IMPORIENT CHEMICAL (PVT.) LTD VS COMMISSIONER OF INCOME-TAX, ZONE-II, LAHORE
2002 P T D 187
[Lahore High Court]
Before Mansoor Ahmad, J
IMPORIENT CHEMICAL (PVT.) LTD through Chief Executive
Versus
COMMISSIONER OF INCOME-TAX, ZONE-II, LAHORE and another
Constitutional Petition No-10493 of 2001, heard on 27/09/2001.
(a) Income Tax Ordinance (XXXI of 1979)---
----S. 50(5)---Advance income-tax---Payment of---Filing of return-- Scope---Person who is an importer and has no other source of income and has paid the tax under the provisions of S.50(5) of the Income Tax Ordinance, 1979, the payment so made is deemed as full and final discharge of his liability and such importer is not required to file any return.
(b) Income Tax Ordinance (XXXI of 1979)---
----Ss. 50(4) & 50(5)---Constitution of Pakistan (1973), Art. 199-- Constitutional petition---Advance income-tax---Deduction o f tax at source---Supply of imported goods to prospective buyers---Issuance of exemption certificate---Authorities denied the issuance of the certificate for the reason that the assessee had not filed irrevocable declaration of option for the presumptive tax regime---Validity---Deduction of tax at the time of such supply would be a deduction of tax in the account of the buyers and it would not be a payment made by the importer--Once the importer had paid tax under S.50(5) of the Income Tax Ordinance, 1979, in full and final discharge of his tax liability, the importer was entitled to deal with his business for supply of imported goods without any further liability---Importer was entitled to the issuance of exemption certificate under S.50(4) of the Income Tax Ordinance, 1979---High Court remanded the case to the Authorities for decision afresh---Constitutional petition was allowed accordingly.
(c) Income Tax Ordinance (XXXI of 1979)---
----Ss. 50(4) & 50(5)---Deduction of tax at source---Opting for presumptive tax regime---Filing of irrevocable declaration---Effect-- Filing of such declaration opting for presumptive tax regime would only be relevant in the nature of cases falling under S.50(4) of the income Tax Ordinance, 1979---Where case of the assessee was covered under the provision of S.50(5) of the Income Tax Ordinance, 1979, the assessee could not be declined the issuance of exemption certificate merely on the plea that he failed to submit irrevocable declaration of option of the presumptive tax regime.
Hashim Sabir Raja for Petitioner.
Muhammad Ilyas Khan for Respondents.
Date of hearing: 27th September, 2001.
JUDGMENT
The petitioner has filed the present writ petition feeling aggrieved on the denial of the respondents to issue an exemption certification under section 50(4) of the Income Tax Ordinance, 1979.
2. Brief facts of the case as stated by the petitioner are that he is an importer and his sole business is import of chemicals and he is not involved in another business. It is stated that the petitioner regularly pays the tax at the stage of import of every consignment through the Collector of Customs as required under section 50(5)(a) of the Income Tax Ordinance, 1979. The plea of the petitioner is that this deduction al source of tax under section 50(5)(a) is a full and final discharge of his liability as provided under section 80(c)(4). The grievance of the petitioner is that he applied to the respondents for issuance of exemption certificate under section 50(4) so that the income-tax is not deducted again and the imported consignment is sold in the local market. The petitioner submitted an application which was dismissed by the respondent No. 1 vide his letter, dated 2-6-200which is impugn through the present writ petition.
3. It is pleaded on behalf of the respondents Watt petitioner is a commercial importer and does not qualify for issuance of exemption certificate under section 513(4) of the Income Tax Ordinance, 1979 being a commercial importer. It was further added that the presumptive tax regime would apply to the importers-cum-suppliers of goods subject to concessional rate if they opt for it by filing an irrevocable declaration to that effect with return of income under section 55 (ibid). According to the Revenue as the assessee-company has never filed an irrevocable declaration, as such the deduction of tax in the case of this assessee is not final discharge of liability.
4. I have considered the arguments of both the parties and examined the various provisions of Income Tax Ordinance, 1979 which were referred to by both the counsel. Section 50 is a part of Chapter-VI which deals with the payment of tax before assessment. It provides for deduction at source in respect of various categories of persons. Sub-clause (5) of section 50 provides that the Collector of Customs shall in the case of every importer of goods would collect advance tax computed on the basis of the value of such goods, as increased by the customs duty and sales tax, if any levied thereon at the rates specified in the First Schedule.
4-A. Section 80-C is a part of the presumptive tax regime and deals with the tax on income of certain contractors and importers. It provides that notwithstanding anything contained in this Ordinance or any other law for the time being in force, where any amount referred to in subsection (2) is received by or accrues or arises or is deemed to accrue or arise to any person the whole of such amount shall be deemed to be income of the said person and tax thereon shall be charged at the rate specified in the First Schedule. Sub-clause (2) of section 80-C categorizes the amount as computed for collection of tax under section 50(5) in respect of goods imported not being goods imported by any industrial undertaking as raw material for its own consumption, Section 80-C(4) contemplates where the assessee has no income other than the income referred to in subsection (1) in respect of which tax has been deducted or collected, the tax deducted or collected under section 50 shall be deemed to be the final discharge of his tax liability under this Ordinance and he shall not be required to file the return of total income under section 55. The other relevant provisions are contained in clause (9) Part IV of IInd sSchedule wherein it is provided that the provisions of section 80-C as they relate to payment of income on account of supply of goods on which tax is deductible shall not apply in respect of any person being a manufacturer of such goods unless he opts for presumptive tax regime.
5. It is thus clear from the relevant provisions of the Income Tax Ordinance, 1979 that if a person is an importer and has no other source of income and has paid the tax under the provision of section 50(5), the payment made would be deemed as full and final discharge of his liability and he would not be required to file any return. The plea raised by the Revenue in the instant case is that because the petitioner has not filed any irrevocable declaration under clause (9), Part IV of IInd Schedule, therefore, he was not found entitled for the issuance of exemption certificate as envisaged under section 50(4). The provisions relating to issuance of exemption certificate are contained under section 50(4) wherein it is provided that the Commissioner may on the application made by any such recipient and after making such enquiry as he thinks fit, allow, by an order in writing, any person responsible for making such payment not to deduct any tax from any payment or payments made to such recipient in any financial year. The case of the petitioner is that he as an importer having no other business was entitled to issuance of exemption certificate on the ground that the consignment which he has imported and for which he has paid the tax under section 50(5) was a full and final discharge of the tax liability under the provision 'of section 80-C of Income Tax Ordinance, 1979 and his liability to deduct tax on making the supply of the imported goods would result in, a double taxation. The plea of the petitioner is not correct because deduction of tax at the time of making of supply of imported goods to prospective buyers would be a deduction of tax in the account of the buyers and it would not be payment made by the petitioner but issuance of exemption certificate under section 50(4) in favour of the petitioner is supported on the reason that once he has paid tax under section 50(5) in full and final discharge of his tax liability he may be entitled to deal with his business for supply of imported goods without any further liability and in this context he is entitled to the issuance of exemption certificate. The plea of the Revenue that clause (9) of Chapter IV' of IInd Schedule was attracted to in the case of the petitioner is incorrect. The filing of irrevocable declaration opting for presumptive tax regime would only be relevant in the nature of cases falling under section 50(4). As the case of the petitioner was covered under the provision of section 50(5), therefore, the provisions of clause (9) were not attracted to and he could not be declined the issuance of exemption certificate merely on the plea that he failed to submit an irrevocable declaration of option for the presumptive tax regime. As the Department, has admitted that the petitioner is an importer and has no other business therefore, he was entitled to the issuance of exemption certificate and refusal to issue the same on the premises of clause (9) was misconceived. Therefore, I am partly in agreement with the learned counsel for the petitioner that the issuance of exemption certificate was wrongly declined to the petitioner. The issuance of exemption certificate under section 50(4)(b) is conditional with such inquiries as the Commissioner of Income Tax may like to make and these inquiries would obviously be made in the light of the instructions issued by the Central Board of Revenue (C.B.R.) from time to time including Circular 10 of 1996 which inter alia requires that firstly the tax at import stage must have been prescribed minimum, and that supply of imported goods must have been made under the same business name and style. The petitioner has relied on an unreported judgment of Sindh High Court, Karachi in Income Tax Case No. 98 of 1998, decided on 27-4-2000 and judgment in W.P. No. 849 of 2001 of this Court in case National Engineers v. CIT Zone-E, Lahore where an identical question was dealt with.
6. Accordingly this Constitutional petition is allowed for the aforesaid reason. The application made by the petitioner shall be deemed pending before the Commissioner which would be disposed of in the light of judgment of Sindh High Court, Karachi as well as this Court judgment in W.P. No. 849 of 2001 and it would be reconsidered according to law and the same would not be declined on ground of failure to file irrevocable declaration opting for presumptive tax regime.
Q.M.H./M.A.K./I-74/LCase remanded.