On 28.02.2017 Additional Commissioner Enf-III of PRA, Lahore issued show cause notice to M/s Pakistan State Oil Company Ltd. (The Appellant). in the show cause notice the appellant was treated as a withholding agent in terms of Rule 2 of PSTS (Withholding) Rules 2015. The notice further stated that durin g the period from July 2015 to June 2016, the appellant received taxable services from various commission agents and that under sections 14 and 19 of the PSTSA, 2012 (The Act) read with Rules 4, 5, 6, and 13 of Rules ibid, the appellant was legally bound to withhold/deduct and deposit the due amount of sales tax on services but failed to comply with the statutory obligations. Detail of the services were as under .
Sr.
No.Service CategoryIncome Tax Withheld a 12%Total Commission PaidPST Payable
1. Commission agents (Sr.No.42 to 2nd Schedule)1,693,676,805/- 14,113,973,375/- 2,258,235,740/- The show-cause notice charged the appellant with the violation of different provisions of The Act, as mentioned supra and called upon to show cause under section 52 read with 60 that why the above stated amount may not be assessed/recovered, along with the default surcharged under section 49 of The Act.
2. In response to the show cause notice, M/s. A.F. Ferguson & Co., the authorized representatives (AR) appeared, submitted reply , discussed/argued the case and produced relevant documents before the authority . After considering the evidence and the arguments, the authority passed the order dated 18.09.2017 whereby the contents of the show cause notice were upheld. Feeling aggrieved, the appellant filed an appeal before the Commissioner (Appeals), PRA Lahore and on 05.09.2018 the order of the Additional Commissioner was upheld except the modification made to the extent of imposition of penalty which was deleted against the appellant. Being dissatisfied with this order of the Commissioner (Appeals), the present appeal under section 66 of The Act, before this tribunal was filed on the following grounds.
1. That the appellate order dated September 5, 2018 (serviced on October 10, 2018) passed by the learned Commissioner (Appeals) Punjab Revenue Authority ['PRA'] in the matter of assessment order dated September 18, 2017, earlier passed by the Additional Commissioner Enforcement-III PRA, Lahore under section 52 of the Punjab Sales Tax on Services Act, 2012 ['PST ACT') is bad in law and against the facts of the case.
2. That the learned Commissioner (Appeals) has erred in upholding the learned Additional Commissioner's action of considering the 'profit margin of petrol pump operators/dealers as cons ideration against rendering of 'commission agent services' without appreciating the fact that petrol pump operators/dealers are buyers of petroleum products and risk and rewards in respect thereof transfer to them at the time of supply by the appellant.
3. That without prejudice to ground of appeal No. 2 above, the learned Commissioner (Appeals) PRA has erred in upholding default surcharge under section 49 of the Act.
3. During the pendency of the appeal, on 17.01.2019, the appellant filed and application of allowing to submit Additional Grounds of Appeal, as under .
2.1 That the learned Commissioner (Appeals) has erred in upholding the learned Additional Commissioner's action of treating the appellant as 'withholding agent' in complete disregard and in contravention to the ratio settled by Honorable Supreme Court of Pakistan through its judgment reported as 2017 PTD 1372 .
4. The arguments of both sides are heard on the application for allowing to submit Additional grounds of appeal and on the main appeal.
5. Learned counsel for the appellant has argued that the additional ground No. 2.1 is based on law therefore it can be raised at any time and before any forum;- That without deciding the question regarding status of the appellant as "Withholding Agent ", or not, the dispute cannot be resolved fairly and effectively;- That the appellant is involved in the matter only to the extent of selling the petrol to the dealers where after the appellant has no concern with the price at which the petrol is sold to the public and that the said price is controlled and regulated by the Federal Government;- That the real and true character of the appellant and of the dealer is of FRANCHISER and FRANCHISEE and the appellant deposit the relevant tax in the said head;- That the petrol is sold to the public at a price fixed by the Government therefore, the question of commission does not arise;- That there was not an iota of evidence before the Commissioner (Appeals) or before the Additional Commissioner Enf-III on the basis of which they treated the disputed amount as commission;- That the whole reasoning given by the Commissioner (Appeals) in the impugned order is based on mere presumptions;- That on 01.07.2004 vide circular No. 11 of 2004, a new section 156-A was introduced, in part 3 of first schedule of the income tax ordinance by adding Division VI-A through which, every person selling petro leum product to a petrol pump operator was required to collect tax from the amount of Commission or Discount;- That the case of the appellant is of disco unt and not of commission but the forums below wrongly treated the said tax to be collected from the petrol pump operator , as commission;- That by no stretch of imagination the petrol pump operator is a commission agent of the appellant therefore, the issuance of the show cause notice and both the decisions made by the officers of the PRA, are bad in law hence liable to be set aside. Lastly , learned coun sel has argued that the appeal may kindly be accepted. Learned counsel has relied upon i. 2002 PTD 541 (Lahore High Court) -- Additional Ground ii. 2018 PTD 314 (ATIR) -- Additional Ground iii. 2017 SCMR 1 136 -- 2017 PTD 1372 (PTV Case) iv. Judgement of ATIR dated 25.02.2018 in appellant's own case v. Judgement of ATIR dated 09.05.2018 in appellant's own case vi. PLD 1958 (Lahore High Court) 63 -- Caltex Oil Case vii. PLD 2004 (Supreme Court) 860 -- Bolan Beverages Case viii 2003 PTD 577 (Karachi High Court) ix. 1994 PTD 1728 (ATIR)
6. On the other hand learned DR has opposed the application for allowing to submit additional grounds by arguing that this tribunal has no power to allow the application for filing additional grounds of appeal;-That under section 64(3) of The Act, only the Commissioner (Appeals) is empowered to grant such like application;- That the Additional ground intended to be taken by the appellant is not a question of law rather it is purely a question of fact therefore, it should have be taken at the first instance and that by not taking the said ground, the appellant has waived his right as such.
After arguing the application for allowing to submit additional grounds, the learned DR has straight away and candidly stated before the tribunal that if the appeal is remanded back to the Commissioner (Appeals) PRA Lahore, he will have no objection.
Replying to this statement of the learned DR, the appellant counsel stated on the rostrum that he has no objection if the appeal in hand is remanded back to the Commissioner (Appeals) for determ ination of the character/status of the appellant as of withholding agent or not.
7. Arguments heard. Record Perused
8. There is no denial of the fact that in The Act or in the Punjab Revenue Authority (Appellate Tribunal) Rules, 2016 , no specific provision which deals with the question of allowing the submission of Additional grounds of appeal, is available. However , it is an age old legal principle, accepted by the superior courts of the country that there is no bar to raise legal question at any stage of the proceedings and before any forum. It is also the duty of the courts of law to attend and decide the questions of law even if not raised by the parties. In addition to this it is also notable that had it been the intention of the legislature to bar the power/jurisdiction of this tribunal on this issue, a specific provision barring the same, would have been inserted in The Act or the Rules. Since there is no such barring provision therefore, in the humble view of this tribunal, the power/jurisdiction of this tribunal is not ousted on this issue. The question of considering the appellant as "Withholding Agent" is to be seen and decided on the basis of the definition and charact er assigned to it, by the law and on the basis of the evidence, available with the appellant. Treating the Additional Ground No. 2.1, as integral part of the appeal, the applica tion in hand i.e., allowing to submit additional ground is accepted.
9. The question raised in additional Ground No. 2.1 is the pivotal point in this case. The appellant had not raised the said ground before the forums below and it was also not attended to, specifically by the said forums. For effective and decisive resolution of the dispute, this question (Additional Ground No. 2.1), which goes to the root of the cause, needs to be decided in detail, after considering the law on this point, the judgment cited as 2017 SCMR 1136 = 2017 PTD 1372 (PTV Case) , and the evidence/documents available with the appellant or required by the officer of the authority . Resultantly the order impugned, passed by Commissioner (Appeals) is here by set aside. Appeal in hand is accepted in the terms that the case is remanded back to the competent officer for deciding it afresh keeping in view the observations made by this tribunal in this paragraph.
The Registrar of the Tribunal is directed to communicate this order to all concerned immediately . File of appeal be consigned to record room.