CH. ANWAAR UL HAQ (JUDICIAL MEMBER).---The titled appeal pertaining to tax year 2011 has been preferred at the instance of Revenue, calling in question the impugned Order-in-Appeal No,5035 dated 08.05.2013, passed by the learned CIR(A), Faisalabad. The appellant/department assailed the order of the CIR(A) on the following ground:-- 'That the learned CIR(A) was not justified to reduce minimum tax rate under section 113 from 1% to 0.2% of turnover for the tax year 2011 relying upon the S.R.O. 57(1)/2012 dated 24.01.2012, as the same relates to tax year 2012".
2. The relevant facts in brief are that the taxpayer in this case is an Association of Persons (AOP) filed return of income for tax year 2011, declaring sales/turnover at Rs,49,850,800/- and income at Rs,358,950/-. Subsequently, it was found by the department that as per provisions contained in section 113 of the Income Tax Ordinance, 2001, the taxpayer was required to pay minimum tax @I% upon total turnover declared during the year whereas it had paid tax on income declared.
Accordingly, a show cause notice dated 04.07 2012, was issued by the assessing officer to rectify the deemed assessm ent in terms of section 221 to levy correct amount of tax. Since, no response was made by the taxpayer, the assessing officer proceeded ex parte and rectified the deemed assessm ent under section 221 by levying minimum tax under section 113 in the fallowing manner:-- Turnover declared 49,850,800 Minimum tax under section 113 @1% including surcharge for 3-1/2 months 520,318
3. Being aggrieved, the taxpayer went in appeal before the CIR(A) and assailed the treatment meted out at assessm ent stage. Before the CIR(A), it was conceded by the AR that though the taxpayer was required to pay minimum tax under section 113 on total turnover declared during the year 2011, however, the rate of minimum tax is leviable 0.2% in terms of S.R.O. 57(1)/2012 dated 24.01.2012, instead of .1% as applied by the assessing officer. The learned CIR(A) being convinced with the AR's arguments observed that S.R.O. 57(1)/2012 is retrospectively applicable in the case.
Accordingly, he directed to levy minimum tax at the reduced rate of 0.2% of turnover for the year 2011.
4. It is the contention of the learned DR that the CIR(A) was not justified to reduce minimum tax rate under section 113 from 1% to 0.2% of turnover for the tax year 2011 relying upon the S.R.O. 57(1)/2012 dated 24.01.2012, as the same relates to tax year 2012 which cannot be given retrospective effect.
On the contrary, the learned AR submitted that section 113 is a charging section and it is trite law that amendment made in the charging provisions applicable retrospectively unless the legislature specifically provides that the same are applicable prospectively. Thus, it is asserted by the learned AR that the AOP is liable to avail benefit of reduction of minimum tax. Reliance was placed on judgment of the Hon'ble Sindh High Court reported as 2016 PTD 427.
5. I have heard the arguments of both sides and have perused the available record. Through S.R.O.
57(1)/2012, dated 24.01.2012, clause (13) was inserted in Part-III of the Second Schedule to the Income Tax Ordinance, 2001, which reads as under:- "(13) for the petroleum agents and distributors who are registered under the Sales Tax Act, 1990 and rice mills and dealers, the rate of minimum tax under section 113 on the amount representing their annual turnover under section 113 shall be reduced by eighty per cent. "
6. Further section 53.Of the Ordinance deals with exemption and tax concessions in the Second Schedule and its subsection (2) provides that--
(2) The Federal Government may, from time to time, pursuant to the approval of the Economic Coordination Committee of Cabinet, whenever circumstances exist to take immediate action for the purposes of national security, natural disaster, national food security in emergency situations, protection of national economic interests in situations arising out of abnormal fluctuation in international commodity prices, removal of anomalies in taxes, development of backward areas and implementation of bilateral and multilateral agreements by notification in the official Gazette, make such amendment in the Second Schedule by-
(a) adding any clause or condition therein;
(b) omitting any clause or condition therein; or
(c) making any change in any clause or condition therein, as the Government may think fit, and all such amendments shall have effect in respect of any tax year beginning on any date before or after the commencement of the financial year in whi.Ch the notification is issued".
7. Through above assertion of clause (13) vide S.R.O. 57(1)/2012, dated 24.01.2012, the rate of minimum tax in the case of rice dealers were reduced to eighty percent of their total turnover. In my considered view, the said reduction allowed by the legislature is not applicable to the instant taxpayer as the AOP had already filed its return of income on 09.01.2012 for tax year 2011 i.e, for the period ended on 30.06.2011. The said reduction in minimum tax is not applicable retrospectively for the reason that amendment relates to change of rate of tax and it is a settled law that amendment regarding change in rate of tax is always prospective and being not of the nature of beneficial legislation, it is not operated retrospectively.
8. Accordingly, I holds that the taxpayer is not entitled to reduction of minimum tax as introduced through S.R.O. 57(1)/2012 dated 24.01.2012 which is applicable for the tax year 2012 in terms of proviso to subsection (2) of Section 53 of the Income Tax Ordinance, 2001 Resultantly, the impugned order of the CIR(A) is vacated and that of the as3essing officer's is restored.
9. Appeal filed by the Department succeeds in the above manner.