ASIM HAFEEZ, J. The petitioner , through this constitutional petition, seeks declaration of invalidity against orders dated 30.01.2020 and 06.02.2020, whereby the estimate(s) furnished by the petitioner regarding computation of advance income tax payments, for the 1st and 2nd quarters of Tax year 2020 ('tax year'), in terms of section 147 of the Income Tax Ordinance, 2001 ("Ordinance, 2001"), were rejected and notices under section 137 of Ordinance, 2001 for recovery of payable advance tax issued.
The respondents are duly represented and with concurrence, this case is treated as PAKKA CASE and decided accordingly .
2. The elephant in the room is the jurisdictional challenge thrown to the existence and assumption of jurisdiction by the respondent No.3, who allegedly proceeded to reject the estimate(s) furnished with regard to computation of advance tax payments. Conversely , the petition is resisted, on behalf of the respondents, on the point of availability of an alternate remedy under section 127 of Ordinance, besides submissions on merits.
3. Briefly the facts, necessary for adjudication of the lis at hand, are that the petitioner , whose income was chargeable to tax, furnished estimate of advance tax amounts, computed for the 1st quarter of tax year, wherein alleged tax credit(s) amounting to Rs.561,565,000/-, allegedly accrued under section 65D of Ordinance, 2001 - was deducted from the amounts computed. The estimate furnished was rejected and notices under section 137 of Ordinance, 2001 for recovery of the amounts, tabulated in accordance with sub-section (4) of section 147 of Ordinance, 2001 were issued. Aggrieved, the petitioner invoked constitutional jurisdiction bearing W.P No. 64399/2019, which was disposed of with direction to decide the matter afresh. The estimate furnished, for 1st quarter , was again rejected vide order dated 30.01.2020. During the interregnu m period, deemed assessment order regarding return of income for the Tax year 2018 was amended vide order dated 25.10.2019, in terms of section 122(5A) of Ordinance, 2001, whereby claim of tax credit(s) was dismisse d. The petitioner unsuccessfully impugned order dated 25.10.2019 before the Commissioner Inland Revenue (Appeals). Thereafter , second appeal was filed before learned Appellate Tribunal, which is claimed to be pending adjudication. In the meanwhile, the obligation to pay advance tax payment for 2nd quarter accrued. The petitioner again furnished estimate, computing advance tax payments, wherein amounts of Rs.1,047,271,000/- was deducted on account of claimable tax credit(s) under section 65D, ibid. The estimate for 2nd quarter was rejected on 06.02.2020 and recovery notices were issued under section 137 of Ordinance, 2001. The rejection of estimate(s) regard ing advance tax payments was primarily on account of alleged deductibility / adjustments of tax credit(s), allowance and admissibility whereof is vehemently disputed by the department. Hence, this petition. It is noted that deemed assessment order for the Tax year 2019 was amended vide order dated 06.03.2020, in exercise of powers under section 122 (5A) of Ordinance, 2001, whereby claim of tax credit under section 65D was again rejected.
4. Learned counsel for the petitioner submits that respondent No.3 (Officer Inland Revenue) lacked jurisdiction to question the computation and authenticity of estimate(s) furnished, regarding computation of advance tax payments, which estimate(s) cannot be questioned by the department. Alternately submits that in terms of first and second provisos to sub-section (6) of section 147 of Ordinance, 2001, the Commissioner has limited power to reject the estimate(s) furnished, which power can only be exercised subject to the existence of conditions prescribed, none of which was available when authority was purportedly exercised. Adds that no claim with respect to advance tax payments, allegedly overdue, can be raised till conclusive determination of income tax liability for the relevant tax year. Per learned counsel, alleged payable advance tax, subject to any tax is found payable upon carrying assessments, can be recovered along with penalty , as default surcharge, under section 205 of Ordinance, 2001. To support these submissions, he referred to the judgments reported as "Commissioner of Income Tax V.
M/s Habib Sugar Mills Ltd." (1993 PTD 343), "Call Tell and another V. Federation of Pakistan and others"
(2005 PTD 833), "Lone Cold Storage, Lahore V. Revenue Officers, Lahore Electric Power Co. and others"
(2010 PTD 2502 ), "Karachi Port Trust, Karachi V. Commissioner Inland Revenue, Karachi" (2011 PTD 1996 ), Messrs Lahore Polypropylene Industri es (Pvt.) Ltd. and others V. Federation of Pakistan and others (2012 PTD 1003 ), "Sui Northern Gas Pipelines Limited (SNGPL) V. Federation of Pakistan and others" (2017 PTD 1774 ), "Fauji Fertilizer Company Ltd. V. Federation of Pakistan through Secretary , Ministry of Finance, Islamabad and 3 others" (2018 PTD 719). With respect to the objection regarding maintainability of instant petition, learned counsel emphasized that remedy of appeal is not available to the petitioner under section 127 of Ordinance, 2001, against orders impugned through this petition. Reference, in this behalf, is made to the case reported as Chairman, Central Board of Revenue, Islamabad and 3 others V. Messrs PAK-SAUDI Fertilizer Ltd. (2000 PTD 3748 ). Learned counsel emphasized petitioner 's entitlement to deduct / adjust claimed tax credit(s), which became admissible once return of income for the preceding tax year was furnished, to be construed as deemed assessment; and unless reversed or altered, the declarations made therein are valid and intact. Learned counsel referred to sectio n 53 of the erstwhile Income Tax Ordinance 1979 (Repealed Ordinance), which was analogous to section 147 of Ordinance 2001, to emphasize point of absence of jurisdiction to question estimate(s) furnished regarding advance tax payments. Adds that claims regarding tax credit(s) are still pending adjudication before learned Appellate Tribunal, hence disallowance at this stage constitutes an illegality . Per learned counsel, estimate(s) under reference were rejected in the garb of principle of res-judicata, without appreciating that said principle has no application till the decisions referred attain finality in law. Referred to judgments reported as "Commissioner of Income Tax, North Zone (West Pakistan), Lahore V. Crescent Textile Mills Ltd., Lahore" (1974 (2) Tax 212), "Commissioner of Income Tax, Central Zone 'B' V. Messrs Farrokh Chemical Industries" (1992 PTD 523), "Central Board of Revenue and others V. Chanda Motors"
(1993 SCMR 39), "Messrs MICROP AK (PVT .) LTD., LAAHORE v. INCOME TAX APPELLA TE TRIBUNAL, LAHORE and 2 others" (2001 PTD 1180), "INSPECTING ADDITIONAL COMMIS SIONER OF INCOME TAX and others v. Messrs MICRO PAK (PVT .) LIMITED and others" (2002 PTD 877), "Messrs Engineering Consortium (Pvt.) Limited, Karachi V. I.T.O. Co., Circle Central Zone-C, Karachi" (2006 PTD 333), "Messrs Riaz Bottlers (Pvt.) Limited, Lahore V. Commissioner of Income Tax, Companies Zone-I, Lahore" (2008 PTD 877) "BP Pakistan Exploration and Production Inc., Karachi V. Additional Commissioner , Inland Revenue-B Enforcement and Collection Division-I , Karachi and another" (2011 PTD 647) and "H.M. Extraction Ghee & Oil Industries (Pvt.) Ltd. V. Federal Board of Revenue" (2019 PTCL 533). Lastly argued that sub-section (4) and
(6) of section 147 of Ordinance, 2001 are independent provisions for the purposes of computation and estimation of advance tax liability .
5. Learned counsel appearing for respondent department seeks dismissal of instant petition in wake of availability of remedy of appeal under section 127 of Ordinance, 2001, and reference, in this behalf, is made to the cases reported as "WEAL TH TAX OFFICER and another v. SHAUKA T AFZAL and 4 others" (1993 SCMR 1810 ) and "COMMMISSSIONER OF INCOME TAX, COMP ANIES-II and another v. HAMDARD DAWAKHANA (WAQF), KARACHI" (PLD 1992 SC 847). Per learned counsel, assumption and exercise of jurisdiction by respondent No.3 - who is duly authorized and competent - was in accordance with the first and second provisos to sub-section (6) of section 147 of Ordinance, 2001, added through Finance Act 2018 (XXX of 2018) dated 22.05.2018 ("Act, 2018).
Learned counsel emphasized, that claim of tax credit(s) under section 65D of Ordinance, 2001, was inadmissible and only such tax credit(s) are adjustable against computed advance tax, as allowed under section 168 of Ordinance, 2001, reference is made to item (D) of computation formula prescribed for tabulation of advance tax under sub-section (4) of section 147 of Ordinance, 2001. Submits that claim of tax credit(s) was otherwise rejected, while amending deemed assessments for the Tax years 2018 and 2019, vide orders dated 25.10.2019 and 06.03.2020. Learned counsel referred to the case of "H.M. EXTRACTION GHEE AND OIL INDUSTRIES (PVT .)
LTD. and another v. FEDERAL BOAR D OF REVENUE and another" (2019 SCMR 108) to highlight the adjustment mechanism with respect to claim of exemption(s) and tax credit(s). Further submits, that judgments referred are distinguishable in view of amendments introduced through Act, 2018.
6. Arguments heard. Available record perused.
7. The objection regarding maintainability has been confronted on two grounds, firstly on jurisdictional plane; averring that respondent No.3 lacked jurisdiction to review and reject estimate(s) furnished, regarding computation of advance tax payments and to proceed to recover allegedly payable advance tax before conclusive determination of income tax liability for the respective tax year. And secondly that no remedy of appeal is available under section 127 of Ordinance 2001, in view of the nature of the orders impugned here.
8. The question of alternate remedy would pale into insignificance if jurisdictional challenge succeeds, in which eventuality the very act of assumption of jurisdiction would be of no legal effect. It is therefore appropriate to decide the jurisdictional objection first. It is significant to note that petitioner has not questioned the vires, constitutionality or legality of the first and second provisos to sub-section (6) of section 147 of Ordinance, 2001 - added through the Act, 2018.
9. There is no dispute regarding the statutory obligation to pay advance tax for requisite tax year in accordance with section 147 of the Ordinance, 2001, which obligation was allegedly discharged upon furnishing computed advance tax liability for the 1st quarter vide document dated 27.09.2019 - followed by explanatory letters dated 11.10.2019 and 20.01.2020. The contents of the document dated 27.09.2019 manifest that advance tax liability was worked out under sub-section (4) sectio n 147 of Ordinance, 2001. The petitioner , while computing the liability proceeded to effect deduction of Rs.561,565,000/- for 1st quarter on the basis of alleged claim of tax credit(s), claimed under section 65D of Ordinance, 2001. It was alleged through document dated 11.10.2019 that advance tax liability of Rs.483,282,000/-, computed under sub-section (4) of section 147, ibid, was not payable in lieu of deduction of claim of tax credit(s), and in fact excess tax of Rs.82,283,641 was paid. Likewise, excess advance tax payment was claimed by the petitioner while computing advance tax liability for 2nd quarter of the tax year, wherein deduction of Rs.1,047,271,000/- was made on the basis of alleged tax credit(s), claimed to have accrued in terms of section 65D, ibid. The estimate for 2nd quarter was furnished through document dated 31.12.2019. Respondent No.3 rejected the estimate(s) furnished on the premise that estimate(s) were invalid, being contrary to computation formula provided under sub-section (4) of section 147 of Ordinance, 2001 and otherwise no deductions could be effected on the basis of alleged tax credit( s), against computed liability of advance tax, as claimed tax credit(s) was never allowed in terms of section 168 of Ordinance, 2001; hence, not available for any alleged adjustments against advance tax liability . Manifestly , respondent No.3, claimed to be duly authorized under section 210 of the Ordinance, 2001, rejected the estimate(s) upon assumption of jurisdiction in terms of first and second proviso to sub-section (6) of section 147 of Ordinance, 2001, added through Act, 2018, which provisos hold critical position in the context of subject matter controversy . It is expedient to reproduce sub-section (6) of section 147, ibid, and provisos thereto, for ease of reference, which read as; "(6) If any taxpayer who is required to make payment of advance tax under sub-s ection (1) estimates at any time before the last instalment is due, that the tax payable by him for the relevant tax year is likely to be less than the amount he is required to pay under sub-section (1), the taxpayer may furnish to the Commissioner an estimate of the amount of the tax payable by him, and thereafter pay such estimated amount, as reduced by the amount, if any, already paid under sub-section (1), in equal instalments on such dates as have not expired; *Provided that an estimate of the amount of tax payable shall contain turnover for the completed quarters of the relevant tax year, estimated turnover of the remaining quarters along with reasons for any decline in estimated turnover , documentary evidence of estimated expenses or deductions which may result in lower payment of advance tax and the computation of the estimated taxable income of the relevant tax year: *Provided further that where the Commis sioner is not satisfied with the documentary evidence provided or where an estimate of the amount of tax payable is not accompanied by details mentioned in the first proviso, the Commissioner may reject the estimate after providing an opportunity of being heard to the taxpayer and the taxpayer shall pay advance tax according to the formula contained in sub-section (4).
[*added through Act, 2018] [Emphasis supplied]
10. While comparing sub-section (6) of section 147, with and without the provisos, fundamental departure has been made, when contextualized in the context of jurisdictional objection. Out with the old, in with the new. It is evident that, subject to the conditions prescribed, jurisdiction to reject the documentary evidence furnished has been extended, which was lacking before the introduction of provisos, ibid. Even no such authority was extended under section 53 of the Repealed Ordinance , largely referred by learned counsel for the petitioner to emphasize jurisdictional objection. In terms of first proviso, certain parameters were laid down, to be adhered to while furnishing estimate(s) thereunder , which inter-alia included provisioning of documentary evidence relating to alleged deductions, resulted in reduced payment of advance tax. Documentary evidence by way of estimation was accordingly provided by the petitioner , tabulating the advance tax liability and effecting deduction(s) on the basis of tax credit(s) - claimed under section 65D of Ordinance, 2001. The expression 'documentary evidence' calls for no explanation for understanding its meaning, scope and extent. Officer Inland Reve nue, acting in terms of second proviso to sub-section (6) of section 147, ibid, proceeded to review the documentary evidence furnished and rejected the same, upon being unsatisfied. Upon rejection of the estimate(s) adva nce tax payable in terms of the computation formula was claimed. The assumption of jurisdiction is in accordance with the mandate of the provisos to sub-section (6) of section 147 of Ordinance, 2001. The significance of the provisos, while interpreting sub- section (6) of section 147, ibid, cannot be undermined or ignored, which provisos in fact, control and regulate the procedure provided under sub-section (6) of section 147, ibid, for furnishing estimate(s) thereunder . Their Lordships, while dilating upon the cano ns of statutory interpretation in the context of 'proviso', in the case of MESSRS EAST AND WEST STEAMSHIP COMP ANY v. PAKIST AN, through the Secretary to the Government of Pakistan, Ministry of Commerce, Karachi (PLD 1958 Supreme Court 41 , at page 72), observed that "Moreover , one of the plainest rules of statutory interpretation is that a proviso is to be regarded as something which excepts a particular case from a general principle. The effect of a proviso is to except something out of a preceding portion of the enactment or to qualify something enacted therein which but for proviso would be within it.
As is said in Caries on Statute Law;- "The natural presupposition is that, but for the proviso, the enacting part of the section would have included in it the subject-matter of the proviso"
11. In nutshell, submissions made by learned counsel to object to assumption of jurisdiction are misconceived, which if adverted to, would have the effect of making section 147 in general and provisos in particular redundant and ineffective. Their Lordships while interpreting the effect of section 15-B of Income Tax Act 1922, in the case of MUHAMMADI STEAMSHIP Co. LTD v. The COMMISSIONER OF INCOME-T AX (CENTRAL) KARACHI (1966 PTD 664), held that "it is a well-established rule of interpretation of statutes that no words in a statute are to be treated as surplusage or redundant". Likewise, no redundancy or surplusage can be attributed to the provisos to sub-section (6) of section 147 of Ordinance, 2001. The provisos have to be given full effect, without an exception.
Apex court in the case of Messrs HIRJINA & Co. (PAKIST AN) LTD, KARACHI v. COMMISSIONER OF SALES TAX CENTRAL, KARACHI (1971 SCMR 128), reiterated time-tested principle of interpreting taxing enactments, relevant portion is reproduced hereunder as; "while interpreting the taxing statute the Courts must look to the words of the statu te and interpret it in the light of what is clearly expressed and not imply anything which is not expressed and provisions to support assumed deficiencies."
[Emphasis supplied]
12. Without getting into nitty-gritty of factual details, bordering the domain of exercise of jurisdiction conferred, it is evident that jurisdiction is available, but exercisable subject to the conditions prescribed. The matter of exercise of jurisdiction is another specie. There is conspicuous distinction between the existen ce of jurisdiction and exercise of jurisdiction, as former implies grant or conferment of authority to adjudicate and later manifest the manner of application / execution thereof. Their Lordships, in the case of STATE v. ZIA-UR REHMAN and others (PLD 1973 Supreme Court 49) while classifying the expressions 'jurisdiction' and 'judicial power ' observed as follows; "It expresses the concept of the particular res or subject-matter over which judicial power is to be exercised and the manner of its exercise. Jurisdiction, there fore, a right to adjudicate concerning particular subject-matter in a given case, as also the authority to exercise in a particular manner the judicial power vested in the Court".
13. The argument that sub-section (4) and sub-section (6) of section 147, ibid, are independent in its operations is misconceived, which, if adverted to would render sub-section (4), ibid, redundant. The liability to pay advance tax has to be computed in accordance with sub-section (4) of section 147, for each quarter of the respective tax year, which quarterly computed liability for the tax year would conjointly constitute an obligation to pay advance tax for the tax year in terms of sub-section (1) of section 147, ibid. There is no escape or avoidance from the computation formula prescribed under sub-section (4) of section 147, ibid. For the purposes of clarity , it is expedient to reproduce sub-section (4) of section 147, which reads as: (4)"Where the taxpayer is an association of persons or a company , the amount of advance tax due for a quarter shall be computed according to the following formula:- A. is the taxpayer 's turnover for the quarter provided that where the taxpayer fails to provide turnover or the turnover for the quarter is not known, it shall be taken to be one-fourth of one hundred and ten percent of the turnover of the latest tax year for which a return has been filed; B. is the tax assessed to the taxpayer for the latest tax year .
[Explanation.--For removal of doubt it is clarified that tax assessed includes tax under sections 1 13 and 1 13C.] C. is the taxpayer 's turnover for the latest tax year; and D. is the tax paid in the quarter for which a tax credit is allowed under section 168.
[Emphasis supplied]
14. The significance of item (D) cannot be undermined, while allowing deductions, as evident from sub-section (4) of section 147, ibid. It is not the case of the petitioner that tax credit(s) alleg edly deducted from the liability computed were allowed in terms of section 168 of Ordinance, 2001. Since, this court is not touching the issues regarding legality or admissibility of said tax credit(s), therefore exercises restraint to make any comment in this behalf. Coming back to the scope of sub-section (6) of section 147, ibid, it is eviden t that it provides an option to the taxpayer to furnish estimate(s) of the amount of the tax payable, if upon estimation at any time before the last installment is due, that tax payable for the relevant tax year is likely to be less than the amount taxpayer is required to pay under sub-section (1) of section 147, ibid, the taxpayer shall pay the estima ted amounts, as reduced by the amounts, if any, already paid under sub-section (1) of section 147, ibid. In essence, the petitioner while submitting estimate(s) claimed - without prejudice to the computation formula - that amounts payable under sub-section (1) of section 147, ibid, stood reduced allegedly in wake of claimed tax credit(s), by effecting deductions from the computed liability of advance tax payments. The applicability of sub-section (4) of section 147, while making estimate(s) is significant, which is evident from the perusal of second proviso thereto, whereby the Commissioner is empowered to make directions for payment of tax in accordance with the formula prescribed. Until computation of advance tax liability has taken place in accordance with the statutory mandate, there is no question of alleged estimation of tax payable for the relevant year and consequent adjustments therefrom, for the purposes of sub- section (6) of section 147, ibid. The computation appears to be condition precedent for undertaking estimation under sub-section (6) of section 147, ibid. The argument is inherently flawed, which, for instance, implies that petitioner or a taxpayer , as the case may be, may proceed to claim and deducts alleged tax credit(s) from computed advance tax liability - notwithstanding same are not allowed under section 168 of Ordinance, 2001, in terms of item D of sub-section (4) of section 147 of Ordinance, 2001. Such a construction, if accepted, would implies that every eligible taxpayer , required to pay the advance tax, may unilaterally claim tax credit(s), proceed to effect adjustments and pay reduced advance tax payments. The submissions are contrary to the estimates submitted by the petitioner .
15. In light of aforesaid, the argument regarding absence or want of jurisdiction, to examine and reject the estimate(s) furnished is without any force and same is repelled. The judgments referred by learned counsel for the petitioner and reasonings adopted therein, wherein, commonly , it was held that Taxation officer / authorities have no jurisdiction to question the estimate(s) furnished with regard to the computation of advance tax payments, are distinguishable and do not apply to the controversy at hand. In fact, no such authority or jurisdiction was available or conferred to review and reject estimate(s), either under section 53 of the Repealed Ordinance or section 147 of Ordinance, 2001, as it existed before the amendments introduced. None of the judgments referred have interpreted section 147 of the Ordinance, 2001, after the amendments are introduced through the Act, 2018.
16. Learned counsel has also argued that act of issuance of impugned recovery notices, section 137 of Ordinance, 2001 is devoid of jurisdiction and no recovery could be effected with respect to alleged due advance tax liability , till conclusive determination of liability of income tax for the relevant tax year, which determination has to be carried out in accordance with the assessment mechanism provided in Part-II of Chapter X of Ordinance, 2001. An ancillary submission is that any failure, if any attributable to the petitioner taxpayer , can be effectively remedied by resorting to imposition of levy of default surcharge under sub-section (1B) of section 205 of Ordinance, 2001, only after assessment and determination of income tax liability . The argument loses significance when examined in the context of jurisdiction extended in terms of provisos to sub-section (6) of section 147 of Ordinance, 2001, whereby jurisdiction to examine the documentary evidence and reject the same, upon being unsatisfied has been provided, which implies that the Officer / Taxation authorities are competent to pass orders, determining payable advance tax in accordance with computation formula prescribed, and any failure thereof is enforceable alike an assessment order , in terms of sub-section (7) of section 147, ibid. The question of existence of jurisdiction has been discussed in earlier part of the judgment and need no elaboration. The mechanism for computation of advance tax payments, due dates for such payments - timelines are prescribed under sub-section 5(A) of section 147, ibid for the payment of advance tax payments for each quarter of respective tax year - and consequences of failure are provided under section 147 of Ordinance, 2001. The payable advance tax, treated as tax due under an assessment order , is recoverable under section 137 of Ordinance, 2001. It is expedient to reproduce sub-section (7) of section 147 and section 137 of Ordinance, 2001, for facility , which read as; Sub-section (7) of section 147; The provisions of this Ordinance shall apply to any advance tax due under this section as if the amount due were tax due under an assessment order ."
"137. Due date for payment of tax.-- (1) The tax payable by a taxpayer on the taxable income of the taxpayer including the tax payable under section 113 or 113A for a tax year shall be due on the due date for furnishing the taxpayer 's return of income for that year .
(2) Where any tax is payable under an asse ssment order or an amended assessment order or any other order issued by the Commissioner under this Ordinance, a notice shall be served upon the taxpayer in the prescribed form specifying the amount payable and thereupon the sum so specified shall be paid within thirty days from the date of service of the notice;"
Provided that the due date for payment of tax payable under sub- section (7) of section 147 shall be the date specified in sub-section (5) or sub-section (5A) or first proviso to sub-section (5B) of section 147.
[Emphasis supplied]
17. In terms of sub-section (7) of section 147 of Ordinance, 2001 - deeming clause - the provisions of the Ordinance are made applicable to advance tax payments due under section 147 of the Ordinance - which makes recovery of tax due, recoverable under section 137 of Ordinance, 2001. There is nothing in section 147 of the Ordinance, 2001, to defer recovery of due advance tax till final determination of tax liability for the tax year and any construction contrary thereto would otherwise threaten the existence of deeming provision of law. The scope and significance of a deeming clause has been illustrated in the case of Mehreen Zaib-un-Nisa vs Land Commissioner (PLD 1975 SC 397 ), wherein it was observed as follows; "when a statute contemplates that a state of affairs should be deemed to have existed, it clearly proceeds on the assumption that in fact it did exist at the relevant time but by a legal fiction we are assume as if it did exist"
It is also apt to refer to the relevant portions from the case of Elahi Cotton Mills Limited v. Federation of Pakistan (PLD 1997 Supreme Court 582 , at page 677) to understand the context, which reads as; "(xvii) That generally the effect of a deeming provision in a taxing statute is that it brings within the tax net an amount which ordinarily would not have been treated as an income. In other words, it brings within the net of chargeability income not actually accrued but which supposedly to have accrued notionally .
(xviii) That when a statute enacts that something shall be deemed to have been done which in fact and in truth was not done, the Court is entitled and bound to ascertain for what purposes and between what persons the statutory fiction is to be resorted to.
(xix) That where a person is deemed to be something the only meaning possible is that whereas he is not in reality that something, the Act required him to be treated as he were with all inevitable corollaries of that state of affairs.
(xx) That the legal fictions are limited for a definite purpose, they cannot be extende d beyond the purpose for which they are created."
18. The expression "assessment order" in sub-section (7) of section 147 of Ordinance, 2001 has to be construed and interpreted exclusively in the context of section 147 and any contrary construction, otherwise subjecting it to or establishing any purported proximity with the nature of the assessment order , envisaged under section 120 of Ordinance, 2001, would render provisos to sub-section (6) of section 147, subsection (5A), sub-section (7) of section 147 and sub-section (2) - including proviso thereto, added through the Finance Act, 2018 - of section 137 of Ordinance, 2001, redundant, superfluous and ineffective, which is undesirable and unwarranted, especially in the absence of any incidence of legislative incompetence or purported violation of any Fundamental right. The scheme of collection of advance tax payable, timing of its collection and provisioning of mechanism for effecting recovery thereof, which amount is due, cannot be catalogued with the realm of chargeability or levy, which distinction is crucial and need to be acknowledged for the survival of section 147 of Ordinance, 2001 and harmonious applicability thereof. The purpose and object of section 147-ibid, to allow collection of advance tax and effect recovery thereof, can be enforced without offending the mechanism of levy or chargeability of tax and changing the provisional character of advance tax, made recoverable accordingly . Guidance, in this behalf, is solicited from the ratio of the decision in the case of Indus Jute Mills Ltd. V. Federation of Pakistan (2009 PTD 1473 ), wherein his Lordship Sh. Azmat Saeed, J, as his lordship then was, while interpreting section 235 of Ordinance, 2001, observed as follows; "16. However , before proceeding further it would be appropriate to draw a distinction between the collection of tax and its levy or changeability . Similarly , the process of assessment of liability also must be distinguished. The distinction between the subject matter of the tax and the standard whereby it was measured must also be borne in mind. In the case of Whiteny v. Inland Revenue Commissioners reported as AIR 1926 AC 37 it has been held at page 52 as follows:-- ..."Now there are three stages in the imposition of a tax, there is the declaration of liability , that is the part of the statute which determines what persons in respect of what property are liable. Next, there is the assessment.
Liability does not depend on assessment. That ex-hypothesis has already been fixed. But assessment particularizes the exact sum which a person liable has to pay. Lastly , come the methods of recovery , if the person taxed does not voluntarily pay ."
17. In the case reported as Elahi Cotton Mills Ltd. PLD 1997 SC 582 , the Hon'ble Supreme Court held as under:-- "(xxvii) That there is a clear distinction between the subject matter of a tax and the standard by which the amount of tax is measured keeping in view the practical difficulties which are encountered by the Revenue to locate the persons and to collect the tax due in certain trades, if the Legislature in its wisdom thought that it would facilitate the collection of tax due from specified traders on a presumptive basis, the same is not violative of the Fundamental Rights relating to equality"....
18. The aforesaid clearly identifies three stages of imposition of tax, i.e., 'Declaration of Liability , Assessment and Recovery . However , the aforesaid three stages need not necessarily occur in any particular order . More importantly , the recovery of tax whether directly from the assessee or indirectly through collection from expenditure or deduction from receipts, as the case may be, does not amount to assessment of tax, nor creates any liability to pay the said amount. Advance tax is merely a provisional payment. Furthermore, the mode of recovery of tax is not the sole determining factor in ascertaining the subject matter of tax".
[Emphasis supplied]
19. In the case of COMMISSIONER OF INLAND REVENUE v. Messrs PEPCO PAKIST AN (2015 PTD 863), Division Bench of this Court elucidated the rational of advance tax, its collection before the determination (passing of assessment order) and credit to be allowed against taxable income so determined, distinguishing it from charging or levy of tax. The challenge to the mechanism for collection and recovery of tax is misconceived. Of all the judgments referred, the cases of Karachi Port Trust, Karachi (supra) and Sui Northern Gas Pipelines Limited (SNGPL) (supra) require discussion, wherein, besides deciding the question of absence of jurisdiction of Taxation Officer / authorities to examine the estimate(s) furnished in terms of section 147 of the Ordinance, the validity of the orders passed in terms of sub-section (7) of section 147 were also discussed, thoug h in the context of availability of jurisdiction to review and reject estimate(s) furnished. Let's examine these two cases, as other case law referred is not relevant in lieu of amendments. It is expedient to reproduce, for facility , reasoning extended in the case of Sui Northern Gas Pipelines Limited (SNGPL) (supra), which reads as; "A closer look at the impugned notices are, in fact, unilateral and an ex-parte determination of an alleged advance tax due from the petitioner -company . This is not the mandate of subsection (7) and by the said provision, which is merely by way of legislating by reference, powers cannot be conferred on the officer of income tax to dispute at each stage of the payment of advance tax by a taxpayer"
[emphasis supplied] It is expedient to reproduce, the reasoning in the case of Karachi Port T rust, Karachi (supra), which reads as; "The learned counsel for the respondent has also not been able to point out any provision of law which provides such authority and therefore we are of the considered opinion that once an estimate is filed only option available to the Taxation Authority is to levy default surcharge under section (1B) of section 205 after completing the assessment, if such default surcharge is leviable on the basis of assessment. The language of subsection (7) of section 147 is also clear which provides an authority to the Taxation Authority to recover advance tax not paid as if it was a tax due under an assessment order so that provisions of section 137(2) are not violated. However , we are inclined to agree with the learned counsel for the applicant that it does not provide them an authority and jurisdiction to pass any order for the recovery of such tax and therefore we are on the considered opinion that order passed by the Taxation Of ficer is without proper jurisdiction and authority and cannot be sustained.
[Emphasis supplied]
20. In above-noted cases, one thing is common, that the orders were passed by the Taxation Officer / Authority under sub-section (7) of section 147 of Ordinance, 2001, claiming payment of allegedly due advance tax payments.
The ratio settled in the cases of Karachi Port Trust, Karachi (supra) and Sui Northern Gas Pipelines Limited (SNGPL) (supra) underlines the principle that in the absence of an authority or jurisdiction to examine or dispute the estimate(s) furnished, no corresponding power is vested to pass any order for the recovery of advance tax payments. And rightly so, how could a Taxation officer / Authority , in the absence of any jurisdiction / authority to object or differ with the estimates furnished, could pass any order in respect thereof. The amendments in sub- section (6) of section 147 and proviso to sub-section (2) - added through the Finan ce Act, 2018 - of section 137 of Ordinance, 2001 has introduced sea-change, whereby , besides extending jurisdiction to reject the estimate(s) the Commissioner is also empowered to direct taxpayer to compute advance tax amounts in accordance with the formula of computation provided under sub-section (4) of section 147 of Ordinance, 2001, and pay the same within the timeframe prescribed - reference is made to sub-section (5A) of section 147, ibid. No doubt, default surcharge can be claimed upon default in payment of quarterly advance tax payments, in accordance with due dates mentioned, without waiting for determination of tax liability after the close of relevant tax year. In this case, the Officer Inland Revenue, examined the documentary evidence, comprising of docu ments containing estimate(s) of advance tax payments and expressed lack of satisfaction, whereafter order of rejection of estimates was passed, whereupon advance tax becomes payable and recoverable as tax due. The conferment of jurisdiction / authority to reject estimate(s) renders the cases of Karachi Port Trust, Karachi (supra) and Sui Northern Gas Pipelines Limited (SNGPL) (supra) inapplicable qua subject matter controversy . It appears that legislature was mindful of the judicial pronouncements referred, while introducing the amendments through the Finance Act 2018. To recapitulate the discussion, it is reiterated that amendments effected have not altered the scope, nature and purpose of the advance tax but addressed the mischief of evasion of advance tax payments through furnishing of invalid and inadequate estimate(s), which are subjected to scrutiny in terms of first and second provisos to sub-section (6) of section 147 of Ordinance, 2001, subject to fulfillment of the conditions prescribed therein. The jurisdictional objection qua initiation of recovery of due advance tax is repelled. The disputes, if any, regarding calculation, computation and deductions can appropriately be raised in terms of remedies available.
21. After holding that requisite jurisdiction is available, I take up the question of availability of remedy of appeal under sub-section (1) of section 127 of Ordinance, 2001, against the orders impugned. It is expedient to reproduce sub-section (1) of section 127, ibid, for facility , which reads as; "127. Appeal to the Commissioner (Appeals).-- (1) Any person dissatisfied with any order passed by a Commissioner or an Officer of Inland Revenue under section 121,122, 143, 144, 162, 170, 182, or 205, or an order under sub-section (1) of section 161 holding a person to be personally liable to pay an amount of tax, or an order under clause (f) of sub-section (3) of section 172 declaring a person to be the representative of a non-resident person or an order giving effect to any finding or directions in any order made under this Part by the Commissioner (Appeals), Appellate Tribunal, High Court or Supreme Court, or an order under section 221 refusing to rectify the mistake, either in full or in part, as claimed by the taxpayer or an order having the effect of enhancing the assessment or reducing a refund or otherwise increasing the liability of the person may prefer an appeal to the Commissioner (Appeals) against the order".
[Emphasis supplied]
22. The petitioner has impugned two orders, one of which is order dated 30.01.2020, wherein component of default surcharge, in terms of section 205 of the Ordinance, 2001, was included, which per-se becomes appealable under subsection (1) of section 127 of Ordinance, 2001. Learned counsel submits that no default surcharge has been claimed with respect to order dated 06.02.2020. Notwithstanding the aforesaid, I proceed to decide the issue as follows. Primary submission, by learned counsel for the petitioner , is that reference to section 147 of Ordinance, 2001 or any order passed therein, is conspicuous by its absence in section 127, ibid, therefore, no remedy of appeal is available. Reference is made to the decision in the case of Messrs PAK-SAUDI Fertilizer Ltd. (supra), which, albeit a leave refusing order , is otherwise not applicable to the facts and circumstances of the case at hand.
In the case of Messrs PAK-SAUDI Fertilizer Ltd. (supra), the question involved was that whether section 53 of Repealed Ordinance, extends any authority unto the Assessing Officer / Assistant Commissioner to frame assessment and demand advance income-tax in case of non-payment of advance tax, which was answered in negative. Even on facts, the case of Messrs PAK-SAUDI Fertilizer Ltd. (supra), is different, wherein there was no dispute regarding any difference qua the estimation furnished and actual advan ce tax payable, resulting in the claim of increased liability . The controversy in the case of Messrs PAK-SAUDI Fertilizer Ltd. (supra) has to be examined in the context of section 53 of Repealed Ordinance. The case at hand is distinguishable, wherein deductibility of certain amounts was rejec ted and enhanced/increased advance tax payments were claimed, which order is appealable under section 127 of the Ordinance, 2001. The words 'or an order having the effect of enhancing the assessment or reducing a refund or otherwise increasing the liability of the person' are meaningful and cannot be ignored. Learned counsel for the petitioner has objected that conditions prescribed for exercise of authority in terms of provisos to sub-section (6) of section 147 were not available, which questions along with other ancillary issues can appropriately be raise d and may examined by the appellate forum, in case appeal is filed. This court is not inclined to exercise jurisdiction qua any matter touching the exercise of jurisdiction. The question of authorization of respondent No.3 to assume jurisdiction in terms of sub-section (6) of section 147 of Ordinance, 2001 can be raised before the appellate forum. I am not convinced with the submissions that no adequate opportunity was afforded, record speaks for itself. This court is not inclined to comment of the factum of deductibility of alleged tax credit(s), which issues are sub-judice and any comment, in respect thereof, would prejudice the case of the parties.
23. In view of the above, this petition is incompetent and same is, therefore, dismissed. Any observation made herein shall not prejudice the case of any party on merits, either with respect to the proceedings currently pending or proceedings to be initiated by invoking the remedy of appeal provided under the provisions of Income Tax Ordinance, 2001, if advised, which matters shall be decided without being influenced by this judgment. No order as to the costs.