APPELLATE TRIBUNAL INLAND REVENUE, DIVISION BENCH-I,
ISLAMABAD
M.A.Nos.244
to249/IB/2022
IN
ITA
Nos.132 to 137/IB/2022
(Tax
Years 2014 to 2018)
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Celmore Technologies (Pvt) Ltd. Plot No.3, Naqeeb Plaza, Tulip
Road, Sector A, DHA-Phase-II, Islamabad. |
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Appellant |
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Vs |
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Commissioner Inland Revenue, CTO, Islamabad. |
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Respondent |
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Appellant By: |
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Mr. M Ellahi, Advocate Mr. M. Sadique Butt, Advocate Ms.
Jaweria Kokab,G.M(Finance) |
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Respondent By: |
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Ashfaq Ahmed Naqvi, Advocate (Legal
Advisor) assisted by Mr. Shaheryar Akram, DR |
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Date of Hearing: |
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28.09.2022 |
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Date of Order: |
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28.09.2022 |
O R D E R
M. M. AKRAM (JUDICIAL MEMBER): Through
the titled miscellaneous applications, the applicant taxpayer seeks the
following relief from this Tribunal:-
a. Restore the status quo by directing the
Respondent Department and its Recovery Officers to refund the amounts recovered
from the Applicant’s Bank Account at the time, when the Further Stay Extension
Order dated 26.09.2022 of this Learned Tribunal was in the field;
b. Credit the recovered amounts in the bank
accounts of the Applicant; and
c. Pass appropriate strictures and issue
necessary disciplinary instructions against the Recovery Officers.
In all the above
applications, the facts of the case and the relief sought from this Tribunal
are the same, therefore, all these applications are being decided through this
common order.
2. The
relevant facts, in this case, are that the appeals were pending before
this Tribunal, which is the first independent forum outside the departmental
hierarchy. The stay against recovery of tax, granted earlier, was extended for
30 days, through an order dated 25.08.2022. Before the expiry of the 30-day
stay, the Applicant vigilantly moved another Stay Extension Application on
21.09.2022 which was taken up by this Tribunal on 22.09.2022 (Thursday) before
the learned Bench No. II of this Tribunal. Since the stay granted earlier
through the Previous Stay Extension Order had not lapsed, this Tribunal
adjourned the case in the presence of the parties and fixed all the aforesaid
applications for 26.09.2022 (Monday), which was the first working day after the
expiry of the Previous Stay Extension Order. On 26.09.2022 this Tribunal again
extended the stay for 40 days vide order dated 26.09.2022. The department was well aware of the forgoing
facts, despite this, the assessing officer issued the notice dated 26.09.2022 under section 140 of
the Income Tax Ordinance, 2001 (‘the
Ordinance”) to the Banks, attaching the bank accounts and requiring them to
pay a sum of Rs.168,575,684/. The banks complied with
the direction of the Recovery Officer (RO).
All this happened on the same day on 26.09.2022 in the presence of the stay
order/application for extension of the stay order and recovered an amount of
Rs.88 million from the different Bank accounts of the applicant. Aggrieved
by the impugned action, the applicant approached this Tribunal through the
titled applications and assailed the impugned action on several grounds.
3. It is the case of the applicant
taxpayer that the amount of Rs. 88 million has been recovered by the Recovery
Officer (RO) illegally in
contravention of well-settled principles of law, equity, fair trial, and good
conscience. The action of the RO is challenged, inter alia, on the grounds that
when an application for extension of stay of recovery was pending before this
Tribunal, no action could be taken for recovery of the disputed demand. That
this Tribunal had not disposed of the application for stay of recovery filed by
the applicant taxpayer at the time the RO resorted to the coercive action of
attachment of bank accounts and recovering the amount there from. That the RO
had resorted to coercive action under section 140 of the Ordinance whereas the
power under the said section is vested only with the Commissioner IR. That,
in utter disregard of the fact within their knowledge that the stay had been
extended, the Respondent Department willfully flouted the further stay
extension order of this Tribunal and went on to make the recovery from the bank
accounts of the Applicant by abusing the due process of law on the same date. That
the Department has not only blatantly violated the directions passed by this
Tribunal but also recklessly overlooked the settled legal principles developed
by our Superior Courts, which are binding on all the organs of the State in
terms of Articles 189 and 201 of the Constitution of the Islamic Republic of
Pakistan, 1973. The learned AR for the appellant explained that access to
justice is a fundamental right; no recovery can be made unless a matter is
decided by the Appellate Tribunal, which is the first independent forum outside
the departmental hierarchy. In support, reliance was placed on the judgment
titled Z.N. Exports v. Collector of Sales Tax, 2003 PTD 1746
[Lahore], para 2 at p. 1746 and Sun-Rise Bottling v. FOP,
2006 PTD 535 [Lahore], paras 1-2 at p. 536. It has been stated that flouting a
stay order tantamount to obstruction of justice and interference with the legal
process. Reliance was placed on Saifur Rehman v. Muhammad Ayub,
(PLJ 1999 Karachi 263). He submits that a statutory forum conferred with the
power to pass an order had the inherent power to implement its order. Reliance
was placed on MCB v. Federation, 2020 CLD 829 [Sindh] and
further contended that the Applicant shall suffer irreparable loss and undue
hardship if the reliefs prayed for are not granted.
4. It is further submitted that the Tribunal
has the power to grant a stay of recovery till disposal of the appeal. The RO
has recovered the demand illegally because of which the power/authority of the
Tribunal has been rendered nugatory. It was contended that when the demand is
illegally recovered by the Revenue authorities, the Tribunal must pass such
orders/directions to correct the administrative action of the Revenue
authorities. It was contended that the Tribunal has the power to undo the unlawful
wrong committed by the Revenue authorities. The learned counsel for the
applicant further contended that the taxpayer has a very strong prima facie
case in its favour and, therefore, the collection of the disputed demand by the
Revenue authorities is highly unjust and unreasonable. The applicant has been
deprived of the money, which was required for business. When the demand created
by the Revenue is the subject matter of appeal and the applicant has a fair
chance of success, depriving the taxpayer of the use of his own money is unjust
and unreasonable. It was contended that the action of the RO to collect the
disputed demand has made the process of appeal nugatory and ineffective. It was
accordingly pleaded that the Tribunal may use its extraordinary power for
directing the revenue authorities to refund the tax, which has been recovered
illegally.
5. The learned Legal Advisor (LA) for the
Departmental, on the other hand, has taken preliminary objection that the
application is neither maintainable nor proceedable under section 131(5) of the
Ordinance. It has been stated that there is no violation of any order of this
Tribunal rather the department complied with earlier stay orders as well as the
current stay order dated 26.09.2022. He argued that the main appeal of the
taxpayer is still pending before this Tribunal and the Applicant may apply for
a refund to the department under section 170 of the Ordinance if the appeal succeeds.
He submits that the Tribunal in the exercise of its powers for grant of stay
does not have the power to grant a refund of tax even when it is recovered
illegally. The learned Departmental Representative further contended that in
this case the amount has not been recovered illegally. It has been stated in
the written submissions that the application for extension of stay of the taxpayer was taken
up by this Tribunal on 22.09.2022, however, no stay was granted to the taxpayer
on the said date. As such the department decided to recover the outstanding tax
while adopting the modes as provided in Part-IV Chapter-X of the Ordinance. A
notice under section 140 of the Ordinance was issued to the banks who were
holding money on behalf of the taxpayer. The notice, as evident from the
electronic record, was served upon banks before 10:30 am, and the total amount
of PKR 88 million was recovered before 12 pm on 26.09.2022 prior to the
decision on an application for extension of stay application of the Appellants.
Hence, the recovery proceeding and recovery had been completed by the time the
stay application was taken up by this Honorable Tribunal at 12:05 pm. When the
application was taken up by this Honorable Tribunal, the DR present in the
Court apprised the bench that recovery proceedings had already been affected so
the applicant was not entitled to interim relief. The fact is evident from the
content of the interim order whereby the department was directed to de-attach
the accounts if already have been attached. This also proves that the Honorable
Bench was mindful of the fact while passing the interim order that recovery had
already been affected, therefore, issued a direction to de-attach the accounts.
Moreover, the ATIR directed for the "de-attachment of bank accounts"
and did not order returning of the cheques already acquired by the department
and presented before the banks for clearance. In compliance with the ATIR
directions, the bank accounts of the taxpayer were immediately detached. It is
also submitted that the AR for the taxpayer present in the Court has also
admitted the position that the recovery had already been affected.
6. We have given our careful consideration to
the rival contentions. These applications are peculiar in character in so far
as the applicant taxpayer not only seeks a direction for the refund of Rs.88
million claimed to have been recovered without following the due process of law
but also seeks to pass
appropriate strictures and issue necessary disciplinary instructions against
the concerned revenue authorities. When the demand
stands collected ordinarily, we do not interfere. However, in this case, it is
noted with regret that the revenue authorities have been unfairly
overenthusiastic by not following the procedure established by law, disobeying
the binding judgments of the Courts, in the existence of stay, and not
following the instructions issued by the FBR, as a result of which the taxpayer
has suffered humiliation and has been deprived of remedies available to it by law.
We consider it our duty to remedy the unlawful wrong so that the taxpayer's
confidence in the administration of justice and rule of law is maintained.This
Tribunal has inherent powers to ensure that the taxpayer is not left high and
dry only on account of illegal and highhanded actions on the part of revenue
and the RO. The lower authorities are bound to obey the order passed by this
Tribunal unless and until it is not reversed or suspended by the Superior Courts.
In this respect, the Federal Board of Revenue time and again had also issued
Circular Letter No.8(I)/S/IR-JUDICIAL/2016/44574-R dated 01.04.2016 to all the
Chief Commissioner IR to ensure compliance with the orders of the ATIR and
Superior Courts.
7. The issues broadly arising, in this case,
are as under:
(i) Whether,
on the facts and in the circumstances of this case, the recourse to coercive
action by the revenue authorities under Section 140(1) of the Ordinance for the
recovery of 165,575,684/- from the Banks disobeying the settled principle of
law, violation of instructions of FBR, in the presence of a stay order or even
pending the application for extension of stay before the tribunal immediately
following the expiry of the previous stay order was unwarranted and bad in law?
(ii) Whether the Tribunal in its statutory powers of granting a stay
of recovery has also the ancillary and incidental power in appropriate cases to
direct the refund of tax recovered unlawfully and without following the due
process of law?
(iii) Whether, on the facts
and in the circumstances of this case, the appropriate strictures and
necessary instructions for disciplinary proceedings against the revenue
authorities be passed?
8. We will first consider the question at
serial No. (i) and for that matter, analyze the scheme of the Ordinance. When
any sum is determined as payable in consequence of any order passed under the
Ordinance, the assessing officer is required to serve upon the taxpayer a
notice of demand under 137 in the prescribed form specifying the sum so
payable. After the service of the demand notice, the taxpayer gets a right of
appeal against the assessment order. If the decision of the assessing officer
is accepted by the taxpayer, then the demand becomes absolute and the assessing
officer is free to recover the demand by following the provisions of the
Ordinance relating to the recovery of the said demand. The taxpayer, however,
may dispute the demand by filing an appeal under 127 of the Ordinance against
the assessment order within thirty days of the service of the demand
notice/assessment order. Upon the written request by a taxpayer, section 137(4)
empowers the Commissioner to extend the time for payment of tax or allow the
taxpayer to pay tax in installments. The discretion vested in the Commissioner
may be exercised by him, subject to such conditions as he may think fit. When
the taxpayer is in default or deemed to be in default in making the payment, a
notice under section 138 of the Ordinance may be issued by the Commissioner to
affect the recovery of demand by various modes specified under 138 of the
Ordinance. The Commissioner (Appeals) has the power to grant the stay of
recovery till the decision on appeal.
9. An appeal is provided to the Tribunal
under section 131 of the Ordinance against the orders of the CIR(A). Under
section 132 the Tribunal has the power to pass such orders thereon, as it
thinks fit, in relation to an appeal filed before it. In terms of section
131(5) of the Ordinance, the Tribunal has the power to grant the stay against
recovery of tax demand. It is thus evident that the Tribunal has the power to
grant a stay of recovery of the disputed demand. This power can be exercised
only when an appeal is filed by the taxpayer against the decision of the first
appellate authority, i.e., the CIR(A). There is a period of sixty days allowed
for the filing of an appeal to the Tribunal against the decision of the first
appellate authority. The question arises as to what is the fate of the
taxpayer's right to seek a stay of the disputed demand in the period which is
available to them for filing an appeal against the decision of the first
appellate authority. The answer to this question is found in the decision of
the Bombay High Court in the case of Mahindra & Mahindra Ltd v Union of
India, (1992) 59 ELT 505 (Bom). In this case, the customs
authorities had recovered the disputed demand by encashment of bank guarantee
during the pendency of the stay application and before the expiry of the
statutory period of three months for filing the appeal. Their Lordships of the
Bombay High Court held that the customs authorities were not justified to
recover the disputed demand by encashment of the bank guarantee during the
pendency of the stay application and before the expiry of the statutory period
of three months for filing the appeal. The Department was accordingly directed
by the Hon'ble Bombay High Court to pay back the entire amount recovered by en-cashing
the bank guarantee. Therefore, it is evident that when the taxpayer is having a
right to seek an extension of time/stay of recovery of the disputed demand
pending an appeal before the respective authorities, it will be unreasonable/unfair
to hold that during the intervening period the RO has unfettered powers of resorting
to coercive action for recovery of the disputed demand. The rationale behind
the decision of the Bombay High Court in the case of Mahindra & Mahindra
Ltd (supra), is that the authorities cannot by their actions render the
provisions of the Act ineffective and nugatory. Hence, following the above-said
ratio and to maintain the confidence of the public in the administration of
justice and rule of the law, we find that if the RO is not allowed to resort to
coercive action before the expiry of the limitation provided for filing of an
appeal or while an in-time application for stay or extension of a stay is
pending before the Tribunal or CIR(A). In our opinion, if the RO is not
debarred as above, the power of the Tribunal to grant a stay of recovery of tax
will be rendered ineffective, which can never be the intention of the
legislature. Hence, the RO is barred from having recourse to coercive measures
to recover a tax demand until before, the expiry of the limitation provided for
the appeal or, the filing of the appeal, whichever is later. Similarly, where,
an in-time, application for grant of stay or, application for extension of stay
has been filed, the RO is further barred to recover the tax by coercive means
until the time, such an application is not adversely decided by the Appellate
Authority at the ad-interim stage, provided the delay in deciding the
application is not attributable to the Appellant.
10. In this case the applicant taxpayer had
filed an appeal before this Tribunal against the decision of the CIR(A). An
application had also been filed under section 131(5) of the Ordinance for
getting interim relief against the recovery of disputed tax demand. The interim
relief was granted/extended to the taxpayer lastly vide order dated 25.08.2022
for 30 days. Before the expiry of the 30-day stay, the Applicant taxpayer
vigilantly moved another Stay Extension Application on 21.09.2022 which was
taken up by this Tribunal on 22.09.2022 (Thursday). Since the stay granted
earlier through the previous Stay Extension Order had not lapsed, this Tribunal
adjourned the case in the presence of the parties and fixed all the aforesaid
applications for 26.09.2022 (Monday), which was the first working day after the
expiry of the previous Stay Extension Order. On 26.09.2022 this Tribunal again
extended the stay for 40 days vide order dated 26.09.2022. The department was well aware of the forgoing
facts, despite this, the Deputy Commissioner IR (recovery officer) issued the
notice dated 26.09.2022 under
section 140 of the Ordinance to the Banks, attaching the bank accounts and
requiring them to pay a sum of Rs.168,575,684/ without giving any specified
time in the said notice as required under subsection (1) of section 140 ibid.
The banks complied with the direction of the RO. All this happened on the same
day on 26.09.2022 in the existence of a valid and in-time application for an extension
of stay and recovered an amount of Rs.88 million from the different Bank
accounts of the applicant In view of our above finding, we declare that the revenue
department and RO have acted unlawfully and in haste to take unfair advantage
of the situation by abusing the process of law to extort the tax demand from
the taxpayer. In peculiar facts of this case, we also find that the stay had
expired on a day (Saturday), which is a holiday in Tribunal, therefore, it would
be fair to find that it must be deemed to continue until the end of the
following business day.
We find it very unfortunate that the above ambush planned
and staged by the RO is highly improper and contrary to various decisions of
the High Courts and Apex Court. It has been impressed upon the RO, time and
again, that coercive action for the recovery of the disputed demand should not
be resorted to unless a matter is decided by the Appellate Tribunal, which is
the first independent forum outside the departmental hierarchy. Reliance may be
placed on M/s Pak Saudi Fertilizers Ltd Vs Federation of Pakistan and others(2002
PTD 679), M/s Z.N. Exporters (Pvt) Ltd Vs Collector of Sales Tax(2003 PTD
1746), M/s Brothers Engineering (Pvt) Ltd Vs Appellate Tribunal Sales Tax,(2003
PTD 1836), M/s Pearl Continental Hotel, Lahore & others Vs Customs, Excise
and Sales Tax Appellate Tribunal, Lahore(2005 PTD 1368), M/s
Sun Rise Bottling Company (Pvt.) Ltd Vs Federation of Pakistan and 4 others,
(2006 PTD 535), M/s Karachi Shipyard and Engineering Works Ltd Karachi Vs Additional
Collector Customs, Karachi(2006 PTD 2207), M/s Pak Suzuki Motors
Company Ltd Vs Collector of Customs, Karachi, (2006 PTD 2237) and M/s
Mari Petroleum Company Ltd Vs Appellate Tribunal Inland Revenue and others(2016
PTD 2406).
Besides the above judgments, the
FBR vide Circular-Letter No:7(20)S(IR-Operations) 202 dated 12.10.2021
categorically asked the concerned Chief Commissioners IR to avoid unnecessary
hazards of litigation and coercive measures for the recovery of disputed tax
demands until the case has passed the test of appeal at the level of learned
Commissioner IR (Appeals). It is pertinent to mention that under section 214 of
the Ordinance, the orders, instructions, and directions issued by the Board are
binding on the lower authorities except for the Commissioner (Appeals) in the
exercise of his appellate function.
11. There is another instance of the RO's action
demonstrating the high-handedness and the callous approach. The department is
required before invoking section 140 ibid to issue notice intimating the
taxpayer regarding the invocation of section 140 and requiring him to make
payment of the tax liability within a reasonable time. The Hon’ble High Court
in the case titled Sultan Mahmood Khan Vs Deputy Commissioner Inland Revenue and 3
others, (2015 PTD 458) has held that after insertion of Article 10A
in the Constitution of Pakistan, fair trial and due process are fundamental
rights of every citizen for determination of civil rights and obligations. In
the instant case, no notice was served on the applicant before invoking section
140, therefore, the impugned action of the revenue authorities seeking recovery
from the bank of the taxpayer is without lawful authority. Reliance may also be
placed on the case titled Huawei Technologies Pakistan (Pvt) Ltd Vs
CIR and others, (2016 PTD 1799).
12. Further, as per section 140 of the
Ordinance, the power to issue the notice is vested in Commissioner whereas the
impugned notice dated 26.09.2022 was issued by the Deputy Commissioner IR. The
learned DR was specifically asked to place on record the jurisdictional order,
if any, issued by the Commissioner IR under section 210 of the Ordinance
specifically delegated his power to the Deputy Commissioner IR. The DR has not
placed on record such an order despite giving the opportunity. Thus, the action
taken by the DCIR under section 140 is illegal and void ab-initio. Hence, the entire
proceedings initiated by the RO against the applicant taxpayer were without
jurisdiction. When the foundation lacks a legal mandate, the entire
superstructure built thereon would surely fall. Reliance may be placed
on the judgment titled Moulana Atta Ur Rehman Vs Al-Hajj Sardar
Umer Farooq and others (PLD
2008 SC 663) wherein it was held that:-
“In the same string are the cases reported as Rehmatullah
and others v. Saleh Khan and others (2007 SCMR 729), Punjab Workers' Welfare
Board Government of Punjab and Human Resources Department, Lahore v. Mehr Din
(2007 SCMR 13), Muhammad Tariq Khan v Khawaja Muhammad Jawad Asami (2007 SCMR
818) and All Pakistan Newspapers Society v. Federation of Pakistan and others
(PLD 2004 SC 600). The learned High Court has not appreciated the law laid down
in the above-reported cases. It is
well settled that when the basic order is without lawful authority and void ab
initio, then the entire superstructure raised thereon falls to the ground
automatically as held in Yousaf Ali v. Muhammad Aslam Zia (PLD 1958 SC 104)”.
(Emphasis supplied)
13. We are living in a democratic setup and the
taxpayers deserve to be respected for their contribution to national
development. Public servants are expected to discharge their functions
dutifully but not unreasonably. The officers are supposed to work diligently
but not harassingly. It is absolutely necessary for the Department of Revenue
to gain public trust and confidence by acting judiciously and avoiding undue
harassment. We appreciate the scheme of rewarding honest and diligent officers
of the Department but also feel that there is a necessity of identifying
overzealous officers harassing the taxpayers by misusing their powers and
creating a bad name for the Department. In this case, the action of the revenue
authorities in the existence of the stay order, disobeying the binding
judgments of High Courts and Apex Court and not following the clear
instructions of the FBR, the recovery of the disputed demand from the Banks is
highly improper, unwarranted and bad in law. The action of the revenue
authorities is also unreasonable for the reason that they were well aware that
the application of extension in stay is fixed for 26.09.2022 before the
Tribunal. We accordingly hold that in the peculiar facts and circumstances of
the case, the RO has recovered the sum of Rs. 88 million from the Banks
unlawfully and prima facie with a zeal of bad faith.
14. The second question that arises is as to
whether the Tribunal has the power to direct refund of the tax recovered by the
revenue authorities without the authority of law. In this connection, it is a
firmly established rule that an express grant of statutory power carries with
it by necessary implication, the authority to use all reasonable means to make
the such grant effective (Sutherland Statutory Construction, Third Edition,
Arts. 5401 and 5402). The powers which have been conferred by sections 131 and
132 of the Ordinance on the Tribunal with the widest possible amplitude
must carry with them by necessary implication all powers and duties incidental
and necessary to make the exercise of those powers, fully effective. In Domat's
Civil Law Cushing's Edition, Vol. 1 on page 88, it has been stated:
"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."
15. Maxwell on Interpretation of Statutes,
Eleventh Edition, contains a statement at p. 350 that:
"where an Act confers a
jurisdiction, it impliedly also grants the power of doing all such acts or
employing such means, as are essentially necessary to its execution. Cui
jurisdiction data est, ea quoque concessaessevidentur, sine quibus jurisdiction
explicari non-potuit." An instance is given based on Ex. parte Martin(x)
that "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."
16. It
is well known that an Appellate Tribunal Inland Revenue exercises judicial
powers and is the first independent forum outside the departmental hierarchy.
The Tribunal's powers in dealing with appeals are of the widest amplitude and
have in some cases been held similar to and identical with the powers of an
appellate court under the Civil Procedure Code (see section 224 of the
Ordinance). It
is difficult to conceive that the legislature should have left the entire
matter to the administrative authorities to make such orders as they choose to
pass in the exercise of unfettered discretion. In the case of Polini
v. Gray (1879) 12 Ch. D 438, that
"It appears to me on the
principle that the Court ought to possess that jurisdiction because the
principle which underlies all orders for the preservation of the property
pending" litigation is this, that the successful party in the litigation,
that is, the ultimately successful party, is to reap the fruits of that
litigation, and not obtain merely a barren success".
17. The argument of the learned counsel for the
respondents that the applicant taxpayer should now move an application for a refund
under section 170 of the Ordinance is also totally misconceived for the reason
that the recovery itself was illegal and there is no reason for the applicant
to move an application before the respondents for a refund of amounts illegally
recovered. The Hon'ble Supreme Court of Pakistan in the case titled Attock
Cement Pakistan Ltd. v. Collector of Customs, Collectorate of Customs and
Central Excise, Quetta and 4 others, (1999 PTD 1982) has condemned
the extraordinary zeal shown by the respondents for the recovery of amounts
from the appellant on the ground that an impatient department with a view to
achieving a target of recovery of revenue also reflects upon the mala fide of
their demand. In the instant case, the notice under section 140 of the
Ordinance was issued on 26.09.2022 to the banks without giving time for the
payment to the Commissioner as required under section 140(1) ibid and in the
presence of the stay order. This clearly suggests undue haste on the part of
the RO to recover amounts from the Banks. Therefore, the Revenue authorities
have acted in total disregard of the orders of the Appellate Tribunal and due
process. Reliance may also be placed on FESCO Vs Federation of Pakistan and
others, (2014 PTD 1549).
18. Considering the above principles of law and
the law laid down by the Courts the Tribunal has the statutory power to grant a
stay of recovery and all other powers to make the power effective, we hold that
in appropriate cases the Tribunal has all the powers relating to the
subject-matter of appeal including the power of granting a stay of recovery and
refund of tax recovered by the Revenue authorities. In this view of the matter,
we are of the considered view that the Tribunal has the power to direct the
Revenue authorities to refund the tax recovered by the RO unlawfully by
misusing his powers. Since the RO has misused his powers and made an unlawful
recovery, we consider it our public law duty to curb such a trend and maintain the
confidence of the public in the administration of justice and the rule of law.
We are conscious of the fact that the power to direct refund of tax when the
appeal is pending in the Tribunal is to be exercised only in exceptional cases.
In our view, this case falls within the category of such exceptional cases. If
we do not interfere in this case it would amount to allowing a public servant
to circumvent the law and prevent the subjects from taking recourse to the
legal remedies available to them. It will amount to our failure to discharge
our duty. Thus, the
act and conduct of the revenue officials, in this case, are against the
judicial conscience. Canons of law, justice, and ethics have been violated by
the officials of the Department. An effort has been made to render the
provisions of the law inoperative, debarring the taxpayer from availing of the
benefit given by this Tribunal by way of interim relief. This Tribunal cannot
be a silent spectator of the arbitrary and illegal action on the part of the department
and RO so as to frustrate the legal process provided under the Ordinance.
19. We, accordingly exercise our power under
section 132 (6) of the Ordinance and direct the revenue authorities to refund a
sum of Rs. 88 million recovered from the Banks to the applicant taxpayer within
a period of seven days from the date of service of this order otherwise the law
shall take its course.
20. We would now like to deal with the last
issue arising in this case, as to whether, on the facts and in the
circumstances of this case, the appropriate strictures and necessary
disciplinary instructions against the revenue authorities be passed? To begin
with, for the exercise of any statutory discretion, public policy always remains at the top of relevant
considerations. Reliance is placed on De Smith’s Judicial Review (7th
Edition);andDH Travels v. Commissioner Enforcement,(2018 PTD 657).
It is always in the interest of public
policy that statutory discretion is exercised in accordance with the
law. As stated by the Tribunal in the case of Shahid Impex v. Director
General, Karachi,(2014 PTD Trib. 674), whenever an order is passed
by an officer without caring whether jurisdiction vests in him or not, its prima-facie, reflects on his conduct as
well as competency. The Tribunal went on to hold that if there is an abuse of
power by such an officer then no hesitation should be felt in passing stringent
stricture against the officer. In the instant case, RO violated the stay order
of this Tribunal in daylight and abused the discretion by making recovery in a
manner not supported by the law. In the case of Golden Plastics v. Secretary
Revenue, Islamabad,(2003 PTD 779), the Federal Tax Ombudsman held
that non-compliance of appellate order, disobeying and disregarding it, by the
assessing officer is tantamount to indiscipline, insubordination, and
maladministration, making the officer liable to suitable disciplinary action.
21. Let us set
out the relevant provisions for disciplinary matters. Under the Government
Servant (Efficiency and Discipline) Rules 1973, the grounds of efficiency under
section include inefficiency and misconduct. Under section 7(1) of the FBR Act,
2007, the Chairman, FBR has the power to decide a representation against “any act of maladministration,
corruption, and misbehavior by any officer or employee of the Board or any
unnecessary delay or hardship”. Under section 9(1) of the Establishment of
Office of Federal Tax Ombudsman Ordinance, 2000, the Ombudsman can “investigate any allegation of
maladministration on part of the Revenue Division or any Tax Employee.”
22. Keeping
in view the above, the matter is referred to the learned Chairman, FBR to look
into the conduct of the concerned officers namely, (1) Dr. Nasir Khan, Chief
Commissioner, CTO, Islamabad; (2) Mr. Mohiuddin Ismail, Commissioner IR
(Enforcement), CTO, Islamabad, and (3) Miss Alishpa Asif, Deputy Commissioner IR,
Enforcement Unit-V, CTO, Islamabad within the purview of section 7 of the FBR
Act, 2007. The learned Chairman, FBR shall pass a speaking order, after
affording an opportunity of hearing to the concerned officers within a period
of 30 days from this order, under intimation to the Registrar, Appellate
Tribunal Inland Revenue, Islamabad. Thereafter, the taxpayer applicant shall be
at liberty to approach the Federal Tax Ombudsman, Islamabad to investigate the
allegation of maladministration if so advised. Hence, let a copy of this order
be sent to the learned Chairman, FBR, and Federal Tax Ombudsman, Islamabad for
necessary action.
23. As far as
the obstruction of justice (to interfere
with or obstruct or interrupt or prejudice the process of law or the due course
of any judicial proceedings) is concerned, that is a matter squarely
covered under section 3 of the Contempt of Court Ordinance, 2003. It is
reproduced below:-
“3. Contempt of Court. Whoever disobeys or disregards any order, direction, or process of a Court, which he is legally bound to obey; or commits a willful breach of a valid undertaking given to a court; or does anything which is intended to or tends to bring the authority of a court or the administration of law into disrespect or disrepute, or to interfere with or obstruct or interrupt or prejudice the process of law or the due course of any judicial proceedings, or to lower the authority of a court or scandalize a judge in relation to his office, or to disturb the order or decorum of a court, is said to commit "contempt of court". The contempt is of three types, namely, the "civil contempt", "criminal contempt" and "judicial contempt".
24. Let a
copy of this order be delivered to the learned Registrar (Judicial), Islamabad
High Court, with a reference that the Hon’ble Islamabad High Court may be
graciously pleased to deal with this question of contempt proceedings within
the meaning of Section 3 of the Contempt of Court Ordinance, 2003.
25. CONCLUSION
i.
We direct the revenue authorities to
refund/return a sum of Rs. 88 million recovered from the Banks to the applicant
taxpayer within a period of seven days from the date of service of this order
otherwise the law shall take its course.
ii. We refer the matter to the learned Chairman, FBR to look into the conduct of the concerned officers namely, (1) Dr. Nasir Khan, Chief Commissioner, CTO, Islamabad; (2) Mr. Mohiuddin, Commissioner IR (Enforcement), CTO, Islamabad, and (3) Miss Alishpa Asif, Deputy Commissioner IR, Enforcement Unit-V, CTO, Islamabad within the purview of section 7 of the FBR Act, 2007. The Chairman shall pass a speaking order, after affording an opportunity of hearing to the concerned officers within a period of 30 days from this order, under intimation to the Registrar, Appellate Tribunal Inland Revenue, Islamabad. Thereafter, the taxpayer applicant shall be at liberty to approach the Federal Tax Ombudsman, Islamabad to investigate the allegation of maladministration if so advised.
iii. We refer the matter to the learned Registrar (Judicial), Islamabad High Court, with a reference that the Hon’ble Islamabad High Court may be graciously pleased to deal with this question of contempt on the judicial side, as to whether the concerned officers namely, (1) Dr. Nasir Khan, Chief Commissioner, CTO, Islamabad; (2) Mr. Mohiuddin, Commissioner IR (Enforcement), CTO, Islamabad, and (3) Miss Alishpa Asif, Deputy Commissioner IR (RO) Enforcement Unit-V, CTO, Islamabad have been guilty of contempt of Court by violating the stay order of this Tribunal.
26. The titled applications are disposed of in
the above terms.
27. This order consists of (19) pages and each
page bear my signature.
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|
(M. M. AKRAM) JUDICIAL MEMBER |
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(MUHAMMAD IMTIAZ)
ACCOUNTANT MEMBER |
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