' MUHAMMAD JAWED ZAKARIA, JUDICIAL MEMBER:--These miscellaneous applications for rectification are filed by the taxpayer company for the tax periods from January 2009 to December 2009, January 2010 to December 2010 and January 2013 to December 2013 against the Stay order in F.E.
Stay No,06/KB/2013 to F.E. Stay No,08/KB/2013 dated 21-02-2013 passed by the Division Bench of this Tribunal, whereby the miscellaneous applications, for grant of stay to the applicant/taxpayer company, were rejected for the reasons recorded therein.
2. Mr. Muhammad Arshad, FCA appeared on behalf of the applicant/taxpayer company while Mr. Faisal Rauf, DR represented the Department/respondent. The learned counsel for the applicant argued that:-- a. The aforementioned appeal was filed by the applicant against consolidated appellate order No,STA/32, 33 and 34/LTU/2012 dated 17 January 2013 passed by the Commissioner Inland Revenue (Appeals) [CIR(A)]. The appeal was allotted F.E. No .07/KB/2013. b. The CIR(A) confirmed the assessme nt Order No,06/97/2012 dated 25 September 2012 passed by the Deputy Commissioner Inland Revenue, (DCIR), Audit Unit-04, Zone-II, LTU, Karachi whereby illegal demand of Federal Excise Duty (FED) of Rs,36.36 million on alleged excisable services of Rs,281.530 million was raised. The DCIR also imposed a penalty of Rs,1.826 million. c. The applicant also filed application for grant of stay of above alleged demand and allotted FE
(Stay) No,06/KB/2013. d. The CIR(A) confirmed the actions of the DCIR who has treated income from dealing in foreign currencies as excisable services and has arbitrarily charged/levied FED thereon. Out of the above alleged demand of FED, major demand has been raised on dealing in foreign currencies. e. It is submitted that the CIR(A) has not considered the reported decision of the Appellate Tribunal cited as 2012 PTD (Trib.)
954, wherein the learned members of the Tribunal has held that the income generated on trading in foreign currency is merely due to the difference in the rates prevailing on the date of buying and selling of foreign currency and thus no services has been rendered to any customers for the generation of such income. As such income represents an exchange gain/loss and therefore income from trading in foreign currency is not subject to FED. f. The stay application was heard on 21 February 2013 and the learned Tribunal has decided the said application by passing an order on 06 March 2013. g. While reviewing the order dated 06 March 2013, it is noted that the stay application has been rejected on the grounds that the taxpayer is not entitled for stay of demand since neither a recovery notice was issued nor any coercive measure has been adopted by the department. h. It is respectfully submitted that the learned ATIR, during the hearing, accepted the stay application of the applicant and verbally directed that no recovery of alleged demand of FED should be initiated against the applicant till the decision of the main appeals. An affidavit is also enclosed with this application duly signed by the authorized representative of the applicant who appeared before the Tribunal on the hearing of stay application which confirms the above facts. i. It is further submitted that the departmental representative, Mr. Muhammad Ali Khan, Additional Commissioner Inland Revenue, LTU, Karachi was present during the hearings and the supposedly noted the above directions of the ATIR for conveying to the field officers.
' In the light of the facts and circumstances discussed above, it is prayed that the verbal direction, of the Tribunal might have escaped attention of learned members, therefore, it is humbly requested that the order in question may kindly be rectified and, pass an appropriate order confirming the decision which were verbally announced by the learned Tribunal during the hearing by the learned members.
3. On the other hand learned Departmental Representative supported the impugned order of Tribunal regarding rejection of stay applications of the applicant for the reasons stated therein.
4. We have heard the learned representatives of both the parties and have gone through the record of the case and impugned order.
5. On perusal of the order of this Tribunal bearing Stay order in F.E. (Stay) No,06/KB/2013 to F.E.(Stay)
No,08/KB/2013 dated 21-02-2013, we find that the miscellaneous applications for grant of stay were rejected by observing as under:-- "5. We have considered the arguments of both the parties and have also perused the relevant record. However, when learned AR was asked as to any coercive measures have been taken by the department and any recovery notice has been issued to the registered person, he told that neither any recovery notice has been issued nor any coercive measures have been adopted by the department. In such circumstances, taxpayer is not entitled for stay of demand, hence its application for stay is rejected."
' One of us is the author of aforementioned stay order (Ms. Farzana Jabeen, Accountant Member).
During court proceedings, when we had asked the learned counsel for the taxpayer that under which provision of Federal Excise Act he has filed miscellaneous application for rectification in Stay order in F.E. Stay No,06/KB/2013 to F.E. Stay No,08/KB/2013 dated 21-02-2013, he could not reply satisfactorily.
6. We are of the opinion that the Tribunal cannot rectify the stay order. Power of rectifying stay order has not been granted to the Tribunal vide Section 36 of the Federal Excise Act, 2005. This provision apparently appears for adjudicating authority. Mere-bare reading of Section 36 is reproduced for the sake of ready reference as under:-- "36. Power to rectify mistakes in orders. ---The Federal Government, the Board or any Federal Excise Officer may rectify any mistake which is apparent from the record in any order passed by it or him under any of the provisions of this Act or the rules made there under, on its or his own motion or on an application made by a person affected by the order within three years of the passing of such order provided that no such rectification which has effect of enhancing any penalty or fine or requiring the payment of a greater amount of duty shall be made unless the person affected by the proposed rectification has been given an opportunity of being heard."
7. The matter of stay is purely of discretion in nature of the authority i,e, Tribunal and cannot be claimed as a matter of right. At the time of proceedings of the stay application when the counsel of the applicant was asked, he could not prove the prima facie case for grant of stay, hence the stay application was rejected.
8. We may also mention that it is true there is essential distinction between "stay of recovery of tax" and "injunction". The Judicial consensus holds that an order of stay takes effect immediately on being passed even if it is not brought/served to the tax department/ officers below, whereas an injunction order becomes operative upon being served on the party against whom it is directed.
Before embark upon the issue we at the very outset may observe that when judgment/order is reserved by the court/Tribunal it does not mean the same has a prima facie case in appellant's favour. Reserving judgment by this Tribunal, the operation of the recovery proceedings is not automatically suspended unless expressly ordered to do so.
9. As far grant of stay by the Tribunal, we are of the considered opinion that Section 37 of the Federal Excise Act, 2005 unequivocally provides that the Tribunal may in particular case stay the recovery subject to such conditions as it may deem fit to impose so as to safeguard the interest of revenue. The Section runs as under:-- "Section 37 Deposit, pending appeal, of duly demanded or penalty levied.---(1) Where in any appeal, the decision or order appealed against relates to any duty demanded or penalty imposed under this Act, the person desirous of appealing against such decision or order shall, pending the appeal, deposit the duty demanded or the penalty imposed provided that the Appellate Tribunal or [Commissioner (Appeals)] may in any particular case dispense which such deposit subject to such conditions as it may deem fit to impose so as to safeguard the interest of revenue.
(2). The order for such dispensation under subsection (1) shall cease to have effect on the expiration of a period of six months following the date on which order for dispensation was passed or until the order of dispensation is withdrawn earlier or the case is finally decided earlier by the Appellate Tribunal or [Commissioner (Appeals)].
(3). Notwithstanding subsections (1) and (2), the Appellate Tribunal or [Commissioner (Appeals)] may direct, pending decision on the appeal, the duty demanded or penalty Imposed, along with the default surcharge payable under this Act, be paid by the appellant in suitable installments spread over a period not exceeding six months from the date of such direction: ' Provided that where a person has, at the time of filing appeal, deposited fifteen per cent of the liability covered under the decision or order appealed against, he shall not be required to separately seek stay against recovery and stay in such a case shall commence from the date of payment of such fifteen per cent amount and shall remain valid till the expiry of a period of six months or till the decision of the appeal, whichever is earlier unless the case is decided in his favour and the amount so paid is claimed to have become due for refund."
10. Keeping in view the above provision of law in mind, we are of the considered opinion that the applicant has failed to make out prima facie case, as no hardship is seen to have been caused to the Applicant.
11. At this moment we may observe that the powers of the Tribunal are of the widest amplitude in dealing with appeals before it. It is trite law that the Tribunal have the powers of granting stay as well as during the pendency of the appeal before it. As per provisions of law cited supra, the stay may be granted for a limited and specified period as inbuilt in the said provision. There is no automatic stay. Mere filing and pending of appeal shall not operate as suspension or stay. There is no provision in the Ordinance in support of the contention that an assessment becomes provisional or non-existent with the filing of an appeal against it or during the pendency of such appeal. It is a recognized principle of law that the mere fact of pendency of an appeal does not operate as stay of execution, nor does it affect the executability of the decision appealed against.
12. Stay is purely discretionary in nature which having been exercised judiciously after conscious application of mind that cannot be rectified under the garb of rectification application. This is tainted to misleading and misguiding the Court.
13. The other main consideration ought to be the balance of convenience in relation to the interest of the both (Taxpayer v. Tax/Revenue Department) and to save injury accruing to any one of them.
The applicant seeking a stay should show that there is likelihood of substantial loss to it, if the stay is not granted. For that matter/ reason the applicant shall satisfy the Tribunal by sufficient cause and it will be for the applicant/ appellant to satisfy the Tribunal for forming an honest opinion that the substantial loss/ undue hardship that would be caused in not granting the stay. Mere reference of the word of "Substantial loss will accrue if stay is not granted" is not sufficient compliance of the duty cast on the applicant seeking stay of recovery of tax levied without elaborating ground or grounds for "shall dause Prima facie case", Balance of convenience in favour of applicant" and "substantial loss/irreparable injure to the applicant /taxpayer. It, however, does not mean that Tribunal would withhold stay of tax demand without keeping in view or without applying mind to or without examining or prima facie attending to facts and circumstances of each case. However, the Tribunal seized with application for stay should have regard to facts and ircumstances of case in order to determine whether or not there is sufficient cause of undue hardship for stay of tax recovery.
14. Further, on merit of the case, the applicant has not shown that any coercive measures are being initiated by the department neither any notice of hardship was issued nor any recovery proceedings are seen to have been initiated by the department against the taxpayer until to date.
15. It is also observed by this Bench that there is no apparent bona fide mistake pointed out in the impugned order of rejection of stay which is floating on the surface of the record. The scope, power and extent to rectify mistake in order under section 36 of Federal Excise Act, 2005 is very limited, restricted and qualified.
16. This infra, alighted judgment of the Hon'ble Supreme Court applies to instant case with all force and we respectfully following the dictum laid down, hold that it requires no emphasis that the scope of appeal is much wider as compared to the rectification of mistake, as envisaged under section 36 of Federal Excise Act, 2005. In appeal proceedings, an aggrieved party/appellant is allowed to raise all the questions/ grounds of facts and law. However, in case of rectification before any authority as spelt out in relevant section 36 of FED Act, 2005. The objection, which ought to be allowed to be raised even before the authorities enumerated and envisaged in aforesaid provision are also restricted to the rectification of mistake which ought to be floating and apparent from surface of the record. It has been held by the various superior courts that where the issue requires debate, further probe/deep investigation and long drawn arguments the same would fall outside the scope of "mistake". Such mistakes must be apparent to be floating on the surface of the record.
Our this view is fortified by the landmark judgment of the Hon'ble Supreme Court of Pakistan reported as 1992 SCM R 687 = 1992 PTD 570 wherein their lordships held that:-- "Section 35 of the repealed Income Tax Act, 1922, hereinafter referred to as 'The Act' confers a power to rectify any mistake in the order which is apparent from the record. Such power can be exercised Suo motu or if it is brought to the notice by an assessee. Therefore, essential condition for exercise of such power is that the mistake should be apparent on the face of record; mistake which may be seen floating on the surface and does not require investigation or further evidence.
The mistake should be obvious that on mere reading the order it may immediately strike on the face of its. Where an officer exercise the powers under section 35 entering into the controversy, investigates into the matter, re-asses the evidence or takes into consideration additional evidence different from the order, then it will not amount to "rectification" of the order. Any mistake which is not patent and obvious on the record, cannot be termed to be an order which can be corrected by exercising powers under section 35."
17. From the above discussion we have arrived at the following conclusions:-- Proposed rectification as prayed by the Applicant could not be permitted under the law / Federal Excise Act, 2005.
No mistake is patent and obvious on record or in impugned order, hence the same is not rectifiable even under the garb of General Laws.
To grant stay is purely discretionary powers of the Tribunal which are judiciously and judicially exercised after proper application of conscious mind hence, it does not need any rectification and no rectification lie against such stay Order.
Change of view of the Taxpayer / Counsel of the Applicant does not constitute a mistake apparently on the surface of the record whereas no single infirmity or mistake is pointed out.
The powers conferred in Federal Excise Act, 2005 regarding rectification of mistake is not analogous to power conferred on civil court by Order, Rule and other Civil Procedure Code (C.P.C.).
The determination of the apparent mistake subjectively by authority/Applicant is not sufficient. If it is a mistake which requires to be established by a complicated process of investigation, arguments or proof it cannot be regarded as a mistake apparent from the record. Mistake must be glaring, obvious and self-evident mistake. It should not be farfetched.
18. Under the above circumstances and ratio decidendi of the judgment of the Hon'ble Supreme Court of Pakistan, we do not find any merits for consideration in these Miscellaneous Applications for rectification filed by the applicant, which are hereby rejected.
19. All three captioned Miscellaneous Applications stand dismissed as indicated supra.
20. All the Miscellaneous Applications are hereby dismissed.