' This is a constitutional petition filed by the Colony Sarhad Textile Mills Ltd., Rawalpindi, petitioner, for a direction to compel the Sales Tax Officer, Companies Circle-I, Rawalpindi, respondent No. 1, to make immediate and prompt payment of Rs, 29,48,091 to them, being sales tax refund due to the petitioner for the Assessm ent Years 1971-72 to 1974-75, with interest for mala fide recovery and withholding of the said sum or, in the alternative, to adjust the said sum against the income tax dues payable by the petitioner to the Government of Pakistan.
2. The case of the petitioner is that with regard to Assessment Years 1967.68 to 1974-75 they were entitled to the refund of sales tax charged on purchases made by it of raw materials etc., which sales-tax was charged by the sellers in the price in the bills which were paid by the petitioner Company. The petitioners filed claims in the prescribed forms before the Sales Tax Officer, Companies Circle-4 Rawalpindi, under section 27(2) of the Sales Talc Act for the refund of the under-noted amounts relevant to the assessment years given next to each:- Assessm ent Year Amount 1967-68 Rs, 2,55,217 1968-69 Rs, 2,56,625 1969-70 Rs, 3,72,617 1970-71 Rs, 3,68,066 1971-72 Rs, 5,13,639 1972-73 Rs, 4,09,723 1973-74 Rs, 7,10,931 1974-75 Rs, 13,13,798 ' Respondent No. 1 issued notices in form SST.24 calling upon the petitioner Company to file various documents in proof of its claims for the refund of sales tax, which were complied with by various Chief Accountants and other Officers of the petitioner Company, who appeared before respondent No. 1 on the dates fixed by him and presented relevant documents to substantiate its claims for the refunds.
3. Since the petitioner's claims for the refund of sales tax with regard to Assessment Years 1967-68 to 1969-70 have been paid and adjusted on 5-5-1981 by respondent No. 1, I need not discuss the case of these assessm ent years, but confine myself to claims for assessment years 1971-72 to 1974- 75 which are presently in dispute.
4. The hearing with regard to assessment year 1971-72, both with regard to the petitioner's liability to sales tax, if any, and its claim for refund, took place on 24-6-1975 before respondent No. 1, who found that the petitioner was not liable to sales tax nor was it entitled to claim any refund vide its order Annexure 'A'. Similarly, the hearing with regard to Assessment Years 1972-73 and 1973-74 regarding both the same matters took place on 24-10-1975 before respondent No. 1, who came to the same finding vide his order Annexure 'B'. In the order dated 24-6-1975, respondent No. 1 referred to the fact that notice on Form SST.24 was issued and complied with by Mr. Sarwat Hussain Zaidi, the Chief Accountant of the Company, with whom the case was discussed. Likewise, in the order dated 24-10-1975, respondent No. 1 referred to the fact that in response to the notice in the form SST.24, Mr. Sidrat Ullah attended, with whom the case was discussed. In both these orders dated 24-6-1975 and 24-10-1975 (Annexures 'A' and '131 the legal issue whether the petitioner was entitled to the refund of the sales tax was discussed and rejected on the ground that as the end products manufactured by the petitioner Company were only liable for excise duty and no sales tax was levied on it, refund of sales tax on the purchase of raw materials, etc., could not be allowed. The petitioner Company, thereupon, preferred an appeal before the Appellate Assistant Commissioner, Sales Tax, Rawalpindi, with regard to assessment years 1971-72 to 1973-74, who, vide his judgment dated 19-1-1977 (Annexure 'C') allowed the claims of sales tax for all the three years. The appellate Court held that the excise duty paid by the petitioner on its end products included the component of sales tax and therefore, the petitioner was entitled to claim refund of sales tax paid by it when purchasing raw materials etc., which went into the making of the finished end products. In order to give effect to the appellate orders, respondent No 1 issued a letter to the petitioner Company on 11- 6-1977 requiring it to produce documentary evidence in support of its refund applications. The petitioner Company, thereupon, by letters Annexures 'D', `E,' and 'F' dated 20-11-1977, covering the said three assessm ent years, requested respondent No. 1 to pay their claims for the amounts due, as stated in para. 2 above, on the ground that the question of verification was never disputed by him in his earlier orders refusing their claims or in appeal before the Appellate Assistant Commissioner, Sales Tax, Rawalpindi, and that he was, therefore, not justified in re-opening the said question again. On 29-6-1978, respondent No. 1 rejected petitioner Company's claims for the refund of the sales tax for the assessm ent years 1971-72 to 1973-74 on the ground that the petitioner Company had not been able to prove its claims, as required by law. The said order is Annexure `G' to the petition.
5. Likewise, the hearing with regard to assessment year 1973-74 both with regard to the petitioner's liability to sales tax, if any, and its claim for refund, took place on 29-6-1978 before respondent No. 1, who found that the petitioner was neither liable to sales tax nor was entitled to claim any refund, vide his order Annexure 'H'. In the said order, respondent No. 1 referred to the fact that summons in form SST.24 was issued, in response to which Mr. Sidrat Ullah had appeared from time to time on behalf of the assesse and the case was discussed with him. In respect of this assessment year also, respondent No. 1 held that as the petitioner Company's end products were not liable to sales tax, refund of sales tax on the purchase of raw materials etc., which went in the making of the end product, was not available.
6. The petitioner Company again preferred appeals before the Appellate Assistant Commissioner, Sales Tax, Rawalpindi, with regard to both the orders (Annexures `G' and 'H') of respondent No. 1 dated 29-6-1978. The Appellate Assistant Co missioner, Sales Tax, Rawalpindi, by his judgment dated 3-6-1980 and 9-6-1980 (Annexure 'I' & `J'), accepted the petitioner's claims and directed respondent No. 1 to allow the claims of the petitioner without further delay with regard to assessm ent years 1971-72 to 1974-75.
7. Being aggrieved by the aforesaid orders of the Appellate Assistant Commissioner, Sales Tax, Rawalpindi, respondent No. 1 preferred seven appeals before the Appellate Tribunal, Peshawar, with regard to all the aforesaid for assessment years and the three assessment years 1967-68 to 1969-
70. In his grounds of appeal, respondent No. 1 took up the objection that the Appellate Assistant Commissioner, Sales Tax, was not justified in directing respondent No. 1 to allow the claims of refund, without first permitting him to verify their genuineness and quantum. The Appellate Tribunal, Peshawar, by its order dated 31-10-1981 (Annexure 'R'), rejected the respondent's appeals and upheld the orders of the learned Appellate Assistant Commissioner, Sales Tax, Rawalpindi, dated 3-6-1980 and 9-6-1980.
8. The learned counsel for the petitioner Company submits that the predecessor of the present respondent No. 1 had verified the petitioner's claims for the refund of sales tax relating to the assessm ent years 1971-72 to 1973-74 in proceedings on 24-6,1975 and 24-10-1975 (Annexures 'A' & 'B'), but had rejected the petitioner's claims on legal grounds only and that when the petitioner preferred an appeal against the said two orders before the Appellate Assistant Commissioner, Sales Tax, Rawalpindi, respondent No. 1 never took up the objection of verification, but argued the legal issue alone which was decided against him on 19-1-1977 (Annexure 'C'). However, when the petitioner Company pressed for the payment of its claims relating to these three assessment years, respondent No. 1 again took up the question of verification, notwithstanding written representation made by the petitioner on 20-11-1977 (Annexures & 'F') that the amounts were never disputed by him during the proceedings of assessment, that what alone was disputed was that legally it was not maintainable as the end products were not liable to sales tax, that the legal dispute was resolved in their favour by the Appellate Assistant Collector, Sales Tax, that the appellate Court had directed him to pay' the claims and that he was avoiding to do so.
Respondent No. 1, however, by his order dated 29-6-1978 (Annexure `G') held that a mere omission of a few words in the A. A. C's. Orders directing him to allow the refund after verification could not be made an exercise for not producing documentary evidence to prove that sales tax was paid on the raw materials purchased by it and rejected the petitioner's claims. In the meantime, respondent No. 1, rejected the petitioner's claim for refund of sales tax on 29-6-1978 (Annexure 'H') relating to Assessm ent Year 1974-75. Learned counsel for the petitioner further submits that the petitioner Company then again preferred two appeals against these two orders before the Appellate Assistant Commissioner, Sales Tax, Rawalpindi, on the ground that respondent No, I was avoiding the compliance of the appellate orders and that he should be directed to comply with the same, as the amounts were never disputed by him in proceedings under section 27, which view prevailed with the Appellate Assistant Commissioner, Sales Tax, Rawalpindi (Annexures and who directed respondent No. 1 to allow the claims of the petitioner for all for assessment years without any further delay. Learned counsel further submits that the dispute regarding verification was finally taken up by respondent No. 1 in seven separate appeals filed by him relating to Assessment Years 1967-68 to 1969-70 and 1971-72 to 1974-75 before the Appellate Tribunal, Peshawar, which rejected all of them on 31-10-1981 (Annexure 'R') and directed him to comply with the directions as contained in the appellate orders. In view of the final order of the Appellate Tribunal, Peshawar, dated 31-10-1981 (Annexure 'R'), the learned counsel submits that the same is final by virtue of section 15(7) of the Sales Tax Act, as the same was not challenged by respondent No. 1 through any reference filed in the High Court under section 17 thereof. Relying upon Bhopal Sugar Industries v.
Income tax Officer (I), the learned counsel submits that whatever be the validity of the final order passed by the Appellate Tribunal, respondent No. 1 is duty bound to obey and comply with the same, and he cannot question it in any ancillary proceedings. Lastly, the learned counsel submits that the predecessor of respondent No, I actually paid the claims of the petitioner company for refund of sales tax with regard to Assessment Years 1967-68 to 1969-70 on 5-5-1981, by allowing an adjustment of Rs, 8,82,459 against the income-tax dues payable by the petitioner Company to the Government of Pakistan.
9. On behalf of the respondents, it is submitted that when original proceedings took place under section 27(2) of the Sales Tax Act, with the case of the petitioner Company under section 10(3) of the same Act, respondent No. 1 never went into the question of verification, as he considered the claim legally untenable, in view of the fact that the end products of the petitioner Company were only liable to excise duty and not sales tax and since no sales tax was paid by the petitioner Company, it could not claim refund on account of sales tax paid by it when purchasing raw materials which went into the making of the end products. It is submitted that the mere fact that respondent No. 1 in his original orders (Annexures 'A', 'B' {{FOOT NOTE}}
(1) AIR. 1961 SC 182 {{FOOT NOTE}} ' and 'H') did not specifically state that verification was not done, or that the amounts claimed by way of refund were treated as disputed by him, pending their later verification, this did not mean that the Department had forfeited its right of verifying the claims submitted by the petitioner for refund. In this connection it is submitted that under section 27(2) of the Sales Tax Act, the petitioner had to satisfy respondent No. 1 that the sales tax paid by it exceeded the amount with which it was properly chargeable under the Act, in order to be entitled to the refund; and in view of rule 31 of the Sales Tax Rules, 1951, the claims for refund had to be supported by the petitioner Company by statements showing the description, quantity and value of the goods and the tax paid in respect of them, together with proofs of payment of the tax. Unless proof of payment of tax was supplied, it was submitted that the Sales Tax Officer could not sign the refund voucher in Form SST.23 which contained para. 2 stating that he had satisfied himself that the sales tax claimed had been deposited in the Treasury. The learned counsel for the respondent further submits that all the impugned orders of the Appellate Assistant Commissioner, Sales Tax, and the Appellate Tribunal, referred to by the learned counsel for the petitioner Company, inherently included the element of verification, without which no claim could be allowed by respondent No. 1 and the mere fact that words had been used that "the claims of the petitioner Company have been allowed and that respondent No. 1 should comply with the orders", did not expressly exclude the duty of respondent No. 1 to submit to verification before the claims were accepted. In this connection, learned counsel referred to Messrs Tribal Textile Mills Ltd. v. Commissioner of Sales Tax (1), and the decision of the Income-tax Appellate Tribunal, Karachi, reported in 1981 PTD (Trib.)
121. Lastly, the learned counsel refers to affidavits of Messrs Hamid Ullah Malik and Muhammad Daud Tahir, who were previously Sales Tax Officers and had dealt with the case of the petitioner Company, to show that when they dealt with the petitioner's claims for refund of sales tax for Assessment Years 1971-72 to 1974-75, they only dealt with the legal question regarding the maintainability of their claims and actual inquiry with regard to the verification did not take place or arose at that time, as the same was then premature.
10. I have given my anxious consideration to this case. The dispute between the parties actually narrows down to the short question whether the petitioner Company still stands bound to submit to verification, as required by rule 31 of the Sales Tax Rules, in order to prove its claims for refund to the satisfaction of the Sales Tax Officer, Companies Circle-I, Rawalpindi, respondent No. 1, notwithstanding the orders of the Appellate Assistant Commissioner, Sales Tax Rawapindi, dated 3- 6-1980 and 9-6-1980 (Annexures 'I' and 'J') and that of the Appellate Tribunal, Peshawar Bench, Peshawar, dated 31-10-1981 (Annexure 'R'). After the legal issue was first decided by the Appellate Assistant Commissioner, Sales Tax, Rawalpindi, on 19-1-1977 (Annexure 'C') with regard to the petitioner's legal entitlement to the refund of the sales tax for the Assessment Years 1971-72 to 1973- 74, respondent No. 1 called upon the petitioner Company to submit its documentation etc., for verification of its claims. The petitioner, by filing three letters dated 20-11-1977 (Annexures 'D', 'E' and 'F') regarding the said three Assessm ent Years, disputed respondent No, l's claim for verification, on the ground that the amounts claimed by it were never disputed by him or his predecessor during the first proceedings that took when the original orders under sections 10(3) and 27(2) were made, that what was only {{FOOT NOTE}}
(1) 1980 PTD 373 {{FOOT NOTE}} ' disputed by him was the legal issue regarding the maintainability of their claims, on the ground that their end products were not liable to sales tax, that the legal dispute was resolved in their favour by the Appellate Assistant Commissioner, Sales Tax, on 19-1-1977 (Annexure 'C') and that the said Appellate Court had directed him to pay their claims, which he should now do and not avoid.
Thus was laid the ground for the dispute which persists till now, namely, that respondent No. 1 or his predecessor, not having stated anything in the original orders that he challenged the amounts claimed, or that he had not verified the claims, or that his orders should be read subject to verification, to be conducted at some later stage, it must be assumed that verification was not in dispute. Whatever be the position, respondent No. 1, notwithstanding the order of the Appellate Assistant Commissioner, Sales Tax, Rawalpindi, dated 29-6-1978 (Annexure `G'), dismissed the petitioner's claims for refund of sales tax for the Assessment Years 1971-72 to 1973-74 on the ground that the petitioner Company had not filed documents for proper verification on the, basis of which the same could be verified. By original order passed on the same day i,e, 29-6-1978 (Annexure 'H'), respondent No. 1 also rejected the petition for the refund of sales tax for the Assessment Year 1974- 75 on the same legal grounds, as his predecessor had done originally for the earlier three assessm ent years. Again, respondent No. 1 did not state clearly in the last order that verification had not been done by him or that the order was subject to verification, in case the same was upset in appeal. However, the petitioner Company went up in appeal before the Appellate Assistant Commissioner, Sales Tax, against both the orders dated 29-6-1978 (Annexures 'G' and 'H'). The only point agitated before the Appellate Assistant Commissioner, Sales Tax, was that respondent No. 1 had not given effect to the appellate order dated 19-1-1977 (Annexure 'C') passed earlier in the case, and as his predecessor had observed that there was no doubt left as to the genuineness of the claim of the petitioner Company and that the claim for refund of the sales tax was allowed for all the three years, respondent No. 1 instead of giving full benefit to the petitioner Company, by virtue of the earlier appellate order, could not ask them to produce documents which the petitioner Company was not warranted by law to comply, as the claim had been allowed. The said appeals were allowed by the Appellate Assistant Commissioner, Sales Tax, on 3-6-1980 and 9-6-1980 (Annexures 'I' and The Appellate Assistant Commissioner, Sales Tax, inter alia, held that the Sales Tax Officer in the particular case had far exceeded his power and that he felt this was solely to harass the petitioner Company, which was one of the 80 special persons marked for victimization by Mr. Bhutto's regime, as per the White Paper issued by the Government, and that keeping in view the submissions made, he directed that the claims of the petitioner Company should be allowed, without any further delay. Respondent No. 1, being aggrieved by the two appellate orders (Annexures & 'J'), finally preferred for separate appeals against the same, apart from three others relating to Assessm ent Years 1971-72 to 1973-74, before the Appellate Tribunal, Peshawar, wherein the following grounds were taken :-
(1) That the order of the A. A. C., 'B' Range, Rawalpindi, is bad in law and contrary to the facts of the ease.
(2) That the said A. A. C. Was not justified in directing to allow the refund claim without verifying the genuineness of the quantum. In this very respect the A. A. C., vide A.
0. No, 371 dated 7-9-1974, had held to allow the refund, after necessary verification.
(3) It is prayed that the order of the learned A. A. C., 'B' Range, Rawalpindi, on the above point, may be vacated."
' The Appellate Tribunal, Peshawar, supported the Appellate Assistant Commissioner's orders allowing the refund and, since it did not find any error therein, held that the same were binding on all the subordinate officers. The Appellate Tribunal, therefore, found no case for interference and confirmed the order passed by the Appellate Assistant Commissioner, Sales Tax, and dismissed .
The appeals on 31-10-1981 (Annexure 'R'). A judgment is authority on all points mooted and decided.
See Azizul Islam v. The Province of East Pakistan (1). Respondent No. 1 mooted the point regarding his entitlement to verify the petitioner's claims for refund. The Appellate Tribunal did not accept his claim or expressly grant him such a right. Rather, it accepted the petitioner's contention that as the Appellate Assistant Commissioner had directed payment of the refund claims, the lower hierarchy was bound to honour those orders. In the face of this order of the Appellate Tribunal, Peshawar, respondent No. 1 stands debarred from verifying the petitioner's claims for refund for the Assessm ent Years 1971-72 to 1974-75. Whether the Appellate Tribunal's order (Annexure 'R') or the Appellate Assistant Commissioner's orders (Annexures '1' and I') are right or wrong, it is not for me to decide or comment, for these orders have attained finality. Where a Court or Judicial Tribunal has jurisdiction to decide a matter which falls within its competence, then it has the jurisdiction to decide it rightly or wrongly. Whoever, is aggrieved, must resort to proper legal steps to have the order set aside. If the Commissioner of Sales Tax was aggrieved by the said order of the Appellate Tribunal, Peshawar, he should have presented a reference to the High Court under section 17 of the Sales Tax Act. The respondents have filed a copy of a letter addressed by the Commissioner of Sales Tax, Rawalpindi Zone, to the Second Secretary, Central Board of Revenue, Islamabad, on 1-11- 1982 wherein it is conceded that there was a clear case where a reference should have been made to the High Court, which opportunity was lost, as no recommendation was made for the filing of the reference. Since no reference was filed, the order of the Tribunal has attained finality, under section 15(7) of the Sales Tax Act, 1951. Even otherwise, the respondents are not in a position to explain why the Appellate Assistant Commissioner, Sales Tax, when passing his orders Annexures 'I' and ordered respondent No. 1 to allow the petitioner's claims unconditionally, whereas he could have allowed it subject to verification, as his predecessor had done for the Assessment Year 1970-71. Still further, the present respondent No. 1 is not in a position to explain why the Central Board of Revenue directed his predecessor to pay the refund claims aggregating Rs, 8,82,459 relating to Assessment Years 1967-68 to 1969-70 without verification to the petitioner Company. The Department has been blowing hot and cold at different times. Whatever be the merits or demerits of their ambivalent position, respondent No. 1 is duty bound to comply with the orders of his senior officers and higher Tribunal. The hierarchy of officers and tribunals under the Sales Tax Act, 1951, is based on a pyramidal system, with the Sales Tax Officers constituting the lowest base of the judicial system, the Appellate Assistant Commissioners constituting B the appellate forums midway and the Appellate Tribunal forming the highest judicial appellate body at the apex, subject to the right of the Commissioner of Sales Tax, in his supervisory jurisdiction, to revise any order of his subordinates and to the right of the assesse and the Commissioner to refer legal questions to the High Court by way of reference. For the orderly and {{FOOT NOTE}}
(1) PLD 1962 Dacca 368 {{FOOT NOTE}} ' more perfect running of such a system, full and faithful compliance of all orders passed by the Tribunal or the Appellate Assistant Commissioners by officers placed in the lower tiers, is both necessary and desirable. Without this inherent obedience, the whole system would fail and run to rack and ruin, placing the confidence which the public has in the whole system, in thorough jeopardy. The Supreme Court of India in Bhopal Sugar Industries v. Income-tax Officer (1), dealt with such a similar situation and observed as follows :- "Where the Income-tax Officer had virtually refused to carry out the clear and unambiguous directions which a superior Tribunal, like the Income-tax Appellate Tribunal, had given to him by its final order in exercise of its appellate powers in respect of an order of assessment made by him, such refusal is in effect a denial of justice, and is furthermore destructive of one of the basic principles in the administration of justice based as it is on the hierarchy of Courts. In such a case a writ of mandamus should issue ex debito justiae to compel the Income-Tax Officer to carry out the directions given to him by the Income-tax Appellate Tribunal. The High Court would be clearly in error if it refuses to issue a writ on the ground that no manifest injustice had resulted from the order of the Income-tax Officer, in view of the error committed by the Tribunal itself in its order. Such a view is destructive of one of the, basic principles of the administration of justice."
' Respectfully following the said view, I hold that the petitioner Company is entitled ex debit justiae to a writ of mandamus to compel respondent No. 1 to carry out the directions given to him by the Appellate Tribunal and the Appellate Assistant Commissioner, Sales Tax.
11. For the foregoing reasons, this petition is accepted and the Sale Tax Officer, Companies Circle-I, respondent No. 1, is hereby directed to either refund the sum of Rs, 29,48,091 (together with 5 % additional payment on the said amount on account of delayed payment) to the petitioned Company or, in the alternative, to adjust the said sum (together with the additional payment) against the income-tax dues due and payable by th petitioner Company to the Income Tax Department; the said refund or adjust mint to be made within a month from the date of this judgment.
12. The petitioner Company shall be entitled to its costs.
(1) AIR 1961 SC 182
(1) AIR 1961 SC 182
(1) AIR 1961 SC 182