TAX CASE LAWS

Citation Name : 2020 PLD 1 ISLAMABAD
Side Appellant : MUSHTAQ AHMAD SUKHERA
Side Opponent : PRESIDENT OF PAKISTAN through Secretary
S. 3(1)---Federal Ombudsmen Institutional Reforms Act (XIV of 2013), Ss. 3 & 5---General Clauses Act (X of 1897), Ss. 16 & 21---Constitution of Pakistan, Arts. 48 & 209---Constitutional petition---Removal of Federal TAX Ombudsman---Advice of Prime Minister---Petitioner was Federal TAX Ombudsman who was removed by Federal Government---Plea raised by Government was that appointment of petitioner was made by the President after consulting Prime Minister which made such appointment contrary to applicable LAW ---Validity---Summary submitted to Prime Minister and proposing to withdraw summary whereby advice tendered to the President regarding appointment of petitioner as TAX Ombudsman was based on gross misinterpretation of S.3(1) of Establishment of Officeof Federal TAX Ombudsman Ordinance, 2000 and LAW enunciated by the Supreme Court---Notification in question issued in view of summary had undermined and jeopardized legislative intent of ensuring independence of Office of TAX Ombudsman and Ombudsman appointed under other relevant LAW s---High Court set aside summary to remove petitioner as TAX Ombudsman as it was illegal, issued in violation of Establishment of Office of Federal TAX Ombudsman Ordinance, 2000 and Federal Ombudsmen Institutional Reforms Act, 2013 and was without LAW ful authority and jurisdiction---Constitutional petition was allowed in circumstances.

Citation Name : 2019 PTD 606 SUPREME-COURT-AZAD-KASHMIR
Side Appellant : WAPDA MANGLA through General Manager Finance (Power)/Chief Engineer
Side Opponent : The COMMISSIONER INLAND REVENUE (PT) AZAD JAMMU AND KASHMIR COUNCIL, MIRPUR
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.

Citation Name : 2019 SCMR 2018 SUPREME-COURT
Side Appellant : AL-KHAIR GADOON LTD.
Side Opponent : The APPELLATE TRIBUNAL
Notice for recovery of TAX ---Incorrect provision of LAW mentioned in the notice---Effect---Quoting of wrong provisions of LAW in a show cause notice would not necessarily vitiate the entire process initiated thereunder---In deciding the legal validity of the show cause notice, it was important to first see whether the recipient/assessee of the said notice had been put to any prejudice in preparing and putting up its defence to the allegations made therein; and whether the issuer of the notice had the authority to issue the same, provided the notice had all the necessary facts leading to the alleged acts or omission of the recipient constituting the stated contravention of provisions of LAW , and thus, to be meaningfully responded by the assessee.

Citation Name : 2019 SCMR 2018 SUPREME-COURT
Side Appellant : AL-KHAIR GADOON LTD.
Side Opponent : The APPELLATE TRIBUNAL
Ss. 4(1), 4(2) & 35---Show cause notice mentioning incorrect provision of LAW ---Mix question of LAW and facts---Appellate Tribunal, jurisdiction of---Scope---Question as to whether the challenge to the notice made by the appellant-TAX payer before the Appellate Tribunal, which had not yet been decided by the Tribunal, should be decided by the Supreme Court, or be left to be decided first by the Appellate Tribunal, where it was originally agitated---Held, that the matter should be remanded to the Appellate Tribunal; firstly, for the reason that the said crucial determination would require considering of mixed questions of LAW and facts, which could best be undertaken by the Appellate Tribunal; secondly, any finding by the Supreme Court or even by the High Court on the said challenge to the very legality of the notices, would surely prejudice the appellant-TAX payer by denying it a forum of redressal under the Central Excises Act, 1944; and thirdly and finally, another fundamental issue, raised by the appellant in response to the notices, as to whether the excisable goods questioned in the notices were manufactured prior to a particular date, when excise duty was imposed thereon, and if so, to what legal effect, also required a definite finding, and the Appellate Tribunal, being the last forum for adjudicating such mixed question of fact and LAW , would be also carried out to meet the ends of justice---Present Appeals were deemed to be pending before the Appellate Tribunal.

Citation Name : 2019 SCMR 1989 SUPREME-COURT
Side Appellant : ABBASI ENTERPRISES UNILEVER DISTRIBUTOR, HARIPUR
Side Opponent : COLLECTOR OF SALES TAX AND FEDERAL EXCISE, PESHAWAR
S. 36(3) & Proviso---Extended period for issuance of show-cause notice---Scope---Precedent---Applicability---TAX payer was aggrieved of show cause notice issued by authorities beyond period specified in LAW ---Plea raised by authorities was that order of extension was made on 24-09-2010 whereas judgment in case titled 'Collector of Sales TAX Gujranwala v. Super Asia Muhammad Din and Sons and others' reported as 2017 SCMR 1427 was not applicable as it was given on 31.03.2017 and was not applicable to former---Validity---Supreme Court disapproved the plea raised by authorities---LAW declared by Supreme Court as to proper interpretation and application of first proviso to S. 36(3) of Sales TAX Act, 1990 applied fully to the order of extension under consideration---Order of Collector was invalid and inoperative in LAW and as there was no LAW ful extension of time---Supreme Court observed that order-in-original should have been made by Additional Collector within 90 days of 13.06.2005, i.e., by 12.09.2005---Notice was issued beyond date and it was invalid and non est in LAW , therefore, same had to be quashed and forums of appeal including High Court in TAX reference erred materially in failing to do so---Supreme Court quashed order-in-original and set aside judgment passed by High Court as well as decisions of departmental forums below---Appeal was allowed.

Citation Name : 2019 SCMR 1735 SUPREME-COURT
Side Appellant : MUJAHID SOAP AND CHEMICALINDUSTRIES (PVT.) LTD.
Side Opponent : CUSTOMS APPELLATE TRIBUNAL, BENCH-I,ISLAMABAD
S. 179(3)---Adjudication---Period of 120 days for rendition of judgment after issuance of show cause notice---Scope---Judgment reserved---Order-in-original was issued by the Collector (Adjudication) after a lapse of 157 days from the date of show cause notice, however, customs authorities contended that the judgment was reserved on the 116th day after the date of the show cause notice, thus, it was within the time period of 120 days---Question as to whether the customs authorities were justified in treating the date of conclusion of hearing and for judgment to be reserved as the date of disposal of the show cause notice---Held, that on the 116th day after issuance of show-cause notice no decision was verbally announced by the adjudicating officer nor was any decision communicated to the parties prior to the subsequent issuance of the order-in-original---Adjudicatory decision could not be said to have been recorded/taken without announcement or communication thereof to the parties---LAW was quite accommodating for the TAX ing authority as an extension was available beyond the originally prescribed period of 120 days for rendition of a decision---Even though no decision was communicated within the said period, such an extension could be sought and granted subsequently but in such an event it was mandatory that the decision came within 180 days after the date of show cause notice---In the present case, however, the Collector did not even apply for an extension but consumed 157 days to record the reasons for his judgment and to communicate the same to the parties---Resultantly the impugned decision was beyond time prescribed in S. 179(3) of the Customs Act, 1969, and was therefore, held to be invalid---Appeal was allowed accordingly.

Citation Name : 2019 SCMR 1053 SUPREME-COURT
Side Appellant : INDEPENDENT MEDIA CORPORATION(PVT.) LIMITED
Side Opponent : PROVINCE OF SINDH
Ss. 2(92), 45, 66 & 83---Sindh Sales TAX Ordinance (VIII of 2000) [since repealed], Ss. 3 & Sched. Item II---Sindh Revenue Board Act (XI of 2010), S. 3---Sales TAX ---Accrued penalties and default surcharge, payment of---Amnesty scheme issued by Provincial Government [Notification No. SRB-3-416/2014 dated 17-04-2014 ('the Amnesty notification')] with respect to payment of accrued penalties and default surcharge---Vires of---Whether Sindh Revenue Board could grant an amnesty for penalties and default surcharge accumulated under the repealed Sindh Sales TAX Ordinance, 2000---Held, that the Amnesty notification provided that the Sindh Revenue Board would exempt the whole of the amount of penalty and 95 per cent of the amount of default surcharge, payable on the principal amount of arrears of the [sales] TAX as were outstanding on the date of present notification, if the said principal amount of TAX and the 5 per cent of the amount of default surcharge were paid in the prescribed manner---With the promulgation of the Sindh Sales TAX on Services Act, 2011, the Sindh Revenue Board Act, 2010 and the establishment of the Sindh Revenue Board the province's dependency on the Federation and on the Federal Board of Revenue (FBR) to administer and collect on its behalf sales TAX on services, including penalty and default surcharge thereon, came to an end---Sindh Sales TAX on Services Act, 2011, had repealed the Sindh Sales TAX Ordinance, 2000 but S. 83 of the Act of 2011 had saved certain matters accrued thereunder which henceforth had to be administered by the Sindh Revenue Board, including the power to issue notifications exempting the collection of sales TAX on service, accrued penalties and default charges---Provincial Government had not withdrawn, supplanted or varied the Amnesty notification---Nor was the said notification assailed before a competent court of LAW ---Amnesty notification encouraged those who had not paid the penalty and default surcharge to get exemption from payment, provided they came forward and paid five per cent of the default surcharge amount---Once the requisite amount was paid pursuant to the said notification, the Provincial Government, which had itself approved the issuance of the said notification, could not seek to restrict the scope of the said notification and contend that under the Sindh Sales TAX on Services Act, 2011 the said exemptions could not be given---Joint reading of Ss. 2(92), 45, 66 & 83 of the Sindh Sales TAX on Services Act, 2011 left no doubt that the Sindh Revenue Board, with the prior approval of the Provincial Government, could issue the Amnesty notification---Petitions for leave to appeal were converted into appeals and allowed accordingly.

Citation Name : 2019 SCMR 1011 SUPREME-COURT
Side Appellant : DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE C-4, KARACHI
Side Opponent : NATIONAL BANK OF PAKISTAN, KARACHI
Ss. 17 & 32(1)---Interest earned by financial institutions on Government securities---Whether the same was liable to be TAX ed on accrual or on receipt basis---'Hybrid system' of accounting---Scope---Bank/assessee in the present case maintained its accounts on the accrual system but accounted for interest on Government securities on receipt basis, also known as the "hybrid" system---As a matter of LAW , an assessee was not limited to using either the accrual or the receipt basis of accounting---In LAW it was permissible to use the "hybrid" system of accounting by mixing and merging elements from the two systems, which was a question of LAW , and must be regarded as having been answered and settled accordingly---Secondly, if such question arose, then it had to be shown as a matter of fact in respect of the income year corresponding to the given assessment year that the assessee had, in fact, regularly employed the "hybrid" system of accounting (requirement under S. 32 of the Income TAX Ordinance, 1979), which was a question of fact, and therefore had to be dealt with and answered accordingly---Department was wrong in refusing to accept interest income offered on receipt basis in respect of the assessment years at hand, and the Appellate Tribunal erred materially in dismissing the bank's appeals in such regard---High Court reached the correct conclusion in LAW by finding that the interest earned by the Bank on Government securities was liable to be TAX ed on receipt basis---Appeals were dismissed accordingly.

Citation Name : 2019 SCMR 906 SUPREME-COURT
Side Appellant : PAKISTAN MATCH INDUSTRIES (PVT.) LTD.
Side Opponent : ASSISTANT COLLECTOR, SALES TAX AND CENTRAL EXCISE MARDAN
Fiscal statute---Exemption from TAX ---Where a TAX payer fairly came within the scope of an exemption, then the same could not be denied on the basis of some supposed intention of the LAW -maker.

Citation Name : 2019 SCMR 906 SUPREME-COURT
Side Appellant : PAKISTAN MATCH INDUSTRIES (PVT.) LTD.
Side Opponent : ASSISTANT COLLECTOR, SALES TAX AND CENTRAL EXCISE MARDAN
S. 47---Reference to High Court---Scope---'Questions of LAW '---In case of a TAX reference before the High Court, all factual aspects of the case were closed by, and at the level of, the Appellate Tribunal; and it was only questions of LAW that could travel to the High Court---Factual points could not be allowed to be opened or (re-)agitated, unless there had been a material misreading or non-reading of the evidence, which was itself a question of LAW that could be taken to the High Court.