(a) Interpretation of statutes---

---- Fiscal statute---Preamble---While interpreting a fiscal statute Court must look at all the words of statute and interpret the same in the light of what is clearly expressed and Court has no jurisdiction to imply anything which is not expressed.

Messrs Hanjama & Company v. Commissioner 1971 SCMR 128 and Collector of Customs' case 1977 SCMR 371 rel.

(b) Interpretation of statutes---

----Fiscal statute---Preamble---Principle of strict construction---Application of---Principle of strict construction of fiscal statute is applicable only to taxing provisions, such as charging provisions, and not to those parts of statutes which contain machinery provisions.

1980 TLR 185 rel.

(e) Interpretation of statutes---

----Fiscal statute ---Recovery---Machinary provision---Interpretation of-- Principles ---Machinary provision of a fiscal statute should be interpreted in such a manner that recovery is not frustrated or adversely affected---To achieve the object of recovery one cannot travel beyond the spirit of law and cause violence to the language and intention of the statute---Machinery provision can be extended only to the extent it is permissible under the law-- One cannot override the rights of other parties only because a recovery has to be made---Such provisions have their own limitation and they are to be found within the statute itself.

Commissioner of Income-tax v. Maithram Ranjidas AIR 1940 PC 124 and Messrs Escart Limited's case 1975 PTD 570 rel.

(d) Interpretation of statutes---

---- Fiscal statute---Machinery provisions of fiscal statute should be liberally construed to ensure recovery.

Province v. K.B. Amiruddin PLD 1953 Lah. 433; PLD 1956 FC 220 and Lt.-Col. Nawabzada Muhammad Amir Khan's case PLD 1961 SC 119 rel.

(e) Income Tax Ordinance (XXXI of 1979)---

----S.50(7BB)---Deduction of tax at source---Penal consequence for no deduction---Non-deduction of advance tax on the basis of S.50(7BB) of Income Tax Ordinance, 19.79, penal consequences have to be faced by the deducting authority.

Raman's case 1985 PTD 787 rel.

(f) Income Tax Ordinance IXXXI of 1979)---

----S. 50(7BB)---C.B.R. Circular No.12 of 1993, dated 11-7-1993---S.R.O. No.614(1)/93, dated 18-7-1993---Constitution of Pakistan (1973), Art. 199-- Constitutional petition---Deduction of tax at source---Approval of building plan---Assessing Officer issued a letter to Administrator of District Council to deduct tax under S.50(7BB) of the Income Tax Ordinance, 1979 on the estimated cost of construction to be calculated by applying the rate of Rs.400 per sq. ft.---Assessee's contention was that tax be deducted @ one-half percent. on the total estimated cost of construction contracted between the assessee and contractor---Validity---Letter issued by the Assessing Officer to deducting authority by fixing cost of construction at the rate of Rs.400 per sq. ft. was not borne out and was not in accordance with the Notification No.614(1)/93, dated 18-7-1993 under S.50(7BB) of the Income Tax Ordinance, .1979---Letter did not contain any comparative rates of the other departments, therefore, same. was not sustainable in the eyes of law and such notification was misconstrued by the Assessing Officer---Chairman, Central Board of Revenue was directed to issue general instructions to all the functionaries to issue letters to the Administrative Officer concerned in accordance with law and Notification, dated 18-7-1993, after comparison of the rate mentioned by different departments in the Notification or fix rate either on yearly basis for each area or 2/3 years so that citizen should not be penalized.

Messrs Ellahi Cotton Mills' case PLD 1997 SC 582 and PLD 1979 Lah. 415 ref.

Sh. Zia Ullah for Appellant.

Gltulam Rasool and Shafqat Cholian for Respondents

Date of hearing: 12th May, 2000.

JUDGMENT

The brief facts giving rise to this writ petition are that petitioner owned land at 9th km, Bhopatian Chowk, Main Raiwind Road, Rohi Nalla, Lahore. The petitioner wanted to construct the non-residential building over the said plot. The petitioner submitted building plan before respondent No.3 for approval for the purpose to construct non-residential building over it. The proposed area of construction mentioned in the building plan is 120234 sq. ft. The petitioner invited tenders for the constructions of the aforesaid building and accepted. M/s. Shaheen Associates submitted its tender alongwith others, the tender of M/s. Shaheen Associates was lowest amounting to Rs.24,878,427 on 18-9-1999. Subsequently M/s. Shaheen Associates in result of negotiation with the petitioner reduced the aforesaid amount and finally the contract was awarded by the petitioner to M/s. Shaheen Associates amounting to Rs.24,014,310.000 as is evident from Annexure 'F' for the constructions; completion and maintenance of main two production halls consisting of tannery and belting alongwith stores as is evident from building plan Annexure 'A'. Income-tax Officer 14 Zone B sent letter, dated 4-4-1995 to the Administrator under the heading tax withholding on construction of non-residential building under section 50(7BB) of Income Tax Ordinance, 1979. Additional Commissioner of Income-tax/Wealth Tax Range 2, Zone 3 sent another letter on 16-5-1996 to the Administrator under the same heading applying the rate of Rs.400 per sq.ft. is estimated and respondent No.3 is under obligation to deduct tax at the aforementioned rate. Respondent No.3 did not approve/sanction the building plan of the petitioner without depositing the tax at the aforesaid rate. The petitioner being aggrieved filed this writ petition with the following prayer:--

"That the writ petition of petitioner may kindly be accepted and respondent No.3 may kindly be directed to approve the building plan submitted by the petitioner and collect withholding tax @ one -half per cent on the total cost of construction amounting to Rs.2,40,14,310. The costs of this petition may also be awarded to the petitioner."

2. The petitioner's counsel submits that by virtue of proviso of (7BB) of section 50 it is condition precedent for the respondents to issue a notification for specifying the method for imposing advance tax on the 9stimated costs. The respondents did not issue any notification, therefore, demand of income-tax authorities under section 50(7BB) is not sustainable in the eyes of law. He further submits that section 50(7BB) is not attracted in the case of the petitioner as the petitioner has awarded a contract for construction of his building to M/s. Shaheen Associates with specific rates and amount whereas; section 50(7BB) is attracted only where the estimated costs is mentioned. He further submits that circular issued by respondent No. 1 under the aforesaid section in the year 1993 according to which the estimated costs of constructions of building be adopted on the basis of the costs of construction as specified by the Pakistan Works and Power Department or the Provincial Building Department or Development Authorities or local authority concerned whichever is highest for similar type of construction in that area; thereafter respondent No.2 sent two letters to respondent No.3 on 4-4-1995 and 16-5-1996 respectively on the basis of which respondent No.3 demanded withholding tax from the petitioner-on the total costs of construction Rs.400 per sq.ft. coupled with the facts that Legislature has given only authority to C.B.R. to specify the amount to fix estimated costs for construction but C.B.R. has not fixed the same as is evident from impugned notification, dated 18-7-1993; he summed up his arguments that action of respondents is not in accordance with provisions of Income Tax Ordinance, 1979.

3. The learned Legal Advisor of respondents Nos. l and 2 raised following preliminary objections:

(i) The petitioner wants resolution of disputed question of facts regarding the estimated cost of construction through Constitutional jurisdiction which is not permissible;

(ii) that deduction of advance tax under section 50(7BB) of Income Tax Ordinance, 1979 is not full and final discharge of liability, hence the writ petition is not maintainable. The writ petition is liable to, be dismissed on ground of laches;

(iii) on merits he submits that petitioner's stand that specific amount of construction was settled between the petitioner and M/s. Shaheen Associates is their internal arrangements which needs factual verification and that cannot be resolved by this Court under Constitutional jurisdiction;

(iv) that under the aforesaid provisions of Income Tax Ordinance, respondents have issued Notification S.R.O. No.614(1)/93, dated 18-7-1993 which was published under proper authority in the official Gazette; that respondent No.2 has asked respondent No.3 to deduct the advance income-tax from all the owners on the basis of the aforesaid provisions of law and notification.

He further submits that C.B.R. has not delegated its powers to any other department simply directed to consider the rate of other departments mentioned in the Notification, dated 18th July, 1993 at the time of determination of the estimated cost of construction; that contention of petitioner's counsel has no force to accept the cost of construction agreed between the petitioner and contractor which is not in accord with the spirit of section 50(7BB) and Notification; that it is advance tax which is adjustable under section 53 of Income Tax Ordinance, 1979.

4. Malik Ghulam Rasul, Legal Advisor of respondent No.3 submits that respondent No.3 under the law is bound to accept the directions of respondents Nos. 1 and 2 and act according to their direction otherwise penal consequences have to be faced by respondent No.3 on the basis of aforesaid provisions of law; that under the direction of this Court respondent No.3 provided proper opportunities to the petitioner and representative of respondents Nos.2 and 3 and did not conclude the matter as parties did not cooperate and not enter appearance in spite of several opportunities provided to them.

5. I have given my anxious consideration to the contentions of learned counsel for the parties and perused the record. It is, better and appropriate to reproduce operative part of section 50(71313); Notification, dated 18-7-1993, letter, dated 4-4-1995 and letter, dated 16-5-1996 to resolve the controversy between the parties:---

Section 50(7BB) of Income Tax Ordinance, 1979:--

(a) At the time of approving any building plan for construction in respect of any building not being a residential house the person responsible for such approval, shall collect advance tax from the owner of such property on the estimated cost of construction of such building at one-half of the rates specifies' in the First Schedule, and the credit for the tax so collected in any financial year shall, subject to the provisions of section 53, be given in computing the tax payable by such owner for the assessment year commencing on the first day of July next following such financial year, or in the case of an assessee to whom section 72 or section 81 applies, the assessment year in which the "said date" as referred to therein falls whichever is the later.

(b) -----------------------

Provided that the Central Board of Revenue may, by notification in the official Gazette, specify,---

(ii)the method for the determination of the "estimated cost of construction letter, dated 18-7-1993 is as under:--

"the Central Board of Revenue is pleased to specify that for the purposes of the said subsection the estimated cost of construction of a building shall be determined on the basis of cost of construction as specified by the Pakistan Public Works Department or the Provincial Building Department or the concerned development authority or the local authority, whichever is the higher, for a similar type of construction in the area where such building is being constructed." .

Letter, dated 4-4-1995 is as

under:---

"This tax is to be collected 1 % of the estimated cost of construction of the building before granting approval of its building plan and another 1 % before issuing its completion certificate. The cost of construction is to be estimated on the basis of rates adopted for similar construction by Pak. P.W.D. Provincial Building Department, or Development Authority whichever are the highest. Tax so collected is to be deposited to the credit of Federal Government within a period of 7 days by clearly indicating the particulars of the owners of the building. "

Letter, dated 16-5-1996 is as under:---

"Section 50(7BB) of the Income Tax Ordinance, 1979 imposes legal obligations on authorities approving a building plan and issuing a completion certificate for collection of tax (g 2% of estimated cost of construction of all non-residential buildings, constructed on plot areas exceeding 500 sq. yards. First instalment of 1 % of the estimate cost is to be collected before granting of approval of building plan and the second instalment of 1 % before issuing the completion certificate. The cost of construction according to C. B. R. Circular No. 12 of 1993, dated 11-7-1993 is to be estimated on the basis of the rates adopted for similar construction by Pak PWD, the Provincial Buildings Department. the development or local authority of area whichever rate is the highest.

4. Information collected front your office reveals that you had sanctioned 8 Site Plans in respect of non-residential buildings with plot area exceeding 500 sq. yards in each case as per details in the Annexure. Cost of construction applying the rate of Rs.400 per sq. ft. is estimated in column (4). On the total estimated. cost of construction, the District Council was under obligation under section 50(7BB) to deduct tax amounting to Rs.6,14,296. Despite several opportunities allowed and visits of the Inspector no evidence regarding. collection of aforementioned tax has been produced."

Mere reading of aforesaid section, notification and letter, dated 4-4-1995 reveal that the same are in accordance with law. Section 50(7BB) was inserted by the competent body by Finance Act No.10 of 1993, as per principle laid down by the Hon'ble Supreme Court in M/s. Ellahi Cotton Mills' case (PLD 1997 SC 582). Proviso (I1) of aforesaid section 50(7BB)(b) confer powers to C.B.R., therefore, C.B.R. issued S.R.O. No.614/93, dated 18-7-1993 which was published in official Gazette on 18th July, 1993, therefore, contention of petitioner's counsel has no force that C.B.R. has no authority to issue notification. Similarly the contention of petitioner's counsel has no force that notification was not published in the official Gazette. C.B.R. has given formula to determine the estimated cost of construction of a building on the basis of cost of construction as specified by Pakistan Public Works Department or Provincial Building Department does not indicate at all that the C.B.R. has delegated its powers to the other department on the well-known principle of adoption or legislation by Reference which is known principle. In arriving to this conclusion I am fortified by judgment of this Court "P.I.A. Corpn's case (PLD 1979 Lah. 415), It is also settled proposition of law that interpreting a fiscal statute that Court must look all the words of statute and interpret the same in the light of what is clearly expressed arid Court has no jurisdiction to imply anything which is not expressed. In this behalf reliance is placed on M/s. Hanjama & Company v. Commissioner (1971 SCMR 128) and Collector of Customs' case (1977 SCMR 371). It is settled proposition of law that principle of strict construction of fiscal statute is applicable only to taxing provisions such as charging provisions and not to those 'parts of statutes which contain machinery provisions as per principle laid down in (1980 Tax Law Report 185). It is true that the machinery provision of a fiscal statute should be interpreted in such a manner that recovery is not frustrated or adversely affected. But it does not mean that to achieve this object one can travel beyond the spirit of law and do violence to language and intention of the, statute. The machinery can be extended only to the extent it is permissible under the law. In this attempt one cannot override of other parties only because a recovery has to be made. Such provisions have their own limitation and they are to be found within the statute itself. In arriving to this conclusion I am fortified by the following judgments:

Commissioner of Income-tax v. Maithram Ranjidas AIR 1940 PC 124.

M/s. Escart Limited's case 1975 PTD 570.

It is also settled proposition of law that machinery provisions of fiscal statute should be liberally construed to ensure recovery as per principle laid down by this Court in W.P. Province v. K.B. Amiruddin (PLD 1953 Lah. 433). The aforesaid judgment was confirmed by Federal Court reported as (PLD 1956 Federal Court 220). The same wits again upheld by the Hon'ble Supreme Court in Lt.-Col. Nawabazada Muhammad Amir Khan's case (PLD 1961 SC. 119): The contention of learned counsel for respondent No.3 has a force that in case of non-deduction of advance tax on the basis of aforesaid section penal consequences have to be faced by respondent No. 3 as is held by D.B. of Karachi High Court in Raman's case (1985 PTD 787).

In view of what has been discussed above, this writ petition is not maintainable. Anyhow the letter issued by respondent No.2 to respondent No.3 on 16-5-1996 by fixing cost of construction at the rate of Rs.400 per sq. ft is not borne out and is not in accordance with notification issued by C.B.R., dated 18-7-1993 under the aforesaid section 50(71313). The letter does not contain any comparative rates of the other departments, therefore, same is not sustainable in the eyes of law. The Notification of C.B.R. is misconstrued by the subordinate functionaries of C.B.R. In view of these circumstances, let a copy of this order Judgment be sent to Chairman, C.B.R., Islamabad, who is directed to issue general instructions to all the functionaries to issue letters to the Administrative Officer concerned in accordance with law and Notification dated 18-7-1993, after comparison of the rates mentioned by different departments in the Notification or the Chairman, C.B.R. must issue a notification and fix rate either yearly basis for each area or 2/3 years so that poor citizen should not be penalized. He is also directed to issue direction in the light of notification, preferably, within one month, after receiving the order of this Court.

Disposed of in the aforesaid term.

C.M.A./M.A.K./L-8/1Order accordingly.