Messrs TAUQIR ASHRAF & CO., LAHORE through Managing Partner VS CUSTOMS, CENTRAL EXCISE AND SALES TAX APPELLATE TRIBUNAL, LAHORE
2007 P T D 47
[Lahore High Court]
Before Nasim Sikandar and Sh. Azmat Saeed, JJ
Messrs TAUQIR ASHRAF & CO., LAHORE through Managing Partner
Versus
CUSTOMS, CENTRAL EXCISE AND SALES TAX APPELLATE TRIBUNAL, LAHORE and 2 others
Sales Tax Appeal No. 309 of 2002, decided on 25/07/2006.
Sales Tax Act (VII of 1990)---
----Ss. 3(1), 33(4)(c), 34 & 47---S.R.O. No.630(I)/95, dated 2-7-1995---Payment of fixed amount of sales tax under agreement---Reference/appeal to High Court---Appellant who was engaged in running a steel Re-Rolling Mills, was paying fixed amount of sales tax during the period 1995-96 in terms of Notification S.R.O. No. 630(I)/95 dated 2-7-1995---Subsequently, appellant was directed to pay the amount alleged to have been evaded by it along with additional tax and penalty---Appeal filed by appellant against said order was dismissed by Appellate Tribunal holding that Association of Re-Rolling Mills of which appellant was a member itself approached with the request to continue with the fixed tax regime---Appellate Tribunal found that since most of the members of association had complied with the terms of agreement with the Revenue, no legal or moral justification existed on the part of appellant to refuse compliance after having initially accepted the same---Tribunal found that appellant was estopped from taking plea of non-acceptance of said agreement at such belated stage---Validity---Mere minutes of meeting between the association and the Revenue, were not enough to charge the existing tax regime fully supported by the provisions of S.3(1) of Sales Tax Act, 1990---View of the Tribunal that matter stood settled by way of an administrative arrangement, could not be accepted as correct statement of law---No levy against the express words of the statute could be made on the basis of such an agreement, much less to say of imposition of additional tax or penalties in case of non-compliance with the terms of the agreement---Levy of tax rate and collection would not depend upon the will or agreement of some gentlemen who were supposed to represent other taxpayers of their class---Impugned order of Appellate Tribunal, was set aside by the High Court, in circumstances.
Crescent Re-rolling Mills, Lahore v. Assistant Collector of Sales Tax, Lahore 2005 PTD 2436 ref.
A. Karim Malik for Appellant.
Mian Mehmood Rashid for Respondent-Revenue.
ORDER
This further appeal under section 47 of the Sales Tax Act, 1990 seeks to challenge an order of the Customs, Excise and Sales Tax Appellate Tribunal, Lahore recorded on 27-4-2002.
2. The appellant, at the relevant time, was engaged in running a Steel Re-Rolling Mills at Lahore. It was paying fixed amount of sales tax during the period 1995-96 in terms of Notification S.R.O. No.630(I)/95, dated 2-7-1995. By way of an order in original dated 10-1-2006 it was directed to pay the sum of Rs.20,15,554 alleged to have been evaded amount of sales tax along with additional tax (to be calculated at the time of payment) under section 34 of the said Act. Also the Adjudicating Authority imposed a penalty of Rs.10,07,777 under section 33(4)(c) of the Act.
3. The appellant failed before the Appellate Tribunal. Learned members of the Tribunal appear to have agreed that the association of the Re-Rolling Mills of which the appellant was a member itself approached the Federal Government with the request to continue with the fixed tax regime undertaking that they would pay 20% more during 1996-97 as compared to 1995-96 and in return they were promised that no audit of any of the members of the association will be undertaken. Before the Tribunal it was further contended by the Revenue that most of the members of the association accepted the agreement and paid the tax accordingly. Only a very few of them defaulted and that default on their part did not derogate from terms and conditions of the agreement between the Revenue and the association. Hence the said order in original was defended.
4. Learned members of the Tribunal disapproving the conduct of the appellant found that it failed to point out the basis on which compliance was made with the terms of the agreement for some time particularly between July, 1996 to December, 1996. In the view of the learned members of the Tribunal since most of the members of the association complied with the terms of the agreement with the Revenue there was no legal or moral justification on the part of the appellant to refuse compliance after having initially accepted the same. According to the learned members the appellant was estopped from taking the plea of non-acceptance of the agreement at the belated stage when they had stopped making payments of sales tax at the rate agreed between its association and the Revenue.
5. We have heard the learned counsel for the parties. It is not disputed that the issue in hand already stands resolved by this Court in the case of Crescent Re-rolling Mills, Lahore v. Assistant Collector of Sales Tax, Lahore 2005 PTD 2436. While finding for the appellant in that case a Division Bench of this Court comprising one of us (Nasim Sikandar, J.) stated following reasons to allow these appeals:---
"Firstly, The appellants are correct in pointing out that mere minutes of meeting between the association and the Revenue were not enough to change the existing tax regime fully supported by the provisions of section 3(1) of the Sales Tax Act, 1990. The view of the Tribunal that the matter stood settled by way of an administrative arrangement cannot be accepted as correct statement of law. Not only the imposition of a tax but also any change even in its rate or process of collection cannot be made without there being a superior or subordinate legislation. The minutes of the meeting between the Revenue and the association of a class taxpayers is neither a superior nor a subordinate legislation. In our taxation system it is correct that legislature at time delegates its powers to the Revenue wing of the Government to make changes giving exemptions or altering the rate of levy or the procedure to collect it. The exercise of such power by the executive however is certainly conditional to the existence of a delegation in the superior legislation i.e. an Act of the Parliament. In the case in hand it was necessary to formally legalize the terms of the agreement either by an Act of the Parliament or if the existing law so permitted, by way of a subordinate legislation in the form of a notification. In absence
of a delegated power and manifestation of that power through a notification or an amendment in the rules, the agreement between the association and the Revenue was at best a promise to pay at a certain rate on the part of one party and to refrain from conducting audit by the other. That set of promise could very well be a gentleman's promise. However, it was not enforceable in law. No levy against the express words of the statute can be made on the basis of such an agreement, much less to say of imposition of additional tax or penalties in case of non-compliance with the terms of agreement.
Secondly, we are also not ready to accept the idea that the appellants were in any manner estopped from taking the plea of non-acceptance of the agreement. There is no estoppel against law. The agreement between the parties having never been reduced in the form of a statutory instrument, any person affected by the same could very well refuse to abide by such agreement even after having initially accepted the same. An association of taxpayers is different from a collective bargaining agent which is authorized by law to negotiate and bargain on behalf of the labourers which it represents. An association of taxpayers has no role to play under the Sales Tax Act nor any of the rules framed thereunder. It can certainly represent the interest of its members. However, in absence of any support from any law it cannot bind its members when it comes to payment of a levy, its rate or even the procedure of its collection. This is clearly discernable from the present scheme of the Sales Tax Act, 1990. It also means that compliance of most of the members of the association cannot upgrade the agreement to the status of a statutory instrument. The levy of tax, its rate and collection does not depend upon the will or agreement of some gentlemen who suppose to represent other taxpayers of their class. The constitutional prohibition against imposition of tax except under the authority of a law as contained in Article 77 read with Article 127 also extends not only to the rate of tax and the procedure of its collection unless the superior legislation had delegated such a power and that power had been exercised strictly in terms and conditions of the delegation. The agreement between the said association and the revenue as noted above, having never been converted into law through the process prescribed in that behalf no person could be forced to comply with the same. The plea that a person did for some time accepted the terms of an agreement and acted upon the same does not convert that agreement into a law."
6. For the aforesaid reasons which apply on all fours to the facts in hand and the questions raised therein, we will allow this appeal and set aside the impugned order of the Tribunal as also the earlier orders of the Revenue Authorities.
7. Appeal accepted.
H.B.T./T-25/LAppeal allowed.