued

showcause notices and their replies to the same were duly considered. It may be

25 observed that under the scheme a maximum of 20% of the returns filed by the assessees could be selected for total audit. The percentage of the selected case? Through computer ballot or by the Regional Commissioners of Income Tax had not been squarely laid down with precision. However, no prejudice was shown to have been caused to the respondents on

account of the non-specification

of the percentage of cases to be selected by the C.B.R. through computer balloting or by the Regional Commissioners. In our view, paragraphs 9 and 10 of the Scheme could not be said to be ultra vires the provisions of section 59 or any other provision of the Ordinance. 22. As regards the policy guidelines, dated 17-12-2000 issued by the C.B.R. to the Regional Commissioners of the Income Tax, it seems that discretion of the Regional Commissioners in selecting the cases for total audit was thereby restricted. They could select only those revenue potential cases where there was

an

evidence,

information

or

reason

to

believe

that

the

true

particulars of income had been suppressed. Under the Scheme, the number of selected returns could not exceed the maximum limit of Regional

Commissioner's

were

further

directed

to

20%. However, the

identify

and

select

the

revenue potential cases only based upon factors including an evident decline in income and disparity in expenses on utility vis-a-vis income declared. Besides, cases of taxpayers acquiring new assets or incurring a liability of Rs.50,000 or

more

through

statements

or

a

non-institutional

where

Department

was

loan,

as

otherwise

declared

in

the

in

their

knowledge

wealth of

some

investments made by them, could also be considered for selection. If it was felt

that

sources

of

such

acquisition/investment

required

detailed

examination. In order to identify such cases, the tax profiles of Survey and Registration might also be consulted. The C.B.R. specifically directed that before making a final selection, the Regional Commissioners of Income Tax must confront

ihe

assessees,

indicate

the

basis

of

provide their

them

opportunity

proposed

of

selection

being

in

the

heard

and

notices

must

to

be

communicated to them. These guidelines were administrative in nature meant for the internal

consumption of the Income Tax functionaries which did not create

any rights nor did they impose any obligations. Those instructions had not taken

away

any

vested

right

of

the

assesses

and

would

not

govern

the

adjudicatory proceedings of quasi-judicial in nature. However, it could not be said that the guidelines were, in any way, extraneous, irrelevant or unfair to the object to be achieved by the process of selection of cases for total audit. In our view, the procedure of selection of cases for total audit as provided by paragraphs 9 and 10 of the Scheme was not nullified or whittled down by the policy guidelines, dated 17-12-2002. 23. Now, we have to examine whether the policy guidelines, dated 17-12-2002 were

invalid

for

the

reason

of

not

having

been

issued

either

before

or

contemporaneously with the promulgation of the Self-Assessment Scheme. There was no requirement of section 59 or any other provision of the Ordinance or rule for issuance of guidelines either before or along with the Scheme. The very object of the provisions of section 59(1-A) would have

been frustrated if

the income taxpayers were informed, before hand, of the categories of cases or

26 persons

which

would

be

selected

for

total

audit.

If

that

was

done,

the

possibility of tax evasion under the scheme at a massive scale could not be ruled out. The assessees were required to file their true return under the Scheme as far as possible. The previous publication of the guidelines would have been a hay-day for all the tax evaders as they would be knowing before hand that their cases were not going to be selected or scrutinized. As long as the Income-tax Authorities acted within the for corners of section 59 of the Ordinance and the Self-Assessment Scheme and did not abuse their power or authority, the objection as to the provisional or/and final selection of cases for total audit was not sustainable. The guidelines for the selection of cases by the Regional Commissioners would not suffer from any taint of invalidity merely because certain categories had been identified for total audit based on the reasonable classification which was not violative of Article 25 of the Constitution. There was no

requirement of law for issuance of the

guidelines by the C.B.R. side by side with the announcement of the Scheme as they were to follow the Scheme after its announcement and not to precede it. 24. The objection of Dr. Ilyas Zafar, Advocate Supreme Court, as to nonpublication of guidelines in the Official Gazette also needs to be attended. There was no statutory obligation on the part of the C.B.R. to have published the

guidelines

in

the

Official

Gazette.

They

were

in

the

nature

of

administrative instructions meant for the internal consumption of the Regional Commissioners issued in aid of carrying out the purposes of

Self-

Assessment Scheme. They did not enjoy the status of statutory rules which were required, by section 165 of the Ordinance, to be notified through publication in the Official Gazette. Moreover, it all depends on the nature and context of statute whether the provisions requiring publication of a notification in the Official Gazette would be construed as

directory only or mandatory so as

to invalidate a notification or instructions on account of non-publication in the Official Gazette. The purpose of publication and the legal effect of nonpublication of a Gazette Notification in the Official Gazette has been examined by the superior Courts in a number of cases. In Jalal Din v. Natha Ram and another (AIR 1922 Lahore 474), a learned Division Bench of the High Court observed that a notification was a method implied for communicating orders, rules, etc. to the general publ'ic. In Pakistan through Secretary, Ministry of Defence and others v. late Ch. Muhammad Ahsan through legal heirs and others (1991 SCMR 2180), certain lands had been requisitioned under the Defence of India Act, 1939 and the owners of the land were paid yearly lease money thereunder. But the notification of the acquisition/requisition of land had not been published in the official Gazette. It was observed that depending upon the circumstances of each case, the mere fact that publication in the official Gazette was delayed could neither invalidate the notification nor would make its operation retrospective as such vis-a-vis the date of actual

signing

it. It was found that factual acquisition of land had been acted upon for nearly 50 years and there was an air field in the land for such a long time. Notice/notification although had been signed and issued to all concerned but had not been gazetted. In other words, the purpose of the publication in the ordinary

sense

was

practically

served

almost

contemporaneously

when

the

27 acquisition took place and in fact it was more substantial publication insofar as the owners were concerned than if it would Lave been in the official Gazette. Mere fact that publication in the gazette was delayed, could not invalidate the notification. A somewhat similar view was taken in the case of r Muhammad Siddiquie v. Market Committee, Tandlianwala (1983 SCMR 785). In the case

of

Saghir

Ahmed

through

legal

heirs

v.

Province

of

Punjab

through

Secretary Housing and Physical Planning, Lahore and others (PLD 2005 SC 261), a housing scheme had been approved and notified by the Government. There was no stipulation of publication of such an approval in the official Gazette as a mandatory condition. It was held that the non-publication of the Government's approval

of

the

scheme

in

the

official

gazette

would

not

invalidate

the

approval. It was further observed that the official acts performed by public authorities deserved due regard by the Courts and every possible explanation for

their

validity

should

be

explored

and

the

whole

gamut

of

powers

in

pursuance of which they acted or performed their function and discharged their duties should be examined. In Mazur-ul-Haq v. Controlling Authority, Local Councils, Montgomery and others (PLD 1963 SC

652), the names of the official

members were not notified in the official Gazette as provided by Article 26 of the Basic Democracies Order, 1959, and section 17 of Municipal Administration Ordinance, 1960. It was held that unless there be something in the language of a statute which showed that the person concerned would not commence to hold office

till

there

was

a

notification

in

the

Gazette,

a

provision

for

a

notification should not be interpreted as a condition precedent to the holding of an office. 25. The learned counsel for the respondents also took a strong exception to the preliminary selection of cases for total audit by the Commissioners of Income Tax without affording prior opportunity of hearing to the assessees. We find that the C.B.R. through policy guidelines had clearly directed the Regional Commissioners of Income Tax to ensure that the selection was material

evidence

and

that

a

fair

and

just

treatment

was

based on given

to

all

taxpayers. Before making final selection, they were required to issue notices to the assessees indicating therein the basis of their proposed selection, to confront them with relevant material and provide them due opportunity of being heard. Therefore, the interests of the taxpayers were adequately safeguarded by the policy guidelines of the C.B.R. in the process of final selection of their cases by the Regional Commissioners even though they were not heard by the Commissioners at an early stage. 26. The rules of natural justice are not inflexible. They yield to and change with the exigencies of different situations. They do not apply in the same manner to situations which are not alike. These rules are not cast in a rigid mould nor can they be put in a legal strait-jacket. They are not immutable but flexible. They can be adopted and modified by the Statutes. The need to act in an emergency may also exclude at least a prior

hearing or where a decision

affects so many people that a hearing would be impracticable. In some cases there may be collective right, of hearing, or to be consulted although not necessarily

a

hearing

in

individual

cases.

Depending

upon

the

facts

and

28 circumstances

of

each

case,

there

is

no

mandatory

requirement

of

natural

justice that in every case the other side must be given a notice before preliminary steps are taken. It might suffice if reasonable opportunity of hearing is granted to a person before an adverse action or decision is taken against him. However, it is not possible to lay down an absolute rule of universal application governing all situations as to the exclusion or otherwise of the audit alteram partem rule during the course of preliminary inquiries or investigations. 27. The application preliminary

stage

or otherwise of

of

the

administrative

principles of natural

proceedings

was

examined

justice at in

various

jurisdictions by way of judicial review. In Pearlberg v. Varty (Inspector Taxes) (1972) 2 All England Reports 7) the Income-tax Authorities made an application to the Commissioner under the provisions of section 6(1) of the Finance Act of 1964 for leave to make assessment on a taxpayer for the

years

1946-47 and 1950-51. The permission was granted without giving the taxpayer an opportunity to be heard. The taxpayer claimed that those assessments were invalid on the ground that the Commissioner had acted ultra vires in granting leave without giving him an opportunity of hearing. The House of Lords observed that the Commissioner was not required to give the taxpayer an opportunity to be heard as his decision to give leave would not tantamount to any final determination of the rights of the

taxpayer.

28. In the case of Regina v. Saskatchwan College of Physicians and Surgeons (supra) it was held that the preliminary inquiry committee had no power to decide whether Dr. Samuels had been guilty of misconduct; it had no power to affect any of his legal rights in any way whatever; and it had no power to impose any penalty

or obligation upon

him. Having no power to adjudicate

anything, it was not, when conducting its investigation, acting in a judicial or quasi-judicial capacity. In R. v. Church Assembly Legislative Committee (1972) All England Reports 696) it was observed that the Church Assembly of the Church of England and its Legislative Committee were bodies that set in motion in a preliminary way, proposals for legislation, and they did not exercise judicial functions for determination judicially

questions affecting the

rights of subjects. In the case of Parry Jones v. Law Society and others, (supra), the Court of Appeal took the view that where the only inquiry was as to whether there was prima facie evidence, natural justice did not require that the party should be given notice of it. In Norwesi Hoist (supra), the company had moved the Court for a declaration that the view of the Inspectors to investigate the affairs and submit report to the department was unlawful and ultra vires as the information and the material had not been disclosed to the company. The Court of Appeal held that under section 165(b) of the Companies Act,

1967,

the

department

had

wide

discretion

to

appoint

inspector

to

investigate and report to it which was exercised at a preliminary stage for the purpose of good administration and carried with it no implication that there was

any

case

against

the

company.

Accordingly,

justice were at that stage inapplicable.

the

principles

of

natural

29 29. In Christopher John Moran (supra), the Court of Appeal observed that it was no good for the tactician to appeal to the rules of natural justice. They had no application to a preliminary inquiry of that kind. The inquiry was made with a view to seeing whether there was a charge to be made. It did not do anything which adversely affected the man concerned or

prejudiced him in any way.

It was simply a preliminary hearing to see if there was going to be a charge. If there was, there should be a hearing in which an impartial body would look into the rights and wrongs of the case. In all such cases, all that was necessary was that those who were holding the preliminary inquiry should be honest men-acting in good faith doing their best to come to the right decision. In that case, a Committee had been appointed to investigate dealings of the plaintiff Christopher John Moran who was an insurance broker and a member of Loyd's auditors. 30. In Rees and others (supra). It was held by the Privy Council that there were many situations in which natural justice did not require that a person must be told of the complaints made against him and given a chance to answer them at the particular stage in question. Essential features leading the Courts to that conclusion had included the fact that the investigation was purely preliminary, that there would be a full chance adequately to deal with the complaints later, that the making of the inquiry without observing the audit alteram partem maxim was justified by urgency or administrative necessity, that no penalty or serious damage to reputation was inflected by proceeding to the next stage without such preliminary notice, that the statutory scheme properly construed excluded such a right to know and to reply at the earlier stage. However, their Lordships did not lay down an absolute rule to that effect. 31. In Liberty Oil Mills v. Union of India (AIR 1984 SC 1271), an order of investigation principles

of

was

challenged

natural

on

justice.

the

The

ground

Supreme

of Court

non-compliance of

India

with

observed

the that

procedural fairness embodying natural justice was to be implied whenever action was taken affecting the rights of parties. An opportunity to be heard might not be predecisional; it might necessarily have to be post-decisional where the danger to be averted or an act to be prevented was imminent or where the action could break no delay. In Union of India v. Tuisi Ram Patel (AIR 1984 SC 1416), it was observed that right of prior notice could be excluded where the same would obstruct the taking of prior action. In Lewis v. Heffer and others (1978 (3

All

E.R.

suspended

the

354),

the

National

Constituency

Executive

Officers

and

Committee

Committee

of

Labour

pending

Party

inquiry

had

without

affording opportunity of hearing or issuance of show-cause notice. Lord Denning (as he then was) speaking for the Court of Appeal held that there had been no breach of rules of natural justice. It was only where the suspension was to be effected by way of punishment that natural justice demanded that the persons concerned should be given an opportunity of being heard before the suspension was imposed.

Where the suspension was made as a holding operation pending

inquiries, the rules of natural justice did not apply, because the suspension was merely done as a matter of good administration in a situation where prompt action was necessary.

30

32. In Paul Wallis Furnell v. Whangarei High Schools Board (1973) (P.C.) Appeal Cases 660), the Privy Council dealt with the challenge of a school teacher against whom sub-committee of the school conducted a preliminary investigation without giving him opportunity to make a representation. The Supreme Court of New Zealand had set aside the suspension of the school teacher by the school board

on

the

ground

that

the

principles

of

natural

justice

had

not

been

followed by the subcommittee and by the board before conducting preliminary investigation or passing the suspension order. It was held that one of the principles of natural justice was that a man should not be condemned and the teacher knew that under the terms of his employment he might be suspended pending the determination of charges against him. In Wednesbry Corporation v. Minister of Housing and Local Government (1965 1 All E.R. 186), the Minister's action to issue instructions to the Inspectors as regards scope of inquiry was held to be not subject to hearing. In Hardutt Mull Jute Mills v. State of Bihar (AIR

1957 Patna 21), a learned Division Bench of the Patna High Court while

dealing with a wealth tax case held that as a matter of law it was not correct to say that the party adversely affected should be heard at each and every stage of administrative process. 33. In Muhammad Hayat v. the Chief Settlement and Rehabilitation Commissioner and

another

(PLD

1970

Lah.

679),

the

registration

of

criminal

case

and

commencement of police investigation before hearing the accused were held to be not violative of principles of natural justice. In that case the investigation into a case of bogus claim of a refugee by Police

Officer was challenged on

the plea that the said Officer before making a report, had not afforded an opportunity of hearing to the accused. 34. We are inclined to agree with the learned Attorney General for Pakistan that

the

opportunity

of

hearing

was

not

required

to

be

afforded

by

the

Commissioners to the respondents at the preliminary stage of making proposals or recommendations of their cases to the Regional Commissioners for total audit. However, before the final selection of cases, the policy guidelines, dated 17-12-2002 seem to have been,. faithfully observed by the

Regional

Commissioners of Income Tax, who were required to confront the assessees with the material, provide them due opportunity of being heard and communicate them the basis of their proposed selection. In none of these cases, any allegations of

personal

bias,

mala

fide

or

other

unfair

treatment

by

Commissioners or other officers of the Income Tax specifically

levelled

or

substantiated

by

the

the

Regional

Department were

respondents.

Therefore,

no

exception could be taken to the selection of the cases of the respondents by the Regional Commissioner made after due process of law. 35. Some of these cases such as Civil Appeals No.282, 299 to 309, 312 to 315, 835, 837, 840, 842, 844/2004, 1211, 1212, 1213, 1214, 1641, 1704/2005 have been filed after the

expiry of limitation

period. They are

accompanied by the

applications for condition of delay. Since the other appeals were filed within limitation period, therefore, we aondone the delay in all such

appeals for

31 the

reasons

stated

in

the

applications

for

condonation

of

delay

and

the

following principles laid down in the cases of Sheikh Muhammad Rashid (supra), Ch. Manzoor Elahi (supra), Mahreen Zaibun-nisa (supra), Fazal Elahi and others (supra) and Province of Punjab v. Muhammad Tayyab and others (1989 SCMR 1621). The cases of Muhammad Hussain and others referred

to

by

Mr.

Shahid

Hamid,

(supra) and Ali Muhammad (supra) Senior

Advocate

Supreme

Court

are

distinguishable from the facts of these cases. 36. The objection as to filing of these appeals without availing remedy of Intra-Court Appeals has been taken by the respondent at a brlated stage of final

hearing

of

these

appeals.

Ordinarily,

this

Court

does

insist

the

petitioner or appellant to avail the remedy of Intra-Court appeal, in the first instance, as was done in the case of Imtiaz Ali Malik (supra) treferred to by Mr. Shahid Hmaid, Senior Advocate Supreme Court. However, this is a rule of practice for regulating the exercise of discretion

which does not oust or

abridge the constitutional jurisdiction of this Court. Therefore, in certain exceptional circumstances, this Court can entertain petitions, or as the case may be, direct

appeals even where

the remedy of Intra-Court

appeal under

section 3 of the Law Reforms Ordinance, 1973 has not availed by a party. Rference may usefully be made to the cases of \mst. Shohrat Bano v. Ismail Dada Adam Soomar (1968 SCMR 574), Province of Punjab through Secretary Excise and Taxation, Government of Punjab and Sargodha and others (PLD

others v. Sargodha Textile Mills Ltd.,

2005 SC 988) and Punjab Employees Social Security

Institution Lahore and others v. Manzoor Hussain Khan and others (1992 SCMR 441). The present appeals involve important question of law of great public importance having fr-reaching consequences. Thereafter, the objection of the respondents is not tenable in the peculiar facts of this case. 37. For the foregoing reasons, these appeals are allowed and

the impugned

judgments of the High Court are set aside with no order at as to costs.

Appeals allowed.

32

HIGH COURTS OF PAKISTAN ----------------------------------------------------------------Eastern Lather Company Ltd. v. Federation of Pakistan NO: WP 5893 YEAR: 2003 DECIDED ON 28/10/2003 CITATION: DTPHC1659; VOL7/12TF52 ----------------------------------------------------------------Income Tax Ordinance, 1979 -- Section 32 -LAW APPLICABLE --

Establishment

of

Office

of

the

Wafaqi

Mohtasib

before the President against the decision of

Order,

1983

Representation

Mohtasib --

FACTS -Complaints was filed before the Wafaqi Mohtasib seeking damages on account of demurrages paid to Karachi Port Trust by the

Complainant on account of

late clearance due to delay in issuance of exemption certificate under section 50(5) of the Income Tax

Ordinance, 1979 Mohtasib vide order dated 10.02.2001

ordered the Department to pay amount of Rs. 1,281,782 so that the complainant is compensated for the monetary loss suffered. Department filed representation before

the

President

which

was

decided

against

the

Complainant

--

The

Complainant filed writ petition in the High Court challenging the order of the President passed against him without giving opportunity of hearing – RESULT -Writ accepted -- Representation on the point in issue would be deemed pending before President which would be decided after hearing the parties -RATIO THE PETITIONER CANNOT CONDEMNED UNHEARD -Petitioner has admittedly been denied notice and the right of hearing on the respondent's representation against it -- The Petitioner has been condemned unheard --

33

VESTED RIGHT OF PARTICIPATION -The impugned order adversely affects the petitioner but has been passed without opportunity

of

hearing

to

the

petitioner

who

was

vested

with

a

right

of

participation in the proceedings against it as a party thereto -JURISDICTION VESTED IN PRESIDENTS IS QUASI JUDICIAL AND NOT ADMINISTRATIVE -The President exercises the same nature of functions as are performed by the Ombudsman -- Thus visualized, the president while performing his functions under Article 32 of the Order acts in quasi judicial and not in administrative capacity -LAW AND

PRINCIPLE OF LAW ON OPPORTUNITY OF HEARING --

The law and the principle of natural justice oblige the honourable President to decide a representation before him after an opportunity of hearing to the parties before him -ORDER WITHOUT HEARING -- WITHOUT LAWFUL AUTHORITY -Under the above explained circumstances, the impugned order conveyed to the petitioner through Memo No. 257/200 Law (WM) dated 17.01.2002 is declared to be without lawful authority and of no legal effect ----------------------------------------------------------------------[IN THE LAHORE HIGH COURT, LAHORE] EASTERN LEATHER COMPANY (PVT.) LTD. v. FEDERATION OF PAKISTAN Present: MR. MUHAMMAD SAIR ALI, J. W.P. No. 5893 of 2003, decided on 28th October 2003. Petitioner by: Raja Amir Khan, Advocate. Respondent by: Mr. Shahid Jamil Khan, Advocate. Date of hearing: 20-10-2003. Date of Order: 28-10-2003. ----------------------------------------------------------------------

34 JUDGMENT MUHAMMAD

SAIR

ALI,

J.

-

M/s

Eastern

Leather

Company

(Pvt.)

Limited

(the

petitioner) as manufacturer imported chemicals for manufacturing and processing of leather and leather products. Respondent No. 2 i.e. Commissioner of Income Tax issued certificate of exemption from deduction of income tax at source at import stage, on 06.12.1995 for a period of six months ending on 30.06.1996. In the meanwhile, petitioner opened certain. L.C s to import goods and machinery etc.

Renewal

of

certificate

application/representation

was

to

requested

respondent

by

the

remained

petitioner,

but

unresponded

his

whereupon

petitioner filed a Writ Petition No.15740/1996 before this Court. This petition was however decided on 06.10.1996 through directions to release the goods on furnishing of Bank guarantee by the petitioner. Owing to delay in release of the

imported

consignment,

the

petitioners

had

to

pay

demurrage

charges

amounting to Rs. 12,81,782. 2. Petitioner thereupon filed a complaint before the Hon,ble Wafaqi Mohtasib to seek refund of the demurrage charged from and paid by the petitioner. The grounds of complaint were that the petitioner had to suffer the above referred payment of demurrage charges owing to delay caused by non-issuance of exemption certificate by the respondents. The petitioner's complaint before the Hon'ble Wafaqi Mohtasib succeeded through order dated 10.02.2001. The Hon'ble Wafaqi Mohtasib observed and recommended as under:-``In view of the above facts of the case it is established that

the

complainant

had

to

pay

the

amount

of

Rs.12,81,782/- as demurrage charges due to negligence and mal-administration of the Agency, as the Agency failed to issue Exemption Certificate inspite of various applications submitted by the complainant in this regard. Therefore, amount of Rs.12,81,782/- may be refunded to the complainant is

compensated

for

the

monetary

loss

it

has

Compliance be reported to this Secretariat

suffered. within 30

days.'' 3. Against the above order, the respondents filed representation before the Hon'ble President of Pakistan under Article 32 of the Establishment of Office of Wafaqi Mohtasib (Ombudsman) Order, 1983. The same was accepted by Hon'ble the President of

Pakistan on the ground

that the

Hon'ble

Wafaqi

Mohtasib

appointed under the Order of 1983, was divested of the jurisdiction to hear the petitioner's

complaint

dated

23.02.2000

upon

promulgation

of

Federal

Tax

Ombudsman Ordinance, 2000 w.e.f. 11.08.2000 as provisions of the said Ordinance were applicable retrospectively and thus affected proceedings pending before the Hon'sble Wafaqi Mohtasib qua federal taxes. The findings and recommendation dated 10.02.2001 were thus set aside and petitioner was intimated of the above decision through Memo No. 574/2001-Law (WM) dated 17.01.2002 by a section officer. Hence the present constitutional petition.

35 4. On pre-admission notice, report and para wise comments were filed on behalf of the respondent. 5. Upon joint request of the learned counsel for the parties, this case is decided as an admitted/pacca case. 6. The case came up for hearing before this Court today. The learned counsel for the petitioner drew my attention to the impugned order conveyed to the petitioner through the above referred memo dated 17.01.2002 and stated that the order was void a-for having been passed without notice and without opportunity of hearing to the petitioner. Reliance was placed upon a number of judgments to contend that the

impugned order of

Hon'ble the

President

of

Pakistan was

unsustainable for having been passed in absence of the petitioner. 7. Learned counsel for the respondent faced with above situation, had no answer to offer.

He however tried to build his defence on merits.

8. Having heard the learned counsel for the parties, this Court has no option but to accept this constitutional petition. Petitioner has admittedly been denied notice and the right of hearing on the respondents' representation against it. The petitioner has been condemned unheard. The impugned order adversely affects the petitioner but has been passed without an opportunity of hearing to the petitioner who was vested with a right of participation, in the proceedings against it as a party

thereto. Question of

hearing on a representation to the

absence of proper

Hon'ble the President

of

Pakistan was

settled by the august Supreme Court of Pakistan in the cases of "Federation of Pakistan

vs.

Muhammad

Tariq

Pirzada

and

"Federation of Pakistan vs. Muhammad Tariq 2189).

In

case

reported

as

1999

SCMR

two

others

(1999

SCMR

2744)

and

Pirzada and two others (1999 SCMR

2189,

the

Hon'ble

Supreme

Court

of

Pakistan was pleased to settle the law on the nature of the jurisdiction vesting in the President under Article 32 of the above referred Order of 1983. It was held that:``the jurisdiction vested in the President under Article 32 partakes of appellate jurisdiction...'' And that: ``Under the scheme of the Order, the President exercises the

same

nature

of

functions

as

are

performed

by

the

Ombudsman. Thus visualized, the President while performing his functions under Article 32 of the Order acts in quasijudicial

and

not

in

administrative

capacity,

which

is

totally distinguishable from administrative actions.'' 9. Cumulative reading

of the above

referred two judgments

of

the

august.

Supreme Court of Pakistan reveals that the law and the principles of natural

36 justice oblige the Hon'ble President to decided a representation before him after an opportunity of hearing to the parties before him. 10. The law as above pronounced was followed by this court in the cases of "Muhammad

Saleem

Vs

Federal

Tax

Ombudsman

etc."

(Writ

Petition

No.

16946/2002)and "Muhammad Hussain and another Vs. Federation of Pakistan (2003 YLR 2793) to set aside orders passed on representations without hearing the party represented against. 11. Under the above explained circumstances, the impugned order conveyed to the petitioner through Memo No. 257/2001-Law (WM) dated 17.01.2002 is declared to be without lawful authority and of no legal effect. 12. This constitutional petition has been decided on the ground of absence of hearing to the petitioner therefore the questions of law and facts involved in the present constitutional petition have not been dealt with and decided. These questions

are

left

to

be

re-decided

in

the

representation

filed

by

the

respondents before Hon'ble the President of Pakistan. The representation shall be deemed to be pending and shall be re-decided in accordance with law after due notice and opportunity of hearing to the parties. HIGH COURTS OF PAKISTAN ----------------------------------------------------------------Suleman Spinning Mills Limited v. IACIT Lahore NO: WP 20218YEAR: 2002 DECIDED ON 27/02/2003 CITATION: DTPHC1624; 88TAX147; 2003PTD1343; ----------------------------------------------------------------Income Tax Ordinance, 2001 -- Section 239(6) -Income Tax Ordinance, 1979 -- Sections 50, 86, 117, 124 -Income Tax Rules, 1982 -- Rule 50 -Constitution of Pakistan (1973) -- Article 199 -Constitutional

petition

--

Prosecution

for

non-compliance

of

statutory

obligations -- Payment of deducted tax not deposited in Govt. treasury within prescribed time -- Imposition of additional tax and prosecution -- Notice u/s 117 -- Validity -- Petitioner deducted tax u/s 50(4)(a) from payments made to supplier and did not pay same in Govt. treasury for about period of four years -- As result thereof supplier was not given credit on account of tax so deducted and department failed to refund all deducted if amounts excess in their

assessed

liability

--

Suppliers

filed

complaints

before

Federal

Tax

Ombudsman who took serious view of non-timely payment of deducted amounts by petitioners to credit of Govt. and termed such action as unlawful retention, embazzlement

and

misuse

of

government

money

by

withholding

petitioners who had deducted huge sum from payment of said

agents

like

complainant but did

not deposit same for period of about four years -- Reply to show cause notice by petitioners that supplier verbally requested them not to deposit deducted

37 tax as they had obtained exemption certificate from C.l.T. (Companies), but it was

upon

non-production

of

certificate

that

amount

was

deposited

after

condiderable delay could not findfavour -- Notice -- Challenge to -- Whether Federal Tax Ombudsman holding action of revenue in non-recovery of Govt. funds as maladministration recommended reference to Legal Advisor for prosecution proceedings against them -- Held yes -- Whether it has not been denied by petitioners that prior of issuance of notice for proceedings of prosecution u/s 117, legal advice was also sought and it was so given by Legal Advisor of department -- Held yes -- Whether petitioners thus cannot say that notifying authority

mechanically served notice upon mere recommendation of Federal

Tax Ombudsman -- Held yes -- Whether bare reading of sub-section (6) of section 239 shows that proceedings for prosecution in respect of income year ending on or before 30th June, 2002, have specifically been permitted by above said provision of Income Tax Ordinance, 2001 to be taken and continued as if this ordinance has not come into force -- Held yes -- Whether provision of section 50(8) mandate payment within prescribed time in prescribed manner by person making deduction -- Held yes -Whether applicable rule prescribing time and manner in rule 50 of Income Tax Rules, 1982 which provides for one week's time for deducted in Govt. treasury -- Held yes --

crediting amount so

Whether cumulative reading of

section 50(8)(c) and section 52 of repealed Income Tax Ordinance, 1979 and Rule 50 of Income Tax Rules, 1982, does show that petitioners are also assessees in default having violated express provisions of section 50(8) of ordinance and rule 50 by deposit of deducted tax years after prescribed time of one week -Held yes -- Whether petitioner's action attracted provisions of section 86 as well as those of section 117(a) of repealed Ordinance, 1979 Whether

section

86

itself

provides

that

imposition

of

-- Held yes --

additional

tax

for

violation of section 50 ``shall be without prejudice to any other liability'' which such person may incur -- Held yes -- Whether provisions of section 86 and 124 read together show that imposition of additional tax or prosecution for an offence are independent actions which do not, in any way, affect or prejudice or exclude each other and can both be resorted to at same time in appropriate cases -- Held yes -- Whether impugned notices for

initiation of proceedings

against petitioners u/s 117 of late Income Tax Ordinance are valid and proper -

Held

yes

–

Whether

no

additional

notice

was

required

to

be

given

to

petitioners as assessee in default -- Held yes -Constitutional petition -- Interpretation, scope and application of Sections 50, 117, 124 and 86, Income Tax Ordinance, 1979 -- Tax was deducted by the petitioner and payment of the deducted tax was not made in compliance with the requirements

of

Section

50(8)(c)

of

the

Income

Tax

Ordinance,

1979

which

mandated the payment of such deducted tax within the prescribed time and manner by the person making the deduction -- Effect -- Petitioner's action attracted provisions of Section 86 as well as those of Section 117(a) of the Income Tax Ordinance, 1979 -- Imposition of additional tax or prosecution for an offence were independent actions, which were not mutually exclusive and did not, in any way, affect prejudice or exclude each other and could both be resorted to at

38 the same time in appropriate cases --Notice for initiation of proceedings against the petitioner under

section 117 of the Income Tax Ordinance, 1979 was

valid and proper -- No additional notice was required to be given to the petitioner as assessees in default -- Principles -Proceedings for prosecution in respect of an income-tax year ending on or before 30-6-2002 have specifically been permitted by Section 239(6), Income Tax Ordinance, 2001 to be taken and continued as if the Ordinance of 2001 has not come into force –-

----------------------------------------------------------------{IN THE LAHORE HIGH COURT, LAHORE} Messrs SULEMAN SPINNING MILLS LTD., LAHORE through Manager Finance v. INSPECTING ADDITIONAL COMMISSIONER ON INCOME-TAX, LAHORE and another Writ Petitions Nos. 20218 to 20221 of 2002, heard on 27th February, 2003. Shahbaz Butt for Petitioners. Shahid Jamil Khan for the Resopondents. Date of hearing: 27th February, 2003. ---------------------------------------------------------------------JUDGMENT This judgment shall deal with and decide Writ Petition No. 20218 of 2002, Writ Petition No. 20219 of 2002, Writ Petition No. 20220 of 2002 and Writ Petition No. 20221 of 2002, raising identical questions of law and facts and filed by Companies belonging to the same group against same respondents. 2. The grievance purportedly arose to the petitioners upon service of notice by the respondent No. 1 in July, 2002 for contravention of provisions of section 50 of repleaded Income Tax Ordinance, 1979 and to initiate prosecution under section 117 ibid. Reply thereto was filed by petitioners. Upon withdrawal of the notice by respondent No. 1 present Constitutional petitions were filed. 3. The admitted facts as emerging from the plea of the parties raised in the Constitutional

petitions

and

reply/parawise

comments

of

respondent

No.

1

thereto, concisely are that petitioner-companies, during the period relevant to assessment year 1998-1999, deducted tax at source under section 50 of repealed

39 Income Tax Ordinance, 1979 from the payments to Messrs Zafar Farhat Industries (Pvt.) Ltd. i.e. suppliers. The amount so deducted was not deposited/paid within one week as per provisions of Rule 50 of Income Tax Rules, 1982. In the meanwhile, upon complaint of Messrs Zafar Farhat Industries (Pvt.) Ltd., to learned Federal Tax Ombudsman, following observations were made by learned Federal Tax Ombudsman in his order, dated 10-6-2002:-``Sh. Ghulam Asghar, Advocate, counsel of the complainant pointed

out

that

the Department

was

not addressing

the

problem seriously because allegedly, the intention was to drag on so as to delay the refund as long as possible. He produced the original letter of ACIT, Circle 33, Multan addressed

to

delivered

by

one

``Hakim-ud-Din,

the

postal

Karachi''

authorities

at

but

wrongly

complainant's

address. The fact that complete address of Mr. Hakim-ud-Din was not noted on the letter clearly betrays the unfair motive. It was pointed out that even the withholding agents whose offices were at a walking distance from the Income Tax Office, Multan were not approached and the treasury challans

of

Rs.178,315 Spinning

Rs.110,657,

relating

Mills

to

Rs.112,582, Arain

Limited,

Mills

Arain

Rs.52,781 Limited,

Textile

Mills

and

Suleman

and

Arain

Fabres Limited, Multan were obtained by the complainant through his own efforts without any assistance from the department. (5)

It

transpires

that

the

functionaries

deal

with

the

tax

withholding agents very casually nd quite obviuosly, do not attach due importance to the fact that millions of rupees deducted on behalf of the State by the textile mills and several others are unlawfully retained by them for indefinite periods to be employed in their own business at the cost of public. (6)

This

amounts

to

embezzlement

of

Government

funds

by

the

withholding agents. In the case in hand the above mentioned four mills

among

them

had

deducted

Rs.45,43,675

complaint as far back as 1997-98 and paid

only

from

one

these into Government

treasury after almost four years, on 8-2-2002 and that too when the complainant persuaded them challans. The complainant of other tax amounts

to give copies of the reasury

claims to have furnished a long list

deducting agencies who deliberately

into

the

exchequer.

Sh.

Ghulam

did not deposit

Asghar,

the

learned

counsel, furnished photocopy of letter, dated 3-3-2002

written

by him to the CIT, Multan pointing out this embezzlement. (7)

In

involved,

Complaint a

No.250

detalied

of

2002

decision

where has

similar been

issues

rendered

recommendations amongst which following are incorporated

were with

and made

40 in this case as well. The only difference betweenthe facts of instant complaint with the facts in Complaint No.250 of 2002 is that here refund was delayed by denying credit claimed on account of taxes withheld while in the other case not only demand was created bt refusing to allow credit against such claims but such dubious demand was collected from the complainant under duress. 4. In para 9, learned Federal Tax Ombudsman held that maladministration in that case was established and in para 10 of the orders. recommendations were made. The recommendations relevant to the case regarding initiation of prosecution against the petitioners are also reproduced hereunder:-(ii) ``That the additional tax be charged under section 86 of

the

Income

Tax

Ordinance

on

the

delayed

deposits

discussed in Para.4 and 6 supra. (iii) That notices are issued to all the four defaulters under section 116 for default under section 108 for nonfiling of statement prescribed under the Rules framed in pursunace

of

proceedings

section

for

51

imposing

of

the

Ordinance

penalties

and

chargeable

initiate under

the

law. (iv) That RCIT to direct the CIT concerned to refer the matter of default committed by the four mills to the legal advisor for prosecution proceedings to be filed against them.'' It was upon this recommendation that respondent-Department sought legal advice of the Legal Advisor under section 117 of the repealed Income Tax Ordinance. Learned

Legal

Advisor,

through

legal

advice,

dated

27-7-2992,

advised

prosecytion under section 117 ibid as was recommeded by learned Federal Tax Ombudsman, hence the present Constitutional petitions. 5.

Since

cases

were

throughly

and

fully

argued,

therefore,

the

same

are

disposed of as admitted/`Oacca' cases. 6. The arguments of the learned counsel for the petitioners are that upon repeal

of

Income

Tax

Ordinance,

1979

and

promulgated

and

consequent

effectiveness from 1-7-2002 of Income Tax Ordinance, 2001, proceedings for prosecution of the petitioners through a notice under section 117, after repeal of Income Tax Ordinance, 1979, were ultra vires and without jurisdiction. Further argued that respondent No.1 acted upon the recommendation of Federal Tax

Ombudsman

and

did

not

apply

his

mind

to

serve

show-cause

notice

for

prosecution. He also submitted that the learned Fwederal Tax Ombudsman's order was also void a initio as petitioners were not a party and were, as such. condemned unheard. And that section 50(4) of late Income Tax Ordinance, 1979 only provided for deduction of the tax at source and did not visualize deposit

41 wherefor, action, at maximum, could be taken under section 52 ibid by serving a prior notice declaring the non-paying person as assessee in default in respect of

non-paid

amount.

And

further

that

effect

of

non-obstante

clause

of

subsection (4) of section 50 ibid, is that no further action under section 117 could be taken over and above invocation of section 86 ibid for charging additional tax, which in the case of the petuitioners has laready been impose. Contrarily, learned counsel for respondent No.1 by reference to section 239(6) of newly-promulgated Income Tax Ordinance, 2001, stated that proceedings for any income year ending on or before 30th June, 2002, had been saved and thus notice for prosecution was validly served upon the petitioners in mid July, 2002, as the same related to the period prior to 39th June, 2002. He further answered the contention of the learned counsel for the petitioners by stating that petitioners delayed deposit of the amount deducted, for a period of four years, despite mandate contained in subsection (8)(c) of section 50 of late Income Tax Ordinance, 1979 to pay deducted amount within the prescriberd time and in the prescribed to be seven days in Rule 1982. And any violation thereto

50 of the Income Tax Rules,

attracted additional tax under section 86

ibid without prejudice to any other liability including that of prosecution under section 117 ibid for non-compliance with the provisions of section 50 ibid, as has been mandated in the provisions of section 124 ibid. He further stated that provisions of section 52 have no applicability in the present case because the same applied to failure to pay the tax deducted, but in the present case, the tax was paid but with a delay of four years. The impugned notice was thus supported by the learned counsel for respondent No.1. 7. Hearing the learned counsel for the parties, the record annexed with the petitions as well as the provisions of law referred to were examined with able assistance of the learned counsel for the parties. The chronology of events and facts

re-counted

disputed.

above

Petitioners

shows

that

specifically

the

facts

in

admit having

the

present

deducted

tax

case

are

under

not

section

50(4)(a) of repealed Income Tax Ordinance, 1979 for the assessment year 19981999 from the payment made to Messrs Zafar Farhat Industries (Pvt.) Ltd., who had supplied goods to the petitioners and that the petitioners did not pay the same in the Government treaury for about a period of four years. As a of this non-payment of the deducted amount, Zafar Farhat

result

Industries (Pvt.)

Ltd. was not given the credit on account of the tax so deducted from their proceeds and Department delayed or failed to refund all the deducted amounts in excess of their assessed liability. Zafar Farhat Industries (Pvt.) Limited thus filed

Complaint

No.1596

of

2001

before

learned

Federal

Tax

Ombudsman.

Proceedings upon this complaint were initiated. These proceedings ultimately culminated

in

order,

dated

10-6-2002,

relevant

parts

of

which

have

been

reproduced in para 3 above. Adequate to state here that learned Federal Tax Ombudsman taking serious view of non-timely payment of the deducted amount by the

petitioners

unlawful

to

retention,

the

credit

of

embezzlement

the

and

Government,

misuse

of

termed

Government

such

action money

as by

withholding agents like petitioners, who were observed to have deducted a huge

42 sum of Rs.45,43,675 from the payment of the said complainant in 1997-98, but did not deposit the same till 8-2-2002 i.e. for a period of about four years. 8. Learned Federal Tax Ombudsman holding action of the Recenue in non-recovery of Government funds as maladministration, recommended reference of the matter by CIT ''to the Legal Advisor for prosecution proceedings.....against them'', (the petitioner) it was upon this recommendation that respondent No.1 referred the matter to Legal Advisor under section 117 of the repleaded Ordinance, 1979 for advice, who, on the basis of facts and law, recommended proceedings for recovery of additional tax under section 86 and also for prosecution under section 117 read with section 124 of the repealed

Ordinance. Company copy of

the advice has been placed on record during hearing. 9. Upon receipts of such advice, respective show-cause notices were issued by respondent No.1 to the petitioners in the second week of July, 2002. Reply was given

by

each

of

the

petitioners.

Their

defence

was

that

Zafar

Farhat

Industries (Pvt.) Lyd. verbally requested not to deposit the deducted tax they obtained Exemption Certificate from the Commissioner of Income Tax (Companies), Multan, but it was upon non-production of the Certificate that the amount was deposited and delay so caused, was because of the verbal request and nonproduction by

Zafar farhat Industries of the Exemption Certificate.

10. Since the plea of defence so taken is not under adjudication by this Court, therefore, no opinion need be expressed upon the same. However, examination of the contents of the show-cause notice shows that although reference has been made in recopmmendation of learned Federal Tax Ombudsman, yet the facts leading to delayed deposited deposit of the deducted amount on 8-2-2002 have been specifically

stated

in

the

notice

as

foundation

for

the

allegation

of

contravention of provisions of section 50 of the repealed Ordinance read with Rules 61 and 200 of the Income Tax Rules, 1982 to invoke petitioner's liability to additional tax under section 86 as well as prosecution under section 117 of the said Ordinance, for the purposes of sekking a reply from the petitioners. It has not been denied by the petitioners that prior to issuance of notice for proceedings of

prosecution under section 117 ibid, legal advice was also

sought by respondent No.1 and was so given by the learned Legal Advisior of the Department.

Petitioners

thus

cannot

say

that

the

Notifying

Authority

mechanically served the notice upon mere recommendation of the learned Federal Tax Ombudsman. The contents of the notice itself demonstrate due and proper applications of mind to the facts of the case and provisions of law by CIT. 11. Even otherwise, show-cause notice contains prima facie allegation of facts and law and not final adjudication through process of trail. Such notice is obviously for the purposes of determining prima facie existence of a case with reference

to

the

offended

provisions

of

law.

And

upon

receipts

to

reply

thereto, if Notifying Authority tentatively finds commission of default of offence, proceedings are initiated for prosecution, wherein, accused person obviously has an alienable right to defend himself and disprove allegations through evidence. In case, the learned Federal Tax Ombudsman only recommended

43 reference of the matter to learned Legal Advisor for advice as tp prosecution of petitioners in view of their admitted delay in depositing the deducted amounts. As such, learned Federal Tax Ombudsman was not obliged to grant a hearing to the petitioners as a party for kind of

recommendations made by him

in order, dated 10-6-2002. 12. Another serious objection of the learned counsel for the petitioners is that after repeal of the Income Tax Ordinance, 1979 and promulgation of new Income Tax Ordinance, 2001 with effect from 1-7-2001, show cause notice of midJuly, 2002 could not be issued and proceedings thus could not be initiated after

1-7-2001.

This

objection

would

have

of

course

been

very

valid

and

forceful, had such proceedings for prosecution not been saved in subsection (6) of section 239 of the Income Tax Ordinance, 2001, which being pertinent is reproduced hereunder:--``Any

proceeding

for

prosecution

in

respect

of

an

assessment for an income year ending on or before the 30th day of June, 2002 shall be taken and continued as if this Ordinance has not come into force.'' Bare reading of the above said reproduced provision shows that proceedings for prosecution in respect of an income tax year 2002, have specifically been section 239 of

ending on or before 30th June,

permitted by the above said subsection (6) of

Income Tax Ordinance, 2001 ''to be taken and continued as if

thisOrdinance has not come into force.'' 13. In the present case, deduction and non-payment of the deducted tax by petitioners

relates

to

income

tax

year

1997-98

as

per

pleadings

of

the

petitioner in Para. 2 of the petitions. The periodpreceds 30th June, 2002. Proceedings for prosecution under the late Income Tax Ordinance, 1979, have been specificially saved and kept alive in respect of assessment upto 30th June, 2002 disregarding repeal of Income Tax Ordinance, 1979 and promulgation of Income Tax Ordinance, 2001. The impugned notices have although been served in mid-July, 2002, yet the same relate to assessment period prior to 30th June, 2002, wherefor, petitioner's objection of repeal of Ordinance, 1979 cannot succeed. 14. There is no substance in the proposition advanced by the learned counsel for respondent-Revenue that provisions of section 52 are not applicable to the present case. Reason thereof is that the said section applies ``where any person falls of deduct or collect, or having deducted or collected......failto pay the tax as required by or under section 50.....``The provisions of this section thus apply to person failing to deduct the tax under section 50 or having deducted such tax, fails to pay the same under or as required by section 50 ibid. In the present case, tax was admittedly deducted and was also paid by the petitioners. The payment of the deducted tax was, however, with a delay of four years, which obviously was not in compliance with the provisions of subsection 8(c) of section 50 of

requirements and

44 repealed Ordinance, 1979, which reads as under:---

(8)

``Any

sum

deducted

or

purported

or

collected

under this section shall be(a) deemed in cases to which subsections (1)(2) and (3) apply, to be income received by the assessee' (b)

treated

as

payment

of

tax

on

behalf

of

the

in

the

assessee; and (c)

paid

within

the

prescribed

time

and

prescribed manner by the person making the deduction or collection, as the case may be, to the credit of the Federal Government.'' The above reproduced provisions of section 50(8) ibid thus mandate payment within the prescribed time in the prescribed manner by the person making the deduction. The payable rule prescribing time and the manner isd Rule 50 of Income Tax Rules, 1982. This rule provides for one week's time for crediting the amount so deducted in the Government treasury. The cumulative reading of section 50(8)(c) and section 52 of repleade Income Tax Ordinance, 1979 and Rule 50 of the Income Tax Rules, 1982, does show that petitioners are also assessees in default having violated the express provisions of section 5(8) ibid of the Ordinance

and

Rule

50

ibid

by

deposit

of

deducted

tax

years

after

the

``prescribed time'' of one week. 15. The petitioners' action attracted provisions of section 86 as well as those of section 117(a) of the repleaded Ordinance, 1979. Section 86 relates to imposition of additional tax on the amount not paid, Additional tax has been imposed upon the petitioners. Additional tax is admittedly in the nature of interest for delayed payment of the amounts due and is a civil liability. Such imposition does not, in any way, affect the liability of the petitioners to be criminally prosecuted under section 117 ibid. Section 86 itself provides that imposition of additional tax for violation of the provisions of section 50 ``shall be without prejudice to any other liability'' which such person may incue. Furthermore, section 124 of repealed Income Tax Ordinance, 1979 caters for a converse situation. It stated that a prosecution for an offence against the Ordinance may be instituted ``without prejudice to any other liability incurred by any person under this Ordinance. ........'' As such, provisions of section 86 and 124 ibid read together show that imposition of additional tax or prosecution for an offence are independent actions which do not, in any way, affect or prejudice or exclude each other and can both resorted to at the same time in appropriate cases. 16. Furthermore, subsevtion (4) of section 50 ibid no doubt begins with a non obstante clause mandatorily providing for relevant persons liability to deduct

45 tax ``notwithstanding anything contained in this Ordinance''. No such clause was added to any other subsection except subsection (5) of section 50. The nature of notwithstanding clause of subsection (5) was also different and begins with the words ``notwithdtanding anything contained in any law for the time being in force'', while the provisions of subsection (4) have been made applicable ``notwithstanding anything contained in the Ordinance.'' Such rider was neither placed upon entire section 50 nor were

provisions of section 86

and 14 meant to become superfluous, redunant or inapplicable upon deduction of tax under subsection (4) of section 50 ibid. Plain reading of provisions of this subsection reveals than an intendment, construction of provision in the Ordinance;

contrary

to

the

purpose/scope

of

aforesaid

subsection

(4),

was

negatived by insertion of ``notwithstanding'' clause in the said subsection. The

object

provision.

was It

to is

achive thus

deduction

fallacious

to

of

tax

argue

imperatively that

such

non

as

per

the

obstante

said

clause

excludes liability of person violating provisions of said subsection, to be prosecuted under section 117 ibid. Such construction would not only render the provisions of section 117 ibid redundant but would essentially detract from purpose of section 50(4); for violation of which prosecution under section 117(a) has been prescribed. Such construction being patently contrary to the settled principles of interpretation of statutes, cannot be accepted. 17. In view of what has been held above, the imougned notices for initiation of proceedings against the petitioners under section 117 of the late Income Tax Ordinance, are held to be valid and proper. Furthermore, no adfditional notice was required to be given to the petitioners as assessees in defaults. In view thereof, these petitions have no merit and are accordingly dismissed with no order as to costs. Petitions dismissed.

46

HIGH COURTS OF PAKISTAN ---------------------------------------------------------------------Farid Ullah Khan v. Federal Tax Ombudsman NO: ICA 51 YEAR: 2005 DECIDED ON 01/02/2005 CITATION: DTPHC1738; 2005PTD1797; ---------------------------------------------------------------------Income Tax Ordinance, 2001 -Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000) -Sections 2(3), 9, 14 -Constitution of Pakistan (1973), Article 199 -Law Reforms Ordinance (XII of 1972) -- Section 3 -Constitutional petition -- Intra Court appeal -- Observation of Federal Tax Ombudsman with regard to ``maladministration'' -- View expressed by High Court while dismissing Constitutional petition with remarks that ``maladministration in the Central Board of Revenue or any of its establishments could be taken notice of by Federal Tax Ombudsman'' was not unjustified -Ombudsman could suggest measures to curb maladministration in view of the facts of particular case -- If appellant had any grievance, he could have agitated the matter by filing representation before President of Pakistan, even if Department was not recommending any such representation -- Single Judge was justified to take view that Constitutional petition was not entertainable ----------------------------------------------------------------------[IN THE LAHORE HIGH COURT, LAHORE]

47

FARID ULLAH KHAN v. FEDERAL TAX OMBUDSMAN, REGIONAL OFFICE, LAHORE and others Present: SYED ZAHID HUSSAIN and SYED SAKHI HUSSAIN BOKHARI, JJ Intra-Court Appeal No.51 of 2005 in W.P. No. 1150 of 2005, decided on 1st February, 2005. Dr. Ehsan-ul-Haq Khan and Abdul Latif Chishti for Appellant. Date of hearing: 1st February, 2005. --------------------------------------------------------------------ORDER While

disposing

of

a

complaint

on

13-12-2004,

the

Federal

Tax

Ombudsman

observed that "Mr. Fariq Ullah (ITI) has been dragged in the dispute because his brother is a practising Advocate at Pakpattan. He should therefore be posted out in the same manner as Rao Abdul Qayyum (III)". It was assailed by Farid

Ullah,

appellant,

through

the

petition

under

Article

199

of

the

Constitution of Islamic Republic of Pakistan, 1973 which petition has been dismissed by a learned Single Judge of-this Court on 25-1-2005, This is IntraCourt Appeal thereagainst. 2.

The

prime

contention

of

the

learned

counsel

is

that

the

Federal

Tax

Ombudsman had no jurisdiction to make any such observation in exercise of his jurisdiction

under

the,

law

i.e.

Establishment

of

the

Office

ofFederalTax

Ombudsman Ordinance, 2000. 3. Suffice it to observe that the view taken by the learned Single Judge while dismissing the petition of the appellant that "Malaministration in the Central Board Revenue or any of its establishment can be taken notice of by Federal Tax Ombudsman" is not unjustified. The Ombudsman could suggest measures to curb the maladministration in view of the facts of a particular case. Moreover, if the appellant had any

grievance, he could

have agitated the

matter by filing

representation before the President of Pakistan, even if the Department was not recommending any such representation. In such view of the matter, the learned Single Judge was justified to take the view that the Constitutional petition was not entertainable. In the circumstances, we find no valid basis to take a different view of the matter or to interfere with the order, passed by the learned Single Judge. The appeal is accordingly dismissed in limine. Appeal dismissed.

48

HIGH COURTS OF PAKISTAN -----------------------------------------------------------------

Sahib Jee v. RCIT NO: WP 11983YEAR: 2005 DECIDED ON 20/03/2009 CITATION: DTPHC2041; 100TAX274; 2009PTD955; ----------------------------------------------------------------Income Tax Ordinance, 2001 -Establishment of Office of Federal Tax Ombudsman Ordinance, 2000 -- Section 32 -Represident to President -- Performing of functions u/s 32 by President -Scope -- Whether section 32 of Ordinance provides that aggrieved party, by recommendation

of

F.T.O.

may,

within

30

days

of

recommendation,

make

representation to President – Who may pass such order thereon as hee msy deem fit -- Held yes -- Whether President, being head of state has to discharge numerous functions -- Held yes -- Whether representationist had not challenged final order within prescribed time, same had thus

attained finality,

therefore, representation before President was liable to rejection -- Held yes -- Whether findings of President that where law provides for review, limitation for further remedy shall berekoned from date when review is decided, cannot be sustained on ground that if period of limitation is not provided under law, President can neither grant such time nor provide under Ordinance, 2001 -- Held yes -Administration

of

Justice

--

Similarly

placed

in

similar

circumstances

--

Judicial notice -- Scope -- Whether similarly placed identically without any discrimination unless there be differentiation -- Held yes -- Whether court can take judicial notice of changed situation/circumstances of case which have taken place after institution of case and can mould relief

accodingly --

Held yes -President, while performing his function under Section 32 of the Establishment of Office of Federal Tax Ombudsman Ordinance, 2000, acts in quasi judicial and not in administrative capacity -- Scope of such function of the President -Section 32 of the Ordinance provides that aggrieved party, by recommendation of the Federal Tax Ombudsman may, within 30 days of the recommendation, make representation to the President who may pass such order thereon s he may deem

49 fit -- Recording of reasons while setting

aside the recommendations of

Ombudsman is minimum requirement under the law which is in consonance with the principles

of

natural

justice

--

Representation

under

Section

32

of

the

Ordinance can be made against the recommendations and not against the order on review application -- Principles -Administration of Justice -- Similarly placed persons in similar circumstances have to be treated and dealt with identically without any discrimination unless there be any differentiation -Administration of Justice -- Judicial notice -- Scope -- Court

can take

judicial notice of the changed situation/circumstances of the case which have taken place after the institution of the case and can mould relief accordingly ---------------------------------------------------------------------------[IN THE LAHORE HIGH COURT, LAHORE] Messrs SAHIB JEE v. REGIONAL COMMISSIONER OF INCOME TAX and OTHERS Present: SYED ZAHID HUSSAIN, C.J. and RAJA MUHAMMAD SHAFQAT

KHAN ABBASI, J.

Writ Petition No. 11983 of 2005, decided on 20th March, 2009. Siraj-ud-Din Khalid for Petitioner. Shahid Jamil Khan, Legal Advisor for Income Tax Department. Aamir Rehman, Deputy Attorney-General for Pakistan for Respondent. Date of hearing: 13th March, 2009. --------------------------------------------------------------------------JUDGMENT [RAJA MUHAMMAD SHAFQAT KHAN ABBASI, J.].-- Through this writ petition, the petitioner

has

assailed

order,

dated

9-6-2005

passed

by

the

President

of

Islamic Republic of Pakistan under section 32 of Establishment of the Office of Federal

Tax

Ombudsman

Ordinance,

2000

(hereinafter

called

as

``F.T.O.

Ordinance, 2000'') against the recommendation of the Federal Tax Ombudsman (F.T.O.), dated 26-11-2002 and order, dated 26-1-2004 on a review application filed by respondent No.1/Regional Commissioner of Income Tax, Lahore.

50 2. Precise facts of the case are that the petitioner who is in the business of readymade garments, filed Income Tax Return for the year, 2001-2002 on 1-102001 and declared income of Rs.1,503,204 under the Self-Assessment Scheme. 3. The petitioner filed Complaint No.786-L of 2002 under section 11 of F.T.O., Ordinance,

2000

on

28-6-2002

before

respondent

No.4/Faderal

Tax

Ombudsman,

Islamabad against action of respondent No.1 qua selecting the case for total audit under para. 9(a)(ii) of Circular No.4 of 2001 (Income Tax) alleging maladministration.

The

complaint

of

the

petitioner

was

respondent No.4/Federal Tax Ombudsman, Islamabad on

accepted

by

the

26-11-2002 with the

recommendations that ``the preconditions for a selection order by the R-CIT, inter alia, include suppression of income, evidence of revenue potential of the case, clear evidence of decline in income, creation of new assets not covered by the declared income and disparity in expense on utilities. As none of the conditions/factors were found in complainant's return of income, there was no valid reason or justification for the R-CIT to select the case for Total Audit. This infirmity has rendered his decision arbitrary, unreasonable and illegal.'' It

is

further

recommended

that

``return

be

accepted

under

Self-Assessment

Scheme and compliance reported within 30 days of the receipt of this Order.'' Respondent No.5/Revenue Division filed Review Application No.74 of 2003 under section 14(8) of the F.T.O. Ordinance, 2000 against the recommendation of F.T.O., dated 26-11-2002. The same was rejected on 26-1-2004 by respondent No.4/F.T.O. Respondent No.6/Federation filed representation under section 32 of F.T.O. Ordinance, 2000 against findings of the F.T.O., dated 26-11-2002 on Complaint No.786-L/2002, and order, dated 26-1-2004 on Review Application No.74 of 2003. The petitioner took objection of limitation as well as maintainability of the representation in

his reply/comments before the President of Islamic

Republic of Pakistan. However,

the

representation

of

respondent

No.6/Federation

of

Pakistan

was

accepted on 9-6-2005 by the President whereby recommendation of F.T.O., dated 26-1-2004 in Review No.74 of 2003 (in Complaint No.786 of 2002) was set aside. 4.

The

learned

counsel

for

the

petitioner

contends

that

if

a

person

is

aggrieved by recommendation of F.T.O., he can file representation within 30 days of the recommendation whereas in the present case, representation was filed on 27-2-2004 which was hopelessly time-barred as the same was filed after lapse

of

more

than

15

months.

He

further

submits

that

against

the

recommendations of Federal Tax Ombudsman, dated 26-11-2002, review application under section 14(8) of Federal Tax Ombudsman Ordinance, 2000 was dismissed on 26-1-2004. He further submits that right of representation is available under section 32 of the Ordinance only against the recommendations of the Federal Tax Ombudsman and not therefore,

the

against any order

impugned

order,

dated

passed by him on 9-6-2005

passed

review by

the

application, President

of

Islamic Republic of Pakistan is without jurisdiction. He further submits that the impugned order indicates that the same has been passed in the name and on behalf of the President of Islamic

51 Republic of Pakistan by a Section Officer (Rana Qamar Sultan) who is not the competent

authority

to

pass

such

an

order.

He

further

submits

that

the

petitioner was not personally heard. Further states that F.T.O. Ordinance, 2000 was promulgated by the President of Islamic Republic of Pakistan, therefore, personal hearing under section 32 of the F.T.O. Ordinance, 2000, should have been given. Conversely the learned counsel for the respondents submits that the order passed by the President is legal and correct. The petitioner was given hearing in the form of written reply/comments to the representation which are available on the file as Annex-D which was sufficient hearing. He further submitted that as per scheme of law, it was not possible for the President to provide personal oral hearing to each of the party. Regarding limitation issue, he states that limitation will be reckoned from the date when reasons for non-compliance are rejected by the Ombudsman. He further states that the review application was dismissed

on

26-1-2004

which

was

dispatched

to

the

parties

on

30-1-2004,

therefore, representation was filed on 27-2-2004 within time. He further states that the review is

provided under section 14(8) of the F.T.O. Ordinance,

2000; although no time limit is provided under the F.T.O. Ordinance for filing review. He further states that the Hon'ble Supreme Court has finally decided the question involved in the present lis regarding Self-Assessment Scheme under sections 4-A, 59(3) and 59(1-A) of Income Tax Ordinance (XXXI of 1979) in a case reported as Commissioner of Income Tax and others v. Messrs Media Network and others (2006 PTD 2502), therefore, if the impugned order is set aside even then the petitioner will not get benefit of the order of the F.T.O. 5. The contentions of the learned counsel have been considered and record perused. 6. Contention of learned counsel for the petitioner regarding non-hearing by the President himself, has no force. It is not possible for the President to give opportunity of personal hearing in each case. President being head of the State

has

to

discharge

numerous

functions.

The

petitioner

comments/reply to the representation which is sufficient

had

filed

compliance of

law as held in Federation of Pakistan through Secretary Education, Islamabad v. Prof. Dr. Anwar and 2 others (2006 SCMR 382) and Commissioner of Income Tax, Faisalabad Zone, Faisalabad and another v. Akhlaq Cloth House, Faisalabad and another (2008 PTD 965) (ibid). 7.

The

President,

while

performing

his

function

under

section

32

of

the

Ordinance acts in quasi judicial and not in administrative capacity. Reliance is placed on Hafiz Muhammad Arif Dar v. Income Tax Officer (PLD 1989 SC 109) and

Federation

of

Pakistan

through

Secretary,

Establishment

Division,

Government of Pakistan, Islamabad v. Muhammad Tariq Peerzada and 2 others (1999 SCMR 2744). Recording of reasons while setting aside the

recommendations of

Ombudsman is minimum requirement under the law which is in consonance with the principles of natural justice. Reliance is placed on Federation of Pakistan

52 through Secretary, Establishment Division, Government of Pakistan, Islamabad v. Muhammad Tariq Peerzada and 2 others (1999 SCMR 2189). 8. There is consensus that issues of like nature were considered by a learned Division Bench of this Court comprising one of us (Sayed Zahid Hussain, C.J.) in

ICA

No.296

of

2004

and

the

judgment

rendered

therein

is

reported

as

Commissioner of Income Tax, Faisalabad Zone, Faisalabad and another v. Akhlaq Cloth House, Faisalabad and another (2008 PTD 965). The operative part of the judgment is as follows:-``In view of the preceding discussion, it follows that all such cases where the person/party concerned had notice/opportunity of filing comments/reply to the of the President cannot be

representation, the decision annulled simply for the reason that

personal/oral hearing was not afforded. But where the person/party concerned had no notice/opportunity of filing comments or reply and

decision was made without affording such opportunity, the

representation need to be considered and decided after and

affording

an

opportunity

of

filing

notice

reply/comments

to

the

same.'' 9. Right of representation has been given to the aggrieved person against the recommendation of F.T.O. under Article 32 of the Ordinance, 2000. Although power of review has been given to the Ombudsman under Article 14(8) of the Ordinance, 2000. Neither the period of limitation for filing review is provided nor any further remedy against the rejection of review has been provided under the Ordinance, 2000, hence the President or the Court cannot fix or prescribe any period of limitation. In the present case, the representationist assailed the order, dated 26-11-2002 of the F.T.O. through representation under section 32 of the F.T.O. Ordinance, 2000 on 27-2-2004 after a delay of about fifteen months whereas limitation for filing of representation under Article 32 of the Ordinance,

2000

is

provided

as

30

days.

The

representationist

had

not

challenged the final order, dated 26-11-2002 within the prescribed time. The same had, thus,

attained finality. Therefore, the representation before

the President was liable to rejection. The legislature has not provided any remedy against the rejection of review. Intention of the legislature is that if any different recommendations were made in review than the original one then the aggrieved party will have right to file representation within 30 days. Against the order of rejection of review, no further remedy has been

provided

under the Ordinance, 2000. Thus, the right of representation was not available to the Revenue Division under Article 32 of the Ordinance, 2000 against the order

on

review

application.

The

representation

made

on

27-2-2004

against

recommendation, dated 26-11-2002 was time-barred whereas against order, dated 26-1-2004 passed on review, no representation was

maintainable. Revenue

Division had wrongly challenged both orders through single representation which were liable to be rejected. Finding of the President that where law provides for review, limitation for further remedy shall be reckoned from the date when review

is

decided,

cannot

be

sustained

on

the

ground

that

if

period

of

limitation is not provided under law, the President can neither grant such time

53 nor provide under the Ordinance, 2000. In the identical issue, the same view was taken by the President in Case No.1743 of 2001 of Specialty Printers (Pvt.) Ltd., in which the President had

rejected

the

recommendations

on

the

ground

of

being

time

barred

and

representation can only be made against the recommendations and not against the order of review. The relevant view of the President is as under:-``Section

32

of

the

Establishment

of

Office

of

Federal

Ombudsman Ordinance, 2000 provides that the Revenue

Tax

Division

or any person aggrieved by the recommendation of the Federal Tax Ombudsman may, within 30 days of the

recommendation, make

representation to the President who may pass such order thereon as he may deem fit. The Federal Tax Ombudsman made his recommendation on February 28, 2002. The agency instead of making representation against the FTO's recommendation has been made against the FTO's order of June 26, 2002 rejecting the review application. Under section

32

ibid

representation

can

be

made

against

the

recommendations and not against the order on review application. This

representation

made

on

July

23,

2002

against

the

recommendation of February, 28, 2002 is time barred. Accordingly, the President has been pleased to reject the representation of Revenue Division as time-barred''. It

is

established

circumstances

has

principle to

be

of

law

treated

and

that

similar

dealt

with

placed

personin

identically

similar

without

any

discrimination unless there be any differentiation. The case of the present petitioner was to be dealt with accordingly as of the above cited case (Case No.1743

of

2001).

Reliance

is

placed

on

Nizamuddin

and

another

v.

Civil

Aviation Authority and 2 others (1999 SCMR 467), Shrin Munir and others v. Government of Punjab through Secretary Health, Lahore and another (PLD 1990 SC 295) and Aman Ullah Khan and others v. The Federal Government of Pakistan, through Secretary, Ministry of Finance, Islamabad and others (PLD 1990 SC 1092). 10. Copy of the representation is available on the file which indicates that during the pendency of the complaint before F.T.O., Assessing Officer finalized the assessment proceedings under section 62 of the Income Tax Ordinance. The petitioner had availed the remedy of appeal against assessment order, dated 3010-2002. It is also established principle of law that Court can take judicial notice of the changed situation/circumstances of the case which have taken place after the institution of the case and can mould the relief accordingly. Reliance is placed on Mst. Amina Begum and others v. Mehar Ghulam Dastgir (PLD 1978

SC

220),

Federation

of

Pakistan

through

Secretary,

Ministry

of

Law,

Justice and Parliamentary Affairs, Islamabad and others v. Aftab Ahmad Khan Sherpao and others (PLD 1992 SC 723) and Prof. (Retd.) Masoodul Hassan v. Muhammad Iqbal (PLD 1998 Lahore 177). However, we are not called upon to dilate on this aspect of the matter any further as the order which was assailed before us was of respondent No.6 passed on the representation under section 32 of the Ordinance.

54

In view of the above discussion, we declare order of respondent No.6, dated 96-2005 as of no legal effect and disposed of the writ petition with no order as to costs. Order accordingly.

HIGH COURTS OF PAKISTAN --------------------------------------------------------------------------Lone Cold Storage v. Revenue Officer LESCO NO: WP 7754 YEAR: 2010

DECIDED ON 15/07/2010

CITATION: DTPHC2104 ; 103TAX5 ; 2010PTD2502 2011PTCL305 ; --------------------------------------------------------------------------Income Tax Ordinance, 2001 -- Sections 147, 159, 168, 235 -Income Tax Rules, 2001 -- Rule 40 -Constitution of Pakistan (1973) -- Article 199 -Constitutional petition -- Electricity consumption -- Demand of transitional advance tax -- Controversy revolving around conflict between Section 147 and 235 -- Demand of transitional advance tax after payment of advance tax u/s 147 -- Validity -- Order of Court -- Condition precedent to have binding force – Whether

order

where

Court

has

not

been

properly

assisted

and

main

legal

questions have not been raised, deliberated or discussed does not constitute binding precedent -- Held yes -- Whether advance tax is estimated amount of proposed income tax to be paid by taxpayer at close of tax year -- Held yes -Whether estimate is to be

made by taxpayer and is not for authorities to

question or object till close of taxpayer when law authorities, tax authorities to

verify advance tax paid and impose additional tax if advance tax paid has

been less than 9% of total income tax liability of tax year -- Held yes -Whether once liability of advance tax as estimated by tax payer is discharged during currency of tax year, transtitional advance tax must also come to an end, however, present legislative layout of Ordinance does not provide this and transitional Advance Tax continues subjecting taxpayer/petitioner to Advance Tax in disregarded of fact that such tax already stands paid -- Held yes -Whether nil tax certificate can be issued for taxpayer in case where advance

55 tax

u/s

147

had

already

been

paid

--

Held

yes

--

Whether

payment

of

transitional advance tax u/s 235 which has been suspended by High Court through interim

orders

shall

remain

suspended

till

such

time

that

concerned

Commissioner decides application u/s 159(1) of petitioner and also petitioners in connected cases -- Held yes -Interpretation

of

Statutes

--

Literal

approach

and

purposive

approach

--

Preference -- Functions of Court -- Tool of reading down -- Concept of -Whether where literal construction or plain meaning causes hardship, futility, absurdity or uncertainty, then purposive or contextual construction would be preferred to arrive at more just reasonable and sensible result -- Held yes – Whether function of Court is to expound law and not to legislate but in case of difficulty court must interpret, same liberally to advance it cause -- Held yes – Whether where purpose of statute was clear, then interpretation tool of reading down such provisions would be restored to -- Held yes -Order of court -- Main legal question neither raised nor did court discuss same nor was court properly assisted -- Effect --

Such order would not constitute a

binding precedent -Constitutional petition -- Demand of transitional advance tax under Section 235 of Income Tax Ordinance, 2001 during currency of same Tax Year after payment of advance tax under Section 147 thereof -- Validity -- Transitional advance tax not an independent tax, but a separate collection point of receiving advance tax estimated by taxpayer for same tax year under Section 147 of the Ordinance -- Payment made under Section 235 of the Ordinance would be adjusted under Section 147 read with Section 168 thereof, thus, total collection of advance tax could not be more than estimated amount of advance tax under Section. 147 for same Tax Year -- Word ``transitional'' used in Section 235 of the Ordinance, would mean process change from one condition to another signifying fluctuating chargeability there under – Once liability of advance tax as estimated as estimated by taxpayer discharged during currency of tax year, then transitional advance tax would come to an end --

Commissioner

under

Section

159(1)

of

the

Ordinance,

upon

application

writing, by taxpayer could issue a lower arte certificate (i.e. 0% rate or nil rate certificate) in case of full payment of advance tax -- After issuance of such certificate, chargeability of Section 235 of the Ordinance, would remain intact, but the rate tax would be reduced making some ineffective -- High Court directed petitioner to approach Commissioner, who after verifying full payment of advance tax under Section 147 of the Ordinance, would issue him nil rate certificate, otherwise not -- Principles -Interpretation of statutes -- ``Literal approach'' and ``purposive approach'' - Preference -- Where literal

constitution or plain meaning causes hardship,

56 futility, absurdity or uncertainty, then purposive or contextual construction would be preferred to arrive at a more just, reasonable and sensible result -Interpretation

of

statutes

--

Function

of

court

to

expound

law

not

to

legislate, but in case of difficulty must interpret same liberally to advance its cause -- Principles -Interpretation of statutes -- Conflict between two provisions of a statute -Effect -- Where purpose of statute was clear, then interpretative toll of ``reading down'' such provision would be restored to -Concept, nature and scope of advance tax -- Application of Sections 147 and 235 -- Section 235 to be integrated and co-extensive with the liability under section 147 of the Ordinance rather than a stand alone liability -Section

235

is

not

independent

tax

but

a

separate

collection

point

for

receiving advance tax that has been estimated for the tax year by the taxpayer under Section 147 -- The transitional advance tax under section 235 continues subjecting the taxpayer/petitioner to advance tax in disregard of the fact that such a tax already stand paid -- When the liability to pay advance tax stands discharged, there is a transition in the chargeability under section 235, which is effect comes to nil such is the nature of transitional advance tax – Commissioner under Section 159(1) upon application in writing by taxpayer could issue a lower rate certificate in case of full payment of advance tax, after issuance of such certificates chargeability of section 235 would remain intact, but rate of tax would be reduced making same ineffective -Where

literal

construction

or

plain

meaning

causes

hardship,

futility,

absurdity or uncertainty purposive or contextual construction is preferred to arrive at a more just, reasonable and sensible result -Every law is designed to further the ends of justice and not to frustrate it on mere technicalities -- Though the function of the courts is only to expound the law and not to legislate, nonetheless the legislature cannot be asked to sit to resolve the difficulties in the implementation of its intention and the spirit of the law -- It is duty of the court to nould or

creatively interpret

the legislation by the liberally interpreting the statute -- The statutes must be interpreted to advance the cause of statute and not to defeat it -The intention of the legislature does not appear to authorize or sanction continuous charge of advance tax under section 235, once it is paid under section 147, for any such interpretation would render the scheme of advance tax under section 147 meaningless, hollow and otiose -- In order to resolve the conflict between the two provisions, after the purpose of the ordinance is clear, is to rely on the interpretative tool of reading down -- Where main legal question was neither raised nor court discuss the same nor

57 the court was properly assisted such court order would not constitute a binding precedent ---------------------------------------------------------------------------[IN THE LAHORE HIGH COURT, LAHORE] LONE COLD STORAGE, LAHORE v. REVENUE OFFICERS, LAHORE ELECTRIC POWER CO. and others Present: SYED MANSOOR ALI SHAH, J Writ Petition No. 7754 of 2010, decided on 15th July, 2010 Sirajuddin Khalid, Ch. Anwar-ul-haq and Shahzad Ahmad Durrani for Petitioners. Muhammad Ilyas Khan, Muhammad Asif Hashmi, Sajjad Hussian Jafferi and Mansoor Usman Awan for Respondents. Dr. Ikram-ul-Haq and Asim Zulifqar, amici curiae. Dates of hearing: 19th April, 7th , 24th May and 4th June, 2010 --------------------------------------------------------------------------JUDGMENT SYED MANZOOR ALI SHAH, J-This consolidated judgment shall also decide writ petitions mentioned in Schedule A to this Judgment as common questions of law and facts arise in these cases. 2. Brief facts are the petitioner are taxpayers under the Income Tax Ordinance, 2001 (``the Ordinance'') and are also liable to pay advance tax under section 147 of the Ordinance. They are also subject to transitional advance tax under section 235 of the ordinance, being commercial or industrial consumers of electricity. 3. The main controversy in these cases revolves around the conflict between sections 147 and 235 of the Ordinance. The precise grievance that when the taxpayers (petitioners) have paid advance tax for the Tax Year under section 147 of the Ordinance, can be subjected to pay transitional advance tax under section 235 of the Ordinance, over and above, the advance tax paid under section 147 during the currency of the same Tax Year. 4. Messrs Ch. Anwar-ul Huq, Siraj-ud-din Khalil, Javed Iqbal Qazi and Shahzad Ahmad Durrani Advocates appeared for the petitioners. It has been vehemently

58 argued that the petitioner in some cases have paid their advance tax for the Tax Year, in others they have no liability of advance tax to start with at the beginning of the Tax Year and finally in some cases refund is outstanding in their favour. Therefore, further charge of advance tax under section 235 is confiscatory besides being against the legislative scheme and intent of the Ordinance. 5. Dr. Ikram-ul-Haq, Advocate Supreme Court of Pakistan and Asim Zulifqar, Chartered Accountants and adjunct faculty in tax laws at the School of Law and Policy. Lahore University of Management and Sciences (LUMS) were appointed as amici curiae to assist the court. Notice under order XXVII-A of the C.P.C., was also issued on 5-4-2010 to the Attorney General of Pakistan as involving interpretation of constitutional law was

question

involved.

6. Dr. Ikram-ul-Haq, amicus curiae argued that there are three regimes running through the Ordinance namely; tax on total income (direct tax); presumptive tax and minimum tax. He further submitted that under section 147 of the Ordinance a formula is provided and on the basis of said formula advance tax has to be worked out at the end of the quarter (first quarter starting from July till September and ending on 15 October, 2010). He then

referred to section 147

(4)(A) and 147 (4)(AA) of the Ordinance and submitted that advance tax is based on the concept of ``pay

as you earn.''

7. The learned amicus curiae argued that the Ordinance already provides a mechanism to ensure that if advance tax is paid under section 147 of the Ordinance,

the

taxpayer

is

not

saddled

with

additional

advance

tax

under

section 235 of the Ordinance. 8. Explaining the legislative scheme of the Ordinance that provides a solution to

the

current

impasse,

he

submitted

that

the

first

component

for

such

adjustment is provided in the formula itself as component ``D'' provided in section 147(4) i.e., (A x B/C)-D. All the tax paid during the quarter is deducted from rest of the formula thereby reducing the amount of tax to be paid. He then submitted that is case ``D'' is equal or more than the remaining part of the formula, assessee can approach the Commissioner concerned under section 159(1) of the Ordinance for issuance of a nil rate certificate. He also referred to Rule 40 and the form of the application for the certificate under section 159(1) of the Ordinance as specified in part VI of the First Schedule to the Rules, to contend that the said form clearly provides for such a situation. 9. It is submitted that subsequently the order of the Commissioner can be challenged before the Regional Commissioner/ Chief Commissioner Inland Revenue under section 122(B) of the Income Tax Ordinance, however against the said order assessee can either approach the FTO or invoke the jurisdiction of this Court.

59 10.

The

learned

amicus

curiae

submitted

that

efforts

should

be

made

to

harmonize the provisions of the Ordinance. He further submitted that at best section 235 can be read down in order to resolve the conflict created by the two

provisions.

Learned

amicus

also

argued

that

exemption

provided

under

section 235(3) does not come to the rescue of the petitioner as exemption is a concept juxtaposed to income. In the present case the issue does not pertain to income but to advance tax which is an estimated

deposit made by the taxpayer.

Exemption certificate will mean that the income of the taxpayer is not liable to tax which is not the case here. In the present case, the learned amicus reiterated that issuance of lower or nil tax rate certificate is the answer. 11. Mr. Asim Zulifqar, Chartered Accountants amicus curiae submitted that the other

mechanism

provided

under

the

law

is

under

section

159(3)

of

the

Ordinance, where the Federal Board of Revenue can grant exemption. Thereafter, the parties can recourse to section 159(1) and obtain an exemption certificate. He also supported the contention of Dr. Ikram-ul-Haq, regarding issuance of nil rate certificate under section 159(1) of the Ordinance. 12. He further submitted that any payment under section 235 after the advance tax has been paid for the Tax Year is actually a refund, standing in favour of the taxpayer. To keep taxpayers' money for almost a year (from the date of collection till refund) is confiscatory and unconstitutional. It burdens the taxpayers with additional cost as the companies do business on borrowed finance and the financial cost of having is to be paid by the

taxpayer. He argued

that advance tax charged under section 235, knowing well that it has to be refunded, amount to double taxation and is therefore, patently confiscatory. 13. Mr. Muhammad Ilyas Khan, Advocate appearing for respondent submitted that the question raised in this petition has already been settled in an unreported case of Messrs Riaz Bottlers (Pvt.) Ltd. case (Writ Petition 38 of 2010) decided by this court on 4-2-2010. He also placed reliance on Indus Jute Mills Ltd. v. Federation of Pakistan (2009 PTD 1473) and the leave granting order dated 1-3-2010 of the august Supreme Court of Pakistan

passed in C.P. 149

to 154 of 2010 arising out of I.C.A. 462 of 2009 [reported as ``Messrs AlKhalil

Cold

Storage

v.

Federation

of

Pakistan

through

Secretary

Finance,

Islamabad and 3 others'' (2010 PTD 1260) arising out of the above mentioned Indus Jute Mills case. He also referred to an order of learned Single Judge of this

court

passed

in

Writ

Petition

No.

1583

of

2010

dated

4-3-2010

and

contended that the present question cannot be re-agitated or re-opened by the petitioners in the light of the above judgment and order. 14. He however,, supported the submissions made by Dr. Ikram-ul-Haq, amicus curiae that under section 159(1) read with Rule 40, a nil tax certificate can be obtained by the petitioners and submitted that law should be protected as laid down in Elahi Cotton Mills Ltd. (PLD 1997 SC 582): He further submitted that section 159(3) is not applicable to the present case.

60 15. Mr Asif Hashmi, advocate for the respondent department also relied on the judgment of the unreported case of Messrs Riaz Bottlers (Pvt.) Ltd. (ibid). He pointed out that section 236A (2) provides that the said transitional advance tax at the time of sale by auction is subject to section 147 but sections 235 and 236 are not subject to section 147. His argument was that petitioner can always get refund and placed reliance on the judgment of this court given in Messrs Riaz Bottlers case (supra). 16. Arguments heard. Record Pursued. 17. The question that requires determination in this case is whether a taxpayer who has discharged his liability of advance tax under section 147 of the Ordinance can be subjected to transitional advance tax under section 235 of the Ordinance during the currency of the same Tax Years? 18. Before reviewing the legislative lay out of the Ordinance regarding advance tax and the scope of its chargeability section 147 and 235 of the Ordinance, I would first like to address the preliminary objections of the respondents. 19. It has been argued by the respondents that the present issue has already been decided in Indus Jute Mills case (ibid). The issues for consideration before this Court in the aforesaid case are set out in paras. 4 to 9 of the said judgment in the following manner:-``(4) It was contended on behalf of the petitioners that's ction 235 of the Income Tax Ordinance, 2001 as amended offends against Article,

142(c)

of

the

Constitution

of

Islamic

Republic

of

Pakistan, 1973. It is the case of the petitioners that by virtue of the impugned provisions purportedly the tax, which is levied and is being collected on electricity bills of the assessee in pith

and

substance

is

a

tax

imposed

upon

the

consumption

of

electricity which is an expenditure incurred by the assessee for carrying on business, and such tax on fall

within

the

pale

of

any

of

expenditure does not

the

terms

of

the

Federal

Legislative List of the Constitution. Hence, Mjlis-e-Shoora was not vested with the legislative competence to impose the said tax in view of Article Republic

Pakistan,

142(c) of the Constitution of Islamic 1973.

It

is

contended

that

legislative

competence in this behalf at best would best in the Provincial Legislature

subject to the other contentions raised on behalf of

the petitioners. It is added that the said tax does not come within the parameters of item 47 of the Federal Legislative List of the Constitution, hence cannot be levied thereunder or in lieu thereof

under

item

52

of

the

said

Legislative

List.

In

this

behalf, it is further contended that it is not the nomenclature employed which is relevant but rather the pitch and substance of the tax.

61 (5)

In

the

expenditure

alternative incurred

may

it

was

at

best

further be

contended

used

as

a

that

any

measure

for

determining the capacity of an assessee to pay the income tax. However, in such circumstances there must necessarily be a direct nexus between the subject-matter of tax, (in the instant case income) and the levy. And by virtue of section of 235 of the Ordinance,

the

collection

is

effected

in

respect

of

the

electricity consumption bill from a great variety of business concerns those

including

exempted

both

there

commercial

from)

and

and

the

industrial

cost

of

(other

than

electricity

as

a

proportion of the cost of production in case of industrial units and cost of business in case of commercial units is of incredible variation

ranging

from

negligible

to

logical and rational nexus can be

overwhelming,

hence,

no

drawn between the cost of

consumption of electricity and the income generated by consumers thereof. (6) It is next contended on behalf of several of the petitioners that

the

cost

production

is

of

electricity

extremely

high

consumption if

as

a

industrial

total

cost

activity

of

being

undertaken is power intensive as for example foundries. While in other cases, the cost of electricity consumption as a total cost of business may be very low say for commercial activities, and the same

rate

of

tax

has

been

levied

on

both

sets

of

consumers/assesses. Two assessee in an unequal situation have been treated equally which is the worst form of discrimination. Hence, section

235

of

the

Ordinance

under

challenge

offends

against

Article 25 of the Constitution of Islamic Republic of Pakistan, 1973.

Furthermore,

the

said

provision

is

also

discriminatory

inasmuch as the collection made from companies is refundable while in the respect of persons other than companies, the same is only adjustable but not refundable. There is no rationale basis for such discrimination. It is added that there is no intelligible differentia to sustain the claim of valid classification in this behalf. (7) It is also the case of the petitioners that in fact provision of section 235 of the Income Tax Ordinance, 2001 is confiscatory in nature, hence, offend against Article 24 of the Constitution of Islamic Republic of Pakistan, 1973. In this behalf it is contended that with reference to power intensive industrial concerns the tax levied and collected under section 235 of the Ordinance is in fact more than the normal profit/income that can be earned from such business, as a consequence whereof such business have not only become uneconomical, but also it is impossible to pay the tax liability from the income of the business necessitating disposal of its capital to pay such liability, hence the impugned levy is

62 confiscatory and expropriatory, and thus, violative of Article 24 of the Constitution of Islamic Republic of Pakistan, 1973. (8) It is further added that tax under Ordinance, 2001 can be levied on income and not expenditures, in the

only

instant case

the cost of power or energy cannot be treated as income especially in the absence of any deeming clause or a changing section. It is further contended that even otherwise section 235 is vague and ambiguous. (9) It is also contended that several of the petitioners are also being dealt with under various presumptive tax and deductions effected thereunder are a final their tax liability, hence provision of Ordinance cannot be pressed into

regimes discharge of

section 235 of the

service as would constitute

double taxation.'' 20. The question in hand is the constitutionality, legality, utility and equity of charging transitional advance tax under section 235 of the Ordinance when taxpayer has fully paid advance tax under section 147 of the Ordinance for the Tax Year. This question has not been dealt with in the above cited judgment of this Court. It is pointed out that the Para. 9 of the Indus Jute Mills Case raises an issue regarding final discharge of the tax under presumptive tax regime under the Ordinance but does not take into account the question raised in the petition i.e., the effect of the continued and constant chargeability under section 235 irrespective of the final discharge of liability of advance tax under section 147 of the Ordinance. 21. The counsel for the respondents also placed on record leave granting order of the august Supreme Court of Pakistan dated 1-3-2010 passed in C.P Nos. 149 to 154 of 2010 which arises out of the order of the Intra Court appeal reported as ``Messrs Al-Khalil Cold Storage v. Federation of Pakistan through Secretary Finance, Islamabad and 3 others'' (2010) 102 Tax 58 (H.C. Lah.) (2010 PTD 1260), which arise out of the Indus Jute Mills case (supra). Therefore, for the reasons given above, the matter pending before the august Supreme Court of Pakistan is not the one raised here. 22. Reference was made to another unreported Order dated 4-3-2010 passed in Writ Peition No. 1583 of 2010 titled Flying Paper Industries v. Lesso. Similar question was raised in the said petition. From the Order it appears that the Court was not properly assisted as this was also noted in the said order:-``Learned Counsel for the petitioners have been unable to point out any Article of the Constitution or any Principle of law, whereby,

if

Advance

Tax

required

to

be

collected

under

a

particular provision of the Income Tax Ordinance, the Legislature is barred or estopped from directing the collection of advance tax or levy withholding tax a

different transaction under any

other provision and that too through a latter section of the same statute.''

63 (emphasis supplied) 23. I am of the view that real gravity of the legal proposition advanced before this court was neither canvassed before the learned Judge in Chambers nor was the Court properly assisted besides the legal question was not considered in the said brief order. The present case pertains to fundamentals rights of the petitioners pertaining to property and to carrying out a lawful business and requires deeper probe into the tax

legislation. An order where the court

has not been properly assisted and main legal question have not been raised, deliberated or discussed does not constitute a binding precedent. 24. My judgment in Messrs Riaz Bottlers (Pvt.) Ltd. v. Lesco (Writ Petition No. 38 of 2010) was also referred and submission made by the counsel for the respondents was that the instant issue has already been decided in the said case. The said case was an offshoot of an earlier litigation where during the pendency of the writ petitions interim relief was granted and

recovery of

the advance tax under section 235 of the Ordinance was stayed. The said interim orders continued for little more than a year and during the currency of the stay orders, the taxpayer paid their income tax for the tax year. The petitions were finally dismissed vide judgment reported as Indus Jute Mils Ltd., (supra), as

a

result

LESCO

billed

the

petitioners

with

the

entire

advance

tax,

accumulated due to the interim orders passed in the said case, for the period October, 2008 till December, 2009, Messrs Riaz Bottlers case (supra), allowed relief to the taxpayers against the advance tax for year ending 30th June, 2009. As the tax year ending 30th June, 2010 was still running it was held that the tax paid for the two quarters of the new tax year could be easily adjusted under sections 147 and 168 of the Ordinance against payments to be made against the next two

quarters. The issue was about adjustment of advance tax paid

in the first two quarters of the tax year and not about the continuous charge of advance tax under section 235 if the advance tax for the tax year stood paid. The issue in hand is therefore totally different. 25. For the above reasons, the judgment and order cited by the respondents above

does

not

address

the

question

raised

in

the

instant

petition.

The

preliminary objection of the respondents is therefore rejected. 26. Now coming to the main question raised in this petition. Survey of sections 147, 159, 235 of the Ordinance (reproduced in Schedule B to this judgment for ready reference) reveals that section 147 provides the main scheme of advance tax under the Ordinance. The concept of advance tax has been explained in my judgment in Mrs. Riaz Bottlers (supra) dated 4-2-2010 as hereunder: (18) ...... The concept of "advance tax" and the mechanism of its payment

need

to

understood

before

the

issue

in

hand

can

be

adjudicated. Advance tax as a concept has been explained in Kanga, Palkhivala and Vyas's, The Law and Practice of Income Tax (Ninth Edition Volume-II page 2135) in the following manner:--

64 ``Under the basic scheme of this Act, the subject of is the income of the previous year and not the

charge

income of the

assessment year; in other words. The tax is assessed and paid in the next succeeding year upon results of the year before. These sections mark a departure from that basic scheme. They rest on the principle of `pay as you earn', i.e. paying tax by installments in respect of the income of the very year in which the tax is paid.'' (Reliance Purshottamdas v. CIT 48 ITR (SC) 206,211). (emphasis supplied) (19) Provisions dealing with advance tax under the Ordinance are section 4, 127, 168, 170, and 231A to 236 (relevant

provisions

are

for

reproduced

in

Schedule

A

to

this

judgment

ready

reference). Section 4 is the charging section which imposes income tax, for each tax year, on every person who has a taxable income for the tax year. Section 4(6) provides that where by virtue of any provision of the Ordinance income tax has to be paid in advance, it shall as the case may be paid accordingly. (20) Advance Tax is preliminary a procedure of collection of

tax

Under Section 147 the amount of the advance tax to be paid in four quarters himself

is for

an the

estimated tax

year.

amount As

determined

held

in

by

Call

the

Tell

tax

and

payer

another

Federation of Pakistan and others (2005 PTD 833) "the collection of advance tax does not amount to levy of tax advance is payment made by merely on account to be adjusted against the charge of income tax as finally ascertained. It is not a tax but merely a provisional payment on an amount towards tax due. The said amount does not become the property of the Central Government but remains vested in the assessee." While hearing the appeal in the same case the august Supreme

Court of Pakistan held that: "Advance tax

collected from buyers shall be merely credited with the Government which can be utilized and adjusted to the extent found necessary towards the ultimate liability of income tax due, after it has been determined and excess amount, if any, is to be refunded to the purchasers of the pre-paid telephone cards.'' Call Tell (Pvt.) Limited v. Federation of Pakistan (2004 PTD 3032.) (21) Advance tax due is be computed by a tax payer according to the

formula

provided

in

section

147(4)

of

the

Ordinance.

Thereafter the tax payer is to estimate the tax payable for the relevant tax year at any time before the last

installments

advance tax is due. After determining whether the estimated amount of tax payable by the taxpayer is more or less than advance tax collected, the taxpayer is to move the Commissioner concerned with the estimated amount after making adjustment for the amount (if any) already paid under section 147(4). The payment of the advance

65 tax is split into four quarters and deposited by the tax payer accordingly as mentioned in section 147(5). Under section 147(8) tax payer paying advance tax during the year is allowed tax credit in computing the tax due. Under section 147(10) in case advance tax is not able to be credited the taxpayer is entitles to refund in accordance with the section 170. This shows that advance tax is a computed amount, which is paid through running installments in the current tax year and before its last installments is due the tax payer has the facility to

adjust it against the estimated

amount of the tax due and pay the balance amount. Advance tax, therefore, is a

supplementary collection system, which is

finally in the tax payable by the taxpayer. (22) Advance tax is also collected through Chapter XII of the Ordinance which provides for Transitional Advance Tax,

wherein,

advance tax is collected on the basis of the cash withdrawal from a bank (section 231A), purchase of motors cars and jeeps (section (231B), brokerage and commission (section 233), collection of tax by a stock exchange registered in Pakistan (section 233A), tax on motor

vehicles

(section

244),

CNG

Stations

(section

234A),

Electricity consumption (section 235) and Telephone users (section 235). Under section 168 an amount of advance tax paid under the above provisions including section 235 is allowed tax credit in computing the tax due by the taxpayer on the taxable income for the tax year in which the tax was collected or deducted. (23) The Scheme of the advance tax under sections 147 and under Chapter

XII

of

the

Ordinance

clearly

shows

that

the

intention of the legislature is to ensure that a computed amount of advance tax [as per formula given in section collected from the taxpayer during the year. Payments advance tax under the

147(4)] is

subsistence of tax Ordinance is so scheduled

that the last installments is to be paid on 15th June of the Tax Year, which proceeds the filing of the tax return for the same tax year. Advance Tax, therefore, has a specific stage and timing in the tax year and is no more than a quarterly contribution towards the final payment o tax due/payable by the taxpayer. For the sake of arguments, if for some reason the advance tax is not paid and the tax due/payable is duly paid by the taxpayer at the end of the Tax Year, the taxpayer and the collection agent may be penalized for the act of not paying or collecting the tax but are not bound under the law to pay advance tax for the tax year that has come to a

close

(reference

section

161(B)

and

205

of

the

Ordinance).

Obligation to pay advance tax, therefore, can survive only till the payment of the tax due for the tax year and not beyond. After the tax due has been paid, the provision of advance tax loses its purpose and legal force. In fact, advance tax has to be paid contemporaneously with the running tax year and cannot be demanded

66 if the tax due or tax payable for the tax year has been duly paid. The

liability of advance tax, therefore cases once the tax tax

due has been paid. An irresistible conclusion is that id tax is payable for the tax year it is but a obvious that no advance tax for the that tax year is payable. It might not be handy to refer Union Bank Ltd. V. Federation of Pakistan (1998 PTD 2116) wherein it was held: "if a person is not liable to pay a certain kind of tax he cannot be assessed to pay that tax in advance." In Elahi Cotton Mills v. Federation of Pakistan (PLD 1997 SC582) it is held that: "where there is exemption from the payment of tax it would equally apply to advance tax. (24)

Other

section

than

147,

the the

estimated ordinance

amount

of

provides,

advance inter

tax

under

alia,

collection or deduction of advance tax in the electric

for bills.

The purpose remain the same i.e. collection of tax in advance during tax year. Even in these cases, "if the said advance tax is collected on the electric bills for any reason and finally the tax due is paid, the chargeability of tax under the said provision (section 235) loses its mischief.'' 27. In Indus Jute Mills Case (supra) it has been held:-``The legal status of advance tax has been held by the Hon'ble Supreme Court in the case reported as 1993 PTD 343 Commissioner of Income Tax v. Asbestos Cement Industrial Ltd. and others to be; The said amount does not become the property of the

Central

Government

company

but

remains

vested

in

the

assesee

undoubtedly; it is an amount which must be paid in advance in respect of tax before it becomes due. But if nothing

or

a

lesser

amount

is

found

due

(the tax) becomes and

payable,

the

Government in that even shall have to return the amount paid of the sum Paid in excess with interest from the date of payment to the date of such assessment, Thus the amount of advance tax in fact and in law is the property of the assessee..'' 28. Advance Tax is, therefore, an estimated amount of proposed income tax to be paid by the tax payer at the close of the Tax Year. After the said estimation the law requires the tax payer to pay the said estimated amount during the currency of the Tax Year in four quarter. The estimate to be made by the taxpayer and is not for the tax authorities to question or object till the close of the Tax Year when the law authorizes the tax authorities to verify the advance tax paid and impose additional tax if the

advance tax paid has been

less than 90% of the total income tax liability of the taxpayer (section 205 of the Ordinance). 29. While the tax payers pays the estimated amount of tax, section 235 provides for collection of transitional advance tax at the rates specified in Part-IV of

67 the First Schedule in the manner electricity consumption charges are charge. Section 235 of the Ordinance further facilitates the payment/collection of advance tax by monthly deduction of the same in the electricity bills of the taxpayer. The said payment gets adjusted as formula,

mentioned

above,

in

section

component "D" in the

147(4)

of

the

Ordinance.

All

the

calculations, assessment and adjustments of advance tax are made under section 147 of the Ordinance, even the payment under section 235 is adjusted under section 147 read with section 168 of the Ordinance. 30. While section 147 of the Ordinance deals with the Advance Tax, section 235 deals with the Transitional Advance Tax. Section 235 is not an independent tax but

a

separate

estimated

for

collection

the

Tax

point

Year

by

for the

receiving taxpayer

Advance

under

Tax

section

that 147.

payment/collection of Advance Tax cannot be more than the

has The

been total

estimated

amount of Advance Tax under section 147 for the Tax Year. The Ordinance guards against

excess

payment

of

advance

tax

under

the

head

of

advance

tax

in

subsections (4), (5) and (6) of section 147. Therefore, once liability of advance tax as estimated by the tax payer Is discharged during the currency of the Tax Year, the Transitional Advance Tax must also come to an end, however, the present legislative layout of the Ordinance does not provide this and the transitional

advance

tax

under

section

235

of

the

Ordinance

continues

subjecting the tax payer/petitioner to Advance Tax is disregard of the fact that such a tax already stands paid. 31. Sections 147 and its purpose comes to a naught if a taxpayer is asked to pay more advance tax once the liability of advance tax has been estimated and settled for the Tax Year. The formula under section 147(4) is as under:-(Ax B/C)-D Where D means tax paid in the quarter for which a tax credit is allowed under section 168) which includes section 235). Therefore, the advance tax estimated for the Tax Year by the taxpayer factors in the transitional advance tax and if "D" is more than the rest of the formula the overall payment goes into negative i.e., over and above what a taxpayer is liable tp pay, which does not appear to be intention of the legislature. 32. The arguments of the revenue that advance tax under section 235 can be refunded to the tax payer at the end of the Tax Year and therefore, it should be paid, confirms that no advance tax is actually due from the tax payer. Why should a taxpayer or a citizen of this country part with his property or deprived of holding property unless law creates such a liability? 33. On the face of it the constitutionally of section 235 of the Ordinance in the present situation when the taxpayer has no further liability under section 147

of

the

Ordinance

is

seriously

suspect.

It

prima

facie,

appears

that

fundamentals rights of the petitioners guaranteed under Articles 10A, 18, 23 and 24 read with the concept of economic justice provided in the Objectives Resolution read with Article 2A and Article 4 of the Constitution are under threat. However, instead of gauging the

constitutionality of the afore

said provision, there is another route available, sections 147 and 235 of the

68 Ordinance can be harmonized. This harmonization can be effectively achieved through purposive interpretation of the Ordinance. 34. It is settled law that where literal construction pr plain meaning causes hardship,

futility,

absurdity

or

uncertainty,

purposive

or

contextual

construction is preferred to arrive at a more just, reasonable and sensible result. "Every law is designed to further the ends of justice and not to frustrate it on mere technicalities. Through the function of the courts is only to expound the law and not to legislate, nonetheless the legislature cannot be asked to sit to resolve the difficulties in the

implementation of its

intention and the spirit of the law. In such circumstances, it is the duty of the

court

to

mould

or

creatively

interpret

the

legislation

by

literally

interpreting the statute. The statutes must be interpreted to advance the cause of the statute and not to defeat it." Reliance is placed on Introduction to Interpretation of Statutes by Dr. Avtar Singh (Reprint Edition 2007). 35. Lord Denning in his book Discipline of Law wrote that "the literal approach is now completely out of date. Although Lord Denning did not have in mind taxing statutes when he made the observation, it may modify the rigour of the literal approach in interpreting taxing statutes. 36. In Kammins v. Zenith Investment Ltd. (1971) AC 850, Lord Diplock drew a distinction between the `literal approach' and the `purposive approach' of which the last-mentioned is the modern method of interpretation. "The Courts now increasingly tend to enquire into the intention of the legislature and seek to further that intention. As Maxwell on the interpretation of Statutes says: `The tendency of modern decisions upon the whole is narrow materially the difference between what is called a strict and beneficial construction." 37. "The Court must proceed on the premise that the law making authority intended to make a valid law to confer power validity or which will be valid. The

freedom

therefore,

to

search

the

spirit

of

the

enactment

or

what

is

intended to obtain or to find the intention of the Parliament gives the Court the power to supplant and supplement the expression used to say what was left unsaid. This is a power which is an important branch of judicial power, the concession of which if taken to the extreme is dangerous, but denial of that power would be ruinous and this is not contrary to the expressed intention of the

legislature

or

the

implied

purpose

of

the

legislation."

Delhi

Transportation Corporation v. D.T.C. Mazdoor Congress" (AIR 1991 SC 101) 38. Applying the purposive approach, the intention of the legislature does not appear to authorize or sanction continuous charge of advance tax under section 235, once it is paid under section 147, for any such interpretation would render the scheme of advance tax under section 147 meaningless, hollow and otiose. 39. Further, the word "transitional" employed in section 235 of the Ordinance means the process o change from one condition to another. The "transitional"

69 nature of section 235 signifies the fluctuating chargeability under the said section. It means that when the liability to pay advance tax stands discharged, there is a transition in the chargeability under section 235, which in effect comes to nil. Such is the nature of transitional advance tax. 40. In order to resolve the conflict between the two provisions, after the purpose of the Ordinance is clear, is to rely on the interpretative tool of reading down. In Indus Jute Mills Case, Sh. Azmat Saeed, J speaking for this Court held:-``(37)

In

view

of

above,

this

court

is

confronted

with

possible options; either us to strike down impugned

two

section

235, Income Tax Ordinance, 2001 being ultra vires the Constitution and fundamental rights of the citizens or in the alternate, to resort to the time honored rule of

interpretation of employing

the theory of reacting down and looking beyond the literal meaning of the provision) see Elahi Cotton Mill's case supra) 41. Mittal in Interpretation of Taxing Statutes writes:-``The theory of reading down is a rule of interpretation restored to by the Courts where a provision, read literally, seems to offend a fundamental right, or falls outside the competence of the particular legislature. In interpreting the provision of a statute the courts will presume that the legislation was intended to be inter vires and also reasonable. 42. Dr. Avtar Singh in Introduction to interpretation of Statutes (Reprint Edition 2007) writes:-``Similarly, for upholding any provision, if it could be saved by reading it down, it should be done, unless plain words are so clear

as

to

be

in

defiance

of

the

Constitution.

These

interpretations spring out because of the concern of courts to always let a legislation to achieve its objective and not to let it fall merely because of a possible ingenious interpretation. The words are not static but dynamic. This infuses fertility in the filed of interpretation. This equally helps to save an Act but also the cause of attack on the Act. Here the courts have to play a cautions role of needing out the wild from the crops, of course, without infringing the constitution. For doing this, courts have taken help from the Pre-amble, objects, the scheme of the Act , its

historical

background,

the

purpose

of

enacting

such

a

provision., the mischief, if any which existed, which is sought to be

eliminated. The principle of reading down, however, will

not be available. Where the plain and literal meaning from a bare reading of any impugned provisions clearly shows that it confers arbitrary, uncanalised or unbridled power.''

70 43. The Supreme Court of India in Delhi Transport Corporation v. D.T.C. Mazdoor Congress (AIR 1991 SC 101) held: ``.It was settled that the court would sustain the presumption of constitutionality by considering matters of common knowledge and to assume every state of facts which could be conceived and could even read down the section, if it became necessary to uphold the validity of the provision., that the underlying rationale of this rule of interpretation, or the doctrine of reading down of a statute

being

that

when

a

legislature,

whose

powers

were

not

unlimited, enacted a statute, it was aware of its limitations, and in the absence of express intention or clear language to contrary, it must be presumed to have implied into the statute the requisite limitations

and

conditions

to

immunize

it

from

the

virus

of

unconstitutionality, that sice every legislature intended to act within its powers, in within its limited powers and it would not be expected to have or intended to transgress its limits. The doctrine

of

reading

down

or

of

recasting

applied in limited situations. It is

the

statute

can

be

essentially used, firstly,

for saving a statute from being struck down on account of its unconstitutionality. It is an extension of the principle that when two interpretations are possible -one rendering it constitutional and

the

other

preferred.

The

making

it

constitutional

unconstitutionality

may

the

former

spring

from

should either

be the

incompetence of the legislature to enact the statute or from its violation of any of the provisions of the Constitution. The second situation which summons its aid is where the provisions of the statute are vague and ambiguous and it is possible to gather the intention of the legislature from the object of the

statute,

the context in which the provisions occurs and the purpose of for which it is made. The Doctrine of Reading Down is, therefore, an internal aid to construe the word or phrase in a statute to give reasonable meaning, but not to detract, distort or emasculate the language

so

as

to

give

the

supposed

purpose

to

avoid

unconstitutionality. Thus, the object of reading down is to keep the operation of the statute within the purpose of the Act and constitutionally valid. It cannot be accepted that the Courts, in process of interpretations of the Statute, would not make law but leave

it

to

appropriate premise

and

harmoniously

the

legislature

for

necessary

amendments.

In

an

case, judges would articulate inarticulate major would all

give the

life

and

provisions

force ironing

to

Statute

out

the

by

reading

creases.

The

object is to elongate the purpose of the Act. The Courts, though, have no power to amend the law by process of interpretation, but do have power to mend it so as to be in conformity with the intendment of the legislature, Doctrine of reading down is one of the principles of interpretation of statute in that process. But when the offending language used by the legislature is clear,

71 precise and unambiguous, violating the relevant provisions in the constitution, resort can not be had to the doctrine of reading down

to

blow

life

into

the

void

law

to

save

from

unconstitutionality or to confer jurisdiction on the legislature. but

where

the

statute

is

silence

or

not

expressive

or

inarticulate, the Court must read down in the silence of the statute

and

in

the

in-articulation

of

its

provisions,

the

Constitutional inhibitions and transmute the major inarticulate premise into a reality 44.

In

Calcutta

Guj.

Education

and read down the statute accordingly.''

Society

and

another

v.

Calcutta

Municipal

Corporation and others (AIR 2003 SC 4278) the Indian Supreme Court held: ``The rule of "reading down" a provision of a law is now well recognized. It is a rule of harmonious construction in a different name. It is restored to smoothen the crudities or ironing the creases found in a statute to make it workable. In the grab of `reading

down',

however,

it

is

not

open

to

react

words

and

expressions not found in it and thus ventire into a kind of judicial legislation. The rule of reading down is to be used for the limited purpose of making a particular provisions workable and to bring it in harmony with other provisions of the statute. It is to be used keeping in view the scheme of the statute and to fulfill its purposes.'' 45. In BR Enterprises v. State of UP [1999(9) SCC 700]: ``First

attempt

provision

and

should not

be

made

invalidate

it

by

the

courts

merely

one

of

to

uphold

the

the

possible

interpretation leads to such a result, howsoever activate it may be.

Thus,

where

there

are

two

possible

interpretations,

one

invalidating the law and the other upholding the latter should be adopted. For this, the courts have been endeavoring, sometimes to give restrictive or expansive meaning keeping in view the nature of

legislation,

may

be

beneficial,

penal

or

Cumulatively, it is to sub-serve the object of the that they are aware of the law and would

fiscal

etc.

legislature,

wisdom of legislature

that they are aware of the law and would never have intended for an individual legislation. This also keeps courts within their track and checks individual zeal of going wayward. Yet in spite of this, if the impugned legislation cannot be saved the courts shall not hesitate to strike it down.'' 46. Under section 159(1) of the Ordinance (See Schedule-B) the Commissioner upon application in writing by the taxpayer can issue a lower rate certificate or a nil rate certificate in theory can also be a 0% rate certificate or a nil rate certificate. Rule 40 the Income Tax Rules 2001, provides as under:-

CERTIFICATES, STATEMENTS AND PROCEDURE FOR PAYMENT OF ADVANCE TAX

72 PART I- SECTION 159 CERTIFICATE 40. Exemption or lower rate certificate under section 159--(1) An application for a certificate under subsection 159 shall be made in the form specified in Part-VII of the First Schedule to these rules. (2) A certificate issued by Commissioner under subsection (1) of section 159 shall be in the form specified in Part VIII of the First Schedule to these rules. (3) ............. (4) .............. The form of application to be made to the Commissioner under section 159(1) of the Ordinance is specified in Part-Vii of the Schedule of the Rules in the following manner:-PART VII OF THE FIRST SCHEDULE GOVERNMENT OF PAKISTAN DEPARTMENT OF INCOME TAX OFFICE OF THE---Application for certificate of exemption from deduction at a lower rate under section 159. (1). An application for a certificate under the section 159 shall be in the following form, namely

APLICATION FOR CERTIFICATE UNDER SECTION 159 OF THE INCOME TAX ORDINANCE, 2001 The Commissioner, I____of_____hereby declare that I am entitles to nil/reduce rate withholding tax certificate, on the following basis, in accordance with the provisions of the Income Tax Ordinance, 2001 for the tax year_____ (i) was less than the minimum liable to tax; (i) amounted to Rs. ____ on which tax is chargeable at the rate of ____ (ii) is under the Agreement of Avoidance of Double Taxation signed by Government of Pakistan with the Government of

73 ____the country of my residence, not liable to Pakistan tax/chargeable to Pakistan at the rate of ____ (iii) was held exempt under clause ____ of the Second Schedule or is exempt

under clause _____of the Second

Schedule. (iv) That income is not likely to be chargeable to tax in view of tax

credits or unabsorbed loses, or

(v) Or, in any case, since advance tax under section 147 has been duly paid

already, or

(vi) The goods imported are for manufacturing purposes at own factory/ mills/unit. (vii) For any other reasons (to be specified). I therefore, request that certificate may be issued to the person

responsible

for

paying

profit

on

securities/dividends/royalties/other amounts particulars of which are given in the Schedule annexed thereto, or to a person

responsible

for

collecting

tax

at

source,

authorizing him not to deduct tax at the rate of ____at the time

of

payment

of

such

amount

or

to

exempt

from

withholding tax at source. Signature -----------Name -----------Nationality -----------Address -----------Date -----------47. The said application clearly shows that nil tax certificate can be issued for the taxpayer, in case where advance tax under section 147 had already been paid.

Once

the

nil

tax

certificate

is

issued

under

section

235,

the

chargeability of section remains intact but the rate of the tax is reduced resulting in reading

down section

235 and making it ineffective when the

advance tax has been fully paid. Nil rate tax certificates does not opened section 235(3) of the Ordinance and can easily co-exist with the same. This reconciles

both

unconstitutional.

the

provisions

and

there

is

no

need

too

declare

section

74 48. For the above reasons petitioners are directed to approach the concerned Commissioners

under

section

159(1)

of

the

Ordinance

and

the

concerned

Commissioners are directed to decide the said application for the issuance of NIL RATE CERTIFICATES within a period of ONE MONTH from the date of receipt of application of the petitioner(s) after verification of the payment of advance tax under section 147 of the Ordinance. The direction for expeditious disposal of the application of the taxpayer under

section 159(1) of the Ordinance is

because of the recurring and continuous nature of transitional advance tax under section 235 of the Ordinance. While deciding the application for nil tax rate

certificate

the

concerned

Commissioner

will

keep

the

ratio

of

this

judgment in mind and will consider the chargeability of section 235 to be integrated

and

co-extensive

with

the

Ordinance rather than a stand alone

liability

under

section

147

of

the

liability in these circumstances.

49. Before parting with the judgment, respondent Federal Board of Revenue is directed

to

find

a

permanent

solution

to

this

issue

by

either

issuing

appropriate exemption under section 159(3) of the Ordinance or bring about necessary legislative amendment so that the taxpayer is not saddled with this liability.

It

is

also

expedient

that

in

the

larger

interest

of

good

and

effective tax governance in the country, Federal Board of the Revenue addresses this issue at its earliest. 50. This court is indebted to the valuable assistance rendered by the amici curiae

namely:

Dr

Ikram-ul-Haq,

Advocate

and

Asim

Zulifqar,

Chartered

Accountant. Their rich contribution is acknowledged. 51.

For

the

above

reasons,

these

writ

petitions

are

allowed.

In

case

Petitioners file applications under section 159(1) of the Ordinance before the concerned Commissioners for the issuance of nil tax certificate along with the necessary documentation establishing the discharge of liability under section 147

of

the

Ordinance,

the

Commissioners

concerned

shall

decide

the

said

application within ONE MONTH of the receipt of the said application. 52. The amount and payment of transitional advance tax under section 235 which has been suspended through interim orders passed by this court shall remain suspended

till

such

time

that

the

concerned

Commissioner

decides

the

application under section 159(1) of the petitioner in the concerned cases. In case application of the petitioner(s) is rejected after verification by the Commissioner,

the

petitioner(s)

shall

be

liable

to

pay

advance

tax,

the

concerned electricity company shall raise and said consolidated amount in the next electricity bill due to the petitioner(s). In case no application received from the petitioner(s) within a fortnight from the date of the announcement of this decision, the said petitioner shall be liable to pay advance tax under section 235 and the amounts suspended by this court shall stand received in the next electricity bills of the petitioner(s). In case application succeeds the petitioner will not liable to pay advance tax under section 235 and the amount

75 stayed during the pendency of this case or a portion therefore, as the case may be, shall not be charged from the petitioner. 53. All these writ petitions are allowed in the above terms. Petitions allowed.

76

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80

81

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83

84

85

86