C. P. NO. D-2728 / 2014
Present:
Mr. Justice Aqeel Ahmed Abbasi.
Mr. Justice Muhammad Junaid Ghaffar.
M/S Advance Telecom -------------------------------------------------- Petitioner
Versus
The Federation of Pakistan & others ------------------------------- Respondents
Date of hearing: 22.09.2014
Petitioner: Through Iqbal Salman Pasha Advocate.
Respondent No. 1: Through Mr. Dilawar Hussain Standing Counsel
Commissioner Inland
Revenue, Zone-III,
RTO-III, Karachi: Through Mr. Jawaid Farooqui Advocate.
Respondent No. 3& 4: Through Mr. M. Sarfaraz Ali Metlo Advocate.
Assisted by Mr. Asif Jamali Deputy Commissioner,
Inland Revenue RTO-II, Karachi.
J U D G M E N T
Muhammad Junaid Ghaffar, J. Through instant petition the petitioner has impugned notice dated 12.5.2014 issued under Section 48(1) of the Sales Tax Act 1990, whereby the Bank account being maintained by the Petitioner at Bank Al-Falah Limited M. A. Jinnah Road Branch, Karachi has been attached and an amount of Rs. 34,789,711/- has also been recovered on the basis of such notice.
2. Briefly, the facts as stated in the memo of petition are that the petitioner is an Importer of mobile / cellular phones which, for the purposes of jurisdiction are classified as electronic goods and such jurisdiction in respect of Income Tax and Sales Tax affairs, rests with Commissioner Inland Revenue, Zone III, RTO-III, Karachi on the basis of Notification bearing No. C.No.57 (2) Jurisdiction/2011-Vol-V/2187-R dated 31.12.2012. It is the case of the petitioner that Sales Tax is being paid by the petitioner on mobile / cellular phones at the import stage in terms of SRO 460(1)/2013 dated 30.5.2013, which represents final tax liability and no further Sales Tax is required to be paid on further sale and supply of imported mobile / cellular phones. It is further stated that the petitioner has been regularly filing its Sales Tax Return through the E-Portal of FBR by showing output tax as Nil. The case of the petitioner is that neither any show cause notice was ever issued to the petitioner before the attachment of Bank accounts, nor any such notice could have been issued by the respondent No. 4 as the respondent No. 4 had no jurisdiction to monitor the Sales Tax affairs of the petitioner, therefore the impugned notice issued in terms of section 48(1) of the Sales Tax Act 1990 is liable to be set aside.
3. Mr. Iqbal Salman Pasha learned Counsel for the petitioner has contended that the petitioner is being regularly assessed by the office of Commissioner Inland Revenue, Zone III, RTO-III, Karachi for the purposes of Income Tax and Sales Tax on the basis of aforesaid Notification dated 31.12.2012, whereby at Serial No. 3 it has been provided that all individuals, corporate or non-corporate persons or classes of persons, dealing in Electronics & Electric goods, would fall within the jurisdiction of Commissioner Inland Revenue, Zone III, RTO-III, Karachi. Learned Counsel further contended that the Commissioner Inland Revenue, Zone III, RTO-III, Karachi vide letter dated 10.2.2014 has even initiated audit proceedings under Section 177 of the Income Tax Ordinance 2001 against the petitioner, which clearly establishes that the jurisdiction in the case of petitioner, falls with Commissioner Inland Revenue, Zone III, RTO-III, Karachi. Learned Counsel further contended that even otherwise on merits of the case, the petitioner is already paying Sales Tax on the import of mobile phones in terms of SRO 460(1)/2013 dated 30.5.2013, which according to the learned Counsel, is the final discharge of Sales Tax liability of the petitioner and no further sales tax is required to be paid by the petitioner at the time of supply /sale of mobile phones. Per learned Counsel, therefore, no notice could even otherwise be issued for the recovery of the alleged short payment of Sales Tax.
4. Conversely Mr. Muhammad Sarfaraz Ali Metlo learned Counsel appearing on behalf of respondents No. 3 & 4 has contended that in terms of Section 11-A of the Sales Tax Act, 1990 the respondents No. 3 & 4 were justified to effect recovery of the short paid amount of sales tax and since it has been provided under Section 11-A of the Sales Tax Act, 1990, that the short paid amount can be recovered without issuance of a notice, therefore, the respondents No. 3 & 4 were justified to issue notice of attachment under Section 48(1) of the Sales Tax Act, 1990, for attachment of Petitioners Bank account. Per learned Counsel the jurisdiction over the case of the petitioner, at the time of issuance of the attachment notice vested with Commissioner Inland Revenue, Zone I, RTO-II, Karachi, as the petitioner is registered as a wholesaler of electronic items and telecommunication equipment, and since the business address of the petitioner falls within the territorial limits of Saddar Town, Karachi, hence, Commissioner Inland Revenue, Zone I, RTO II Karachi, has jurisdiction over the case of the petitioner in view of FBR Notification C.No.57(2) Jurisdiction/2011/103736-R dated 30.6.2012, and on the basis of this Notification, the petitioner cannot claim that the jurisdiction of its affairs lies with Commissioner Inland Revenue, Zone III, RTO-III, Karachi. Learned Counsel further submitted that the case of the petitioner was transferred to Commissioner Inland Revenue, Zone-III, RTO-III, Karachi, subsequent to issuance of impugned notice dated 12.5.2014, on 24.6.2013 on the specific request of Chief Commissioner RTO-III, Karachi vide its letter dated 30.5.2014. In view of such contention learned Counsel submitted that instant petition being misconceived is liable to be dismissed in limine.
5. Pursuant to Court notices issued to the respondents, Mr. Jawaid Farooqui learned Counsel has entered appearance on behalf of Commissioner Inland Revenue, Zone III, RTO-III, Karachi and has contended that the impugned action was lawfully initiated by the respondents No. 3 & 4 in terms of Section 11-A read with Section 48(1) of the Sales Tax Act, 1990 as the petitioner is required to pay Sales Tax at the time of sale and supply of the mobile phones, in addition to the Sales Tax being paid at import stage in terms of SRO 460(1)/2013 dated 30.5.2013. However, learned Counsel has referred to the Para wise comments filed by the Commissioner Inland Revenue, Zone-III, RTO-III, Karachi, wherein in response to Para 4 of the petition, it has been admitted that the petitioner has been doing business of import and supply of mobile phones and the jurisdiction in respect of the petitioner lies with Commissioner Inland Revenue, Zone III, RTO-III, Karachi.
6. We have heard all the learned Counsel and perused the record. Since a short controversy is involved, by consent of all the learned Counsel, instant petition is being disposed of at Katcha peshi stage.
7. It appears that admittedly the petitioner is engaged in the business of import and supply of mobile / cellular phones having its business address within the limits of Saddar Town, Karachi. The case of the petitioner is, that the jurisdiction over the business affairs of the petitioner in respect of Income Tax and Sales Tax, lies with Commissioner Inland Revenue, Zone III, RTO-III, Karachi, vide Notification dated 31.12.2012 issued by FBR, wherein it has been provided that all individuals, corporate or non-corporate persons or classes of persons, dealing with any electronic and electric goods as Manufacturers/ Traders / Distributors / Importers / Exporters would fall within the jurisdiction of Commissioner Inland Revenue, Zone III, RTO-III, Karachi. Whereas, the case of the respondents No. 3 & 4 is, that the jurisdiction over the affairs of the petitioner's Income Tax and Sales Tax matters lies with Commissioner Inland Revenue, Zone I, RTO-II, Karachi, on the basis of Notification dated 30.6.2012, vide serial No.1 (c), which provides that all individuals, corporate or non-corporate persons or classes of persons (other than those assigned to any other LTU/RTO/Zone) falling within the territorial limits of Saddar Town, Karachi are to be governed by Commissioner Inland Revenue, Zone I, RTO-II, Karachi. It is the case of the respondents No. 3 & 4 that they have acted on the basis of this Notification dated 30.6.2012 and by exercising powers under Section 11-A of the Sales Tax Act, 1990 have issued the impugned notice of attachment under Section 48(1) of the Sales Tax Act, 1990 for recovery of the outstanding amount of Sales Tax against the petitioner. To have a better understanding of the controversy in hand, it would be advantageous to reproduce the relevant portion of the Notifications dated 30.6.2012 and 31.12.2012 which reads as follows:-
"GOVERNMENT OF PAKISTAN
REVENUE DIVISION
FEDERAL BOARD OF REVENUE
************
C.No.57 (2) Jurisdiction/2011/103736-R Islamabad 30th June, 2012
NOTIFICATION
(Inland Revenue Wing, FBR)
Subject:- JURISDICTION OF COMMISSIONERS INLAND REVENUE, REGIONAL TAX
OFFICE-III, KARACHI.
In exercise of the powers conferred under sub-section (1) of section 209 of the Income Tax Ordinance, 2001, sub-section (1) of Section 30 and section 31 of the Sales Tax Act, 1990, sub-section (1) of Section 29 of the Federal Excise Act, 2005, and in supersession of the all earlier orders or notifications of the Board in respect of jurisdiction of RTO-II, Karachi, the Federal Board of Revenue is pleased to direct that the Commissioners of Inland Revenue specified in column (2), shall exercise the powers and functions, as specified in column (3), in respect of the persons or classes of persons or cases or classes of cases or arrears as specified in column (4) of the Table below (excluding cases or cases of cases or persons or classes of persons assigned to other RTOs/LTUs).
2. This notification shall take effect from 01.07.2012.
TABLE
|
S.No. |
Commissioner Inland Revenue |
Powers & functions |
Jurisdiction |
|
1 |
2 |
3 |
4 |
|
01. |
Commissioner Inland Revenue (Zone-I), RTO-II, Karachi |
The Commissioner Inland Revenue shall exercise powers and perform functions as assigned in:
(a) Income Tax Ordinance, 2001, and Rules there under:
(b) Sales Tax Act, 1990 and Rules there under;
(c) Federal Excise Act, 205 Rules there under;
(d) Wealth Tax Act, 1963 (Repeated) and
(e) Finance Act, 1989 (Act No. V of 1989), as amended vide Finance Act, 2010 |
(a) All individuals, corporate or non-corporate persons or classes of persons of the following sectors whose place of business is situated in the areas, falling within the limits of former Civil Division Karachi:-
i)………………
ii) ……………..
b) ……………..
c) All non-corporate cases or classes of cases or persons or classes of persons (other than the cases assigned to any other LTU/RTO/Zone) falling within the territorial limits of Saddar Town of Civil District of Karachi.(emphasis supplied)
d)------- e) ------ f) ------- g) ------
|
"GOVERNMENT OF PAKISTAN
REVENUE DIVISION
FEDERAL BOARD OF REVENUE
************
C.No.57(2)Jurisdiction/2011-Vol-V/2187-R Islamabad 31st December, 2012
NOTIFICATION
(Inland Revenue Wing, FBR)
Subject:- JURISDICTION OF COMMISSIONERSINLAND REVENUE, REGIONAL TAX
OFFICE-III, KARACHI.
In exercise of the powers conferred under sub-section (1) of section 209 of the Income Tax Ordinance, 2001, sub-section (1) of Section 30 and section 31 of the Sales Tax Act, 1990, sub-section (1) of Section 29 of the Federal Excise Act, 2005, and in supersession of the all earlier orders or notifications of the Board in respect of jurisdiction of RTO-III, Karachi, (except the jurisdiction of Chief Commissioner of RTO-III, Karachi) the Federal Board of Revenue is pleased to direct that the Commissioners of Inland Revenue specified in column (2), shall exercise the powers and functions, as specified in column (3), in respect of the persons or classes of persons or cases or classes of cases or arrears as specified in column (4) of the Table below (excluding cases or cases of cases or persons or classes of persons assigned to other RTOs/LTUs).
2. This notification shall take effect from 01.01.2013.
TABLE
|
S.No. |
Commissioner Inland Revenue |
Powers &functions |
Jurisdiction |
|
1 |
2 |
3 |
4 |
|
03. |
Commissioner Inland Revenue (Zone-III), RTO-III, Karachi |
The Commissioner Inland Revenue shall exercise powers and perform functions as assigned in:
(a) Income Tax Ordinance, 2001, and Rules there under:
(b) Sales Tax Act, 1990 and Rules there under;
(c) Federal Excise Act, 205 Rules there under;
(d) Wealth Tax Act, 1963 (Repeated) and
(e) Finance Act, 1989 (Act No. V of 1989), as amended vide Finance Act, 2010 |
All individuals, corporate or non-corporate persons or classes of persons whose place of business is situated in the areas, falling within the limits of former Civil Division Karachi:-
I. …….
II. ……..
III……….
IV. ………
V. Electronics & Electric goods Manufacturers / Traders / Distributors / Importers / Exporters.
VI. ------------
VII. -----------
VIII. ----------
IX. -----------
X. ------------
XI. ----------- |
8. From perusal of the above Notifications, it appears that the contention of respondents No. 3 & 4 is entirely misconceived and not based upon the proper interpretation and appreciation of law. The Notification dated 30.6.2012, on which the respondents No. 3 & 4 have placed reliance, is in fact a Notification which confers jurisdiction vide serial No. 1 (c) to only such classes of persons who have their business addresses within the limits of Saddar Town, Karachi, but, such jurisdiction is not exercisable in case of those classes of persons who have been assigned to any other LTU/RTO/Zone. The case of Petitioner and like persons have been assigned to other RTO, subsequently vide Serial No.3 of Notification dated 31.12.2012, whereby the jurisdiction in respect of the petitioner and other such type of persons dealing in electronics and electric goods as Manufacturers/ Traders / Distributors / Importers / Exporters has been conferred upon the office of Commissioner Inland Revenue, Zone III, RTO-III, Karachi. Therefore, we are of the view that FBR itself has specially assigned the case of the petitioner to Commissioner Inland Revenue, Zone III, RTO-III, Karachi, through Notification dated 31.12.2012, hence; the jurisdiction over the affairs of the petitioner's business in respect of Income Tax and Sales Tax affairs would not fall under Serial No.1 (c) of Notification dated 30.6.2012. In reaching this conclusion we have also taken into account the candid admission brought before us through Para wise comments filed by the Commissioner Inland Revenue, Zone III, RTO-III, Karachi, whereby it has been admitted that the jurisdiction in respect of the petitioner's case vests with Commissioner Inland Revenue, Zone III, RTO-III, Karachi. In view of such undisputed position we are of the view that the impugned action initiated by respondents No. 3 & 4, whereby notice under Section 48(1) of the Sales Tax Act1990, dated 12.5.2014 was issued and the Bank accounts of the petitioner were attached, was without jurisdiction and any lawful authority, hence, liable to be declared as void ab-initio. It is trite law that exercise of jurisdiction by an authority is a mandatory requirement and its non-fulfillment would entail the entire proceedings to be Coram non-judice. When the statute specifically provides and vests jurisdiction in a particular Court, forum or authority, an attempt by any other Court, forum or authority to take cognizance of the matter or to initiate any proceedings, would render such proceedings non-est in the eyes of law, void ab-initio and of no legal effect. All the authorities performing functions under any statute must conduct themselves strictly within the domain and jurisdiction vested in them under the law and not otherwise. All such actions which have been initiated on the basis of such defective jurisdiction cannot be sustained, and all subsequent actions taken purportedly on the basis of such defective jurisdiction are also liable to be declared illegal, void ab-initio as if the same were never initiated. If any authority is needed, we may refer to the case of Mansab Ali Vs. Amir and 3 others reported in PLD 1971 SC 124 wherein the Hon’ble Supreme Court has observed as follows:-
"It is an elementary principle that if a mandatory condition for the exercise of jurisdiction by a Court, tribunal or authority is not fulfilled, then the entire proceedings which follow become illegal and suffers from want of jurisdiction. Any order passed in continuation of these proceedings in appeal or revision equally suffers from illegality and are without jurisdiction. The learned Advocate General fully supported this view and asked for dismissal of the appeal."
9. Though, we have held that the impugned action was without any lawful authority and jurisdiction, however, we may further observe that even otherwise the action which was taken purportedly in terms of Section 11-A read with section 48(1) of the Sales Tax Act, 1990 is also misconceived and without any lawful authority, as the instant matter on its facts and circumstances do not attract the provisions of Section 11-A of the Sales Tax Act, 1990. It would be advantageous to refer to the said provision which reads as under:-
"[11A. Short paid amounts recoverable without notice.---
Notwithstanding any of the provisions of this Act, where a registered person pays the amount of tax less than the tax dues as indicated in his return, the short paid amount of tax along with default surcharge shall be recovered from such person by stopping removal of any goods from his business premises and through attachment of his business bank accounts, without giving him a show cause notice and without prejudice to any other action prescribed under section 48 of this Act or the rules made there under:
Provided that no penalty under section 33 of this Act shall be imposed unless as show cause notice is given to such person.]"
10. From perusal of the above provision it appears that where a registered person pays the amount of tax less than the tax due as indicated in his return, the short paid amount of tax along with default surcharge shall be recovered from such person by stopping removal of goods from his business premises and through attachment of his business bank account without giving him a show cause notice and without prejudice to any other action prescribed under Section 48 of the Act or the rules made there under. The respondents No. 3 & 4 have tried to take shelter under this provision of the Sales Tax Act, however, we are of the view that such stance of respondents No. 3 & 4 is entirely misconceived, as this provision relates to a situation when a registered person has paid the amount of tax, which is other than the tax due as indicated in his return. This would mean that if a registered person files its return and indicates any amount in the said return as payable, and fails to pay the said amount of tax which is due on the basis of the return itself, an action under Section 11-A of the Sales Tax Act, 1990, can be initiated by the respondent department, whereas in the instant matter the petitioner is disputing the amount being claimed by the respondents as due, as according to the petitioner they have already paid and discharged the liability of the tax due at the time of import in terms of SRO 460(I)/2013 dated 30.05.2013 and are not required to pay any further tax at the stage of sale and supply of the mobile phones imported by them. The petitioners return of Sales Tax do not disclose any amount which is due, and has not been paid, hence the case of the petitioner does not fall within the ambit of section 11-A of the Sales Tax Act, 1990, as erroneously claimed by respondents No. 3 & 4. If the interpretation placed by respondents No. 3 & 4 is accepted, then the provision of Section 11 of the Sales Tax Act, 1990, which provides for assessment and recovery of tax not levied or short levied or erroneously refunded, would become redundant and such redundancy cannot be attributed to the legislature which again is a settled principle of law.
11. In view of herein above facts and circumstances of the case, we are of the view that the impugned action taken by respondents No. 3 & 4 by issuing attachment notice under Section 48(1) of the Sales Tax Act, 1990 and the recovery of the amount of Rs. 34,78,9711/- is illegal and without any lawful authority and jurisdiction. Consequently, we had allowed instant petition vide short order dated 22.9.2014, whereby, we had directed the respondents to refund the said amount recovered unlawfully, within three days from the order of this Court. These are the reasons of the short order.
J U D G E
J U D G E