MUHAMMAD MUJIBULLAH SIDDIQUI, J.----The petitioner has sought the following relief in this petition:
(1) The impugned clarification issued by the C.B.R. Is illegal, contrary to S.R.Os. Issued by the Government of Pakistan and is of no legal consequences.
(2) To declare that the Return (Interest) earned on WAPDA registered Bond and C.A.A. Bearer Bonds is not liable to Income-tax in the light of the S.R.Os. No.745(1)/89, dated 11th July, 1989 read with S.R.O. 269(1)/90, dated 11th March, 1990 and S .R.O. No.561(1)/91, dated 6th June, 1991 issued by the Government of Pakistan.
(3) To declare that the Notices issued by the respondent No. 4 and Annexures P/20 to P/22 as illegal and of no legal consequences.
(4) Any other/better relief/(s) as this Honourable Court may deem fit and proper in the matter.
(5) To restrain, the defendant No. 4 from taxing Return (interest) on Bonds without having change in the Statute by the Legislature.
2. Briefly stated the relevant facts leading to this writ petition are, that the petitioner is an incorporated body under the Companies Act/Ordinance, and is a regular assessee of the Income- tax Department. The Government of Pakistan issued S.R.O. No.745(1)/89, dated 11th July, 1989, to the effect that the return (interest) on WAPDA Bona (IInd. Issue Regulation 1989) were exempted from Income-tax from 27th March, 1989. This SRO was amended vide S.R.O. 269(1)/90, dated 11th of March, 1990 to give effect to the 3rd issue of WAPDA Bonds for the purposes of exemption. The WAPDA Bonds were sold with the statement in the Brochure published by WAPDA, that the individuals or bodies Corporate shall be exempted from income tax on the return (interest) on the said Bonds. The petitioner in pursuance of the above S.R.Os. And publications, purchased registered. WAPDA Bonds IIIrd Issue for Rs.30 Million. The petitioner field Return of total income for assessm ent year 1990-91 claiming exemption on, returns of WAPDA Bonds which were allowed by the Jespondent No.4/Deputy Commissioner of Income-tax up to the assessment year 1995-96. The Government of Pakistan vide another S.R.O. Bearing No.561(1)/91, dated 6th June, 1991 issued the Civil. Aviation Bonds and the return (interest) whereof was also declared exempt from the levy of Income-tax. The petitioner purchased C.A.A. Bonds amounting to Rs.66 million and claimed exemption under the aforesaid S.R.O. Which was refused by the respondent No.4 in the assessment year 1991-92. The petitioner preferred an appeal challenging the refusal of exemption which was allowed by ,the' Commissioner of Income-tax (Appeals). Thereafter, the respondent No.4 allowed the exemption up to the assessm ent year 1995-96. However, during the proceedings for the assessm ent years 1996-97 and 1997-98, the petitioner received a letter from the respondent No.4 stating therein that the exemption claimed by the petitioner on WAPDA Bonds was not admissible under the lInd Schedule to the Income Tax Ordinance, 1979. The petitioner submitted an explanation and approached respondent No.2, Central Board of Revenue, seeking directions to respondent No.4 to allow exemption thereon. The petitioner further approached respondent No.2 through Ministry of Industries and Production for favourable action. The Ministry of Production also approached C.B.R. Asserting that the exemption be allowed to the petitioner in the light of. S.R.Os.
Issued by the Government of Pakistan. The respondent No.4, however, did not pay any heed to the requests and explanations, offered by the petitioner and framed assessments for the ' assessment years 1996-97 and 1997-98, taxing the return (interest) on WAPDA and C.A.A. Bonds for the reason that no provision in the lInd Schedule permits the claim of exemption on these bonds. The petitioner preferred First Appeal before the Commissioner Income-tax (Appeals), who vide order, dated 27-2-1999 directed the respondent No.4 to obtain. Clarification from the Central Board of Revenue, regarding taxability of WAPDA and C.A.A. Bonds. Thereafter, the respondent No.4 passed orders under section 132 of the Income-tax Ordinance, 1979 and excluded the Return (interest) on WAPDA and C.A.A. Bonds from the taxable income on the condition that the same will be decided after the receipt of clarification from C. B. R. On 26th May, 1999 the petitioner received a letter from the respondent No.4, intimating that the C.B.R. Has clarified vide letter, dated 15-5-1999 that the Return on WAPDA and C.A.A. Bonds is taxable. The respondent No.4 expressed his intention to rectify the assessm ent order for the purpose of taxing the return (interest) income earned from WAPDA and C.A.A. Bonds. The letter, dated 15-5-1999 addressed to petitioner reads as follows: The Chairman, Pakistan Automobile Corporation Limited, 2nd Floor, Finance & Trade Centre, Tower B, Shahrah-e-Faisal, P.O. Box-4231, Karachi SUBJECT: EXEMPTION ON RETURN (INTEREST) ON CIVIL AVIATION AUTHORITY BONDS AND WAPDA BONDS. The undersigned is directed to refer to your D.O.
Letter No. Nil, dated 8-2-1999 on the subject addressed to Secretary, Ministry of Industries and Production, Government of Pakistan, Islamabad, and to state that the matter has been examined by the Board.
(2) The legal position is that under clause (79A) of Part I of the Second Schedule to the Income Tax Ordinance, 1979, only the income from WAPDA Bearer Bonds was exempt if such bonds were held by individuals and companies etc. (other than banks and insurance companies etc.). The Bearer Bonds issued after 30-6-1991 are not entitled to exemption under this clause.
(3) Another exemption, which was granted only to individuals was allowed vide clause (79B) w.e.f.
6-6-1989 in respect of return on WAPDA Second Issue (1989) bearer or registered bonds. This exemption was also restricted to bonds issued up to 30th June, 1991.
(4) As far as return on C.A.A. Bonds is concerned, it has not been exempted under the Income-tax Ordinance, 1979.
(5) PACO may consider the advisability of taking up the issue with WAPDA and C.A.A.
(Sd.)
(PERVEZ AKHTAR), Secretary (Exemptions)
Ph:9205561.
3. After receiving the above letter from C.B.R., the respondent No.2 issued notices to the petitioners intimating that in compliance to the directions of CIT (Appeals), clarification has been received from C.B.R. And the WAPDA Bonds as well as C.A.A. Bonds do not enjoy exemption.
4. Being aggrieved with the issuance of notices by the respondent No.4, the petitioner has invoked writ jurisdiction of this Court under Article 199 of the Constitution assailing the clarification issued by C.B.R. And the notices issued by the respondent No.4, further praying that the respondent No.4 be restrained from taxing the return/interest on WAPDA and C.A.A. Bonds.
5. Pre-admission notice was issued to the respondents and parawise comments have been filed by the respondent No.4. Objection has been taken to the maintainability of petition for the reason that alternate and efficacious remedy is available to the petitioner under the law and the matter is pending before CIT(A) for adjudication.
6. We have heard Mr. Jawaid A. Siddiqui, Advocate for the petitioner, Mr. Shaikh Haider, Advocate for respondent No.4 and Mr. Muhammad Jameel, Advocate for the respondent No.5.
7. On 26-1-2000, Mr. Shaikh Haider, learned counsel for the respondent No.1 contended that the petitioner has concealed the true facts and has suppressed the fact that the petitioner has already availed the remedy available under the Income Tax Ordinance, and therefore, the. Petition is liable to be dismissed. At his request the learned counsel for the petitioner was directed to seek instructions from the petitioner and to make a statement, if any appeal has been preferred by the petitioner, assailing the clarification issued by the C.B.R. And consequent treatment given by the respondent No.4. The learned counsel was further directed to produce the grounds of appeal in the appeals pending before the appellate authority under the Income-tax Ordinance. On 1-2-2001, the learned counsel for the petitioner has produced a copy of the grounds of appeals, pending before the learned Commissioner of Income Tax (Appeals)-II Karachi which are as follows: ASSESSMENT YEAR 1996-67 GROUNDS OF APPEAL That the Impugned Order passed under sections 132/62/156, dated 31st May, 1999 is bad in law and on facts of the case.
(2) That the Assessing Officer erred in taxing the Return on WAPDA Bonds and Civil Aviation Bonds amounting to Rs.1,40,69,308 by invoking section 156 of the Income Tax Ordinance, 1979.
(3) That the Assessing Officer has erred in not following the Circulars/S.R.Os. Wherein the Return on these WAPDA and C.A.A. Bonds were declared as exempt in the hand of the Company.
ASSESSMENT YEAR 1997-98 GROUNDS OF APPEAL
(1) That the Impugned order passed under sections 132/62/156, date 31st May, 1999 is bad in law and on facts of the case.
(2) That the Assessing Officer erred in taxing the Return on WAPD Bonds amounting to Rs.37,50,000 by invoking section 156 of th Income Tax Ordinance, 1979.
(3) That the Assessing Officer has erred in not following th Circulars/S.R.Os. Wherein the Return on these WAPDA Bond were declared as exempt in the hand of the Company.
8. In view of the facts brought to our notice at the instance o respondent No.4 as stated above both the learned Advocates for the partie were first directed to address arguments on the point of maintainability of th petition.
9. Mr. Jawaid Siddiqui, learned counsel for the petitioner submitt that notwithstanding the remedy available to the petitioner under the Incom Tax Ordinance in the form of revision, appeal and reference the petition maintainable because the C.B.R. Being the apex body in the hierarchy of t administration had already expressed its opinion in the letter, dated 15th o May, 1999, and therefore, agitating the same point against the view held b the C.B.R. Would be an exercise in futility. In support of his contention h placed reliance on the judgment of Supreme Court in the case of Collector o Customs v. Messrs S.M. Ahmad & Company (Pvt.) Limited 1999 SCM 138. In the cited case the respondent had .Imported wood from Singapor Malaysia on which duty was levied by the custom officials. At the instanc of importer/respondent the issue was referred to the Chief of Custo C.B.R., Islamabad for determination of the correct assessment. The C.B. Confirmed the assessment made by the custom officials. The responde invoked Constitutional jurisdiction of the High Court and filed a writ befor the Lahore High Court challenging the assessment carried out by the Custo Authorities. The writ was allowed by a learned Single Judge of Lahore Hig Court. The Collector of Customs feeling aggrieved preferred Leave t Appeal before the Hon'ble Supreme Court inter alia, on the point that th writ petition was not maintainable when the respondent had an alternat remedy by way of Appeal/Revision under section 196 of the Customs Act 1969.
10. The question of maintainability of a writ .Petition, without firs availing the remedies of appeal/revision under the Customs Act; was rais before the High Court also and was overruled for the reason that th respondent having failed up to C.B.R., to convince them that the assessmen carried out by them was wrong and was left with no remedy except to invok the Constitutional jurisdiction of the High Court.
11. The Hon'ble Supreme Court upheld the view of Lahore High Court on the point of maintainability holding as follows: "As regards the maintainability of writ petition in the presence of alternate remedy, it is a settled proposition of law that it is no bar if such remedy is only illusory in nature, as observed in Gulistan Textile Mills Ltd. v. Pakistan (1983 CLC 1474). No useful purpose would have been served if the respondent had been required to avail of the remedy of the appeal or revision because the highest body i.e. The C.B.R. Had already expressed its opinion against the respondent. A reference may be made to Messrs Usmania Glass Sheet Factory Limited, Chittagong v. Sales Tax Officer, Chittagong (PLD 1971 SC 205) wherein it was observed that where a dispute arises between the parties in respect of fiscal right based on a statutory instruments, it can be determined in writ jurisdiction.
After the decision given by the C.B.R., it would have been difficult for the Federal Government to take a contrary view about the assessment/evaluation of the wood imported by the respondent, and in these circumstances no exception could be taken to the respondent's invoking Constitutional jurisdiction of the High Court. Classification of goods is not always a pure question of fact and being a mixed question of fact and law, the High Court is possessed of jurisdiction to adjudicate upon such question in Constitutional jurisdiction in the light of dictum of the Supreme Court in M.Y. Khan v. M.M. Aslam and 2 others (1974 SCM R 196) and Messrs Delite House Ltd. v.
Assistant Collector, Customs (1988 CLC 5)".
12. On the other hand Mr. Shaikh Haider, learned counsel for the respondent No.4 vehemently argued that the judgment relied upon by Mr. Jawaid Siddiqui is not attracted to the facts of the present case. He has contended that the petition pertains to the proceeding under the Income Tax Ordinance, 1979 and the Hon'ble Supreme Court has specifically held that the tendency to bypass the remedy provided under the relevant statute and to press into service, Constitutional jurisdiction of the High Court which has developed lately, needs to be discouraged. Mr. Shaikh Haider has candidly conceded, that if the question of jurisdiction is involved the writ jurisdiction of High Court can be invoked. According to Mr. Shaikh Haider the question of jurisdiction is not involved in the present case. In support of his contentions he has placed reliance on the judgment of Hon'ble Supreme Court of Pakistan, in the case of Commissioner of Income-tax v. Hamdard Dawakhana
(Waqf) PLD 1992 SC 847. The Hon'ble Supreme Court has held as follows: "Before parting with the judgment we may observe that in cases where any party resorts to a statutory remedy against an order he cannot abandon or bypass it without any valid and reasonable cause and file Constitutional petition challenging the same order. Such practice, in cases where statutory provides alternate and efficacious remedy up to High Court, cannot be approved or encouraged. In a recent judgment of this Court in C.A. No.79-K of 1991, one of us (Ajmal Mian, J.) in similar situation observed as follows:-- 'We may now revert to the question, whether the appellant was justified to file above Constitutional petition against the order of the Tribunal instead of invoking section 136 of the Ordinance for making a reference to the High Court. According to Mr. Rehn Naqvi, a reference under the above provision would not have been adequate and efficacious remedy as it would have taken years before it could have been heard. The same could be true for a Constitutional petition. The,tendency to bypass the remedy provided under the relevant statute and to press into service Constitutional jurisdiction of the High Court has developed lately, which is tope 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 mala fide. To force an aggrieved person in such a case to approach the forum provided under the relevant statute may not be just and proper.
In the present case, the appellant had opted to avail of the hierarchy of forums provided for under the Ordinance up to the stage of filing of appeal before the Tribunal and, therefore, it would have been proper on the part of the appellant to have invoked section 136 of the Ordinance for making a reference to the High Court instead of filing a Constitutional petition. In our view, once a party opts to invoke the remedies provided for under the relevant statute, he cannot at his sweet-will switch over to Constitutional jurisdiction of the High Court in the mid of the proceeding in the absence of any compelling and justifiable reason."
13. Mr. Shaikh Haider has further placed reliance on the judgment of Hon'ble Supreme Court in the case of H.M. Abdullah v. I.T.O. Karachi and 2 others 1993 SCM R 1195. In this case the Hon'ble Supreme Court has held as follows: "(5) It has been noticed that during the pendency of the writ petition, the notices under section 65 were acted upon and the Income-tax Officer passed the assessment orders. We may observe that these orders could have been challenged through appeal before the Appellate Tribunal. Further, on a question of law, reference also lay before the High Court. As a matter of fact all the points urged before the High Court in its Constitutional jurisdiction could be raised in the. reference application under section 136 of the Income Tax Ordinance, 1979. It is clear to us that for all intents and purposes on the passing of the assessment orders by the Income Tax Officer, the writ petition became infructuous, as an alternate remedy in terms of Article 199 of the Constitution was available to the appellant Unfortunately, the High Court's attention was not drawn to this aspect of the matter. There is no gainsaying that 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 grievance of the aggrieved party. In the circumstances of the case, the appellant was not entitled to invoke the Constitutional jurisdiction of the High Court and bypass the remedy available under the Income Tax Ordinance.
Reference in this connection may be made to the following observations appearing in Commissioner of Income-tax v. Hamdard Dawakhana (Waqf); Karachi (1993) 67 Tax 1 (SC Pak) = PLD 1992 SC 847 at p.861:--- ...In cases where any party resorts to statutory remedy against an order he cannot abandon or bypass it without any valid and reasonable cause and file Constitutional petition challenging the same order. Such practice, in cases where statute provides alternate and efficacious remedy up to High Court, cannot be approved.'
6. For the foreoging reason alone, without going into the merits of the case, this appeal is liable to be dismissed."
14. Mr. Shaikh Haider has submitted that the Hon'ble Supreme Court reiterated the above view in the case of Wealth Tax Officer and another v. Shaukat Afzal and 4 others 1993 SCM R 1810. In this judgment the Hon'ble Supreme Court has held as under: "We have heard learned counsel for the parties Mr. Shaikh Haider and Mr. Shahensha Hussain.
Some factual disputes have been raised by the parties. After going through the impugned judgment, we noted that the respondents had filed appeal before the Tribunal against the action of the appellants and that appeal was still pending when the respondents filed Constitutional petition in the High Court. The learned High Court has noted this fact and made the following observation:--- 'Mr. Shaikh Haider the learned counsel also contended that the petition suffers from laches as appeal is pending before the Tribunal. Mr. Shahenshah Hussain has contended that the appeal is pending but it has not yet been decided and further that the respondents are demanding and recovering wealth tax from the petitioners. Mr. Shaikh Haider frankly states that due to shortage of Benches the appeal could not be heard. In such circumstances when the Supreme Court has already laid down in clear terms the meaning of the expression 'assets' which is clearly applicable to the facts of this case and although the petitioners have filed appeal which has not been heard and is not expected to be heard in the near future and further that they are being pressed by the respondents for recovery of demands they are entitled to challenge the same under Article 199."
The respondents had approached the Tribunal for the redressal of their grievance. Before exhausting departmental appeal, the High Court should not have entertained the Constitutional petition particularly, when the appellants' contention was that the precedent on which reliance was placed by the High Court, was distinguishable. This Court, in the case of Commissioner of Income- tax, Companies-II and another v. Hamdard Dawakhana (Waqf), Karachi (1993) 67 Tax 1 (SC Pak) = (PLD 1992 Supreme Court 847) has observed as under:-- "Before parting with the judgment we may observe that in cases where any party resorts to a statutory remedy against an order, he cannot abandon or bypass it without any valid and reasonable cause and file Constitutional petition challenging the same order. Such practice, in cases where statute provides alternate and efficacious remedy up to High Court, cannot be approved or encouraged."
We may also add the following observation of this Court in the case of A Hahib Ahmad v. K.K.G.
Scott Christian and others (PLD 1992 Supreme Court 353): 'It is often said that if a Court has no jurisdiction it is better for the High Court to interfere in its extraordinary jurisdiction to provide swift and efficacious remedy. Experience has shown and it has now been recorded as opinion in a large number of cases, that in practice even if it was so few decades ago, it is no more so in the present circumstances. See a very recent judgment of this Court on this very issue Messrs English Boot Shoes Ltd. v. Collector, Central Excise and Land Customs (Civil Appeal No.344-K of 1986, decided on 24-12-1991).'
We, therefore, accept this appeal, set aside order of the High Court. The respondents are allowed to go to the Tribunal and they may move an application for revival of appeal. It is expected and hoped that the Tribunal will decide the case on merits."
15. We have carefully considered the contentions raised by the learned Advocates for the parties. A perusal of the judgments cited at the bar shows that the facts of the case, 1999 SCM R 138 (ibid) on which Mr. Jawaid Siddiqtii has placed reliance are distinguishable. The single Judge of Lahore High Court allowed the Writ Petition which was filed in the year 1993 when no appeal was provided under the Customs Act before any independent forum as is provided under the Income Tax Ordinance. The law has been amended in the year 1995, and an appeal has been provided before the Customs, Excise and Sales Tax Appellate Tribunal which is not subordinate to the C.B.R.
However, the Income Tax Appellate Tribunal is in existence since the year 1942 which is absolutely independent of the C.B.R. And any opinion or decision of C.B.R. Is not binding on the Income Tax Appellate Tribunal. Moreover, by now it stands established that any opinion of C.B.R. Is not binding even on the Appellate Additional Commissioner of Income Tax/GIT (Appeals). As already observed a Second Appeal lies to the Income Tax Appellate Tribunal and thereafter a reference is available to the High Court, under section 136 of the Income Tax Ordinance.
16. For the foregoing reasons, we are of the considered opinion that the ratio of the judgments of Hon'ble Supreme Court of Pakistan, on which Mr. Shaikh Haider has placed reliance is attracted and consequently it is held that the petitioner cannot be allowed to bypass/abandon the remedy already availed by it by filing the first appeal before the CIT (A). Respectfully following the dictum laid down by the Hon'ble Supreme Court in the judgments on which Mr. Shaikh Haider has placed reliance, it is held that the petition is not maintainable. As the petition is being disposed of on the point of maintainability therefore, we would not like to give any findings on merits which shall be considered by the appellate authorities under the Income Tax Ordinance, 1979.
The petitioner did not come to this Court with clean hands. He withheld relevant information relating to the filing of the Appeal. The petition is, thus, patently mala fide and vexatious to the knowledge of the petitioner and is accordingly dismissed with special costs of Rs.5,000 only. .