PUNJAB BEVERAGES CO. (PVT.) LTD. VS ADDITIONAL COMMISSIONER INLAND REVENUE, 2015 PTD-LAHORE-HIGH-COURT-LAHORE 2296 (2015)

Income Tax Ordinance (XLIX of 2001)--

----Ss. 113(2)(c), 122, 127 & 133---Constitution of Pakistan, Art.199--- Constitutional petition---Alternate remedy---Petitioners were income tax assessees who assailed order-in-original without exhausting remedies available under Income Tax Ordinance, 2001--- Validity---Cases filed by petitioners were premature and preemptive as a question of law had yet to be framed in their cases based on facts of their case---Having gone through rigours of two appeals, cases of petitioners would ripen and then it was to be seen whether a question of law had arisen out of order of Income Tax Appellate Tribunal---Such was the intent of law and procedural form which had to be followed---Jurisdiction to High Court was given specifically under S. 133 of Income Tax Ordinance, 2001, to interpret a question of law and petitioners could not by-pass the entire process and pray for an interpretation on a question of law at an earlier stage in Constitutional petition---Each case of petitioners was to be decided on its own merits and each petitioner had opportunity to urge its case before Commissioner Inland Revenue, then if required before Income Tax Appellate Tribunal and then ultimately if required before High Court in a reference---Neither party could urge what the question of law was or be that would arise once the Appellate Tribunal had decided the case---If question of law was decided at such stage, the entire process given under Income Tax Ordinance, 2001, would become redundant and would give petitioners the ability to avoid due process as provided under Income Tax Ordinance, 2001, where a specific mechanism had allowed a case to become ripe before it could be seen whether a question of law was made out---Essentially exhaustion of specialized remedies under Income Tax Ordinance, 2001, was necessary before seeking interference from High Court---Petition was dismissed in circumstances.

Commissioner Inland Revenue, Zone-II, Karachi v. Messrs Kassim Textile Mills (Pvt.) Limited, Karachi 2013 PTD 1420; Mughal-e- Azam Banquet Complex through Managing Partner v. Federation of Pakistan through Secretary and 4 others 2011 PTD 2260; Collector of Customs, Customs House, Lahore and 3 others v. Messrs S.M. Ahmad and Company (Pvt.) Limited, Islamabad 1999 SCMR 138; Commissioner of Income Tax, Companies-II and another v. Hamdard Dawakhana (Waqf), Karachi PLD 1992 SC 847 and Anjuman-e-Ahmadiya, Sargodha v. (1) The Deputy Commissioner, Sargodha and (2) The Government of West Pakistan, through the Secretary Colonies, Board of Revenue, West. Pakistan, Lahore PLD 1966 SC 639 ref.

Shahid Pervez Jami and Mudassar Shujauddin for Petitioners (In W.Ps. Nos.824, 825, 1355 and 3008 of 2014).

Khurram Shahbaz Butt for Petitioners (In W.Ps. Nos.24807/2013 and 9548/2015).

Muhammad Younas Khalid and Muhammad Ajmal Khan for Petitioner (In W.P. No. 15377/2014).

Malik Asad Mehmood and Muhammad Ilyas Khan, for Respondents.

Saeed-ur-Rehman Dogar for Respondent FBR (In W.Ps. Nos.824 and 825 of 2014).

Date of hearing: 3rd April, 2015.

JUDGMENT

MRS. AYESHA A. MALIK, J.---This common judgment decides upon the issues raised in the Writ Petitions detailed in Schedule `A', appended with this judgment, as all these petitions raise common questions of law and facts.

2. The petitioners all seek the benefit of section 113(2)(c) of the Income Tax Ordinance, 2001 ("Ordinance").

3. In this regard, the petitioners in W.Ps. Nos.9548/15 and 15377/14 have impugned show-cause notices dated 26-1-2015 issued by the Commissioner Inland Revenue, Lahore and 12-5-2014 issued by the Additional Commissioner Inland Revenue, Lahore respectively. The petitioners in W.Ps. Nos.24807/13, 3008/14 and 825/14 have impugned orders-in-original dated 30-6-2013, 31-12-2013 11-12-2013 respectively issued by the Additional Commissioner Inland Revenue. The petitioners in W.Ps. Nos.824 and 1355 of 2014 being aggrieved of the orders-in- original dated 13-11-2013 and 26-11-2013 issued by the Additional Commissioner Inland Revenue respectively have filed appeals before the Commissioner Inland Revenue (Appeals) and have come to this Court against the orders-in-original.

4. The case of the petitioners is that they are entitled to the benefit of Section 113(2)(c) of the Ordinance as they have been paying minimum tax under Section 113 of the Ordinance on account of declared losses. However, when they sought the benefit of section 113(2)(c) under the Ordinance it was denied to them. Mr. Shahid Pervez Jami and Mr. Mudassar Shujauddin, Advocates for the petitioners (In W.Ps. Nos.824, 825, 1355 and 3008 of 2014) submitted that the petitioners have been denied this benefit on account of the judgment in the case titled Commissioner Inland Revenue, Zone-II, Karachi v. Messrs Kassim Textile Mills (Pvt.) Limited, Karachi 2013 PTD 1420. Mr. Khurram Shahbaz Butt, Advocate for the Petitioners (In W.P. No. 24807/2013 and W.P. No.9548/2015) submitted that the impugned orders are without jurisdiction having been passed after the expiration of the period of limitation under Section 122(4) of the Ordinance. Learned counsel submitted that the issue is of one interpretation of Section 113(2)(c) of tilt Ordinance and whether the Respondents can refuse adjustment of minimum tax paid for the preceding tax years (in which loss was declared). They all argued that since it is a decided issue in the Kassim Textile Mills Case, the remedy under the Ordinance is not adequate or efficacious.

5. At the very outset, learned counsel for the respondents raised an objection on the maintainability of the instant petitions on the ground that statutory remedy was available to all the petitioners. He stated that some of the petitioners are aggrieved by orders-in-original issued by the Additional Commissioner Inland Revenue against which appeals are pending before the Commissioner Inland Revenue (Appeals) whereas other petitioners have come against the orders-in-original and against show-cause notices. In this regard, following information has been placed before the Court:--

Learned counsel for the respondents argued that the Ordinance provides remedy to all the petitioners in the form of two appeals and a reference. Therefore this Court should not interfere at this stage and allow the petitioners to bypass the statutory remedy. In this regard, reliance has been placed on the case titled Mughal-e-Azam Banquet Complex through Managing Partner v. Federation of Pakistan through Secretary and 4 others (2011 PTD 2260) wherein it was held that laying challenge to a show-cause notice was, no different than filing a petition on the basis of an apprehension or a speculation. Such a petition was premature and not ripe for adjudication. Learned counsel further argued that notwithstanding the Kassim Textile Mills Case, each case will be seen on its own facts and merits by the competent forum and it will be ascertained whether the Kassim Textile Mills Case is relevant to their case. Therefore he argued that the petitions are not maintainable.

6. Heard and record perused.

7. The common facts in all these cases are that the petitioners were issued notice under Section 122(9) of the Ordinance seeking amendment of the assessment under Section 122(5A) of the Ordinance read with Section 122(1) of the Ordinance. Two petitioners in W.Ps. Nos.9548/2015 and 15377/2014 have impugned the show-cause notices before this Court. Three petitioners in W.P. Nos.24807/2013, 3008/2014 and 825/2014 have impugned the orders-in-original passed under section 122(5A) of the Ordinance before this Court. Two petitioners in W.Ps. Nos.824/2014 and 1355/2014 have filed the appeals before the Commissioner Inland Revenue (Appeals) which are pending. The basic arguments of the learned counsel for the petitioners is that the remedy of appeal is illusionary on account of the fact that the matter in issue has been decided by the Hon'ble Sindh High Court in Kassim Textile Mills Case and that the respondents will decide the issue on the basis of the said judgment. Learned counsel for the petitioners stated that the remedy available under the statute is no longer efficacious or adequate for the petitioners, hence the, petitions are maintainable. The petitioners seek interpretation of Section 113(2)(c) of the Ordinance to the facts of their cases. They disagree with the decision given in the Kassim Textile Mills Case and believe that their cases will suffer the same fate, hence they argue that the statutory remedy is neither adequate nor efficacious and the matter is a fait accompli.

8. The Ordinance is a comprehensive code which specifically provides for the remedy of an appeal before the Commissioner Inland Revenue (Appeals) under Section 127 of the Ordinance. Against the orders of the Commissioner Inland Revenue (Appeals), remedy under Section 131 of the Ordinance is provided being an appeal before the Appellate Tribunal. Against the said order, remedy is in the form of a Reference under Section 133 provided for under the Ordinance, which is remedy before this Court, in which questions of law can be decided. The Ordinance therefore provides the petitioners two appeals and a reference before this Court. The question that arises is whether the remedy is illusionary as the question of law stands decided in Kassim Textile Mills Case. In the case titled Collector of Customs, Customs House, Lahore and 3 others v. Messrs S.M. Ahmad and Company (Pvt.) Limited, Islamabad (1999 SCMR 138), the Hon'ble Supreme Court of Pakistan held that constitutional petition was maintainable in the presence of alternate remedy, if that remedy was illusionary in nature. The alternate remedy under the Customs Act, 1969 was considered illusionary in this case because the CBR declared the classification for imported wood. The Hon'ble Supreme Court of Pakistan held that since the CBR had rendered its decision and classified imported wood, it would be difficult to take a contrary view regarding the classification of imported wood. Therefore within the statutory hierarchy when the matter stood decided, the statutory remedy was considered illusionary as the customs department was bound by the opinion of the CBR.

9. So far as the petitioners in W.Ps. Nos.9548/15 and 15377/14, their petitions have been filed on the basis of an apprehension. They have come against a show-cause notice without filing any reply. In these cases there is no adverse order against the petitioners and the question of whether Kassim Textile Mills Case is relevant has not ripened. No substantive right of the stated petitioners has been infringed and at this stage it is a preemptive argument to urge that their cases will be decided as per the Kassim Textile Mills Case.

10. As to the other petitioners, they essentially seek the interpretation of Section 113(2)(c) of the Ordinance to the effect that they having declared loss are entitled to the benefit of Section 113(2)(c) of the Ordinance. The Hon'ble Sindh High Court in Kassim Textile Mills Case in I.T.R. No.132/2011 decided the question of law 'whether in-the facts and circumstances of the case, the learned Tribunal has 'correctly concluded that the benefit under Section 113(2) (c) of the Income Tax Ordinance, 2001 is available to the respondent taxpayer'. In this case, the petitioner had gone through the statutory remedies available under the Ordinance bringing their cases ultimately to the High Court in a Reference for interpretation of a question of law. In the case titled Commissioner of Income Tax, Companies-II and another v. Hamdard Dawakhana (Waar), Karachi (PLD 1992 SC 847), the Hon'ble Supreme Court of Pakistan held that where a statute provides for alternate and efficacious remedy all the way up to the High Court, the process cannot be bypassed without valid and reasonable cause. In this case, the petitioners claim that the respondents will treat their cases in terms of the dicta laid down in the Kassim Textile Mills Case, hence denying them due process. What needs to be seen is whether the request of the petitioners is reasonable that the Court interpret the question of law raised by the petitioners at this stage when the petitioners have not availed the remedy of an appeal and have the right to file a reference under the Ordinance.

10A. In the Kassim Textile Mills Case relied upon by the petitioners the judgment was delivered in a Reference (I.T.R.A. No.132/2011) by the Hon'ble Sindh High Court meaning that the petitioners went through the statutory remedy and ultimately their case was decided in a reference. The present petitioners seek the same relief through these constitutional petitions without availing the alternate remedy. A reference before the High Court under Section 133 of the Ordinance can be filed in each case where a question of law arises out of the order of the Appellate Tribunal. Unless the dispute does not go through the stages of appeal the case of the petitioners will not ripen for interpretation on a question of law. At this stage, it is mere speculation that the question of law is the same as it was in the Kassim Textile Mills Case. The petitioners' case is based on a fear arising from what they anticipate will happen in their case based on the Kassim Textile Mills Case. They claim a reasonable certainty of a presumed threat on the basis of which they seek interference from this Court. However, even if their apprehensions culminate into an adverse order by the competent authority, the remedy of appeal and reference is available to the petitioner and the question of law can only arise from the order of the Appellate Tribunal. This court cannot preempt the question of law and decide upon it at this stage. The petitioners will have to go through the stages available under the act for their case to ripen for the purposes of interpretation of a question of law.

11. The question of whether alternate remedy is adequate was seen in the case titled Anjuman-e-Ahmadiya, Sargodha v. (1) The Deputy Commissioner, Sargodha and (2) The Government of West Pakistan, through the Secretary Colonies, Board of Revenue, West Pakistan, Lahore (PLD 1966 SC 639) wherein the court stated that to disentitle a person from extraordinary remedy the alternate remedy must be a remedy in law. One which is not less convenient, beneficial and effective and if what is sought to be enforced by such extraordinary remedy is a legal right to the performance of a legal duty of a public nature. The Court held that there are two exceptions to the rule one, that the Court will not interfere to enforce the law of the land through its extraordinary remedy of an order of mandamus in cases where remedy is available under the law, and two when in accordance with the general rule where a statute creates an obligation and enforces its performance in a specified manner, the remedy by mandamus will not be available. In the said case, the Hon'ble Supreme Court of Pakistan held that the adequacy of the remedy, must further be judged, with reference to a comparison of the speed, expense or convenience of obtaining that relief through the alternate remedy, with the speed, expense or convenience of obtaining it under Article 98. The Court has to make a comparison of the speed, expense or convenience of giving that relief under Article 98, with the speed, expense or convenience of obtaining it from the other authority. In this case, the remedy available under the Act is adequate and efficacious for the petitioners. The question in these petitions of adequacy cannot be judged in the light of speed, expense or convenience of obtaining the relief but must be judged in the light of the provisions of the Act itself. The Act is a taxing statute, creating fiscal rights and obligations. Specific and specialized remedy is provided for under the Act which caters to the possible disputes which can arise. Furthermore given that it is a taxing statute, the words of the Act must be given effect to, such that nothing is to be read into it and nothing is to be implied. The Act provides for a specific manner in which a tax liability is to be adjudicated upon, the same should be followed as there is no equity in tax and no presumption as to tax.

12. The petitioners in W.Ps. Nos.824 and 1355 of 2014 whose appeals are pending apprehend that the decisions will be based on the Kassim Textile Mills Case, hence denying them true interpretation of law, which would grant diem the benefit of Section 113(2)(c) of the Ordinance. These cases are premature and preemptive as a question of law has yet to be framed in their cases based on the facts of their case. Having gone through the rigours of two appeals, their case will ripen and it will have to be seen whether a question of law arises out of the order of the Appellate Tribunal. This is the intent of the law and the procedural form which must be followed. Given that the Ordinance specifically gives jurisdiction to this Court under section 133 to interpret a question of law, the petitioners cannot bypass the entire process and pray for an interpretation on a question of law at an earlier stage in a constitutional petition. Each case of the petitioner will be decided on its own facts and each petitioner has the opportunity to urge its case before the Commissioner Inland Revenue, then if required before the Tribunal and then ultimately if required before this Court in a reference. At this stage, neither party can urge what the question of law is or be that will arise once the Appellate Tribunal has decided the case. If the question of law is decided at this stage, the entire process given under the Ordinance becomes redundant and gives the petitioners the ability to avoid due process as provided under the Ordinance where a specific mechanism allows a case to become ripe before it can be seen whether a question of law is made out. Essentially exhaustion of the specialized remedies under the Ordinance is necessary before seeking interference from this Court.

13. In view of the aforesaid, no case for interference is made out.

petitions are dismissed.

Schedule-A

Details of Writ Petitions mentioned in Judgment dated 3-4-2015 passed in W.P. No.824/2014

MH/P-26/LPetitions dismissed.