HASEEB WAQAS SUGAR MILLS LTD. VS GOVERNMENT OF PAKISTAN, 2015 PTD-LAHORE-HIGH-COURT-LAHORE 1665 (2015)

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

----S. 47---Interpretation of S.47 of the Sales Tax Act, 1990---Reference to High Court---Adjudication of reference application under S.47 of the Sales Tax Act, 1990---Scope---Nature and scope of jurisdiction of High Court under S. 47 of the Sales Tax Act, 1990---Bar to adjudicate under S. 47 of the Sales Tax Act, 1990 on questions of law not raised before Appellate Tribunal---Powers of High Court under S. 47 of the Sales Tax Act, 1990 were circumscribed by the conditions laid down by S. 47 itself, and therefore High Court while adjudicating on reference applications could not travel beyond scope of S. 47 of the Sales Tax Act, 1990---Crucial words used in S. 47 which determined the ambit of power conferred on High Court were "subject to any question of law arising out of such order", therefore two conditions had been laid down for interference by the High Court; firstly; reference application had to state a question of law, and secondly, that question of law must arise out of order of Appellate Tribunal---Question of law, therefore, if the same did not arise out of order of Appellate Tribunal, jurisdiction of High Court would not be attracted and interference under S. 47 of the Sales Tax Act, 1990 would not be called for----Question was not merely of jurisdiction to be vested in the High Court but of certain jurisdictional facts to exist in order for High Court to exercise power under S. 47 of the Sales Tax Act, 1990 and such jurisdictional facts could only exist if the question of law sought to be raised arose out of order of Appellate Tribunal---Nature of jurisdiction under S. 47 of the Sales Tax Act, 1990 was a special jurisdiction and such jurisdiction was limited by the para meters given in the provision itself---High Court under S. 47 of the Sales Tax Act, 1990 therefore could not adjudicate upon any question of law raised for the first time before it.

S.T.R. No.11/2009; Caltex Oil (Pakistan) Ltd. v. Collector, Central Excise and Sales Tax and others 2005 PTD 480; Messrs Ahmad Karachi Halva Merchants and Ahmad Food Products v. The Commissioner of Income Tax, South Zone, Karachi 1982 SCMR 489; Messrs F.M.Y Industries Ltd. v. Deputy Commissioner Income Tax and another 2014 SCMR 907; Director Intelligence and Investigation (Customs and Excise), Faisalabad and another v. Bagh Ali 2010 PTD 1024; Brothers Steel Mills Ltd. v. Ilyas Miraj PLD 1996 SC 543, 562; Tristar Polyster v. City Bank 2001 SCMR 410 and Pakistan Industrial Creidt and Investment Corporation v. Government of Pakistan 2002 CLD 1 rel.

(b) Jurisdiction---

----Jurisdiction could not be enlarged or extended beyond the scope of the law, which conferred such jurisdiction---Before a Court could claim to exercise judicial power, it must have jurisdiction, for jurisdiction was the authority of a court to hear a case and hence exercise a judicial power.

Craig R. Ducat and Harold W. Chase, 5th ed. P.5) rel.

Nauman Mushtaq Awan for Applicant.

Sheikh Izhar ul Haq (in S.T.Rs. Nos.14 of 2008 and 127 of 2007), Ms. Kausar Parveen (in S.T.R. No.185 of 2011) and Sarfraz Ahmad Cheema (in S.T.Rs. Nos.21 of 2009 and 116 of 2007) for Respondents.

Date of hearing: 12th February, 2015.

JUDGMENT

SHAHID KARIM, J.---This single judgment shall decide the instant Reference Application (S.T.R. No.14/2008) as well as connected Reference Applications bearing S.T.Rs. Nos. 127/07, 185/2011, 21/2009 and 116/2007, as all of these involve identical question of law urged to have arisen in these Reference Applications though out of orders passed by the Appellate Tribunal Sales Tax, Lahore (Tribunal) on different dates. The impugned orders have been passed on 13-11-2007, 30-7-2007, 2-8-2011, 12-2-2009 and 17-7-2007 respectively.

2.The facts in these Reference Applications are different in each case and there are a number of questions of law which have been framed to arise in these Reference Applications, however, the learned counsel for the applicants has confined his arguments to the following question of law in all the captioned reference applications:--

"Whether the adjudication vide order-in-original involved is hopelessly time barred and this prime fact which is also a paramount question of law has been taken care of/adjudicated upon by the foras below?"

3.Because of the commonality of the question of law reproduced above in all Reference Applications, it is not necessary to narrate or advert to the facts in each one of them separately. The learned counsel for the applicants did not urge any other question of law formulated in the Refernece Application during the course of his arguments and thus they shall be deemed to have been abandoned and not pressed.

4.The learned counsel for the applicant has relied upon section 36 of the Sales Tax Act, 1990 (Act) (as it then was) to contended that an officer of Inland Revenue, empowered under section 36 of the Act was obligated to make an order within a period of 45 days as if the order had not been made within the said period, it can only be done after an extension has been granted by the Commissioner who may do so for reasons to be recorded in writing. It was further provided by section 36 of the Act that the extended period shall in no case exceed 60 days. It is pertinent to say that section 36 of the Act has been omitted by Finance Act, 2012. However, these cases relate to the period prior to the year 2012. Also initially the period for determination by the Officer of Inland Revenue was 45 days which was later substituted by the words "120 days" by the Finance Act, 2008.

5.The learned counsel for the respondent department has submitted that the question sought to be raised does not arise from the impugned order, in that, this objection has not been taken by the applicant before the forums below and has been urged for the first time in the instant reference applications.

6.The question whether the time frame prescribed in section 36(3) of the Act for deciding the show cause notice is a mandatory requirement, has been dilated upon and determined in a number of judgments of this Court. It would suffice to refer to observations made by this Court in S.T.R. No.11/2009 dated 19-4-2012 in which after referring to the judgments on the issue, it was held as under:--

"Whether the timeframe prescribed in section 36(3) of the Sales Tax Act, 1990 for deciding the Show Cause Notice is a mandatory requirement?

2. The above question has already been answered in the affirmative by this Court in judgments reported as Messrs Meraj Din through Partner v. Collector Customs, Excise and Sales Tax (Appeals), Lahore and 2 others, (2009 PTD 2004), Messrs Hanif Straw Board Factory through Proprietor v. Additional Collector (Adjudication) Customs, Central Excise and Sales Tax, Gujranwala and 2 others (2008 PTD 578), Tanveer Weaving Mills through Director Finance v. Deputy Collector Sales Tax and 4 others, (2009 PTD 762) and Messrs Super Asia Muhammad Din Sons (Pvt.) Ltd. through Chief Executive v. Collector of Sales Tax, Gujranwala and another (2008) 97 Tax 156 (H.C. Lah.)=(2008 PTD 60). Messrs Meraj Din through Partner v. Collector Customs, Excise and Sales Tax (Appeals), Lahore and 2 others, (2009 PTD 2004) was a case where the question arose out of the order of the appellate Tribunal and it was thus in these circumstances that this Court determined the question of law raised in the reference application. The other two cases viz Messrs Super Asia Muhammad Din Sons (Pvt.) Ltd. through Chief Executive v. Collector of Sales Tax, Gujranwala and another, (2008) 97 Tax 156 (H.C. Lah.)=(2008 PTD 60) was a decision given on a Constitutional petition under Article 199 of the Constitution of Islamic Republic of Pakistan, 1973 as also was the case titled Tanveer Weaving Mills through Director Finance v. Deputy Collector Sales Tax and 4 others, (2009 PTD 762) referred to above by the learned counsel for the applicants. These cases are, therefore, distinguishable and do not deal with the question which arises in the present reference application."

7.However, the question here is not regarding the effect of section 36 of the Act to be mandatory or directory. The question here is whether the applicant can raise this issue for the first time in this reference application having not taken this objection at any of the forums below. The learned counsel for the applicant submits that the question raised is a pure question of law and can be raised at any stage of the proceedings, whether original or appellate. It is thus futile, according to him, to say that the applicant is estopped from raising it here for the first time. He further submits that it is a settled proposition of law, laid down by superior courts that questions of law and jurisdiction can very well be taken at any stage and the courts are under a bounden duty to decide them and cannot be brushed aside on the plea of estoppel. He has relied upon a judgment of the Supreme Court of Pakistan viz Caltex Oil (Pakistan) Ltd. v. Collector, Central Excise and Sales Tax and others 2005 PTD 480 and the following observations by the Supreme Court of Pakistan in the judgment:--

"This is settled principle of law that a question of law arising out of the facts of the case relating to the fundamental issues involved therein, even if was not raised before the lower forum, can be allowed to be taken before the higher forum and this Court for doing complete justice may, if the, facts and circumstances of a case so demand, allow to raise a question of law which was not as such taken before the High Court. This is the duty of the Court seized of the matter, to apply the correct law to meet the ends of justice and this Court in Gatron (Industries) Ltd. v. Government of Pakistan (1999 SCMR 1072) = PTCL 1999 CL 359) held that "even when leave is not granted on a point, the same can be allowed to be canvassed in appeal if it is necessary for doing complete justice in a case or a matter pending before the Court as contemplated by sub-article (1) of Article 187 of the Constitution."

8.The proposition laid down in the above judgment of the Supreme Court of Pakistan is not denied and no cavil can be taken to it. However the above judgment of the Supreme Court enumerates a general rule based on the doctrine of ultra vires. This rule is subject to exceptions and cannot be applied to each and every case without regard to the law or the statute from which the order arises. It remains to be seen whether the said rule can be made applicable to the jurisdiction being exercised by this Court under the Act. It is common ground between the parties that the order in original under section 36 of the Act in all these cases was passed beyond the period mandated under the law and, therefore, the orders in original passed by the adjudication officer were beyond time. It is also admitted on all hands that the objection was not taken by the applicants before the forums below.

9.The scope of section 47 of the Act and the powers of this Court to interfere in the orders of the Tribunal would be a relevant issue in the facts and circumstances of the case. Section 47, so far as relevant, is reproduced as under:--

"47. Reference to the High Court.--

(1)Within ninety days of the communication of the order of the Appellate Tribunal under subsection (5) of section 46, the aggrieved person or any officer of Inland Revenue not below the rank of an Additional Commissioner, authorized by the Commissioner may prefer an application in the prescribed form along with a statement of the case to the High Court, stating any question of law arising out of such order.

(2)The statement to the High Court referred to in subsection (1), shall set out the facts, the determination of the Appellate Tribunal and the question of law, which arises out of its order.

(3)where, on an application made under subsection (1), the High Court is satisfied that a question of law arises out of the order referred to in subsection (1), may proceed to hear the case.

10.The powers of this Court under section 47 of the Act are circumscribed by the conditions laid down in section 47 of the Act itself and thus this Court, while making an adjudication in the reference applications, cannot travel beyond the scope of section 47 of the Act. The crucial words in section 47 of the Act which determine the ambit of the power conferred on this Court are "subject to any question of law arising out of such order". Therefore, two conditions have been laid down for interference by this Court; firstly the reference application has to state a question of law and secondly, that question of law must arise out of the order of the appellate Tribunal. It follows, therefore, that if a question of law does not arise out of the order of the Tribunal, the jurisdiction of this Court will not be attracted and interference under section 47 of the Act will not be called for. The question here is not merely of jurisdiction to be vested in this Court but of certain jurisdictional facts to exist in order for this Court to exercise powers under section 47 of the Act. Those jurisdictional facts can only exist if the question of law sought to be raised arises out of the order of the Appellate Tribunal. Two judgments of the Supreme Court of Pakistan shed light on the aspect that we are confronted with viz. whether this Court can proceed to determine a question of law in the exercise of the powers conferred by section 47 of the Act, even though it does not arise from the order of the Appellate Tribunal. In Messrs Ahmad Karachi Halva Merchants and Ahmad Food Products v. The Commissioner of Income Tax, South Zone, Karachi (1982 SCMR 489) the question was regarding the interpretation of the expression "arising out of such order" in section 66(1) of the Income Tax Act, 1922 and it was held as under:--

"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.

12. Concluding thus, we are not inclined to agree with the opinion of the Division Bench in (1974) 29 Taxation 31 which has followed the minority view of the Supreme Court of India in the case of Scindia Steam Navigation Co. Ltd. which itself did not find favour in the subsequent cases decided by the Supreme Court of India. Even on the general principle, where a ground is taken but not pressed, it should be regarded as having been abandoned for all intents and purposes. Accordingly, the contention of the learned counsel for the petitioner has no merit. Appeal fails which is dismissed."

11.More recently, in Messrs F.M.Y Industries Ltd. v. Deputy Commissioner Income Tax and another (2014 SCMR 907), the Supreme Court of Pakistan reiterated the principle of law with reference to sections 133 and 137 of the Income Tax Ordinance, 2001 (provisions of which are in pari materia with section 47 of the Act) in the following words:

"10. A perusal of the above extract reveals that the learned High Court only has to give opinion on questions of law raised before, it and not on the grounds mentioned in the appeal. It is now a settled law that only those questions can be raised before the learned High Court which are questions of law and are arising from the order of the Tribunal. Questions of law have been held to include questions argued before the Tribunal on which finding has been given by the Tribunal or questions argued before the Tribunal but no finding has been given by the Tribunal on such questions and questions which were never argued but had been adjudicated by the Tribunal. The question whether assessment should have been finalized under section 62 or 63 of the Ordinance does not fall under any of these categories. It was not argued before the Tribunal nor adjudicated by the Tribunal. We, therefore, regret that this question do not merit consideration by us at this stage. In this connection we would also refer to the judgment of this Court in the case of Collector of Customs E&ST and Sales Tax v. Pakistan State Oil Company Ltd. (2005 SCMR 1636) where this Court held as under:

"Perusal of section 196 of the Act reveals that High Court can exercise its jurisdiction only in respect of questions of law arising out of order under section 194-B of the Act. It is significant to note that before the Customs hierarchy plea of limitation was not raised. It being so, the High Court was not competent to consider said plea, as it was neither raised, before the Collector Customs, nor before the Tribunal. There is no discussion on the point of limitation in the orders passed by the Collector Customs and the Tribunal. Question of limitation is a mixed question of law and fact and unless it was raised before the forum below, it could not straightway be agitated before the High Court. It can be concluded that such question never arose from the order passed by the Tribunal. Factual controversy is sorted out up to the level of the Tribunal. Remedy under section 196 is restricted to legal points only, which was not available to the respondent-Company before the High Court. From a perusal of this extract it is clear that a new question of law that has not been agitated before the Tribunal cannot be raised before the High Court or this Court."

12.A judgment of the Division Bench of this Court reported as Director Intelligence and Investigation (Customs and Excise), Faisalabad and another v. Bagh Ali (2010 PTD 1024) has dealt with a similar issue, as the instant reference application, in the following manner:--

"11. Now considering the first question, it may be mentioned that the real object of providing a special appeal/reference to the High Court in these fiscal matters is confined and restricted only to the question of law. Such question necessarily should emanate, spring up, originate and stem from the proceedings, which have reached the Appellate Tribunal and certainly must be spelt out from the order of the Tribunal itself. Where such a legal question, be that of jurisdiction either of the forums below in hierarchy of the Tribunal or the Tribunal itself it should be agitated before the said forum and on account of analyzing the orders, it should emerge for the determination, but if not, it cannot be held to be that question of law arising out of the order, regarding which appeal/ reference has been provided to the High Court under the special laws, in line with the object, purpose and spirit of the law, therefore, a restricted and circumscribed interpretation should be placed in construing the expression `arising out of the order' ..."

12. In our view, the expression 'arising out of the order' is to be interpreted and applied in the context of the law in which the empowerment has been provided to the High Court to decide certain cases. The jurisdiction of the High Court in this behalf is limited only to the question of law, which as stated earlier emerges out of the impugned order of the Tribunal before the High Court or even from the orders of the forums lower in the departmental hierarchy, but not any supplemented, incidental or an ancillary question which was not in issue in these proceedings; therefore in appeal/reference under the special law, no collateral attack to the order of the Appellate Tribunal can be made even if based upon the lack of jurisdiction..."

13.It is obvious that the High Court exercises special jurisdiction under section 47 of the Act and that jurisdiction is limited by the parameters given in the provision itself. The jurisdiction cannot be enlarged or extended beyond the scope of the law which confers the jurisdiction. "Before a court can claim to exercise judicial power, it must have jurisdiction: for jurisdiction is the authority of a court to hear a case and hence to exercise a judicial power". (Constitutional Interpretation by Craig R. Ducat and Harold W. Chase, 5th ed. P.5).

14.It was observed in Brothers Steel Mills Ltd. v. Ilyas Miraj (PLD 1996 SC 543, 562) that the High Court when it exercised jurisdiction under the Income Tax Ordinance, 1979 (since repealed) it exercised original civil jurisdiction as a Special Court; in Tristar Polyster v. City Bank (2001 SCMR 410), it was held that the High Court when it exercised its jurisdiction under the 1997 Act, "it was not a High Court in its ordinary meanings exercising jurisdiction as such whereas on the other hand, it was exercising special jurisdiction having been constituted as a Banking Court." Similarly, in Pakistan Industrial Credit and Investment Corporation v. Government of Pakistan (2002 CLD 1), reference was made to the definition of "Banking Court" in the 1997 Act as also to Section 5 thereof, which provided that "The Chief Justice of each High Court shall, for securing the expeditious disposal of cases under this Act nominate one or more Judges to exercise jurisdiction in respect of cases hereunder.... "It was held that "when a Judge of the High Court is nominated by the Chief Justice for expeditious disposal of the cases under the Act, he acts as Banking Court, any order passed by him as such court would be in the capacity of a Banking court and not the High Court in its ordinary jurisdiction. "For this view, support was sought from Pakistan Fisheries Ltd. v. United Bank Ltd. where it was held that the jurisdiction conferred on the High Court under the 1979 Ordinance was a special jurisdiction and "while exercising such jurisdiction the High Court bears the fictional character of a Special Court as defined in the Ordinance."

15.There is no doubt, therefore, that this Court exercises a special jurisdiction under section 47 of the Act and that jurisdiction merely extends to deciding 'the question of law, which arises out of the order'. This Court will not go into any question of law raised for the first time before it. This is the rule settled by the Supreme Court of Pakistan in the judgment brought forth, above.

16.In view of the above, we find that the reference applications do not give rise to a question of law to arise from the orders of the Appellate Tribunal and thus these reference applications are dismissed.

17.This judgment shall also deal with the following connected Constitutional petitions filed by the applicants against the recovery notices issued during the pendency of these reference applications and these petitions were directed to be heard along with the instant reference applications.

(i)W.P. No.28985/14 in S.T.R. No.14/2008.

(ii)W.P. No.29704/14 in S.T.R. No.21/2009.

(iii)W.P. No.29703/14 in S.T.R. No.116/2007.

(iv)W.P. No.28945/14 in S.T.R. No.127/2007.

(vi)W.P. No.28948/14 in S.T.R. No.185/2011.

Since these petitions lay a challenge to the recovery proceedings during the pendency of the instant reference applications, they have become infructuous and are also disposed of in view of the decision made in these reference applications.

A copy of this judgment shall be sent to the Tribunal under seal of the Court.

KMZ/H-12/LApplication dismisse