AL-KARAM CNG VS FEDERATION OF PAKISTAN
2011 PTD 1
[Lahore High Court]
Before Syed Mansoor Ali Shah, J
AL-KARAM CNG and others
Versus
FEDERATION OF PAKISTAN and others
Writ Petition No.3253 of 2010, decided on 15/06/2010.
(a) Income Tax Ordinance (XLIX of 2001)---
----Ss. 156A & 234A---Selling of petroleum products and running of CNG Station---Deduction of tax at source---Provision of Ss.156A and S.234A of Income Tax Ordinance, 2001---Scope Section 156A of the Income Tax Ordinance, 2001 provides that any person selling petroleum products to a petrol pump operator shall deduct tax from the amount of commission at the rate specified. The said tax deducted shall be the Final Tax on the Income arising from the sale of the Petroleum Products. Similarly, advance tax shall be collected on the amount of gas bill for Compressed Natural Gas Station. The tax collected shall be the Final Tax on the income of the CNG Station arising from the consumption of the GAS. Subsection 4 of section 234A further provides that taxpayer shall not be entitled to claim any adjustment of withholding tax collected or deducted under any head, during the tax year.
(b) Income Tax Ordinance (XLIX of 2001)---
----Ss. 169(2)(a), 156A &. 234A---Tax collected or deducted as final tax---If provisions of Ss.156A and 234A, Income Tax Ordinance, 2001 apply to a taxpayer, his income shall not be chargeable to tax under any head of income in computing the taxable income of the taxpayer.
(c) Income Tax Ordinance (XLIX of 2001)---
----S. 235---Electricity consumption---Collection of advance tax on the amount of electricity bill of commercial or industrial consumer---Scope---Such collection is not to be made from a person who produced a certificate of exemption form the Commissioner---Such a tax, in the case of a company is adjustable against tax liability.
(d) Income Tax Ordinance (XLIX of 2001)---
---Ss. 147(1)(d), 156A, 234A read with S.169(2)(a)---Constitution of Pakistan, Arts. 23, 24, 4 & 10A---Petroleum products---CNG Station--Advance tax paid by the taxpayer---Tax deducted as a final tax---Right of individuals to be dealt with in accordance with law---Protection of property rights---Sections 147(1)(d), 156A, 234A read with S.169(2)(a) of the Income Tax Ordinance, 2001 clearly show that once the taxpayer has discharged his liability of Final Tax he is not chargeable to tax under any head while computing his taxable income---Charge of continuous Advance Tax even thereafter under S.235 is therefore in conflict with the cluster of provisions relating to final tax and conceptionally in disagreement' with the legislative intent---Advance tax is an estimated amount which is to be calculated by the taxpayer and paid in advance during the tax year---In the present case, the tax deducted under Ss.156A and 234A of the Income Tax Ordinance, 2001 is the final discharge of the tax; in such a situation to demand advance tax from a taxpayer amounts to frustrating the concept of advance tax---Once the final tax liability is secured, the question of paying advance tax cannot arise which is not the purpose of advance tax under the Ordinance---Prima facie, the constitutionality of S.235 in the face of the final tax. provisions under Ss.156A, 234A and 169 of the Income Ordinance, 2001 appears to be suspect---Even a penny charged without lawful authority offends Arts.23 & 24 of the Constitution besides offending due process guaranteed under Arts.4 and 10A of the Constitution---Poor legislative arrangement which fails to resolve such internal conflict seriously threatens economic justice provided under the Objectives Resolution, which is a substantive part of the Constitution---Taxpayers cannot be deprived of their property because of poor tax governance.
(e) Income Tax Ordinance (XLIX of 2001)---
----Ss.169, 170 & 235---Transitional advance tax---Tax collected or deducted as a final tax---Refund---Scope---Facility to obtain refund under S.169 or 170 of the Income Tax Ordinance, 2001 does not confer a right on the tax authorities to charge tax without any lawful justification---Refund arises where due to some inadvertence excess taxis charged or paid; it surely does not grant a licence to the tax authorities to charge taxes which the law prohibits or does not sanction---In the present case inspite of discharge of Final Tax under the Ordinance the taxpayers were being subjected to deduction of transitional advance tax under. S.235, which was not chargeable and therefore will invariably be refunded---Taxpayer cannot be deprived of his property just because he was entitled to refund at some later stage---Refund could not be a pretext to charge tax if the tax was not lawfully permissible.
(f) Interpretation of statutes---
----Where literal construction or plain meaning causes hardship, futility, absurdity or uncertainty, the purposive or contextual construction is preferred to arrive at a more just, reasonable and sensible result---Every law is designed to further the ends of justice and not to frustrate it on mere technicalities---Though the function of the courts is only to expound the law and not to legislate, nonetheless the legislature cannot be asked to sit to resolve the difficulties in the implementation of its intention and the spirit of the law---In such circumstances, it is the duty of the court to mould or creatively interpret the legislation by liberally interpreting the statute---Statutes must be interpreted to advance the cause of statute and not to defeat sauce.
Interpretation of Taxing Statutes by Mittal ref.
(g) Interpretation of statutes---
----Conflict between two provisions---Resolution of---Theory of "reading down"---Applicability---Scope.
In order to resolve the conflict between the two provisions, after the purpose of the statute is clear, is to rely on the interpretative tool of reading down.
Theory of reading down is a rule of interpretation which is resorted to by the courts when they find a provision read literally seems to offend a fundamental right or falls outside the competence of the particular legislature.
In interpreting the provision of a statute the courts will presume that the legislation was intended to be inter vires and also reasonable. The rule followed is that the enactment is interpreted consistent with the presumption which imputes to the legislature an intention of limiting the direct operation of its enactment to the extent that is permissible. Legislature is presumed to be aware of its limitations and is also attributed an intention not to over-step its limits. To keep the Act within the limit of its scope and not to disturb the existing law beyond what the object requires, it is construed as operative between certain persons, or in certain circumstances, or for certain purposes only, even through the language expresses no such circumstances of the field of operation. To sustain law by interpretation is the rule.
The reading down of a provision of a statute puts into operation the principle that so far is reasonably possible to do so, the legislation should be construed as being within its power. It has the principal effect that where an Act is expressed in language of a generality which makes it capable, if read literally, of applying to matters beyond the relevant legislative power, the court will construe it in a more limited sense so as to keep it within power. If certain provision of law construed in one way would make them consistent with the Constitution and another interpretation would render them unconstitutional the court would lean in favour of the former construction.
Similarly, for upholding any provision, if it could be saved by reading it down, it should be done, unless plain words are so clear as to be in defiance of the Constitution. These interpretations spring out because of the concern of courts to always let a legislation to achieve its objective and not to let it fall merely because of a possible ingenious interpretation. The words are not static but dynamic. This infuses fertility in the field of interpretation. The principle of reading down, however, will not be available, where the plain and literal meaning from a bare reading of any impugned provisions clearly shows that it, confers arbitrary, uncanalised or unbridled power.
Elahi Cotton Mills Ltd. v. Federation of Pakistan PLD 1997 SC 582 and Introduction to Interpretation of Statues (Reprint Edition 2007) by Dr. Avtar Singh ref.
(h) Income Tax Ordinance (XLIX of 2001)---
---Ss. 235(3) & 159(1)---Advance tax---Exemption---Provision of S.235(3) of Income Tax Ordinance, 2001 provides that advance tax shall not be collected if the taxpayer produces a certificate from the Commissioner that his income is exempt from tax---Such certificate is issued under S.159(1) of the Ordinance if the taxpayer enjoys exemption from tax under the Ordinance.
(i) Income Tax Ordinance (XLIX of 2-001)---
----Ss. 53, 156A, 169, 243A, 235(3), 159(1) & Second Sched. Part I---Exemptions and tax concessions in the Second. Schedule of Income Tax Ordinance, 2001---Scope---"Exemption" and "discharge of final tax"---Distinction---Petroleum products---CNG Station---Tax collected or deducted as final tax---Exemption or. lower rate certificate by Commissioner---Taxpayer, under Ss. 156A and 234A read with S.169 of the Ordinance has no chargeability under the law after discharge of final tax---Final tax clauses under the Ordinance stand at higher pedestal than the exemption clauses---If benefit of exemption can preclude the chargeability of tax under S.235(3), the discharge of final tax under the Ordinance can also extend the same benefit to the taxpayer, if not more---"Exemption" in S.159 does not have limited meaning; it would be discriminatory to limit its meaning by excluding "final tax" under the Ordinance---Sections 159(1) and 235(3) of the Ordinance can, therefore, be read down to include "final tax clauses" within the meaning of exemption under said sections---Commissioner, therefore, while issuing an exemption certificate, will also consider the cases falling under final tax clauses---Principles.
Exemptions under the Income Tax Ordinance, 2001 are provided in section 53 read with Part-I of the Second Schedule to the Ordinance. The purpose of exemption is that the payability of the taxpayer is restricted in terms of the exemption however the chargeability of the tax remains. Whereas sections 156A and 234A when read with section 169 of the Ordinance reveal that the taxpayer has no chargeability under the law after the discharge of final tax under the, law. Final Tax clauses under the Ordinance therefore stand at a higher pedestal than the exemption clauses. If benefit of exemption can preclude the chargeability of tax under section 235(3), the discharge of final tax wider the Ordinance can also surely extend the same benefit to the taxpayer, if not more. It would be discriminatory to limit the meaning of "exemption" in section 159(1) of the Ordinance by excluding "final tax provisions" under the Ordinance. In the absence of any legislative integration between sections 156A, 234A and section 235, operational harmonization can be achieved by extending the benefit available to exemption clauses under section 159(1) to the final tax clauses also.
Sections 159(1) and 235 (3) of the Ordinance can therefore be read down to include "final tax clauses" within the meaning of exemption under the said sections. The Commissioner, therefore, while issuing an exemption certificate, will also consider the cases falling under final tax clauses.
(j) Income Tax Ordinance (XLIX of 2001)---
----Ss. 156A, 234A, 169(2)(a), 159 & 235-Constitution of Pakistan, Art.199---Constitutional petition---Petroleum products---CNG Station--Tax collected or deducted as a final tax---Charge of transitional advance tax in monthly electricity bill under S.235, Income Tax Ordinance, 2001---Scope---Exemption or lower rate certificate---Scope---Taxpayers (petitioners) in the present case, run and manage petrol pumps and CNG Stations; they purchase petroleum products and CNG from the market; under Ss.156A and 234A, Income Tax Ordinance; 2001 the tax deducted in purchasing petroleum products or CNG was the final tax on the income of the taxpayers from the said business---Contention of the taxpayers was that their sole income was generated by running petrol pump or a CNG Station and once the said income was subject to final tax, transitional advance tax could not be charged in their monthly electricity bills under S. 235 of the Ordinance---Precise question for determination was that "as the income of the taxpayers solely arose from the consumption of petroleum products and CNG at the Petrol Pumps and the CNG Stations, tax deducted under Ss.156A & 234A of the Ordinance amounted to final discharge of income tax, thereafter having been finally discharged from income tax, advance tax charged under S.235 of the Ordinance was without lawful authority and hence illegal---Validity---Held, taxpayers (petitioners) were entitled to an exemption certificate under S.159(1) of the Ordinance once it was established to the satisfaction of the Commissioner concerned that the final tax had been fully discharged under Ss.156A & 234A of the Ordinance and that there was no other income of the taxpayer---Said exemption certificate would be valid for the purpose of S.235(3) of the Ordinance---High Court directed the taxpayers (petitioners) to approach the concerned Commissioners under S.159(1) of the Ordinance who, on receipt of the application of the taxpayer, will issue exemption certificates after verification that the petitioners had no other income but the one accruing under Ss.156A and 234A of the Ordinance and that the liability of final tax had been fully discharged---High Court clarified that in case the said certificate was not issued to the taxpayers on the ground that they had other source of income, the amount of income tax in the electricity bills which was stayed during the pendency of the proceedings shall stand revived and the petitioners shall be liable to pay the same and in such a situation electricity companies were directed to issue the said bills immediately along with the tax liability withheld by High Court.
Indus Jute Mills Ltd. v. Federation of Pakistan 2009 PTD 1473 distinguished.
Commissioner of Income Tax, Karachi v. Sir E.H. Jaffar and Sons (Pvt.) Ltd. 9 Tax Forum 35-Vol 5; ITA No.98 of 1998; Interpretation of Taxing Statutes by Mittal; Elahi Cotton Mills Ltd. v. Federation of Pakistan PLD 1997 SC 582 and Introduction to Interpretation of Statues (Reprint Edition 2007) by Dr. Avtar Singh ref.
Ch. Anwar-ul-Haq for Petitioners.
Muhammad Ilyas Khan, Muhammad Asif Hashmi for Respondents.
Muhammad Nawaz Waseer, Standing Counsel for Federation.
Asim Zulfiqar, Charted Accountant as Amicus Curiae.
Dates of hearing: 9th, 14th and 15th June, 2010.
JUDGMENT
SYED MANSOOR ALI SHAH, J.---This consolidated judgment shall also decide writ petitions mentioned in Schedule A to this judgment as common question of law and facts arise in these cases..
2. Brief facts of the case are that the petitioners run and manage petrol pumps and CNG stations. They purchase petroleum products and compressed natural Gas (CNG) from the market. Under sections 156A and 234A of the Income Tax Ordinance, 2001 ("Ordinance") the tax deducted in purchasing petroleum products or CNG is the Final Tax on the income of the petitioners from the said business. The grievance of the petitioners is that their sole income is generated by running a petrol pump or a CNG station and once the said income is subject to Final Tax, transitional advance tax cannot be charged in the monthly electricity bills of the petitioners under section 235 of the Ordinance.
3. Counsel for the petitioners submitted that the petitioners have no other source of income and therefore after the deduction of tax under sections 156A and 234A, they are not liable to pay advance tax under section 235 of the Ordinance.
4. Mr. Muhammad Ilyas Khan, Advocate on behalf of respondents submitted that there is difference between sections 234A and 156A of the Ordinance. He referred to Indus Jute Mills Ltd. v. Federation of Pakistan (2009 PTD 1473) and submitted that the matter in hand has already been decided in the said case. He argued that the present petition is a sub-set of the earlier litigation decided in the above 'cited case. He contended that the petitioners should approach the Federal Board of Revenue under section 159(3) of the Ordinance instead of directly invoking the jurisdiction of this court. Lastly, he submitted that section 235 is an independent provision and operation of the same cannot be stopped.
5. Mr. Muhammed Asif Hashmi, also appearing on behalf of FBR relied heavily on Indus Jute Mills Ltd. case (supra) to submit that the matter has already been resolved in favour of the department.
6. Mr. Asirn Zulfiqar, Chartered Accountant was appointed as amicus curiae. He submitted that the present cases pertain to businesses running CNG stations or petrol pumps or in some cases, both. He submitted that under section 156A of the Ordinance, petrol supplied to the petitioners is subject to withholding tax which amounts to final discharge of tax of the petitioners. He submitted that there are five main suppliers of petroleum products in the country, namely, PSO, Caltex, Total, Shell and Attock Oil. Similarly for CNG stations withholding tax on the, supply of CNG to the said stations amounts to final discharge of tax under section 234A of the Ordinance. He submitted that there are two suppliers of CNG in the country, namely, Sui Northern Gas Company Limited and Sui Southern Gas Company Limited and in the present case Sui Northern Gas Company Limited would be the relevant Company. By identifying the suppliers of petroleum products and CNG the amicus emphasized that the transaction can be easily verified.
7. He contended that under the law where the withholding tax amounts to final discharge, the taxpayer is not supposed to file a return and instead has to file a simple statement under section 115(4) of the Ordinance which is considered to be an assessment order under section 169. This is opposed to section 114 of the Ordinance whereunder a normal return is filed by the taxpayer. It is contended that once discharge of final tax takes place under sections 1.56A or 234A of the Ordinance, the charge of advance tax under section 235 in the electricity bills is unlawful because any such amount collected, if at all, has to be refunded under section 170 of the Ordinance.
8. While referring to the decision of the august Supreme Court of Pakistan in Commissioner of Income Tax, Karachi v. Sir E.H. Jaffer and Sons (Pvt.) Ltd., (9 Tax Forum 35 Vol 5) it has been contended that in the said case a commercial importer with final discharge of tax under section 50(5) of Income Tax Ordinance, 1979 ("Repealed ordinance"). However, after the import when the said importer made local sales, he was again subjected to tax under section 50(4) at the rate of 3%. It was held by the august Supreme Court of Pakistan that once the tax is finally discharged, no other tax can be charged from the petitioner under the same head. He also placed reliance on judgment dated 30-3-2000 passed in I.T.A. No. 98 of 1998 by the High Court of Sindh, Karachi for the above argument. It was contended that the said problem can be resolved under section 159(3) of the Ordinance. He drew a parallel in the Sales Tax Act, 1990 by referring to Sales Tax General Orders Nos. 7 to 10 of 2007.
9. Arguments heard. Record perused.
10. The precise question placed before this court for determination by the petitioners is that as the income of the petitioners solely arises from the consumption of petroleum products and CNG at the Petrol Pump and the CNG Station, respectively. Tax deducted under sections 156A and 234A of the Ordinance amounts to final discharge of income tax of the petitioners. Thereafter having been finally discharged from payment of income tax, advance tax charged under section 235 of the Ordinance is without lawful authority and hence illegal.
11. Sections 147, 156A, 159, 234A and 235 of the Ordinance are the relevant provisions that deal with the question in hand. The aforesaid sections are reproduced in Schedule-B to this judgment for ready reference.
12. Section 156A of the Ordinance provides that any person selling petroleum products to a petrol pump operator (petitioners) shall deduct tax from the amount of commission at the rate specified. The said tax deducted shall be the Final Tax on The Income Arising from the Sale of The Petroleum Products. Similarly, advance tax shall be collected on the amount of gas bill for Compressed Natural Gas Station (petitioners). The tax collected shall be the Final Tax on the Income of the CNG StationArising from the Consumption of the GAS. Subsection (4) of section 234A further provides that tax payer shall not be entitled to claim any adjustment of withholding tax collected or deducted under any head, during the tax year.
13. Section 169(2)(a) of the Ordinance provides that if sections 156A and 234-A of the Ordinance apply to a taxpayer, his income shall not be chargeable to tax under any head of income in computing the taxable income of the person.
14. Section 235 provides that there shall be collected advance tax at the rates specified on the amount of electricity bill of a commercial or industrial consumer. Section 235(3) provides that such a collection is not to be made from a person who produces a certificate of exemption from the Commissioner. Such a tax in the case of a company is adjustable against tax liability.
15. This issue was half-heartedly agitated before this court in Indus Jute Mills Ltd. v. Federation of Pakistan (2009 PTD 1473). The court referred to it as "a feeble attempt" because it was not made clear if the only source of income of the petitioners was solely from purchase of petroleum products or CNG. The question in hand was raised en passe in the above cited case without the petitioners taking the position that the only source of income is the income generated under sections 156A and 234A of the Ordinance. Therefore this court observed:
"Thus, the tax collected under section 235 of the Ordinance can be adjusted against any tax due with regard to other income of the assessee not covered under the separate presumptive tax regime, and where no such liability of tax exists, then obviously the amount collected under section 235(1) of the Ordinance would be refunded to the company under section 235(4) thereof."
16. In the present cases the petitioners are not the same, besides they have placed on record their accounts to show that there is no other source of income, except provided in the aforesaid sections. It has been vehemently argued that in the face of discharge of Final Tax any charge of further tax is confiscatory and violative of fundamental rights and the concept of economic justice. Therefore, this issue was not central to Indus Jute Mills' case and cannot therefore be considered to be a binding precedent on this question.
17. Sections 147(1)(d), 156A, 234A read with section 169(2)(a) of the Ordinance clearly show that once the taxpayer has discharged his liability of Final Tax he is not chargeable to tax under any head while computing his taxable income. Charge of continuous Advance Tax even thereafter under section 235 is therefore in conflict with the cluster of provisions relating to final tax mentioned above. It is also conceptionally in disagreement with the legislative intent. Advance tax is an estimated amount which is to be calculated by the taxpayer and paid in advance during the tax year. In the present case, the tax deducted under sections 156A and 234A of the Ordinance is the final discharge of the tax. In such a situation to demand advance tax from a taxpayer amounts to frustrating the concept of advance tax. Once the final tax liability is secured, the question of paying advance tax cannot arise. It is not the purpose of advance tax under the Ordinance.
18. Prima facie, the constitutionality of section 235 in the face of the final tax provisions under sections 156A, 234 A and 169 appears to be suspect. Even a penny charged without lawful authority offends Articles 23 and 24 of the Constitution besides offending due process guaranteed under Articles 4 and l0A of the Constitution. The poor legislative arrangement which fails to resolve this internal conflict seriously threatens economic justice provided under the Objectives Resolution, which is a substantive part of the Constitution. Petitioners cannot be deprived of their property because of poor tax governance.
19. Further, the facility to obtain refund under section 169 or 170 of the Ordinance does not confer a right on the tax authorities to charge tax without any lawful justification. Refund arises 'where due to some inadvertence excess tax is charged or paid. It surely does not grant a license to the tax authorities to charge taxes which the law prohibits or does not sanction. In the present case inspite of discharge of Final Tax under the Ordinance the petitioners are being subjected to deduction of transitional advance tax under section 235, which is not chargeable and therefore will invariably be refunded. A taxpayer cannot be deprived of his property just because he is entitled to refund at some later stage. Refund cannot be a pretext to charge tax if the tax is not lawfully permissible.
20. The way ahead through this legislative impasse can either be to gauge the constitutionality of section 235 when it comes into conflict with the final tax provisions mentioned above and to strike it down or to harmonize the two sets of provisions by using purposive interpretation of the Ordinance and using the interpretative tool of reading down.
21. It is settled law that where literal construction or plain meaning causes hardship, futility, absurdity or uncertainty, the purposive or contextual construction is preferred to arrive at a more just, reasonable and sensible result. "Every law is designed to further the ends of justice and not to frustrate it on mere technicalities. Though the function of the courts is only to expound the law and not to legislate, nonethe less the legislature cannot be asked to sit to resolve the difficulties in the implementation of its intention and the spirit of the law. In such circumstances, it is the duty of the court to mould or creatively interpret the legislation by liberally interpreting the statute. The statutes must be interpreted to advance the cause of statute and not to defeat it." Reliance is placed on Interpretation of Taxing Statutes by Mittal.
22. In order to resolve the conflict between the two provisions, after the purpose of the Ordinance is clear (as is evident from the above referred provisions), is to rely do the interpretative tool of reading down Justice Ajmal Mian J, in Elahi Cotton Mills Ltd. v. Federation of t Pakistan (PLD 1997 SC 582) held:
"That theory of reading down is a rule of interpretation which is resorted to by the courts when they find a provision read literally seems to offend a fundamental right or falls outside the competence of the particular Legislature."
23. In Indus Jute Mills' Case, Sh. Azmat Saeed J. speaking for this court held:--
"37. In view of the above, this Court is confronted with two possible options; either is to strike down the impugned section 235 Income Tax Ordinance, 2001 being ultra vires the Constitution and fundamental rights of the citizens or in the alternate, to resort to the time honoured rule of interpretation of employing the theory of reading down and looking beyond the literal meaning of the provision..."
24. Mittal in Interpretation of Taxing Statutes writes:
"The theory of reading down is a rule of interpretation resorted to by the Courts where a provision, read literally, seems to offend a fundamental right, or falls outside the competence of the particular legislature. In interpreting the provision of a statute the courts will presume that the legislation was intended to be inter vires and also reasonable. The rule followed is that the enactment is interpreted consistent with the presumption which imputes to the legislature an intention of limiting the direct operation of its enactment to the extent that is permissible. Legislature is presumed to be aware of its limitations and is also attributed an intention not to over-step its limits. To keep the Act within the limit of its scope and not to disturb the existing law beyond what the object requires, it is construed as operative between certain persons, or in certain circumstances, or for certain purposes only, even through the language expresses no such circumstances of the field of operation. To sustain law by interpretation is the rule.
The reading down of a provision of a statute puts into operation the principle that so far is reasonably possible to do so, the legislation should be construed as being within its power. It has the principal effect that where an Act is expressed in language of a generality which makes it capable, if read literally, of applying to matters beyond the relevant legislative power, the court will construe it in a more limited sense so as to keep it within power. If certain provision of law, construed in one way would make them consistent with the constitution and another interpretation would render them unconstitutional the court would lean in favour of the former construction."
25. Dr. Avtar Singh in Introduction to Interpretation of Statues (Reprint Edition 2007) writes:
"Similarly, for upholding any provision, if it could be saved by reading it down, it should be done, unless plain words are so clear as to be in defiance of the Constitution. These interpretations spring out because of the concern of courts to always let a legislation to achieve its objective and not to let it fall merely because of a possible ingenious interpretation. The words are not static but dynamic. This infuses fertility in the field of interpretation. The principle of reading down, however, will not he available, where the plain and literal meaning from a bare reading of any impugned provisions clearly shows that it confers arbitrary, uncanalised or unbridled power."
26. Section 235(3) provides that advance tax shall not be collected if the taxpayer produces a certificate from the Commissioner that his income is exempt from income tax. Such a certificate is issued under section 159(1) of the Ordinance if the taxpayer enjoys exemption from tax under the Ordinance.
27. Can this facility be available to the petitioners in the present case? Difference between exemption and discharge of final tax needs to be considered. Exemptions under the Ordinance are provided in section 53 read with Part-I of the Second Schedule to the Ordinance. The purpose of exemption is that the playability of the taxpayer is restricted in terms of the exemption however the chargeability of the tax remains. Whereas sections 156A and 234A when read with section 169 of the Ordinance reveal that the petitioner has no chargeability under the law after the discharge of final tax under the law. Final Tax clauses under the Ordinance therefore stand at a higher pedestal than the exemption clauses. If benefit of exemption can preclude the chargeability of tax under section 235(3), the discharge of final tax under the Ordinance can also surely extend the same benefit to the tax payer, if not more. It would be discriminatory to limit the meaning of "exemption" in section 159(1) of the Ordinance by excluding "final tax provisions" under the Ordinance. In the absence of any legislative integration between sections 156A, 234A and section 235, operational harmonization can be achieved by extending the benefit available to exemption clauses under section 159(1) to the final tax clauses also.
28. Sections 159(1) and 235 (3) of the Ordinance can therefore be read down to include "final tax clauses" within the meaning of exemption under the said sections. The Commissioner, therefore, while issuing an exemption certificate, will also consider the cases falling under final tax clauses.
29. I, therefore, hold the petitioners entitled to an exemption certificate under section 159(1) of the Ordinance once it is established to the satisfaction of the Commissioner concerned that the final tax has been fully discharged under sections 156A and 234A of the Ordinance and that there is no other income of the petitioners The said exemption certificate will he valid for the purposes of section 235(3) of the Ordinance.
30. The petitioners are directed to approach the concerned Commissioners under section 159(1) of the Ordinance who on receipt of the application of the taxpayer will issue exemption certificates after verification that the petitioners have no other income but the one accruing under sections 156A and 234A of the Ordinance and that the liability of final tax has been fully discharged.
31. Before parting with the judgment it is clarified that in case the said certificate is not issued to the petitioners on the ground that the petitioners have other source of income, the amount of income tax in the electricity bills which was stayed during the pendency of these petitions shall stand revived and the petitioners shall be liable to pay the same. In such a situation respondent electricity companies are directed to issue the said bills immediately along with the tax liability withheld by this Court.
32. For the above reasons these petitions are allowed in the above terms.
M.A.K./A-272/LPetition allowe
SCHEDULE A
| Sr. No. | Writ Petition No. | Title |
| 1. | Writ Petition No. 1241 of 2010 | Haider Petroleum v. FOP etc. |
| 2. | Writ Petition No. 1773 of 2010 | Al-Jehad Filling Station and others v. FOP etc. |
| 3. | Writ Petition No.1774 of 2010 | Brite Way CNG and others v. FOP etc. |
| 4. | Writ Petition No.1522 of 2010 | Messrs Times CNG v. FOP etc. |
| 5. | Writ Petition No. 2869 of 2010 | Khalid Petroleum v. FOB etc. |
| 6. | Writ Petition No.5003 of 2010 | Noor Sons CNG Stations v. FOP etc. |
| 7. | Writ Petition No. 5688 of 2010 | Al-Sadiq CNG and others v. FOP etc. |
| 8. | Writ Petition No.7956 of 201C | Muslim CNG Filling Station v. FOP etc. |
SCHEDULE B
"S.147. ADVANCE TAX PAID BY THE TAXPAYER.
(1) Subject to subsection (2), every taxpayer whose income was charged to tax for the latest tax year under this Ordinance or latest assessment year under the repealed Ordinance other than:-
(a) income chargeable to tax under the head "Capital Gains".
(b) income chargeable to tax under sections 5, 6 and 7;
(ba) income chargeable to tax under section 15:
(d) income from which tax has been collected under Division II or deducted under Division III or deducted or collected under Chapter XII and for which no tax credit is allowed as a result of subsection (3) of section 168,
shall be liable to pay advance tax for the year in accordance with this section;
(2) This section does not apply to an individual or association of persons where the individual's or association of persons latest assessed taxable income excluding income referred to in clauses (a), (b), (ba), (c) and (d) of subsection (1) is less than two hundred thousand rupees.
(4) Where the taxpayer is a company, the amount of advance tax due for a quarter shall be computed according to the following formula, namely:---
(AxB/C)-D
Where-
(A)is the taxpayer's turnover for the quarter;
(B)is the tax assessed to the taxpayer for the latest tax year;
(C)is the taxpayer's turnover for the latest tax year; and
(D)is the tax paid in the quarter for which a tax credit is allowed under section 168, other than tax deducted under section 155.
(4A) Any taxpayer who is required to make payment of advance tax in accordance with subsection (4), shall estimate the tax payable by him for the relevant tax year, at any time before the last installment is due. In case the tax payable is likely to be more than the amount he is required to pay under subsection (4), the taxpayer shall furnish to the Commissioner an estimate of the amount of the tax payable by him and thereafter pay such amount after making adjustment for the amount (if any) already paid in terms of subsection (4).
(4AA) Tax liability under section 113 shall also be taken into account while working out payment of advance tax liability under this section.
(4B) Where the taxpayer is an individual or an association of persons having latest assessed income of two hundred thousand rupees or more, the amount of advance tax due for a quarter shall be computed according to the following formula, namely:--
(A/4)-B
(A) is the tax assessed to the taxpayer for the latest tax year or latest assessment year under the repealed Ordinance; and
(B) is the tax paid in the quarter for which a tax credit is allowed under section 168, other than tax deducted under section 149 or 155.
(5) Advance tax is payable by an individual or an association of persons to the Commissioner:--
(a)in respect of the September quarter, on or before the 15th day of September;
(b)in respect of the December quarter, on or before the 15th day of December;
(c)in respect of the March quarter, on or before the 15th day of March; and
(d)in respect of the June quarter, on or before the 15th day of June.
(5A) Advance tax is payable by a company to the Commissioner -
(a)in respect of the September quarter, on or before the 15th day of October;
(b)in respect of the December quarter, on or before the 15th day of January;
(c)in respect of the March quarter, on or before the 15th day of April; and
(d)in respect of the June quarter, on or before the 15th day of June, and
(6) If any taxpayer who is required to make payment of advance tax under subsection (1) estimates at any time before the last installment is due, that the tax payable by him for the relevant tax year is likely to be less than the amount he is required to pay under subsection (1), the taxpayer may furnish to the Commissioner an estimate of the amount of the tax payable by him, and thereafter pay such estimated amount, as reduced by the amount, if any, already paid under subsection (1), in equal installments on such dates as have not expired.
(6A) Notwithstanding anything contained in this section, where the taxpayer is a company or an association or persons, advance tax shall be payable by it in the absence of last assessed income or declared turnover also. The taxpayer shall estimate the amount of advance tax payable on the basis of quarterly turnover of the company or an association of persons, as the case may be, and thereafter pay such amount after:--
(a) taking into account tax payable under section 113 as provided in subsection (4AA); and
(b) making adjustment for the amount (if any) already paid.
(7) The provisions of this Ordinance shall apply to any advance tax due under this section as if the amount due were tax due under an assessment order.
(8) A taxpayer who has paid advance tax under this section for a tax year shall be allowed a tax credit for that tax in computing the tax due by the taxpayer on the taxable income of the taxpayer for that year.
(9) A tax credit allowed for advance tax paid under this section shall be applied in accordance with subsection (3) of section 4.
(10) A tax credit or part of a tax credit allowed under this section for a tax year that is not able to be credited under subsection (3) of section 4 for the year shall be refunded to the taxpayer in accordance with section 170.
SECTION 156-A. PETROLEUM PRODUCTS.--
(1) Every person selling petroleum products to a petrol pump operator shall deduct tax from the amount of commission or discount allowed to the operator at the rate specified in Division VIA of Part III of the First Schedule.
(2) The tax deducted under subsection (1) shall be a final tax on the income arising from the sale of petroleum products to which subsection (1) applies.
SECTION 159 EXEMPTION OR LOWER RATE
CERTIFICATE
(1) Where the Commissioner is satisfied that an amount to which Division II or III of this Part or Chapter XII applies is exempt from tax under this Ordinance; or
(a)subject to tax at a rate lower than that specified in the First Schedule,
(b)the Commissioner shall, upon application in writing by the person, issue the person with an exemption or lower rate certificate.
(IA) The Commissioner shall, upon application from a person whose income is not likely to be chargeable to tax under this Ordinance, issue exemption certificate for the profit on debt referred to in clause (c) of subsection (1) of section 151.
(2) A person required to collect advance tax under Division II of this Part or deduct tax from a payment under Division III of this Part or deduct or collect tax under Chapter XII shall collect or deduct the full amount of tax specified in Division II or III or Chapter XII, as the case may be, unless there is in force a certificate issued under subsection (1) relating to the collection or deduction of such tax, in which case the person shall comply with the certificate.
(3) The Board may, from time to time, by notification in the official Gazette:
(a) amend the rates of withholding tax prescribed under this Ordinance; or
(b) exempt persons, class of persons, goods or class of goods from withholding tax under this Ordinance.
(4) All such amendments shall have effect in respect of any tax year beginning one any date before or after the commencement of the financial year in which the notification is issued and shall not be applicable in respect of income on which tax withheld is treated as discharge of final tax liability.
(5) The Board shall place all notifications issued under sub-section (3) in a financial year before both Houses of Majlis-e-Shoora (Parliament).
SECTION 234 A. CNG STATIONS.-
(1)There shall be collected advance tax at the rate specified in Division VIB of Part III of the First Schedule on the amount of gas bill of a Compressed Natural Gas station.
(2)The person preparing gas consumption bill shall charge advance tax under subsection (1) in the manner gas consumption charges are charged.
(3)The tax collected under this section shall be a final tax on the income of a CNG station arising from the consumption of the gas referred to in subsection (1).
(4)The taxpayers shall not be entitled to claim any adjustment of withholding tax collected or deducted under any other head, during the tax year.
SECTION 235. ELECTRICITY CONSUMPTION:-
(1) There shall be collected advance tax at the rates specified in Part-1V of the First Schedule on the amount of electricity bill of a commercial or industrial consumer.
(2) The person preparing electricity consumption bill shall charge advance tax under subsection (1) in the manner electricity consumption charges are charged.
(3) Advance tax under this section shall not be collected from a person who produces a certificate from the Commissioner that his income during tax year is exempt from tax.
(4) under this section,--
(a) in the case of taxpayer other than a company, tax collected upto bill amount of thirty thousand rupees per month shall be treated as minimum tax on the income of such persons and no refund shall be allowed;
(b) in the case of a taxpayer other than a company, tax collected on monthly bill over and above thirty thousand rupees per month shall be adjustable; and
(c) in the case of a company, tax collected shall be adjustable against tax liability.