Shahid Jamil Khan, J. Petitioners in this and connected petition are aggrieved of charging arrears of tax in utility bills for natural gas against a column titled; "Arrears/Aging.
It is admitted position that the impugned arrears are of tax and not of natural gas.
2. Learned counsel for petitioners submits that impugned recovery of arrears is in absence of any prescribed procedure and determination of tax. In response, it is apprised that order dated 14.02.2019 is passed by the Commissioner Inland Revenue ("CIR"), during proceedings of this petition, therefore, recovery of tax arrears, through utility bills, stands justified. Relevant part of CIR' s order is reproduced: - "4. I perused the available record and verbal submissions made by Representative of the petitioner . The fact is that the zero-rating against sui gas bill was granted to the petitioner through amendment in STGO no.17/2007 dated 13.09.2007 vide STGO No.81 of 2017 dated 08.05.2017. As per aforesaid STGO, the supply of gas to the petitioner would be charged at the rate of zero percent, however , the said facility cannot be allowed retrospectively . This office has already submitted parawise comments on the grounds of writ petition in the Honourable Court. thus, the chargeability of sales tax arrears pertaining to period prior to issuance of STGO No.81 of 2017 dated 08.05.2017 by Sui Northern Gas Pipe Lines Ltd. (SNGPL) is in accordance with law." [emphasis supplied] Perusal of this order reveals the relevant facts. The petitioner 's entitlement to tax concession (under SRO 1125(I)/201 1 dated 31.12.201 1) at the rate of zero percent was determined through STGO No.81 of 2017 dated 08.05.2017. However , inadvertently , this concession of not charging sales tax on supply of natural gas was allowed before issuance of the STGO. As per the order by Commissioner , ibid, the tax not charged before issuance of the STGO is being recovered through the utility bills without referring to any provision of law .
3. Heard. Record perused.
4. Provisions under a taxing statute are divisible into three categories; charging, assessment and recovery . For recovery of tax, as arrears or otherwise, it should be determined, by invoking assessment provisions. If the determination brings the transaction within the mischief of charging provisions, the tax can be recovered by adopting the procedure prescribed under relevant recovery provisions, which may be regular or special.
Special procedure for collection and payment of sales tax on natural gas is provided in Chapter IV of Sales Tax Special Procedure Rules, 2007 ("Rules of 2007"). Rule 20 enjoins responsibility of charging and paying sales tax on the person who supplies natural gas. Under its sub-rule (2)(c); gas transmission and distribution company is responsible to charge, collect and deposit sales tax on supply of natural gas. Both provisions are reproduced: - "20. Levy and collection of sales tax.-( 1) Every person who supplies natural gas shall be liable to registration and shall charge and pay sales tax at the rate specified in sub-section (1) of section 3 of the Act.
2. Sales Tax on natural gas shall be levied and collected at the following stages and in the following manners, namely:- (a)....
(b)....
(c) in case of supply of natural gas by a gas transmission and distribution company , the person responsible to charge, collect and deposit sales tax shall be the gas transmission and distribution company and the value for the purposes of tax shall be the total amount billed including price of natural gas, charg es excluding the amount of late payment surcharge, rents, commissions and all duties and taxes, local, Provincial and Federal, but excluding the amount of sales tax as provided in clause (46) of section 2 of the Act: [emphasis supplied] The consequence of non-compliance are given in Rule 24, which is also reproduced:- "24. Penalty .-(1) Non-issuance of gas bill or invoice for a tax period or any inordinate delay in the issuance of such bill by the person engaged in supplying or distribution natural gas shall be liable to penalties under the relevant provisions of the Act.
(2) If the tax is not paid within the date due as provided under this Chapter , the registered person supplying or distributing natural gas shall be liable to pay default surcharge and such other penalties prescribed in the Act."
The special procedure, ibid, is silent about recovery of a tax which is not charged by a distribution company against supply of natural gas.
5. The column titled "Arrears/Aging throug h which tax arrears are recovered, is meant for arrears supply of natural gas. Even if, after amendments in the special procedure, law authorizes to recover tax arrears through bills, it has to be through an independent column showing that the arrears are of tax. The impugned practice, besides being without lawful authority , is a misrepresentation. Full disclosure of the particulars and necessary information for the recovery is now fundamental right under Article 19A of the Constitution of Islamic Republic of Pakistan, 1973, therefore, the impugned practice is highly deprecated and declared illegal.
6. As there is no special procedure for recovery of tax not charged by distribution company , therefore, the impugned recovery of tax arrears through utility Bills is declared without lawful authority . Nevertheless, if tax is determined in accordance with law and instructions are issued, under the law for recovery of any tax through utility Bill, the bill issuing authority must satisfy itself that the instruction is based on an order , determining tax, by the competent of ficer and that particulars of the recoverable tax are fully disclosed.
7. Member (Policy), FBR is directed to issue a clarification to all the utility providers that arrears of tax cannot be recovered, in utility bills, in a camouflaged manner , as is impugned in this case. The utility bill must contain an express entry , showing nature of tax arrears, determined by the Commissioner under the prescribed special or normal procedure.
Learned Additional Attorney General shall ensure that Member (Policy) has issued the clarification to all utility providers, in light of the decision and direction in this case. If recoverable tax is determined and recovery procedure is prescribed, the official communication of instruction to utility provider , must contain these details, upon which, only the utility provider shall recover the tax in a specific and express column.
With the directions, noted above, this and connected petition are disposed of .