MR. JUSTICE MIAN SAQIB NISAR.--(1). All the Intra-Court Appeals mentioned in the Schedule, attached hereto, are being disposed of together, as these involves the common questions of law.
2. The major portion of the matters (appeals/writ petitions) pertains to the challenge by the appellants regarding the provisions of section 235 of the Income Tax Ordinance, 2001 ("the Ordinance") read with Part IV of the First Schedule, thus they filed the constitutional petitions. It is their case, that earlier to the amendment of the section, which was effected through Finance Act, 2008 on 1-7-2008, Rs. 2000 were being charged as withholding tax or advance income tax on the electricity bills amounting to Rs. 20,000 or more, however, the bills less than the aforesaid amount were chargeable on other percentage, but on account of the change brought in law, the percentage has incredibly increased. The petitions, which were primarily founded upon the attack to the vires of law, on the grounds set out therein, have been dismissed by the Learned Single Judge in Chambers through the impugned judgment dated 15-5-2009, which judgment subsequently has been the basis of the dismissal of other case of the similar nature. Hence these appeals.
3. The Learned counsel for the appellants maintains that the taxation in issue is ultra vires of the Constitution of Islamic Republic of Pakistan, 1973; violative of the equality Article thereof; it is a tax on expenditure, rather than the income and thus the matter does not fall within the Federal/Concurrent Legislative Lists and, therefore, the competence of the Parliament to impose it, it is confiscatory, harsh, unreasonable and amounts to double taxation.
4. Mian Ashiq Hussain, Advocate appearing in quite a number of matters has argued, that the impugned taxation is a legislative trespass because the expenditure as subject of tax has not been enumerated in either of the two, rather the exclusion of expenditure as a subject of tax is explicit, therefore, it is ultra vires', that what is excluded by law cannot be included on the settled principles of interpretation; reference in this regard is made to State and another v. Sajjad Hussain and others 1993 SCM R 1523; he has also argued that the measure of tax is distinct from the subject of tax and as the subject of tax is not within the competence of Federal Legislature being the expenditure, therefore, in die garb of the measure of tax, the imposition is absolutely invalid and unauthorized; he states that there is a clear distinction between the subject-matter of a tax and the standard by which the amount of tax is measured and it is only the subject of the taxation on account of which the tax can be imposed. It has been contended that even otherwise the amount of electricity bill cannot be made the basis for the measure of tax because of certain factors, such as the charges of MDI, which has no nexus with the capacity of production/sale/income; the load shedding; electricity consumption having no link with the production, as it varies according to the components of cost of generation etc. While the capacity of income depends upon the kind and quality of machinery/skill etc. Of the undertaking; both the variables have distinct dynamics which moves independently; the measure of tax has no nexus with the income of the appellants; the cost of electricity as a proportion of the cost of production in case of industrial units, cannot be standardized in the case of commercial units on account of incredible variations, in certain ventures, the electricity is used as raw material and, therefore, no logic and rational basis can be drawn between the cost of consumption of electricity and the income generated by consumers; he has stated that as has been categorically held tty the honourable Supreme Court in Pakistan Industrial Development Corporation v. Pakistan through the Secretary, Ministry of Finance 1992 PTD 576 (at 589), any amount which is not an income cannot be subjected to tax. It is stated that the Learned Single Judge in Chambers has erroneously relied upon the judgment of the honourable Supreme Court in Elahi Cotton Mills ' case PTCL 1997 CL. 260. He has also argued that the mechanism of recovery of the impugned tax is discriminatory. In support of his various contentions, the Learned counsel has placed reliance upon the judgments reported as Pakistan Tobacco Company Ltd. And another v. Federation of Pakistan through Secretary, Ministry of Commerce, Islamabad and 3 others 1999 SC MR 382, Government of Pakistan and others v. Muhammad Ashraf and others PLD 1993 SC 176, Messrs Elahi Cotton Mills Ltd. And others v. Federation of Pakistan through Secretary M/o Finance, Islamabad and 6 others PTCL 1997 CL. 260, In the matter of the Central Provinces, and Berar Sales of Motor Spirit and Lubricants Taxation Act, 1938, AIR 1939 FC 1 equal to PTCL 1986 FC 33; that any income cannot be subjected to tax under vague and ambiguous charging provisions, B.P. Biscuit Factory Ltd. Karachi v. Wealth Tax Officer another 1996 SCM R 1470; the liability to pay the tax arises by charging section alone It. Col. Nawabzada Muhammad Amir Khan v. The Controller of Estate Duty, Government of Pakistan, Karachi etc. PLD 1962 SC 335; reference has also been made to the judgment from the Indian jurisdiction reported as The Province of Madras v. Messrs. Boddu Paidanna and sons AIR 1942 FC 33 to dilate upon the character of income tax. The Learned counsel submits that the judgments relied upon by the Learned Single Judge in Chambers have no nexus to the present issue and are distinguishable on their own facts.
5. Ch. Aitzaz Ahsan, the other Learned counsel for the appellants, has argued that Elahi Cotton Mills' case PTCL 1997 CL. 260 has the closet nexus to the case in hand; he has also placed on the record a Chart prepared in relation to Ittehad Chemicals Ltd. And according to him, the final income tax liability of the said company is in the negative, yet it shall now be liable to pay the advance tax (due to the impugned provisions), which shall impair and destabilize the financial condition of the company and ultimately it is found that the tax liability was not there, it shall be put to the hassle of refund. The Learned counsel has stated that the impugned tax is palpably arbitrary; he has made reference to numerous portions of the judgment in Elahi Cotton Mills' case in particular and has read pages Nos. 624, 625, 637, 658, 669 (para
30. (1), 690 (para 44), 649, 653, 665 and 670. When questioned by the Court, the following ratio of the judgment in Elahi Cotton Mills ' case has been propounded by the Learned counsel:-
(i) It is focused on sections 80-C and 80-D of the Income Tax Ordinance;
(ii) The rule of liberal interpretation of Legislative entry is expounded;
(iii) It deals with the limits of taxing within the legislature's provinces;
(iv) It deals with the category of taxation generally, but emphasis the need for upholding the law if it is founded upon the principles of fairness and reasonableness and is non-discriminatory;
(v) It upholds the concept of presumptive tax.
When further asked regarding the application of the dictum to these cases, the Learned counsel has placed reliance on Serial No.(iv) (ibid).
6. Mr. Muhammad Ilyas Khan, the Learned counsel for the respondent-income Tax Department has defended the impugned judgment and has heavily relied upon Call Tell (Pvt.) Limited through Authorized Representative and another v. Federation of Pakistan through Secretary, Ministry of Law Justice and Human Rights Division, Islamabad and others PTCL 2005 CL. 1 and Call Tell and another v. Federation of Pakistan and others 2005 PTD 833. He too has drawn support from the Elahi Cotton Mill's case.
7. Heard. We are not convinced that the impugned tax has been imposed upon the expenditure, rather in its true sense, the pith and substance and in essence, it is the advance nature of the tax on income, which is permissible under the law; it is not a new concept (advance tax) to the income tax regime and was enforced as per the provisions of section 147 of the Income Tax Ordinance, 2001, may be even prior thereto. This also has been the position by virtue of section 235 of the Ordinance, 2001 in its original form. And it is now that only the increase in the quantum of advance tax has been made. Such an advance tax is ultimately founded upon and is embedded in the domain of the income, whereas the electricity bills inclusive of whatever charges are added thereto have been made the yardstick, the standard and the measure for the purposes of collecting the advance tax, which is liable to be adjusted as against the final liability of the taxpayer and if found to be paid in excess, the refund in this behalf is contemplated to be made within a particular period of time. Therefore, we hold that the impugned tax squarely falls in entry No. 47 of the Federal Legislative List, which as per the settled law has to be given widest possible meaning and amplitude and thus, on account of any misnomer of describing it as an expenditure cannot be held to be beyond the legislative competence of the Parliament.
8. It has also not impressed us that the said imposition is confiscatory, unreasonable, unfair, and harsh or in any way a double taxation. We are not persuaded that to charge the advance tax in the manner under challenge offends against any Article of the Constitution or entry of the Federal/Concurrent Legislative Lists. In this behalf, inter alia, on account of various portions of Elahi Cotton Mills' case, we are fortified in our view by the principles deduced in the said dictum, which is aptly applicable to the instant matter; the principles on account of catena of case-law and treaties have been considered and discussed in the judgment, which elucidates at pages Nos. 669, 675 to 679 besides paragraph No. 34 of the judgment. For the submission that the imposition in question is discriminatory, suffice it to say that rather it is founded upon the rule of parity and equality. It has been imposed upon all those, who fall within the category of section 235 of the Ordinance, but subject to the exemption, which has been granted to certain sectors upon their request as has been explained by the Learned counsel for the Income Tax Department. If any of the appellants are able to bring their cases at par with the said exemptees and apply in this behalf, we are sure that their cases shall also be considered by the department as per the law.
9. Now coming to the category of those cases, which fall within the ambit of section 234-A of the Ordinance. The Learned Single Judge in Chambers has correctly determined the issue and validly attended and resolved it by relevant paragraphs Nos. 42 to 46 of the impugned judgment.
In the light of above, we do not find any infirmity in the view and the reasoning of the Learned Single Judge in Chambers calling for interference in the Intra-Court appellate jurisdiction.
Resultantly, all the appeals have no merits and are hereby dismissed.
SCHEDULE
1. ICA No. 321 of 2009,
2. ICA No. 323 of 2009,
3. ICA \ No. 324 of 2009,
4. ICA No. 325 of 2009,
5. ICA No. 326 of 2009,
6. ICA No. 327 of 2009,
7. ICA No. 328 of 2009,
8. ICA No. 329 of 2009,
9. ICA No. 331 of 2009,
10. ICA No. 332 of 2009,
11. ICA No. 343 of 2009,. l2. ICA No. 344 of 2009,
13. ICA No. 345 of 2009,
14. ICA No. 346 of 2009,
15. ICA No. 347 of 2009, I6. ICA No. 352 of 2009,
17. ICA No. 354 of 2009,
18. ICA No. 361 of 2009,
19. ICA No. 362 of 2009,
20. ICA No. 363 of 2009,
21. ICA No. 363 of 2009,
22. ICA No. 365 of 2009,
23. ICA No. 370 of 2009,
24. ICA No. 371 of 2009,
25. ICA No. 372 of 2009,
26. ICA No. 373 of 2009,
27. ICA No. 374 of 2009,
28. ICA No. 375 of 2009,
29. ICA No. 376 of 2009,
30. ICA No. 377 of 2009,
31. ICA No. 381 of 2009,
32. ICA No. 382 of 2009,
33. ICA No. 383 of 2009,
34. ICA No. 384 of 2009, 35.
ICA No. 385 of 2009,
36. ICA No. 386 of 2009,
37. ICA No. 387 of 2009,
38. ICA No. 390 of 2009,
39. ICA No. 391 of 2009,
40. ICA No. 392 of 2009,
41. ICA No. 393 of 2009, 42, ICA No. 394 of 2009,
43. ICA No. 395 of 2009,
44. ICA No. 396 of 2009,
45. ICA No. 397 of 2009,
46. ICA No. 398 of 2009,
47. ICA No. 399 of 2009, 48 ICA No. 400 of 2009, 49 ICA No. 401 of 2009,
50. ICA No. 404 of 2009,
51. ICA No,405 of 2009,
52. ICA No. 406 of 2009,
53. ICA No. 407 of 2009,
54. ICA No. 408 of 2009,
55. ICA No. 409 of 2009,
56. ICA No. 412 of 2009,
57. ICA No. 413 of 2009,
58. ICA No. 414 of 2009,
59. ICA No. 417 of 2009,
60. ICA No. 418 of 2009,
61. ICA No. 419 of 2009, 62-. ICA No. 420 of 2009;
63. ICA No. 421 of 2009. 64.
ICA No. 423 of 2009,
65. ICA No. 424 of 2009,
66. ICA No. 425 of 2009,
67. ICA No. 426 of 2009,
68. ICA No. 427 of 2009,
69. ICA No. 428 of 2009,
70. ICA No. 429 of 2009,
71. ICA No. 430 of 2009,
72. ICA No. 431 of 2009,
73. ICA No. 432 of 2009,
74. ICA No. 440 of 2009,
75. ICA No. 441 of 2009,
76. ICA No. 442 of 2009,
77. ICA No. 443 of 2009, 78, ICA No. 444 of 2009,
79. ICA No. 445 of 2009,
80. ICA No. 446 of 2009,
81. ICA No. 447 of 2009,
82. ICA No. 448 of 2009,
83. ICA No. 449 of 2009,
84. ICA No. 450 of 2009,
85. ICA No. 454 of 2009,
86. ICA No. 456 of 2009,
87. ICA No. 457 of 2009,
88. ICA No. 458 of 2009, 89.
ICA No. 459 of 2009,
90. ICA No. 460 of 2009,
91. ICA No. 462 of 2009,
92. ICA No. 463 of 2009,
93. ICA No. 464 of 2009,
94. ICA No. 465 of 2009,
95. ICA No. 466 of 2009,
96. ICA No. 467 of 2009,
97. ICA No. 468 of 2009,
98. ICA No. 469 of 2009,
99. ICA No. 470 of 2009,
100. ICA No. 471 of 2009,
101. ICA No. 472 of 2009,
102. ICA No. 473 of 2009,
103. ICA No. 474 of 2009,
104. ICA No. 475 of 2009,
105. ICA No. 476 of 2009,
106. ICA No. 477 of 2009,
107. ICA No. 478 of 2009,
108. ICA No. 479 of 2009,
109. ICA No. 482 of 2009,
110. ICA No. 483 of 2009,
111. ICA No. 484 of 2009,
112. ICA No. 485 of 2009,
113. ICA No. 486 of 2009,
114. ICA No. 487 of 2009,
115. ICA No. 488 of 2009,
116. ICA No. 489 of 2009, 116-A. ICA No. 492 of 2009,
117. ICA No. 490 of 2009,
118. ICA No. 491 of 2009,
119. ICA No. 497 of 2009,
120. ICA No. 498 of 2009,
121. ICA No. 499 of 2009,
122. ICA No. 500 of 2009,
123. ICA No. 505 of 2009,.
124. ICA No. 509 of 2009,
125. ICA No. 510 of 2009,
126. ICA No: 511 of 2009,
127. ICA No. 512 of 2009,
128. ICA No. 514 of 2009,
129. ICA No. 515 of 2009,
130. ICA No. 516 of 2009,
131. ICA No. 517 of 2009,
132. ICA No. 518 of 2009, 133.
ICA No. 519 of 2009,
134. ICA No. 520 of 2009,
135. ICA No. 521 of 2009,
136. ICA No. 522 of 2009,
137. ICA No. 524 of 2009,
138. ICA No. 525 of 2009,
139. ICA No. 526 of 2009,
140. ICA No. 527 of 2009,
141. ICA.
No. 528 of 2009,
142. ICA No. 529 of 2009,
143. ICA No. 530 of 2009/144. ICA No. 531 of 2009,
145. ICA No. 533 of 2009,
146. ICA No. 534 of 2009,
147. ICA No. 535 of 2009,
148. ICA No. 536 of 2009,
149. ICA No. 537 of 2009,
150. ICA No. 538 of 2009,
151. ICA No. 541 of 2009,
152. ICA No. 547 of 2009,
153. ICA No. 550 of 2009,
154. ICA No. 563 of 2009,
155. ICA No. 571 of 2009,
156. ICA No. 613 of 2009,157. ICA No. 618 of 2009,
158. ICANo/621 of 2009,
159. ICA No. 626 of 2009,
160. ICA No. 627 of 2009,
161. ICA No. 628 of 2009,
162. ICA No. 629 of 2009,
163. ICA No. 630 of 2009,
164. ICA No. 633 of 2009,
165. ICA No. 634 of 2009,
166. ICA No. 635 of 2009,
167. ICA No. 636 of 2009,
168. ICA No. 637 of 2009,
169. ICA No. 638 of 2009,
170. ICA No. 640 of 2009,
171. ICA No. 646 of 2009,
172. ICA No. 647 of 2009,
173. ICA. No. 648 of 2009,
174. ICA No. 651 of 2009,
175. ICA No. 652 of 2009,
176. ICA No. 653 of 2009,
177. ICA No. 658 of 2009,
178. ICA No. 667 of 2009,
179. ICA No. 668 of 2009,
180. ICA No. 669 of 2009,
181. ICA No. 671 of 2009,
182. ICA No. 694 of 2009,
183. ICA No. 695 of 2009,
184. ICA No. 696 of 2009,
185. ICA No. 697 of 2009,
186. ICA No. 703 of 2009,
187. ICA No. 705 of 2009,
188. ICA No. 706 of 2009,
189. ICA No. 708 of 2009,
190. ICA No. 709 of 2009,
191. ICA No.710 of 2009,
192. ICA No, 714 of 2009,
193. ICA No. 718 of 2009,
194. ICA No. 728 of 2009,
195. ICA No. 740 of 2009,
196. ICA No. 741 of 2009,
197. ICA No. 746 of 2009,
198. ICA No. 748 of 2009,
199. ICA No. 749 of 2009. 200:-ICA No. 750 of 2009, 201. ICA No. 751 of 2009,
202. ICA No. 756 of 2009, 203. ICA No. 787 of 2009, 204. ICA No. 788 of 2009, 205. ICA No. 789 of 2009,
206. ICA No. 790 of 2009, 207. ICA No. 791 of 2009, 208. ICA No. 792 of 2009, 209. ICA No. 793 of 2009,210. ICA No. 797 of 2009, 211. ICA No. 847 of 2009, 212. ICA No. 859 of 2009, 213. ICA No. 860 of 2009, 214. ICA No. 861 of 2009, 215. ICA No. 862 of 2009, 216. ICA No. 863 of 2009, 217. ICA No. 864 of 2009, 218. ICA No. 865 of 2009, 219. ICA No. 866 of 2009, 220. ICA No. 874 of 2009, 221. ICA No. 879 of 2009, 222. ICA No. 924 of 2009; 223. ICA No. 925 of 2009,224. ICA No. 926 of 2009, 225. ICA No. 932 of 2009,226. ICA No. 963 of 2009, 227. ICA No. 964 of 2009, 228. ICA No. 973 of 2009, 229. ICA No. 984 of 2009, 230. ICA No. 985 of 2009, 231. ICA No. 986 of 2009, 232. W.P. No. 8561 of 2009, 233. W.P. No. 8562 of 2009,234. W.P. No. 10141 of 2008, 235. W.P. No. 16521 of 2009, 236. W.P. No. 16663 of 2009.