Commissioner Inland Revenue, Withholding Zone, RTO, Islamabad. Vs M/s SAZ Enterprises (Zarkoon Heights), Zarkoon Heights, G.T Road, Sector G-15, Islamabad.

 

APPELLATE TRIBUNAL INLAND REVENUE, DIVISION BENCH-I,

ISLAMABAD

ITA No.1484/IB/2018

(Tax Years 2015 to 2017)

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Commissioner Inland Revenue, Withholding Zone, RTO, Islamabad.		Appellant
	Vs
M/s SAZ Enterprises (Zarkoon Heights), Zarkoon Heights, G.T Road, Sector G-15, Islamabad. NTN:4053283-6		Respondent
Appellant By:		Mr. Mobeen Sajjad, DR
Respondent By:		Mr. Rizwan Haider, ITP
Date of Hearing:		25.06.2025
Date of Order:		25.06.2025

ORDER

M. M. AKRAM (Judicial Member): The titled appeal has been filed by the appellant Department to assail the appellate Order No. 911/2018 dated June 8, 2018, passed by the learned Commissioner Inland Revenue (Appeals-II), Withholding Zone, Regional Tax Office, Islamabad, in relation to tax years 2015 to 2017. The present appeal has been preferred on the grounds detailed in the accompanying memorandum of appeal.

2.      The brief facts giving rise to this appeal are that the respondent taxpayer was considered liable to collect/deduct Capital Value Tax (CVT) under section 7(7) of the Finance Act, 1989, on the transfer of immoveable properties at the prescribed rates. It was alleged that the taxpayer failed to fulfill its statutory obligations as a withholding agent in respect of such transfers. In this regard, the assessing officer issued notices to the taxpayer, seeking details of CVT paid on the land on which the project "Zarkoon Heights" is constructed. Consequently, the assessing officer concluded the audit proceedings and passed the order vide DCR No. 96/14 dated April 31, 2018.

3.      Being aggrieved by the said order, the taxpayer preferred an appeal before the learned Commissioner Inland Revenue (Appeals-II), Withholding Zone, RTO, Islamabad. The learned CIR(A), vide the impugned appellate order No. 911/2018 dated June 8, 2018, vacated the assessment order and deleted the CVT demand. Dissatisfied with the said decision, the Department has now instituted the instant appeal before this Tribunal, challenging the appellate order.

4.      The matter was taken up for hearing on June 23, 2025. At the very outset, the learned Authorised Representative (AR) for the respondent taxpayer was called upon to address the preliminary issue regarding the maintainability of the appeal filed before the learned Commissioner Inland Revenue (Appeals) [CIR(A)] against the impugned order, which had been passed under section 7(7) of the Finance Act, 1989. It was specifically highlighted that the said statutory provision merely incorporates select provisions of the Income Tax Ordinance, 2001, for the limited purpose of collection and recovery of Capital Value Tax (CVT), and does not, in express terms, provide a statutory right of appeal against such an order.

In response, the learned AR for the respondent taxpayer asserted that a right of appeal does indeed exist in such cases, contending that where tax is imposed and recovery proceedings are undertaken, the affected party must be afforded an opportunity to contest the matter through the appellate mechanism. In support of this contention, the learned AR placed reliance upon judicial precedents reported as 2003 PTD 1249 and 2006 PTD 967, which were cited as affirming the taxpayer’s right to appeal in matters arising under similar statutory frameworks. Furthermore, reliance was also placed upon Circular No. 9 of 1997, dated July 24, 1997, purportedly issued by the Federal Board of Revenue, which, according to the AR, supports the proposition that the appellate remedy is available in such instances.

5.      Conversely, the learned Departmental Representative (DR) opposed the arguments advanced by the taxpayer, contending that section 7(7) of the Finance Act, 1989, does not confer any appellate right upon the taxpayer against an order passed thereunder. It was submitted that the said provision strictly pertains to the collection and recovery of CVT, and cannot be construed as incorporating a full appellate framework of the Income Tax Ordinance, 2001. On this basis, the learned DR argued that the appeal before the learned CIR(A) was not maintainable in law and, therefore, the impugned appellate order was passed without lawful authority and merits reversal.

FINDINGS:

6.      We have given due consideration to the arguments advanced by both parties and have carefully examined the material available on record. Capital Value Tax (CVT) was introduced under section 7 of the Finance Act, 1989, and has undergone several amendments over time. As per the statutory scheme, the responsibility for collecting CVT was primarily vested in the registering or attesting authorities. Prior to its amendment through the Finance Act, 2003, sub-section (7) of section 7 provided for the application of section 32 of the Wealth Tax Act, 1963, for the collection of CVT.

Pursuant to the amendments introduced by the Finance Act, 2003, the legislative reference to section 32 of the Wealth Tax Act was substituted with a reference to Part IV of Chapter X of the Income Tax Ordinance, 2001. The word “Act” at the end of the sub-section was also substituted with the word “Ordinance”, thereby limiting the applicability of the Income Tax Ordinance to matters exclusively relating to the collection and recovery of CVT.

7.      It is pertinent to observe that the provisions contained in Part IV of Chapter X of the Income Tax Ordinance, 2001 (i.e., sections 137 to 146B) solely pertain to the procedural aspects of the collection and recovery of tax dues. In contrast, the appellate framework of the Income Tax Ordinance, 2001, is encapsulated within Part III of Chapter X (i.e., sections 127 to 136), which falls outside the scope of incorporation under section 7(7) of the Finance Act, 1989, as amended.

In view of the foregoing, it is manifestly clear that the legislature has not conferred a statutory right of appeal in respect of orders passed under section 7(7) of the Finance Act, 1989. The judicial precedents cited by the respondent taxpayer, including the cases reported as 2003 PTD 1249 and 2006 PTD 967, pertain to the legal framework prior to the amendments introduced by the Finance Act, 2003, and are therefore inapplicable to the matter at hand.

8.      It is a well-settled principle of law that the right to file an appeal is not inherent but must be expressly provided for by statute. The superior judiciary of Pakistan has consistently held that an appeal is a creature of statute and can only be availed of where specifically granted by law. Reference in this regard may be made to the authoritative pronouncements of the Hon’ble Supreme Court of Pakistan in Mughal Surgical (Pvt.) Ltd. v. Presiding Officer, Punjab Labour Court No. 7 and others (2006 SCMR 590), Muzaffar Ali v. Muhammad Shafi (PLD 1981 SC 94), and Malik Umar Aslam v. Mrs. Sumaira Aslam and others (2014 SCMR 45), wherein it has been consistently held that a statutory right of appeal cannot be presumed and must be explicitly conferred by the legislative enactment.

9.      In the present case, there is no dispute that the order in question was passed by the Assessing Officer on April 31, 2018, under section 7 of the Finance Act, 1989. The said order was subsequently challenged by the respondent taxpayer before the learned Commissioner Inland Revenue (Appeals) under section 127 of the Income Tax Ordinance, 2001. However, as elaborated above, the legal framework governing CVT, post the 2003 amendment, does not envisage or permit the filing of an appeal against such orders. Therefore, the appeal entertained by the learned CIR(A) was without lawful authority, and the resultant appellate order was passed without jurisdiction. Accordingly, the impugned appellate order is hereby vacated, and the original order passed by the Assessing Officer is restored to its legal effect.

10.    Accordingly, the appeal of the appellant department is accepted.

 

 

	-SD- (M. M. AKRAM) JUDICIAL MEMBER
-SD- (MUHAMMAD NAEEM ASHRAF) MEMBER