WAPDA MANGLA through General Manager Finance (Power)/Chief Engineer VS The COMMISSIONER INLAND REVENUE (PT) AZAD JAMMU AND KASHMIR COUNCIL, MIRPUR
2019 P T D 606
[Supreme Court (AJ&K)]
Present: Ch. Muhammad Ibrahim Zia, C.J., Raja Saeed Akram Khan and Ghulam Mustafa Mughal, JJ
Messrs WAPDA MANGLA through General Manager Finance (Power)/Chief Engineer
Versus
The COMMISSIONER INLAND REVENUE (PT) AZAD JAMMU AND KASHMIR COUNCIL, MIRPUR
Civil Appeal No.34 of 2018, decided on 22/11/2018.
(On appeal from the judgment of the High Court dated 25.10.2017 in Reference No.29 of 2012).
Sales Tax Act (VII of 1990)---
----S. 47---Reference to the High Court---Jurisdiction of High Court under S.47 of the Sales Tax Act, 1990----Nature and scope---High Court, under S.47 of the Sales Tax Act, 1990, was under obligation to answer questions of law raised in a reference before it and to deliver judgment while specifying the grounds upon which such judgment was based.
Mian Sultan Mehmood, Javaid Najam-us-Saqib, Advocates assisted by Mian Ashiq Hussain, Advocate along with Shehzad Asif, Director Legal WAPDA, Muhammad Adnan, Deputy Director WAPDA and Kamran Khurshid, Assistant Director (Legal) WAPDA in Person for Appellant.
Haji Ch. Muhammad Afzal, Advocate for Respondent.
Date of hering: 20th November, 2018.
JUDGMENT
RAJA SAEED AKRAM KHAN, J.---The titled appeal by leave of the Court is addressed against the judgment of the High Court dated 25.10.2017, whereby the reference filed by the appellant, herein, has been dismissed.
2.Necessary facts for disposal of the instant appeal are that the Collector of Central Excise and Sales Tax Mirpur (CE&ST), initiated assessment proceedings against WAPDA for the period commencing from January, 2000 to October, 2000, on the ground that it generates and supplies the electricity from its power station at Mangla, which falls in the territorial jurisdiction of CE&ST, Mirpur. The WAPDA raised jurisdictional objection to the aforesaid assessment proceedings, however, the Collector passed the order on 30.06.2001, and raised demand of an amount of Rs.1048.483/- million from the appellant/WAPDA. Later on, the Collector passed another order dated 17.10.2001, and demanded an amount of Rs.1334.101/- million from WAPDA. Feeling, dissatisfied from the aforesaid orders the appellant preferred an appeal before the Sales Tax Appellate Tribunal, Muzaffarabad. The learned Appellate Tribunal remanded the case to the respondent Collector for decision afresh through order dated 30.05.2001. On remand of the case the Collector again passed the same order on 30.06.2001. Feeling aggrieved from the orders dated 30.06.2001, and 17.10.2001, the WAPDA filed separate appeals before the Appellate Tribunal Inland Revenue, AJ&K Council, Muzaffarabad. The learned Tribunal consolidated both the appeals and while setting aside the orders passed by the Collector dated 30.05.2001, 30.06.2001, and 17.10.2001, respectively, directed the appellant/WAPDA to produce relevant record of generation and supply of electricity from Mangla Power House before the Collector for fresh calculation of assessment of Sales Tax, failing which the orders dated 30.05.2001 and 17.10.2001 shall prevail, vide judgment dated 14.04.2012. Feeling dissatisfied the appellant filed a reference before the High Court which has been dismissed through the impugned judgment dated 25.10.2017, hence appeal by leave of the Court.
3.Messrs Mian Sultan Mehmood, Javed Najam-us-Saqib Advocates, counsel for the appellant, assisted by Mian Ashiq Hussain (who appeared as a friend of the Court), submitted that the impugned judgment of the learned High Court is against law and the record. They submitted that more than one dozen legal propositions were raised in the reference before the High Court and under the statutory provisions, it was enjoined upon the learned High Court to answer all the questions raised in the reference but not a single question has been attended to and answered by the learned High Court while handing down the impugned judgment in departure of the statutory provisions i.e. section 47(5) of the Sales Tax Act, 1990. They submitted that neither the legal propositions raised in the reference and forcefully argued have been appreciated nor answered by the High Court, which amounts to condemn the appellant unheard. They further argued that according to law, the sales tax has to be levied on goods. In this, case 'goods' means electric power which has been defined in the rules with confine meanings of "electric power supplied by a person to the consumer". According to this meaning, the appellant is not supplying the electric power to the consumers, hence he is not liable to pay the sales tax, as the appellant is just generating the electric power in Azad Jammu and Kashmir and not supplying the same to the consumer. They further argued that the learned High Court also failed to consider the fact that under section 4 of the Sales Tax Act, 1990, the sales tax at the rate of zero present is applicable on export and admittedly, the territory of Azad Jammu and Kashmir is governed by its own constitution, the Sales Tax Act, 1990 is adapted and is applicable in Azad Jammu and Kashmir territory with full force, therefore, under such admitted circumstances the supply of electricity to Pakistan does not mean supply to consumer, rather it amounts to export. The sales tax against the electricity generated at Mangla Power House is being paid by WAPDA at Lahore regularly. The initiation of assessment proceedings by the CE&ST against the appellant and demand of millions of rupees are against law. The judgment of the learned High Court is patently illegal, hence the same is liable to be vacated.
4.On the other hand, Haji Ch. Muhammad Afzal, Advocate, counsel for the respondent forcefully converted the arguments addressed by the counsel for the appellant and submitted that admittedly the appellant is generating the electric power and a registered person. According to law once a person is registered for the purpose of sales tax, he is under obligation to collect and pay the sales tax. The arguments advanced on behalf of the counsel for the appellant are misconceived. According to the statutory provision of Sales Tax Act, 1990, the appellant fully falls within the definition of registered person and being generator of electric power, he has to Collect and pay the sales tax. As the electric power is being generated within the territory of Azad Jammu and Kashmir, therefore, the respondent is legally authorized to collect the sale tax from the appellant and issue notice in case of default. He submitted that the reference by the appellant before the learned High Court was incompetently filed without complying with the statutory provisions and the same was liable to be dismissed on the sole ground but the learned High Court decided the same on merits.
5.We have heard the arguments of the counsel for the parties at some length and gone through the impugned judgment along with the other material available on record. The counsel for both the parties in their arguments raised numerous propositions but the crucial argument which attracted the attention of the Court is regarding the interpretation of subsection (5) of section 47 of Sales Tax Act, 1990, therefore, we are intendedtoexamine the same at first.Forbetterappreciationsub-section (5) of section 47 of Sales Tax Act, 1990 is reproduced asunder:--
"47.-----------------------
(5) The High Court upon hearing of any a reference under this section shall decide the question of law raised by the reference and deliver judgment thereon specifying the grounds on which such judgment is based and the order of the Tribunal shall stand modified accordingly. The Court shall send a copy of the judgment under the seal of the Court to the Appellate Tribunal."
After going through the hereinabove reproduced statutory provision, it is crystal clear that the High Court was under obligation to answer the question of law raised in the reference and deliver the judgment while specifying the grounds on which such judgment is delivered. The claim of the appellant is that more than one dozen legal questions were raised in the reference but neither a single question has been considered nor resolved by the learned High Court. The juxtapose perusal of the statutory provision and the impugned judgment of the learned High Court shows that the learned High Court has passed the impugned judgment in departure from the supra provision in the following terms:-
"7. The learned appellate Tribunal has recorded the impugned judgment dated 14.04.2012, by giving sounds reasons, which do not warrant any interference by this Court. Even otherwise, the learned counsel for the petitioner failed to point out any illegality or irregularity which might have been committed by the Tribunal. The authorities referred to and relied upon by the learned counsel for the parties are distinguishable from the facts of the instant case, therefore, need not be discussed."
Thus, the arguments of the counsel for the appellant that more than one dozen legal questions were raised in the reference but not a single question has been answered by the learned High Court while handing down the impugned judgment, has substance. Even otherwise, the counsel for the respondent has also forcefully argued that important legal questions regarding the competency of reference were raised, which were not attended to and resolved by the learned High Court. In this state of affairs, as we have reached the conclusion that the impugned judgment of the learned High Court is passed in derogation of the statutory provision, therefore, we are not intended to discuss the other points raised in the appeal, rather we have decided to remand the case to the learned High Court to get its wisdom at first.
6.Resultantly, the appeal is accepted and impugned judgment of the learned High Court is set aside. The case is remanded to the learned High Court for decision afresh, after providing fair opportunity of hearing to the parties and attending all the questions of law raised in the reference in compliance of the statutory provision i.e. section 47(5) of the Sales Tax Act, 1990.
The appeal is accepted in the above terms with no order as to costs.
KMZ/8/SC(AJ&K)Appeal allowed.