DHAN FIBRES LTD. VS CENTRAL BOARD OF REVENUE, ISLAMABAD and others, 2006 PTD-SUPREME-COURT 2683 (2006)

(On appeal from the judgment/order dated 3-6-1999 passed by Peshawar High Court, Peshawar in W.P. No.1442 of 1997).

Sales Tax Act (VII of 1990)---

----Ss. 2(9), (43), 6(2), 26 & 34---Filing of Monthly Return Rules, 1996, R. 5 (4)---Constitution of Pakistan (1973), Art.185(3)---Tax not deposited on or before stipulated date under Rule 5(4) of Filing of Monthly Return Rules, 1996---Payment of additional tax---Vires of Rule 5(4) of Monthly Return Rules, 1996 in relation to S.6 of Sales Tax Act, 1990---Company-Appellant filed tax returns and pay orders in respect of tax period on 20th of four different months along with bank instruments---Returns were accepted by Revenue Department on 22nd and 23rd of the relevant months beyond the due date of 20th of each month--Company was informed by Department that as the former did not deposit tax on or before stipulated date, therefore, it was liable to pay additional tax under S.34 of Sales Tax Act 1996---Company filed constitutional petition challenging therein vires of Rule 5(4) of Monthly Returns Rules, 1996 but petition was dismissed---Company contended that time consumed by the bank in clearance of instruments was not to constitute delay on its part---Validity---Under S.6(2) of Sales Tax Act, 1990, tax was to be paid along with return on or before 20th of each month being a cut out date, in the way/mode/manner and at the time specified which meant that tax was required to be deposited and received by Government treasury on or before 20th of the month and if bank instrument had not been cleared on said date then it was to be deemed that return had been filed and accepted on the date when tax was actually received---Admittedly, in the present case, the bank instrument for payment of tax was cleared after 20th of month when return was submitted---Company in view of the violation was liable to pay additional tax in accordance with S.34 of Sales Tax Act, 1990---Imposition of penalty or additional tax under S.34 of Sales Tax Act, 1990 was mandatory and there was no discretion left with Revenue Department to allow any exception---Case was to be decided on its merits as to whether the evasion or non-payment of tax was wilful or mala fide, decision on which was to depend on the question of recovery of additional tax---No impediment or hurdle existed for Company to ensure deposit of sales tax by submitting tax return before 20th of the month instead of filing the same on last cut out date---Tax was to be deemed to have been received when bank instrument was cleared---Section 2(26) of Sales Tax Act, 1990, clearly mandated that tax was to be paid by registered person at the time of filing of return in respect of relevant period---"Making payment" Meant that bank instrument was to be cleared by bank before 20th of month, otherwise, it was to be deemed that tax was paid subsequently---Word "paid" used in S.2(26) of Sales Tax Act, 1990 meant that money had been given---Rule 5(4) of the Monthly Returns Rules, 1996, was not ultra vires of S.6 of Sales Tax Act, 1990---Department had rightly imposed additional tax upon Company in terms of S.34 of Sales Tax Act, 1990---Leave to appeal was disallowed.?

D.G. Khan Cement v. Federation of Pakistan 2004 SCMR 456 rel.

Imtiaz Rashid Siddiqui, Advocate Supreme Court and Mahmud?ul-Islam, Advocate-on-Record for Appellant.

M. Bilal, Senior Advocate Supreme Court, Mumtaz Ahmad, Member (Legal), C.B.R. for Respondents.

Date of hearing: 24th February, 2006.

JUDGMENT

IFTIKHAR MUHAMMAD CHAUDHRY, C.J.---This appeal by leave of the Court is directed against the judgment dated 3rd June, 1999, passed by Peshawar High Court, Peshawar in Writ Petition No.1442 of 1999.

2. Leave to appeal has been granted to 'examine the following questions:---

1. ??????? Whether under rule 5(4) of the Filing of Monthly Return Rules, 1996 vide ???????? Notification No. S.R.O. 551(I)/96, dated 1st July, 1996 are ultra vires of section 6 of the Sales Tax Act, 1990?

2. ??????? Whether payment of tax made in deviation to the rules of 1996 could attract the ??????????? liability particularly additional tax under section 34 of the Sales Tax Act, 1994?

3. Precisely stating facts, giving rise to instant proceedings, are that appellant submitted tax returns and pay orders in respect of the tax period in terms of section 2(9) and (43) of the Sales Tax Act, 1990 [hereinafter referred to as `the Act, 1990] namely on or before 20th of the month, on 20th October, 1996, 20th November, 1996, 20th February, 1997 and 20th May, 1997 respectively, accompanying bank instrument, meant for the payment of tax. Admittedly, after clearance the returns were accepted on 22nd October, 1996, 23rd November, 1996, 23rd February 1997 and 22nd May, 1997, respectively, beyond the due date of 20th of the month. Therefore, the appellant was informed that as the tax has not been deposited on or before the stipulated date therefore, under rule 5(4) of the Filing of Monthly Return Rules, 1996 (hereinafter referred to as `the Rules, 1996') appellant was liable to pay additional tax under section 34 of the Act, 1990, on account of delayed payment. Accordingly an Order-on-Original No.118 of 1997 dated 25th June, 1997 was issued whereby additional tax liability has been imposed upon the appellant. Thus a constitutional petition was filed on its behalf, questioning the constitutionality of rule 5(4) of the Rules, 1996 and the order dated 25th June, 1997. Learned High Court dismissed the writ petition by means of impugned judgment. Hence instant appeal by leave of the Court.

4. Learned counsel for appellant contended that no sooner the tax return along with bank instrument for payment of the tax is submitted on or before 20th of the month, so as to discharge tax liability for the relevant tax period, it would be deemed that tax has been paid within time and the time consumed by the bank in clearance of the instrument would not constitute the delay on its part.

5. On the other hand learned counsel appearing for the respondents contended that law has provided 20th of the each month to be a cut out date and as the tax return is be submitted of the preceding months, therefore, if the payment has been made beyond the date to the Tax Department, it would be deemed that on the said date the return has been filed. According to him this is import of Rule 5(4) of the Rules, 1996.

6. We have heard the learned counsel for the parties and have gone through the relevant provisions of the law as well. It is to be noted that section 26 of the Act, 1990 provides that "every registered person shall furnish not later than the due date a true and correct return in the prescribed form to a designated bank specified by the Board, indicating the purchases and the supplies made during a tax period, the tax due and paid and such other information, as may be prescribed." In pursuance of above provision, vide Notification No. S.R.O. No. 551(1)/1996 dated 1st July, 1996, the C.B.R. framed rules, Relevant rule i.e. 5(4) is reproduced hereinbelow for convenience:' --

"5. Receipt of return by the Bank,---

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??????????? (1) -----------------------------------------------???????

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??????????? (2) -----------------------------------------------

??????????? (3) -----------------------------------------------

??????????? ?(4) On clearance of the instrument, the Bank official shall sign and stamp the return indicating the date on which the payment is received by the Bank and the said date shall be treated as the date of payment of tax and submission of tax return."

7. At this juncture, it may not be out of context to note that section 6(2) of the Act, 1990 provides that the tax in respect of taxable supplies made in Pakistan during the tax period shall be paid by the registered person at the time of filing the return in respect of that period under Chapter-V. This provision of law makes it abundantly clear that tax has to be, paid along with return on or before 20th of each month being a cut out date, in the way/mode/manner and at the time specified, meaning thereby that by means of any recognized mode, tax is required to be deposited and must be received by Government treasury on or before the 20th of the month and if the bank instrument has not been cleared on the said date then it would be deemed that the return has been filed and accepted on the date when the tax was actually received. As in present case, admittedly, the bank instrument for payment of tax was cleared after 20th of the month when the return was submitted. Thus in view of violation, the appellant was liable to pay the additional tax in accordance with section 34 of the Act, 1990. In this behalf learned counsel appearing for respondents relied upon D.G. Khan Cement v. Federation of Pakistan 2004 SCMR 456, wherein this Court while examining the implications of section 34 of the Act, 1990 has held that "imposition of penalty or additional tax under section 34 of the Sales Tax Act, '1990 was mandatory and there was no discretion left with the Authorities to allow any exception." It has been further observed that "each and every case, however, had to be decided on its own merits as to whether the evasion or non-payment of tax was wilfull or mala fide, decision on which would depend upon the question of recovery of additional tax." In our considered opinion in the instant case there was no impediment or hurdle for appellant to ensure deposit of sales tax by submitting the tax return before 20th of the month instead of filing the same on the last cut out date, thereby depriving the public exchequer from the tax, which was due on the said date because actually the tax would be deemed to have been received when the bank instrument was cleared'. Section 2(26) of the Act, 1990 clearly mandates that the tax shall be paid by the registered person at the time of filing of the return in respect of the period. Making payment means that the bank instrument should be cleared by the bank before the 20th of the month, otherwise, it would be deemed that the tax was paid subsequently. The word `paid' used in the section, as per its dictionary meaning represents that the money has been given.

8. Thus, we are of the opinion that so far as the rule 5(4) of the Rules, 1996 is concerned, it is not ultra vires to section 6 of the Act, 1990 and under these circumstances the department had rightly imposed additional tax upon the appellant in terms of section 34 of the Act, 1990.

For the foregoing reasons, appeal is dismissed with costs.

S.M.B./D-11/SC????????????????????????????????????????????????????????????????????????????????? Appeal dismissed.