Messrs REHMAT STEEL MILLS through Chief Executive, Lahore VS GOVERNMENT OF PAKISTAN through Secretary Finance, Islamabad and 3 others
2007 P T D 948
[Lahore High Court]
Before Umar Ata Bandial, J
Messrs REHMAT STEEL MILLS through Chief Executive, Lahore
Versus
GOVERNMENT OF PAKISTAN through Secretary Finance, Islamabad and 3 others
Writ Petition No.17114 of 2002, decided on 13/12/2006.
Sales Tax Act (VII of 1990)---
----Ss. 3, 7 & 11---Constitution of Pakistan (1973), Art.199---Constitutional petition--Charge of sales tax---Determination of tax liability and assessment of tax---Petitioner/(Re-rolling Mills) were charged with Sales Tax pursuant to C.B.R. Order dated 25-10-1997, wherein 200 units of electricity consumption was treated as reflecting manufacture of one metric ton of mild steel products---Such indirect calculation of production based on electricity consumption, was devised with the consent of Re-rolling Mills Association, of which petitioner was a member---Subsequently by order dated 24-4-2001 C.B.R. amended the calculation and reduced to 130 units electricity consumption that represented the manufacture of one metric ton of mild steel products---New formula for assessing production was challenged by petitioner solely on the ground that department had applied it retrospectively with effect from 1-7-2000---Maintainability of constitutional petition filed by petitioner was opposed on grounds of estoppel, laches and availability of alternate remedy---On the merits, department, however was unable to show law authorizing C.B.R. to impose a retrospective formula of assessment on the bases of alleged consent of petitioner's Association rather than the petitioner itself --Validity---Taxing Department must justify its taxing measures on the basis of lawful authority and taxing measures could not be validated on the basis of the consent of an assessee---Executive measures having adverse effect on the propriety or rights of a citizen, could not be applied retrospectively---Important factual point in the case was that petitioner had accepted the validity and binding effect of the assessment formula agreed to by petitioner's Association---That agreement, however was about assessment rather than charging of a tax---Consent in such matters was a means of settlement---Question being whether agreement with Association had provided retrospective application of assessment formula; matter was sent back to department for verification, whether the date of enforcement of new assessment formula was needed as stated in the impugned order---If such date was determined in the documents constituting the agreement, then petitioner would be bound by it, otherwise demand in question would be illegal.
Messrs Pfizer Laboratories Limited v. Federation of Pakistan and others PLD 1998 SC 64 rel.
Ch. Abdur Razzaq for Petitioner.
Waqar Azeem for Respondents
ORDER
UMAR ATA BANDIAL, J.---The petitioner Re-rolling Mills were charged with sales tax pursuant to C.B.R. order dated 25-10-1997 wherein 200 units of electricity consumption was treated as reflecting
manufacture of one metric ton of mild steel products. This indirect calculation of production based on electricity consumption was devised with the consent of the Re-rolling Mills Association of which the petitioner is a member.
2. Subsequently, by order dated 24-4-2001 the C.B.R. amended the calculation and reduced to 130 units, the electricity consumption that represents the manufacture of one metric ton of mild steel products. The new formula for assessing production is challenged by the petitioner solely on the ground that the respondents have applied it retrospectively with effect from 1-7-2000. Learned counsel for the respondent submits that the petitioner deposited the bulk of his liability and decided to challenge the taxing measure after a delay of longer than one year. He opposes maintainability of the petition on grounds of estoppel, laches and availability of alternate remedy. On the merits, however, he is unable to show law authorizing C.B.R. to impose a retrospective formula of assessment on the basis of the alleged consent of the petitioner's association rather than the petitioner itself.
3. Under the rule laid down by the Hon'ble Supreme Court Messrs Pfizer Laboratories Limited v. Federation of Pakistan and others PLD 1998 SC 64 a taxing department must justify its taxing measures on the basis of lawful authority. This is the mandate of Article 177 of the Constitution. A taxing measure cannot be validated on the basis of the consent of an assessee. The other legal principle relevant to the present case is that executive measures having adverse effect on the property or rights of a citizen cannot be applied retrospectively.
4. However, an important factual point in the case is that the petitioner accepts the validity and binding effect of the assessment formula agreed by the petitioner's association. That agreement is about assessment rather than charging of a tax; consent in such matters is a means of settlement. But the question is whether the agreement with the association provides for retrospective application of the assessment formula. The matter is, therefore, sent back to the respondent No.3 for verification whether the date of enforcement of the new assessment formula is indeed as stated in the impugned order dated 24-4-2001. If such date is determined in the documents constituting the agreement then the petitioner shall be bound by it otherwise the demand in question shall be illegal. Disposed of.
5. The aforesaid inquiry shall be conducted and completed in accordance with law within two months from the date of receipt of a certified copy of this order by the respondent.
H.B.T./R-73/LOrder accordingly.