FINDINGS /DECISION All these complaints though filed by different parties raise common question of law and fact and are thus disposed of by this decision collectively. The complainants have alleged that while computing income-tax @ 6% on import the sales tax is included in the ITP value of the imported goods. The objection is that sales, tax should not be added 'in the ITP value and the Income Tax should be deducted without such addition. Full details of bills of entry, value of goods, sales tax and the income-tax deducted have been furnished. According to the complainant the excess amount deducted be refunded .
2. The department in its reply has stated that the imposition of withholding tax at import stage is governed by section 148 of the Income Tax Ordinance, 2001 and the value of goods is determined by adding customs duty and sales tax as provided by subsection (9) of section 148 of the Income Tax Ordinance, 2001. It has further been stated that this section is identical to subsection (5) of section 50 of the repealed Income Tax Ordinance, 1979. It has been denied that any maladministration has been committed by the department. It has further been pleaded that as the matter relates to assessment the Federal Tax Ombudsman has no jurisdiction.
The claim made by the complainant is incorrect, illegal and has been denied. The complainants themselves filed statements under section 143(B) of the repealed Income Tax Ordinance, 1979 for earlier years and statement under section 115(4) of the Income Tax Ordinance, 2001 for the tax year, 2003 declaring that the tax withheld is the final discharge of tax liability. These statements filed voluntarily were accepted as final tax liability under section 80C of the repealed Income Tax Ordinance, 1979 and section 169 of the Income Tax Ordinance, 2001.
3. Haji Yusuf the learned counsel for the complainant does not deny the applicable provisions of law referred above, but relies on the judgment of the Lahore High Court Messrs Ramma Pipe & General Mills (Pvt.) Ltd. v. Federation of Pakistan and others 1994 PTD 848 and submits that High Court judgment is binding and, therefore, to disregard it amounts to maladministration by the respondents. The judgment is short and is reproduced hereunder:-- "In this petition under Article 199 of the Constitution of Islamic Republic of Pakistan, 1973, the grievance of the petitioner is that while computing tax under section 80-C of the Income Tax Ordinance, 1979, sales tax paid on goods supplied by the petitioner has also been included in the income of the petitioner, though it was not permissible for respondents under the law to do so.
Mr, Muhammad Ilyas Khan, learned counsel appearing for respondents on instructions from respondents has conceded that while charging income tax under section 80C of the Income Tax Ordinance, 1979, the amount paid as sales tax cannot be deemed to be the income of the petitioner and as such, cannot be subjected to payment of income-tax. He submits that tax liability of the petitioner shall be worked out after deducting the sales tax paid. ."
4. Reference has also been made to a judgment of the Tribunal and another decision of the Lahore High Court in Writ Petition No.18286 of 2001 decided on 16-11-2001 in which a short order was passed as follows:-- "The matter agitated in the present petition is the same which was decided by the learned Bench of this Court in the case titled Messrs Ramma Pipe and General Mills (Pvt.) Limited through its Director v. The Federation of Pakistan through Secretary, Ministry of Finance, Islamabad and 3 others (1994 PTD 848). This petition is also disposed of in the light of the said precedent."
5. In order to appreciate the contention of the learned counsel for the complainant it is necessary to refer to relevant provisions of the repealed Ordinance which are reproduced as follows:-- "Section 80-C.---Tax on income of certain contractors and importers.
(1) Notwithstanding anything contained in this Ordinance or any other law for the time being in force, where any amount referred to in subsection (2) is received by or accrues or arises or is deemed to accrue or arise to any person (being a resident,) the whole of such amount shall be deemed to be income of the said person and tax thereon shall be charged at the rate specified in the First Schedule.
(2) The amount referred to in subsection (1) shall be the following, namely:--
(a) Where the person is a resident,
(i) the amount representing payments on which tax is deductible under subsection (4) of section 50, other than payments on account of services rendered.
(ia) the amount representing payments from which tax is deductible under subsection (4A) of section 50.
(ii) the amount as computed for purpose of collection of tax under subsection (5) of section 50 in respect of goods imported, not being goods imported by an industrial undertaking as raw material for its on consumption Section 50(4)Notwithstanding anything contained in this Ordinance.
(a) any person responsible for making any payment in full or in part (including a payment by way of an advance) to any person (being resident) hereinafter referred to (being resident) (hereinafter referred to respectively as "payer" and "recipient"), on account of the supply of goods or for service rendered to, or the execution of a contract with the Government, or a local authority, or (a company) (or a registered firm) or any foreign contractor or consultant or consortium shall, deduct advance, at the time of making such payment, at the rate specified in the First Schedule.
Section 50(5)Notwithstanding anything contained in any law for the time being in force,
(a) the Collector of Customs shall, in the case of every importer of goods, collect advance tax computed, on the basis of the value of such goods as increased by the customs duty and sales tax, if any, (levied) thereon, at the rates specified in the First Schedule, and credit for the tax so collected in any financial year shall, subject to the provisions of section 53, be given in computing the tax payable by such importer for the assessment year commencing on the first day of July next following the said financial year, or in the case of an assessee to whom section 72 or section 81 applies, the assessm ent year, in which the "said date", as referred to therein, falls, whichever is the later;
(b) the tax under clause (a) shall be collected in the same manner and at the same time as the customs duty, as if such goods (even though exempt from such duty) were liable to such duty, and all the, provisions of the Customs Act, 1969 (IV of 1969) shall, so far as may be, apply accordingly: Provided that in the case of a manufacturer importing raw materials, (other than edible oils) exclusively for its on use, the Regional Commissioner of Income Tax may certify reduction of the rate of collection under this subsection (up to one hundred) per cent, if the aggregate of tax paid or collected during that year equals the amount of tax paid by such assessee in the immediately preceding year and the certificate is not issued during the first year of assessee's business.
6. The perusal of the above provisions of law makes it clear that the Legislature has distinguished and differentiated for the purposes of deducting tax in respect of "contract and services rendered" and "goods imported". Under subsection (4) of the section 50 of the repealed Ordinance any person responsible for making any payment on account of the supply of goods or for services rendered was required to deduct advance tax at the time of making such payment at the rate specified in the first schedule. Therefore, the amount paid on account of supply of goods or services rendered without reference to sales tax was the amount on which advance tax was to be deducted. The provisions in respect of import of goods are different. Under subsection (5) of section 50 the Collector of Customs has been authorized in case of every importer of goods to collect advance tax on the basis of value of goods as increased by customs duty and sales tax.
Therefore, the value of imported goods has clearly been defined and specifically been mentioned that it will B include sales tax and customs duty as well. The total thus arrived at will be subjected to tax at the rate specified in the First Schedule of the Ordinance. This difference in the provisions of law is important while analyzing the applicability of the judgment relied upon by the learned counsel for the complainant. The first case cited by the learned counsel relates to supply of goods and not import of goods. As the value of supply of goods does not include the sales tax, the learned representative for the department had rightly conceded that it cannot be included for the purposes of computing advance tax. The other order in Writ Petition No.18286 of 2001 does not give facts but it has been observed that the matter agitated in the petition was the same as In Ramma Pipe and General Mills (Pvt.) Limited. It is, therefore, clear that this case being identical related the advance tax charged on the supply of goods. It may be noticed that under section 80-C(2)(ii) the tax charged is computed for purposes of calculation of tax under subsection (5) section 50 in respect of goods imported, not being goods imported by an industrial undertaking as raw material for its on consumption. The amount which is to be computed under subsection (5) of section 50 reproduced above is the basis for purposes of deducting advance tax. Thus the import value C having been specifically defined to include the sales tax which is not so in the case of supply of goods, reliance placed by the learned counsel is misplaced. Both the provisions are completely different and independent and therefore, the question of excluding the sales tax from the value of the imported goods for purposes of deducting advance tax does not arise.
7. In the circumstances no maladministration has been identified. The department stated that it has filed appeal against the judgment of the High Court and had promised to produce the stay order. However, in view of the aforestated discussion it is not necessary to wait for the stay order because that judgment does not apply to the present cases which relates to import of goods and not supply of goods.
The case is closed. .