Commissioner Inland Revenue, Zone-IV, LTO, Islamabad. Vs M/s Supernet Limited.

 

APPELLATE TRIBUNAL INLAND REVENUE, DIVISION BENCH-I,

ISLAMABAD

ITA No.1305/IB/2024

(Tax Year 2018)

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Commissioner Inland Revenue, Zone-IV, LTO, Islamabad.		Appellant
	Vs
M/s Supernet Limited; 75-East, Instaphone Plaza, Blue Area, Islamabad.		Respondent
Appellant By:		Ms. Najwa Farooq, DR
Respondent By:		Mr. Tipu Saeed, Advocate
Date of Hearing:		14.11.2024
Date of Order:		14.11.2024

ORDER

M. M. AKRAM (Judicial Member): The titled appeal was filed on May 17, 2024, by the appellant department under the newly substituted Section 131 of the Income Tax Ordinance, 2001 ("the Ordinance"). The appeal challenges the appellate order dated April 30, 2024, issued by the Commissioner Inland Revenue (Appeals-I), LTO, Islamabad, for the tax year 2018, based on the grounds outlined in the memorandum of appeal.

2.      The titled appeal was heard on multiple occasions. As recorded in the order sheet dated September 11, 2024, the learned AR for the respondent raised objections regarding the applicability of Section 131 of the Ordinance, which was amended through the Tax Laws (Amendment) Act, 2024. The amended provision introduced the term "person" as defined under Section 2(42), read with Section 80 of the Ordinance. Furthermore, the term "Commissioner" is separately defined in Section 2(13) of the Ordinance. The following key issue was identified for determination:

Does the term "Commissioner," as defined in Section 2(13) of the Income Tax Ordinance, 2001, fall within the scope of "person" as defined in Section 2(42), read with Section 80 of the Ordinance, thereby entitling the Commissioner to file an appeal under the newly substituted Section 131?  

As a result, the learned DR was directed to submit a written explanation on the matter. In response, the learned DR submitted a letter dated October 2, 2024, through the Commissioner Inland Revenue (CIR). It was argued that the second appeal was filed against the CIR(A)'s impugned order dated April 30, 2024, before the implementation of the amendment. The DR asserted that, at the time of filing the appeal on May 17, 2024, the unamended provision of Section 131(1) was applicable, which allowed either the "taxpayer or Commissioner" to file an appeal before the Appellate Tribunal.

3.      Analysis and Findings/Observations: 

A.   Chronology and Applicability: The instant appeal was filed on 17.05.2024, after the substitution of Section 131 through the Tax Laws (Amendment) Act, 2024, which became effective from 03.05.2024. The substituted Section 131(1) stipulates:

"131. Appeal to the Appellate Tribunal. —(1) Subject to Section 126A, any person, other than an SOE, aggrieved by any order passed by an officer of Inland Revenue, Commissioner, Chief Commissioner, Board, or Commissioner (Appeals) under this Ordinance or its rules may, within thirty days of receiving such order, appeal to the Appellate Tribunal or refer the matter to the High Court."

Prior to the amendment, Section 131(1) stated:

 

"131. Appeal to the Appellate Tribunal. —(1) Where the taxpayer or Commissioner objects to an order passed by the Commissioner (Appeals), the taxpayer or Commissioner may appeal to the Appellate Tribunal against such order."

B.   Interpretation of the Revised Law: The comparison reveals a significant change in the terminology. The pre-amendment provision explicitly mentioned "taxpayer or Commissioner," granting both parties the right to file an appeal. However, the substituted provision replaces these terms with "any person," which broadens the scope of entities eligible to file an appeal but excludes State-Owned Enterprises (SOEs).

C.   Application to the Current Appeal: The filing date (17.05.2024) falls under the amended/substituted Section 131 through the Tax Laws (Amendment) Act, 2024 became operational after the assent of the President of Pakistan on 03.05.2024. It is settled law that when an Act of Parliament provided that it will come into force at once then every provision of it became enforceable from the day the Act received the assent of the President unless any provision of the Act itself suggested that it would come into force only when some authority nominated in such behalf so decided or on the happening of an event. Where the legislature intended to leave a matter for the Federal Government to decide before it was given effect then it specifically stated so in the law itself. Reliance is placed on the judgment titled M/s Khurshid Soap & Chemical Industries (Pvt) Ltd & others Vs Federation of Pakistan, (PLD 2020 SC 641), Mst. Ummatullah through Attorney Vs Province of Sindh and six others, (PLD 2020 Kar 236) and Muhammad Nawaz Abbasi Vs Federation of Pakistan and four others, (2012 PLC (C.S) 1037). Therefore, the right to appeal must be assessed in light of the new terminology. The learned DR’s reliance on the prior provision does not align with the amended legal framework, which was already in effect by the time the appeal was lodged.

Conclusion 

The amendment to Section 131 fundamentally alters the legal landscape, replacing "taxpayer or Commissioner" with "any person," as the basis for filing an appeal. Given that the instant appeal was filed after the amendment's effective date, the rights and obligations under the substituted Section 131 govern the matter. Consequently, the learned DR’s argument citing the unamended provision lacks merit in this context. The appeal's maintainability must therefore be evaluated strictly within the parameters of the amended law.

4.      The question of whether the term "Commissioner," as defined in Section 2(13) of the Income Tax Ordinance, 2001, falls within the scope of "person" as defined in Section 2(42), read with Section 80 of the Ordinance, thereby entitling the Commissioner to file an appeal under the newly substituted Section 131 requires careful analysis of the statutory language and intent.

Analysis:

Definition of "Person": 

·       Section 2(42) defines "person" as having the same meaning as provided in Section 80.

·       Section 80(1) enumerates categories of persons, including individuals, companies, associations of persons, and various types of legal and artificial entities such as governments and trusts.

·       The definition does not explicitly include "official designations" such as the "Commissioner" within its scope.

·       Definition of "Commissioner" (Section 2(13)):

o   Section 2(13) separately defines the "Commissioner" as an officer of Inland Revenue. This suggests that the Commissioner is considered a distinct legal entity in the context of the Ordinance, not necessarily a "person" as contemplated under section 2(42).

o   The Commissioner, as an officeholder or authority, does not have an independent legal personality unless the statute explicitly provides it.

o   The term "person" under sections 2(42) and 80 is generally intended to refer to taxpayers or entities with legal standing to act in a personal or representative capacity for taxation purposes.

2.   Substituted Section 131:

o   The revised section 131 permits only "any person, other than an SOE," to file an appeal to the ATIR. It does not explicitly include the Commissioner within the scope of "person."

o   In contrast, the previous version of section 131 explicitly allowed both the "taxpayer" and the "Commissioner" to appeal to the ATIR. The removal of the term "Commissioner" from the revised provision appears deliberate.

o   Likewise, the newly substituted Section 133 of the Ordinance continues to use the terms "aggrieved person" or "Commissioner" in relation to filing a reference application before the High Court.

3.   Legislative Intent:

The exclusion of the term "Commissioner" from the substituted section suggests that the legislature intended to limit the appeal rights to persons as defined under section 2(42). If the Commissioner were to retain the right to appeal, the language of section 131 would likely have mirrored the previous version by expressly including the "Commissioner."

4.   Harmonious Interpretation:

The principle of harmonious construction requires that statutory provisions be read in a way that does not render any term redundant. It is a trite law that while interpreting the law, in particular, fiscal laws, the provisions be construed such that between two or more reasonable constructions of their terms that which will save them should prevail. The statute should be read as a whole, and all possible efforts should be made to apply and adhere to the rules of purposive and harmonious construction so that the allegedly conflicting provisions can be reconciled and saved. Reliance is placed on the judgments reported as Waqar Zafar Bakhtawari v. Mazhar Hussain Shah (PLD 2018 SC 81), Lucky Cement LTD v. Commissioner Inland Tax (2015 SCMR 1494); Collector of Sales Tax and Central Excise (Enforcement) v. Mega Tech (Pvt.) Ltd. (2005 SCMR 1166); Abdul Saboor v. Federation of Pakistan (2024 PTD 517); and Reliance Commodities (Private) Ltd v. Federation of Pakistan, (2020 PTD 1464). The separate definition of "Commissioner" in section 2(13) and the substitution of section 131 likely indicates that the Commissioner, as an officer of Inland Revenue, is not automatically considered a "person" for the purposes of filing an appeal under the new section 131.

Conclusion:

The substituted section 131 appears to restrict the right to appeal to the Appellate Tribunal to "any person" as defined under section 2(42), which does not explicitly include the Commissioner. Therefore, under the new section 131, the Commissioner may not have the right to appeal to the ATIR.

5.      In light of the foregoing discussion, the department's appeal is dismissed as not maintainable under the newly substituted/amended Section 131 of the Ordinance, 2001. 

 

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