MUHAMMAD JAWED ZAKARIA, JUDICIAL MEMBER.---In this very case, the taxpayer moved an application before the learned CIR(A) for grant of stay which was granted by the learned CIR (A) subject to payment of 10% of the outstanding demand till 11-04-2018. Being aggrieved from the order passed by the learned CIR (A) the taxpayer approached this forum by filing of appeal as well as application for grant of stay.
2. On the date of hearing, Mr. Abdul Khaliq, ITP, appeared on behalf of the applicant/taxpayer while Mr. Imran Qadeer, represented the Department.
3. During the course of hearing, learned representative for the taxpayer apprised that the main appeal is still pending adjudication for writing judgment before the CIR(A). He submitted that hearing of the appeal was taken up by the learned CIR (A) on 21.2.2018. He strongly contended that the applicant attended the appellate proceedings and submitted his written submission.
He further submitted that the department had attached the bank accounts of the taxpayer and withdrawn an amount of Rs.1,00,000/= (Rupees one hundred thousand) from the bank accounts of the taxpayer. He further submitted that applicant has got a good prima facie / arguable case and balance of convenience is also tilt in favour of the taxpayer. He further submitted that the department has issued Notice under section 48 of the Sales Tax Act, for recovery of disputed tax demand threatening therein to attachment of moveable or immoveable assets and recovery of tax through sale of property or through arrest of tax default. He submitted that the business activities of the applicant had become dormant due to freezing of the accounts. The learned counsel further argued that notwithstanding the pendency of the appeal before the learned CIR(A), the department is going ahead with the recovery proceedings. According to the learned counsel the entire process of filing of this appeal would be rendered nugatory in case the impugned recovery proceedings are not stayed more particularly when the appeal of the taxpayer is pending adjudication before the CIR (A), In the circumstances he prayed that the department may be directed to de-attach the accounts of the taxpayer and stay against the forcible coercive measure and recovery of disputed demand may be granted.
4. The learned D.R. on the other hand, strongly opposed the grant of stay.
5. We have heard the learned representatives from both the sides and have also perused the relevant record of case and conditional stay order of learned CIR(A) and order of Assessing Officer.
From perusal of the records, it is transpired that the learned CIR(A) has concluded the hearing on 21-2-2018 but the learned CIR(A) has not yet passed the order. The appeal was heard on 21/2/2018 and conditional stay was granted on 2/4/2018, therefore, he should have decided the main appeal instead of granting the conditional stay as more than 40 days had been elapsed. The concept of finalization of all issues up to the level of CIR(A) is obviously for the benefit of both taxpayer and the department. This has also gear up the appellate machinery at rate of knots and speedy trial of the case and to avoid protracted litigation between the parties and to rescue the taxpayers as.well as department from vexing twice for the same cause and quick dispensation of the justice.
6. The CIR(A) is included in the Income Tax Authority under section 207 of the Income Tax Ordinance, 2001, CIR(A) working under the hierarchy of FBR. The CIR(A) is working specially under FBR Member (Legal). The order of the learned CIR(A) enforcing the applicant to deposit 10% of the outstanding demand is unjustified and unlawful for the simple reason that the learned CIR(A) has not been given powers to either collect the tax or recover the same. Directions by the learned CIR(A) to deposit 10% of the outstanding demand is outside the domain of the learned CIR(A). Even CIR(A) cannot direct the taxpayer to deposit 1% or any fraction of percentage of tax, thus, separate authorities have been created for enforcement, recovery and collecting of taxes. Therefore, in our opinion, the CIR(A) is not enjoying powers of the appellate court as he is not an independent, impartial though he ought to be.
7. It is noted that the learned CIR(A) has neither decided the appeal though heard by him nor granted the unconditional stay. Therefore, the misery has been added to the taxpayer. The relevant provisions of sections 128 (1A) and 128(1AA) of the Income Tax Ordinance, 2001 reads as under:-- 128 (1A)- Where in a particular case, the Commissioner (Appeals) is of the opinion that the recovery of tax levied under this Ordinance, shall cause undue hardship to the Taxpayer, he, after affording opportunity of being heard to the Commissioner against whose order appeal has been made, may stay the recovery of such tax for a period not exceeding thirty' days in aggregate."
[(IAA) The Commissioner (Appeals), after affording opportunity of being heard to the Commissioner against whose order appeal has been made, may stay the recovery of such tax for a further period of thirty days provided that the order on appeal shall be passed within the said period of thirty days.
From perusal of the aforesaid provisions of section 128, it is declared and trite law that the supra provisions of law are directory in nature an& not mandatory. As the provisions are directory in nature, therefore, the learned CIR(A) can grant the stay beyond 30 days or beyond 60 days or even till the decision of pending appeal before him. The learned CIR(A) has inherent, ancillary and implied powers to grant the stay till the decision or disposal of the appeal. This power, in the instant case, has not been exercised by him and directed to deposit 10% of the outstanding amount using stereo typed stock phrases and in slipshod manner without recording any appropriate figure and findings and cannot be expected from a senior officer who is enjoying at least quasi judicial powers. The entire purpose of the dispute will be frustrated or rendered nugatory if department and high ups of FBR are allowed to continue to make mockery, the coercive measures and recovery proceedings in connivance and collusion with CIR(A), to recover targeted revenue / budgetary measure by hook and crook, as power to taxation is not power to destroy. Of course, nothing is certain but death and taxes, and taxes are the life blood of government but it ought not to be collected from the Parties of taxpayer unless and until disputed demand going through appeal and scrutiny by an independent judicial forum. The Court while taking up the matter for issuance or refusal, or conditional interim injunction / interlocutory order, the Court had to see that a strong prima facie arguable case, was made out in favour of the taxpayer, if the taxpayer succeeded in establishing a strong prima facie arguable case, then other two ingredients, irreparable loss and balance of convenience, had to be looked into. In addition, while deciding the stay application, the Court is required to travel beyond four corners of the application to determine, though tentively, as to on what facts, finding to be based. Thus, spectrum of stay order is broader and more comprehensive. Further reading of provisions of sections 128 (1A) and 128(1AA) of the Income Tax Ordinance, 2001, clearly shows that the time specified in Section 128 of the Income Tax Ordinance, 2001 is directory, if the appeal is not decided within the specified period, the stay would continue till- the disposal or decision of appeal unless expressly revoked by Tribunal on the application of the department. The appeal of the Taxpayer was heard on 21-2-2018 and the same was reserved for writing judgment since last 40 days. Despite pending of appeal the Department issued recovery notice dated 26.03.2018 and geared up recovery and coercive measures and also attached bank accounts. In the light of Section 128 read with Section 131(5) of the Income Tax Ordinance, 2001. A plain reading of Section 128 (1A) and (1AA) of the Ordinance of 2001, it obviously appears that the time specified for the validity of an order passed in relation to the stay of recovery of the tax is directory in nature. It would give rise to an anomaly if the provision is interpreted in a manner that on the one hand the learned CIR(A) has been empowered to grant stay after forming an opinion to the effect that the recovery shall cause hardship and on the other hand for the legislature to have intended that the taxpayer is exposed to the rigours of hardship merely because the appeal was not decided within a specified period and that too without any fault or default on part of the appellant. A reasonable interpretation of Section 128 ibid obviously would be that the time specified therein is directory and, therefore, if the appeal is not decided within the said period, the stay would continue till the disposal or decision of the appeal by CIR(A), unless expressly vacated by the learned Tribunal on the written Miscellaneous Application for vacation of the stay. Any other interpretation would defeat the legislative intent of protecting a taxpayer against undue hardship. The word "undue hardship" has been significantly defined and also included situation where taxpayer is able to show a strong prima facie case. However, this is not hard and fast rule, for grant of stay it has to be looked that the applicant has a strong prima facie case and if the applicant / taxpayer having strong prima facie arguable case, then simply the stay ought to be allowed / granted. The Taxpayer has statutory right to challenge the demand created by the Taxation Officer and remedies are available to the taxpayer by way of filing appeals. The Assessing Officer Inland Revenue should not have made "hasty" attempts to make a recovery of demand until and unless the period of filing appeal before the competent authority is exhausted.
Besides being if the stay application filed by the Applicant / taxpayer is pending adjudication, no recovery / coercive measures shall be initiated by the department until and unless the stay application is disposed of an interim order having been received by the Applicant, even in case of rejection of stay clear 07 working days time to be allowed to avail the alternate remedy. The taxation officer in this case has attached the bank account without prior notice or without enabling the taxpayer to make a representation or seek recourse to a remedy in law. The Taxation Officer should not attach the bank account without prior notice to the taxpayer. The taxation officer should not act as a mere tax gatherer but as a quasi-judicial authority vested on him and he must objectively decide the considering that an in appeals lies against his order in this very case the appeal is pending before the learned CIR(A) and the stay application move by the taxpayer has been turndown and/ or restricted by him therefore, the issuance of notice/attaching the bank account of the taxpayer without providing the taxpayer to exercise and avail the appellate decision is against the sprit of natural justice. The sanctity of the rule of law must be preserved.
8. The learned CIR(A) has power to grant interim relief, wherever an appellant requests for such relief and makes out a prima facie case for grant of such relief. Such powers has to be exercised honestly, fairly, judicially and judiciously, if not, at least quasi judicially in accordance with the principles laid down by superior courts. While exercising jurisdiction, Commissioner (Appeals) has ancillary, inherent, implied or incidental power to grant interim relief i.e. to grant stay against the disputed demand made by the taxation officer. Remedy of appeal before commissioner cannot be said to be inadequate and ineffective in absence of express power in the statute to grant interim relief. The dispute with regard to assessment order or order pending in the shape of appeal. When a taxpayer prefers appeal disputing whole or part of the demand amount, the taxpayer may approach to the concerned Deputy Commissioner or CIR / Taxation Officer Inland Revenue / OIR requesting him not to take any coercive measure, the taxation officer IR/IRO, can also in his discretion, may stay the recovery proceedings till such time the appeal is pending before the appellate forum. It is, therefore, opined that there was no mandatory need to even file application by the taxpayer before the learned CIR(A) time and again, seeking stay of recovery of disputed tax.
However, it is clarified that the respondent department shall not misinterpret the order passed by this Court as referred to hereinabove, which shall be complied with letter and spirit and the recovery proceedings may not be initiated till final decision by the Commissioner (Appeals).
9. The conduct of the learned CIR(A) while dealing with the appeal cannot be appreciated in the context of National Judicial Policy (NJP). we, with great concern would observe that the Government functionary including taxing officer/ CIR\CIR(A) henceforth is to work hand in hand with the judiciary to usher in an age of the speedy and meaningful justice delivery systems in our beloved and beautiful country to remove the adage "JUSTICE DELAYED IS JUSTICE DENIED" from Pakistan Judicial system. Early and meaningful speedy disposal of pending appeals will bring some relief to the taxpayers and may also stop unnecessary deferment of revenue. In this way CIR(A) may protect and safeguard the interest of both taxpayer as well as of revenue. Delay in dispensation of complete and meaningful justice dispensed with and at times makes it worthless.
Facts and conduct of appeal shows deliberately contribute to the delay in passing the order while the appeal hearing was finally concluded on (almost 02 months elapsed but no order has been passed). Since the function of the judicial and quasi-judicial authorities is to secure justice with fairness, these principles provide great humanizing factor intended to invest law with fairness to secure justice and to prevent miscarriage of justice. The principles are extended even to those who have to take administrative decision and who are not necessarily discharging judicial or quasi- judicial functions. They are a kind of code of fair administrative procedure. In this context, procedure is not a matter of secondary importance as it is only by procedural fairness shown in the decision making that decision becomes acceptable. In its proper sense, thus, natural justice would mean the natural sense of what is right and wrong. This court take due notice of the fact that the delay in the disposal cf an appeal or a stay application may take place for reasons which is not the fault of the taxpayer. Where the failure of the first appellate authority to dispose of the appeal or the application for stay arises without any default on dilatory tactics, there would, in my view be no reason or justification to penalise the taxpayer by recovering any demand in the mean time. This aspect of procedural fairness, namely, right to a fair hearing, would mandate what is literally known as 'hearing the other side'. Prof. D.J. Galligan [On "Procedural Fairness" in Briks (ed), the Frontiers of Liability(Vol.1)(Oxford 1994)1 attempts to provide what he calls 'a general theory of fair treatment' by exploring what it is that legal rules requiring procedural fairness might seek to achieve. He underlines the importance of arriving at correct decisions, which is not possible without adopting the aforesaid procedural fairness, by emphasizing that taking of correct decisions would demonstrate that the system is working well. On the other hand, if mistakes are committed leading to incorrect decisions, it would mean that the system is not working well and the social good is to that extent diminished. The rule of procedure is to see that the law is applied accurately and, as a consequence, that the social good is realised. For taking this view, Prof. Galligan took support from Bentham[A Treatise of Judicial Evidence (London 1825)], who wrote at length about the need to follow such principles of natural justice in civil and criminal trials and insisted that the said theory developed by Bentham can be transposed to other forms of decision making as well. This jurisprudence of advancing social good by adhering to the principles of natural justice and arriving at correct decisions is explained by Galligan ["On 'Procedural Fairness' in Briks (ed), the Frontier of Liability (vol. One) (oxford 1994)1 in the following words:-- "On this approach, the value of legal procedures is judged according to their contribution to general social goals. The object is to advance certain social goals, whether through administrative processes, or through the civil or criminal trial. The law and its processes are simply instruments for achieving some social good as determined from time to time by the law makers of the society.
Each case is an instance in achieving the general goal, and a mistaken decision, whether to the benefit or the detriment of a particular person, is simply a failure to achieve the general good in that case. At this level of understanding, judgments of fairness have no place, for all that matters is whether the social good, as expressed through laws, is effectively achieved." Galligan also takes the idea of fair treatment to a second level of understanding, namely, pursuit of common good involves the distribution of benefits and burdens, advantages and disadvantages to individuals (or groups). According to him,- principles of justice are the subject matter of fair treatment.
However, that aspect need not be dilated."
10. At this time we feel it appropriate to bring into the notice of high ups of the FBR hierarchy that in some cases the department is not complying with the orders passed by this Tribunal from time to time. The Tribunal vide its judgment reported as 2010 PTD (Trib) 557 strongly deprecated the tendency of ignoring or by-passing the direction of the superior authorities on the part of revenue: "We have in so many cases deprecated the tendency of ignoring or bypassing the directions of the superior authorities on the part of the Revenue Officers. This tendency needs to be cured for better administration of justice, observance of discipline and maintaining rule of consistency and law. The Taxation Officer in this case having scanty knowledge of the dispensation of justice and interpretation of statue has tried to demonstrate that he knows the law and the legal proceedings better than his superior officer and he may be right in thinking so but while acting as a judicial/ Quasi Judicial which have always been viewed very seriously and may entail into an appropriate action which however, we do not propose to take in this case."
11. Further the ATIR (Tribunal) has ruled in 1996 PTD (Trib.) 388 that its judgments are binding on the appellate authorities subordinate to the Tribunal under hierarchy of judiciary. We are, therefore, of the opinion that it is not the taxpayer's fault or default. The taxpayer is being penalized and punished for its obedience to law of the land. It is common knowledge, that a statute normally does not provide for each and every conceivable eventuality and in respect of some unforeseen events arising in a case for which it has made no provision, the courts would be deemed to have inherent jurisdiction in the interest of orderly dispensation of justice unless and until prohibited by the statutory provision of statute.
12. Last but not the least, it is firmly established that an express grant of statutory power carries with it by necessary implication the authority to use all reasonable means make such grant effective.
While dealing with an application for stay pending disposal of the appeal preferred by the taxpayer, the CIR(A)[First Appellate Authority] has got to exercise its statutory authority and a statutory duty and its inherent and implied discretionary, powers to UNCONDITIONAL STAY in a judicious and judicial manner and it cannot order to pay 10% of the outstanding demand and grant conditional stay in a MECHANICAL, and or STEREO TYPED order. Law is made clear that no exercise of discretion power/ statutory authority or statutory duty can be made whimsically or arbitrarily, but the CIR(A) cannot sit mum on stay application and / or pending appeal or the same cannot put or keep in cold storage for long time. The CIR(A) cannot say that it shall not exercise its / his discretionary power inherent power, Judicial duty or statutory authority and statutory duty, CIR(A) must dispose of M.A (Stay) Application judiciously and judicially and order thereof to be served on stay application maximum within clear 07 (sevr.) days on receipt of stay application after opportunity of being heard. The CIR(A)'s order on stay application ought to be reached in the hands of taxpayer within (seven) working days and not later than that.
13. Under the similar facts and circumstances of the case the Hon'ble High Court of Sindh while exercising powers under Extra Ordinary Constitutional Jurisdiction in C.P. No. 3118 of 2016 observed as under: "2. Through listed application, the petitioner seeks extension of period of stay, which according to learned counsel for the petitioner, was granted for 45 days vide order dated 01.06.2016 passed on similar application, on the grounds that inspite of the fact that the appeal has been heard by the Commissioner (Appeals) and the decision is awaited, the respondents intend to initiate recovery proceedings in respect of the demand of tax, which is subject matter of the appeal. However, the petitioner has not attached any recovery notice issued by the respondent in respect of demand, which is subject matter of appeal before Commissioner (Appeal). Moreover, the order dated 01.06.2016, whereby, instant petition was finally disposed of, reflects that directions have been given to the Commissioner (Appeals) to decide the appeal within 45 days and until disposal of appeal, no recovery shall be made, and in case of any adverse order passed by the Commissioner (Appeals), for further seven (7) days from the date of such order, no recovery proceedings shall be initiated by the respondents.
We are of the opinion that there was 'no need to even file earlier application as well as the listed application seeking extension of time for stay of recovery of disputed tax, more particularly, when there are no recovery proceedings have so far been initiated by the respondents. Accordingly listed application, under the facts and circumstances is misconceived, which is dismissed in limine. However, it is clarified that the respondent department shall not mis-interpret the order passed by this Court as referred to hereinabove, which shall be complied with in letter and spirit and the recovery proceedings may not be initiated till final decision by the Commissioner (Appeals). We may further observe that since specific directions were issued to the Commissioner (Appeals) to decide the subject appeal within 45 days, such directions should have been complied with to avoid unnecessary litigation in this regard. It is expected that needful shall be done within a reasonable period of time.
Let copy of this order be sent to the concerned Commissioner, Inland Revenue (Appeals-TV) to ensure compliance."
14. Keeping in view the above dictum laid down by the Hon'ble High Court in the above Petition, it is therefore, directed to the CIR(A) either release/ issue and served CIR(A)'s appellate order within 30 days from receipt of this order or grant unconditional stay till the disposed of decision of main appeal. The CIR(A) ought to pass judicious speaking order after application of conscious mind, dispose of the appeal and issue/ serve the appellate order as observed supra. Till then, as a protective measure Respondent/Department is strictly directed not to adopt any coercive measures for the recovery of the disputed demand and de-attach bank accounts.
CONCLUSION: That the taxpayer can file Appeal before ATIR against the refusal of stay order or conditional stay granted by the learned CIR(A).
That where the applicant /appellant has made out a strong prima facie case, it would be inequitable to refuse stay in such case.
That the Order passed by the learned CIR(A) granting conditional stay is vacated.
Imposing condition by the learned CIR(A) for payment of 10% of the outstanding demand is hereby waived by us and the learned CIR(A) is directed to grant unconditional stay.
The department is directed to de-attach the bank accounts.
That the taxpayer may file fresh stay application before the learned CIR(A), if it is needed, requesting therein to grant unconditional stay till releasing the appellate order as directed above.
CIR(A) should stay his hands till the appeal is disposed of which has been heard / concluded by him and the taxpayer has been waiting for order almost for the last two months.
Department is directed that in case, the CIR(A) decides appeal against taxpayer further 07 days time be allowed to the taxpayer to avail the alternate remedy.
Recovery proceeding should also not to be initiated, if stay application filed by the taxpayer before the CIR(A) or before the Tribunal and the same is pending for adjudication.
It is clarified here that the above listed findings and discussion elsemtere in the said order are applicable up to the extent of learned CIR(A) as it is included in the definition of tax authorities and the same is not independent judicial foram adjudicating appeal impartially.
Though the learned CIR(A) is included in the hierarchy of "tax authorities" yet he is not a recovery / collecting authority. The learned CIR(A) is enjoying quasi judicial authority which is distinct from the recovery officers.
Finally, it may be noted that in case of non-compliance or disobeying of this court's order, this court's shall be constrained to take judicial notice and would pass judicial stricture against such officer who are working under the hierarchy of FBR. But here we would also observe that they [CIR(A) and all OIRs] should show good grace and gesture of good and independent judicial and judicious officer as they are Trustees of Allah and not the Trustees of FBR. If the compliance of this order is not made well in time, we would also write letters to the Chairman, (FBR), as well Member (Legal) and other high ups of the FBR/ Finance Ministry. We may also write to Hon'ble Chief Justice of Pakistan and Hon'ble Chief Justice of Sindh High Court for "Contempt Proceedings" against non compliance of this court order and utter violation of due process of law. However, as the department has freezed the accounts of the taxpayer, therefore, it is also directed, the department to de-attach the accounts and further restrain the department and its officers and agents from taking any coercive measures during the stay granted by this Court.
15. As we have decided the stay application, therefore, appeal bearing I.T.A. No. 160/KB of 2018 which pertains to grant of unconditional stay by the learned CIR(A), has become infructuous and stands dismissed and disposed of accordingly.
17. Before parting with this judgment, the aggrieved taxpayer may say so that the greedy persons have become both petitioner as well as Judge, who should make my lawyers, from whom should I seek justice? The whole system has become such that it is impossible to get justice anywhere. The above observations may be summerised in following couplet by Faiz Ahmed Faiz.
"Bane hain Ahal-e-hawas muddai bhi munisf bhi kise vakeel karain kise munisfi chaahain"
18. The miscellaneous application is allowed to the above terms.