OCEAN PAKISTAN LIMITED, ISLAMABAD. VS FEDERAL BOARD OF REVENUE, through Chairman, 2012 PTD-ISLAMABAD 1209 (2012)

Income Tax Ordinance (XLIX of 2001)---

----S.122(SA) & (9)---Constitution of Pakistan, Art.199---Constitutional petition---Petroleum Concession Agreement between Government and petitioner containing a clause applying Income Tax Ordinance, 1979 to petitioner/company---Sale of working interest under such agreement by petitioner to a third party---Issuance of show-cause by Authority to petitioner alleging gains received from such sale to be taxable under Income Tax Ordinance, 2001---Validity---Authority having issued impugned notice could decide question as to whether sale of working interest would fall outside such agreement and petitioner would be governed by the Income Tax Ordinance, 2001---Impugned notice was neither without jurisdiction nor coram non judice nor was there any mala fide on part of authority in issuing the same---Petitioner might present his case before Authority---High Court dismissed constitutional petition, in circumstances.

Muhammad Akram Sheikh and Sajid Ijaz Hotiana for Petitioners.

M. Bilal, Babar Bilal and Hafiz Munawar Iqbal for Respondents.

Sardar Zafar, Sajid Ali and Shaukat Mahmood, representatives of Respondents.

Date of hearing: 11th April, 2012.

JUDGMENT

RIAZ AHMAD KHAN, J.---,This judgment is directed to dispose of Writ Petition No.2958 of 2011.

2. Brief facts of the case are that the petitioner Messrs Ocean Pakistan Limited was issued show-cause notice dated 12-10-2011 under section 122(9) read with section 122(5A) of the Income Tax Ordinance, 2001 by the Additional Commissioner Inland Revenue, Islamabad. The petitioner has challenged the said Show-Cause Notice through instant writ petition.

3. Learned counsel for the petitioner contended that Khipro Petroleum Concession Agreement was executed between the President of the Islamic Republic of Pakistan, the Government Holdings and the petitioner company. Clause 29.6 of the agreement provided that the Income Tax Ordinance, 1979 shall remain applicable for the purpose hereof. It was further submitted that according to the agreed terms, the law applicable to the petitioner was the Income Tax Ordinance, 1979; whereas, the Show-Cause Notice was issued under the provisions of amended law i.e. the Income Tax Ordinance, 2001. The Show-Cause Notice as such was unlawful and could not be acted upon. The learned counsel further submitted that the petitioner was only a 'licensee' and not 'owner'. The petitioner has no intangibles and as such the Show-Cause Notice, wherein it has been stated that 'the petitioner had received 'gains' from the disposal of any intangible, was not correct.

4. On the other hand, learned counsel for the respondent admitted that in the agreement, clause 29.6 was a freezing provision, but in respect of the matters, pertaining to the agreement. The learned counsel further submitted that according to the Show-Cause Notice, claim of the respondents was that the petitioner had sold 'working interest' in Mirpur Khipro Oil and Gas Fields and LPG Plant to Messrs B.P. Pakistan and out of the said transaction had received certain 'gains'. Those 'gains' were taxable income and accordingly Show-Cause Notice was issued to the petitioner company. The learned counsel further submitted that the petitioner will have every right to raise all points/claims on the issue of Show-Cause Notice, before the proper forum; however, the process of law cannot be bypassed by invoking constitutional jurisdiction of this Court.

5. I have heard learned counsel for the parties and have also perused the record.

6. Admitted position in the present case is that the petitioner company had executed Khipro Petroleum Concession Agreement with the President of the Islamic Republic of Pakistan and the Government Holdings; the said agreement had a freezing provision in clause 29.6 of the agreement. According to the said freezing provision, the Income Tax Ordinance, 1979 was applicable to the petitioner company. However, claim of the respondents is that the petitioner sold his 'working interest' to a third person, which was not governed by said agreement and the 'gains' so received by the petitioner were liable to be taxed, under the Income Tax Ordinance, 2001.

7. Without dilating upon merits of the case, the issue as to whether the sale of 'working interest' falls outside the ambit of agreement and consequent to the sale, the petitioner is to be governed by the Income Tax Ordinance, 2001, is a question, which can be decided by the Additional_, Commissioner Inland Revenue, who had issued the impugned Show-Cause Notice. The notice itself is neither without jurisdiction nor coram non-judice. Similarly, there is no mala fide on the part of respondents in issuing the impugned Show-Cause Notice. The petitioner may present his case before the Income Tax Authorities; however, no writ can be issued. The petition is accordingly dismissed.

S.A.K./88/Isl??????????????????????????????????????????????????????????????????????????????????????? Petition dismissed.