Messrs GOBAL TELECOM (PVT.) LTD. through Duly Authorized Chief Executive VS FEDERATION OF PAKISTAN through Ministry of Finance, Islamabad and others, 2007 PTD-LAHORE-HIGH-COURT-LAHORE 1969 (2007)

(a) Sales Tax Act (VII of 1990)---

----S.72---Constitution of Pakistan (1973), Art. 199---Constitutional jurisdiction of High Court---Scope---Orders, instructions and directions of Central Board of Revenue---Where order determining tax liability can be lifted to appellate forum of an extra departmental tribunal and then to High Court in referable jurisdiction, except in the cases of complete lack of jurisdiction or bar of limitation, an interference in Constitutional jurisdiction will not only militate against the system of collection of revenue but also will not be in the interest of taxpayer at the end of the line.

(b) Sales Tax Act (VII of 1990)---

----Ss.46 (5) & 47---Reference---Jurisdiction of High Court---Scope---High Court enjoys referable jurisdiction under S.47 of Sales Tax Act, 1990, in respect of questions of law arising out of the orders of appellate Tribunal recorded under S.46 (5) of Sales Tax Act, 1990---Barring cases of lack of jurisdiction on the part of revenue authority both on executive as well as the adjudication side, High Court is very slow in interfering in the matters which are likely to come to it in referable jurisdiction.

(c) Sales Tax Act (VII of 1990)---

----Ss.11, 36, 46 (5), 47, 66 & 72---Sales Tax Refund Rules, 2002, Rr.4 & 11---Constitution of Pakistan (1973), Art. 199---Constitutional petition---Reference to High Court---Refund of sales, recovery of---Direction of Central Board of Revenue---Merits of the case---Petitioner was aggrieved of the direction issued by Central Board of Revenue for initiating proceedings against it for recovery of amount received as sales tax refund---Validity---Most of the contentions of petitioner concerning interpretation of S.66 of Sales Tax Act, 1990 or Rr.4 and 11 of Sales Tax Refund Rules, 2002, pertained to merits of the case and adjudicating authority was the only and proper forum, to rule thereupon---Prospectivity or otherwise of the view expressed by Central Board of Revenue in various letters referred by assessee and factum of their subsequent withdrawal could also very well be adjudicated upon by the authority issuing the show-cause notice---Adjudicating authority was under no stress, obligation or legal requirement to be influenced by a direction, circular or letter issued by Central Board of Revenue expressing an opinion or making advice on a particular legal issue or interpretation of a provision of law---No order, instruction or direction could be made by the Board so as to interfere with the discretion of the officers in the exercise of their quasi-judicial functions---Natural corollary of the proviso to S.72 of Sales Tax Act, 1990, being that a Sales Tax Officer in exercise of his quasi-judicial functions was not obliged to follow any such order, direction or instruction which was opposed to any express provision of law, rules or a precedent of the superior Court---Petition was dismissed in circumstances.

Edulji Duishaw Limited v. Income Tax Officer PLD 1990 SC 399; Pir Sabir Shah v. Shad Muhammad Khan, Member Provincial Assembly, N.W.F. P. and another PLD 1995 SC 66; Gatron (Industries) Limited v. Government of Pakistan and others 1999 SCMR 1072; Al Ahram Builders (Pvt.) Ltd. v. Income Tax Appellate Tribunal 1993 SCMR 29; Farzand Raza Naqvi and 5 others v. Muhammad Din through Legal Heirs and others 2004 SCMR 400; Messrs Flying Board and Paper Products, Lahore Cantt. v. Deputy Collector-II, Government of Pakistan, Directorate of Sales Tax, Custom House, Lahore and 3 others 2002 PTD 7; Messrs Julian Hoshang Dinshaw Trust and others v. Income Tax Officer, Circle XVIII South Zone, Karachi and others 1992 SCMR 250: Collector of Customs, Custom House, Lahore and 3 others v. Messrs S.M. Ahmad and Company (Pvt.) Limited, Islamabad 1999 SCMR 138; Khawaja and Company Fruit Products (Pvt.) Ltd. Through Director v. Secretary, C.B.R. (Sales Tax Wing), Revenue Division, Islamabad and 3 others (GST 2005 CL 478; Khan Trading Company,. Gujranwala v. Collector of Customs, Excise and Sales Tax (Adjudication), Lahore PTCL 2001 CL 615; Messrs D.G. Khan Cement Co. Ltd. v. Federation of Pakistan and others PTCL 2002 CL 332; Messrs Mishal Exports, Gujranwala and others v. Collectorate of Sales Tax and Central Excise, Gujranwala PTCL 2004 CL 18; 'Mst. Tasnim Akhtar, Lahore v. Government of Pakistan and others 2006 PTD 1261; Nihal Chand Agarwalla and others v. S. Venkatesan and another AIR 1960 Calcutta 413 and The Collector of Sales Tax and Central Excise (West), Karachi v. Customs, Excise and Sales Tax Appellate Tribunal, Karachi 2005 PTD 53 ref.

Khalid Mehmood v. Collector of Customs, Custom House, Lahore, 1999 SCMR 1881 rel.

Mian Abdul Ghaffar, Imtiaz Rashid Siddiqui and Malik Muhammad Arshad for Petitioner.

A. Karim Malik and Izharul Haque for Revenue.

ORDER

NASIM SIKANDAR, J.---The petitioner, a private limited company engaged in providing pay phone facilities seeks to challenge a show-cause notice issued by Addl. Collector (Adjudication), Collectorate of Sales Tax and Federal Excise, Lahore, dated 2-11-2006. Through that notice the petitioner was confronted with as many as five grounds to allege that it had claimed and was allowed inadmissible refund of a sum of Rs.59,073,374.

2. It is sated that the impugned notice is in conflict with the letter issued by the C.B.R, on 24-12-2004, that refund claims sanctioned under the Sales Tax Refund Rules, 2002 cannot be proceeded under sections 11 and 36 of the Sales Tax Act (for short the Act), that the Adjudicating Officer is proceeding despite the fact that the concerned Collectorate had already reported to the Central Board of Revenue qua the admissibility of the refund under the law, that the adjudication proceedings contemplated in the show-cause. notice would be of no avail in view of the direction issued by the C.B.R. on August 5, 2006 requiring all the Collectorates in Pakistan to initiate action for recovery of the amounts refunded, that the position taken by the C.B.R., in its letters, dated 10-6-2002, 30-7-2003, 24-12-2004 and 2-8-2006 is contradictory and against the law and that the adjudication proceedings on the show-cause notice will in all likelihood result in formalizing the contradictory stance taken by the C.B.R, in the above stated letters. Following prayer has accordingly been made in the petition:--

"In view of the above, it is therefore, most respectfully prayed that this honourable Court be pleased to hold and declare that the letters C. No. 1(17)CEB/96, dated 2 August, 2006 and 5 August, 2000 of Central Board of Revenue and the stance adopted therein vis-a-vis its clarification contained in letter No.1(17) CEB/96, dated 24 December, 2004 as well as the lawfully sanctioned refunds granted unto the petitioner are without lawful authority and of no legal effect. The impugned letters be graciously struck down.

It be kindly further declared that the consequent Show-Cause Notice C. 42-ADC-1Ladj/2006/710, dated 2-11-2006 based- on the impugned letters is also without lawful authority and of no legal effect. The same be graciously struck down.

3. The respondent/revenue in its para-wise comments states that the petitioner has not approached this Court with clean hands inasmuch as the inadmissible refund received by the petitioner through collusion of the Revenue functionaries is sought to be protected through the medium of the present petition. After giving a detailed history and background of the various provisions of Federal Excise Tax as well as the Sales Tax Act and making a reference to a number of S.R.Os. issued from time to time to give effect to the legal provisions, it is alleged that the petitioner as a pay phone company was not liable to charge or collect sales tax on sales of phone cards, that the concept of discount prices was not relevant to Central Excise Duty and that the second clarification made by the, C.B.R. being incorrect was rightly withdrawn, that withdrawal of clarification could not be made use of by the petitioner in order to perpetuate the unjust enrichment, that the petitioner needs to raise all the grounds taken in this petition before the adjudicating authority for final determination of the matter, that incidence of duty having passed on the consumers the making of request for refund and its acceptance by certain functionaries of the Department was totally in negation of the law as well as the rules, that the C.B.R, had a valid justification to disagree with the justifications made by Collectorate of Sales Tax and Federal Excise,. Lahore in favour of admissibility of refund, that the leviable duty was actually charged by PTCL along with the cost of the card and was remitted by it to the Government treasury as a collecting agent, that legally as well as factually no refund was admissible either to the PTCL or to the pay phone companies providing services to their customers on purchasing the same from PTCL, that the petitioner having never paid the duty in question from its pocket, there was no question of making a claim for refund and that the petitioner as pay phone company acting as agent of PTCL for selling the cards to the customers was in no manner entitled to claim or to be paid the refund in question.

4. Learned counsel for the petitioner places reliance upon the ratio settled in re: Edulji Dinshaw Limited v. Income Tax Officer (PLD 1990 SC 39'9), re. Pir Sabir Shah v. Shad Muhammad Khan, Member Provincial Assembly, N.W.F.P. and another (PLD 1995 SC 66), re. Gatron (Industries) Limited v. Government of Pakistan and others (1999 SCMR 1072), re. Al Ahram Builders (Pvt.) Ltd. v. Income Tax Appellate Tribunal, (1993 SCMR 29), re. Farzand Raza Naqvi and 5 others v. Muhammad Din through Legal Heirs and others, (2004 SCMR 400) and re. Messrs Flying Board and Paper Products, Lahore Cantt. v. Deputy Collector-II, Government of Pakistan, Directorate of Sales Tax, Customs House, Lahore and 3 others (2002 PTD 7). Also relies upon re. Messrs Julian Hoshang Dinshaw Trust and others v. Income Tax Officer, Circle XVIII South Zone, Karachi and others (1992 SCMR 250), re. Collector of Customs, Customs House, Lahore and 3 others v. Messrs S.M. Ahmad and Company (Pvt.) Limited, Islamabad (1999 SCMR 138) re. Khawaja and Company Fruit Products (Pvt.) Ltd. through Director v. Secretary, C.B.R. (Sales Tax Wing), Revenue Division, Islamabad and 3 others (GST 2005 CL 478) to claim that in presence of the C.B.R. letter directing recovery to be made from the petitioner no useful purpose would be served by ,joining the adjudication proceedings.

5. Learned counsel for the respondents/revenue in opposing the maintainability of the petition places reliance upon re. Khan Trading Company, Gujranwala v. Collector of Customs, Excise and Sales Tax (Adjudication), Lahore (PTCL 200) CL 615), re. Messrs D.G. Khan Cement Co. Ltd. v. Federation of Pakistan and others (PTCL 2002 CL 332); re. Messrs Mishal Exports, Gujranwala and others v. Collectorate of Sales Tax and Central Excise, Gujranwala, (PTCL 2004 CL 18), re. Mst. Tasnim Akhtar, Lahore v. Government of Pakistan and others 2006 PTD 1261, re. Nihal Chand Agarwalla and others v. S. Venkatesan and another (AIR 1960 Calcutta 413), re. Khalid Mehmood v. Collector of Customs, Customs House, Lahore, (1999 SCMR 1881), and re. The Collector of Sales Tax and Central Excise (West), Karachi v. Customs, Excise and Sales Tax Appellate Tribunal, Karachi 2005 PTD 53.

6. After hearing the learned counsel for the parties I have concluded that no interference can possibly be made with the impugned show-cause notice nor the relief as prayed for can be granted. Following are my reasons:--

(i) The petitioner has failed to bring home any jurisdictional fact against the impugned notice. The department/Adjudicating Officer has not committed any illegality in asking for the explanation of the factual and legal issues raised in the show-cause notice. The grounds taken in the petition and the arguments advanced at the bar pertain mostly to the merits of the case and not the vires of the notice.

(ii) The case law relied upon at the bar in favour of the maintainability of the petition is clearly distinguishable. The total sum of the ratio settled in these judgments being that a High Court in its constitutional jurisdiction may interfere if the remedy before the departmental authorities including appeal would be mere illusory or patently a wastage of time. Obviously, these are the cases where the preposition of law or the fact is not disputed by the either party in terms of the limitation provided by law or the .period of default or the lapse of time. The ratio settled in the above judgments however needs to be applied very cautiously. For, an extended application of the ratio is likely to make the provisions for appeal to the tribunal and a reference to this Court nugatory and redundant. To say that a direction or an interpretation of a provision of law already made by the Central Board of Revenue will reduce the adjudication or first appellate proceedings a farce cannot be true in every situation. Section 72 of the Act is a complete answer to such objection as far the adjudication proceedings are concerned. The ratio of these judgments therefore, would be applicable only to executive actions of the Sales Tax Officers. Therefore, where the order determining tax liability eau be lifted to the appellate forum of an extra departmental tribunal and then A to this Court in referable jurisdiction, except of course in the cases of complete lack of jurisdiction or bar of limitation, an interference in constitutional jurisdiction will not only militate against the system of collection of revenue but also will not be in the interest of the tax payer at the end of the line.

(iii) In the case in hand mere direction by the Central Board of Revenue that the matter be initiated for recovery of the refund earlier received by the petitioner can in no manner be treated as a direction for recovery. Had it been so, the Revenue would have straightaway required the petitioner to surrender the refund received by it. On the other hand, as noted above the petitioner has been confronted with a number of legal and factual grounds to allege that the refund received by it was not admissible under the law. Obviously if the petitioner can successfully demonstrate the admissibility of refund there would hardly be any justification for the adjudicating authority to burden the petitioner with recovery only on account of the stated letter of the Central Board of Revenue, dated August 5, 2006.

(iv) The reliance of the learned counsel for the revenue on the above case law particularly the ratio settled in re. Khalid Mehmood v. Collector of Customs, Customs House, Lahore, (supra) is, therefore, pertinent and relevant. In that case the Hon'ble Supreme Court of Pakistan desired that the phrase used in Article 199 "if it is satisfied that no other adequate remedy is provided by law" should always attract the attention to the High Court. Also that bar of exercise of jurisdiction under that article in case of adequate alternate remedy being available was attracted in cases where the High Court itself or the Supreme Court was the repository of ultimate appellate, revisional or referable jurisdiction. It hardly needs mention that this Court enjoys referable jurisdiction under section 47 (Reference of the High Court) of the Act in respect of questions of law arising out of the orders of the appellate tribunal recorded under sub-section (5) of section 46 of the Act. Therefore, baring cases of lack of jurisdiction on the part of a revenue authority both on executive as well as the adjudication side this Court will be very slow in interfering in the matters which are likely to come to it in the referable jurisdiction.

(v) The argument that the refund having been allowed under the direction of the Collector, an Addl. Collector as Adjudicating Authority cannot proceed with the matter has no legs to stand upon. The provisions of section 36 of the Act do not make any distinction as to the level of authority or designation of an officer in the hierarchy of the department to curtail the jurisdiction of the Adjudicating Authority. The provisions of sections 36 and 45 of the Act clearly and without any ambiguity confer the jurisdiction on an Addl. Collector to adjudicate matters without restriction as to the amount of tax involved or the amount erroneously refunded.

(vi) The contention that the Board can proceed against the petitioner under section 45-A of the Act and that the petitioner would be willing to submit to its jurisdiction is all the more novel and unacceptable, in tact this argument is self-contradictory. On the one hand the petitioner seeks to avoid joining proceedings before the Addl. Collector (Adjudication) on the ground of the stated direction made by the Central Board of Revenue for recovery, and at the same time it is willing to appear before that very authority which is alleged to have issued the direction for recovery. The provisions of the Act to my mind do not confer any choice of forum to a tax payer placed in a similar situation. The requested direction to the C.B.R. to take up the case in its revisional jurisdiction under section 45-A as against the on going adjudication proceedings under section 36 will have absolutely no legal basis.

(vii) Most of the arguments addressed at the bar for the petitioner concerning the interpretation of section 66 of the Act or Rules 4 and 11 of the Sales Tax Refund Rules pertain to the merits of the case and the Adjudicating. Authority is the only and proper forum to rule there upon. And,

(viii) The prospectively or otherwise of the view expressed by the Central Board of Revenue in various letters referred to above and the factum of their subsequent withdrawal can also very well be adjudicated upon by the Authority issuing the show-cause notice. Also it can safely be reiterated that an Adjudicating Authority is under no stress, obligation or legal requirement to be influenced by a direction, circular or letter issued by the Central Board of Revenue expressing an opinion or making au advice of a particular legal issue or interpretation of a provision of law. The proviso to section 72 of the Act makes it vividly clear that no order, instruction or direction shall be made by the Board so as to interfere with the discretion of the officers in the exercise of their quasi-judicial functions. The natural corollary of the proviso being that a sales tax officer in exercise of its quasi-judicial functions is not obliged 'to follow any such order, direction or instruction which is opposed to any express provision of law, the Rules or a precedent of the superior Court.

7. Dismissed in limine.

M.H./B-46/LPetition dismissed.