Shahid Jamil Khan, J. This judgment holds that the concept of "Change of opinion " to entertain Constitutional petition against a Show Cause Notice issued under Section 65 of the Repealed Income Tax Ordinance, 1979 ("Repealed Ordinance") (Edulji Dinshaw Limited v. Income Tax Officer (PLD 1990 Supreme Court 399)) is not applicable for a Show Cause Notice under Section 122 of the Income Tax Ordinance, 2001 ("Ordinance of 2001") and Section 1 1 of the Sales Tax Act, 1990 ("Act of 1990") .
2. Petitioners have assailed show cause notice dated 17.06.2019, whereby charging of further tax is proposed on the supplies, alleged to have been made to unregistered persons.
Learned counsel for the petitioners submits that after charging extra tax under Rule 58T of Chapter XIII of the Sales Tax Special Procedures Rules, 2007 ("Rules of 2007") , further tax is exempted under Sub-Rule (5).
Confronted that interpretation is to be made by the Taxation Officer after determining the fact, whether supplies are made to unregistered persons, learned counsel has placed reliance on the judgment in Edulji Dinshaw' s case .
Further submits that FBR's Letter No.C.No.1/47-STB/2013 dated 12th of June, 2013 is also assailed.
Respondents' side has raised objection on maintainability of this petition against a show cause notice 3.Heard. Record perused.
4. Extra tax is charged under Rule 58T on specified goods in addition to tax under Section 3(1) and (2) of the Sales Tax Act, 1990 and subsequent supplies are exempt under Sub-Rule (5). Relevant provisions of the Rule 58T are reproduced:- 58T. Mode, manner and rate applicable for payment of extra amount of tax.-- (1) Extra amount of sales tax at the rate of [2]% of value of supplies shall be levied and collected on the supplies of all specified [***] goods by manufacturers and importers in addition to the tax payable under sub-sections (1) and (2) of section 3 of the Act, as the case may be.
2. ...
3. ...
4. ...
(5) The specified [***] goods on which extra sales tax has been paid in the aforesa id manner shall be exempt from payment of sales tax on subsequent supplies including those as made by a retailer .
(6) The retailers operating under Chapter II shall be entitled to deduct value of supplies subject to extra tax under this Chapter from their turnover for the purpose of payment of sales tax under the said Chapter . However , they shall pay sales tax at a rate specified in Chapter II which is based on their total turnover .? [emphasis supplied] Learned counsel was confronted that there is no specific exemption from charging further tax and that the claimed exemption is a matter of interpretation, therefore, objection be raised in reply to the impugned show cause notice, but he insisted for decision on merits, placing reliance on the judgment in Edulji Dinshaw Case .
5. The judgment in Edulji Dinshaw Case (supra) by the August Supreme Court of Pakistan is examined. Notices under Section 65 of the Repealed Ordinance were assailed in Constitutional jurisdiction but writ petition was dismissed with observation that ordinary remedy for obtaining relief was available and it was not established that impugned order was without jurisdiction or in excess of jurisdiction.
Appeal filed against this order by learned High Court was decided in favour of the taxpayer (assessee), through the judgment by August Court, holding that no new material was available with the assessing officer to proceed under Section 65 for determining any under assessment or escaped assessment on the allegation that taxpayer company was involved in sale and purchase of immoveable property , which was adventure in the nature of trade, hence the amount earned was liable to be taxed as income instead of capital gain. The judgm ents from Indian and Pakistani jurisdictions, referred in the judgment were on "change of opinion ". Relevant excerpts from the judgment are reproduced:- "Before any of these sales was completed the requisite permission the Income-tax Officer concerned was obtained by appellant-company , and the proceeds received from the sales were shown in the return for each year. The proceeds of the sales of the properties and the compensation amounts received from the Government for the acquisition of appellant's properties, were throughout treated as capital gains, and not income from business, and specific orders were passed under sectio n 9, and not under section 10 which pertains to business income. These sales cannot be said to be frequent so as an inference can be drawn that appellant was carrying on the business of buying and selling of the properties, which was in fact specifically barred under the Memorandum and Articles of Association. On the facts and circumstances proved on record, we are, clearly of the view that the sale proceeds of the properties and the compensation amounts received from the Government in respect of the compulsory acquisition of the properties were indeed capital gains, and was not income from business, for, the appellant- company was not a dealer or engaged in the business of buying and selling of the properties. All the transactions or sales of the properties and the compulsory acquisition of land by the Government were fully disclosed by the appellant-company and after conscious consideration the Income-tax Officer has finalised the assessment orders . It has not been shown that appellant had purchased any property from any outsider and sold or disposed of during the assessment years in question. There is also force in the argument advanced on behalf of the appellant that since the case of the appellant throughout is that the sale proceeds of the properties and the compensation amounts received in respect of the compulsory acquisition of the properties by the Government were capital gains and not income, appellant could not, and ought not to, have disclosed these transactions under section "C", Part-I of the Income-tax Return. Once all the facts have been fully disclosed by the assessee and considered by the Income-tax Authorities and the assessments have been consciously completed, and no new fact has been discovered there can be no scope for interference with these concluded transactions under the provisions of section 65 of the Ordinance on the ground that the income chargeable to tax under the Ordinance has escaped assessment or has been under assessment etc., in the meaning of clause of subsection(l) of section 65 of the Ordinance. On the glaring facts and circumstances of this case the mischief of section 65 of the Ordinance was not attracted at all so as to call for the issuance of the impugned notices against the appellant-company, not to speak of passing the assessment orders dated 26-12-1982 which however have been already declared as nullity in law by the order of this Court dated 23- 12-1982, for the reasons stated earlier.? [emphasis supplied]
6. The 'change of opinion' by the assessing officer was not allowable to reopen the case under the Section 65 (pari materia to Section 122(5) of the Ordinance of 2001). Definite information was a precondition for proceeding to determine 'under assessment' or 'escaped assessment' . Under the scheme of Repealed Ordinance of 1979, income tax return was subject to an assessment proceeding under Section 61 followed by an assessment under Section 62, after examining the available record and produced documents. The assessment order was presumed to had been passed after application of conscious mind and due perusal of available material/record. For invoking the provisions of Section 65, therefore, it was necessary that assessing officer should have an information, definite in nature, not available at the time of assessment proceeding or consequent order . Since assessing officer was authorized to go beyond the definite information, while proceeding under Section 65, therefore, it was called reopening of the assessment.
7. No occasion for 'change of opinion' arises now under the scheme of existing Income Tax Ordinance, 2001, because the return filed under the Section 114 is taken to be an assessment order under Section 120 for all purposes of the Ordinance, without application of mind by any officer/authority under the Ordinance of 2001. After filing return, the record supporting declarations in return, is to be kept by taxpayer for six years under Section 174(3), which can be called for audit under Section 177 to verify the declarations in the return and ensure compliance of different provisions under the Ordinance of 2001. The issues/audit observations are required to be confronted to taxpayer before preparing audit report under Section 177(6). Under its sub-section (6A); after issuance of audit report, Commissioner may proceed under Section 122 for amendment of the assessment order passed by operation of law .
Similar is the situation under the scheme of Act of 1990, as the person, registered under this Act is obliged to make declaration of the taxable supplies in a tax period and is authorized to adjust input tax paid from the amount due as output tax, while filing the return. Such declarations are subject to audit under the Section 25 and consequent proceedings under the Section 11. Provisions of Section 11 can be invoked in absence of audit also, if tax due on supplies is not paid, short paid, wrongly adjusted or refunded etc., which in this case, assertively, is non-payment of further tax. Since Taxation Officer would apply its conscious mind for the first time on the issue of charging further tax under the facts and circumstances of this case, therefore, the law on 'change of opinion', as enunciated in Edulji Dinshaw Case, is inapplicable.
8. This Court in Northern Power Generation Company Limited v. Federation of Pakistan and others (2015 PTD 2052 ) has already examined scope of constitutional jurisdiction by referring to applicable judgments by August Supreme Court, where a show cause notice is assailed. Relevant portion from the judgment is reproduced:-
7. August Supreme Court of Pakistan has enunciated, in a series of its decisions, on the issue of constitutional jurisdiction to be exercised by High Court, against Show Cause Notice or an order where statutory remedy is available. Tracing back the history would bring to our notice, the expression by Apex Court in Nagina Silk Mil Lyalpur v. The Income Tax Officer, A-Ward, Lyallpur (PLD 1963 S.C. 322), where it was held that in case of absence or excess of jurisdiction writ of certiorari may be granted even though the right of statutory appeal had not been availed of. Latest case in favour , to exercise jurisdiction by High Court is Commissioner of Income Tax v.
Messrs Eli Lily Pakistan (Pvt.) Ltd. (2009 PTD 1392 ). The Apex Court followed its earlier decision in Murree Brewery Case ( PLD 1972 SC 279 ) and reiterated:- "...56. It was further held that the rule that the High Court would not entertain a writ petition when other appropriate remedy was yet available was not a rule of law barring jurisdiction, but a rule by which the Court regulated its jurisdiction. It was noted that one of the wel recognized exceptions to the general rule was a case where an order was attacked on the ground that it was wholly without authority . Where a statutory functionary acted mala fide or in a partial, unjust and oppressive manner , the High Court in the exercise of its writ jurisdiction had power to grant relief to the aggrieved party ."
However in a subsequent judgment, Messrs Ocean Pakistan Ltd. V. Federal Board of Revenue, Islamabad and others (2012 PTD 1374 ) the Hon'ble Court has further elaborated the general rule and exception for exercis e of constitutional jurisdiction by High Courts. Relevant part is reproduced for ease of reference:- "7. Learned counsel for the petitioner , when confronted with the preliminary objections raised by the learned counsel for the respondent has relied upon the case of Commissioner of Income Tax V. Messrs Eli Lily Pakistan (Pvt.) Ltd. (2009 SCMR 1279 ) and read out part-56 from the judgment; the substance of para-56 is that this Court, while discussing the observation made earlier in the case of Commissioner of Income Tax v.
Hamdard Dawakhana (Waqf) PLD 1992 SC 874) i.e. "tendency to bypass the remedy provided in the relevant statute and to press into service constitutional jurisdiction of the High Court was to be discouraged though in certain cases invoking of such jurisdiction instead of availing the statutory remedy was justified" has approved the same by further holding that "when the impugned order/action was palpably without jurisdiction and/or mala fide, forcing the aggrieved person in such a case to approach the forum provided under the relevant statute, may not be just and proper". It is further held in the judgment (supra) that "where a statutory functionary acted in mala fide or in a partial, unjust and oppressive manner , the High Court in exercise of its writ jurisdi ction had power to grant relief to the aggrieved party ."
8. Some of the judgment where the exercise of jurisdiction is deprecated are; In Deputy Commissioner of Income Tax/W ealth Tax, Faisalabad and others Vs. Messrs Punjab Beverage Company ( 2007 PTD 1347 ), while observing that the jurisdiction cannot be invoked for convenience, it was held:- ".....4. We have held in the judgment that such practice is to be deprecated because if merely on the basis of show-cause notice proceedings are started then in such position department would never be in a position to proceed with the cases particularly the recovery of revenue etc."
In Messrs H.M. Abdulah v. The Income Tax Officer, Circle V, Karachi and 2 others (1993 SCMR 1195) it is observed that:- "...5. Income Tax Ordinance is a complete code in itself which creates rights in favour of an assessee, and in certain circumstances in favour of the Revenue as well, and also provides remedy for redress of the grievances of the aggrieved party . In the circumstance s of the case, the appe lant was not entitled to invoke the Constitutional jurisdiction of the High Court and bypass the remedy available under the Income T ax Ordinance."
AL Ahram Builders (Pvt.) Ltd V. Income Tax Appelate Tribunal (1993 SCMR 29) the Hon'ble Court held as under:- "...9. The tendency to by-pass the remedy provided under the relevant statute to press into service constitutional jurisdiction of the High Court has developed lately, which is to be discouraged. However, in certain cases invoking of constitutional jurisdiction of the High Court instead of availing of remedy provided for under the relevant statute may be justified, for example when the impugned order/action is palpably without jurisdiction and/or malafide."
In Income-T ax Officer and another V. M/s. Chappal Builders' case (1993 SCMR 1108) the August Court withdrew its leave granting order to observe:- "When after considerable arguments we had already reached the above conclusion and had also announced it and the consequential dismissal of the appeals was yet to be announced, the learned counsel for the appellants brought to our notice that the respondent in this case approached the High Court in its writ jurisdiction without seeking and exhausting the statutory remedies. In several of the very recent judgments we have not approved in such situation the interference by the High Court in tax matters, when the normal course being adopted by almost at the High Courts in the matters other than tax, rule of alternate remedy is being followed.
In the above extraordinary position when we had made part announcement, there is no alternative left except to withdraw the leave grant order and disposed of the appeal. W e order accordingly , with no order as to costs."
9. In light of various enunciations by Hon'ble Supreme Court of Pakistan it can safely be concluded that where alternate remedy is available, non exercise of jurisdiction under Article 199 of the Constitution by High Court, is a rule to be applied for regulating its constit utional jurisdiction. Exceptions to this rule are that the show cause notice or order is ultra vires, palpably without jurisdiction or with mala-fide intent; availing of statutory remedy , against which, would be inefficacious because such action is to be nipped in the bud. In presence of the exceptions, the High Court should lean its discretion in favour of the petitioner to provide him speedy and efficacious justice by issuing writ of certiorari.
However , where petitioner approaches High Court for issuance of a writ of certiorari by pleading jurisdictional issue, on an interpretation of his choice and relevant provision is susceptible to various interpretations, the issuance of show cause notice or an order cannot said to be palpably without jurisdiction or mala-fide.
9. The letter dated 12th June, 2013 assailed by learned counsel for the petitioner , contains guidelines for the field formation by FBR, on the further tax imposed by inserting sub-section (1A) through Finance Act, 2013. Earlier , further tax was imposed through Finance Act, 1998, but was omitted through Finance Act, 2004 for the reasons explained in the impugned letter , relevant part of which is reproduced:- "F.B.R's LETTER C.NO.1/47-STB/2013, DATED 12TH JUNE, 2013.
SUBJECT : BUDGET 2013-14 INSTRUCTIONS REGARDING SALES TAX & FEDERAL EXCISE DUTY MEASURES.
I am directed to refer to above subject and to state that the budgetary measures relating to sales tax and federal excise duty appear in clauses 3 and 5 of the Finance Bill 2013 respectively and in the Notification No.SRO 500 to 510(I)/2013, all dated 12th June, 2013.
2. The main measures are briefly described below for guidance and ease of understanding. However , for the accurate legal position, reference may please be made to the Finance Bill and related notifications. The field formations are requested to carefully go through all the proposed legislative amendments and the aforementioned notifications and take necessary steps for smooth and ef fective implementation thereof.
(03). Further tax @ 2% on Supplies to Unregistered persons. - In order to promote documentation of the economy and to create an incentive for unregistered persons to get sales to registration, a new sub-section (1A) has been inserted in section 3 of the Sales Tax Act, 1990, to impose further tax @ 2% on supplies made to persons who have not obtained sales tax registration number . Supplies made to registered persons are not affected by this measure. This measure is also effective from 13th June, 2013. Further tax imposed earlier had led to creation flying invoices', but now RTOs/LTUs are expected to effectively use CREST and SMAR T computerized system to prevent and curb such malpractices. A separate notification is being issued to exclude certain transaction from this levy . " [emphasis supplied] Since, the impugned show cause notice is based on a provision of law i.e. Section 3(1A) of the Act of 1990 and not the impugned letter, therefore, any deliberation on it is unnecessary, hence, plea against this letter fails.
Even otherwise, the assailed letter would not affect levy of further tax under Section 3(1A) of the Act of 1990, vires of which have already been upheld and charging section is interpreted in Kamalia Sugar Mills Ltd. v. Customs Central Excise and Sales Tax Appellate Tribunal and others (2016 PTD 2183 ), operative part of which is also reproduced:- Under the circumstances, in our opinion benefit of the SRO 208 could not be extended to Further Tax chargeable under subsection (1A) of Section 3. Both the SROs, if read collectively, had envisaged fixation of the value of taxable supply of locally produced sugar which, otherwise, was chargeable on the actual value as envisaged under Section 2(46)(a). However, exemption was given to the extent of remaining value, actually received from recipient.
Further Tax under subsection (1A) was in the nature of extra/further tax from the tax already been charged under subsection (1); if supply was made to an unregistered person. The legislature, in its wisdom, had levied this additional amount of tax to bring maximum number of businessmen into tax net by imposing extra/further levy of tax, where recipient of supply was not in the tax net."
10. No case for interference against impugned show cause notice is made out. This and connected W.P.No.64723 of 2019, being not maintainable, are dismissed . ?