(a) Income Tax Ordinance (XXXI of 1979)‑‑‑

‑‑‑‑S.8‑‑‑Central Board of Revenue‑‑‑Functions‑‑‑Scope‑‑‑Central Board of Revenue cannot interfere with the judicial or quasi judicial functions entrusted to the various functionaries under a statute‑‑‑Any interpretation of provision of any Statute, Ordinance, Rules, Regulations and S.R.0S, issued by the Central Board of Revenue cannot be treated as judicial interpretation to be made binding on the adjudicating Authorities‑‑‑Views of the Central Board of Revenue as to the interpretation of law would not have the force of law‑‑‑Central Board of Revenue had no jurisdiction/power or authority to control the decisions or discretion vesting in the adjudicating Authorities‑‑ Powers of judicial adjudication vested in the forum provided under law cannot be controlled or curtailed by the Central Board of Revenue, by giving a particular interpretation to a particular provision of the relevant law, rules or regulations.

Central Board of Revenue, Islamabad and others v. Sheikh Spinning Mills Limited, Lahore and others 1999 SCMR 1442 rel.

(b) Customs Act (IV of 1969)‑‑‑

‑‑‑‑S.19 ‑‑‑SRO 554(1)/98, dated 12‑6‑1998‑‑‑C.B.R: Letter C. No.l(53) Mach/90, dated 18‑1G‑2000 ‑‑‑C.B.R. Letter C. No. Mach/90, dated 8‑5‑2001 ‑‑-Sales Tax Act (VII of 1990), S.13 ‑‑‑Constitution of Pakistan (1973), Art.l99 ‑‑‑Constitutional petition ‑‑‑Exemption ‑‑‑Exemption allowed on import of spare parts of machinery under SRO 554(1)/98, dated 12‑6‑1998 was refused by placing restriction on the interpretation of said SRO vide C.B.R. Letter C. NoA(53) Mach/90, dated 18‑10‑2001 to the effect that only such spare parts were permissible and exempted under SRO 554(1)/98 which fell under Chaps. 84 & 85 of P.C.T. ‑‑‑Validity ‑‑‑Adjudicating Authorities were under an obligation to act independently of any such interpretations, instructions and directions issued by the Central Board of Revenue while deciding the matters placed before them under the law and they could not disallow an exemption claimed before it merely because the Central Board of Revenue had given a particular interpretation to a particular provision, relevant law, rules and regulations or S.R.O.

Central Board of Revenue, Islamabad and others v. Sheikh Spinning Mills Limited, Lahore and others 1999 SCMR 1442 rel.

Messrs Central Insurance Co. and others v. Central Board of Revenue 1993 SCMR 1232; Messrs Kohinoor Ralwind Mills Limited and another v. Central Board of Revenue through Member, Income‑tax, Government of Pakistan and 2 others 2000 PTD 335 J and The Commissioner of Income‑tax, East Pakistan, Dacca v. Noor Hussain PLD 1964 SC 657 ref.

Nauman Akram Raja for Petitioner.

ORDER

This order shall dispose of Writ Petitions Nos.2153, 2154, 2155, 2156, 2157 and 2158 of 2001, as common questions of law and facts are involved in all these petitions.

2. The petitioners, in all these petitions, are alleged to be the companies incorporated in accordance with the laws of this country and are carrying on the businesses of manufacture and sale of texture products and for the purposes of their business operations these companies import machinery as well as parts thereof and the said machinery/parts are imported by the petitioners in accordance with the relevant laws and rules. The petitioners seek clearances of spare parts imported by them under S.R.O. 551(1)/98, dated 12‑6‑1998. According to the petitioners, the machinery as well as spare parts thereof are entitled to complete exemption from payment of customs duty and sales tax provided the same are imported and utilized in the mode and manner specified in the notification itself. It is also alleged that this exemption is being enjoyed by the petitioners and other manufactures' from 1990 to date and each notification issued by the respondents SRO(I)/90, dated 12‑9‑1990, SRO 424(1)/97, dated 13‑6‑1997, as amended by SRO (1)/98, dated 14‑5‑1998 and lastly the abovesaid SRO 554(1)/98, dated 12‑6‑1998 made available an exemption from the payment of customs duty and sales tax not only to the machinery imported thereunder but also to the spare parts of the machinery. It is argued before this Court that an ambiguity in this regard was removed by the Ministry of Commerce, vide Office Memorandum, dated 15‑4‑1992, which clarified that the import of spare parts under the then notification in field was fully permissible and the view‑point of the Ministry of Commerce was accepted and endorsed by the Central Board of Revenue, vide letter dated 9‑6‑1992, whereby it was specifically stated that spares imported either alongwith machinery or separately under SRO 962(1)/90 shall be fully entitled to the benefit of said notification.

3. The grievance of the petitioners is that the Central Board of Revenue, vide its impugned letter, dated 18‑10‑2000 while reaffirming its earlier decision that SRO 551(1)/98, dated 12‑6‑1998, fully permitted the import of spares of machinery, however, placed a completely unwarranted and unlawful/restriction on the interpretation of the above SRO to the effect that only such spares are permissible and exempted under SRO 554(1)/98 which fell under Chapters 84 and 85 of P.C.T. and due to the abovesaid letter, dated 18‑10‑2000, the respondents have refused to allow the clearance of machinery and spares imported by the petitioners or being imported by the petitioners on the ground that the import of spare parts is not permitted under the above SRO 554(1)/98,

dated 12‑6‑1998. The respondents have disallowed and are disallowing the clearances of the spare parts on the basis of another impugned letter dated 8‑5‑2001, issued by the Central Board of Revenue, whereby the import of "maintenance spares/consumable parts", has been disallowed under SRO 554(1)/98, dated 12‑6‑1998.

4. The petitioners are, therefore, challenging the legality and validity of restrictions imposed in the abovesaid letters No. C.No.1(53)Mach/90, dated Islamabad the 18th October; 2000 (Annex‑G) and C. No. 1.Mach/90, dated Islamabad, the 8th May, 2001 (Annex‑K), issued by the respondents.

5. It is submitted by the learned counsel for the petitioners that the abovesaid impugned letters are wholly without jurisdiction and could not have been issued by the respondents at all because it is well‑settled law that the Central Board of Revenue does not have any authority or jurisdiction whatsoever to issue circulars/instructions which tantamount to interference with the judicial process that has been entrusted to the subordinate authori ties. The instructions being issued by the Central Board of Revenue to facili tate the administrative duties of its subordinate officers, cannot take the form of directions that interfere with the discretion and decision making power vested in the subordinate officers in their judicial capacity. Reliance in this regard is placed on Messrs Central Insurance Co. and others v. Central Board of Revenue 1993 SCMR 1232; Messrs Kohinoor Raiwind Mills Limited and another v. Central Board of Revenue through Member, Income tax, Government of Pakistan and 2 others 2000 PTD 3351 and The Central Board of Revenue, Islamabad and others v. Sheikh Spinning Mills Limited, Lahore and others 1999 SCMR 1442. These petitions are being disposed of today at this limine stage only in regard to the above assertions and arguments of the learned counsel for the petitioners and the other assertions and arguments, in regard to the legality and validity of the abovesaid impugned letters, are not being considered on merits and the same are being left to be considered and decided by the competent authorities, which are and which will be seized of the petitioners' matters on judicial side, in original or in appeals. However, the other legal issues which have been raised and which are not being decided today.

6. In Messrs Central Insurance Co. and others v. The Central Board of Revenue, Islamabad and others (supra), the Hon'ble Supreme Court while considering the various provisions of Income Tax Ordinance (XXXI of 1979) held that, "though the Central Board of Revenue has administrative control over the functionaries discharging their function under the Ordinance, but it does not figure in the hierarchy of the forums provided for adjudication of assessee's liability as to the tax. In this view of the matter, 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. We may point out that the Central Board of Revenue cannot issue any administrative direction of the nature which may interfere with the judicial or quasi judicial functions entrusted to the various functionaries under a statute. The instructions and directions of the Central Board of Revenue are bonding 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 this Court and not by the Central Board of Revenue. In this view of the matter, the interpretationplaced by the Central Board of Revenue in the Circular, can be treated as administrative interpretation and not judicial interpretation."

The Hon'ble Supreme Court in the later part of the same judgment in para.26 has referred to the following observations as to the status of the Central Board of Revenue's interpretation of law, made by Cornelius, C.J. in the case of the Commissioner of Income‑tax, East Pakistan, Dacca v. Noor Hussain PLD 1964 SC 657:

"The Board's view as to the interpretation of law do not have the force of law, and the expectation would be particularly where a fiscal statute is involved which should be implemented with strict impartiality, that references to inclination towards relaxation or otherwise would have been avoided."

7. In Messrs Kohinoor Raiwind Mills Limited and another v. Central Board of Revenue through Member, Income‑tax, Government of Pakistan, Islamabad and 2 others (supra), it has been held by the learned Single Judge of this Court that,

"although under section 3A of the Income Tax Ordinance, 1979 the Central Board of Revenue has the power to administer the law but it certainly has no jurisdiction, power or authority to issue a circular in respect of a continuous issue, it would tantamount to whittling down the discretion vesting in the adjudicating officer and authorities under the Income Tax Ordinance."

The learned Single Judge while referring to such a Circular issued by the Central Board of Revenue which interpreted clause (118) of the Second Schedule read with section 80D of the Income Tax Ordinance; 1979, held that by issuing such a circular the power of adjudication officer to decide as to whether or not the exemption claimed by the petitioner was invalid, has been completely taken away and as such this circular is void and has no legal effect.

8. In The Central Board of Revenue, Islamabad and others v. Sheikh Spinning Mills Limited, Lahore and others (supra), the apex Court while making a reference to the Messrs (Central Insurance Co. and others v. The Central Board of Revenue, Islamabad and others) (supra) held that:

"It seems to be well‑settled proposition of law that the Central Board of Revenue or for that matter even the Federal Government cannot control or curtail judicial adjudication power vested in the forums provided under the relevant law by giving a particular interpretation to a particular provision of the relevant law or by issuing Notification/S.R.O. for that purpose."

9. In this judgment while considering the issue of maintainability of a Constitutional petition before the High Court in such‑like matter, the apex Court held that the learned Judge‑in‑ Chamber was not justified in granting a general declaration in respect of such a notification assailed before it and was observed that it would have been appropriate to have asked the petitioners before the High Court to approach, the forum provided under the Act by providing guidelines.

10. In view of the decision given by the Hon'ble Supreme Court in The Central Board of Revenue, Islamabad and others v. Sheikh Spinning Mills Limited, Lahore and others (supra) in regard to the maintainability of such like Constitutional petitions, as the present, I have decided not to go into the issue of legality and validity of the letters impugned in these petitions issued by the Central Board of Revenue and adopting the course suggested by the apex Court in the same judgment, and keeping in view a settled law narrated and cited above, these petitions are disposed of with the observation that the adjudicating authorities whether on the original side or on the appellate side, while determining the petitioners' liabilities to pay the customs duty and sales tax under the SRO 554(1)/98, dated 12‑6‑1998 shall keep in mind the above‑quoted settled law and that the Central Board of Revenue cannot interfere with the judicial or quasi‑judicial function entrusted to the various functionaries under a Statute and any interpretation of any provision of any Statute, Ordinance. Rules, Regulations and S.R.Os. issued by the Central Board of Revenue, placed by the Central Board of Revenue cannot be treated as judicial interpretation to be made binding on the adjudicating authorities and the views of the Central Board of Revenue as to the interpretation of lawdo not have the force of law and the Central Board of Revenue has no jurisdiction, power or authority to control the decisions or discretion vesting in the adjudicating authorities and the judicial adjudications powers vested in IA the forum provided under the relevant law cannot be controlled or curtailed by the Central Board of Revenue, by giving a particular interpretation to a particular provision of the relevant law, rules or regulations. The relevant adjudicating authorities are under an obligation to act independently of any such interpretations, instructions and directions issued by the. Central Board of Revenue while deciding the matters placed before them under the law for 13 adjudication and they cannot disallow an exemption claimed by a petitioner before it merely because the Central Board of Revenue has given a particular interpretation to a particular provision, relevant law, rules and regulations or S.R.Os.

C.M.A:/M.A.K./C‑112/L Order accordingly.