Income Tax Ordinance (XXXI of 1979)

----S. 129---Workers' Welfare Fund Ordinance (XXV of 1971), S.4---Appeal against levy of Workers' Welfare Fund comes within the ambit of S.129 Income Tax Ordinance, 1979---levy of Workers' Welfare Fund is appealable under S.129, Income Tax Ordinance, 1979 for no separate appellate machine, has been created for hearing appeals under Workers' Welfare Fun a Ordinance, 1979.

Nemo for Appellant.

Syed Humayoon Zaidi, D.R. for Respondent.

Date of hearing: 31st May, 1992.

ORDER

MUHAMMAD MUJIBULLAH SIDDIQUI (JUDICIAL MEMBER).---The above appeal is directed against the order dated 27-5-1991 by the learned Commissioner of Income-tax (Appeals), Zone II. Karachi it, I.TA. No. C.I.T. (A-II)/547/1990 relating to the assessment year 1989-90.

2. None present for the appellant though duly served with the notice of hearing. The service of notice on the appellant is held good and the appeal is heard ex parte with the assistance of learned D.R.

3. A perusal of the grounds of appeal shows that the sole grievance of the appellant is that the learned C.I.T. (A) was not justified in dismissing the first appeal as non-maintainable.

4. Briefly stated relevant facts giving rise to this appeal are that the appellant, a private limited company, filed return declaring income in Part I and Part II. Income of Rs.1,59,459 was shown which was claimed to be exempt under clause 119 of the Second Schedule to the Income Tax Ordinance, 1979. The appellant derived income from manufacturing and sale of steel wool used for washing and cleaning of utensils which is manufactured out of iron scrap and steel. The appellant's factory is situated in tax holiday area of Hub, district Lesbela of Balochistan Province, which enjoys tax-holidy under clause 119 of the Second Schedule to the Income Tax Ordinance, 1979. Therefore, the plea of exemption of the income was allowed. The trading account as declared was accepted. The taxable income was taken at nil. However, Workers Welfare Fund was levied amounting to Rs.3,127.

5. Being aggrieved with this treatment, the appellant submitted rectification application before the Assessing Officer contending that since the appellant's income was exempt from tax under the Second Schedule, the Workers Welfare fund was not leviable upon it. The assessing officer refused to rectify the order and hence first appeal was preferred. The learned C.I.T.(A) held that the appeal was not maintainable under section 129 of the Income Tax Ordinance, 1979 for the following reasons:--

"Workers Welfare Fund is a levy imposed under the Workers' Welfare Fund Ordinance, 1971 and not under the provisions of Income-tax - Ordinance, 1979. The I.T.O. is only authorised to collect it on behalf of the Federal Government at the time of making Income Tax assessment of an `Industrial Establishment' as defined in the W.W.F. Ordinance. The question as to whether a person falls under the definition of an industrial Establishment or not and whether such levy is imposable on exempt income or not, are questions which can only be answered with reference to the provisions of Workers' Welfare Fund Ordinance and not those of the Income Tax Ordinance. The levy of W.W.F. is, however, not appealable under the provisions of section 129 of the I.T. Ordinance, 1979 and therefore, I am of the considered opinion that so far as the questions raised in this appeal are concerned. I am not competent to pass any judgment on them.

It may be pertinent to observe here that every statute which levies any tax or duty, contains within itself machinery not only for the administration and collection of such levy, but also for appeals and revisions so as to safeguard the interest of the tax-payers. An officer of one tax collecting department may be entrusted with the task of collecting any such levy imposed through another statute, but the appeals and revisions against such levy can only be instituted under the provisions of the taxing statute. For example, both Excise and Customs authorities are entrusted with the task of collection of sales tax at various stages. However, appeal against levy of the sales-tax lies under the Sales Tax Act and not under the provisions of Customs or Excise Acts.

In view of the foregoing discussion, the question sought to be agitated by the appellant cannot be entertained and the appeal, being inadmissible is dismissed in limine:'

6. Being aggrieved with the above finding the appellant has preferred second appeal before us.

7. A perusal of the impugned order of the learned C.I.T.(A) shows that the main consideration which prevailed with him was that, since the Workers Welfare Fund is levied under the Workers Welfare Fund Ordinance, 1971, therefore, the appeal should also be preferred under the provisions of Workers Welfare Fund Ordinance, 1971, before the authorities empowered under the said Ordinance. The learned C.I.T.(A) has observed in his order that:--

"It may be pertinent to observe here that every statute which levies any tax or duty, contains within itself machinery not only for the administration and collection of such levy, but also for appeals and revisions so as to safeguard the interest of the tax-payers. An officer of the tax collecting department may be entrusted with the task of collecting any such levy imposed through another statute, but the appeals and revisions against such levy can only be instituted under the' provisions of the taxing statute."

8. The above finding of the learned C.I.T.(A) shows that he is of the view that Workers Welfare Fund Ordinance, 1971 is a self-contained Act and a complete code in itself like Income. Tax Ordinance, 1979 or Customs Act or Sales Tax Act but in doing so he has fallen in error because he has made these observations without going through the provisions contained in Workers Welfare Fund Ordinance, 1971. Section 4 of the Workers Welfare Fund Ordinance, 1971 which empowers levy of Workers Welfare Fund on a total income of every industrial establishment which is not less than one lakh of rupees in any year of account reads as follows:--

"Mode of payment by, and recovery from industrial establishments.----- (1) Every industrial establishment, the total income of which in any year of account commencing on or after the date specified by the Federal Government in the official Gazette in this behalf is not less than one lakh of rupees shall pay to the Fund in respect of that year a sum equal to two per cent of so much of its total income as is assessable under the Ordinance or would have been so assessable but for the exemption made by section 48 thereof.

(2) Every industrial establishment, which is liable under subsection (1) shall pay the amount due from it to the Income Tax Officer having jurisdiction over the industrial establishment for purposes of the Ordinance.

(3) The industrial establishment shall, on or before the date on which it is required to furnish a return of income under section 55 of the Ordinance, pay the amount due from it under subsection (1) calculated with reference to the total income reported in the said return.

(4) At the time of making an assessment under the Ordinance, or as soon thereafter as may be, the Income Tax Officer shall, by order in writing, determine the amount due from industrial establishment under subsection (1), if any, on the basis of the income so assessed after taking into account the amount paid by the industrial establishment under subsection (3) in respect of the year and the industrial establishment shall pay the amount so determined on or before the date specified in the order.

(5) Any change by way of enhancement or reduction in the assessed income subsequent to the assessment made under the Ordinance shall be given effect to by adjustment of the amount due under subsection (1).

(6) Any amount paid by an industrial establishment under subsection (3) which is found, on the basis of an order in appeal or revision under the Ordinance to have been paid in excess shall be refunded to it by the Income-tax Officer.

(7)The payment made by an industrial establishment to the Fund under subsection (1) shall be treated as an expenditure- for purposes of assessment of income-tax.

(8) Where any industrial establishment fails to pay the amount due from it as required under this section, it shall, without prejudice to any other liability, to which it may be subject under this Ordinance or any other law, be liable to pay an additional amount equal to eight per cent per annum of the amount due from it from the date on which it was originally liable to the date on which it is paid.

(9) The provisions of the Ordinance, relating to the mode and time of recovery of the Income-tax leviable under the Ordinance shall, so far as may be, apply to the recovery of the amount due under subsection (1)."

9. A perusal of the above section shows that no separate mechanism or structure has been provided for seeking redress by an aggrieved party. No appellate hierarchy is provided in the Workers Welfare Fund Ordinance. On the contrary, a perusal of section 4 of the Workers Welfare Fund Ordinance shows that the levy of Workers Welfare Fund has been assigned to the Income Tax Officer appointed under the Income Tax Ordinance, 1979 and the levy of Workers Welfare Fund has been treated as part of the assessment order; subsection (4) of section 4 clearly provides that at the time of making an assessment under the Income Tax Ordinance or as soon as thereafter the Income Tax Officer shall, by order in writing, determine the amount due from the industrial establishment under subsection (1), if any, on the basis of income so assessed. Subsection (5) of section 4 further provides that any change by way of enhancement or reduction in the assessed income subsequent to the assessment made under the Income Tax Ordinance shall be given effect to by adjustment of the amount due under subsection (1). It is further provided in subsection (6) that any amount paid by an industrial establishment under subsection (3) which is found on the basis of, an order in appeal or revision under the Income Tax Ordinance to have been paid in excess shall be refunded to it by the Income Tax Officer. All these provisions are indicative of the fact that the legislature intended to make the levy of Workers Welfare Fund a part of the assessment order. Thus, after coming to the above conclusion when we read section 129 of the Income Tax Ordinance, 1979, we find that it provides for filing of appeal by an assessee objecting to an order made by the Income Tax Officer under sections 59 or 59-A, 62, 63, 65 etc. As we have seen, every assessment order made by an Income Tax Officer under various provisions of the Income Tax Ordinance, 1979 is appealable before the AA.C./C.I.T.(A) under section 129 of the Income Tax Ordinance, 1979, on appeal agitating grievance in respect of the levy of Workers Welfare Fund comes within theambit of section 129 of the Income Tax Ordinance, 1979. In fact, the levy of Workers Welfare Fund under section 4 of the Income Tax Ordinance, 1979 has been made part of the assessment proceeding under the Income, Tax Ordinance, 1979 by way of legislation by reference and/or legislation by incorporation.

10. In the above circumstances, it is held that the learned C.I.T. (A) has misdirected in holding that the levy of Workers Welfare Fund is not appealable under provisions of section 129 of the Income Tax Ordinance, 1979 and that the appeal shall lie under the provisions contained in the Workers Welfare Fund Ordinance, 1971. No appellate machinery has been created for hearing appeals under Workers Welfare Fund Ordinance, 1971, and therefore, the view taken by the learned C.I.T.(A) is not sustainable in law. The impugned order of learned C.I.T.(A) is, therefore,, hereby vacated and the appeal is remanded back to the learned C.I.T.(A) with the direction to decide the same on merits after giving reasonable opportunity of being heard to the appellant.

11. The appeal is allowed as above.

M.B.A./1624/T Appeal allowed.