ARSHAD MAHMOOD VS ADDITIONAL DISTRICT JUDGE, JHELUM
1999 P T D 704
[Lahore High Court]
Before Malik Muhammad Qayyum, J
R.A.C. ASSOCIATES (PVT:) LIMITED through Riaz Ahmad Chowhan, Director
Versus
CENTRAL BOARD OF REVENUE through Chairman, Islamabad and another
Writ Petition No.21861 of 1998, decided on 28/10/1998.
Income Tax Ordinance (XXXI of 1979)---
----S.85(2)---C.B.R. Circular No.3 of 1997, dated 18-2-1997---Constitution of Pakistan (1973), Art.199---Payment of tax on demand---Power of Inspecting Additional Commissioner to grant stay of payment ---C.B.R. Circular No.3 imposed restriction on Inspecting Additional Commissioner to the effect that stay could be granted subject to 30 % payment of the impugned demand---Validity---Circular No.3 of 1997 issued by the Central Board of Revenue on 18-2-1997 being without any lawful authority and of no legal effect, the question of grant of stay should be decided by the concerned Authority without being in any manner influenced by the conditions imposed in such circular.
1993 SCMR 1232 ref.
Mian Ashiq Hussain for Petitioner. Shafqat Mahmood Chauhan for Respondent.
Date of hearing: 28th October, 1998.
JUDGMENT
This petition under Article 199 of the Constitution of Islamic Republic of Pakistan, 1973 arises out of the following circumstances:---
2. The petitioner is a Company incorporated under the Companies Ordinance, 1984 and is carrying on its business of estate development. It filed its return of income for the assessment year 1995-96 declaring loss of Rs.80,826. On 30-6-1998, respondent No.2 passed an ex parte order under section 63 of the Income Tax Ordinance, 1979 against the petitioner. The petitioner challenged the aforesaid order by filing an appeal before the Commissioner of Income Tax (Appeals). He also applied to the Inspecting Additional Commissioner for grant of interim order restraining the respondents from enforcing the impugned demand pending the decision of appeal. He was, however, confronted with Circular No.3 of 1997, dated 18-2-1997 issued by the Central Board of Revenue to the effect that while granting stays, it should be ensured that 30% of the amount is recovered immediately and for the recovery of remaining 70% no coercive measures shall be taken for a period of 3 months from the date of assessment order or the order of the Appellate Authority. The petitioner feeling aggrieved of the aforesaid order has filed the present petition.
3. Mian Ashiq Hussain, learned counsel for the petitioner has contended that the impugned circular is contrary to the provisions of section 85(2) of the Income Tax Ordinance, 1979 which empowers the relevant Authority to grant stay of payment of tax or to allow the payment of tax in instalment without placing any embargo that no stay can be granted with respect to 30% of the impugned demand. According to the learned counsel, Central Board of Revenue could not issue administrative instructions which tend to take away the judicial power of the Authority hearing the appeal.
4. Mr. Shafqat Mahmood Chauhan, learned counsel appearing on behalf of the respondents has defended the impugned circular by arguing that it does not in any manner militate against the judicial power and the Authority is free to interpret the law without being dictated by the Central Board of Revenue and further that the impugned circular is not based upon interpretation by any provision of the Act but it is purely administrative in nature.
5. Before proceeding further it appears to be useful to reproduce sub? para. 3 of Circular No.3 of 1997 which is relevant for the present purpose: ---
"It has now been decided that 30% of the demand shall be recoverable as soon as it is raised, while no coercive measures shall be taken for recovery of the remaining 70% of the tax demand up to a period of 3 months from the date of an assessment order, and whereas the assessee has filed an appeal against such an order."
6. Subsection (2) of section 85 of the Income Tax Ordinance, 1979 reads as under: ---
"Notwithstanding anything contained in subsection (1), where the assessee or any other person on whom a notice under the said subsection has been served makes an application for granting stay of payment of the tax or for allowing payment in instalments, the Inspecting Additional Commissioner may, subject to the provision of section 89, stay the payment of tax till such time as he thinks fit or allow the payment of tax in such instalments as he may determine. "
7. It may also be stated that earlier the provision was that 15 % of the amount had to be deposited as a condition for grant of stay but the proviso to that effect was omitted by Finance Act, 1996 with the result that the condition for deposit of 15 be of the amount stood removed. In these circumstances, clearly when the Legislature itself has manifested its view by removing the bar, the same could not be imposed in an indirect manner by the Central Board of Revenue by issuing administrative instructions.
8. So far as the power of the Central Board of Revenue is concerned, it is unnecessary to enter into detailed discussion in view of the clear pronouncement of the Supreme Court in Central Insurance Company v. Central Board of Revenue (1993 SCMR 1232) in which it was observed that: ---
"Though the Central Board of Revenue has administrative control over the functionaries discharging their functions under the Ordinance, but it does not figure in the hierarchy of the forum provided for adjudication of assessees' liability as to the tax. Any interpretation placed by the Central Board of Revenue, on a statutory provision cannot be treated as a pronouncement by a forum competent to adjudicate upon such a question judicially or quasi?-judicially. The Central Board of Revenue cannot issue any administrative direction to the nature which may interfere with the judicial or quasi judicial functions interested to the various functionaries under a Statute. The instructions and directions of the Central Board of Revenue are binding on the functionaries discharging their functions under the Ordinance in view of section 8 so long as they are confined to the administrative matters. The interpretation of any provision of the Ordinance can be rendered judicially by the hierarchy of the forums provided for under the above provisions of the Ordinance, namely, the Income-tax Officer, Appellate Assistant Commissioner, Appellate Tribunal, the High Court and the Supreme Court and not by the Central Board of Revenue. In this view of the matter the interpretation placed by the Central Board of Revenue on the relevant provisions of the Ordinance in the Circular, can be treated as administrative interpretation and not judicial interpretation. "
9. This brings into bold relief, the nature of interference which can be made by the Central Board of Revenue while exercising control over the functionaries. The power to grant interim relief is a judicial or at least quasi judicial in nature. The discretion of the Inspecting Additional Commissioner when he is to grant stay order in an appropriate case without insisting on the payment of 30% in advance could not be whittled down or controlled by the Central Board of Revenue by issuing a circular which tend to interfere with the exercise of statutory powers and cannot be upheld.
In view of what has been said above, this petition is allowed and Circular No.3 of 1997 issued by the Central Board of Revenue on 18-2-1997 is declared to be without any lawful authority and of no legal effect with the result that the question of grant of stay shall be decided by the concerned Authority without being in any manner influenced by the aforesaid circular.
No order as to costs.
C.M.A./R-76/L??????????????????????????????????????????????????????????????????????????????????? Petition allowed