RAANA AHMED (ACCOUNTANT MEMBER).---Facts of the case are that statement under section 115(4) of Income Tax Ordinance, 2001 was filed declaring commission at PKR 166,167,390/- and tax deducted at PKR 1,661,673/- as final discharge of tax liability which was deemed to be an assessm ent order under section 120(1). Subsequently, deemed assessment order under section 120(1) was found erroneous insofar as prejudicial to the interest of revenue for the reason that the taxpayer had failed to pay minimum tax on declared turnover of PKR 2,276,888,597/. Accordingly, the Ad.CIR passed an amended order under section 122(5A) dated 15.05.2013, as under:-- Amount (Rs,)
Declared turnover 2,276,888,597 Minimum tax under section 113(1) @ 1% 22,768,886 Less 80% reduction as per S.R.O. 57(1)/2012 dated 24.01.201218,215,109 Balance tax payable 4,553,777 15% surcharge 199,228 Total tax payable 4,753,005 Less tax paid 1,734,493 Balance tax payable 3,018,512
2. Later on, the Ad.CIR observed that the order under section 122(5A) dated 15.05.2013, suffered from legal infirmity, hence he passed amended order under section 122(5A) dated 17.12.2015, as under: Amount (Rs,)
Commission income 1,112,777 Tax deducted under section 233 111,277 Declared turnover 2,276,888,597 Minimum tax under section 113(1) @ 1% 22,768,886 Add 15% default surcharge on proportionate tax chargeable for 3.1/2 months996,139 Total tax payable 23,765,025 Less tax already deducted 1,623,216 Balance tax payable 22,141,809
3. The taxpayer filed appeal, against the said order of the OIR, before the learned CIR(A) who vide order under section 129 dated 20.05.2016, rejected the appeal of the taxpayer. The taxpayer filed instant appeal, against the said order of the CIR(A), before the ATIR, on the following grounds: 1) That the impugned orders dated 17th December, 2015 and 20th May, 2016 respectively passed by Additional Commissioner (IR) and the learned CIR (A) are bad in law and contrary to the facts of the case.
2) That since the different opinion from the already expressed opinion was expressed, after the examination of the same facts, falls within the ambit and scope of change of opinion, which is not permissible under the law, therefore, the amendment of assessment on such changed opinion was not maintainable. The learned CIR (A) has erred in holding that order of the Additional Commissioner (IR) does not fall within the ambit and scope of changed opinion.
3) That the succeeding authority was not legally justified in sitting in review on the earlier order passed by his predecessor, therefore, action taken by the Additional Commissioner (IR) was prima facie unlawful and without jurisdiction. The learned CIR(A) has misdirected himself in confirming the action of the Additional Commissioner (IR).
4) That both the authorities below have failed to appreciate that beneficial legislation through S.R.O. No,57(I)/2012 dated 24th April, 2012, especially in the circumstances of the present case was applicable retrospectively, in view of the law laid down by the superior courts.
5) That both the Additional Commissioner (IR) and the learned CIR(A) have erred in law and fact respectively in imposing and confirming the minimum tax a 1% and declining reduction to the extent of 80% of the minimum tax, so imposed.
6) That the Additional Commissioner (IR) and the learned CIR (A) have misconstrued, misconceived and erroneously interpreted the statutory provisions as contained in Section 122 of the Ordinance, in the context of further amendment. Hence, both the actions were unlawful and void ab initio.
7) That the imposition of minimum tax at PKR 22,768,886/- by the Additional Commissioner (IR) was legally inasmuch as factually incorrect. The learned CIR(A) was not justified in confirming the above charge.
8) That the imposition of default surcharge a 15% on the minimum tax was not only legally incorrect but also contrary to the statutory stipulations hence the actions of additional Commissioner (IR) was not tenable in the eye of law. The learned CIR (A) has failed to appreciate the applicable law and has erred in confirming the imposition of surcharge.
4. Both parties have been heard. Relevant record has also been perused. While the learned AR of the appellant assailed the order of the CIR (A), elaborated his grounds of appeal and also produced a number of case laws, the learned DR defended the order of the CIR (A). It is observed that the appellant's grounds of appeal are repetitive, not "distinct" and are also generalized, not "specific", in violation of Rule 10 of the ATIR Rules, 2010.
5. As per grounds of Appeals Nos, 2, 3 and 6, the appellant has contested the second amendment order as "change of opinion" and "review of own order" by the Ad.CIR. Application of tax rate for a tax year is not discretionary, hence, it does not involve "opinion" or "view" of a tax officer. As has been held above, S.R.O. 57(1)/2012 dated 24.01.2012, allowing 80% reduction in minimum tax liability, was applicable from tax year 2012 but it was mistakenly applied for tax year 2011 by the Ad.CIR.
Correction of this patent illegality by the Ad.CIR does not amount to "change of opinion" or "review of own order".
6. As per grounds of Appeals Nos, 4, 5 and 7, the learned AR of the appellant has pleaded that S.R.O.
No,57(I)/2012 dated 24th April, 2012, being beneficial, is applicable retrospectively and, hence, he is entitled to 80% reduction in minimum tax on turnover. For a proper understanding of Remedial Legislation, Beneficial Legislation and Adversarial Legislation, their purpose/character, application/operation and relevant case-law are tabulated hereunder: Remedial or Curative LegislationBeneficial or Advantageous LegislationAdversarial, Detrimental or Prejudicial Legislation removes a defect; redresses a difficulty; recompenses for a wrong; remedies an ill; fills a lacuna; cures an evil; eases an inconvenience; suppresses a mischief;gives an incentive; provides a relief; confers a rights; extends a benefit; grants a concession; Examples include tax reductions, tax rebates, tax credits, tax allowances, etc.creates an obligation; imposes a new liability; affects, invades upon or impairs an existing interest or vested right; are, generally and normally, retrospective (though only in pending proceedings) even if not so expressed in clear and unambiguous termsare, by default, prospective even if not so stated in clear and unambiguous termsare, necessarily, prospective even if not so declared in clear and unambiguous terms may be made prospective but only if intentionally so provided in explicitmay be made retrospective but only if consciously so allowed in explicit andmay be made retrospective but only if deliberately so sanctioned in explicit and unequivocal languageunequivocal language (as is evident from the expression "can beand unequivocal language (as is evident from the expression "in the absence of legal sanction" used and highlighted in the case law listed below)given" and can be made" used and underlined in the case law listed below)
Commissioner of IncomeGovernment of Pakistan Tax v. Shahnawaz Ltd.v. Village Devt. and others 1993 SCMROrganization 2005 73 "As explained in Crawford's "StatutorySCMR 492 Construction" a statute relating to remedial lew may properly, in several instances, be given retrospective operation.""the executive orders or notifications, which confer right and are beneficial, would be given retrospective effect and those which adversely affect or invade upon vested right cannot be applied with retrospective effect."
Commissioner of IncomeAnoud Power Generation Tax/Wealth Tax v. M/s. v. Federation PLD 2001 Ellcot Spinning Mills SC 340 "if the notification has been used for the benefit of the subject then it can be made operativeLtd., 2008 PTD 1401 "remedial and curative legislation, unless the law makes it prospective in clear and unambiguous terms, is always retrospective."retrospectively but if its operation is to the disadvantage of a party who is the subject of the notification then it would operate prospectively." Messrs Army Welfare Sugar Mills Ltd. v.
Federation 1992 SCMR 1652/1673 "Notification which purports to impair an existing or vested right or imposes a new liabi lity or obligation, cannot operate retrospectively in the absence of legal sanction, but the con- verse i,e, a notification which confers benefit cannot operate retrospectively, does not seem to be correct proposition of law." "Messrs Taj Mahal Hotel Limited v.
Karachi Water and Sewerage Board 1997 SCM R 50 3 "a notification or an administrative order cannot operate retros- pectively to the disadvantage of the persons affected by it." "Messrs Hashwani Hotels Limited v.
Federation of Pakistan and others PLD 1997 SC 315 it is well settled principle of interpre- tation of a notification and/or an executive order that the same can operate prospectively and not retrospectively." "Messrs Ellahi Cotton Mills Limited and others v. Federation of Pakistan through Secretary, Ministry of Finance, Islamabad and 6 others PLD 1997 SC 58 2 "an executive order/ notification, which is detrimental or pre- judicial to the interest of a person, cannot operate retrospectively.
How- ever, a beneficial execu- tive order/ notification issued by an executive functionary can be given retrospective effect. "Federation of Pakistan v. Shaukat Ali Mian and others PLD 1999 SC 10 2 6 "notification or an executive order which may adversely affect the rights of any person cannot be given retrospective effect but it the same conferred any benefit, it can be made applicable retrospectively."
From the above, it is abundantly clear that beneficial legislation does not automatically apply retrospectively unless it is consciously so sanctioned in explicit and unequivocal language. Hence, the plea taken by the learned AR of the appellant is misconceived.
7. During hearing of appeal, the learned AR of the appellant urged that, alternately, clause (8) of Part III of the Second Schedule to the Income Tax Ordinance, 2001, inserted through S.R.O.
No,1086(1)/2012 dated 30th November, 2010, was also applicable in his case. Although the said ground was not raised in the memorandum of appeal, we are inclined to adjudicate upon it as per Rule 14 of the ATIR Rules, 2010. Reliance was placed on four judgments of the ATIR which deal with "consumer goods including fast moving consumer goods". Without adjudicating upon whether or not petroleum products qualify as "consumer goods including fast moving consumer goods", suffice is to say that if clause (8) of Part III of the Second Schedule to the Income Tax Ordinance, 2001, was applicable in case of petroleum agents and distributors, there was no need to provide 80% reduction in minimum tax on turnover, separgtely, by inserting clause (13) of Part III of the Second Schedule to the Income Tax Ordinance, 2001, through S.R.O. No,57(I)/2012 dated 24th April, 2012. Hence, the argument of the learned AR of the appellant is not acceptable.
8. As per ground of Appeal No, 8, the appellant has generally disputed imposition of default surcharge as illegal without specifically pointing out the illegality. Since, the taxpayer deliberately failed to discharge a patent tax liability, default surcharge has rightly been levied.
9. Appeal is dismissed, being devoid of merit.