COMMISSIONER INLAND REVENUE, ZONE-V, LARGE TAXPAYER, KARACHI VS FARAN SUGAR MILLS LTD., KARACHI, 2014 PTD-KARACHI-HIGH-COURT-SINDH 999 (2013)

Federal Excise Act (VII of 2005)---

----S. 34-A---Reference to High Court---Jurisdiction of High Court under S. 34A of the Federal Excise Act, 2005---Scope---While exercising jurisdiction under S. 34A of the Federal Excise Act, 2005 only such questions could be answered by the High Court which were questions of law and arose from the order of the Appellate Tribunal---Any externous arguments or issues raised for the first time before the High Court by merely formulating question in such a manner to give an impression that such question was a question of law, could not be taken into consideration by the High Court under the limited jurisdiction vested in it under S. 34-A of the Federal Excise Act, 2005.

Messrs Ahmad Karachi Halva Merchants and Ahmad Food Products v. The Commissioner of Income-Tax, South Zone, Karachi 1982 SCMR 489 and Dr. Muhammad Yousuf v. Commissioner of Income Tax 2006 PTD 590 rel.

Muhammad Saleem Mangrio for Applicant.

Date of hearing: 9th December, 2013.

ORDER

AQEEL AHMED ABBASI, J.---Through instant reference application following questions have been proposed, which according to learned counsel for the applicant are the questions of law and arise from the impugned order passed by the Appellate Tribunal Inland Revenue (Pakistan) Karachi in FEA No.36 KB 2012:--

(i)Whether in the facts and in the circumstances of the case the learned ATIR was justified to cancel the orders of officers below whereby S.E.D. was charged at declared selling price of sugar in terms of section 3A read with section 12(5) of the F.E.D. Act. 2005?

(ii)Whether in the facts and circumstances of the case the learned ATIR was justified to vacate the order of learned CIR wherein it was held that provisions of section 12(5) of the F.E.D. Act, 2005 been relevant and substantive law would prevail in determining the actual sale value in absence of minimum price fixed by the Board restricts the registered person to levy and collect duty at higher price on which the goods are sold?

(iii)Whether in the facts and circumstances of the case scope of S.R.O. 564(I)/2006 dated 5-6-2006 can be extended to cover SED levied under section 3A of the F.E.D. Act @ one percent of the value of goods produced or manufactured in Pakistan, which came on the statute Book later on vide Finance Act, 2007?

(iv)Whether in the facts and circumstance of the case, the learned ATIR was justified to not consider the S.R.O. 232(I)/2011 dated 15-3-2011 whereby S.R.O. 564(I)/2006 dated 5-6-2006 was rescinded altogether thereby proving that it held the field for the purpose of Sales Tax only and was rescinded as such without having undergone any amendment except the change of rate?

(v)Whether in the facts and circumstance of the case, learned ATIR was justified to hold that registered person was acting legally and in accordance with law by extending the scope of S.R.O. 564(I)/2006 to cover the definition of value of supply for the purpose of computing Special Excise duty under section 3A of the F.E.D. Act, 2005 which was levied later on vide Finance Act, 2007?

(vi)Whether in the facts and circumstance of the case, the value of goods for the purpose of levy of Special Excise duty would be actual value or any other virtual value in absence of any notification under section 12(5) of Federal Excise Act, 2005?

2.Learned counsel for the applicant has readout the impugned order passed by the Appellate Tribunal Inland Revenue as well as the order of CIT (Appeals) and the order of Deputy Commissioner Inland Revenue and submits that both the orders of CIT (Appeals) and of the appellate tribunal are erroneous and liable to be set aside as the relevant S.R.O. 232(I)/11 dated 15-3-2011 has not been taken into consideration while deciding the subject controversy through instant order. However, on a query of this Court with regard to any finding of the Appellate Tribunal on the subject controversy with particular reference to S.R.O. 232(I)/11 dated 15-3-2011, whereby, according to learned counsel, the previous S.R.O. 564(I)/2006 dated 5-6-2006, was rescinded, the learned counsel for the applicant could not point out such finding by the Appellate Tribunal Inland Revenue. Learned counsel was further inquired as to whether any such ground was raised or argument advanced before the appellate tribunal with regard to proposed questions the learned counsel for the applicant could not refer to the ground or any arguments, which could have been raised or advanced by the learned counsel for the department before the appellate tribunal. It has been conceded by the learned counsel for the applicant that no such ground was raised before the appellate tribunal nor it was even argued, however, he submits that this ground may be considered by this Court as it is a legal question and the impugned order may be set-aside.

3.We have heard the learned counsel and have also gone through the entire record as well as the impugned order passed by the Appellate Tribunal Inland Revenue Pakistan Karachi, which reflects that the controversy as raised through questions proposed by the applicant in the instant reference application does not find any mention either in the impugned order of the Appellate Tribunal or in the orders passed by the CIT (Appeals), whereas, there is no finding recorded by the tribunal in this regard. It will be advantageous to reproduce relevant finding of the tribunal, which reads as follows:--

"15. It is abundantly clear from the above provisions of law and language of relevant S.R.O. that in order to determine value for the purpose of SED/FED, the relevant provision is section 12(1) of the Federal Excise Act, 2005, plain language of the Section clearly indicate that the value of supply to be considered in accordance with Section 2(46) of the Sales Tax Act, 1990, in the instant case the value of supply has been fixed under section 2(46)(g) of the Sales Tax Act, 1990, further the language of S.R.O. 564(I)/2006, dated 5-6-2006 is also undisputed regarding value of supply which shall not affected despite actual value is higher than value fixed by the Board, meaning thereby actual value of supply is not relevant for the purpose of proviso of section 12(5) of the Federal Excise Act, 2005 in the instant case. the case-law referred by the learned counsel for the appellant reported as 2011 PTD (Trib.) 857 overruled the finding of Commissioner Inland Revenue (Appeals) that SED & FED are separate levy, the relevant para of order of the Hon'ble High Court supra is reproduced for convenience:

The word "additional" does not alter the character of the levy imposed under section 3A ibid. Nor does the name of the levy as "special excise duty" make it distinct from the levy of "duties of excise" that the Federal Government can lawfully impose under the Federal legislative List. Thus whether it is additional or special, the levy remains the same, that is, excise duty.

16. For the foregoing reasons, we are of considered opinion that in order to determine value of supply for the purpose of duty whether FED or SED is to be made under section 12(1) of the Federal Excise Act, 2005, in accordance with value of supply under section 2(46) of the Sales Tax Act, 1990, since in the instant case value of supply restricted by the Board under section 2(46)(g) of the Sales Tax Act, 1990, vide S.R.O. 564(I)/ 2009 which is to be considered for the purpose of levy of SED under Federal Excise Act, 2005, accordingly order-in-appeal is vacated and order-in-original is hereby cancelled."

4.From perusal of hereinabove finding as recorded by the appellate tribunal, it is clear that the questions proposed by the applicant through instant reference do not arise from the impugned order passed by the Appellate Tribunal Inland Revenue Pakistan Karachi. It may be observed that while exercising jurisdiction under section 34-A of the Federal Excise Act, 2005, or under section 133(1) of the Income Tax Ordinance, 2001 or under section 47 of Sales Tax Act, 1990, as neither the same were raised, argued or decided by the appellate tribunal, only such questions can be answered by this Court which are questions of law and arise from order of the Appellate Tribunal Inland Revenue Pakistan Karachi. Any extraneous arguments or the issue raised by the applicant for the first time before this Court by merely formulating a question in such a manner to give an impression that such question is a question of law, cannot be taken into consideration by this Court under its limited jurisdiction as vested under section 34-A of the Federal Excise Act, 2005.

5.We are fortified in our view by the decision of the Hon'ble Supreme Court as well as a Division of this Court in the case of Messrs Ahmad Karachi Halva Merchants and Ahmad Food Products v. The Commissioner of Income-Tax, South Zone, Karachi 1982 SCMR 489 and Dr. Muhammad Yousuf v. Commissioner of Income Tax 2006 PTD 590. In the first case as referred to hereinabove, the Hon'ble Supreme Court while defining the scope of reference and the questions which can be entertained and decided by this Court has held as under:

(i)11. There is, therefore, a preponderance of view as held by the High Court in favour of the proposition that expression "arising out of such order" in section 66(1) of the Income-tax Act does not include within its concept a question of law which was not raised, argued or decided by the Tribunal. This Court in PLD 1959 SC (Pak) 202 has not given any wider import to the expression and has confined it to a question of law which is dealt with by the Tribunal. This in our view would not include a question of law which was neither raised nor dealt with by the Tribunal.

Similarly, in the second case as referred to hereinabove a Division Bench of this Court while deciding the reference application filed under section 136(1) of the Income Tax Ordinance, 1979 has held as under:--

(ii)7. The other submission as regard non-obtaining or prior approval from I.A.C. before initiation of proceedings for additional assessment under section 65 has also no force, for the reason that had the applicant raised this plea at the first stage of the proceedings before the Assessing Officer or even before the CIT(Appeals) then it would have been possible for the department to place on record necessary approval to counter such plea. Raising of such plea, which though seems legal but had to be judged on the basis of other material brought on record, for the first time at the stage of arguments, when the proceedings were sub judiced before the Income Tax Appellate Tribunal was thus rightly rejected by the Tribunal. Both the questions are answered accordingly.

6.By respectfully following the decision of the Hon'ble Supreme Court as well as of this Court as referred to hereinabove, we are of the opinion that questions proposed through instant reference application, which admittedly, were neither raised, considered or decided by the tribunal, cannot be termed as questions of law arising from the order passed by the appellate tribunal, hence, cannot be entertained by this Court under its reference jurisdiction as provided in terms of section 34-A of the Federal Excise Act, 2005. Accordingly, we do not find any merits in the instant reference application, which is dismissed in limine along with listed application.

KMZ/C-14/KReference application dismissed.