Through this order we propose to decide intra Court appeals No.237/2016 to 239/2016 as they have common questions of law and fact.
2. Through the said intra Court appeals the appellant, M/s The Hub Power Company Limited, impugns the consolidated order dated 18.04.2016 whereby writ petitions No.2354/2014, 2355/2014 and 2357/2014 were dismissed by the learned Judge-in-Chambers. Through the said writ petitions, the appellant / petitioner had impugned the notices dated 30.04.2014 issued by respondent No.1, the Deputy Commissioner Inland Revenue, under Sections 161 and 205 of the Income Tax Ordinance, 2001 ("the 2001 Ordinance") pertaining to tax years 2012, 2013 and 2014 calling upon the appellant to show cause as to why the amounts mentioned in the said notices may not be recovered under Section 161 along with default surcharge under Section 205 of the 2001 Ordinance.
3. The learned Judge-in-Chambers had dismissed the appellant's writ petitions with the observations that an inquiry is to be conducted before the deemed assessments are amended and once an order in this regard is passed, the same may be assailed in accordance with the law before the proper forum. It was also observed that writ jurisdiction could not be exercised to challenge a show cause notice on the basis of assumptions and speculations.
4. Learned counsel for the appellant submitted that in order to operate turbines for the generation of electricity, the appellant had entered into a fuel supply agreement with Pakistan State Oil Company ("P.S.O."); that in the said agreement, there was a provision to the effect that a penalty in the form of mark-up had to be paid by the appellant in the event of a late payment for the fuel; that by virtue of notification (SRO 586(I)/91), dated 30.06.1991 issued by the Central Board of Revenue, the payments made to P.S.O. by the appellant for the supply of petroleum products were exempt from the payment of income tax; that since the payment for the fuel was exempt from the payment of income tax, a fortiori the penalty in the form of mark-up for late payment was also exempt from income tax; that the appellant, in its reply dated 29.04.2014 to the notice dated 16.04.2014, has specifically raised this ground; that this Court vide judgment dated 27.07.2009 passed in T.R.No.3/2009 titled "Fauji Kabirwala Power Company Ltd. Vs. Commissioner Income Tax, Legal (LTU), Ibd," had held that the interests charge due to the delay in the payment of electricity by WAPDA was exempt from the payment of income tax since the payment for electricity had also been exempt from the payment of such tax; that respondent No.1 could not have treated the penalty in the form of mark-up for delayed payment for fuel to be a debt since it did not come within the meaning of the word "debt" defined in Section 2(xv) or "profit on a debt" defined in Section 2(xlvi) in the 2001 Ordinance; that since the penalty in the form of mark-up for late payment for fuel cannot be treated as payment of any profit on any bound, certificate, debenture, security or instrument of any kind, Section 151(1) of the 2001 Ordinance also did not have application in the instant case; and that the show cause notices are unlawful and liable to be struck down in the Constitutional jurisdiction of this Court. Learned counsel for the appellant prayed for the appeals to be allowed in terms of the relief sought therein.
5. Learned counsel for respondents No.1 and 2 submitted that the appellant had challenged a show cause notice in i the Constitutional jurisdiction of this Court; that the appellant can take all the legal grounds available to it in its replies to the said show cause notices; and that the proceedings pursuant to the impugned show cause notices have not culminated in any order since the appellant filed writ petitions before this Court. Learned counsel for respondents No.1 and 2 prayed for the appeals to be dismissed.
6. We have heard the contentions of the learned counsel for the contesting parties and have perused the record with their able assistance.
7. It is not disputed that by virtue of notification (SRO 586(I)/91), dated 30.06.1991 issued by the Central Board of Revenue, the payments made by the appellant to P.S.O. for the supply of petroleum products is exempt from the payment of income tax. The fuel supply agreement executed between the appellant and P.S.O. has a provision for the payment of penalty in the form of mark-up for the delay in making payment for the supply of fuel. It is with respect to the payment of such penalty in the form of mark-up that the respondents took the view that the appellant should have deducted withholding tax.
8. On 16.04.2014, respondent No.1 issued notices under Section 176 of the 2001 Ordinance requesting the appellant to provide information as to the mark-up paid to P.S.O. for the delay in making payment for fuel. Information was also sought as to the withholding tax deducted under Section 151(1)(d) of the 2001 Ordinance on such mark-up on delayed payment. The appellant submitted detailed replies on 29.04.2014 to the said notices. In the said replies, it was explained that since the payment for fuel to P.S.O. had been exempted from income tax, such an exemption would apply for the payment of mark-up on the delay in the payment for fuel. Thereafter on 30.04.2014, respondent No.1 issued notices under Sections 161 and 205 of the 2001 Ordinance calling upon the appellant to show cause as to why the amount equivalent to the withholding tax that should have been deducted on the mark-up paid by the appellant to P.S.O. for the delay in making payment for fuel should not be recovered from the appellant along with default surcharge. The said notices were challenged in writ petitions before this Court, which were dismissed vide consolidated order dated 18.04.2016 primarily on the ground that the final order that may be passed by respondent No.1 can be challenged before the appropriate forum.
9. Admittedly, the proceedings pursuant to the impugned show cause notices have not culminated in any order. The appellant has not even submitted replies to the show cause notices dated 30.04.2014. There is nothing preventing the appellant from agitating the grounds taken in its writ petitions in the reples to the show cause notices. It may well be that respondent No.1 is convinced with the grounds taken by the appellant in the reply to the show cause notices which may lead to the withdrawal of the same.
10. It is well settled that mere issuance of a show cause notice does not amount to an adverse action. Reference in this regard may be made to the cases of Mir Nabi Bakhsh Khan Vs. Branch Manager, National Bank of Pakistan, Jhatpat and others (2000 SCMR 1017) and Zaver Petroleum Corporation Limited Vs. Federal Board of Revenue (2016 PTD 2332). It is also well settled that a writ petition against the mere issuance of a show cause notice is not maintainable unless the same is wholly without jurisdiction and in violation of a statute. Reference in this regard may be made to the cases of Al-Ahram Builders (Pvt.) Ltd. Vs. Income Tax Appellate Tribunal (1993 SCMR 29), Pakistan Tobacco Company Limited Vs. Government of Pakistan (1993 SCMR 493), Deputy Commissioner of Income Tax/Wealth Tax, Faisalabad Vs. Punjab Beverage Company (Pvt.) Ltd.
(2007 PTD 1347), Irum Shah Shahadi Vs. Principal School of Nursing, Mayo Hospital, Lahore (2017 PLC (C.S.) 943) and Apna T.V. Channel (Private) Limited Vs. Pakistan Electronic Media Regulatory Authority (2017 CLC 199). In the case at hand, there is no exceptional circumstance which would warrant interference with the impugned notices. In the case of Muhammad Aslam Vs. Federation of Pakistan and others (2017 PTD 803), it has been held inter alia that apprehension that under the garb of a notice, coercive action would be taken against the petitioner was nothing but an apprehension and that the High Court in its Constitutional jurisdiction did not act upon mere apprehensions. Therefore, interference at this stage is not warranted.
11. Learned counsel for the appellant could not point out any provision of the law that had been violated by respondent No.1 by issuing the impugned show cause notices. He could also not explain as to how the impugned notices were without lawful authority or jurisdiction. The appellant is at liberty to take the grounds agitated in the writ petitions in the replies to the impugned show cause notices, which are expected to be taken into consideration by respondent No.1 before passing an order. In case respondent No.1 passes an order which is adverse to the appellant, the appellant can assail such an order in an appeal.
12. In view of the above, these appeals are dismissed with no order as to costs.
13. Before parting with this judgment, we deem it appropriate to point out that despite the dismissal of the appellant's writ petitions, respondent No.1 chose not to proceed further in the proceedings pursuant to the show cause notices. No stay order had been issued by the Division Bench of this Court in the appellate proceedings. Inaction on the part of respondent No.1 continued for more almost seven years after the writ petitions were dismissed by the learned Judge-in-Chambers.
Mere pendency of the intra court appeals did not operate as suspension of the proceedings before the Additional Commissioner, Inland Revenue. It is not proper for the Inland Revenue Service to stay its hands in proceedings when no stay order is issued by the High Court.