APPELLATE TRIBUNAL INLAND REVENUE, SPECIAL BENCH, PESHAWAR
MA (Stay) Interim No. 588/PB/2021
(Tax Year 2018)
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M/s
Tribal Areas Electricity Supply Company Limited (TESCO), 212 Wapda House
Shami Road, Peshawar |
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Appellant |
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Vs |
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Commissioner
Inland Revenue |
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Respondent |
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Appellant
By: |
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Mr. Jafar Shah, Tax Manager |
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Respondent
By: |
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Mst. Fouzia Iqbal, DR |
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Date
of Hearing |
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18.10.2021 |
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Date
of Order |
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18.10.2021 |
O R D E R
M.
M. AKRAM (Judicial Member): The
titled appeal along with the miscellaneous application for interim relief has
been filed by the appellant against the order dated 11.10.2021 passed by the
learned Commissioner Inland Revenue (Appeals), RTO, Peshawar for the tax year 2018
whereby he has refused to extend further stay already granted by him with the
observation that in terms of sub-section (1AA) of section 128 of the Income Tax
Ordinance, 2001 (hereinafter referred to as “the Ordinance”) he has
possessed the power to grant a stay for a maximum period of 60 days which he
had already granted to the appellant. The appellant has assailed the said
impugned order before this Tribunal on a number of grounds. Thus, the following
important question emerges from the record which
requires consideration in the present case: -
“Whether in the facts and circumstances of the case, where
the delay in the disposal of the relevant appeal is not attributable to the
taxpayer, the Commissioner Inland Revenue (Appeals) can extend the stay already
granted beyond the period of 60 days or it has possessed
the power to extend the stay for more than sixty days as prescribed in
sub-section (1A) and (1AA) of section 128 of the Ordinance during the pendency
of the appeal of the taxpayer?
2. Before coming to the
provisions of the Ordinance and interpretation thereof, a brief look at the
facts in which the present appeal arises would be necessary.
3. Brief facts giving
rise to the appeal are that the assessing officer passed the order dated 31.12.2020
under section 161/205 of the Ordinance against the appellant taxpayer creating
thereby a tax demand of Rs.259,461,310/-. Aggrieved with the said order, the
appellant filed an appeal before the learned Commissioner Inland Revenue
(Appeals), RTO, Peshawar, for the tax year 2018, which is said to be still
pending. The Appellant approached the appellate authority to get a stay in the
recovery proceedings which was allowed in terms of sections 128(1A) and 128
(1AA) of the Ordinance. Thereafter, the appellant again went up to the learned CIR(A),
Islamabad seeking an extension of the stay order till the decision of the
appeal was pending before him. The learned CIR(A) rejected the prayer of the
appellant and such rejection was communicated to the appellant by order dated 11.10.2021.
From such communication, it appears that the CIR(A) rejected the prayer of the
appellant on the touchstone of sub-section (1A) and (1AA) of section 128 by
observing that it was not empowered to extend the time beyond 60 days.
Admittedly, the appeal preferred by the appellant is still pending before the
learned CIR(A).
4. This is how the
appellant has come up to this Tribunal. It is submitted by learned counsel for
the appellant that no power is vested in the Commissioner Inland Revenue
(Appeals) to grant a stay order under the Ordinance after the expiry of 60 days
and, therefore, the appellant has resorted to section 131 of the Ordinance. The appeal is nothing but a continuation of assessment
proceedings. If in the absence of power to grant extension in stay after expiry
of 6o days, the recovery is made during the pendency of the appeal and if the
appeal is allowed in course of time, then that would cause avoidable
inconvenience to the taxpayer. For effective adjudication of the matters and to
obviate unnecessary inconvenience to the taxpayers, it is nothing but
appropriate to confer the power of granting an extension in stay till the decision
on the appeal on the appellate authorities. Further, the learned AR contended
that Sub-section (4) of Section 129 of the Ordinance states that where a
taxpayer has presented an appeal under 127 of the Ordinance, the Appellate
Authority shall pass an order not later than one hundred and twenty days from
the date of filing of appeal or an extended period of sixty days. The rationale
of this provision read with sub-section (1A) and (1AA) of section 128 is that a
taxpayer should not be unnecessarily inconvenienced during the pendency of the
appeal and, therefore, Sub-section (4) says that the CIR(A) has to decide the
appeal within the stipulated time. Law does not require that once the
assessment is made, recovery of tax should be made immediately, notwithstanding
the remedy of appeal having been provided in the Ordinance. Rather, Sub-section
(1A) and (1AA) of section 128 clearly provide that the taxpayer against whom an
assessment is made should be entitled to get a stay from the appellate
authority so long as his appeal remains undisposed. If such is the intention of
law, then it can hardly be said that the Commissioner Inland Revenue (Appeals)
is vested with the powers of granting a stay order after the expiry of sixty
days, which is not only necessary but expedient for effective adjudication of
appeals. If a taxpayer establishes his, prima facie, case in appeal, then the
appellate authority should be competent to grant a stay order, otherwise, the
taxpayer would be put to a serious loss, which in certain cases may be even
irreparable. What is the use of remedy of appeal, if the irreparable loss is
caused? The remedy of appeal is always provided to alleviate the sufferings and
not to augment them and if the provisions of appeal are read in that spirit,
then the only conclusion that can be reached is that the appellate authority
does possess the power to grant a stay order during the pendency of the appeal,
even if it is not specifically conferred by any statutory provision.
5. Further, the learned
AR for the appellant explained that before sub-section (1A) and (1AA) of
section 128 were inserted in the Ordinance through Finance Acts, 2012 and 2015
respectively with effect from 01.07.2012 and 01.07.2015 conferring power on the
Commissioner Inland Revenue (Appeals) to grant a stay. Before that, a question
came up before the Supreme Court that whether or not the Appellate Authority
possessed the power to grant stay the interim relief is the part of the main
appeal and it is an immutable principle of law which cannot be lightly brushed
aside that where a Court is competent to allow final relief, it has also got
the jurisdiction to allow interim relief. Reliance was placed on the judgment
reported as Additional Collector-II
Sales Tax, Lahore Vs M/s Abdullah Sugar Mills Ltd, (2003 SCMR 1026).
6. Learned counsel for
the appellant, therefore, urged that the entire disputed demand should be kept
in abeyance till the first appeal filed by the taxpayer is decided on merits,
which he submitted that was likely to succeed in toto. He, however, further submitted
that till such appeal is decided and if no stay is granted against such
recovery, the very purpose of filing the appeal would be frustrated. Learned
counsel for the appellant was at pains to explain that if high-pitched
assessments are made by the Assessing Authority arbitrarily, the very purpose
of filing the first appeal for redressal of grievance, can be rendered nugatory
and infructuous if upon a harmonious reading of various provisions in the
scheme of the Ordinance they are not construed to mean that during the pendency
of the first appeal normally demand at least under the high-pitched assessment
orders should be kept in abeyance. He submitted that the present case is an
outstanding and glaring example of such circumstances, which is repeated in
numerous cases and, therefore a fair, reasonable, and harmonious interpretation
of these provisions deserves to be made.
7. On the other hand,
learned DR appearing for the Revenue vehemently submitted that in the absence
of any specific provision conferring power to grant stay after expiry of 60
days upon the First Appellate Authority, namely, Commissioner Inland Revenue
(Appeals), such powers cannot be extended and in view of later amendment
in section 128 of the Ordinance, conferring such powers only to the
extent of further stay of 30 days, by necessary implication, on the other hand,
it should be construed that Parliament deliberately did not want to confer any
such power upon the First Appellate Authority and, therefore, despite the
decision of the Hon'ble Supreme Court in the case of Additional Collector-II Sales Tax, Lahore Vs M/s Abdullah Sugar
Mills Ltd, (supra) no such inherent power can be
inferred from the provisions of the Ordinance available with the first
appellate authority. He, therefore, submitted that Commissioner Inland Revenue,
(Appeals) may decide the pending appeal of the taxpayer in accordance with the
law, however, as far as the stay application is considered, the matter stands
decided at the hands of the departmental authorities and the said order being
valid, they cannot be interfered with in the present case.
8. The arguments were
heard at length and this Tribunal feels persuaded to interpret the relevant
powers of the first appellate authority under the Ordinance to grant a stay and
to interpret the scope of application under sections 128/129(4) of the
Ordinance. The relevant provisions, referred to above, are reproduced
hereinbelow for ready reference to the extent relevant: -
“128. Procedure in appeal.— (1) ………………..
(1A) Where in a particular case, the Commissioner
(Appeals) is of the opinion that the recovery of tax levied under this
Ordinance, shall cause undue hardship to the taxpayer, he, after affording
opportunity of being heard to the Commissioner against whose order appeal has
been made, may stay the recovery of such tax for a period not exceeding thirty
days in aggregate.
(1AA) The Commissioner (Appeals), after affording
opportunity of being heard to the Commissioner against whose order appeal has
been made, may stay the recovery of such tax for a further period of thirty
days, provided that the order on appeal shall be passed within the said
period of thirty days.
129.
Decision in appeal.— (1)…………….
(2) ……………….
(3) ..……………..
(4) As soon
as practicable after deciding an appeal, the Commissioner (Appeals) shall
specify in the order the amount of tax upheld and serve his order on the
appellant and the Commissioner
Provided that such order shall be passed not later
than one hundred and twenty days from the date of filing of appeal or within an
extended period of sixty days, for reasons to be recorded in writing by the
Commissioner (Appeals):
Provided further that any period during which the
hearing of an appeal is adjourned at the request of the appellant or is postponed
due to any appeal or proceedings or stay order, remand or alternative dispute
resolution proceedings or for any other reason, shall be excluded in the
computation of the aforementioned periods.”
From a plain reading of sub-section (1A) and (1AA) of section 128
of the Ordinance, it obviously appears that the time specified for the validity
of an order passed in relation to the stay of recovery of the tax is a directory
in nature. It would give rise to an anomaly if the provision is interpreted in
a manner that on the one hand the learned CIR(A) has been empowered to grant
the stay after forming an opinion to the effect that the recovery shall cause
hardship and on the other hand for the legislature to have intended that the
taxpayer is exposed to the rigours of hardship merely because the appeal was
not decided within a specified period and that too without any fault on part of
the appellant. It is a settled principle of interpretation of a statutory
provision that absurdity cannot be attributed to the legislature. It has been
consistently held by the august Supreme Court that the determination, whether a
provision is mandatory or directory, largely depends upon the “intention and
language in which the provision is couched.” It is, however, settled law that
“where the consequence of failure to comply with the provision is not mentioned
the provision is a directory, and where the consequence is expressly mentioned
the provision is mandatory.” Reliance is placed on Malik Umar Aslam v.
Mrs. Sumaira Malik and others, 2014 SCMR 45, Maulana
Nur-ul-Haq v. Ibrahim Khalil, 2000 SCMR 1305, Ghulam
Hassan v. Jamshaid Ali and others, 2001 SCMR 1001, Human
Rights Cases Nos. 4668 of 2006, 1111 of 2007, and 15283-G of 2010,
PLD 2010 SC 759. In the instant case, the provision is couched in such language
which renders the provision as a directory and not mandatory. As already noted
above, the legislature could not have intended to cause undue hardship to a
taxpayer. A reasonable interpretation of the aforesaid provisions obviously
would be that the time specified therein is a directory and, therefore, if the
appeal is not decided within the said period, the stay would continue till the
disposal or decision of the appeal unless expressly recalled by the learned
CIR(A). Any other interpretation would defeat the legislative intent of
protecting a taxpayer against undue hardship.
Almost a similar
question was posed before the Hon’ble Islamabad High Court (IHC) whereby
his lordship in the case titled M/s Shalimar Recording and
Broadcasting Company Vs The Commissioner IR (Appeals), LTU, and two others,
2019 PTD 2082 has eloquently highlighted the principles and law in order
to discern whether a provision is to be treated as mandatory or directory. In
the said judgment while interpreting the provisos to sub-section (5) of section
131 of the Ordinance it was observed that no doubt these provisos expressly
restricted the period of validity of an injective order passed by the Appellate
Tribunal Inland Revenue are directory in nature and these provisions are to be
read with section 132(2A) of the Ordinance. Similarly, the Hon’ble Lahore High
Court in the case titled Shahnawaz Proprietor Tooba Traders vs
Appellate Tribunal Inland Revenue and others, 2017 PTD 1134
directed the tribunal to decide the stay application on the principle
articulated and annunciated by the Hon’ble Supreme Court in Imran Raza
Zaidi Vs v. Government of Punjab, (1996 SCMR 645) wherein the Apex
Court examined the provision of section 5 of Punjab Service Tribunal Act, 1974
wherein powers to grant stay were not provided; After observing that provisions
of Civil Procedure Code could be invoked it was held: -
“Apart from this, the law is
fairly well settled that even in the absence of an express provision for the
grant of interim relief, the appellate Court/Tribunal having the power to grant
the main relief can also grant the interim relief by suspending wholly or
partially, the operation of the order under appeal before it as such a power is
reasonably incidental or ancillary to the main appellate jurisdiction.”
9. Further, we have
noted that Section 129 of the Ordinance describes the powers and procedure to
be adopted while the learned CIR(A) deals with an appeal. The provisos to
Sub-section (4) of Section 129, which were inserted through the Finance Act,
2009, provides that the learned CIR(A) shall decide the appeal within one
hundred and twenty days or an extended period of sixty days of its filing.
Section 129, therefore, cannot be read in isolation and has to be examined and
interpreted in the context of other provisions relating to the Commissioner's
Appeal so that the legislative intent and the scheme could be discovered. Both
the sections i.e 128 and 129 have prescribed time limitations. If the time
specified in sub-section (1A) and (1AA) of section 128 is treated as mandatory
and otherwise in the case of sub-section (4) of section 129 then it would give
rise to an anomalous and odd situation. The appeal may not have been decided within
the time prescribed under section 129(4) because of the acts or omissions on
the part of the Department or the learned CIR(A) and yet the taxpayer would be
exposed to hardship by depositing the liability. Likewise, if the time
prescribed under sub-section (1A) and (1AA) of section 128 is treated as
mandatory then it would lead to an even more preposterous consequence because
in such an eventuality the party which has exercised the statutory right of
appeal will be left without a remedy because the proceedings would have abated
on the lapse of time. The statutory right of appeal would become redundant.
Losing the right of appeal before the CIR(A) is of greater significance having
regard to the scheme of the Ordinance.
10. The scheme of the Ordinance especially after the amendment
of section 128 of the Ordinance conferring powers of granting stay upon
the appellate authority after insertion of sub-section (1A) and (1AA) in
section 128 of the Ordinance by Finance Act, 2012 with effect from 01.07.2012 and
further by Finance Act, 2015 with effect from 01.07.2015
respectively extending period of stay granted by the CIR(A) in the first
instance for 30 days then extendable up to 30 days in sub-section (1AA), and
this amendment purportedly having been brought on the statute book in pursuance
of the decision of the Hon'ble Supreme Court in the case of Additional Collector-II Sales Tax, Lahore
Vs M/s Abdullah Sugar Mills Ltd,
(supra), the question is as to whether such powers to grant stay can still
be implied as an inherent power of the first appellate authority, namely, CIR
(Appeals) or not. The answer to this question, in the opinion of this Tribunal,
has to be given in the affirmative. The reasons are not far to seek. However, a
perusal of the foregoing judgments it clearly emerges that: -
i. The
power to grant a stay or interim relief has to be read as co-extensive with the
power to grant final relief, the object being that in the absence of the power
to grant interim relief, the final relief itself may be difficult.
ii. Once an appeal is provided, it cannot be
rendered negative in cases where the taxpayer was not at fault.
iii. The object of the amendment made in Section
128 by the Finance Acts, 2012 and 2015 was not to defeat the vested right of an
appeal in a taxpayer whose appeal could not be disposed not on account of any
omission or failure on his part, but either the failure of the appellate
authority or acts of Revenue resulting in non-disposal of the appeal within the
extended period as provided.
iv. It would not be possible on one hand to
hold that there is a vested right of appeal and on the other hand to hold that
there is no power to continue the grant of interim relief for no fault of the
taxpayer by divesting the incidental power of the appellate authority to
continue the interim relief. Such a reading would result in such an exercise
being rendered unreasonable and violative of Article 4 of the Constitution of
the Islamic Republic of Pakistan, 1973.
The
powers of the appellate authorities are indisputably wider and superior in
nature. Section 129 of the Ordinance clearly stipulates that in disposing
of an appeal, the CIR (Appeals) can confirm, modify, reduce, enhance or annul
the assessment. Section 129(1)(b) of the Ordinance further provides that
in other cases, he may pass such order in appeal as he thinks fit. These words
harmoniously read, definitely mean that powers of appellate authorities under
the Ordinance are wide enough. Such powers could not be intended to be drained
out or rendered meaningless if the power to grant stay against the recovery of
disputed demand is to be confined only to the extent of sixty days. Such
expressly, necessary and inherent power must necessarily be read into these
provisions conferring the powers upon the appellate authority to modify the
impugned assessment order in any manner. In specific terms, the first appellate
authority can even enhance the taxable income, while he has the power to reduce
or completely set at naught the assessment. The words "as he thinks
fit" in section 129(1)(b) are not redundant, as no such
redundancy can be attributed to the legislature. Therefore, the mere mentioning
of the power to grant a stay for a maximum period of 60 days in section 128 of
the Ordinance cannot mean that stay cannot be extended further during the pendency
of appeal particularly when the delay in deciding the appeal is not
attributable to the taxpayer.
11. In the landmark decision delivered on 11.03.1968, the three
Judges Bench of the Hon'ble Supreme Court in the case of Income Tax
Officer Vs. M.K. Mohammed Kunhi reported in (1969) 71 ITR 815 (SC):
AIR 1969 SC 430, in a unanimous opinion authored by Grover, J, dealing with
words "as he may think fit", which were available to the ITAT also
while deciding appeals before it and in the face of absence of clear provisions
for grant of stay against the disputed demand of tax, the Apex Court held that
such power is inherent in the appellate powers and the Tribunal should be
deemed to have such power under Section
254 of the Indian Income Tax
Act, 1961. Quoting from Domat's Civil Law Cushing's Edition, Vol. 1 on page 88,
the Hon'ble Supreme Court noted the following quotation:
"It is the duty of the
judges to apply the laws, not only to what appears to be regulated by their
express dispositions, but to all the cases where a just application of them may
be made, and which appear to be comprehended either within the consequences
that may be gathered from it."
Further relying on the Maxim
"Cui jurisdiction data est, ea quoque concessa essee videntur, sine quibus
jurisdictio explicari non-potuit", which means "where an inferior
court is empowered to grant an injunction, the power of punishing disobedience
to it by commitment is impliedly conveyed by the enactment, for the power would
be useless if it could not be enforced."
Thus,
any interpretation which eludes or frustrates the recipient of justice is not
to be followed. Justice means justice between both parties. Justice is the
virtue, by which the Court gives to a man what is his due. Justice is an act of
rendering what is right and equitable towards one who has suffered a wrong. The
underlying idea is of balance. It means to give to each his right. Therefore,
while tempering justice with mercy, the Court has to be very conscious that it
has to do justice in exact conformity with the statutory requirements.
12. Thus, it is evident
from the above-referred law and the judgments cited supra when on a similar
question, the Appellate Tribunal was held to have the power to extend the stay
of demand in an appeal pending before it beyond the period of 180 days even
after the introduction of 2nd proviso to section 131(5), we see
no reason why the same legal position should not follow in the case of the
Commissioner Inland Revenue (Appeals), who is also an appellate authority like
the Appellate Tribunal. In this situation, what holds good in the case of the
Appellate Tribunal equally applies to the Commissioner Inland Revenue, (Appeals).
By respectfully following the foregoing judgments and the statutory provisions,
we hold that the Commissioner Inland Revenue, (Appeals) must be held to have
the power to grant stay till a decision on appeal, which is incidental or
ancillary to its appellate jurisdiction. It is also pertinent to mention here
that almost a similar view was taken by this Tribunal in the case titled International
Enterprises, Karachi Vs The Commissioner Inland Revenue, Zone-V, RTO-II,
Karachi, (2019 PTD 1201). Thus, the answer to the question is in
affirmative. Accordingly, the appeal of the appellant is accepted and the
impugned order passed by the learned CIR(A) is annulled with the observation
that the appellant may file a fresh application for an extension of stay before
the learned CIR (A) along with this order within 07-days from the date of
receipt of this order. If such application is made, then until the decision of
such application, no coercive measures will be taken for recovery of tax against the appellant. The
miscellaneous application for an interim order is also accordingly disposed of.
13. Before parting we may observe herein that of late, we have
experienced a flood of such appeals, where the appellant has filed the
application for an extension in a stay after the expiry of sixty days before
the appellate authority but the appellate authority has failed to give interim
relief and, in the meantime, the assessing officer had proceeded to make
recovery which causes in the filing of a number of appeals before this
Tribunal. This can be avoided by the appellate authorities concerned by showing
more concern for their duties and by disposing of such stay applications
expeditiously by considering binding judgments of the higher courts. In Barkat
Ali vs Muhammad Ehsan, (2000 SCMR 556), the Hon’ble Supreme Court
reiterated that the principal object behind all legal formalities is to
safeguard the paramount interest of justice. Legal precepts were devised with a
view to impart certainty, consistency, and uniformity to the administration of
justice and to secure it against arbitrariness, errors of individual judgment,
and mala fides. Unfortunately, disobeying or non-considering the binding
judgments by the first appellate authorities, this Tribunal is being flooded
with avoidable litigation which is causing more harm to the public at large who
is awaiting for dispensation of justice within a reasonable time from the
highest fact-finding authority in the State. This Tribunal is already burdened
with thousands of cases awaiting their turn for disposal. The constraint in
which this Tribunal is functioning is being added by this inaction of the
authorities and is causing a delay in the disposal of a huge number of cases.
We do not propose to make this order an occasion to illustrate the various
reasons for the delay but we will be failing in our duty if we refrain from
showing our concern for such callousness on the part of the appellate authorities
in sitting tight over the stay application compelling the taxpayer to run
either to the High Court or Tribunal by filing writ petition or appeal
respectively simply to get an order for an extension in the stay. We,
therefore, recommend the Federal Board of Revenue to look into this aspect of
the matter and, if necessary, to issue a circular to all the appellate
authorities directing them to dispose of stay applications expeditiously in
accordance with the binding judgments of the higher courts and so long the stay
application is not disposed of, the Assessing Officer must be slow or reluctant
in initiating the recovery process. Let a copy of this order be supplied to the
learned Chairman, FBR, and learned Member Legal, for information and necessary
action.
14. This
order consists of (14) pages and each page bears my signature.
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-SD- (M. M. AKRAM) JUDICIAL
MEMBER |
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-SD- (MUHAMMAD IMTIAZ) ACCOUNTANT
MEMBER |
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