GHAZI BAROTHA CONTRACTORS, ATTOCK VS DISTRICT OFFICER EXCISE AND TAXATION, GOVERNMENT OF PUNJAB, ATTOCK, 2009 PTD-LAHORE-HIGH-COURT-LAHORE 1891 (2009)

Capital Value Tax Rules, 1990---

----Rr.4 & 8---Finance Act (V of 1989), S.7 (7)---Constitution of Pakistan (1973), Art.199---Constitutional petition---Additional Capital Value Tax (CVT)---Notice of recovery---Petitioner was aggrieved of notice issued by District Officer Excise and Taxation for recovery of additional CVT---Validity---Where for any reason CVT was not collected under R.4 of Capital Value Tax Rules, 1990, Deputy Commissioner Wealth Tax appointed under Wealth Tax Act, 1963, and having jurisdiction over the case of purchaser or transferee might declare under R.8 of Capital Value Tax Rules, 1990, Registration Authority, manufacturer, purchaser or transferee, as assessee in default and could proceed to collect tax as an officer designated under S.7 (7) of Finance Act, 1989, by Central Board of Revenue in such behalf---Role of District Officer Excise and Taxation in the matter was non-existent when Deputy Commissioner Wealth Tax had decided to proceed in the matter under R.8 of Capital Value Rules, 1990---Matter involved adjudication by competent authority i.e. successor-in-office of Deputy Commissioner Wealth Tax, to determine as to whether additional tax was liable to be paid, if so by whom and quantum thereof---Notice issued by District Officer Excise and Taxation was declared to be without lawful authority and void---High Court directed that matter of liability to pay additional tax should be adjudicated by successor-in-office of Deputy Commissioner Wealth Tax after giving opportunity of hearing to petitioner as well as District Officer Excise and Taxation---Petition was disposed of accordingly.

Farrukh Jawad Panni for Petitioner.

Razzaq A. Mirza, Addl. A.-G. with Shaukat Mehmood, E.T.O. for Respondents.

Date of hearing: 29th July, 2009.

JUDGMENT

MAULVI ANWARUL HAQ, J.---As per facts gleaned from the writ petition and the replies filed by the respondents, the petitioner, a firm registered in Pakistan, imported about 108 vehicles and got the same registered with respondent No.1 (Motor Registering Authority) during the period May-June, 1997. The Deputy Commissioner Wealth Tax (respondent No.3) assessed capital value tax (CVT) in terms of Rule 8 of CVT Rules, 1990 and collected an amount of Rs.67,68,994. The petitioner feels aggrieved of a notice issued by the respondent No.1 on 12-4-2005 calling upon it to deposit an amount of Rs. 2,41,031 within seven days. This is stated to be additional CVT at the rate of 15% and has reference to an audit objection raised by respondent No.2.

2. Learned counsel for the petitioner contends that the respondent No.1 has no jurisdiction to issue the said notice- or to hold the petitioner liable for the additional CVT. According to him, under section 7 of the Finance Act, 1989 as amended from time to time read with Rule 8 of the Capital Value Tax Rules, 1990 only the respondent No.3 or presently his successor-in-office can pass an order, of course, after a notice to and hearing the petitioner. Further contends that the additional tax was made chargeable through Finance Act, 1997, whereas the vehicles were admittedly imported in May-June, 1997, before the said Act became applicable on 1-7-1997. Learned Addl. A.G., on the other hand, contends that as would be apparent from the contents of the impugned notice, the same has been issued because of an audit objection made by respondent No.2 pointing out that since the CVT was paid with a delay on 26-6-2000, additional tax at the rate of 15% per annum was payable, which amount has now been asked to be deposited. Further explains that notwithstanding the fact that the amendment was made by means of Finance Act, 1997, the CVT was due and was paid on 26-6-2000 and as such the penalty for late payment having already been introduced w.e.f. July, 1997, the same is recoverable. Learned law officer of course, does not question the contention that the jurisdiction in the matter does not vest in the respondent No.1.

3. I have gone through the file of this case. There is no dispute that the vehicles were imported in May-June, 1997. The CVT was not assessed or collected by respondent No.1 but by respondent No.3 on 26-6-2000. The provisions relating to the levy of additional tax were added in the Capital Value Tax Rules, 1990, framed by the Central, Board of Revenue in exercise of powers conferred by section 7(9) of the Finance Act, 1989. This has reference to subsection (7) of section 7 of the said Finance Act, 1989, as amended by the Finance Act, 1997. Before proceeding further, I may note here that under, section 7(4) of the Finance Act, 1989, the CVT is to be collected by the person responsible for registering or attesting the transfer of the asset in respect of which the tax is payable, at the time of registering or attesting the transfer. It is obviously clear that in the case in hand the CVT was to be collected by respondent No.1. It is a matter of record that the CVT, in fact, was not collected by respondent No.1. Section 7(7) of the said Finance Act, 1989, lays down where the CVT is not collected from the person liable to pay it, the tax may be collected by an officer designated by the Central Board of Revenue in this behalf from the said person, and the provisions of section 32 of the Wealth Tax Act, 1963, are to apply to the collection of the CVT as these apply to the collection of wealth tax. It is admitted that the tax was collected by the respondent No.3 as a designated officer. Section 7(8) of the said Act, 1989, lays down that where any person fails to collect or having collected fails to pay the CVT as required, he shall be personally liable to pay the tax along with additional tax at the rate of 15% per annum for the period for which such tax or part thereof remains unpaid.

4. Rule 4 of the CVT Rules, 1990, provides that, inter alia, a registration Authority shall require the purchaser or transferee to pay the amount of CVT and the tax so collected is to be credited to the Federal Government in the prescribed form. Rule 8 of the said Rules provides that where for any reason, the CVT is not collected under Rule 4, the Deputy Commissioner of Wealth tax appointed under the Wealth Tax Act, 1963, and having jurisdiction over the case of the purchaser or transferee may declare the Registration Authority, manufacturer, purchaser or the transferee, as the assessee in default and proceed to collect the tax as an officer designated under section 7(7) by the Central Board of Revenue in this behalf. The role of respondent No.1 in the matter, thus, is non-existent once the respondent No.3 decided to proceed in the matter under the said Rule 8.

5. This matter involves adjudication by a competent Authority i.e. the successor-in-office of respondent No.3 as to determine as to whether additional tax is liable to be paid, if so, by whom and, of course, the quantum thereof. No such adjudication ever took place. The writ petition accordingly is allowed inasmuch as the notice dated 12-4-2005 issued by respondent No.1 is declared to be without lawful authority and void and further is disposed of with the direction that the matter of liability to pay additional tax may be adjudicated upon by the successor-in-office of the respondent No.3 after giving an opportunity of hearing to the petitioner as well as respondent No.1 and the person who collected the CVT, as observed above. No order as to costs.

M.H-./G-88/LOrder accordingly.