MUHAMMAD RAZA BAQIR, ACCOUNTANT MEMBER.---The above titled miscellaneous application seeking grant of stay against recovery of tax demand as well as appeal against the order of CIR (Appeals), Zone-I, Lahore dated 04-03-2015, agitating refusal of stay, have been filed at the instance of the applicant/taxpayer. Mr. Shehbaz Butt, learned counsel is present for the taxpayer whereas Mr. Asim Aleem, learned DR has tendered appearance on behalf of the department/respondent.
2. The learned counsel only reiterated the grounds as contained in the grounds of appeal and the application for stay. He stated that the learned CIR(Appeals) has failed to pass a speaking order.
Further submitted that the appellant has a prima facie arguable case with every likelihood, of success and balance of convenience also lies in its favour and if the department is not restrained from recovery of the impugned tax demand, it will cause irreparable loss.
4(sic) On the other hand, learned DR has fully opposed the arguments of learned counsel and submits that the applicant has failed to point out any legal infirmity or lacuna in the order passed by the learned appellate authority. He added that the Commissioner (Appeal) has passed a speaking order and has refused the grant of stay mainly on the ground that the appellant could not make out a prima facie arguable case.
5. We have gone through the facts of the case and carefully considered the contentions of both the parties at the bar. In terms of first proviso to subsection (5) of Section 131 of the Income Tax Ordinance, 2001, this Tribunal is empowered to stay the recovery for a period not exceeding 180 days only in those cases where the tax levied has been upheld by the Commissioner (Appeals). In this case the levy of tax ha not yet been upheld by the Commissioner, who after careful consideration of facts and affording opportunity of hearing has regretted grant of stay to the taxpayer on the ground that the appellate could, not make out a prima facie arguable case.
Learned AR has failed to point out any mistake, or legal flaw in the order of the first appellate authority. In the absence of any such illegality and the limitation of this Tribunal as contained in the afore-referred legal provisions regarding the grant of stay, we are not inclined to interfere in the matter. Accordingly, the appeal filed by the taxpayer is dismissed along with the application for grant of stay. Sd/- Muhammad Raza Baqir, Accountant Member
6. CH. ANWAAR UL HAQ (JUDICIAL MEMBER).---I have gone through the proposed draft order written by my learned brother Mr. Muhammad Raza Baqir, Accountant Member, whereby he has dismissed the application of applicant/taxpayer for grant of stay by holding that in terms of first proviso to subsection (5) of Section 131 of the Income Tax Ordinance, 2001 this Tribunal is empowered to stay the recovery for a period not exceeding 180 days only in those case where the tax levied has been upheld by the Commissioner (Appeals). I respectfully disagree with his findings on the following facts, provisions of law and decision of the superior courts.
7. The Hon'ble Supreme Court of Pakistan in the case of Mehram All and others v. Federation of Pakistan and others (PLD 1998 SC 1445), has laid down that access to justice is fundamental right of a petitioner and essential feature of this right is determination of any grievance or dispute by an independent Tribunal.
8. In the case of Messrs Pak Saudi Fertilizer Ltd., v. Federation of Pakistan cited as (2002 PTD 679), it has been held by the Division of the Hon'ble Karachi High Court that "While a dispute in the shape of appeal are pending, no coercive actions are to be taken." Their lordship declared recovery proceedings initiated by assessing officer to be without lawful authority in view of the pendency of appeal/disputes and unconditionally stayed the coercive measures towards recovery till disposal of appeal by the departmental hierarchies.
9. It is also held by the Superior Courts in a number of cases that the recovery of demand should not be initiated till at least one forum of appeal is availed by the appellant and appeal is decided by that forum as held in 2009 PTD 1220 LHC and 2011 PTD 1290 (LHC), Messrs Saigol Qingqi Motors Ltd., v. Federation of Pakistan, page 1292, Para 5. The aforesaid Para is reproduced as under:-- "Admittedly, the appeal of the petitioner is pending adjudication before the Customs Appellate Tribunal since 21-9-2010 and the same has not been decided so far, obviously, in the event of the recovery of outstanding demand, the petitioner's appeal would become in fructuous. In the case of Sunrise Bottling Company (Pvt.) Ltd. v. Federation of Pakistan (2006 PTD 535), it has been held as under:-- Learned counsel for the petitioner has referred to the judgment of this Court in the case of Z.N.
Exports (Pvt.) Ltd. v. Collector Sales Tax 2003 PTD 1746. In that case it has been held by this court that an assessee is entitled to adjudication in respect of this disputed tax liability by at least on independent forum outside the hierarchy of the respondent-department. Admittedly in this case the impugned liability has been determined by the officers of the respondent-department and remedy of the petitioner before the learned Appellate Tribunal provides the independent adjudication of his challenge to the impugned tax liability.
The Honourable Supreme Court has laid down that access to justice is a fundamental right. In the case of Mehram Ali and others v. Federation of Pakistan and others (PLD 1998 SC 1445), it has been held that an essential feature of such right is the determination of any grievance or dispute by an independent Tribunal."
10.In terms of subsection (1) of Section 131 of the Ordinance any aggrieved party objecting to an order of the Commissioner (Appeals) may file an appeal before this Tribunal. Now, it is well settled principle of law that .a forum which can allow final relief, is competent to grant interim relief.
11.The present appeal/application is against the "decision" of the CIR (A) and not against an assessm ent "order". Therefore, the powers vested under subsection (6) of section 132 of the Income Tax Ordinance, 2001 would apply in the instant case. For sake of convenience the relevant provision is reproduced herein below:--
(6) Where the appeal relates to a decision other than in respect of an assessment, the Appellate Tribunal may make an order to affirm, vary or annul the decision and issue such consequential direction as the case may be required (emphasis added)
11(sic). Accordingly, following the judgments of the Superior Courts quoted above and by exercising powers conferred upon this Tribunal as above, I annul the decision of the learned CIR (A) grant stay against the disputed tax demand with direction to CIR (A) to dispose the main appeal of the taxpayer within reasonable time of 30-days is and till the release of the order of learned CIR (A), the department is directed to restrain from taking any coercive measures against the appellant. Sd/- Ch. ANWAAR UL HAQ Judicial Member 12.Since, difference of opinion has arisen between the Members of this. Bench, we, accordingly, refer the matter to the Hon'ble Chairperson for appointment of any Member(s) of this Tribunal as umpire to resolve the following proposed questions of law on the subject:--
(i) Whether on the facts and circumstances of the case, this Tribunal is bound to follow the above quoted decision of Honourable Supreme Court of Pakistan and High Court in terms of Article 189 and 201 of the Constitution of Islamic Republic of Pakistan, 1973 whereby said Superior Courts has decided the question of law and enunciated a principle of law?
(ii) If the answer of proposed question No, (i) is affirmative, whether the taxpayer is entitled for stay of demand or the tax department can initiate coercive measures, until taxpayer's appeal came before this Tribunal i,e, first forum outside the departmental hierarchy? Sd/- Sd/- MOHAMMAD RAZA BAQIR Ch. ANWAAR UL HAQ (Accountant Member)
Judicial Member MOHAMMAD RAZA BAQIR (ACCOUNTANT MEMBER).---I have gone through noting at para-6 to 12/ante. The undersigned begs to differ with the questions proposed in the preceding paras. The issue involved in this case is not the compliance or otherwise of the orders passed by the superior courts. There is no denying the facts that all the orders passed by the higher fora are bound to be implemented in letter and spirit without any reservation or questions by all authorities. The judgments quoted in the preceding paras are distinguishable as they do not dilate upon the powers of the Tribunal to grant stay in those cases pending before the Commissioner (Appeals) and where stay has been regretted by the first appellate authority or where the case is still pending before Commissioner (Appeals). The question involved in this case is whether or not this Tribunal can grant stay where the demand has not yet been upheld by the Commissioner (Appeals).
Attention is again invited to the first proviso to subsection (5) of section 131 of the Income Tax Ordinance, 2001 which specifically provides that this Tribunal can grant stay only against the recovery of tax, for a period not exceeding 180 days only in those cases where the tax levied has been upheld by the Commissioner (Appeals). Since the condition of upholding the demand has not been met in the instant case, the request for stay was regretted vide para 5/N.
Keeping in view the fact that the learned Judicial Member does not agree with the afore referred legal provisions, it is proposed that the matter may be referred to the Honourable Chairperson for appointment of an umpire member to resolve the following proposed questions of law:
1. Whether this Tribunal can disregard the legal condition of upholding of demand by Commissioner (Appeals) as laid down in the first proviso to subsection (5) of section 131 of the Income Tax Ordinance, 2001?
2. Whether all tax demands get stayed automatically till the decision of the appeal by the Appellate Tribunal irrespective of the conditions of upholding of demand by Commissioner (Appeals) and the limitation of 180 days? Sd/- Muhammad Raza Baqir, Accountant Member CH. ANWAAR UL HAQ (Judicial Member):---Let the matter be put up before Hon'ble Chairperson for resolution of both set of questions framed by the Members of the Bench by a referee Member(s) of the Tribunal. Sd/- Ch. Anwaar ul Haq Judicial Member Shahbaz Butt for Appellant.
Qaisar Mahmood, D.R. for Respondent.
NAZIR AHMAD, (JUDICIAL MEMBER).---The titled appeal has been entrusted to me by the Honourable Chairperson, to decide the questions referred by Division Bench as a result of difference of opinion.
The case was fixed for hearing and the representatives of both the parties were heard at length.
Briefly stated facts of the case are that during the pendency of first appeal before CIR (Appeals), the applicant filed stay application, which was refused vide order dated 04.03.2015. Against this treatment, the applicant came up in appeal challenging the impugned order through appeal along with stay application. The case was heard on 21.04.2014 by the Division Bench of this Tribunal wherein the learned Accountant Member refused to grant stay on the ground enumerated in para 5 of above order. However, the learned Judicial Member by not agreeing with the proposed draft order disapproved by giving a dissenting emote wherein he accepted the appeal as well as stay application by directing the learned CIR (Appeals) to decide the appeal within 30 days and till that time the department was restrained to recover the disputed tax demand. The following questions have been proposed:-- Whether on the facts and circumstances of the case, this Tribunal is bound to follow the above quoted decision of Honourable Supreme Court of Pakistan and High Court in terms of Articles 189 and 201 of the Constitution of Islamic Republic of Pakistan, 1973 whereby said Superior Courts has decide the question of law and enunciated a principle of law. ii) If the answer of proposed question No, (i) is affirmative, whether the taxpayer is entitled for stay of demand or the tax department can initiate coercive measures, until taxpayer's appeal came before this Tribunal i,e, first forum outside the department hierarchy? iii) Whether this Tribunal can disregard the legal condition of upholding of demand by Commissioner (Appeals) as laid down in the first proviso to subsection (5) of Section 131 of the Income Tax Ordinance, 2001? iv) Whether all tax demands get stayed automatically till the decision of the appeal by the Appellate Tribunal irrespective of the conditions of upholding of demand by Commissioner (Appeals) and the limitation of 180 days?
The above questions are decided in perspective of arguments advanced by the representatives of both the parties as well as findings of both the learned Members. The sole issue, precisely, is that in the light of proviso to subsection (5) of section 131 whether the Tribunal is empowered to stay the recovery proceedings in case appeal is pending before the first appellate authority. The relevant section, which deals with the powers of Tribunal to decide the appeals etc. are 131 and 132 of the Ordinance. In section 131 of the Ordinance the procedure to file appeal against the order of Commissioner (Appeals) is given whereas section 132 of the Ordinance deals with the disposal of appeal. Subsection (5) of section 131 of the Ordinance deals with the powers of Tribunal to grant stay and proviso's to this subsection were added through Finance Act, 2008 and 2012 respectively.
However, section 132 of the Ordinance, which deals with the disposal of appeal gives the procedure and frame work under which this Tribunal will function and also stipulates powers of this Tribunal.
According to this section, there are two types of appeals one which relates to the assessment order and other relates to decisions other than assessment. The relevant provisions of sections 131 and 132 are reproduced below for the sake of convenience:--
131. Appeal to the Appellate Tribunal.---(1) Where the [taxpayer] or Commissioner objects to an order passed by the Commissioner (Appeals), the [taxpayer] or Commissioner may appeal to the Appellate Tribunal against such order.
(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.] [Provided further that the Appellate Tribunal may stay the recovery of the tax on filing the appeal which order will remain operative for thirty days and during which period a notice shall be issued to the respondent and after hearing the parties, order may be confirmed or varied as the Tribunal deems fit but stay order shall in no case remain operative for more than one hundred and eighty days.]
132. Disposal of appeals by the Appellate Tribunal.---(1) The Appellate Tribunal may, before disposing of an appeal, call for such particulars as it may require in respect of the matters arising on the appeal or cause further enquiry to be made by the Commissioner.
(3) Where the appeal relates to an assessment order, the Appellate Tribunal may [, without prejudice to the powers specified in subsection (2),] make an order to -
(a) affirm, modify or annul the assessment order; or [(c) remand the case to the Commissioner or the Commissioner (Appeals) for making such enquiry or taking such action as the Tribunal may direct.] (6)Where the appeal relates to a decision other than in respect of an assessment, the Appellate Tribunal may make an order to affirm, vary or annul the decision, and issue such consequential directions as the case may require.
A careful perusal of above quoted legal provisions in juxta position clearly follows that as per subsection (1) of 131 taxpayer as well as the department/revenue can file appeal against the orders passed by the CIR (Appeals), meaning thereby, then all the order passed by the CIR (Appeals) are appealable whereas subsection (3) of section 132 indicates power of the Tribunal only in those orders of CIR (Appeals), which were passed against an assessment order, the Tribunal has power to affirm, modify or annul such assessment or remand the case to the Commissioner or Commissioner (Appeals) with certain directions. Whereas, according to subsection (6) if the appeal relates to a decision other than the assessment order, the Tribunal has the power to affirm, vary or annul the decision and issue such directions, which the case in hand may require.
The above discussion also leads to an understanding that there may be orders or decision, which relate to assessm ent and there may be decisions which do not relate to assessment and both the orders/decisions of the first appellate authority are appealable before the Tribunal and the Tribunal can pass adequate order after hearing the parties in accordance with law. An order of refusal of stay is not the order of CIR (Appeals) against an assessment order and it is order or decision, which is appealable as per section 1 of section 131 of the Ordinance, which envisages that every order of the Commissioner (Appeals) is apealable before the Tribunal. So if we restrict the Tribunal that only those appeals in the stay matter will be filed before the Tribunal in which the tax demand has been upheld by the Commissioner (Appeals) then subsection (6) of the section 132 becomes redundant, which is not the intention of legislature. It is also well settled legal proposition that every provision of law has to be interpreted so as to make the law workable F and no redundary can be attached or attributed to the provision of law or the legislative intention.
So keeping in view the above discussion, I fully concur with the findings of learned Judicial Member that under subsection (6) of the 132 appeal against the order of CIR(Appeals) rejecting the stay application is fully competent.
As far as the referred questions are concerned, Questions Nos, (i) and (ii) are answered in affirmative. Question No,(iii) is replied in negative for the reason that the provision of section 132(3) of the Ordinance relates to an assessment order while provision of subsection (6) of section 132 of the Ordinance relates to decision. Question No,4 has two limbs, first that whether all the tax demands gets stayed on filing of appeal and secondly irrespective of the condition of upholding the demand by CIR (Appeals) and the limitation of 180 days. In my view since any order passed by the CIR (Appeals) is appealable in terms of section 131(1) of the Ordinance, the subsequent consequence shall follow on filing of appeal against order/decision of first appellate authority.
Therefore, no automatic stay shall operative unless the order/decision is not impugned before us.
Therefore, the necessary corollary shall be filing of an appeal against the order passed by the first appellate authority. So far as, the other limbs is concerned, as it has earlier been explained in pre- paras of the order the upholding of demand by CIR (Appeals) as envisaged in section 131(5) of the Ordinance and proviso thereof relates to an assessment order and in case an assessment order has been passed and demand therein has been modified or confirmed, the provisions of section 131(5) of the Ordinance shall apply. However, decision regarding to grant stay shall squarely fall and covered by subsection (6) of 132 of the Ordinance. Therefore, at this stage I may point out that the Tribunal can pass an order in the circumstances affirming, verifying or annulling the decision in as much as issue such consequential direction as the case may require. Therefore, the answer to the other limb shall be in negative.
Therefore, by concurring the finding of learned Judicial Member, I hereby declare that annulment of the decision of the learned CIR (Appeals) regarding grant of stay against the disputed tax demand H with the direction for disposal of main appeal of the taxpayer within 30 days and restraining the department from taking any coercive measures for recovery of disputed tax demand is quite justified.