DESCON ENGINEERING LTD. VS SINDH REVENUE BOARD through Chairman, 2017 PTD-KARACHI-HIGH-COURT-SINDH 1025 (2016)

Sindh Sales Tax on Service Act (XII of 2011)---

----Ss. 78 & 79---Withholding tax---Engineering Procurement and Commission Contracts---Petitioner company was aggrieved of inaction on the part of Sindh Board of Revenue who had not responded to the query of petitioner---Plea raised by petitioner was that Engineering Procurement and Commission Contracts executed between petitioner and other parties were outside the ambit of goods or services and were not chargeable under Sindh Sales Tax on Services Act, 2011---Validity---Such determination required proper scrutiny of facts and interpretation of Engineering Procurement and Commission Contracts, therefore, it required a legal determination through some quasi-judicial proceedings by revenue authorities and could not be decided through some administrative order or instructions in terms of S. 78 of Sindh Sales Tax on Services Act, 2011---Relief claimed by petitioner was misconceived in facts and law and constitutional petition was filed without any legal cause of action, as no adverse order was passed by competent authority relating to subject controversy in accordance with law---Constitutional petition was dismissed in circumstances.

Dr. Ikramul Haq and Ms. Lubna Pervaiz for Petitioner.

Nemo for the Respondents.

Date of hearing: 19th October, 2016.

ORDER

AQEEL AHMED ABBASI, J.---Through instant petition, petitioner company has sought following relief(s):--

a.Direct the respondents to follow the binding judgments already conveyed to them and issue clear and unambiguous clarification in terms of section 24A of the General Clauses Act, 1897.

b.Restrain the respondents from transgressing the Constitutional provisions.

c.Direct them to follow the judgments biding under Articles 189 and 201 of the Constitution.

d.Grant any other relief deem fit in the circumstances.

2.On 04.10.2016, when the matter was taken up for hearing at Katcha Peshi, the learned counsel for the petitioner was directed to satisfy this Court as to maintainability of the instant petition, in response, the learned counsel contended that notice of instant petition may be issued to the respondents and DAG, in the meanwhile, he will prepare himself on the issue of maintainability and will satisfy the Court with the help of case law on the next date of hearing. Accordingly, pre-admission notice was issued to the respondents as well as A.G. Sindh for 19.10.2016 in the following terms:--

"04.10.2016:

Dr. Ikramul Haq, advocate for the petitioner

a/w. Messrs Lubna Pervaiz and S. Muhammad Ijaz, advocates.

1. Granted.

2. Granted subject to all just exceptions.

3. Through instant petition, the petitioner being unlisted public company has expressed its grievance regarding inaction on the part of the Sindh Revenue Board (SRB), who according to learned counsel for the petitioner, in spite of repeated written requests, seeking clarification and instructions from the Board in terms of section 78 of Sindh Sales Tax on Services Act, 2011, have not responded to the query of the petitioner as detailed in their letter dated 26.08.2016 available at Page:409 of the instant petition. Per learned counsel, clarification has been sought regarding taxability as well as application of provisions relating to withholding of tax in respect of the Engineering Procurements and Commission Contracts (EPCC) executed between petitioner and other parties, to enable the petitioner to discharge its responsibility to pay correct and due taxes in accordance with law, however, no response whatsoever has been received so far.

Let pre-admission notice be issued to the respondents as well as Advocate General Sindh for 19.10.2016 when comments shall be filed. However, learned counsel for the petitioner shall come prepared on the next date to assist this Court as to maintainability of instant petition and shall also explain as to whether the query raised through aforesaid letter falls within the domain of Adjudicating Authorities or otherwise."

3.On 19.10.2016, learned counsel for the petitioner was again confronted as to maintainability of the instant petition in view of the observations as recorded in the 2nd para of aforesaid order, however, learned counsel could not satisfactorily respond to such query and submitted that in terms of section 78 of the Sindh Sales Tax on Services Act, 2011, the respondents are required to issue clarification and directions regarding taxability as well as application of provisions relating to withholding tax in respect of the Engineering Procurement and Commission Contracts (EPCC) executed between the petitioner and other parties, to enable the petitioner to discharge its responsibility by making payment of correct and due taxes in accordance with law. Learned counsel for the petitioner was also asked to assist this Court as to whether the instructions and directions sought by the petitioner from the Sindh Revenue Board through their letter dated 26.08.2016 and other correspondence made in this regard, falls within the domain of administrative authority of the respondents i.e. Sindh Revenue Board (SRB), whereby, such order or instructions could be issued to Officer(s) of SRB, or the subject controversy has to be decided through quasi-judicial proceedings by the adjudicating authority in accordance with law. In response to such query, learned counsel for the petitioner has candidly stated that though similar controversy is already pending before the relevant quasi-judicial forum as provided under the Sindh Sales Tax on Services Act, 2011, however, according to learned counsel, the SRB can also resolve such dispute by issuing proper instructions and directions to its officers on the subject controversy in terms of section 78 of the Sindh Sales Tax on Services Act, 2011, to avoid un-necessary litigation and hardship to the petitioner.

4.We have heard the learned counsel for the petitioner and perused the record as well as the relevant provisions of Sindh Sales Tax on Services Act, 2011, with the assistance of learned counsel for the petitioners. It will be advantageous to examine the scope of the provisions of sections 78 and 79 of the Sindh Sales Tax on Services Act, 2011, which are reproduced hereunder:--

"78. Power to issue orders, instructions and directions.---The Board may issue such orders, instructions and directions to all officers of the SRB, as it may deem necessary to administer and implement the provisions of this Act and any rules made thereunder.

79. Officers of the SRB to follow Board's orders.-- All officers of the SRB and other persons employed in the execution of this Act and the rules made there under shall observe and follow the orders, instructions and directions of the Board:"

Provided that no such orders, instructions or directions shall be given so as to interfere with the discretion of officers of the SRB in the exercise of their quasi-judicial functions.

5.Perusal of hereinabove provisions of section 78 reflects that the Sindh Revenue Board (SRB) has the authority to issue such orders, instructions and directions, to all officers of the SRB, as it may deem necessary to administer and implement the provisions of this Act and any Rules made thereunder. However, above section does not authorize the SRB to perform any quasi-judicial functions, relating to chargeability or determination of tax liability of a person as defined in terms of section 2(63) of the Sindh Sales Tax on Services Act, 2011. The authority vested in SRB in terms of section 78 of the Sindh Sales Tax on Services Act, 2011, is limited only to the extent of issuing administrative orders, instructions and directions to the officers of the SRB, whereas, the Board has no authority to issue any orders, instructions or directions in relation to any legal controversy, which requires adjudication through quasi-judicial proceedings and can be resolved through legal orders as provided under the Sindh Sales Tax on Services Act, 2011, including orders passed under Sections 22, 23, 24-B, 25(5), 43, 44, 47, 68, 76 of the Sindh Sales Tax on Services Act, 2011. We are further fortified in our aforesaid view from perusal of the provisions of section 79 as referred to hereinabove, which provides that the orders, instructions and directions issued by the Sindh Revenue Board in terms of section 78 are binding on the officers of the SRB and other persons employed in the execution of this Act and the rules made there under, however, no such orders, instructions or directions can be issued by the SRB so as to interfere with the discretion of the officers of the SRB in the exercise of their quasi-judicial functions. In the instant matter, from perusal of the contents of the subject letter and the correspondence made by the petitioner from SRB in this regard, it appears that the petitioner is seeking for an order and decision of the SRB to the effect that composite EPCC executed between the petitioner and other parties are not chargeable under the Sindh Sales Tax on Services Act, 2011, for the reasons as detailed in the petitioner's letter dated 26.08.2016. We may observe that petitioner might have a prima-facie case to establish before the SRB that the Engineering, Procurement and Construction or Commission Contracts (EPCC) are outside the ambit of goods or services, hence not covered under PCT heading 9624.0000, however, we are of the prima-facie view that such determination require proper scrutiny of facts and interpretation of the EPC Contracts, therefore, it requires a legal determination through some quasi-judicial proceedings by the revenue authorities and cannot be decided through some Administrative order or instructions, in terms of section 78 of the Sindh Sales Tax on Services Act, 2011, as suggested by the learned counsel for the petitioner. In view of hereinabove facts and circumstances of the case, we are of the opinion that relief sought through instant petition is misconceived in facts and law, whereas, instant petition has been filed without any legal cause of action, as no adverse order has been passed by the competent authority relating to subject controversy in accordance with law.

6.Accordingly, instant petition was dismissed in limine vide short order dated 19.10.2016 for being not maintainable and above are the reasons for such short order. However, before parting with the order, we may observe that the petitioner will be at liberty to agitate all grounds regarding taxability or otherwise of the (EPCC) contracts before the relevant statutory forum, whereas, dismissal of instant petition in the aforesaid terms shall have no adverse bearing on the decision on merits in such quasi-judicial proceedings as provided under the Sindh Sales Tax on Services Act, 2011.

MH/D-25/Sindh Petition dismissed.