M/s LMK Resources Pakistan (Pvt) Ltd Vs The Commissioner IR, Zone 1, LTO, Islamabad.

 

APPELLATE TRIBUNAL INLAND REVENUE, DIVISION BENCH-1

ISLAMABAD

 

STA No.493/IB/2024

 

M/s LMK Resources Pakistan (Pvt) Ltd; 9th Floor, No.55-C. PTET/ U Fone Tower, Jinnah Avenue, Islamabad.		Appellant
	Vs
The Commissioner Inland Revenue, Zone-I, LTO, Islamabad.		Respondent
Appellant by		Mr. Waseem Abbass, ITP
Respondent by		Mr. Imran Shah, DR
Date of hearing		28.10.2024
Date of order		28.10.2024

O R D E R

M.M. AKRAM (JUDICIAL MEMBER):The titled appeal was transferred on September 11, 2024, by the Commissioner Inland Revenue (Appeals), LTO, Islamabad, under sub-section (4) of section 43A of the Sales Tax Act, 1990, as introduced through the Tax Laws (Amendment) Act, 2024, and further amended by the Finance Act, 2024.

2.      The Tax Laws (Amendment) Act, 2024, introduced changes to the Sales Tax Act, 1990, affecting the filing of appeals and reference applications before the Commissioner (Appeals), the Appellate Tribunal Inland Revenue (ATIR), and the High Court. These amendments establish monetary thresholds for filing appeals and reference applications with these appellate authorities and courts. Alongside these updates, new provisions, including section 43A of the Sales Tax Act, 1990, were added and later modified through the Finance Act, 2024. These provisions specify the financial jurisdiction for appeals based on established monetary limits, as follows:

Section 43A. Pecuniary jurisdiction in appeals.- (1) Subject to other provisions of this Act,-

 

(a)            an appeal to the Commissioner (Appeals) shall lie where the value of assessment of tax or, as the case may be, refund of tax does not exceed ten million rupees; or

(b)            an appeal to the Appellate Tribunal Inland Revenue shall lie where the value of assessment of tax or, as the case may be, refund of tax exceeds ten million rupees.

 

(2)     A person or, as the case may be, officer of Inland Revenue aggrieved by an order of the Commissioner (Appeals) in cases under clause (a) of sub-section (1) may file a reference before the High Court in accordance with section 133 of the Income Tax Ordinance, 2001(XLIX of 2001).

(3)     A person or, as the case may be, officer of Inland Revenue aggrieved by an order of the Appellate Tribunal in cases under clause (h) of sub-section (1) may file a reference before the High Court in accordance with section 133 of the Income Tax Ordinance, 2001 (XLIX of 2001).

(4)     The cases pending before the Commissioner (Appeals) having the value of assessment of tax or, as the case may be, refund of tax exceeding ten million rupees shall on and from the 31st day of December, 2024 stand transferred to the Appellate Tribunal Inland Revenue.

(5)     All cases transferred from the Commissioner (Appeals) to the Appellate Tribunal under sub-section (4) shall be decided by the Appellate Tribunal within the period provided for under section 132 of the Income Tax Ordinance, 2001 (XLIX of 2001) which period shall commence from the 16th day of June, 2024. (Emphasis supplied)

3.      As mentioned, the titled appeal was transferred on September 11, 2024, from the office of the Learned Commissioner Inland Revenue (Appeals-IV) to this Tribunal. The following questions arise from the record:

i.       What does the phrase "on or from 31st December, 2024" in sub-section (4) signify, and can the Commissioner transfer case to the Tribunal before this date?

ii.      Does the Commissioner (Appeals) have the authority to decide all pending cases before the transfer takes place?

To address question (i), we must examine the phrase "on and from the 31st day of December, 2024" in sub-section (4). This phrase indicates that the transfer of cases exceeding ten million rupees in value from the Commissioner (Appeals) to the Appellate Tribunal Inland Revenue will take effect starting on December 31, 2024, and continue thereafter. Essentially, December 31, 2024, serves as a cutoff date, mandating that:

1.   All qualifying cases pending before the Commissioner (Appeals) as of that date (exceeding ten million rupees in value) must be transferred to the Tribunal.

2.   After this date, any new or remaining cases meeting the pecuniary threshold of exceeding ten million rupees should also be directed to the Tribunal instead of being handled by the Commissioner (Appeals).

Transfer Prior to December 31, 2024

 

The language of sub-section (4) does not provide the Commissioner (Appeals) with the authority to transfer cases before December 31, 2024. The phrase "on and from" implies that December 31, 2024, is the earliest date at which this automatic transfer takes effect, and the provision is silent on any ability or requirement for the Commissioner to initiate transfers to the Tribunal before that date.Thus, prior to December 31, 2024, the Commissioner (Appeals) retains jurisdiction over cases even if they exceed ten million rupees in value, and the transfer of these cases to the Tribunal would only happen starting December 31, 2024.

4.      In response to question (ii), yes, before the transfer of cases to the Appellate Tribunal, the Commissioner (Appeals) retains full authority to decide all pending cases. Sub-section (4) specifies that cases exceeding ten million rupees will be transferred to the Appellate Tribunal effective December 31, 2024. Until that date, the Commissioner maintains full jurisdiction to adjudicate these cases and can continue to make decisions on any pending appeals prior to the transfer.

5.      This new regime is set to take effect on May 3, 2024. To manage the transition to the new appeal regime at the CIR(A) level, the legislature designated December 31, 2024, as the date from which cases exceeding the threshold of PKR 10 million will be transferred to the ATIR, while cases valued at or below PKR 10 million will remain with the CIR(A). This transition was necessary because cases might have been listed or nearing conclusion at the CIR(A) during the interim period (May 3, 2024, to December 31, 2024). Therefore, a transition period was required to smoothly switch from the old regime to the new regime, transferring cases from the CIR(A) to the ATIR. Hence, to preserve the taxpayer’s rights, section 46 of the Act includes the phrases "Subject to section 43A" and "Commissioner (Appeals)". For ease of reference, the relevant part of section 46 of the Sales Tax Act, 1990 is reproduced below:

"Section 46. Appeal to the Appellate Tribunal.“(1) Subject to section 43A, any person, other than an SOE, aggrieved by any order passed by an Officer of Inland Revenue, or the Board or Commissioner (Appeals) under this Act or the rules made there under may, within thirty days of the receipt of such order, prefer an appeal to the Appellate Tribunal or, as the case may be, a reference to the High Court:

Provided that where sub-section (11) of section 134A of Income Tax Ordinance, 2001(XLIX of 2001) shall apply, an SOE may prefer an appeal under this sub-section.” (Emphasis supplied)

 

Additionally, the phrase "or, as the case may be, a reference to the High Court" supports the spirit of clause (a) of subsection (1) of Section 43A and subsection (2) of Section 43A to remove any doubts regarding cases decided during the gap period of May 3, 2024, to December 31, 2024, where the value of the tax assessment or refund is below PKR 10 million. Any other interpretation would render the legislative text redundant or undermine the concept of a single appeal regime.

6.      Based on the reasons outlined above, the office is instructed to promptly return the appeal to the Commissioner Inland Revenue (Appeals) from whom the appeal was originally transferred.

	Sd/- (M. M. AKRAM) JUDICIAL MEMBER
Sd/- (IMRAN LATIF MINHAS)  ACCOUNTANT MEMBER