HIGHNOON LABORATORIES LTD VS COLLECTOR OF SALES TAX (APPEALS), LAHORE
2008 P T D 1
[Lahore High Court]
Before Syed Hamid Ali Shah, J
Messrs HIGHNOON LABORATORIES LTD., LAHORE
Versus
COLLECTOR OF SALES TAX (APPEALS), LAHORE and 2 others
Writ Petition No.5828 of 2007, decided on 15/06/2007.
Sales Tax Act (VII of 1990)---
----S.45-B(4) [as omitted by Finance Act (III of 2006]---Constitution of Pakistan (1973), Art.199---Constitutional petition---Appeal to Appellate Authority---Prayer for temporary injunction qua recovery of demanded amount of tax---Refusal of Appellate Authority to grant such prayer due to omission of subsection (4) of S.45-B of Sales Tax Act, 1990 by Finance Act, 2006---Validity---Appeal was continuity of original proceedings, which would attain finality only upon adjudication of matter by last forum set-up under law---Appellate Authority having powers to grant main relief by setting aside, varying, altering or annulling order appealed against could also grant interim relief by suspending, varying or modifying order appealed against---Where appellant established prima facie case, irreparable loss and valance of convenience in his favour, then Appellate Authority could grant him injunctive relief subject to furnishing of adequate security---High Court set aside impugned order and granted stay order to appellant subject to deposit of 25% of principal amount of tax---Principles.
Commissioner Khairpur Division, Khairpur and another v. Ali Sher Sarki PLD 1971 SC 241; Umer Farooq Syed v. Commissioner of Income/Wealth Tax, Lahore and 2 others 1991 PTD 872; Messrs Adeem Hosiery Dying v. Assistant Collector of Sales Tax 2002 PTD 1616 and Central Board of Revenue and others v. Chanda Motors 1993 SCMR 39 ref.
1996 SCMR 645 and Syed Imran Raza Zaidi, Superintending Engineer, Public Health Engineering Circle-I, Gujranwala v. Government of Punjab through SGA&I Department, Punjab Secretariat, Lahore 1996 SCMR 643 rel.
Ashtar Ausaf Ali for Petitioner.
Muhammad Nawaz Cheema for Respondent.
Date of hearing: 15th June, 2007.
JUDGMENT
SYED HAMID ALI SHAH, J.---The petitioner through the instant writ petition has assailed the order of the Collector Customs, Sales Tax and Federal Excise. (Appeals), Lahore dated 5-6-2007, whereby the application of the petitioner for ad-interim order,' staying the recovery of the liability of sales tax, was turned down on the plea that as consequence of omission of subsection (4) of section 45-B of the Sales Tax Act, 1990 the request of ad interim relief cannot be granted.
2 Learned counsel for the petitioner contends that the Collector (Appeals) has failed to comprehend the effect of subsection (4) through Finance Act, 2006 (Act III of 2006). Prior to amendment through Finance Act, a registered person could claim relief of interim injunction by depositing 15% of the principal amount of tax, as a matter of right. On omission of subsection (4) of section 45-B of the Sales Tax Act, 1990, interim relief to injunction can be claimed by proving the factum of prima facie case, irreparable loss and balance of convenience. Now imposition of condition of payment of 15% cannot be claimed as a matter of right. Learned counsel emphasized that amendment does not take away the right of an appellant to claim relief of injunction during the pendency of the appeal. He adds that even in the absence of express provision for the grant of interim relief, the appellate forum having power to grant main relief, can grant interim relief by suspending whole or part of the order appealed. Learned counsel while referring to the cases of (1996 SCMR 645), Commissioner Khairpur Division, Khairpur and another v. Ali Sher Sarki (PLD 1971 SC 241), Umer Farooq Syed v. Commissioner of Income/Wealth Tax, Lahore and 2 others 1991 PTD 572, Syed Imran Raza Zaidi, Superintending Engineer, Public Health Engineering Circle-I, Gujranwala v. Government of Punjab through SGA & Department, Punjab Secretariat, Lahore (1996 SCMR 643) and Messes Adeem Hosiery Dying v. Assistant Collector of Sales Tax 2002 PTD 1616 has submitted that where a forum or Tribunal, cannot pass the interim relief in the absence of express provision of law or where interim relief is restricted to a specified period, the High Court in such cases, can grant interim relief of injunction. Learned counsel while referring to the case of Central Board of Revenue and others v. Chanda Motors (1993 SCMR 39) submitted that an order passed in original proceedings is not final unless it crosses all the fora set under that law in which it can be challenged and the order of the last forum would be final, thus during the pendency of the appeal, recovery of impugned amount, will unfairly prejudice the rights of the petitioner The purpose of appeal, will be frustrated, if recovery proceedings conclude, before the process of its determination through proper adjudication, attains finality.
3. Learned counsel for the respondent-Revenue, on the other band, has submitted that the law does not provide the remedy of interim injunction, in appeal against the order of Adjudication Authority. The omission of subsection (4), is meaningful. The object of amendment is to make recovery of the adjudged amount, possible and to remove the unnecessary hurdles. He added that if the law prescribes a particular manner and procedure in which things are required to he done, the same must be done that way, or not at all. Learned counsel has brought to my notice various changes in the Sales Tax Act, with specific reference to remedy of appeal. He has submitted that taking away the remedy of interim relief does not affect the rights of the registered person/appellant, as in case the order of Adjudicating Authority is sat aside, the adjudged amount paid by the registered person, can be adjusted towards future liability of sales tax. Learned counsel has submitted that no writ is competent, against an interim order. Extraordinary conditional jurisdiction can be invoked only when final order, in the hierarchy of the department is passed. Learner counsel summed up his arguments by submitting that since no interim relief is available to the petitioner in appeal, it cannot be claimed by invoking the extraordinary jurisdiction of this Court.
4. Heard learned counsel for the parties and record perused.
5. Earlier various petitioners invoked the extraordinary constitutional jurisdiction of this Court, in an identical situation and the request of the petitioners against the coercive measures for recovery of the adjudged amount of sales tax was accorded, in a manner that the petitioners were directed to deposit a certain percentage of the demand of the sales tax amount and a direction was given to the Adjudicating Authority for finalization of the matter within a specified period of time.
6. The Collectors (Appeals) in the hierarchy of the Sales Tax Department, while hearing the appeals in various collectorates, are not entertaining the request of injunctive relief, on the plea that such power of Collector of Appeals, has been taken away by virtue of omission of subsection (4) of section 45-B of the Sales Tax Act, 1990, through Finance Act, 2006 (Act III of 2006). Whether or not, the Collector (Appeals) has the power to grant the relief of temporary injunction, various changes from time to time, which have been brought in section 45 of the Sales Tax Act, 1990, through amendment, need mention: ---
(i) Sales Tax Act, 1990 was enforced in the year 1990 and at the relevant time, according to section 45(3), payment of sales tax demanded with penalties imposed, before filing of appeal, was essential requirement. There was no provision of staying the recovery of adjudged amount, wholly or partially.
(ii) Proviso to subsection (3), was added through Finance Act, 1993, whereby Collector (Appeals) was conferred power to dispense with such deposit as a whole or a part thereof, upon his satisfaction in the cases where the hardship was faced by the appellant to arrange such deposit, subject to imposition of conditions as the Collector may deem fit.
(iii) The Collector (Appeals) was authorized vide second proviso, introduced in subsection 3(ibid), to direct payment of tax demanded or penalty imposed, through instalment spreading over a period of six months. The amendment was brought through Finance Act, 1996.
(iv) The post Collector (Appeals) was abolished and powers of Collector (Appeals) were substituted by "powers of Appellate Tribunal" through Finance Ordinance, 2000 by a direct appeal to the Tribunal.
(v) Section 45-B of Act, 1990 (ibid) was inserted vide Finance Ordinance, 2002 and subsection (4) was introduced in Act, 1990. Resultantly the provisions empowering Collector (Appeals) to direct for deposit of amount pending appeal, dispensation of deposit (according to proviso mentioned above) and dispensation of deposit in case of hardship as whole or a part thereof or deposit in suitable instalments, were restored.
(vi) Third proviso to subsection (4) of section 45-B was added through Finance Act, 2003, in view whereof, effect of interim order qua dispensation of deposit, was restricted to a total period of 6 months.
(vii) Subsection (4) of section 45-B of the Sales Tax Act, 1990, has been omitted through Finance Act, 2006 (Act III of 2006). The appeal against the order of adjudicating authority is now governed under section 45-B of the Sales Tax Act, 1990, the provisions of law as it exist today is as under:-
"45-B. Appeals. (1) Any, person, [other than] the Sales Tax Department, aggrieved by any decision or order passed under sections [10, 11, 36, 45 or 66], by an officer of Sales Tax may, within thirty days of the date of receipt of such decision or order, prefer appeal to the Collector of Sales Tax (Appeals):
Provided that an appeal preferred after expiry of thirty days may be admitted by the Collector of Sales Tax (Appeals) if he is satisfied that the appellant has sufficient cause for not preferring the appeal within the specified period:
Provided further that the appeal shall be accompanied by a fee of one thousand rupees to be paid in such manner as the Board may prescribe.
(2) The Collector of Sales Tax (Appeals) may, after giving both parties to the appeal an opportunity of being heard, pass such order as he thinks fit, confirming, varying, altering, setting aside or annulling the decision or order appealed against:
Provided that such order shall be passed not later than ninety days from the date of filing of appeal or within such extended period as the Collector (Appeals) may, for reasons to be recorded in writing fix: Provided further that such extended period shall, in no case, exceed ninety days.
(3) In deducting an appeal, the Collector of Sales Tax (Appeals) may make such further inquiry as may be necessary provided that he shall not remand the case for de novo consideration."
8(sic). In the above legislative background, remedy of appeal against order adjudication authority under the Sales Tax Act, after the omission of subsection, enlarges the scope of relief of temporary injunction or takes away the remedy of interim relief, requires consideration.
9. Provisions of section 45-B of the Sales Tax Act, 1990 as amended, do not provided for the remedy of interim relief. No other provision in the Sales Tax Act expressly empowers the Collector (Appeals) to grant interim relief, during the pendency .of appeal. Conversely the Collector (Appeals), as envisaged in subsection (2) of section 45, is empowered to confirm, vary, alter, set aside or annul the decision or order appealed against. The powers conferred upon him include the holding of inquiry to debar him from remanding the case for de novo consideration. Perusal of section 45-B reflects that the Collector (Appeals) has been conferred unfettered powers by the statute, without any limitation. The appellate authority having the power to pass any order, including setting aside or annulling the impugned order has no statutory restraint to grant is required to be viewed according to the law enunciated by the Honorable Supreme Court of Pakistan:-
(a) The order passed by the Tribunal under West Pakistan Control of Gondas Ordinance, 1959 (Act XXXV of 1959) was appeal-able under section 18 before Appellate Authority. The Appellate Authority was not conferred with powers to stay execution of order in appeal. It was held in the case of Commissioner of Khairpur and another v. Ali Sher Sarki (PLD 1971 SC 242) that Appellate Authority vested with the power to quit of the charge to a person (grant of ultimate relief), appellate forum can grant ancillary relief of suspending the operation of the order, appealed against.
(b) Leave to appeal was granted in the case of Syed Imran Raza Zaidi, Superintending Engineer, Public Health Engineering Circle-I, Gujranwala v. Government of Punjab through Secretary, Services General Administration and Information Department, Punjab, Secretariat, Lahore and two others (1996 SCMR 645) to consider that the Service Tribunal possesses the powers to grant temporary injunction during the pendency of the appeal. It was observed that even in the absence of express provisions for grant of interim relief, Appellate Court/Tribunal having powers to grant main relief by suspending whole or partly the operation of the order in appeal before it would have all such powers, which were reasonably incidental or ancillary to main appellate jurisdiction. The appellate authority or Tribunal, which has conferred with powers to grant main relief by setting aside, varying, altering or annulling the order appealed against, could grant interim relief by suspending, varying or modifying the order appealed against.
10. Following the above dictum of law laid by the apex Court, brings me to conclude the Collector (Appeals), who is not empowered expressly under the provisions of Sales Tax Act, 1990 to grant interim relief, vest with the same power to grant relief of interim injunction during the pendency of the appeal. The Collector (Appeals) has the power to grant main relief by setting aside, varying, altering or annulling the order appealed against, could grant interim relief by suspending, varying or modifying the order appealed against.
11. The order of the Collector (Appeals) is appealable before the Appellate Tribunal under section 46 of Sales Tax Act, 1990 and a remedy of reference to the High Court is also available under section 47 of the Act, 1990 (ibid) against the decision of the Appellate Tribunal.
The Appellate Tribunal has been conferred with powers to pass interim order and such remedy is also available in this Court in a reference under section 47 of' the Act, 1990 (ibid). Further the remedy of appeal has been provided under Customs Act, 1969 under section 195-B, where the Collector (Appeals) or Appellate Tribunal have the powers to dispense with the deposit of duty demanded or penalty levied, when it is found that such deposit will cause undue hardship to the appellant. A similar remedy (to dispense with deposit of duty demanded or penalty imposed) has been provided to an appellant, who has filed an appeal under section 37(1) of the Federal Excise Act, 2005. The relief ofinjunction during the pendency of the appeal has also been provided under sections 127 and 131 of the Income Tax Ordinance; 2001. A tax payer under different taxing statutes, can avail remedy of interim relief during the pendency of appeal, therefore, a registered person under the Sales Tax Act, 1990 cannot be deprived of such remedy. The appeal is continuity of the proceedings and original proceedings do not attain finality, unless the forum set up under law, in which such proceedings can be challenged, finally adjudicates the matter. Depriving an appellant of his right, to seek interim relief with unfairly prejudice the case of such litigant especially in he circumstances when the litigant has a prima facie case in his favour and his case on the touchstone of irreparable loss and balance of convenience tilts in his favour.
12. Subsection (4) of section 45-B stands omitted through Finance (Act III of 2006). The effect of omission, in view of the above discussion, would be that imposition of conditions and period for which the injunctive order was effective, are taken away through the omission. The amendment/omission of subsection (4) has enlarged the scope and powers of the Collector (Appeals), who is conferred with powers to grant temporary injunction, if an appellant before him, establishes a prima facie case, threat of irreparable loss and balance of convenience in his favour. While granting the injunctive relief, the Collector (Appeals) can consider the issuance of injunction by imposing condition or grant relief subject to furnishing of adequate security.
13. For he foregoing, this writ petition is allowed and impugned order of the Collector (Appeals) whereby he has refused to grant temporary injunction on the ground of omission of subsection (4) of section 45-B is set aside. Resultantly, pending the decision of the appeal by the Collector (Appeals), the recovery of the amount demanded is stayed, subject to payment of 25% of the principal amount of the tax. Tile Collector (Appeals) shall decide the pending appeal expeditiously as early as possible but not later than 90 days of the order of this court.
S.A. K./H-36/LPetition accepte