2025 PLP 883 (PTD)

SYED ARSHAD ALI, J.

The questions for determination in this reference are as follows: Whether an Appellate Tribunal has the authority to remand a case in a time-barred appeal under sub section (5) of section 127 of the Income Tax Ordinance? Whether the service of an order through electronic means can be considered equivalent to personal service or service through registered post as stipulated in clauses (a) and (b) of subsection (1) of section 218 of the Ordinance?

2. The petitioner has filed this Tax Reference under Section 133 of the Income Tax Ordinance, 2001 ("Ordinance"), seeking this Court's opinion on questions of law arising from the order of the Appellate Tribunal Inland Revenue, Peshawar Bench (Special Bench Peshawar), dated 11.02.2022 ("Tribunal"). Briefly stated, the respondent/taxpayer derives income from the sale of garments under the name R-Sheen Peshawar. The Officer Inland Revenue ("OIR"), through a notice dated 23.10.2019 issued under Rule 44(4) of the Income Tax Rules, 2002 ("Rules"), read with Section 161 of the Ordinance, informed the respondent of defaults in the due deduction and collection of withholding tax. After establishing these defaults, the OIR passed an order on 05.08.2020, raising a tax demand of Rs. 2,075,183/-. Aggrieved by this order, the respondent filed an appeal before the Commissioner Inland Revenue (Appeals), Peshawar ("CIR(A)"). However, the Commissioner-IR, through an order dated 21.01.2021, dismissed the appeal on the grounds that it was time-barred by forty days. The Commissioner held that the order was duly served upon the respondent on 05.08.2020 via electronic means as per Section 218(1)(d) of the Ordinance, whereas the appeal was filed on 14.08.2020.

3. The respondent filed a second appeal before the Appellate Tribunal Inland Revenue, Peshawar Bench (Special Bench Peshawar), which, through its impugned order dated 11.02.2022, allowed the appeal. The Tribunal held that the order of the CIR(A), refusing to hear the case on merits and dismissing the appeal solely on the ground of limitation, was unlawful. Consequently, the Tribunal set aside the impugned order of the CIR(A) and directed that the appeal be decided on merits within 60 days of the communication of the order, ensuring due opportunity of hearing to the appellant taxpayer and passing a speaking order.

4. The core issue before this Court pertains to the interpretation of Section 218(1)(d) of the Ordinance. It is undisputed that the assessment order was issued on August 5, 2020, and served upon the respondent on the same date via electronic means, as prescribed under Section 218(1)(d) of the Ordinance. The appeal, however, was filed on August 14, 2020, whereas the statutory limitation period for filing appeal is thirty days as set out under Section 127(5) of the Ordinance.

5. In the light of the facts of the case, the first question to be answered by this Court is, "Whether service of the Order to the tax payer through electronic means, would be a proper service"? In this regard the relevant provisions of Section 218 of the Ordinance are reproduced below:

218. Service of notices and other documents.-(1) Subject to this Ordinance, any notice, order or requisition required to be served on resident individual (other than in a representative capacity) for the purposes of this Ordinance shall be treated as properly served on the individual if- (a) personally served on the individual or, in the case of an individual under a legal disability or a non-resident individual the representative of the individual; (b) sent by registered post or courier service to the place specified in clause (b) [of subsection (2)] or to the individual's usual or last known address in Pakistan; (c) served on the individual in the manner prescribed for service of a summons under the Code of Civil Procedure, 1908 (V of 1908); or (d) served on the individual electronically in the prescribed manner. (2) Subject to this Ordinance, any notice, order or requisition required to be served on any person (other than a resident individual to whom subsection (1) applies) for the purposes of this Ordinance shall be treated as properly served on the person if- (a) personally served on the representative of the person; (b) sent by registered post or courier service to the person's registered office or address for service of notices under this Ordinance in Pakistan, or where the person does not have such office or address, the notice is sent by registered post to any office or place of business of the person in Pakistan: (c) served on the person in the manner prescribed for service of a summons under the Code of Civil Procedure, 1908 (V of 1908); or (d) served on the individual electronically in the prescribed manner, (3) Where an association of persons is dissolved, any notice, order or requisition required to be served under this Ordinance on the association may be served on any person who was [the principal officer or] a member of the association immediately before such dissolution. (4) Where section 117 applies, any notice, order or requisition required to be served under this Ordinance on the person discontinuing the business may be served on the person personally or on any individual who was the person's representative at the time of discontinuance. (5) The validity of any notice issued under this Ordinance or the validity of any service of a notice under this Ordinance shall not be called into question after the return to which the notice relates has been furnished or the notice has been otherwise complied with." Similarly, Rule 74 of the Rules is also reproduced below for ready reference, which states:

74. Service of documents electronically.- (1) This rule applies for the purposes of the service of documents under the Ordinance or these rules. (2) Where a person has provided an electronic address, the document required to be served on the person shall be considered sufficiently served sent to that address. (3) For the purposes of sub-rule (2), a document is considered sent to an electronic address if the sender receives- (a) in the case of a message sent to a facsimile number, confirmation from the sending facsimile machine that the transmission is sent; (b) in the case of a message sent to an electronic mail address, confirmation from the server of the recipient that the message has been received; and (c) from the Board a digitally signed e-mail acknowledging the receipt of Electronic Income Tax Return for electronic withholding tax statement. (4) In this rule- (a) "document" means any notice, order or requisition under the Ordinance; and (b) "electronic address" means a facsimile number or electronic mail address.

6. It is the opinion of the worthy Tribunal that while the respondent undoubtedly received the assessment order through electronic means on 05.08.2020, the limitation period should commence from the date the respondent received an attested copy of the impugned order. Section 218(1)(d) of the Ordinance, introduced via the Finance Act, 2018, expressly allows for the service of documents electronically in the prescribed manner, in addition to other modes of service. The section outlines four distinct methods of service: (i) personal service, (ii) service through registered post, (iii) service in accordance with the procedure for serving summons under the Code of Civil Procedure, 1908, and (iv) electronic service. The Tribunal emphasized that each mode of service is legally recognized and must be interpreted in light of the specific circumstances of each case. On the other hand, the provisions contained in Section 218 and Rule 74 clearly postulates that an order or notice requiring service shall be deemed properly served if delivered electronically, provided the sender receives confirmation of transmission from the facsimile machine or receipt confirmation from the server. Opinion of the Court

7. Section 218 of the Ordinance deals with the service of notice and other documents. Subsection (1) of section 218 stipulates four mode of service of notices and other documents including the assessment orders upon the person/taxpayer; whereas subsection (2) envisages and declares that the service of notice or other documents through the afore mode shall be treated proper service upon the person.

8. Service on the individual electronically in the prescribed manner as clause (d) in section 218(1) & (2) was introduced through Finance Act, 2018. It is important to note that through the same Ordinance after sub-clause (c) in both, subsection (1) as well as subsection (2) punctuation (;) and (or) were also inserted, therefore, the question before us is whether the service of assessment order upon the assessee in any of the mode stated above can be treated as a proper service upon the assessee in respect of the period limitation for the purpose of appeal. According to Crawford, "The Construction of Statues", the word "or" is a disjunctive and it gives an alternative impression. He elaborated this as follow: "In ordinary use the word "or" is a disjunctive that marks an alternative which generally corresponds to the word "either." In face of this meaning, however, the word "or" and the word "and" are often used interchangeably. As a result of this common and careless use if the two words in legislation, there are occasions when the court, through construction, may change one to the other. This cannot be done if the statute's meaning is clear, or if the alteration operates to change the meaning of the law. it is proper only in order to more accurately express, or to carry out the obvious intent of the legislature, when the statute itself furnishes cogent proof of the error of the legislature, and especially where it will avoid absurd or impossible consequences, or operate to harmonize the statute and give effect to all of its provisions."1 As regard the effects of punctuations in the Statutes, Crawford went on to say as below: "Of course, the punctuation of a statute may lend some assistance in its construction, but when the intention of the statute and the punctuation thereof are in conflict, the former must control, even where the punctuation is regarded as a part of the statute. In other words, the punctuation will not control the plain meaning of the text of an enactment. It is subordinate to the text, and the retention of a word is of far more importance than the position of a comma. Indeed, the court may punctuate, or disregard existing punctuation, or repunctuate in order to give the legislative intention effect. Thus, a semi-colon may be placed where a common appears, or a semi-colon substituted in lieu of the word "and". But where a statute is ambiguous, its punctuation may and should be considered and given weight, especially where the act is carefully punctuated. If the punctuation is in accord with the suggested meaning of the statute, it is an important additional reason for the acceptance of that meaning. It should be given weight, unless, from the inspection of the whole statute, it is apparent that the punctuation must be disregarded in order to arrive at the legislative intention."2 The above principles of statutory interpretation provide essential insights into the construction of Section 218 of the Ordinance and its application. The use of the word "or," as highlighted by Crawford, denotes a disjunctive, indicating independent alternatives that are sufficient in themselves, reflecting the legislative intent to treat each mode of service as valid and effective. This is further reinforced by the punctuation used in Section 218, where semi-colons separate clauses (a), (b), and (c), while clause (d) is preceded by both a semi-colon and the word "or." While drawing the distinction between these clauses, the Tribunal wrongly concluded that the electronic mode of service provided in Section 218(1)(d) is a secondary method of service. Moreover, as Crawford explains, punctuation may lend support to statutory interpretation but cannot override the clear legislative intent or the plain meaning of the text. Here, the provision establishes that service of orders/judgments via any mode, when completed in the prescribed manner, is sufficient service upon the taxpayer of the Ordinance. Rule 74 complements this by deeming electronic service valid if receipt confirmation is obtained. The Tribunal recognizes electronic service as sufficient, yet its stance that the limitation period starts only upon receiving an attested copy creates inconsistency. Such an approach could undermine the legislative intent of modernizing and streamlining service methods. The Tribunal's interpretation fails to align with the legislative framework, as it overlooks the intent behind recognizing electronic service as an independent and efficient method, thereby causing unnecessary procedural delays contrary to the law's purpose.

9. Reverting to the second question of limitation under section 127(5) of the Ordinance, it would be appropriate to reproduce the relevant provisions:

127. Appeal to the Commissioner (Appeals).- (1) (2) (3) .. (5) An appeal shall be preferred to the Commissioner (Appeals) within thirty days of the following- (a) where the appeal relates to any assessment or penalty, the date of service of the notice of demand relating to the said assessment or penalty, as the case may be; and (b) in any other case, the date on which the order to be appealed against is served. The language of the above provisions explicitly defines the limitation period for filing an appeal, leaving no room for alternative interpretation due to the clarity of the statutory wording. Moreover, the use of the word "shall" following "appeal" conveys a mandatory obligation, requiring the aggrieved party to file the appeal within the prescribed statutory timeframe. Consequently, the appellant bears the burden of demonstrating valid and sufficient reasons to justify any request for condonation of delay, in line with established principles of statutory interpretation and procedural fairness. Therefore, in our humble view, the limitation period for filing an appeal against an assessment order under section 127(5) of the Ordinance begins from the date the assessee receives the assessment order through any of the prescribed modes of service. This interpretation stems from the explicit language of section 127(5)(a), which ties the commencement of the limitation period to the "date of service of the notice of demand" for cases involving assessments or penalties, and in other cases, to the "date on which the order to be appealed against is served." The repeated reference to "service" in both instances underscores that the limitation period hinges on the proper and timely service of the relevant documents, as governed by section 218 of the Ordinance, which details the modes and manner of service.

10. In this context, the Tribunal has erred in condoning the delay for filing the appeal, as it failed to adequately apply the statutory framework that clearly defines the commencement of the limitation period. By not strictly adhering to the service requirements stipulated under section 218, the Tribunal's decision undermines the legislative intent of ensuring timely appeals and introduces inconsistency in the procedural timeline, leading to unnecessary procedural leniency that is not supported by the provisions of the Ordinance.

11. In view of the above, this Tax Reference is answered in affirmative and as a consequence thereof, the impugned order of the worthy Tribunal dated 11.02.2022 is set aside. Copy of this Judgment be sent to worthy Tribunal in terms of Section 133(5) of the Ordinance. MQ/48/P Reference allowed.