2003 PLP 2083 (PTD)

IJAZ-UL-HASSAN, J.

Dr. Najibullah Khan, petitioner has filed instant Writ Petition No.686 of 2000 under Article 199 of the Constitution of the Islamic Republic of Pakistan, 1973 for declaring Central Board of Revenue's Letter C. No. 1 (19) WHT/91, dated May 4, 2000 and the Central Directorate of National Savings Letter No.F. 8(2) S-1/Cert/98, dated May 9, 2000 as without lawful authority and of no legal effect, with prayer that the National Saving Centre, Mingora be directed to reverse the entries of deduction of withholding tax and the amount so far deducted be credited to the accounts of the customers.

2. The National Saving Centre throughout Pakistan started issuing Regular Income Certificates to customers in 1993. The petitioner has purchased and is the holder of Regular Income Certificates, of various denominations, issued by the National Saving Centre, Mingora Swat. The holder of Regular Income Certificates issued by the National Saving Centres, is entitled to claim monthly profit by presenting the said Certificates to the issuing officer and surrendering to him the relevant coupon attached to the certificates in serial order in token of receipt of the amount of profit. The grievance of the petitioner is that ever since the petitioner purchased the Regular Income Certificates, issued by the National Saving Centre, Mingora, no income tax/withholding tax was deducted from the monthly income accrued on the said Certificates. However; since May, 2000, the National Saving Centre Mingora, started deducting Income, tax/Withholding tax at the rate of 10% per annum on the monthly income accrued to the petitioner on the Regular Income Certificates owned by him and other customers, in purported compliance/implementation of an "observation" enshrined in impugned Letter, C No.1(19) WHT/91, dated May 4, 2000 from the Central Board Revenue, Revenue Division, Government of Pakistan. In the light of the said letter, the Central Board of Revenue has interpreted certain provisions of the Income Tax Ordinance, 1979, and has, in effect, determined that income received by the residents of tribal areas is chargeable to Income-tax/Withholding tax under the Income Tax Ordinance, 1979 and asked the Field formations to implement the said interpretation/observation. Ultimately, vide Letter No.F.8(2)S-1/Cert/98. dated May 9, 2000, the Central Directorate of National Savings, Government of Pakistan, Islamabad, has, in effect, asked the National Saving Centre, Mingora to implement the observation of the Central Board of Revenue contained in letter, dated May 4, 2000 which has caused annoyance to the petitioner and he ha6 invoked Constitutional jurisdiction of this Court by way of filing instant writ petition which is before us for consideration.

3. Barrister Mian Gul Hassan Aurangzeb, learned counsel for the petitioner assailed the legality of deduction of Income-tax/Withholding tax on the monthly income accrued to the petitioner on the Regular Income Certificates owned by him and vehemently contended that Income Tax Ordinance, 1979 having not been extended to PATA in the manner required and in compliance of Article 247 of the Constitution, the impugned deduction is violative of the Constitution and cannot be allowed to remain intact. The learned counsel added that the letters in question issued in this respect by Central Board of Revenue Islamabad are without authority and of no legal effect. He submitted that the National Saving Centre, Mingora, be directed to-reverse the entries of deduction of withholding tax and the amount so far deducted be credited to the accounts of the customers. To augment the contentions, he placed reliance on the following citations:-- (i) Messrs Gul Cooking Oil and Vegetable Ghee (Pot.) Ltd. v. Pakistan through Secretary, Ministry of Finance, Government of Pakistan, Islamabad and others (2000 PTD 203). (ii) Messrs Lucky Cement Limited v. The Central Board of Revenue and others (PLD 2001 Peshawar 7). (iii) Ghilaf Gul v. Commissioner of Income Tax/Wealth Tax Zone-B, Peshawar and 4 others (1997 PTD 849 Peshawar). (iv) Messrs Central Insurance Co. and others v. The Central Board of Revenue, Islamabad and others (1993 SCMR 1232). (v) F.S. Tobacco Company (Pot.) Ltd. v. Superintendent, Central Excise and Sales Tax Nowshera and 4 others (1995 PTD 874 Peshawar).

4. Mr. Salahuddin Khan, learned Deputy Attorney General, appearing on behalf of the Federal Government supported the action of Central Board of Revenue Islamabad and attempted to argue that entire transaction having taken place between the parties at Islamabad, respondents are quite justified to deduct withholding tax from the income of the petitioner and the observation contained in impugned letters is in no manner violative of the provisions of the Constitution, infringing the fundamental or legitimate right of the petitioner. The learned counsel also challenged the maintainability of the writ petition and reiterated that alternate remedy provided under section 129 of the Income Tax Ordinance, 1979 having not been availed, the petition is not maintainable. To substantiate the plea he relied on an unreported judgment of august Supreme Court of Pakistan passed in case captioned Dr. Hafiz Sher Badshah v. Income Tax Officer, Circle-II Mardan and 2 others (Civil Petition No.359-P of 2002).

5. There appears to be no controversy between the parties that petitioner is a bona fide resident of District Swat which comes within the Provincially Administered Tribal Areas (hereinafter referred to as PATA) and the National Saving Centre throughout Pakistan started issuing Regular Income Certificates to customers in 1993. The petitioner has purchased and is the holder of Regular Income Certificates of various denomination by the National Saving Centre Mingora, Swat. It is also a common ground between the parties that the provisions of Income Tax Ordinance, 1979 have not been extended to PATH in the manner as prescribed by the Constitution.

6. By Regulation No.1 of 1969, issued by the Administrator of Martial Law, Zone-A, the Administration of the territories of the former States of Dir, Chitral and Swat was taken away from their respective rulers and was assumed by the then Government of West Pakistan. Paragraph 6 of the said Regulation authorised the Provincial Government to constitute the territories falling in the former States of Dir, Chitral and Swat into such administrative units as it deemed fit. In exercise of this power the provincial Government divided the territories so coming under its administrative control into districts and made them part of the Malakand Division. The Province of West Pakistan was dissolved by President's Order No.1 of 1970 with effect from July 1, 1970. By paragraph 4 of the said order, read with relevant entries in the Schedule thereto, the territories of the former States of Dir, Chitral and Swat were included in the North-West Frontier Province. The Governor of the Province, with the approval of the President, made a number of Regulations, beginning with Regulation No. 1 of 1970, whereby a number of, statutes which were in force in the other parts of the North-West Frontier Province were extended to these territories. The statutes so extended included, inter alia, Evidence Act, Criminal Procedure Code, Pakistan Penal Code, Civil Procedure Code, Civil Courts Ordinance, Suits Evaluation Act, Contract Act, Arbitration Act and Transfer of Property Act. It is pertinent to mention that the Income Tax Ordinance, 1979 has not been extended to PATA in the manner as required under Article 247 of the Constitution. By operation of this Article of the Constitution the Administration of the PATA became the exclusive concern of the Governor of North-West Frontier Province and the President of the Islamic Republic of Pakistan. Even though PATA was included in the territorial limits of the North-West Frontier Province and fell within its executive authority yet no law made by the Provincial Assembly could-extend to them unless the Governor, with the approval of the President issued a specific direction to that effect. While giving such a direction the Governor was empowered to modify the relevant law. Similarly, no law made by the Parliament could apply to PATA without a direction from the President and the President could, modify the law while giving such a direction.

7. Article 247 of the Constitution makes provision for the administration of the tribal areas. The relevant portion of Article 247 reads:-- "

247. Administration of Tribal Areas. (1) ________________________ (2) ________________________ (3) No Act of Majlis-I-Shoora(Parliament) shall apply to any Federally Administered Tribal Area or to any part thereof, unless the President so directs, and no Act of Majlis-I-Shoora (Parliament) or a Provincial Assembly shall apply to a Provincially. Administered Tribal Area, or to any part thereof; unless the Governor of the Province in which the Tribal Area is situate, with the approval of the President, so directs; and in giving such a direction with respect to any law, the President or as the case may be, the Governor, may direct that the law shall, in its application to a Tribal Area, or to a specified part thereof, have effect subject to such exceptions and modifications as may be specified in the direction. (4) ________________________ (5) ________________________ (6) ________________________ (7) ________________________

8. We have heard at length the rival contentions of learned counsel for the parties in the light of the material available on the record and-the judgments cited at the bar.

9. It should not take us long to agree with learned counsel for the petitioner that the Income Tax Ordinance, 1979, having not been extended and applied to PATA by the Governor of N.-W.F.P. with the approval of the. President, the deduction of Income-tax/Withholding tax by the National Saving Centre, Mingora, from the income accrued to the petitioner and other customers on the Regular Income Certificates is against the Constitution, thus, without lawful authority and of no legal effect. Deduction of Income-tax/Withholding tax cannot be lawfully made by the National Saving Centre Mingora, on a mere observation/interpretation of the provisions of Income Tax Ordinance, 1979, by the Central Board of Revenue contained in impugned Letter, C.No.1(19)/WHT/91, dated May 4,2000. It has been contended with justification that the petitioner is exempt from payment of Income tax/Withholding tax because the very Income Tax Ordinance, 1979, is not at all applicable to PATA where the income is derived by the petitioner who, is a domiciled resident of PATA.

10. Adverting to the preliminary objection raised by learned Deputy Attorney-General that the remedy of appeal having not been availed by the petitioner, instant Constitutional petition is not maintainable, we find that the objection, is misconceived. It is true that the jurisdiction under Article 199 of the Constitution is to be exercised where no other adequate remedy is available. Adequate remedy has also been defined to mean efficacious remedy in a number of judgments given by superior Courts. In the instant case we find that since Income Tax Ordinance, 1979 has not been extended to PATA, none of the provisions of the said Ordinance can be made applicable by any force of argument or any stretch of imagination to the assessees in PATA. In other words no provision of the Ordinance could be invoked by or against the assessees thereat, and therefore, the question of availing alternate remedy does not arise at all in the first place. Since the dispute between the parties is fiscal in nature the aggrieved party could directly approach the superior Courts by invoking. Constitutional jurisdiction as observed in Messrs Central Insurance Co. and others v. The Central Board of Revenue, Islamabad and others (1993 SCMR 1232).

11. It has been asserted on behalf of the Federal Government that petition in hand is premature because no final order has been made and only a letter has been issued and that the petitioner having purchased the Saving Certificates of his own without any compulsion, the doctrine of promissory estoppel comes into his way. The submission of the learned counsel does hot hold the field. The judgment relied by the learned counsel proceeds on different facts and is of no help to respondents.

12. Resultantly, we accept the writ petition and declare the impugned deduction, as against the provisions of the Constitution and being without lawful authority, would have no effect. The National Saving Centre Mingora, shall reverse the entries of deduction of withholding tax and the amount so far deducted shall be credited to the account of the customers. We make no order as to costs. M.B.A./269/P Petition accepted.