COMMISSIONER INLAND REVENUE, LARGE TAXPAYERS UNIT, ZONE-II, LAHORE VS NESTLE PAKISTAN LTD., 2014 PTD-LAHORE-HIGH-COURT-LAHORE 1472 (2014)

(a) Sales Tax Act (VII of 1990)---

----Ss. 30 & 31---Scheme of administrative tax governance under the Sales Tax Act, 1990---Specific nature of jurisdiction of sales tax officers under the Sales Tax Act, 1990---Section 30 of the Sales Tax Act, 1990 provided a list of officers of Sales Tax (or Inland Revenue) who were appointed by the Federal Board of Revenue in relation to any area, person or class of persons----Officers mentioned in S. 30 had a specific jurisdiction co-related to an area or person or class of persons and such specific nature of jurisdiction was reaffirmed in S. 31 of the Sales Tax Act, 1990 where an officer of Inland Revenue was under an obligation to exercise such powers and discharge such duties as were conferred or imposed on him under the Sales Tax Act, 1990---In order to achieve an architecture of effective tax governance in the country, officers of the Inland Revenue had been assigned specific jurisdictions based on area or person or class of persons and they could only operate within the said specified domain and even though the officers enjoy a generic nomenclature such as, "Commissioner of Inland Revenue", but they exercised power only within their delineated sphere permitted under the Act---Specific circle of power assigned to each officer went to the root of effective tax governance under the Sale Tax Act, 1990---Structure of governance under Ss. 30 & 31 of the Sales Tax Act, 1990 had to be strictly followed.

(b) Sales Tax Act (VII of 1990)---

----Ss. 47, 30 & 31---Reference to High Court---Persons authorized to file sales tax reference to High Court---Nature of jurisdiction of Commissioner under S. 47(1) of the sales Tax Act, 1990---Scope---Contention of taxpayer was that person who signed the reference, inter alia, at the time of filing of present reference, was no longer the Commissioner Inland Revenue, and was not the Commissioner exercising jurisdiction over the case of the taxpayer---Held, that S.47(1) of the Sales Tax Act, 1990 authorized a "Commissioner" to prefer an application/reference against the order of the Appellate Tribunal before the High Court and it also authorized the said "Commissioner" to delegate the said power to an officer of Inland Revenue not below the rank of Additional Commissioner---Reading of S.47(1) along with Ss. 30 & 31 of the Sales Tax Act, 1990 and notification issued thereunder meant that "Commissioner" under S.47(1), was "Commissioner" enjoying jurisdiction over the taxpayer company; and therefore, it was only the said "Commissioner" who could prefer an application/reference against the order of the Appellate Tribunal in the case of the taxpayer before the High Court and no other "Commissioner"---Such structure of governance had to be strictly followed in terms of Ss. 30 & 31 of the Sales Tax Act, 1990 and it could not be said that any "Commissioner" in the country could assume jurisdiction over the case of the taxpayer and file a reference against the decision of the Appellate Tribunal passed in favour of the taxpayer as any such step would lead to chaos and demolish the structure of tax administration built under Ss. 30 & 31 of the Sales Tax Act, 1990---Section 47(1) of the Act specifically envisaged "Commissioner" as the highest authority authorized to file a reference and no other officer of Inland Revenue, even higher in rank, could file a reference under the said provision---Section 47(1) of the Sales Tax Act, 1990 also showed that the authorization has to be valid at the time when the application/reference was preferred before the High Court and the cutoff date for validation of such authorization was the date of the filing of the reference---On the date of filing of the present reference, the person who signed the power of attorney was no more the Commissioner Inland Revenue but had actually become the Chief Commissioner Inland Revenue, Regional Tax Office---Contention that the said person signed the power of attorney, as well as the affidavit while he was the "Commissioner" Inland Revenue and, therefore, the instant reference was maintainable, was without force because the cutoff point is the time when the reference was filed before the High Court and, admittedly, at the time of the filing of the said reference, the said officer was not the "Commissioner" Inland Revenue enjoying territorial jurisdiction over the petitioner Company---Reference, having been filed by unauthorized person, was dismissed, in circumstances.

Mrs. Kausar Perveen and Ch. Muhammad Zafar Iqbal for Petitioner.

Imtiaz Rasheed Siddiqui, Shehryar Kasuri and Asim Zulfiqar, Chartered Accountant for Respondents.

Date of hearing: 11th March, 2014.

JUDGMENT

SYED MANSOOR ALI SHAH, J.---Learned counsel for the respondent has raised a preliminary objection that the instant reference is not maintainable as the same has been filed by a person who is not authorized to file the instant reference in terms of section 47(1) of the Sales Tax Act, 1990 ("Act"). Elaborating his point he submits that admittedly the instant reference was filed on 28-1-2013. The power of attorney has been signed by one Shafqat Mahmood, Commissioner Inland Revenue (Zone-II), Large Taxpayers Unit, Lahore, dated 24-10-2012 along with his affidavit supporting the reference dated 3-1-2013.

2.Learned counsel has referred to Notification dated 11-1-2013, issued by the FBR, whereby the said officer had relinquished charge of the post of Commissioner Inland Revenue (Zone-II), Large Taxpayers Unit, Lahore, and assumed the charge of the post of Chief Commissioner Inland Revenue (OPS) Regional Tax Officer, Lahore w.e.f. 4-1-2013. Thus, on the date of filing of the instant reference the aforementioned officer was not the Commissioner Inland Revenue (Zone-II), Large Taxpayers Unit, Lahore. Learned counsel further submits that section 47 read with section 31 of the Act and the Notifications issued thereunder dated 1-3-2011 clearly delineate the powers of the respective Commissioner for the purpose of Section 47 of the Act. It is contended that after transfer of the aforementioned officer, w.e.f. 4-1-2013, he was not the Commissioner exercising jurisdiction over the case of the petitioner and, hence, does not qualify to be the "Commissioner" for the purposes of section 47 in the case of the petitioner. He further contends that the appointment of a Chief Commissioner does not change the complexion as section 47(1) requires the Commissioner or his delegatee to file the reference.

3.In reply, learned counsel for the petitioner department vehemently submit that the power of attorney and the affidavit were signed much before the date of relinquishment of the charge by the said officer, therefore, instant reference has been filed by a competent person. Further submit that date of filing of the reference is not relevant and dates of signing the power of attorney and affidavit be considered for the purpose of assessing the maintainability of the instant reference.

4.We have gone through the record of the case and have carefully gone through the Act and the Notifications issued thereunder.

5.In order to fully understand the scope and extent of the authority enjoyed by the Commissioner to prefer an application (Reference) against the order of the Appellate Tribunal before the High Court in terms of section 47(1) of the Act, it is important to consider the structure of administrative tax governance under the Act. This is visible from the nature of appointments of the officers and the scope of the powers enjoyed by them under the Act. Section 30 provides a list of officers of Sales Tax (or Inland Revenue) who are appointed by the Federal Board of Revenue in relation to any area, person or class of persons. This means that the officers mentioned in section 30 have a specific jurisdiction co-related to an area or person or class of persons. This specific nature of jurisdiction is reaffirmed in section 31 of the Act, where the officer of Inland Revenue is under an obligation to exercise such powers and discharge such duties as are conferred or imposed on him under this Act. The above provisions show that in order to achieve an architecture of effective tax governance in the country, the officers of the Inland Revenue have been assigned specific jurisdictions based on area or person or class of persons and they can only operate within the said specified domain. Even though the officers enjoy a generic nomenclature e.g., "Commissioner of Inland Revenue" but they exercise power only within their delineated sphere permitted under the Act. In the present case when sections 30 and 31 are read with Notifications dated 1-3-2011, only Commissioner Inland Revenue (Zone-II), Large Taxpayers Unit enjoys jurisdiction over the petitioner Company, which appears at serial No.96 with NTN No.0225862 under the said Notifications. This specific circle of power assigned to each officer goes to the root of effective tax governance under the Act.

6.Section 47(1) of the Act authorizes a "Commissioner" to prefer an application/reference against the order of the Appellate Tribunal before the High Court. It also authorizes the said "Commissioner" to delegate the said power to an officer of Inland Revenue not below the rank of Additional Commissioner. Reading of section 47(1) along with sections 30 and 31 of the Act and the Notification issued thereunder means the "Commissioner" under section 47(1) of the Act is the Commissioner enjoying jurisdiction over the petitioner Company i.e., Commissioner Inland Revenue (Zone-II), LTU, Lahore in terms of Notification dated 1-3-2011. Therefore, it is only the said Commissioner who can prefer an application/reference against the order of the Appellate Tribunal in the case of the petitioner before the High Court and no other Commissioner. This structure of governance has to be strictly followed in terms of sections 30 and 31 of the Act. It cannot be said that any Commissioner in the country can assume jurisdiction over the case of the petitioner and file a reference against the decision of the Appellate Tribunal passed in favour of the petitioner. Any such step would lead to chaos and demolish the structure of tax administration built under sections 30 and 31 of the Act. Further, section 47(1) of the Act specifically envisages "Commissioner" as the highest authority authorized to file a reference. Therefore, no other officer of Inland Revenue, even higher in rank, can file a reference under the said provision.

7.Section 47(1) also shows that the authorization has to be valid at the time when the application/reference is preferred before the High Court. Therefore, the cutoff date is the date of the filing of the reference. In this case, admittedly, on the date of filing of the instant reference i.e., 28-1-2013 Shafqat Mahmood was no more the Commissioner Inland Revenue (Zone-II), Large Taxpayers Unit, Lahore but had actually become the Chief Commissioner Inland Revenue (OPS), Regional Tax Office, Lahore. The submission of the learned counsel for the petitioner that one Shafqat Mahmood had signed the power of attorney, as well as, the affidavit while he was the Commissioner Inland Revenue (Zone-II), LTU, Lahore and, therefore, the instant reference is maintainable, is without force because the cutoff point is the time when the reference is filed before the High Court and, admittedly, at the time of the filing of the said reference, the said officer was not the Commissioner Inland Revenue enjoying territorial jurisdiction over the petitioner Company.

8.In this view of the matter, we are of the view that the instant reference has been filed by an unauthorized person and the same is not maintainable, resultantly, the questions of law raised in this reference are not required to be answered. The instant reference is, therefore, dismissed on the ground of maintainability. The petitioner-department is, however, free to file a fresh reference after obtaining the requisite authorization under the law, if so advised, subject to the question of limitation.

9.Office shall send a copy of this judgment under the seal of the Court to the learned Appellate Tribunal Inland Revenue Lahore as per section 47(5) of the Act.

KMZ/C-3/LReference dismissed.