SARDAR BEGUM VS RASHID AHMAD
1993 P T D 713
[Lahore High Court]
Before Malik Muhammad Qayyum, J
FIRDOUS TEXTILE PRINTING MILLS (PVT.) LTD., FAISALABAD
versus
FEDERATION OF PAKISTAN through Secretary Finance and 5 others
Writ Petition No. 12063 of 1991, heard on 31/01/1993.
(a) Fixed Amount of Sales Tax (Processed Fabrics) Rules, 1991---.
----R. 5---Notification S.R.O. 783(1)/91, dated 17th August, 1991---Fixed amount of sales tax on power-driven machines in lieu of tax leviable on fabric---Notification levying such fixed tax was issued on 17th August, 1991-- Demand of fixed tax retrospectively---Validity---Authorities could not demand fixed tax before the date, especially when notification in question, itself did not purport to be retrospectively applicable---Notification which had the effect of imposing liability or obligation could not operate retrospectively in the absence of any legal sanction in the statute itself.
Commissioner of Sales Tax (West), Karachi v. Messrs Kruddsons Ltd. PLD 1974 SC 180; Kohinoor Textile Mills Ltd. v. Commissioner of Income Tax Lahore PLD 1974 SC 284; Messrs Army Welfare Sugar Mills Ltd. and others v. Federation of Pakistan and others 1992 SCMR 1652; Messrs Julian Hoshang Dinshaw Trust and others v, Income Tax Officer, Circle XVIII South Zone, Karachi and others 1992 SCMR 250; Commissioner of Sales Tax (West) Karachi v. Messrs Kruddsons Ltd. PLD 1974 SC 180 ref.
(b) Notification-
---- Notification which purports to impose a new liability or obligation cannot operate retrospectively in the absence of any legal sanction in the statute itself.
(c) Sales Tax (Amendment) Act, 1990---
----[As substituted by Finance Ad (VII of 1990), Sched. III)], S. 12-- Constitution of Pakistan (1973), Art. 199---Remedy available in the statute itself---Resort to Constitutional petition for such remedy not warranted-- Determination of the amount of tax having been made by the Superintendent, Sales Tax, remedy against such determination was available under S.12, Sales Tax (Amendment) Act 1990---Petitioner instead of invoking Constitutional jurisdiction should have gone in appeal under S.12, Sales Tax (Amendment) Act, 1990.
(d) Sales Tax (Processed Fabrics) Rules, 1991---
----R. 5---Liability of petitioner worked out on the basis of joint survey conducted by the petitioner's Association's representative and a team of respondents---Fact that such survey was conducted before the levy of fixed tax and promulgation of the rules viz. Sales Tax (Processed Fabrics) Rules, 1991, was of no consequence---Reliance on report of survey previously conducted would not amount to giving retrospective effect to notification---Procedural provisions, even otherwise, are retrospective in nature.
(e) Interpretation of statutes---
---- Procedural provisions are retrospective in nature.
(f) Fixed Amount of Sales Tax (Processed Fabrics) Rules, 1991--
---R. 5---Constitution of Pakistan (1973), Art.199---Demand for payment of fixed tax retrospectively---Validity---Fixed amount of Sales Tax (Processed Fabrics) Rules, 1991, were promulgated and came into force on 17th August, 1991---Demand for payment of fixed tax for the period from 1st July, 1991 to 17th August, 1991 (period prior to enforcement of Rules) was declared to be without lawful authority and of no legal effect.
Mian Saqib Nisar for Petitioner.
Sh. Maqbool Ahmad Standing Counsel for Pakistan.
Date of hearing: 31st January, 1993.
JUDGMENT
This judgment shall dispose of W.P. Nos. 12060, 12061, 12062, 12064, 12065 and 12066 of 1991. By the Notification No. SRO 781(1)/91 the Central Board of Revenue, in exercise of power vesting in it under section 3(4) of the Sales Tax Act, 1990, levied fixed amount of sales tax on power-driven machines in lieu of the tax leviable on fabrics described therein at the rates specified in the notification. On the same day, another notification bearing No. SRO 783(1)/91 was issued by the Board by which rules of the Fixed Amount of Sales Tax (Processed Fabrics) Rules, 1991 were promulgated in order to give effect to the Notification No. SRO 781(1)/91.
2. The grievances of the petitioner in this petition under Article 199 of the Constitution of Islamic Republic of Pakistan, 1973 are that firstly although fixed tax has been levied from 17th August, 1991, the respondents are demanding payment of the said tax for the period 1st July, 1991 to 17th August, 1991 also and secondly that as no joint survey was conducted by the respondents before determining the amount of tax payable by the petitioner, the demand is without any lawful authority.
3. In support of this petition, Mian Saqib Nisar, learned counsel for the petitioner has contended that as the notification levying fixed tax was issued on 17th August, 1991, the respondents cannot demand fixed tax before the date especially when the Notification itself does not purport to be retroactively applicable. It is also argued that a notification cannot be given retrospective effect in the absence of any provision to that effect in the statute itself. In support of this contention, learned counsel has relied upon Commissioner of Sales Tax (West), Karachi v. Messrs Kruddsons Ltd. PLD 1974 SC 180, Koh-i -Noor Textile Mills Ltd. v. Commissioner of Income Tax, Lahore PLD 1974 SC 284, Messrs Army Welfare Sugar Mills Ltd. and others v. Federation of Pakistan and others 1992 SCMR 1652 and Messrs Julian Hoshang Dinshaw Trust and others v. Income Tax Officer, Circle XVIII South Zone, Karachi and others 1992 SCMR 250.
4. There is considerable merit in the contention raised by the learned counsel for the petitioner. It is evident from a perusal of two notifications, first by which the fixed tax was levied and second by which rules were promulgated that these notifications have not been given any retrospective effect and, therefore, it is not understandable as to how the respondents can demand payment of tax from a date earlier than the issuance of the notifications.
5. It is trite law that a notification which has the effect of imposing liability or obligation cannot operate retrospectively in the absence of any legal sanction in the statute itself. In Messrs Army Welfare Sugar Mills Ltd. and others v. Federation of Pakistan and others 1992 SCMR 1652, Commissioner of Sales Tax (West), Karachi v. Messrs Kruddsons Ltd. PLD 1974 SC 180 and Koh-i-Noor Textile Mills Ltd. v. Commissioner of Income Tax, Lahore PLD 1974 SC 284, it was held by the Supreme Court that a notification which purports to impose a new liability or obligation cannot operate retrospectively in the absence of any legal sanction.
6. Faced with this situation; learned Standing Counsel has argued that the tax is being demanded with effect from 1st July, 1991 with the consent of and in consultation of All Pakistan Textile Processing Mills Association of which the petitioner is a member. However, nothing has been brought on record to substantiate this contention. Even in the para-wise comments filed by the respondents, there is no such assertion. This argument of the learned Standing Counsel is, therefore, without any factual basis and cannot be accepted. Furthermore, it is highly doubtful as to whether consent of an association of which petitioner is a member can be made the basis for levying a tax on it.
7. It flows from the above that demand of the respondents for the payment of fixed tax for the period 1st July, 1990 to 17th August, 1991 is clearly without any lawful authority especially when the notifications themselves do not purport to have any retrospective operation.
8. The other objection of the learned counsel for the petitioner is that according to the rule 5 of the Fixed Amount of Sales Tax (Processed Fabrics) Rules, 1991, the amount of tax was to be determined on the basis of joint survey to be conducted by a representative of All Pakistan Textile Processing Mills Association and an officer of the Sales Tax nominated by the Collector subsequent to the promulgation of the rules and as that exercise has not been undertaken, the quantification of the liability of the petitioner is illegal.
9. In this respect, it has been pointed out by the learned Standing Counsel that the determination of the amount of tax has been made by the Superintendent, Sales Tax and if the petitioner feels that the amount has not been worked out properly, it should have availed of the-remedies available to it under the Sales Tax Act, 1990 rather than rushing to this Court by filing this petition. This objection of the learned Standing Counsel is well-founded. There is no reason as to why the petitioner should not have gone in appeal against the order of the Superintendent under section 12 of the Sales Tax Act, 1990.
10. Even on merits, contention of the learned counsel is not well-founded. As has been contended by the learned Standing Counsel and admitted by the learned counsel for the petitioner, a, team comprising of a representative of All Pakistan Textile Processing Mills Association and of the Collector of Sales Tax had conducted the survey on the basis of which the liability of the petitioner has been worked out. The objection of the learned counsel for the petitioner however is that as the aforesaid survey was made before the levy of fixed tax and promulgation of the rules, it could not be taken into consideration. This argument is not well-founded.
11. There is nothing in the Fixed Amount of Sales Tax (Processed Fabrics) Rules, 1991 on the basis of which contention of the learned counsel can be sustained. Rule 5 merely requires that while making a declaration, a copy of the verified report of that survey team consisting of one representative of the Association and an officer of Sales Tax nominated by the Collector shall be annexed with it. It does not prove that the survey should have been conducted after coming into force of the rules. The report may well be of asurvey which was conducted even prior to the enforcement of the rules.
12. Learned counsel for the petitioner has however argued that the reliance on the report of survey previously conducted would amount to giving retrospective effect to notifications. This contention is not borne out by the language of rule but even if it be so, it is well settled that procedural provisions are retrospective in nature.
For the reasons aforesaid, this petition succeeds only to the extent that demand for payment of fixed tax for the period 1st July, 1991 to 17th August, 1991 is declared to be without lawful authority and of no legal effect. No order as toto costs.
A.A./F-72/LPetition partly accepted.