SHAHID MASOOD MANZAR, JUDICIAL MEMBER - -- These three appeals have been preferred by the tax-payer against impugned appellate orders dated 26-06-2015 (for Tax Years 2010 and 2012) and 10-03-2016 (for Tax Year 2014) passed by learned Commissioner Inland Revenue (Appeals-I), Islamabad under Section 129 of the Income Tax Ordinance, 2001 (hereinafter referred to as 'Ordinance'). The said order was passed in consequence of the appeal lodged by the appellant against the amended assessm ent orders dated 28-04-2015 (for Tax Years 2010 and 2012) and 31- 072015 (for Tax Year 2014) issued under Section 122(5A) of the Ordinance passed by same Additional Commissioner Inland Revenue.
2. The appeal for the Tax Year 2014 is contested on the following grounds:---
(1) That the Order passed by learned Commissioner Inland Revenue (Appeals-I), Islamabad (hereinafter referred to "CIR(A)" is bad in law and opposite to facts and circumstances of the case.
(2) That the learned CIR(A) was not justified in remanding back the case after recording the reasons in favour of tax-payer which requiring the quashment or annulment of the proceedings.
(3) That the learned CIR(A) erred in remanding the case to ACIR who had erred in levying minimum tax on fare and freights receipts from passengers and cargo and treating them as "fee" for the purposes of sub-Section (3) of Section 113 of the Income Tax Ordinance, 2001. The chargeability of minimum tax is subject to the items which are exclusively included in the definition of "turnover".
The receipts of the appellant not being "fee" are outside the ambit of minimum tax under Section 113.
(4) That the learned CIR(A) was wrong in assigning illegal and un-harmonized meaning from the material which inadmissible under the law. The context and reference of "fare and freight" from carriage by air as mentioned in the Constitution in Entry No, 53 of the Part-I of Fourth Schedule has been ignored, intentionally and with male fide intent. This matter was confirmed by Zonal Commissioner in a letter to Provincial Revenue Authority which run as estoppel.
(5) That the learned CIR(A) was not justified that learned ACIR was patently ignored about the difference between "fare and freight" and "fee". The reference relied upon also support the contention of the appellant that "fee" does not include "fare and freight".
(6) That 'fare' and 'fee' are two different paradigms. Airline is receiving "fare" from passengers. It is not equivalent to "fee" from the passengers by any means of extended definition. Moreover, there is no deeming provision in Income Tax Ordinance, 2001 where it can be construed that the "fare" is equivalent to deemed as "fee". Even under Carriage by Air Act, 2012 do not refer any expression with reference to 'fee'. Order was passed u/s. 122(5A) is perverse and arbitrary.
(7) That the appellant craves leave to add, remove, modify, withdraw, amend, alter any or all grounds of appeal before and at the time of hearing.
The appellant has also impugned the levy of minimum tax under Section 113 of the Ordinance, through identical additional grounds for the Tax Years 2010 and 2012 in ITA Nos, 794 and 795/IB/2015.
Whereas the Appeals for Tax Years 2010 and 2012 has been urged on following grounds:--- Tax Year 2010
(1) That the Order passed by learned Commissioner of Inland Revenue (Appeals-I), Islamabad [hereinafter referred to "CIR(A)" is bad in law and opposite to the facts and circumstances of the case.
(2) That the learned CIR(A) was not justified in setting aside the case after recording the reasons in favour of tax-payer which requiring the quashment or annulment of the proceedings.
(3) That no case under Section 122(5A) can be subject to revision on account of change of opinion.
Same issue was freshly decided without any application of conscious mind whereas previous officer has correctly applied his mind.
(4) That it is clear case of change of opinion because previous learned Additional Commissioner Inland Revenue had allowed the relief.
(5) That the learned CIR(A) was not justified invoking Section 122(5A) of the Income Tax Ordinance, 2001 as there is no point/element in the assessment under Section 120 of Income Tax Ordinance being erroneous so far as prejudicial to the interest of revenue.
(6) That the learned CIR(A) was not justified the action of ACIR in disallowing the tax credit where the entire amount was paid under Section 133(2) (c) of Income Tax Ordinance, 2001.
(7) That learned CIR(A) was not justified in the action of ACIR disallowing the tax credit of Rs.
42.334,339 for the Tax Year 2008 by placing reliance on irrelevant judgment of Karachi High Court which is absolutely not applicable in the facts and circumstances of the appellant.
(8) That the appellant craves leave to add, remove, modify, withdraw, amend, alter any or all grounds of appeal before and at the time of hearing.
Tax Year 2012
(1) That the Order passed by learned Commissioner of Inland Revenue (Appeals-I), Islamabad [hereinafter referred to "CIR(A)]" is bad in law and opposite to the facts and circumstances of the case.
(2) That the learned CIR(A) was not justified in setting aside the case after recording the reasons in favour of tax-payer which requiring the quashment or annulment of the proceedings.
(3) That the learned CIR(A) was not justified the action of learned ACIR in invoking Section 122(5A) of the Income Tax Ordinance, 2001 as there is no point/element in the assessment under Section 120 of Income Tax Ordinance being erroneous so for as prejudicial to the interest of revenue.
(4) That the learned CIR(A) was not justified was not justified the action of learned ACIR in levy of WWF of Rs. 8,397,220 as the majority of High Courts in Pakistan have ruled the provisions of WWF Ordinance, 1971 as "unconstitutional" and "illegal".
(5) That the learned CIR(A) was not justified the action of learned ACIR in which he was not justified to disallowing the tax credit/tax refunds for the tax paid under Section 113(2)(c) of the Income Tax Ordinance, 2001 arising of Tax Years 2006, 2009, 2010 and 2011 to the tune of Rs. 137,255,721.
(6) That the learned CIR(A) was not justified the action of learned ACIR has merely attempted to create colossal tax liability without allowing the tax credit which were legally admissible under the law.
(7) That the appellant craves leave to add, remove, modify, withdraw, amend, alter any or all grounds of appeal before and at the time of hearing.
3. From the above grounds of appeal, the following issues were agreed to be adjudicated from both sides:
(i) Whether gross amount received by the airline under the head 'fare from passengers 'cargo freight, and "excess luggage" fall within the ambit of 'gross fee' for rendering of services for giving benefits including commission as postulated in the definition of 'turnover' under clause (b) of sub- section (3) of Section 113 of the Income Tax Ordinance, 2001? (in all tax years)
(ii) Whether the ACIR was justified in disallowing the carried forward of excess tax paid under sub- section (1) of Section 113 against the adjustment of tax liability in subsequent years by having change of opinion from her predecessor? (in Tax Years 2010 and 2012)
(iii) Whether appellant is liable to pay Workers Welfare Fund under Section 2(t) of the Workers Welfare Fund? (in Tax Year 2012).
4. Facts for the purpose of disposal of these appeals, in brief, are that the tax-payer is a public limited company engaged in the business of airline under the name and style of "Airblue Limited".
The tax-payer filed the return of income tax for the Tax Year 2014 on the due date and declared a loss of Rs. 639,238,125. Subsequently, the department initiated proceeding under Section 122(5A) of the Ordinance by the concerned Additional Commissioner IR (for short, 'ACIR') and a show-cause notice was issued to the company that no minimum tax under Section 113 of the Ordinance has not been charged on the 'turnover', which render the self-assessment of the appellant erroneous insofar as prejudicial to the interest of revenue. The ACIR not feeling convinced by the reply submitted by the tax-payer proceeded to amend the assessment order under Section 122(5A) of the Ordinance and raised a demand of Rs. 166,184,250 against the company. The said order was contested by the tax-payer in appeal before the first appellate authority which remanded the matter to ACIR for de novo consideration. The tax-payer still feeling dissatisfied with Order of the CIR (Appeals), has preferred this appeal before us. There are similar facts in the Tax Years 2010 and 2012.
5. Since the matter in hand is relating to interpretation of Section 113, minimum tax on the income of certain persons, it is appropriate to reproduce this Section as appearing in the Ordinance at the relevant point of time:--- Section 113 This Section shall apply to a resident company, an individual (having turnover of fifty million rupees or above in the lax year 2009 or in any subsequent tax year) and an association of persons (having turnover of fifty million rupees or above in the tax year 2007 or in any subsequent tax year) where, for any reason whatsoever allowed under this Ordinance, including any other law for the time being in force---
(a) loss for the year;
(b) the setting. off of a loss of an earlier year,.
(c) exemption from tax;
(d) the application of credits or rebates; or
(e) the claiming of allowances or deductions (including depreciation and amortization deductions) no tax is payable or paid by the person for a tax year or the tax payable or paid by the person for a tax year is less than one per cent of the amount representing the person's turnover from all sources for that year: Provided that this sub-section shall not apply in the case of a company, which has declared gross loss before set off of depreciation and other inadmissible expenses under the Ordinance. If the loss is arrived at by setting off the aforesaid or changing accounting pattern, the Commissioner may ignore such claim and proceed to compute the tax as per historical accounting pattern and provision of this Ordinance and all other provisions of the Ordinance shall apply accordingly.
Explanation.---For the purpose of this subsection, the expression "tax payable or paid" does not include tax already paid or payable in respect of deemed income which is assessed as final discharge of the tax liability under Section 169 or under any other provision of this Ordinance.
(1) Where this Section applies:
(a) the aggregate of the person's turnover as defined in subsection (3) for the tax year shall be treated as the income of the person for the year chargeable to tax;
(b) the person shall pay as income tax for the tax year (instead of the actual tax payable under this Ordinance), an amount equal to one per cent of the person's turnover for the year;
(c) where tax paid under sub-section (1) exceeds the actual tax payable under Part I, clause (1) of Division I, or Division II of the First Schedule, the excess amount of tax paid shall be carried forward for adjustment against tax liability under the aforesaid Part of the subsequent tax year Provided that the amount under this clause shall be carried forward and adjusted against tax liability for five tax years immediately succeeding the tax year for which the amount was paid.
(3) "turnover" means,---
(a) the gross sales or gross receipts, exclusive of Sales Tax and Federal Excise duty or any trade discounts shown on invoices, or bills, derived from the sale of goods, and also excluding any amount taken as deemed income and is assessed as final discharge of the tax liability for which tax is already paid or payable;
(b) the gross fees for the rendering of services for giving benefits including commissions; except covered by final discharge of tax liability for which tax is separately paid or payable;
(c) the gross receipts from the execution of contracts; except covered by final discharge of tax liability for which tax is separately paid or payable; and
(d) the company's share of the amounts stated above of any association of persons of which the company is a member.
6. The learned AR of the appellant has initiated the arguments and at the very outset submitted that the appellant is not subject to minimum tax under Section 113 of the Ordinance because the definition of 'turnover' in the aforesaid Section clearly excludes the 'fares and freights' from passengers, cargo and excess baggage and such receipts do not fall in the definition of 'fee'. He stated that in the recent judgment of the Hon'ble Supreme Court in the case of CIT v. Khurshid Ahmad reported as [(2016) 113 TAX 369 (S.C. Pak.)] has very clearly stated that:-- "....The meaning in the said sub-section has assigned to the word 'turnover' used in the Section 113 and therefore the phrase 'turnover from all sources' in sub-section (1) is to be read in conjunction with such definition which is exhaustive in nature and nothing can be added thereto, thus the argument of the appellant/petitioners' that 'turnover' cover all sources under various heads of income is not tenable in law."
The appellant had declared a net turnover of Rs. 16,618.425 million in its audited accounts relating to Tax Year 2014 on account of passengers, cargo and excess baggage. He submitted that the above proposition of law is based on the above dictum of the apex Court of the country according to which the minimum tax can only be charged or levied on the turnover under Section 113(3) of the Ordinance. Any item not covered in the definition of turnover shall be outside the ambit of minimum tax under Section 113 because the legislature has enacted the provision with restrictive meaning. He submitted that the appellant is not subject to minimum tax under Section 113(1) because the fare and freight received by the appellant fall outside the definition of 'turnover' as postulated in Section 113(3) of the Ordinance. He submitted that the case of the appellant does not fall within the ambit of the definition of turnover in terms of clauses (a), (c) and (d) of sub-clause
(3) of Section 113 of the Ordinance, respectively as it is not involved in the case of sale of goods, execution of contracts and is not a member of AOP. There is only possibility where the matter can come under the ambit of minimum is relating to services but in clause (b) of the aforesaid Section has not extended the minimum tax to all services but restricted this to "the gross fees for the rendering of services for giving benefits including commissions" only. This means turnover can only be applicable where the 'gross fees' is for the rendering of services and used in a very restricted manner. All such receipt which do not fall within the meaning or ambit of "gross fees" or "fees" are not subject to minimum tax under Section 113. Therefore, the appellant is not chargeable to minimum tax on the fare and freight received, however, if other services fall within the ambit of 'fee' or 'fees', then it is eligible to minimum tax.
7. The learned AR in this respect referred the Entry No, 53 to the Fourth Schedule (Federal Legislative List) to the Constitution of Pakistan, 1973 which read as under:--- "53. Terminal taxes on goods or passengers carried by railway, sea or air; taxes in their fares and freights."
From the perusal of above entry it is candidly clear that the Legislators were clearly aware of the distinction between 'fares and freights' and 'fee or fees'. This distinction can be further explored once we look into the meaning of above words from the legal literature.
7.1 'Fare' has been defined in various cases and legal dictionaries as follows:-- p. 346, Mitra's Legal and Commercial Dictionary (Eastern Law House)
'Fare' ..............Charges for carriage of passengers, charge for conveyance of a person; cost of communication; cost of transportation; money paid for passage; payment for the right of carriage; money paid for passage by land, air or water 'Fare' means the total amount of all charges of whatever nature (including charges, if any, for the provisions of food or accommodation) payable to the carrier by or on behalf of a passenger in respect of his inland journey. p. 961, Stroud's Judicial Dictionary of Words and Phrases, 7th Ed. (Vol. 2).
'Fare' includes all sums received or charged for the hire, fare, or conveyance of the passengers......
Payment for extra comfort in "reserved" carriage was part of the 'fare'. [1899] 2 Q.B. 267 'Fare' means, in the case of a person who decides to continue a journey beyond the point originally paid to, the full fare for the total journey less what has already been paid. [1963] 2 Q.B.
469 p. 606, Black's Law Dictionary, 6th Ed.
Fare. A voyage, journey, or _passage: The transportation charge paid by passenger. A paying passenger As used in connection with Interstate transportation means a rate of charge for the carriage of passengers, as approved by the proper governmental agency. Krause v. Pacific Mat.
Life Ins. Co. of California, 141 Neb. 5 N.W 2D 229, 232. p. 388, Words and Phrases - Permanent Edition, Volume 16 "Fare is a rate of charge for the carriage of passengers." McNeal Pipe & Foundry Co. v. Howland, 16 S.E. 857, 860. 111 N.C. 615, 20 L.R.A. 743: Chase v. New York Cent. R. Co., 26 N. Y. 523, 526.
In common acceptance, when used in relation to common carriers "fare" relates to the passengers, and not to freight, while compensation embraces both, so that a statute authorizing street surface railroads to convey persons and property in cars for compensation signifies an intention to authorize the carriage of freight. De Grauw v. Long Island Electric Ry. Co., 60 N. Y.S. 163, 167, 43 App. Div. 502.
A charge to a passenger of 10 cents in addition to the usual fare, making the total 3 cents over the lawful rate of fare, is "fare," within Railroad Law, providing a penalty for asking and receiving more than the lawful rate of fare, though the amount was repayable on presentation by the passenger of a slip given him on making the payment. Hogan v. Long Island R. Co., 12G WY S. 449; 450, 142 App. Div. 29.
The purchase of a ticket by a passenger is not the payment of a fare. Payment of fares is made to the conductor alone, whether such fare be paid by cash or by ticket. A fare is a payment that is made when the right of carriage is claimed. As defined by Webster's International Dictionary the word "fare" originally meant "journey," and such is still its connotation. When a ticket is accepted by the conductor, it becomes a fare, but not before. Shelton v. Erie R. Co., 66 A. 403, 407, 73 NJ. L, 538, 9 L.R.A., N.S., 727, 118 Am.St.Rep. 704, 9 Ann. Cas. 883.
7.2 'Freight' has been defined in legal dictionaries as follows:--- 'Freight' defined in p. 374, Mitra's Legal and Commercial Dictionary (Eastern Law House)
'Freight' in the ordinary mercantile sense means the reward payable to a carrier for the carriage of the goods. [Lime Leitao v. Union of India, AIR 1968 Goa 29].
'Freight' includes the profit derivable by shipowner from the employment of his ship to carry his own goods or other movables, as well as freight payable by a third party, but does not include passage money.
It signifies the earnings or profits derived by the shipowner or hirer of the ship from the use of it himself or by letting it to others to be used or for carrying goods for others [Allison v. Bristol Marine Insurance Co. (1876) 1 App Cas 209] p. 438, Wharton Law Dictionary Freight. The sum paid by a merchant or other person chartering a ship or part of a ship, or sending goods in a general ship, for the use of such ship or part, or the conveyance of such goods during a specified voyage or for a specified time, the freight is most commonly fixed by the charter-party, or bill of lading, but in the absence of any formal stipulation on the subject it would be due according to the custom or usage of trade. In the absence of an express contract to the contrary, the entire freight is not earned until the whole cargo be ready for delivery, or has been delivered to the consignee, according to the contract for its conveyance. p. 1931, Advanced Law Lexicon P Ramanatha Aiyar 3rd Edition 2005 Any transported goods, alternatively known as cargo.
2. A charge for transportation of goods or for the hire of a ship, aircraft, etc. for transporting goods.
3. The transportation of goods more slowly and cheaply than by express delivery. (Trade Finance)
Goods being carried (cargo); or money paid to a carrier for carrying goods or by a charterer to a shipowner for the use of cargo space yon a vessel. The latter is also called freightage. (Business Term)
Expenses incurred in transporting cargo. (Insurance) Freight in marine insurance denotes the cost of transporting goods or the hire charges of the vessel. If freight is paid in advance, it is usually merged. in the value of the goods being carried and insured under the cargo policy. Freight may also be insured separately where it is not paid in advance. It is at risk because if the ship fails to reach the destination, freight is wholly or partially lost and hence has to be insured. (Marine Insurance)
If a sum paid by a person chartering a ship or part thereof to the carrier under a contract of affreightment for the carriage and delivery of goods. (Carriage of Goods by Sea and Air)
Freight is a payment to be made to the ship for carriage and delivery, and until there has been carriage and delivery, the shipowner is not under ordinary circumstances entitled to demand freight at all Weir and Co. v. Girvin and C., (1899) 1 QB 193, p. 196. p. 666, Black's Law Dictionary, 6th Ed.
Freight. The price or compensation paid for the transportation of goods by carrier. p. 691, Black's Law Dictionary, 8th Ed.
Freight.
1. Goods transported by water, land or air;
2. Compensation paid to a carrier for transporting goods.
The price or compensation paid for the transportation of goods by carrier.
"Freight in common acceptation of the term, mean the price for actual transportation of goods by sea from one place to another; but, in its more extensive sense, it is applied to all rewards or compensation paid for the use of ship, including transportation of passengers. Commentaries on American Law. * 219.
P. 329-330, Words and Phrases Legally Defined, Vol. I, 4th Ed.
'The words "cargo" and "freight" do, prima facie, and in their natural and ordinary meaning, refer to goods only; and where, in the same document, occur the words "cabin passengers" and "passage.- money", and a contract is made between the same parties as to such latter mentioned subject- matter, the inference is almost irresistible, that the former words were not intended, within the meaning of the contracting parties, to comprise passengers and passage-money of any description; the parties showing themselves capable of making a contract as to passengers by their proper and specific name.' Lewis v. Marshall (1844) 7 Man & G 729 at 744-745, per cur 'What ... does the word "cargo" mean? It means the cargo of the ship, that is what is put on board the ship, or what the ship carries.... I find in Webster's Dictionary cargo defined as "the lading of freight of a ship, the goods, merchandise, or whatever is conveyed in a ship or other merchant vessel"; and Richardson gives its meaning as "the freight or lading of a ship". The question as to the meaning of the same word arose also in the case of Sargent v. Reed [(1745) 2 Stra 1228]'....
'What ... is a cargo? That is a question of fact. A very small quantity of goods in proportion to the carrying capacity of the ship could not be called a cargo. It must, to some extent, approach the carrying capacity.' Miller v. Bogner & Co. [1900] 1 QB 691 at 692-693, per Channell, J.
'In my opinion, goods which had been brought in a ship to a port would still be properly described and referred to as cargo while being unloaded, moved and, if the goods are stored after being unloaded, while being stored.' National Dock Labour Board v. John Bland & Co, Ltd. [1971] 2 All ER 779 at 789, HL, per Viscount Dilhorne 7.3 'Fee' has been defined in various cases and dictionaries as follows:--- 'Fee' or 'Fees' defined p. 614, Black's Law Dictionary, 6th Ed.
Fee. A charge fixed by law for services of public officers or for use of a privilege under control of government. Fort Smith Gas Co. v. Wiseman, 189 Ark. 675, 74 S.W. 2d 789, 790. A fixed charge or perquisite charged as recompense for labor; reward, compensation, or wage given to a person for performance of services or something done or to be done. p. 562, Legal Terms & Phrases - Judicially defined from 1947-2012 by M. Ilyas Khan 2013 Edition- Page 563.
In the case-law titled Rahimuelah Khan v. Govt. of. NWFP reported at 1990 CLC 550 (H.C. Pesh.) has laid down test for the determination of "fee". Test for determining a particular exaction to be "fee".
Certain tests for determining a 'particular exaction to be fee are as follows:---
(I) there must be co-relation between the amount realised as fee and the services rendered or benefits granted to those who are made to pay the same;
(ii) the general purpose for raising revenue alone for the Province or the Federation shall militate against 'quid pro quo' which is an essential component of the levy of fee. Such a 'quid pro quo' may not be determined with exactitude but there has to be significant relations between the fee charged and the services rendered; (iii)a sudden rise in the fee itself which cannot be defended on the afore-stated principle of 'quid pro quo' may metamorphose the levy into tax. If not all, substantial part of the revenue so raised may be earmarked for the benefits of those who pay the fee.
Fee. "... a charge or payment for a service. Charge fixed by law for service of public officers or for use of privilege under control of Governments. Sum payable to public officer for performing his function. Remuneration of lawyer etc. or any professional man"; 7Up v. L.D.A. 2003 CLC 513.
"It is a charge for something may be a privilege conferred or services rendered which cannot be accurately computed in terms of money and is left to be decided either through agreement or by the law or a statutory, authority at its discretion. When fee is fixed by law of under the authority of law it is also compulsory action like a tax because there is an element.of compulsion in such levies.
Generally an element of quid pro quo is present in case of a fee but absent in that of a tax"; Dewan Salman Fibres Ltd. v. Federal Government, PTCL 2003 CL 456.
"Tax is compulsory exaction of money by public authority for public purpose enforceable by law. In contrast, a fee is a sort of consideration for the services rendered which necessitate that there should be an element of quid pro quo"; Quetta Textile Mills v. Prov. of Sindh PLD 2005 Kar. 55 Ref: PLD 1977 Kar. 742, 1986 CLC 533,1990 CLC 550, NLR 1994 Tax 114.
"The fee is charged for the services rendered by the statutory functionaries and for the conferment of a benefit or a privilege as well"; Sapphire Textile Mills Ltd. v. Pakistan 2006 CLD 1523 p. 926, Words and Phrases Legally Defined, Vol. 1, 4th Ed.
Canada '.. In the Concise Oxford Dictionary (8th ed), "fee" is defined as:
1. a payment made to a professional person or to a professional or public body in exchange for advice or services. 2. money paid as part of a special transaction, for a privilege, admission to a society, etc. (enrolment fee).
"Charge" is said to be "a price asked for goods or services" or "a financial liability or commitment".
'Fees'.. the word "fees" is used in connection with occupational charges for the occupation of the municipal property and not in connection with any services that the municipality may render to the occupiers of its property'. AIR 1959 Born. 112.
'Fee' and 'Tax'. The distinction between a 'tax and a 'fee is well-established. A tax is a compulsory exaction of money by public authorities for public purposes enforceable by law and is not a payment for services rendered. The main distinction between them lies primarily in the fact that a tax is levied as a part of common burden, but a fee is a payment for a special benefit or privilege.
PLD 1975 Lah. 748; 1992 SCM R 750; 1990 CLC 638; 1990 CLC 197.
'Fees'... Fees may be of various kinds, for example fee for admission to college, university, a club or a society or for a professional and skilful services rendered by doctor, lawyer, an engineer for services of public functionaries. It may be a payment settled through private contract or fixed by or under the law. it is a charge for something, may be a privilege conferred or services rendered, which cannot be accurately computed in terms of money and is deft to be decided either through agreement or by law or through statutory' authorities in their discretion. Ayaz Textile Mills v.
Federation, PTCL 1993 CL 746.
'Fees'... two elements are essential in order that a payment may be regarded as a fee. In the first place, it must be levied in consideration of certain services which the individuals accept either willingly or unwillingly, and in second place, the amount collected must be earmarked to meet the expenses of rendering these services and must not go to the general revenue of the State to be spent for general public purposes. AIR 1975 SC 846, p. 851, AIR 1954 SC 282, p. 294-5, AIR 1954 SC 400, p. 403, AIR 1954 SC 388, p. 395.
8. Learned AR submitted that the word 'fee' is appearing on different Sections of the Ordinance, e.g., Sections 2(23), 2(46), 2(63), 12(2), 18(1)(e), 21(1), 66AB, 101(12), 105, 127(4), 131(2)(c), 140, 152, 153, 236A, 237 etc.). In the entire Ordinance, the only meaning emanates is reward or compensation for 'services rendered or to be rendered with reference to professional services' fixed by custom or laws.
9. Learned AR urged that in the recent past a situation had emerged wherein the PRA (Punjab Revenue Authority) has issued a letter for registration of the appellant for payment of Sales Tax to PRA instead of FBR (i,e,, Large Tax-payers Unit), in order to avoid non-compliance from either authority, the appellant has sought guidance from the Zonal Commissioner Inland Revenue, Large Tax-payers' Unit, Islamabad. In the aforesaid situation, the Zonal Commissioner IR had communicated to the appellant vide letter No, 273, dated 10-11-2015 is reproduced as under:--- "2. This is with reference to the letter seeking guidance for payment of taxes on passengers by Airlines. The Punjab Revenue Authority (PRA) is pressing you for deposit of tax levied on passengers in the High Court till decision of writ petition. However you are being informed that jurisdiction of taxes on passengers of airlines lies with Federation and not the Provinces.
However, as per the Constitution of Pakistan, 1973, through Article 70(4), the Federal Legislative List has been defined as the Federal Legislative List in the Fourth Schedule upon which legislation is a Federal matter and remains to be; even 'after introduction of the 18th Amendment to the Constitution of Pakistan, 1973. Entry at Serial No, 53 of the Fourth Schedule to the Constitution of Pakistan, 1973 clearly states that terminal taxes on passengers and freight carried by air, falls within the Federal Legislative List and therefore cannot be legislated by a. body other than "Mailis-e-Shoora". Relevant entry is reproduced hereunder for ready reference:-- "53. Terminal taxes on goods or passengers carried by railway, sea or air; taxes on their fares and freights."
In light of the foregoing, it is clear that the Punjab Revenue Authority has taxes a subject which it was not empowered/authorized to legislate upon as per the Constitution of Pakistan, 1973.
Furthermore, the Honourable Supreme Court of Pakistan in the case reported as PLD 1963 SC 137 has decided in favour of the Federation in matters pertaining to such terminal taxes. It is also pertinent to mention that in the instant case where legislation done by the Provincial Assembly is repugnant to the. Act of Majlis-e-Shoora shall prevail. Article 143 is reproduced hereunder for ready reference:--- '143. If any provision of an Act of Provincial Assembly is repugnant to any provision of an Act of Majlis-e-Shoora (Parliament) with Majlis-e-Shoora (Parliament) is competent to enact, then the Act of Majlis-e-Shoora (Parliament), whether passed before or after the Act of the Provincial Assembly, shall prevail and the Act of the Provincial Assembly shall, to the extent of the repugnancy, be void."
5. The High Court has not ordered you to deposit the taxes with the Court till decision of the writ petition. As explained above terminal taxes on goods and passengers fall in Federal Legislative List and can't be taxes by a provincial authority. You are therefore advised to deposit the taxes as per history with LTU, Islamabad in accordance with correct interpretation of law as enunciated in the Constitution of Pakistan."
It is clear from the above letter of the CIR and is conceded position on part of department that the receipts of the appellant are for 'fares and freight', and such 'fares and freights' are subject to terminal taxes on goods and passengers. When consideration is paid in respect of carriage of goods and/or passengers, such receipts are termed as "cargo" (or freight) and "fare" receipts which are classified as 'terminal taxes' otherwise, FED cannot be imposed on this by the Federal Board of Revenue on the airlines.
10. The learned AR argued that the definition of 'turnover' is restrictively defined. He submitted that according to Interpretation of Statutes by. N.S. Bindra (8th Edition), p. 45, Ordinarily, when it is intended to exhaust the significance of word interpreted the word 'means' is used by Legislature.
The use of word 'means' shows that the definition is hard and fast definition and that no other meaning can be assigned, to the expression than is put in the definition." He submitted that in the recent case of CIT v. Khurshid Ahmad reported as ((2016) 113 TAX 369 (S.C. Pak.)), the Honourable Supreme Court of Pakistan has held that:--- "Where the legislature defines, in the same statute, the meaning of a word used therein, such definition most authoritatively expresses its intent which definition and construction is binding on the Courts. When a word has been defined to mean such and such, the definition is prima facie restrictive and exhaustive. Upon a plain reading of the definition of 'turnover' provided in Section 113(3) of the Ordinance of 2001 it is manifest that it (turnover) means: (i) gross receipts derived, from the sale of goods; (ii) gross fees for the rendering of services or giving benefits, including commissions; (iii) gross receipts from the execution of contracts; and (iv) the company's share of the amounts stated above of any association of persons of which the company is a member. The meaning in the said sub-section has been assigned to the word 'turnover' used in Section 113 and therefore the phrase 'turnover from all sources' in sub-section (1) is to be read in conjunction with such definition which is exhaustive in nature and nothing further can be added thereto, thus the argument of the appellants/petitioners that 'turnover' covers all sources under various heads of income is not tenable in law."
From the above judgment it is clear that all sources mentioned in the definition of turnover shall be subject to minimum tax under Section 113 of the Ordinance, all the sources of income under various heads of income are not included in the above definition. In other words, all the revenues of a company are not subject to minimum tax but only those which fall under the definition shall be liable to minimum tax under Section 113 of the Ordinance.
11. On his turn, the learned Departmental Representative stated that the principal activity of the tax payer is to provide air transport and cargo services inside and outside Pakistan for which the appellant received. 'fare' and 'freight'. He submitted that 'fare' and 'freight' received by the appellant fall within the ambit of term 'fee'. He supported the Order of the learned ACIR and prayed that fares and freight may be declared as fee and the appeal of the appellant may be rejected.
12. We have heard the arguments advanced by the rival parties and have carefully gone through the relevant record available on the file as well as case-law referred before us on behalf of the appellant. It is settled law that an enactment has the legal meaning taken to be intended by the legislator. In other words the legal meaning must correspond to the legislative intention.
By having a bird eye view of sub-section (3) of Section 113 of the Ordinance, there is marked difference between clause (b) and clauses (a) & (c). In clause (b) that word 'fees' has been used instead of 'receipts'. This deviation in clause (b) is a clear cut indication of varied intention on part of legislator. This intention can be further ascertained that the "services" are restricted only to the extent of 'gross fees' whereas the 'sales of goods' and 'execution, of contract' are brought into the net of minimum tax on 'gross receipts'. This means the legislator has used word 'gross receipt' for 'sales of goods' and 'execution of contract' to make the scope wide and broad in comparison to 'gross fees' from services. According to Black's Law Dictionary (6th Edition) the word 'receipt is a writing which acknowledges taking or receiving either money or goods which have been delivered.
That which comes in, in distinction from what is expended, paid out, sent away and the like.' In PLD 1963 Kar. 962, 'it was held that the essential ingredient of receipt is the acknowledgement of money or bill of exchange, cheque or promissory note, moveable property etc., having been received." In our considered opinion that the scope of clause (b) is a narrower to that of clauses (a) and (c), if placed, both, in juxtaposition. Once the restricted scope of sub-section (b) of Section 113 of the Ordinance is ascertained, the next question is to determine whether the 'fare' fall within the meaning of "fees" in its ordinary meaning.
13. Before adverting to ordinary meaning it is appropriate to list down the linguistic cannon of construction with reference to interpretation of particular words and phrases. According to Halsbury's Laws of England, 5th Edition, Volume 96 (2012), para No, 1195, has laid down the linguistic canons of construction reflect the nature and use of language generally:--- It is one of the linguistic canons applicable to the construction of legislation that where an enactment has more than one grammatical meaning then, other things being equal, preference is to be given to the ordinary and natural meaning of the word or phrase in question, that is its proper and most known signification, or, if there is more than one ordinary meaning, to the most common and well-established of the possible meanings. The context may, however, quickly drive the interpreter to one of the other meanings which may be a quite different meaning, or a sub- division of the common meaning.
Where the words used are familiar and are in common and general use in the English language, it is inappropriate for the Court to try to define them further by judicial interpretation and to lay down their meaning as a rule of construction.
According to Bennion on Statutory Interpretation, 6th Edition, Section 363, has laid down the principles linguistic canons of construction with reference to interpretation of particular words and phrases.
In statutory interpretation is to consider the ordinary meaning of the word or phrase in question, that is its proper and most known signification. If there is more than one ordinary meaning, the most common and well-established is preferred (other things being equal).
The first task of the interpreter. is to arrive at the ordinary meaning of the word or phrase in question.
Whether or not that is to be regarded as its legal meaning within the relevant enactment is a separate matter. In the case of an ordinary English word, where Parliament chose not to give it any special meaning, there is no need for the Courts to define it. The above contrasts the concept of an ordinary word with the concept of ordinary meaning. It would be elegant to avoid this repetition be speaking of ordinary and extraordinary words and their usual or unusual meanings.
Judicial usage is too strong for this rationalization, but it is useful to bear it in mind. It has been said that a word like necessarily is a 'linguistically irreducible' word which Judges should not replace with a synonym or paraphrase.
In another major legal encyclopaedia, Stair Memorial Encyclopaedia, (The Laws of Scotland: Stair Memorial Encyclopaedia) 5th Edition, Volume 96 (2012). para No, 1131-32, laid down certain presumptions which should be kept in mind while interpreting certain words and phrases in an enactment:--- 1131. Presumption against taking away rights or imposing burdens.
Enactments which take away rights or impose burdens are to be strictly construed, and if there is any ambiguity the construction which is in favour of the freedom of the individual should be adopted.
[i]if there is any ambiguity about the extent of that derogation, the principle is clear that it is to be resolved in favour of maintaining law rights unless they are clearly taken away'
In James Ross v. Lord Advocate the manufacturers of 'Chaco-Puff' brought an action against the Lord. Advocate as representing the Minister of Food to have it declared that 'Choco-Puff' was not 'chocolate confectionery' within the meaning of the Chocolate, Sugar Confectionery and Cocoa Products Order 1949, SI. 1949/781. On the question of the burden of proof Lord Birnam said that: 'if the question of onus were important my view would be that the presumption is in favour of freedom and that in cases of doubt the burden is upon the Ministry to show that a particular foodstuff is covered by the terms of the Order'.
1132. Presumption in favour of popular construction.
General statutes are presumed to use words in their popular sense or, as Lord Reid has put it: 'Any decision by any Court... whether the words of an Act apply to the facts of a particular case must, unless the matter is concluded by authority, ultimately depend on its knowledge of the usage of the English language in ordinary affairs of the kind with which the particular Act is concerned'.
Thus 'five miles square' was interpreted in its popular, rather than in its strict mathematical, sense as meaning an area of twenty-five square miles, irrespective of whether it formed a geometrical figure five miles squarer Again, 'accident' has been given its ordinary meaning of an unintended occurrence with an adverse physical result. Sometime, however, words are given a strict legal interpretation. Moreover, if an 'Act is one passed with reference to a particular trade, business, or transaction, and words are used which everybody conversant with that trade, business, or transaction, knows and understands to have a particular meaning in it, then the words are to be construed as having that particular meaning, though it may differ from the common or ordinary meaning of the words'.
The crux of above is to arrive at the ordinary meaning of the word or phrase in question its proper and most known signification should be considered, however, if there is more than one ordinary meaning, the most common and well-established meaning should be preferred.
14. Now, we have to consider whether 'fee' or 'fees' have equivalent meaning to that of 'fare and freight'. This is the linchpin of the case. The learned ACIR has not been able to answer this question with utmost clarity and authority but resort to answer this question by browsing the internet instead of consulting authoritative legal material. We will examine each definition and dilate upon as under:-- ACIR's relied Material and Source Our Comments (a)A fee is the price one pays as remuneration for services..."
"......Arilines have long charged fees for changing flights, and for excess luggages. However, with the oil price increases since 2003, many are increasing fees. In May 2008, it was announced that some would be charging even for just one checked bag, making it nearly impossible to avoid. Airlines have also invented fees for nearly every "service" that has always previously been included the ticket price. While the extra income may be necessary to prevent bankruptcy, the practice of not including mandatory fees in the stated price is deceptive. Airports also charge landing fees to airline in order to cover costs, particularly airport security.
(https:llen.wikipedia.org/wiki/Fee#Air travel]The meaning of fee is the price one pays as remuneration for service. This meaning is correct to this extent so far human element is involved in such services.
Although there is detail discussion on Fee with reference to changing flights and excess luggage. In the Order of ACIR, we find no observation where she might have attempted to find whether the appellant has ever received such fee or fees from its Customers.
Although the airlines pays landing fee but this is directly reimbursed as such. All the facilities are included in the fare or ticket.
No case is made out by referring this definition which enable the department to treat fare or freight as fee (b)The term fee has also been defined as follows:-- No case is made out by referring this definition which enable the "1. A payment made to a professional person or to a professional or public body in exchange for advice or services....
2. To make a payment to (someone) in return for services"department to treat fare or freight as fee.
(c) A sum paid or charged for a privilege"
Dictionary.comNo case is made out by referring this definition which enable the department to treat fare or freight as fee.
(d)According to Merriam Webster dictionary the term" fee" has been defined as follows:--- b. a sum paid or charged for a service."No case is made out by referring this definition which enable the department to treat fare or freight as fee.
(e) Fee (charge), Noun:-- Charges for services, compensation, compensation for labour, compensation for professional services, consideration, cost, disbursement, dues, enactment, expenditure, expense, fare, fixed charge, payment, price, recompense, reward, toll, wage ....
(http://legal.dictionary.thefreedictionary .com/fee)The learned ACIR has not used the Ordinary meaning. The Ordinary meaning in aforesaid website are defined as under:- "1. A fixed sum charged, as by an institution or by law, for a privilege; a license fee: tuition fees.
2. A charge for professional services: a surgeon's fee.
3. A tip: a gratuity.
4. Law See fee simple.
5. a. In feudal law, an estate in land granted by a lord to his vassal on condition of homage and service.
Also called feud, fief. b. The land so held.
The Officer has not used ordinary meaning but resorted to Thesaurus synonymous which are not permitted din determination of Ordinary Meaning.
(f) "..........1. an amount of money that you pay for professional advice or services www.Oxforddictionaries.com/definition/learner/feeNo case is made out by referring this definition which enable the department to treat fare or freight as fee.
(g)An amount of money paid for a particular piece of work or for a particular right or service."
(Dictionary.cambridge.org/dictionary/English/fee)No case is made out by referring this definition which enable the department to treat fare or freight as fee.
(h) "2. A charge made for a privilege.
(www.collinsdictionary.com/dictionary/english/feeNo case is made out by referring this definition which enable the department to treat fare or freight as fee.
"A fixed sum charged as by an institution or by law, for a privilege, a license fee, tuition fees......."
(www.yourdictionary.com/feeNo case is made out by referring this definition which enable the department to treat fare or freight as fee.
The above definition do not help the department for the determination of the fact that "fare" is equivalent to "fee" or "fees". Even if we agree with the respondent department, only "fee' received (if any) on account excess luggage and changing flight can only be construed as "Fee" for the purposes of Section 113(3) of the Ordinance which discussed nowhere in the 'Order'. So, the definition submitted by the ACIR further reinforce the views of the opposite side.
15. We have also gone through the contents of the letter produced before us with reference to Federal Excise Duty vis-a-vis Sales Tax on Services. In the aforesaid letter No, 273 dated 10-11-2015, the Commissioner Inland Revenue, candidly referred to Entry No, 53 of Part-I of the Fourth Schedule to the Constitution of Pakistan, 1973 wherein it is very categorically stated that the "terminal taxes" are applicable on 'fares and freights' are the subject-matter of the Federal Government. The perusal of the Fourth Schedule, ibid, reveals that in Entry No, 54 is relating to "Fee in respect of any of the matter in this Part, but not including fees taken in any Court."' Analysing Entries at 53 and 54 of Fourth Schedule of the Constitution in juxtaposition makes it crystal clear that Constitution make a visible and categorical demarcation between the "Fares and Freights" and "Fees" by discussing it in different entries. We, therefore, are clear in our minds that words 'fares' and 'freights' vis-a-vis 'fee' or "fees" are not the same in its nature, character and genre, so far as ordinary as meanings are concerned. We, therefore, cannot agree with the interpretation of department and are of the opinion that the 'fares and freights' are not part of "gross fees" as defined in clause (b) of Section 113(3) of the Ordinance. Since the gross receipts on account of 'fare and freight' are not 'gross fees', them minimum tax under Section 113 is not attracted to appellant.
We therefore answer the question in negative. The question was 'Whether gross amount received by the airline under the head 'fare from passengers', 'cargo freight" and "excess luggage" fall within the ambit of 'gross fee' for rendering of services for giving benefits including commission as postulated in the definition of 'turnover' under clause (b) of sub-section (3) of Section 113 of the Income Tax Ordinance, 2001.'
16. In the light of above discussion, we are inclined to accept the appeal and allow the necessary relief to the appellant by deleting minimum tax under Section 113 of the Ordinance by setting aside the Orders passed by first appellate authority and Adjudicating Officer for Tax Year 2014. This Order shall also be apply mutatis mutandis to appeals titled ITA Nos, 794 & 795/IB/2015 for Tax Years 2010 and 2012 filed by the appellant.
17. Regarding the above-referred second issue, without prejudice to our decision in Tax Years 2010 and 2012 supra, the appellant/tax-payer is entitled for the carried forward of excess tax paid for adjustment against tax liability, had the minimum tax provisions under Section 113 applicable to the company for the following reasons:---
(i) In the Tax Year 2010, the proceedings under Section 122(5A) of the Ordinance were completed on 02-11-2012 by the Additional Commissioner Inland Revenue. Later on the said order has attained the finality as no appeal was filed by the appellant. In these proceedings the tax-payer was allowed adjustment of carried forward tax under Section 113(2)(c) read with the proviso. We have, carefully, examined the aforesaid Order and observed that adjustment was allowed with conscious applications of mind and in line with statutory provision/limits. Later on, another ACIR (his successor-in-office) vested with the same powers and jurisdiction has reached to a totally different view and disallowed the statutory adjustment by change of opinion. It is settled principle of law, once a matter is concluded with conscious application of mind, any subsequent taxing authority of same rank and jurisdiction cannot take different view on the same primary facts. Such change of opinion is not permitted under the law, thus, learned ACIR has transgressed her jurisdiction and acted illegally by exercising vested powers arbitrarily in the proceedings under Section 122(5A) of the Ordinance. In reaching this conclusion, we are fortified with the following judgments of the Hon'ble superior and higher Courts:---
(a) Adulji Dinshaw Ltd. v. ITO reported as 61 TAX 205 (SC Pak.)
(b) Arafat Woolen Mills Ltd. v. ITO reported as 61 TAX 46 (SC Pak.)
(c) Services Industries Ltd. v. CIT reported as 94 TAX 237 (HC Lah.)
(d) PICIC Ltd. v. CIT reported as 97 TAX 64 (HC Kar.)
(e) CIT v. American Express Intl. Banking Corp. reported as 67 TAX 30 (HC Kar.)
(f) Republic Motors Ltd. v. ITO reported as 62 TAX 8 (HC Kar.)
(g) N.V. Philip etc., ITO reported as 61 TAX 159
(h) CIT v. Syed Khalid Kamal reported as 2003 PTD 1093.
In the light of above judgments, no action can be taken merely on the basis of change of opinion.
Such an action, if taken, is illegal beyond any scintilla of doubt.
(ii) While passing the Order, the ACIR has relied on the ratio decidendi in the case reported in ITRA No, 132 of 2011 dated 07-05-2013 in the case reported as 2013 PTD 1420. We have also examined this issue and are of the considered opinion that no ratio decidendi can be applied from the above judgment in the material facts and circumstances of this case. We find it appropriate to cite the extract of Section 190 of the famous treatise titled FUNDAMENTAL LAWS OF PAKISTAN by A.K. Brohi, wherein we find "How to Determine the Ratio Decidendi of Case". In the conclusion of Section 190 of the above treatise the author is of the view:--- "The first step then is to determine the material facts on which the Judge has based his opinion.
Having found the material facts, the ratio decidendi would be easy of discernment - it would be the conclusion reached by the Judges on the basis of the material facts and the exclusion of immaterial facts. Professor Paton is, therefore, right when he points out that "no Court has the power to lay down a binding rule of law on facts which are not before it. To discover whether the ratio is binding in a subsequent case we must see if the material facts are identical. If they are not then the first decision is not binding on the Court that deals with the second. This close emphasis on material facts distinguishes the English attitude to decided cases from that of continental jurists who in general regard a judgment as a theoretical answer to a rather abstract question of law."
In this case the learned ACIR has attempted to apply the 2013 PTD 1420 recklessly and without any logical reasoning. She had not even bothered to compare the facts of case relied upon and case in hand. The case in hand is squarely, distinguishable, from the judgment of the Hon'able Sindh High Court in 2013 PTD 1420 as relied upon by the ACIR on the following count:---
(a) The case relied upon by the ACIR deals with the Tax Year 2009. In this tax year, the Finance Act, 2008 has omitted Section 113 from the Ordinance, 2001. It is important to note that the case in hand pertains to Tax Years 2010 and 2012 when the provisions of Section 113 was reinstated by the Finance Act, 2009. In our humble opinion, the dictum of Hon'ble Sindh High Court for Tax Year 2009 can only be applied to other identical cases of Tax Year 2009 bearing the same material facts. It cannot be applied in any subsequent year till Section 113 got omitted from the statute in the same manner as was made in Tax Year 2009. Since statutory provisions of Section 113 were revived by Finance Act, 2009 (for Tax Year 2010), the principle settled in Tax Year 2009 cannot be applied in Tax Year 2010 because of material change in facts as well as legislation.
(b) According to para 3 (p. 1423) of the judgment reveals that the case relied upon by the ACIR contain a controversy of Final Tax Regime. The case in hand is a case under the Normal Tax Regime. Final Tax Regime (FTR) and Normal Tax Regime (NTR) are two different streams in the Statute called Income Tax Ordinance, 2001. Therefore, it was erroneous on part of the ACIR that she applied the ratio of a case which do not fall in final tax regime. Therefore, the said judgment cannot be applied on the facts and circumstances of the case.
(c) The provision of clause (c) of sub-section (2) of Section 113 of the Ordinance relating to impugned tax years carries statutory guarantee and give vested right in the hands of tax-payer for adjustment of actual excess tax paid for next five years, it read as under:--- "(c) where tax paid under sub-section (1) exceeds the actual tax payable under Part I, Division ll of the First Schedule, the excess amount of tax paid shall be carried forward for adjustment against tax liability under the aforesaid Part of the subsequent tax year: Provided that the amount under this clause shall be carried forward and adjusted against lax liability for [five] tax years immediately succeeding the tax year for which the amount was paid."
(The word "three" substituted by the Finance Act, 2011).
No different interpretation is Permissible ;except that transpires from the ordinary meaning of the provision cited above. No officer is allowed to play with the plain meaning.
(d) The proposition of taxing law in this regard is well-settled and approved by the Hon'ble Superior Court of the Country in the following words:--- "If the person sought to be taxed comes within the letter of the law he must be taxed, however great the hardship may appear to the judicial mind to be. On the other hand, if the Crown, seeking to recover the tax, cannot bring the subject within the letter of the law, the subject is free, however apparently within the spirit of the law the case might otherwise appear to be. In other words, if there be admissible, in any statute, what is called an equitable construction, certainly such a construction is not admissible in a taxing statute, where you can simply adhere to the words of the statute..... It is urged that in a taxing Act clear words are necessary in order to tax the subject.
Too wide and fanciful a construction is often sought to be given to that maxim, which does not mean that words are to be unduly restricted against the Crown, or that there is to be any discrimination against the Crown in those Acts. It simply means that in a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used."
Since the ACIR has failed to observe the delicacies attached with the vested power and reached to misleading conclusion. We shall also answer this question in "Negative". The question was 'Whether the ACIR was justified in disallowing the carried forward of excess tax paid under sub-section (1) of Section 113 against the adjustment of tax liability in subsequently years by having change of opinion from her predecessor?'.
From the above discussion, the Orders passed by the ACIR and learned CIR (A) for Tax Years 2010 and 2012 are hereby set aside.
18. The next and the last issue in appeal of Tax Year 2012 is with reference to levy of Workers Welfare Fund. It is argued that the action of ACIR for the levy of VVWF of Rs. 8,397,220 is not justified as the majority of High Courts in Pakistan have ruled the provisions of WWF Ordinance, 1971 in this manner as "unconstitutional" and "illegal". The learned AR of the appellant submitted that recently on 10-11- 2016, Hon'ble Supreme Court of Pakistan has upheld/affirmed the judgment of the Hon'ble Lahore High Court in the case of Workers Welfare Fund v. East Pakistan Chrome Tannery (Pvt.) Limited. The Hon'ble Supreme Court has affirmed the views expressed by the Hon'ble Lahore High Court. Learned AR of the appellant has submitted that the appellant is not subject to Workers Welfare Fund because it is not an 'industrial establishment' as defined in Section 2(f) of the Workers Welfare Fund Ordinance, 1971. He submitted that the Section 2(f) of the Ordinance, 1971 defines an 'industrial establishment' as under:--
(f) "industrial establishment" means--- (i)any concern owning or managing a factory, workshop or other establishment in which articles are produced, adapted or manufactured with the aid of electrical, mechanical, thermal, nuclear or any other form of energy transmitted mechanically and not generated by human or animal agency;
(ii) any concern working a mine or quarry or natural gas or oilfield; (iii)any concern running a tramway or motor omnibus service;
(iv) any concern engaged in the carriage of men and goods by inland mechanically propelled vessels;
(v) any concern engaged in the growing of tea, coffee, rubber or cinchona; and
(vi) any other concern or establishment which the Federal Government may, by notification in the official Gazette, declare to be an industrial establishment for the purposes of this Ordinance, but does not include any concern or establishment which is owned by Government or by corporation established by Government or by a corporation the majority of the shares of which is owned by Government; The learned AR submitted that the above definition is not applicable on the appellant because the tax-payer is not:---
(i) owning or managing a factory, workshop or other establishment in which articles are produced, adapted or manufactured with the aid of electrical, mechanical, thermal, nuclear or any other form of energy transmitted mechanically and not generated by human or animal agency:
(ii) involved in any concern working a mine or quarry or natural gas or oilfield.;
(iii) involved in any concern running a tramway or motor omnibus service;
(iv) involved in any concern engaged in the carriage of men and goods by inland mechanically propelled vessels;
(v) involved in any concern engaged in the growing of tea, coffee, rubber or cinchona; and
(vi) involved in any other concern or establishment which the Federal Government, by notification in the official Gazette, has declared it to be an industrial establishment for the purposes of this Ordinance.
It is evident from the above checklist that, the levy was made by the tax department under the pretext of amendments brought in by the Finance Act, 2006 and Finance Act, 2008 wherein the amendments were declared unconstitutional by the Hon'ble Lahore High Court, which was subsequently affirmed from the Hontle Supreme Court of Pakistan. Therefore, no WWF is payable by the appellant due to the fact that it does not fall under the definition of industrial establishment as postulated in Section 2(f) of the Workers Welfare Fund Ordinance, 1971 (XXXVI of 1971).
19. We have considered the submissions of the appellant and inclined to agree with the submission of learned AR in the light of judgment of Hon'ble Supreme Court in the landmark case of Workers Welfare Funds, M/O Human Resources Development, Islamabad v. East Pakistan Chrome Tannery (Pvt.) Ltd., reported as PLD 2017 Supreme Court 28. In the light of above judgment, we answer the question in 'negative'. The question was Whether appellant is liable to pay Workers Welfare Fund under Section 2(f) of the Workers Welfare Fund?' which is decided in favour of the appellant/tax-payer.
20. Before parting with, judgment, we feel necessary to mention here that there was frequent usage of un-accredited Internet sources and "Wikipedia" while searching the legal meaning of the "fee". Wikipedia is a free online source, comprised of user generated content, written by volunteers.
It is not a static source, the information can be there one day and gone the next day and the quality of its information depends on the quality of the contributors. It is observed that the learned author of the Order, who arrived at "Wikipedia" (via some search engine) to find the meaning of "Fee" and has not resorted to confirm through hyperlink to ascertain whether it is from a reliable source or not. She (ACIR) has not even bothered to take, time to read Wikipedia's own legal disclaimer, otherwise surely the error of usage would never have happened.
"There is absolutely no assurance that any statement contained in the article touching on legal matter is true, correct or precise. Nothing on Wikipedia Organization or of any project of Wikimedia Foundation Inc., should be construed as an attempt to offer or-render a legal opinion or otherwise engage in the practice of law".
When searching for description of major legal works, e.g., Halsbury's Laws of England, Halsbury's Laws of Canada, Halsbury's Laws of Australia, Corpus Juris Secundum, American Jurisprudence "the premier legal encyclopaedias covering all areas of law", no such equivalent disclaimer one can find. Certain judgments of US Jurisdiction were brought to our notice, where the Courts have wisely refused to take judicial notice of Wikipedia content these are referred as under:--
1. In Steel v. MC Makon (No, CIV 5-05-1874 DAD P, 2007 WL2758026 (21-09-2007), the Court denied plaintiff request to take judicial notice of Wikipedia entry "In Shadows of War on Terror" and agreed with defendant's objection that it was "not appropriate subject for judicial notice, hearsay and not authenticated".
2. The Texas Court of Appeal in the case of Flores v. State [No, 14-06-00813-CR, 2008 WL 4683960 (23-10-2008)] refused to take judicial notice of Wikipedia Contents on the ground that 'anyone can. edit [a Wikipedia] article, anonymously, hit and run'.
3. Another Court denied a party's request to take judicial notice of Wikipedia content because 'Wikipedia may not be reliable source of information" in the case of Capcom Co. v. MRK Group Inc., [No, C 08-0904 RS 2008 WL 4661479].
A Wikipedia entry should not be relied upon as the only basis for a Court's holding, reasoning, or logic. The rejection of Wikipedia as a legitimate basis for a Court's holding, reasoning, or logic by Badasa v. Mukasey (540 F.3d 909, 910 (8th Cir. 2008) and other cases is clearly correct given the numerous shortcomings of Wikipedia discussed in this article.
5. Wikipedia should not be cited when a more authoritative source exists for the information. Courts frequently cite a Wikipedia entry instead of a more authoritative source. Some relevant examples include the choice of Wikipedia to define the term "C/O" instead of a definition in Black's Law Dictionary (C&R Forestry, Inc. v. Consol. Human Res., AZ. Inc., No, CV 05-381- N-EJL. 2008 WL 4000161).
In the light of above 'discussion and case-law it has been held that Courts should not accept citations of Wikipedia entries to demonstrate the existence or non-existence of a material fact.
Anyone can edit a Wikipedia entry to suit their version of the facts at issue in a particular case.
Wikipedia entries and other free-online material should not be accepted in support of or in opposition of legal proposition because of the danger of "opportunistic editing": It is, therefore, directed that the free online source, e.g., Wikipedia .or alike, is not a strong reliable source and cannot be used for reliable source before us. Reliable sources are those which are accredited works published by reputed legal publishers or the law reports approved under the Reporting Act, 1875 which was relied upon since the inception of legal profession in this country.
21. The appeals for Tax Years 2010, 2012 and 2014 are decided of in the manner as indicated above.