COMMISSIONER OF INCOME TAX/WEALTH TAX, COMPANIES ZONE, Peshawar VS SHAHZAD GHEE MILLS (PVT.) LTD.
2012PTD969
2012PTD969
[Supreme Court of Pakistan]
Present; Iftikhar Muhammad Chaudhry, C.J.,Khilji Arif Hussain and Tariq Parvez, JJ
COMMISSIONER OF INCOME TAX/WEALTH TAX, COMPANIES ZONE, Peshawar and another
Versus
Messrs SHAHZAD GHEE MILLS (PVT.) LTD. and 4. Others
Civil Appeals Nos. 831, 832, 1216, 1217, 1441 of 2007 and 410 of 2010, decided on 18/10/2011.
(Against the judgments dated 14-9-2006 of the Peshawar High Court, Peshawar passed in T.Rs. Nos.81, 82 and dated 19-12-2006 in T.Rs. Nos.110, 112, 113 and 2-4-2009 in T.R. No.81 of 2007).
(a) Income Tax Ordinance (XXXI of 1979)-.
80-DD-Constitution of Pakistan, Art. 185(3)---Leave to appeal was granted by Supreme Court to consider whether while introducing S.80-DD in the Income Tax Ordinance, 1979, Legislature was presumed to be fully aware of existing law and prima facie no new tax liability was created by insertion of said new section and it seemed that only recovery process of tax was accelerated.
Ellahi Cotton Mills Ltd. v. Federation of Pakistan PLD 1997 SC 582 ref.
(b) Words and phrases----
---"For the time being"---Defined.
Words and Phrases; Legally Defined (Second Edition) at page 267; Advanced Law Lexicon, 3rd Edition 2005 at page 1877; Cambridge Dictionary of American Idioms; Farlex clipart collection. 2003-2008 Princeton University and Cambridge Idioms Dictionary, 2nd Ed. ref.
(c) Income Tax Ordinance (XXXI of 1979)---
----Ss.14(2), 50(5), 80-DD & Second Schedule, clause 118C---Economic Reforms Act (XII of 1992), S.6---Notification No. S. R. O. 1283(1)/90, dated 30-12-1990---Assessment---Exemption, grant of---Deduction of tax at source, on import of edible oil, was treated as final liability under S.80-DD of Income Tax Ordinance, 1979 and tax short deducted was recovered through separate order passed under S.52-A of Income Tax Ordinance, 1979---Rectifications filed by assessees were declined by assessment officer but Commissioner Income Tax (Appeals) accepted appeals and declared that assessees were entitled to exemptions under clause 118C of Second Schedule to Income Tax Ordinance, 1979---Income Tax Appellate Tribunal and High Court maintained the judgment passed by Commissioner Income Tax (Appeals)---Validity---According to Notification No.S.R.O. 1283(1)/90, dated 30-12-1990, exemption" under clause 118C of Second Schedule of Income Tax Ordinance, 1979, was applicable to profits and gains derived by assessee from industrial undertaking set up between I-12-1990 and 13-6-1995, both days inclusive for a period of 8 years beginning with the month in which undertaking was set up or commercial production was commenced, which ever was later--Assessees was to substantiate that industry was established during such period---No evidence had come on record, inasmuch as, income tax authorities, including Commissioner Income Tax (Appeals) and Income Tax Appellate 'Tribunal seized with the matter did not pass speaking order with reference to questions involved in the matter---Claim of exemption was only available in terms of S.50(5) read with S. 80-DD of Income Tax Ordinance, 1979, if assessee would succeed in establishing that after promulgation of Economic Reforms Act, 1992, whenever fresh tax was imposed, might be under newly enacted provision, the exemption was to continue but such protection was prima facie not available to the assessees---To ascertain factual aspect of case and to provide opportunity to parties to establish their respective claims, Supreme Court set aside judgments passed by High Court, Income Tax Appellate Tribunal and Commissioner Income Tax (Appeals) and remanded appeals of assessees to the Commissioner for disposing of the same keeping in view observations made by Supreme Court---Appeal was allowed.
Collector of Customs v. Ravi Spinning Ltd. 1999 SCMR 412 rel.
Raja Abdul Ghafoor, Advocate-on-Record/Advocate Supreme Court for Appellants (in Civil Appeals Nos. 831, 832, 1216, 1217 and 1441 of 2007).
Farhat Nawaz Lodhi, Advocate Supreme Court for Appellants (in Civil Appeal No. 410 of 2010).
Abdul Raul' Rohaila, Advocate Supreme Court and M.S. Khattak, Advocate-on-Record for Respondents (in Civil Appeals Nos. 831 to 832 and 1441 of 2007).
Sh. Iftikhar Ahmed, Advocate Supreme Court for Respondents (in Civil Appeal No. 1216 of 2007).
M. Ilyas Mian, Advocate Supreme Court for Respondents (in Civil Appeal No. 1217 of 2007).
M. Munir Peracha, Advocate Supreme Court and M. Habib Qureshi, Advocate Supreme Court for Respondents (in Civil Appeal No.
410 of 2010).
Date of hearing: 18th October, 2011.
JUDGMENT
IFTIKHAR MUHAMMAD CHAUDHRY, C.J.---These appeals by leave of the Court have been directed against the judgments dated 14-9-2006, 19-12-2006 and 2-4-2009 passed by the Peshawar High Court, Peshawar, in Tax References Nos.81 and 82 of 2006, T.Rs. Nos.110, 112 and 113 of 2006 and T.R. No.81 of 2007, respectively.
2. Brief facts of the case are that the respondents/Private Limited Companies are engaged in the manufacturing of Ghee and Cooking Oil. Their assessment for the year 2000-2001 was completed under section 62 of the Income Tax Ordnance, 1979 (hereinafter referred to as "the ITO, 1979") and in view of the Protection of Economic Reforms Act, 1992 [hereinafter referred to as "the Act, 1992") exemption under clause 118C of the Second Schedule to the ITO, 1979 was allowed. However, tax deduction/deductible at source under section 50(5) on import of Edible Oil was treated as final liability under section 8ODD vide order passed in terms of section 62 and tax short deducted was recovered through separate order passed under section 52A of the ITO, 1979. The assessees filed rectification applications on the ground that provisions of section 8ODD contained in a general statute would not prevail qua section 6 of the Act, 1992, which is a special statute. The request so made by the assessees was turned down with the observation that no mistake apparently was committed by the Authority. However, the appeal filed by them before the Commissioner Income Tax (Appeals) (CIT(A)) was accepted vide A.O. No.850 dated 17-12-2003 declaring that the respondents were entitled to exemption under Clause 118C of the Second Schedule, therefore, the tax charged against them under section 80DD was deleted. Appeal was filed by the Department before the Income Tax Appellate Tribunal (ITAT), which, too, was dismissed; vide order dated 22-12-2005 as a consequence whereof the order of CIT (A) dated 17-12-2003 was maintained. Thus, the appellant Department filed Income Tax References in terms of section 133 of the Income Tax Ordinance, 2001 before the learned High Court, which were dismissed vide impugned judgments dated 14-9-2006, 19-12-2006 and 2-4-2009. Being aggrieved, the appellant Department approached this Court by filing petitions for leave to appeal. In Civil Petitions Nos.13 and 14 of 2007 leave to appeal was granted vide order dated 21-2-2007, relevant paragraphs wherefrom are reproduced herein below:-
"(2) It is inter alia contended that section 80-DD was inserted in the Income Ordinance, 1979 through Finance Act, 1999 w.e.f.1-7-1999. The provision of section 80-DD commence with non obstante clause having over riding effect over the provision of the Ordinance as well as any other law for the time being in force which would include the existing laws as contained in the Economic Reforms Act (XII of 1992).
(3) Learned counsel appearing on caveat for respondents opposed the grant of leave on the premise that in Ellahi Cotton Mills Ltd. v. Federation of Pakistan (PLD 1997 SC 582) it was held that the provisions of Act XII of 1992 being subsequent in point of time and contained in a special statute shall prevail over the provisions of section 80D of the Income Tax Ordinance, 1979 inserted through Finance Act, 1991. Be that as it may while introducing section 80DD in the Ordinance, 1979, the legislature is presumed to be fully aware of the existing law and prima facie no new tax liability is created by insertion of new section and itseems that only recovery process of tax is accelerated.
(4) Since an important question of law of public importance has been raised in these petitions, we would grant leave inter alia to examine the aforesaid questions of law.
Later, leave was granted in other petitions as well in view of the aforesaid leave granting order."
3. Learned counsel appearing on behalf of the appellant contended that the provision of section 80DD inserted in the ITO, 1979 through Finance Act, 1999 and made applicable w.e.f. 1-7-1999 was later in time, therefore, the tax deducted at source under section 50(5) of ITO,1979 on import of Edible Oil was rightly treated as final tax liability under section 80DD and tax recovered from the respondents was not liable to be refunded.
4. On the other hand, learned counsel appearing for the respondents stated that S.R.O. No.1283(I)/90 dated 13-12-1990 was incorporated in the Schedule in terms of section 6 of the Act, 1992, which gave protection to the fiscal incentives for setting up of industries, as a result whereof the respondent companies were not liable to pay tax at source under section 50(5) read with section 80DD of ITO, 1979.
5. We have heard the learned counsel for the appellant as well as respondents and have perused the impugned judgments.
6. It is to be noted that by means of S.R.O. No.1283(I)/90 dated 13-12-1990 tax holiday on profits and gains derived by an assessee from an industrial undertaking set up between the first day of December, 1990, and the thirtieth day of June, 1995, both days inclusive, was allowed for a period of 8 years beginning with the month in which the undertaking was set up or commercial production was commenced, whichever was later. Later, by means of section 6 of the Act, 1992, the aforesaid tax holiday was protected, which provided as under:-
"6. Protection of fiscal incentives for setting up of industries.---The fiscal incentives for investment provided by the Government through the statutory orders listed in the Schedule or otherwise notified shall continue in force for the term specified therein and shall not be altered to the disadvantage of the investors."
It is also noteworthy that section 3 ibid gave overriding effect to the said Act, which is reproduced--herein below for reference:--
"(3) Act to override other laws.---The provisions of this Act shall have effect notwithstanding anything contained in the Foreign Exchange Regulation Act, 1947 (VII of 1947), the Customs Act, 1969 (IV of 1969), the Income Tax Ordinance, 1979'(XXXI of 1979), or any other law for the time being in force."
The provision of section 6 and its effect vis-a-vis section 80D of the ITO, 1979 inserted by the Finance Act, 1991 came up for consideration before this Court in the case of Elahi Cotton Mills Ltd. v. Federation of Pakistan (PLD 1997 SC 582) wherein it was held that since the provisions of the Act, 1992 were subsequent in time and as they were contained in a special statute, the same would prevail over the provision of section 80D ibid, which was part of general statute.
7. Section 6 of the Act, 1992 was once again considered by this Court in Collector of Customs v. Ravi Spinning Ltd. (1999 SCMR 412) in the context of imposition of regulatory duty and its subsequent withdrawal by the Government and it was held that even though the Act, 1992 was given overriding effect over all other existing laws and the fiscal incentives given to the investors could not be withdrawn or altered to their disadvantage during the period specified therein, however, this provision did not curtail or take away the power of the Federal Government vested under section 18(2) of the Customs Act, 1969.
8. Subsequently, by means of the Finance Act, 1999, section 80DD was inserted into the ITO, 1979 effective from 1-7-1999, which provided that notwithstanding anything contained in the ITO, 1979, or any other law for the time being in force, the tax collected under subsection (5) of section 50 on import of edible oils shall be deemed to be the minimum amount of tax payable under the Ordinance and where the final tax liability determined under the Ordinance would exceed the amount collected under the said subsection, the said amount shall be adjustable against such tax liability. Thus, the question which arises for consideration is whether the exemption from tax liability under the S.R.O. noted above later protected by the Act, 1992 would continue to be available to the respondents for a period of 8 years even if a new tax was imposed subsequently as was purportedly done by means of section 80DD, as asserted by the learned counsel for the appellant qua section 3 of the Act, 1992 wherein expression has been used 'for the time being' section 3 of the Act, 1992 has already been reproduced hereinabove.
9. Now let us see the meaning of "for the time being" as per its dictionary meanings. The expression 'for the time being' has been defined in 'Words and Phrases; Legally Defined (Second Edition)' at page 267, as under:--
"The words 'for the time being' are capable of different interpretations, according to the context; for example, they might be used with a context showing clearly that they were intended to point one single period of time; and a case ...
(Ellision v. Thomas (1862) 31 L.J.Ch.867, per Kindersley, V.-C., at p.869)"
In 'Advanced Law Lexicon, 3rd Edition 2005' at page 1877, the expression has been defined as under:--
"At that time; at the moment or existing position [Jivendra Nath Kaul v. Collector/District Magistrate, (1992) 3 SCC 578, 580]"
In the 'Cambridge Dictionary of American Idioms' it has been defined as under:--
"at this time; for the moment"
In the 'Farlex clipart collection. 2003-2008 Princeton university it has been defined as:--
"Temporarily; we'll stop for the time being; for the moment."
In the 'Cambridge Idioms Dictionary, 2nd ed.', the term has been defined as under:--
"If you describe how a situation will be for the time being, you mean it will be like that for a period of time, but may change in the future.
The above definitions clearly indicate that the exemption was allowed from tax which was levied prior to and were applicable on the date of promulgation of the Act, 1992 and no exemption would be allowed from the tax, which would be imposed after the said date. It is to be noted that under section 6 of the Act, 1992, incentive has been given for setting up industries, which provides that the statutory orders listed in the Schedule or otherwise notified shall continue in force for the term specified therein and shall not be altered to the disadvantage of the investors.
10. The Notification No. S.R.O. 1283(I)/90 dated 30th December, 1990 which finds mention in the Schedule to the Act, 1992, with reference to section 6 ibid, was issued in exercise of the powers conferred by subsection (2),of section 14 of the ITO, 1979. According to the said S.R.O., exemption under clause. 118C of the Second Schedule to the said Ordinance, shall be applicable to profits and gains derived by an assessee from an industrial undertaking set up between the first day of December, 1990, and the thirtieth day of June, 1995, both days inclusive, for a period of 8 years beginning with the month in which the undertaking is set up or commercial production is commenced, whichever is later. It was the duty of the respondent assessees to substantiate that the industry was established during the said period. But, in the instant case, no evidence has come on record, inasmuch as, the income tax authorities including CIT(A) and ITAT seized with the matter had not passed a speaking order with reference to thequestions involved in the matter. As far as the claim of exemption from income tax is concerned, it would only be available in terms of section 50(5) read with section 80DD ibid, if one succeeds in establishing that after the promulgation of the Act, 1992 whenever fresh tax is imposed, may be under the newly enacted provision, exemption shall continue. But in our opinion prima facie such protection shall not be available in the instant case, in view of the judgment in the case of Collector of Customs v. Ravi Spinning Ltd. (1999 SCMR 412).
11. Be that as it may, on the factual plan of the case, we are not satisfied as to whether the industries were established during the stipulated period, and if it is established, then the question would be as to whether the exemption would continue or not with regard to the tax levied afterwards, particularly, with reference to section 3 of the Act, 1992, wherein the expression `for the time being' has been used.
12. To ascertain the factual aspect of the case and to provide an opportunity to the parties to establish their respective claims, we set aside the judgments of the High Court, ITAT as well as CIT (A) and remand the case to the CIT (A) for the purpose of re-hearing of the 1 appeals of the respondents and disposing of the same keeping in view the observations made hereinabove as well as principles discussed in the cases referred to hereinabove.
13. This matter is lingering on for the last so many years, therefore, the CIT(A) may dispose of the cases expeditiously as far as possible within a period of four weeks after receipt hereof and similar observations shall be applicable on the higher forums, if approached.
14. These are the reasons of our short order of even date, which reads as under:
"For the reasons to be recorded later the listed appeals are allowed and the matters, are remanded to the Commissioner,Income Tax (Appeals) for decision afresh."
M.H./C-5/SCCase remanded.