UCH POWER (PVT.) LTD. VS FEDERATION OF PAKISTAN, 2017 PTD-ISLAMABAD 2377 (2017)

(a) Words and phrases ---

----"Otherwise"---Meaning of: "In a different way"; "in other respects"; "as an alternative".

Oxford Dictionary 4th Edition rel.

(b) Sales Tax Act (VII of 1990)

----S. 34---Levy of Sales Tax---Default surcharge---Willful default---Interpretation of S.34 of the Sales Tax Act, 1990---Bare perusal of S.34 of the Sales Tax Act, 1990 revealed that payment of default surcharge was not confined only to cases of willful default but same could be demanded in cases where there was default "otherwise"; and the word "otherwise" is defined as "in a different way"; "in other respects"; "as an alternative".

Oxford Dictionary 4th Edition rel.

Messrs RCD Ball Bearing Limited v. Sindh Employee Social Security Institution, Karachi PLD 1991 SC 308; Masood Textile Mills v. Commissioner of Income Tax 2003 PTD 2653; Commissioner of Income Tax v. HBL 2007 PTD 901; Messrs Bhola Weaving Factory v. Customs, Excise and Sales Tax Appellate Tribunal and another 2004 PTD 1048 and D.G. Khan Cement Company Limited v. Federation of Pakistan and others 2004 PTD 1179 distinguished.

Umair Majeed Malik for Petitioner.

Adnan Haider Randhawa for Respondents.

JUDGMENT

AAMER FAROOQ, J.---The petitioner is aggrieved of recovery notices dated 24.10.2016 and 24.11.2016 whereby the accounts of the petitioner company have been attached. The referred recovery notices pertain to default surcharge amounting to Rs. 4763377/- for the period from 07.02.2014 to 15.02.2016.

2.Learned counsel for the petitioner, inter alia, contended that the period referred in the recovery notices is during which petitioner had filed Sales Tax Reference STR No. 2/2014 wherein an injunctive relief was granted to it vide order dated 10.02.2014 in C.M. No. 01/2014. It was further contended that interim relief continued till the decision of the reference i.e. vide judgment dated 25.01.2016. It was also contended that the recovery of additional default surcharge is in the form of penalty which the petitioner is not liable to pay as there was no willful default on its part. In this behalf reliance was placed on cases reported as "Messrs RCD Ball Bearing Limited v. Sindh Employee Social Security Institution, Karachi" (PLD 1991 SC 308), "Masood Textile Mills v. Commissioner of Income Tax" [(2003 PTD 2653)]. It was further contended that since surcharge is in the nature of penalty, therefore, mens rea is required for the same. Reliance was placed on cases titled "Commissioner of Income Tax v. HBL" (2007 PTD 901), "Messrs Bhola Weaving Factory v. Customs, Excise and Sales Tax Appellate Tribunal and another" (2004 PTD 1048) and "D.G. Khan Cement Company Limited v. Federation of Pakistan and others" (2004 PTD 1179).

3.Learned counsel for respondents, inter alia, contended that under section 34 of the Sales Tax Act, 1990 default surcharge is to be paid where default is either willful or otherwise. It was further contended that the petitioner had an alternate remedy by way of representation under section 34-A of the Sales Tax Act, 1990 to the Board.

4.Arguments on behalf of learned counsel for the parties have been heard and the documents placed on record have been perused with their able assistance.

5.The petitioner is aggrieved of two recovery notices issued to it for payment of default surcharge. The recovery notices pertain to default surcharge for late payment of sale tax liability in the sum of Rs.4763377/-. The thrust of arguments on behalf of the learned counsel for the petitioner was that the default in payment of the principal liability was not willful and was due to injunctive relief granted by this Court in Sales Tax Reference No. 02/2014 which was dismissed vide judgment dated 25.01.2016. Under section 34 of the Sales Tax Act, 1990, if a registered person does not pay the tax due or part thereof whether willful or otherwise, in time or in the manner specified under this Act, rules or notification issued thereunder, he in addition to the tax due shall pay default surcharge at the rate provided in the Act. The bare perusal of section 38 ibid shows that the payment of default surcharge is not confined to the willful default but even in cases where there is default otherwise. The word otherwise, has been defined in Oxford Dictionary 4th Edition, Oxford University Press as in a different way; in other respects; as an alternative. The cases relied upon by the learned counsel for the petitioner do not pertain to section 34 of the Sales Tax Act, 1990 and are not relevant. The petitioner also has alternate remedy by way of representation to Federal Board of Revenue under section 34-A of Sales Tax Act, 1990.

6.In view of above, instant petition is without merits and is accordingly dismissed.

KMZ/105/Isl Petition dismissed.