1. MUHAMMAD JAWED ZAKARIA (JUDICIAL MEMBER).---By this single order, we intend to dispose of above titled Miscellaneous Applications along with main Appeals filed by the Applicant/Taxpayer against refusal of request for stay from recovery of tax demand by the learned CIR(Appeals-II), Karachi vide his combined/consolidated single Order No.CIR (A-I)/2015/247 dated: 08 05.2015.
2. Together with main appeal against refusal of stay order, the applicant has also filed Miscellaneous Application for stay of demand before this Tribunal against refusal of stay by learned CIR(A) and thereby praying for grant of stay by this Tribunal. The bereavements made by the Applicant in his application are reproduced as under:-- "The subject appeal was filed under the cover of our letter DT 4232 Dated May 13, 2015 under section 127 of the Income Tax Ordinance, 2001 [Ordinance] against the combined order No. CIR/Appeals-I/2015/247 dated 8, 2015 of the Commissioner Inland Revenue (Appeals-I) [CIR(A)] rejecting the application for stay.
2. The main appeal is still pending disposal before the Commissioner (Appeals), Zone-I, Karachi Through the order, the CIR(A) has disposed off the applicant's for stay of demand of Rs.
3. 923,342,337/- raised in the order dated April 1, 2015 framed under sections 221/124(1) of the Ordinance passed by the Deputy Commissioner Inland Revenue, Audit Unit-04, Zone I, Large Taxpayers Unit Karachi.
4. Stay of demand has been summarily disposed by the CIR(A) vide the aforementioned combined order dated May 8, 2015 with the remarks that the appellant did not make out his case for stay against demand. The applicant prays that the demand created in the order is unjustified and is expected to be adjusted against the refunds due to the appellant. It is thus prayed that the Hon'ble Tribunal may please stay the adjustment of demand of Rs. 923,342,337/- raised in the impugned order. The status of proceedings before the CIR(A) to date are as follows: (i)Order dated April 1, 2015 framed under sections 221/124(1) of the Ordinance, were received by the company on April 15, 2015.
5. (ii)Appeal was filed before CIR(A) vide letter DT 3894 dated April 22, 2015 on April 22, 2015.
6. (iii)An application for out of turn hearing was filed vide letter DT 3929 dated April 22, 2015 and stay of demand was filed before CIR(A) vide letter DT 3976 dated April 25, 2015.
7. (iv)Applications for stay were simultaneously filed before the High Court in Constitution Petition bearing reference No. D-2285 of 2015. The Court vide order dated April 30, 2015 directed the department 'not to recover or adjust the aforementioned demand with the refund till the stay application is directed by the CIR(A) or the appeals are decided within two weeks, whichever is earlier'.
8. (v)CIR(A) has finally conceded appeal hearing on 21.05.2015, order on main appeal is not yet issued.
9. 3.On the date of hearing the learned A.Rs. vehemently argued that on the basis of facts and circumstances of the case relating to the issue under appeal, favorable decisions, relief to the appellant are expected in the instant case, meaning thereby, the balance of convenience is in favour of the appellant.
10. 4.They further submitted that it is pertinent to mention here that this demand has been raised on gross misapplication of law being unreasonable and not acceptable. They further stated that the impugned order was framed in haste on 'ex parte' basis without allowing sufficient opportunity of being heard to the appellant including rejection of extension was also not given. The respective appeal effect to the order of the CIR(A) in the respective year has been rectified/ amended to disallow the relief. Learned A.Rs. for the Applicant/Appellant further pleaded that the manner in which the proceedings have been conducted suggest a "mala fide intention" to reduce existing refunds of the appellant; an aggregate amount of refund in various tax years of Rs.9.9 billion had not been paid to the appellant and the taxpayer has been paying compensation for delayed refunds.
11. 5.During proceedings before this Court, learned counsel for the Applicant/Appellant contended that the learned CIR(A), through the Order No. 247 dated 08.05.2015 has rejected stay sought by the applicant solely on the ground that "there is no issue of recovery of demand". The applicant prayed that the adjustment of determined refund will cause undue hardship for the applicant and that the demand has been incorrectly raised. It is thus prayed that the Hon'ble Tribunal may please stay the recovery/adjustment of entire demand against determined refund. Learned Counsel for the Applicant/Taxpayer invited our attention that the impugned orders where demands have been raised and there is every likelyhood that the department may adjust such determined refunds against the demands which are disputed in appeal and still subjunctive. It appears that the department for meeting the department's budget target the department, will end eavour to adjust/recover the demand which unjustly raised. The Learned AR urged that a favorable decisions, allowing relief to the appellant are expected in the instant case/appeal which pending adjudication before CIR(A) despite the appellant has filed out of turn hearing application vide his counsel's letter DT 3929 dated April 22,2015. The CIR(A) had fixed appeal hearing on 18.05.2015 and finally concluded on 21st May, 2015. The appellant order by CIR(A) is still in despondency, meaning thereby, the balance of convenience is in favour of the appellant. This reveals that there is a 'prima-facie' case of stay of recovery till the matter is decided by CIR(A) this demand has been raised on gross misapplication of law being unreasonable and not acceptable, the demand is sought to be recovered on account of the following main issues. The outstanding demand is based on incorrect interpretation of law/incorrect understanding of the facts of the case without taking into account the decisions of the higher appellate authorities. He further contended that there is a 'prima facie' case for stay of demand. It is therefore prayed that this Tribunal may kindly grant stay of demand and restraint the department from adjustment of refund against illegal demand. The learned counsel also respectfully submitted that the clear direction to be given to the learned CIR(A) to issue appellate order which has already been reserved for order on 21st May, 2015.
12. 6.Learned A.R vehemently argued that the learned CIR(A) was not justified to reject the stay application. The action of the learned CIR(A) is unjustified and arbitrary without applying his conscious, judicious and judicial mind.
13. 7.In support of his arguments the learned D.R. relied upon the reported judgment of Messrs Chenab Board , Faisalabad v. CIR [reported as 2012 PTD (Trib) 941] wherein the Tribunal while granting the stay observed as under: "If recovery of the tax demand created as a consequence of impugned order-in-original is not stayed during the pendency of the main appeal of the present appellant before the CIR (A), it will obviously cause irreparable loss to it. In this state of affairs, it will be quite expedient that the same may be stayed. Accordingly, the same is stayed till the disposal of the appeal by the learned CIR (A)."
14. 8.Learned Counsel for the Applicant/Appellant has placed reliance on a reported judgment in re:89 TAX 177 = 2003 PTD 1746=2003 GST 283 in the case of Messrs Z.N. Exports (Pvt.) Ltd. v. Collector of Sales Tax decided on 03-02-2003 wherein the Hon'ble Court has held that:-- "In all fairness, equity and justice, an assessee should not be forced to pay a demand created by a Revenue authority unless the order creating such demand has undergone the scrutiny of at least one independent forum".
15. 9.The learned AR has further placed reliance on another reported judgment 2011 PTD 1290, of the Hon'ble High Court, Lahore and an unreported decision of the Tribunal in MA(Stay)
16. No.2366/LB/2014- I.T.A. No.2180/LB/2014 [Tax year 2013] dated 26-09-2014 wherein as per his claim the stay was allowed. He further contended that in view of the directions issued by the superior courts, as referred above, that recovery should not be made till disposal of appeal by an independent forum.
17. 10.In view of the judgment cited supra, the learned counsel therefore, prayed that the Honourable Tribunal may be pleased to grant stay from recovery of entire demand till the decision of the main appeal by the Commissioner (Appeals) and issue directions to the concerned tax authorities for early disposed of main appeal.
18. 11.In finale Mr. Shabbar Zaidi, the Learned A.R. submitted that the taxpayer is the leading .banking company/corporate taxpayer, minutely maintain each and every records, accounts are duly adjusted closed and audited by a repute Firih of Chartered Accountants. The case of the Applicant/Appellant is bona fide, prima facie arguable case, balance of convenience is also in favour of the taxpayer and if stay not granted it will cause irreparable loss not only to taxpayer but to the corporate tax culture.
19. 12.The learned DR on the other hand, strongly objected to the stay application and appeal. He while rebutting the contention of the learned counsel for the applicant/appellant regarding application of proviso of sections 131 and 132 he also drew our attention towards 1st provisio to subsection (5) of section 131. The relevant proviso of section 131 of the Income Tax Ordinance, 2001 relied upon by him is reproduced hereunder:-- Provided that if on filing of application in a particular case, the Appellate Tribunal is of the opinion that the recovery of tax levied under this Ordinance and upheld by the Commissioner (Appeals), shall cause undue hardship to the taxpayer, the Tribunal, after affording opportunity of being heard to the Commissioner, may stay the recovery of such tax for a period not exceeding one hundred and eighty days in aggregate:-- 13.The learned D.R. argued that the case of the applicant/appellant is fully covered by the aforesaid proviso. Hence provision of Income Tax Ordinance, 2001 is squsrely applicable as is evident from the perusal of the proviso reproduced supra wherein the legislature has specially used the words recovery of tax levied under this Ordinance and upheld by the Commissioner (Appeals)" ,therefore, it is crystal clear that the power of this Tribunal regarding stay is restricted subject to section 131(5) 1st Proviso to Income Tax Ordinance, 2001.
20. 14.The learned D.R. argued that from perusal of above quoted section of sections, the legislature has empowered the Tribunal to admit, hear and dispose of the appeal as per procedure laid down in sections 131, 132 of the Income Tax Ordinance, 2001, meaning thereby provision of section 131(5) Ist provisowould apply while dealing with stay. He further contended that balance of convenience is not in favour of the taxpayer and even otherwise the learned CIR(A) had justifiably rejected the stay application as the taxpayer has failed to make out his case for stay against demand.
21. Moreover, the learned DR added that determined refund is available for adjustment against demand, therefore, the Miscellaneous Application for stay of demand be rejected.
22. 15.We have heard both the learned counsel and carefully perused the relevant record. The relevant extract from the order of the learned CIR (A) refusing to grant the stay is reproduced extenso hereunder: "OFFICE OF THE COMMISSIONER INLAND REVENUE (APPEALS-I) KARACHI.
23. No. CIR/Appeals-I/2015 /247Dated: 08.05.2015 To, The Commissioner Inland Revenue, Zone-I, Large Taxpayer Unit, Karachi. Sub: Messrs Habib Bank Limited Appeal Against order under sections 221/124(1)/122(5A) The Income Tax Ordinance, 2001 and stay of demand for the tax years 2007 2008, 2009,2010 and 2011.
24. Please refer to the above subject.
25. Mrs. Asra Rauf FCA and Zara Naeem, ACA the learned ARs attended and requested for stay against demand. During proceedings of stay applications, the ARs informed that there were determined refunds available to the appellant and it is likelihood that the department may adjust such determined refunds against the demand in appeals. Since, there is no issue of recovery of demand through coercive measures, therefore, balance of convenience is not in favour of the appellant for stay against demand. Hence, the stay applications are disposed off with remarks that the appellant did not make out his case for stay against demand.
26. Meanwhile, the main appeal is fixed for hearing on 18.05.2015.
27. Sd/- Commissioner Inland Revenue (Appeals-I), Karachi.
28. (Underlying for emphasizing.)
16. That the aforesaid Order is not a speaking order, which is against the fundamentals of justice, in this regard various judgments were cited by the learned counsel including judgment passed by Honorable Appellate Tribunal in the matter of Mohammad Ateeq and other wherein it was held that:- "The order cannot be termed as a quasi-judicial order. There is yet another aspect of the case, which can not be ignored. After the examination of the impugned order we find the same is sketchy, slip-shod and devoid of reasons. The said order is not at all a speaking order and cannot be called a "quasi judicial order" within the parameters set up by law. The tenor of the order amply manifests non application of judicial mind and no reasons have been assigned by the learned adjudicating officer in coming to the impugned conclusions. Even it has been enjoined upon an executive authority, as per section 24(A) of General Clauses Act, 1897 (inserted by General Clauses Amendment Act, 1997, Act No.XI of 1997) to give reasons for making the order."
17. That the Honorable Supreme Court of Pakistan time and again unapproved the passing of such perfunctory orders in the causes involving valuable rights of the parties. It is settled law that quasi- judicial order must be a speaking order manifesting by itself that the authority has applied its judicial mind to the issues end the points of controversy involved in the causes. Furthermore, when the reasons would not be forthcoming, obviously the appellate court would be deprived of the views of the subordinate forum. In any way the impugned order which is not a speaking order and devoid of reasons is not sustainable in law being in contravention of law declared by the Honorable Supreme Court of Pakistan in various cases like Adamjee Jute Mills Ltd. v. The Province of East Pakistan and others (PLD 1959 SC (Pak.) 272), Gouranga Mohan Sikdar v. The Controller Import and Export and 2 others [ PLD 1970 SC 158], Mollah Ejahar All v. Government of East . Pakistan and others [PLD 1970 SC 173] and Muhammad Ibrahim Khan v. Secretary, Ministry of Labour and others [1984 SCMR 1014] etc. After section 24-A GCA the obligation to advance reasons is now a statutory requirement and cannot be casually ignored (Ref: Airport Support Services v. Airport Manager QIA (1998 SCMR 2268).
18. As far grant of stay by this Tribunal/ATIR, we are of the considered opinion that section 131 (5) read with provisio of the Income Tax Ordinance, 2001 (cited supra) unequivocally provides that the Tribunal may stay the recovery proceedings for 180 days, if tax levied under the Ordinance and upheld by the CIR(A) after upholding by the CIR (A) the recovery proceedings cause undue hardships to the taxpayer. The said subsection is reproduced as under:-- "131(5) Notwithstanding that an appeal has been filed under this section tax shall, unless recovery thereof has been stayed by the Appellate Tribunal, be payable in accordance with the assessment made in the case: Provided that if on filing of application in a particular case, the Appellate Tribunal is of the opinion that the recovery of tax levied under this Ordinance and upheld by the Commissioner (Appeals), shall cause undue hardship to the taxpayer, the Tribunal, after affording opportunity of being heard to the Commissioner, may stay the recovery of such tax for a period not exceeding one hundred and eighty days in aggregate: Provided further that in computing the aforesaid period of one hundred and eighty days, the period, if any, for which the recovery of tax was stayed by a High Court, shall be excluded."
29. (Underling for emphasizing) 19.From perusal of the provision of subsection (5) of Section 131 of the Income Tax Ordinance, 2001, read with proviso restricts the empowerment of this Tribunal to grant stay of recovery unless tax levied under this Ordinance and upheld by the Commissioner (A). In the instant case tax has been levied but not yet upheld by the CIR(A), so the empowerment of Bench of the ATIR while hearing stay application does not emerge in the absence of CIR (A)'s order or appeal before the Tribunal. We may further observe that mere refusal of the CIR(A) to grant stay does not mean that he has upheld the levy of tax under this Ordinance against the appeal which is pending adjudication before CIR (A). Further we are of the view that for the grant of stay under the D aforesaid provision is that tax must be levied and upheld by the Commissioner (A). Both the conditions "Tax levied and "upheld by the CIR(A) must co-exist simultaneously. Both the limbs must present together.
30. 20.From perusal of the above quoted section, there is no doubt in our mind that the Tribunal has powers to dispose of the matter of stay which relates to Income Tax or even Sales Tax. The law in this regard is very much clear through proviso to subsection (5) duly empowers the Tribunal to take up the matter of stay under section 131 of the Income Tax Ordinance, 2001.
31. 20(sic) As far as reliance placed by the learned counsel for the applicant on the judgment reported as 2012 PTD (Trib.) 941, the same is distinguishable as proviso (1) to section 131(5) of the Income Tax Ordinance, 2001 was added on 26th June, 2012 while in the judgment relied by the learned counsel for the applicant this proviso was not existed as the judgment was delivered much earlier on 15.3.2012 before the insertion of proviso (1) to section 131 of the Income Tax Ordinance, 2001, hence the Tribunal has not considered this aspect due non-existence of this proviso.
32. 21.The other aspect of the case is that the CIR(A) has the power to grant stay only for 30 days in aggregate under section 128(1A) of the Income Tax Ordinance, 2001 which is reproduced hereunder:-- "128.Procedure in appeal (IA). Where in a particular case, the Commissioner (Appeals) is of the opinion that the recovery of tax levied under this Ordinance, shall cause undue hardship to the taxpayer, he, after affording opportunity of being heard to the Commissioner against whose order appeal has been made, may stay the recovery of such tax for a period not exceeding thirty days in aggregate.
33. 22.The above provisions of law clearly shows/describes that the stay by CIR(A),would be only for 30 days. The Tribunal has wider power to grant the stay for 180 days. If the stay is refused by the CIR(A) and tax levied is not yet upheld by the CIR(A), and the appeal is pending adjudication before him and on refusal of the same the Tribunal cannot exercise his powers under section 131(5) read with proviso that would result influx of Stay Applications before this Tribunal as each taxpayer may get the stay rejected by the CIR (A) and may file appeal and Stay application against the said refusal order before this Tribunal and enjoy 180 days stay what to speak of 30 days in built limitation on CIT(A). If the learned CIR (A) grants the stay for statutory period of 30 days and after expiry file another application for stay before this Tribunal, in this way he would get the stay for 120 days i.e. 30 days by the CIR(A) and plus 180 days by the Tribunal. Therefore, we are of the opinion that when the stay is refused by CIR(A),and tax levied is still subjudice and not yet upheld being the main appeal is also lying before the CIR(A) and tax levied yet not upheld by CIR(A), no stay by Tribunal is permissible to the taxpayer by the Tribunal under section 131(5) read with proviso.
34. 23.However, we may observe that an Appeal before the Tribunal may be filed against refusal of stay order CIR(A) as according to F sections 131 and 132 of the Income Tax Ordinance, 2001, quoted supra, the Tribunal has inherent powers to admit, hear and dispose of the appeal. For filing of appeal before the Tribunal, the procedure has been prescribed under sections 131 and 132 which is reproduced supra.
35. 24.From perusal of the above said sections it is unambiguously clear that the Tribunal may dispose of the said appeal filed against refusal of stay by the CIR(A) by exercising powers under the sections mentioned supra. However, refusal of Stay order is not an assessment order under clause (c) of subsection (3) of section 132 which is as under:--
(c) remand the case to the Commissioner or the Commissioner (Appeals) for making such enquiry or taking such action as the Tribunal may direct.
36. 25.Thus, meaning thereby the Tribunal may direct to the CIR(A) and remand back to him for further examination/reconsideration of stay application or as the Tribunal may direct including direction for allowing/granting stay by CIR(A).
26. However, there is no automatic stay. Mere filing 'and pending of appeal shall not operate as suspension of stay. There is no provision in the Income Tax Ordinance or in Sales Tax Act support that tax levied 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. An order by this Tribunal staying recovery of tax levied under the Income Tax Ordinance and up held by the CIR (Appeals) and not otherwise as restriction imposed by inbuilt provision expressly and clearly.
37. 27.It is also recognized cannon 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.
38. An order by this Tribunal staying recovery of tax created by Officer Inland Revenue and up held by the CIR (Appeals). This matter is one of discretion of the Appellate Tribunal, no doubt, which is to be exercised judicially. The Primary consideration should be "After upholding by CIR(A) the undue hardship shall cause to the taxpayer" and for that reason it has been made obligatory that the Appellate Tribunal is of the opinion that the recovery of tax levied under Income Tax ordinance, 2001 and upheld by the Commissioner (Appeals), shall cause undue hardships to the taxpayer.
39. 28.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.
40. 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 reasonable grounds 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.
41. 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 cause undue hardship". It, however, does not mean that Tribunal would withhold stay of tax demand (as CIR(A) done in the instant case) 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 circumstances of case in order to determine whether or not there is sufficient cause of undue hardship for stay of tax recovery.
42. 29.If we look at the general practice of the higher appellate fora, the following points/principles are considered before grant of stay/ Injunction:-- a. Discretionary relief. The granting of any injunction is purely within the discretion of the Court.
43. This discretion should be exercised in favour of only that party who comes to Court with clean hands. Even if the conditions as laid down for the grant of temporary injunction are fulfilled it may be refused as it is a matter of discretion of the Court. b.General principles for grant of injunction. An injunction is a form of equitable relief and it is to be issued in aid of equity and justice. But not to aid injustice. In order to obtain an interim relief, the applicant has not only to establish that he has a strong prima facie case, but he has also to show that the balance of convenience is on his side and that he would suffer irreparable injury unless he was protected during the pendency of his appeal. Last but not the least, the applicant has to prove categorically that the applicant shall cause undue hardship if recovery proceedings are not stayed. c.Where no serious controversy was raised in the application, mere allegation without producing any prima facie material to substantiate it or pointing out circumstances to justify it can hardly lead to the conclusion that there is a prima facie case justifying grant of injunction.
44. 30.#We are of the considered view that powers to grant interim relief is a judicial or at least quasi judicial in nature and the matter of stay is purely of discretion in nature of the authority which ought to be judiciously exercised. At this moment we may observe that the powers of the CIR(A) are of the widest amplitude while dealing with the appeals and stay applications before him. It is trite law that the CIR(A) has the powers of granting stay during the pendency of the appeal before him. As per provisions of law, the stay may be granted for a limited and specified period as in-built in the provisions of law. The learned CIR (A) while refusing the stay should decide the appeal out of turn. In this case, the appeal was fixed for regular hearing on 18th May, 2015 and appeal has been finally concluded and reserved for order on 21st May, 2015 by the learned CIR(A). The appellant/company have been awaiting for appellate order since then.
45. 31.The Taxpayer's chief aim is main appeal and real disputed issues are still in doldrums and pending adjudication. The speedily dispensation of justice is for the purpose of development of public law. We may at this moment, borrow the golden words of Schwartz and H.W.R. Wade in their book on Legal Control of Government pointing out as under:-- "Restrictive rules about standing are in general inimical to a healthy system of administrative law.
46. If a plaintiff with a good case is turned away, merely because he is not sufficiently affected personally, that means that some government agency is left free to violate the law, and that is contrary to the public interest. Litigants are unlikely to expend their time and money unless they have some real interest at stake."
47. (underlying by us for emphasizing)
48. 32.We with great concern would observe, notwithstanding above observations/discussions, the learned CIR(A) has not yet issued his appellate order which was reserved for order on 21st May, 2015. One may ask what is fault and default of taxpayer? Whether the taxpayer has committed any mala fide or any sin? When the learned CIR(A) has reserved the case then why he cannot disposed of issues of main order on main appeal and why he is not issuing/servicing his appellate order to the taxpayer. It is really highhandedness of the Government functionary including taxing officer/CIR\CIR(A) henceforth is to work hand in hand with the judiciary to usher in an age of the speedy and meaningful justice delivery systems in our beloved and beautiful country to remove the adage "JUSTICE DELAYED IS. JUSTICE DENIED" from the Pakistan Judicial system. Early and meaningful speedy disposal of pending appeals will bring some relief to the taxpayers and may also stop unnecessary deferment of revenue. In this way CIR (A) may protect and safeguard the interest of both taxpayer as well as of revenue, Delay in dispensation of complete justice dispensed with and at times makes it worthless.
49. 33.Law is legislated by the legislature with valid Piece of legislation. Law is not always framed by the court but courts interpret for advancement of justice, therefore, it should not be allowed to operate so as to defeat the ends of justice, since it is in the interest of justice to avoid miscarriage of justice. The courts and quasi- judicial officers including CIR(A) are required not only to do meaningful speedy justice but also must perform their duties in such a manner that justice is seen to have been done. CIR(A) while discharging their judicial duties no steps should be taken which may create apprehension in the mind of an appellant/applicant/taxpayer that justice may not be done. CIR(A) being sub-ordinate authority he is bound to follow and obey the Judgment/ Order of Tribunal (ATIR). It is not open to the CIR (A) to ignore decision of jurisdictional Tribunal or refuse to follow. It must scrupulously follow the decision of this Tribunal/Court in letter and spirit. The language of the Statute clearly indicates that the powers of the Tribunal is very wide amplitude.
50. The ratio, deducible form the foregoing discussion is that the-These powers of Tribunal are of a wide sweep and the judgment of Tribunal is binding on sub-ordinate authority including CIR(A).
34. In this respect we quote the text of CBR's letter C. No. 1(7) DT-14/92 dated February 10, 1991 whereby it has been directed as under:-- "It has been brought to the notice of Board by the Learned ITAT through their order in ITA No. 684/HQ of 1990-91 (Assessment Year 1989-90) that the directions contained in their appellate orders are not being followed by the authorities below. The following observations were also made previously by the learned Tribunal in ITA No. 9.51/HO of 1990-91 vide order dated August, 1991:- "The order of this Tribunal is binding on the subordinate Income Tax authorities and, therefore, we deprecate the manner in which the Commissioner of Income Tax (Appeals) has sidetracked the order of this Tribunal, we disapprove such practice on the part of sub-ordinate income tax authorities and except that in further the orders passed by this Tribunal shall be properly respected and followed."
51. 2.I am, therefore, directed to request to show proper respect to the orders of the Income Tax Appellate Tribunal as they are of binding nature on all subordinate Income Tax authorities and required under the law to be followed.
52. 3.The above instructions may kindly be brought to the notice of all concerned."
35. The learned Tribunal vide its judgment reported as 2010 PTD (Trib) 557 strongly deprecated the tendency of Ignoring or by-passing the direction of the superior authorities on the part of revenue:- - "We have in so many cases deprecated the tendency of ignoring or bypassing the directions of the superior authorities on the part of the Revenue Officers. This tendency needs to be cured for better administration of justice, observance of discipline and maintaining rule of consistency and law. The Taxation Officer in this case having scanty knowledge of the dispensation of justice and interpretation of statue has tried to demonstrate that he knows the law and the legal proceedings better than his superior officer and he may be right in thinking so but while acting as a judicial/ Quasi Judicial which have always been viewed very seriously and may entail into an appropriate action which however, we do not propose to take in this rase."
53. 36.Further the ATIR (Tribunal) has ruled in 1996 PTD (Trib.) 388 that its judgments are binding on the appellate authorities subordinate to the Tribunal under hierarchy of judiciary.
37. We are, therefore, of the opinion that it is not the taxpayer's fault or default. The taxpayer is being penalized and punished for its obedience to law of the land. The taxpayer ought to file M.A.
54. Stay Application once again before the CIR(A) just immediately on receipt of this order While refusing stay CIR(A) has not cited any example of fault default or sin of this corporate taxpayer and it is common knowledge, that a statue normally does not provide for each and every conceivable eventuality' and in respect of some unforeseen events arising in a case for which it has made no provision, the courts would be deemed to have inherent jurisdiction in the interest of orderly dispensation of justice unless and until prohibited by the statutory provision of statute.
55. 38.The learned CIR(A) has rejected stay application on solitary ground that there is no issue of recovery of demand through coercive measures due to determined refunds available to the appellant. It is flabbergast to note as to how CIR(A) can observe that there is no issue-of recovery of demand in the instant case despite determined refund.
56. 39.What is refund? Refund means returning back to the taxpayer of that amount of tax which is paid in excess of what is due from him.
57. 37.Refund, in essence, implies and postulates some amount of tax which has already been paid to the Department which has got to be returned, it is simply a repayment of amount overpaid under whatever mode or set of circumstances, the overpayment is recognized by the statute and ascertained for purposes of repayment to the taxpayer. The Superior Courts have emphatically discouraged and disapproved the tendency of the Revenue to take the plea of technicalities or technical plea or even limitation as the bar for granting of refund legitimately due 0 to tax-payers by observing that "the plea of withholding of refund on technicalities for which the Court always looks upon with disfavour and is unfortunate that a public authority like the Inland Revenue should, in morality and justice, take up such a plea to defeat a just claim of the citizen. It is high time that governments and public authorities adopt the practice of not relying upon technical pleas for the purpose of defeating legitimate claims of citizens and do what is fair and just to the citizens. if course, if a government or a pubic authority takes up a technical plea, me Court has to decide it and if the plea is well-founded, it has to be upheld by the Court, but government or a public authority, unless, of course, the claim is not well-founded based on cogent and concrete documentary evidence, if the evidence for the purpose of resisting such a claim has become unavailable. Therefore, mere technicalities plea should not be the criteria to deny legitimate refund of taxes paid by mistake or otherwise or etc. by the tax-payers. The determined refund is legitimate money of taxpayer and it cannot be treated as governed money and taxpayer is legally justified not only to claim refund but also compensation/interest thereon. It is declared law without any iota of doubts that the legitimate rights of taxpayers cannot be seized by the taxing functionaries in any manner whatsoever or under any circumstances. It would be worth mentioning the latest judicial trend is to deprecate and discourage withholding of citizens money by, a public functionaries on the plea of limitation or any technicalities and refund cannot be adjusted if the tax demand created is patently, palpably and manifestly illegal the same cannot be grabbed under the garb of refund.
58. Seizing/capturing or adjusting of determined refund against supra tax demand is nothing but clearly coercive measures of recovery of tax demand and depriving the taxpayer from the claim of compensation thereon and compensation on compensation. The excess tax paid not only by way of advance tax but also by way of tax deduction at source is to be refunded with compensation/interest. The taxpayer is also entitled to compensation/interest on interest/compensation from the date on which the refund was due to the date refund is granted.
59. [Gujarat Florochemicals Ltd. v. CIT (2008) 300 ITR 328 Gujarat] 41.The taxing authority is not justified to withhold the legitimate determined refund on frivolous grounds/technical grounds or illegal objections/demands raised, thus, meaning thereby is that adjustment of determined refund which is money of the taxpayer lying in the pocket of the government. The adjustment of the same against disputed demand which is pending adjudication/subjudice before appellate fora, if adjusted and denied compensation thereon, this will be tantamount to recovery of tax. Hence, the case of the appellant is prima facie arguable case, balance of convenience appears to be in favour of taxpayer and it may cause injury to taxpayer and he may be stepped behind his back. Therefore, taxpayer is entitled for stay of demand against adjustment of determined refund.
60. 42.The Hon'ble Supreme Court of Pakistan in the case of Pfizer Laboratories Ltd. v. Federation of Pakistan and others reported as PLD 1998 SC 64 after analyzing and going through various case laws and the treatise, the following principles were laid down by their Lordship:-- (i)that if one party under a mistake, whether of fact or law, pays some money to another party (which includes a Government department) which is not due by law or contract or otherwise, that must be repaid in view of section 72 of the Contract Act, 1872.
61. (ii)That the Customs duties and charges referred to in section 33 of the Act should be chargeable and payable by an importer or exporter and that due to inadvertence, error or misconstruction, more amount was paid or recovered than what was due and payable, the claim for the refund of such an excess amount should be made within six months as envisaged in above ,section 33, but where the duty or tax charged and recovered was not payable at all, above section 33 has no application.
62. (iii)That if the customs duty or any other levy was realized and its realization was outside the statutory authority, the provisions of section 27(1) of the Indian Customs Act, 1982, providing limitation of six months was not attracted.
63. (iv)That when any excise duty is recovered which was not leviable. , limitation of one year provided in Rule 11 of the Central Excises and Salt Rules, 1944 is not applicable nor an alternate remedy by way of a suit will be a bar to a Constitutional petition.
64. (v)That payment of excise duty or any other tax without knowledge that the same is exempted under a notification is refundable on the same footing as if there was no lawful imposition.
65. (vi)To return what has been taken wrongly is as much a duty and grace of Government to levy relentlessly and fully what is due as remarked by V. R. Krishna Lyer, J.
66. (vii)That where some money is received by the Government not lawfully due, the plea of limitation by its departments is one which,the Court always looks upon with disfavor as it is violative of the principles of morality and justice.
67. (viii)That when moneys are paid to the State which the State has no legal right to receive, it is ordinarily the duty of the State, subject to special provisions of any particular statute or special facts and circumstances of the case, to refund the amount so received and in case of failure, a superior Court in exercise of its Constitutional jurisdiction can direct the refund of the same if no disputed questions of facts are involved.
(ix) That there may not legal liability on the part of a Government functionary to refund any amount received by it as a tax or other levy by virtue of certain special provisions under the special law but keeping in view that we are living in a democratic society governed by the rule of law and every government, which claims to have ethical and moral values, must do what is fair and just to the citizens regardless of legal technicalities.
68. (x)That as per Indo-Pak laws the fact that the amount of tax of which refund is claimed was voluntarily paid, does not preclude the right to claim refund, if it was not lawfully payable.
69. (xi)That the money paid by a citizen to a public authority in the form of taxes or other levies paid pursuant to an ultra vires demand by the authority is prima facie recoverable by a citizen as of right. Lord Bridge of Harwich of the House of Lords in the case of Tower Hamlets Borough Council (supra) remarked "that the retention of moneys known to have been paid under a mistake at law, although it is a course permitted to an ordinary litigant is not regarded by the Courts as a 'high- minded thing' to do but rather as a 'shabby thing' or a 'dirty trick'.
70. 43.We further observe that Government functionaries, especially in an Islamic Republic of Pakistan or in any democratic society governed by rule of law, are supposed to do justice and not to deprive the people of their rights on ground of technicalities. Objectives Resolution reflects the will of the people of Pakistan to establish an Order wherein the principles of social justice as enunciated by Islam shall also be fully observed. Resolution admits that sovereignty, over the entire Universe belongs to Allah Almighty alone and the authority which he has delegated to the State of Pakistan, through its people for being exercised within the limits prescribed by him, is a sacred trust. In our opinion the Refund is an "Amanah" (Ammanat) and the Public servants hold such amount as an "Amanah" and are supposed to refund/return same to the person entitled to it. Non- returning or non-refunding the "Amanah" is tantamount to khayanat and could be termed as sin and against the canon/teachings/injunction of Islam.
71. 44.We would further observe that the obligation to refund the tax remains with the Government/State and invariably when the refund claim is made, the revenue, department seeks to rely upon technicalities, limitation, alleged absence of mistake, shortage of fund, financial strangeness, budget target etc. conscious action on the part of the taxpayer for making payment, etc., so however as to deny the refund and also the claim for compensation on the refund. The willingness and promptness with which the Government is serious in enforcing collection and recovery of taxes by using all the powers vastly conferred is conspicuously absent when any claim for refund arises and for this purpose it is immaterial whether the authority who has to grant refund is a quasi-judicial authority or even the appellate authority. In most cases, the aggrieved tax-payers are forced to invoke the general law of contracts to exercise their right under section 72 of the Contract Act, 1872 coupled with Article 199 of the Constitution. Judicial intervention becomes inevitable to compel the authority concerned forming part of the Government to grant the refund to the citizen along with directions for payment of compensation/markup for delayed payment.
72. The aggrieved tax-payers have often to file suits against the Federation followed by appeals, writs, and complaints before FTO etc., so much so the aggrieved taxpayers in sonic cases where a tax is collected by the authority concerned not by misconstruing a statutory provision or rule valid in law but by acting under an invalid provision, the action of the authority would be clearly without jurisdiction both for the purpose of making assessment and for the purpose of enforcing collection and recovery of the tax and, hence, the invalidity of the action for levy and collection as being without jurisdiction can be certainly agitated by the aggrieved tax-payers the moment the invalid provision is declared ultra vires or struck down as unconstitutional by the court and assessments/ amended assessm ents declared illegal and annulled by higher appellate forum and in such cases, the aggrieved citizen can also invoke Article 185 to file a writ directly in the Supreme Court for the purpose of obtaining refund. In such cases, the fact that the aggrieved tax-payer did not take action for filing a civil suit in the civil court and/or for filing a writ in the High Court under Article 199 would not stand in the way. But depending upon the costs and time involved, the tax-payer can choose that remedy which is appropriate, easy, quick and efficacious in obtaining justice from court. Therefore, Inland Revenue Department ought to show same speed for refunding "the Refund" as they are showing-at the time of levying, collecting, enforcing recovery of taxes and heavy burden of penalty, additional tax, default surcharge and duty collection. Justice should not only be done but it must manifestly been seen to have been done. Inland Revenue Department ought to gracefully do justice whilst collecting, recovering and also refunding the "REFUND". Last but not the least we would cite the observation of Supreme Court in the case of HMM Ltd. 's case (1990) 77 STC 17 (SC).
73. "WE SEE NO GROUND AS TO WHY THE AMOUNT SHOULD NOT BE REFUNDED. REALISATION OF TAX OR MONEY WITHHOLD THE AUTHORITY OF LAW IS BAD UNDER .... CONSTITUTION .... SO THESE AMOUNTS BECOME COLLECTION WITHOUT THE AUTHORITY OF LAW. THE RESPONDENT IS A STATUTORY AUTHORITY IN THE PRESENT CASE. IT HAS NO RIGHT TO RETAIN THE AMOUNT SO FAR AND SO MUCH. THESE ARE REFUNDABLE. THERE IS NO SCOPE OF. ANY POSSIBLE DISPUTE UNJUST ENRICHMENT OF THE PETITIONER."
45. It is, therefore, directed to the CIR(A) to grant the stay for clear It is, therefore, directed to the CIR(A) to grant the stay for clear 30 daysV against the recovery through any mode of recovery or coercive measures including contra entries and decide the main appeal at the soonest possible time before the expiry of stay order and pass judicious speaking order after application of conscious mind, dispose of the appeal and issue the appellate order within (30) thirty days from the receipt of this order also stay the recovery and coercive measures for 30 days on fresh application If stay iiled by the taxpayer the same to be disposed of within a week from the receipt of this order and stay application. It may also be noted that appeal has been fixed for hearing on 18th May, 2015 and finally concluded for order on 21st May, 2015. However, the applicant / appellant would not seek any adjournment against stay Application and the appeal may be decided strictly on merits in accordance with the provisions of law as already reserved and order be disposed of and served on the taxpayer within 30 days from this receipt of this order before expiration of stay order. Till then, the Respondent/Department shall not adopt any coercive measures for the recovery of the disputed amount and to be released if any, already be initiated through what mode of recovery including contra entries adjustment. <u>CONCLUSION:</u> That the taxpayer can file Appeal against the refusal of stay order by the learned CIR(A). That the Tribunal may grant stay subject to provisions of Section 131(5) read with First Proviso of the Income Tax Ordinance, 2001.
74. That the Order for refusal of stay passed by the learned CIR(A) dated 08-05-2015 is vacated. That the taxpayer may file fresh stay application before the learned CIR(A). That the learned CIR(A) shall decide the stay application within a week from the receipt of stay application and shall allow clear 30 days stay for recovery of tax and not to take any coercive measures under the garb of tax recovery or refund adjustment.
75. That the learned CIR(A) shall decide main appeal on merit and also issue and serve his appellate order to the taxpayer before the expiry of stay order. As the CIR(A) had concluded the hearing of main appeal on 21st May, 2015 accordingly. Till then the Respondent/Department shall not adopt any coercive measures for the recovery of disputed tax amount through whatever mode of recovery through coercive measures or through any adjustment of determined refund. Judgment of Tribunal is binding on all sub-ordinate authority including CIR(A) as discussed supra.
46. Consequently, order of refusal of stay passed by the learned CIR(A) dated 08-05-2015 is hereby vacated. All Miscellaneous R. Applications as well as Mian Appeals for the Tax Years 2007, 2008, 2009, 2010 and 2011 stand disposed of.