PAKISTAN MOBILE COMMUNICATIONS LTD. VS SINDH REVENUE BOARD, 2014 PTD-KARACHI-HIGH-COURT-SINDH 2048 (2014)

Sindh Sales Tax on Services Rules, 2011---

----R. 22(1)---Constitution of Pakistan, Art.199---Constitutional petition---Show cause notice---Effect---Petitioners assailed show cause notices issued by authorities making certain queries with regard to claim of input deduction / adjustment during relevant tax period---Grievance of petitioners was only to the extent of proposed treatment by authorities to claim input adjustment by them in terms of R. 22(1) of Sindh Sales Tax on Service Rules, 2011, whereas authorities had not finally decided legal issue nor passed any final order in such regard---Validity---Petitioners were at liberty to make their submissions, which would be decided by authorities strictly in accordance with law and applying the relevant rules---Show cause notices in question did not suffer from any jurisdictional error nor petitioners had been able to point out any patent illegality in the notices, whereby, an opportunity of being heard had been provided to petitioners---Petition was pre-mature and tantamount to pre-empting decision on the subject controversy thus was not maintainable---Petition was dismissed in circumstances.

Messrs Maritime Agencies (Private) Ltd. v. The Assistant Commissioner-II of Sindh Revenue Board and others Constitutional Petition No.D-769/2014; Roche Pakistan Ltd. v. Deputy Commissioner of Income-Tax and others 2001 PTD 3090 and Sitara Chemical Industries Ltd. v. Deputy Commissioner of Income Tax 2003 PTD 1285 rel.

Ayyaz Shaukat and Waqar Ahmed for Petitioners.

Sharafuddin Mangi, Counsel for the State.

Shaikh Liaquat Hussain, Standing Counsel.

Zamir Ali Khalid, Deputy Commissioner (Legal), Syed Zainul Abdin Shah, Assistant Commissioner and Nida Noor, Assistant Commissioner, Sindh Revenue Board.

Date of hearing: 16th June, 2014.

ORDER

AQEEL AHMED ABBASI, J.---Through this common order and by consent of the learned counsel for the parties, we intend to dispose of both the petitions at Katcha Peshi stage as the facts and the legal controversy involved in both the petitions are similar.

2.Instant petitions have been filed by the petitioners pursuant to show-cause notices issued to the petitioners by Sindh Revenue Board, making certain queries with regard to claim of input deduction/adjustment by the petitioners during the relevant tax period in ratio to the taxable services.

3.Learned counsel for the petitioners have argued that the impugned show-cause notices have duly been responded by the petitioners, wherein, it has been stated that the proposed treatment by the respondent to the input tax adjustment is violative of Rule 22(1) of the Sindh Sales Tax on Services Rules, 2011. It has been contended by the learned counsel for the petitioners that meetings of the petitioners companies were held with the respondents department in this regard in which the respondents have acknowledged the difficulty being faced by the Telecom Companies regarding claim of input adjustment within 120 days instead of 180 days as provided under Federal law, whereas, the respondents i.e. SRB authorities agreed in principle for extending the period from 120 days to 180 days to claim the input adjustment. However, per learned counsel, through impugned show-cause notices, the petitioners are being confronted again by the respondents on the same controversy and it has been proposed by the respondents that input adjustment beyond the period of 120 days cannot being allowed. It has been prayed by the learned counsel for the petitioners that the impugned show-cause notices issued by the respondents may be declared as unconstitutional, unlawful and illegal, void, ab initio and the respondents may be directed to allow input tax as claimed by the petitioners in terms of Rule 22(1) of Sindh Sales Tax on Services Rules, 2011.

4.Conversely, the learned State Counsel, who is present along with representative of the respondents department has raised an objection as to maintainability of the instant petitions and submitted that instant petitions are not maintainable as no final order has been passed against the petitioners, therefore, the petitioners are not aggrieved persons in terms of Article 199 of the Constitution of Islamic Republic of Pakistan, 1973. It is further contended that in case of any adverse order, efficacious remedy is already provided under the Sindh Sales Tax on Service Act, 2011, in terms of section 57 whereby against an order passed by the Assistant Commissioner, an appeal before the Commissioner (Appeals) can be filed. It is further contended by the learned State Counsel that the petitioners cannot be allowed to bye-pass statutory remedy and to directly approach this Court under Article 199 of the Constitution particularly when the Notices are within jurisdiction and do not suffer from any illegality, therefore, instant petitions may be dismissed in limine. In support of his contentions, the learned State Counsel has placed on record copy of order dated 24-4-2014 passed by a Divisional Bench of this Court in Constitutional Petition No.D-769/2014 and submitted that under similar circumstances, the Constitutional Petition filed by the petitioner on mere issuance of Show-Cause Notice has been dismissed in limine.

5.We have heard both the learned counsel for the petitioners and learned State Counsel, perused the record and the impugned Show-Cause Notices and have also examined the order passed by the Divisional Bench of this Court in Constitutional Petition No.769/2014. Admittedly, in both the petitions no final order has been passed by the respondents, which may adversely effect the petitioners nor any demand has been created so far by the respondents, which may prejudice the right and interest of the petitioners. On the contrary, show-cause notices have been issued to the petitioners, whereby, an opportunity of being heard has been provided by the respondents to explain their position with regard to the claim of input adjustment of tax in the case of petitioners in terms of Rule 22(1) of the Sindh Sales Tax on Services Rules, 2011. Petitioners have duly responded to such Show-Cause Notices by submitting written reply, hence surrendered to the jurisdiction of the respondents department. There is no objection or dispute with regard to jurisdiction of the respondent department over the case of the petitioners nor there seems any error or legal bar to issue such Show-Cause Notice to the petitioners. The petitioners have expressed their grievance only to the extent of proposed treatment by the respondents to the claim of input adjustment by the petitioners in terms of Rule 22(1) of Sindh Sales Tax Rules, 2011, whereas, the respondents have not finally decided the legal issue nor passed any final order in this regard, hence the petitioners are still at liberty to make their submissions, which shall be decided by the respondents strictly in accordance with law and applying the relevant Rules. Since the impugned Show-Cause Notices do not suffer from any jurisdictional error nor the petitioners have been able to point out any patent illegality in the impugned Show-Cause Notices, whereby, an opportunity of being heard has been provided to the petitioners, therefore, the petitions filed by the petitioners appear to be pre-mature and tantamount to preempting the decision on the subject controversy. In the case of Messrs Maritime Agencies (Private) Ltd. v. The Assistant Commissioner-II of Sindh Revenue Board and others (C.P.No.D-769/ 2014), this Bench, while dismissing the constitutional petition filed under similar circumstance on mere issuance of Show-Cause Notice, has held as under:--

"6. The tendency to impugn the Show-Cause Notices issued by the Public Functionaries under taxing statutes, before this Court under Article 199 of the Constitution, and to casually bye-pass the remedy as may be provided under a Special Statute is to be discouraged as it tends to render the statutory forums as nugatory. Moreover, if the proceedings initiated under Special Taxing Statutes do not suffer from jurisdictional error or gross illegality the same are required to be responded and resolved before the authority and the forums, provided under the Statute for such purpose, whereas, any departure from such legal procedure will amount to frustrate the proceedings which may be initiated by the public functionaries under the law and will further preempt the decision on merits by the authorities and the forums which may be provided under the statute for such purpose. In the instant case a Show-Cause Notice has been issued by the respondent who admittedly has the jurisdiction over the case of the petitioner, wherein, certain queries have been made and the petitioner has been provided an opportunity to respond to such Show-Cause. Petitioner is at liberty to file detailed reply and to raise all such legal objection, as raised through instant petition, which shall be decided by the respondent strictly in accordance with law, after providing complete opportunity of being heard to the petitioner with particular reference to the provisions of section 3 of Sindh Sales Tax on Services Act, 2011, read with Rule 32 of the Sindh Sales Tax on Services Rules, 2011 as argued by the learned counsel for the petitioner before us. If the petitioner is aggrieved by any adverse decision by the respondent in this regard, a remedy as provided under the law in terms of section 57 of Sindh Sales Tax on Services Act, 2011 can be availed by filling an appeal before the Commissioner (Appeals) Sindh Revenue Board. Similarly an appeal is also provided against the order of CIT (Appeals) in terms of Section 61 before the Appellate Tribunal, whereas, after the order of Appellate Tribunal, a Reference can also be filed before this Court in terms of section 63 of the Sindh Sales Tax on Services Act, 2011 in respect of questions of law which may arise from the order of the Tribunal. Since in the instant case, no final adjudication on the proposed Show-Cause Notice has been made so far by the respondent and merely a Show-Cause Notice has been issued, therefore, we are of the view that instant petition is pre-mature, whereas no cause of action has accrued to the petitioner which may justify the filing of instant petition.

7. In the case of Messrs ROCHE PAKISTAN LTD. V. DEPUTY COMMISSIONER OF INCOME TAX AND OTHERS, reported in 2001 PTD 3090 AND M/S SITARA CHEMICAL INDUSTRIES LTD. AND ANOTHER v. DEPUTY COMMISSIONER OF INCOME-TAX reported in 2003 PTD 1285, the Division Benches of this Court after having examined the case-law of the superior Courts on the issue of maintainability of Constitutional petition, were pleased to dismiss the Constitutional Petitions, which were filed on mere issuance of show-cause notices. It will be advantageous to reproduce the relevant findings of the Court in both the cases are hereunder:

(i)Roche Pakistan Ltd. v. Deputy Commissioner of Income-Tax and others 2001 PTD 3090.

"18. In view of the above discussion, we are of the opinion that the Impugned notice under section 62 of the Ordinance issued by respondent No.1 to Roche is strictly in accordance with law and was not without jurisdiction and/or mala fide. Consequently, it could not be assailed by filing a Constitutional petition under Article 199 of the Constitution. Moreover, as adequate alternate remedy by way of appeal before the Commissioner of Income-tax, a second appeal before the Income-tax Appellate Tribunal and thereafter a reference to the High Court under section 136 of the Ordinance are available to the petitioner, this petition is not maintainable.

19. It would not be out of place to mention here that after filing of this petition, the petitioner submitted his further reply in relation to the question of applicability of section 79 which was withheld by it in the earlier reply to the notice. The conduct of the petitioner in withholding its response to the applicability of section 79 in its reply to the Notice under section 62, filing the present Constitutional petition and thereafter submitting its reply on the question in issue in order to justify the maintainability of the Constitutional petition cannot validate the proceedings which may otherwise be not maintainable. Respondent No.1 would now consider the reply filed by Roche, apply his mind and make the assessment in accordance with law. If Roche is aggrieved by the order passed by respondent No.1 it would be open to it to resort to the statutory remedies available under the law."

(ii)Sitara Chemical Industries Ltd. v. Deputy Commissioner of Income-Tax 2003 PTD 1285.

"The purpose of citing the above cases is to show that the Assessing Officer have been exercising jurisdiction to consider the tax related issues arising out of amalgamation of the companies and consequently, the impugned show-cause notice issued by the Deputy Commissioner of Income-tax is within his competent and jurisdiction to which no exception can be taken. The petition is pre-mature and without any substance which stands dismissed accordingly."

7.In view of hereinabove facts, and by applying the ratio of aforesaid decision to the facts of instant petitions, we are of the opinion that both the petitions besides being misconceived in law and facts, are pre-mature, hence not maintainable and were accordingly dismissed vide our short order dated 16-6-2014 and these are the reasons for such short order.

8.However, before parting with this order we may observe that the petitioners shall be at liberty to raise all such legal objections, which have been raised through instant petition before the respondents department (Sindh Revenue Board), who shall provide complete opportunity of being heard to the petitioners and shall pass a well-reasoned order strictly in accordance with law and with particular reference to the relevant Rules i.e. Rule 22(1) of Sindh Sales Tax on Services Rules, 2011, as referred to hereinabove.

MH/P-17/SindhPetition dismissed.