1981 PLP D169 (PTD)

Representation

• Khalid Anwar for Petitioner.
• Iqbal Kazi for Respondents.
• Date of hearing : 5th February, 1981
• 11. The learned Advocate for the petitioners, in support of the above grounds, inter alia submitted before us as under: -
• The learned Advocate for the petitioners further submitted that he was not challenging the vires of the relevant provisions of the Finance Ordinance, 1972, in this petition, as the petitioners' Constitutional Petition No. 706 of 1973 is pending before this Court in which the said question is directly in issue and as such he would confine his argument before this Court on the presump tion, without prejudice to petitioners' contentions it Constitutional Petition No. 705 of 1973, that the amendments made by the Finance Ordinance, 1972 are valid and legal.
• The learned Advocate for the petitioners urged before us that it was in view of the petitioners' representation as contained the letter dated 2hth March, 1976 Annexure `D', which was addressed on behalf of the petitioners by ‑heir Chartered Accountants Messrs A. F. Ferguson & Co., that two orders Annexures `E' & 'a' under section 35 of the Act were passed by the Income tax Officer, by which, not only the error in depreciation amount claimed was corrected and a wrong levy of surcharge for the year 1972‑73 was withdrawn, but demand for additional taxes, under the provisions of section 18-A(8) and but 45‑A (b) (ii) was dropped and as such issuance of notice dated 1st January 1978 ;end passing of fresh order under section 35 of the said Act by which additional taxes under section 18‑A (8) and section 45‑A (b) (ii) were raised once again, on the basis of alleged mistake, was not legally justified as there was no mistake at all in the previous two orders under section 35 of the said Act by which demand for additional taxes under sections 18‑A (8) and 45‑A (b) (ii) was drop ped. However, the learned Advocate of the petitioners submitted that he w a; also not pressing this objection of re‑opening of the case vide notice dated 1st January 1978, but would confine his arguments before us on the validity of impugned order as far as it relates to the actual levy of additional taxes under sections 18‑A (8) and 45‑A (b) (ii) on the petitioners.
• 12. The first contention that has been urged before us by the learned advocate for the petitioners is, that, although Finance Ordinance, 1972, which, was promulgated on 17th June, 1972, took away the; benefit of tax holiday enjoyed by the companies under section 15‑BB with a retrospective effect and consequently all the provisions of the Act applicable for the assessment year 1972‑73 applied to the companies including the provision of section 18‑A of the said Act on account of the said Finance Ordinance, 1972, but the relevant dates for the payment of advance tax under section 18‑A for the assessment year 1972‑73 had already passed and as such it ‑ was impossible for the peti tioners to comply with the provision of section 18‑A for the assessment year 1972‑73 and as such non‑compliance of said provision by the petitioners was beyond the control of the petitioners and consequently the petitioners cannot be penalized for non‑compliance of section 18‑A for the assessment year 1972‑73 and be made liable to pay additional tax under section 18‑A (8) as it has been done by the impugned order Annexure `1' and therefore the impugned order so far as it relates to the imposition of additional tax under sec tion l8‑A (8), is without jurisdiction, without lawful authority and not in accordance with the provisions of the law as in force on the said dates. In support of this contention the learned Advocate for the petitioners further submitted that since before the promulgation of Finance Ordinance, 1972, petitioners were exempt from the payment of even income tax for the assess ment year.1972‑73 they could not, in law, be impugned with advance know ledge of the intention of the Legislature of withdrawing‑tax holiday with the retrospective effect by the said Ordinance and as such, there was no legal oblig ation on the petitioners, to pay advance tax for the said assessment year and consequently imposition of additional tax under section 18‑A(8) of the said Act by the impugned order Annexure `I' on the petitioners, is without lawful authority and contrary to all the canons of justice and therefore the said order is without jurisdiction and consequently liable to be quashed by this Court. The learned Advocate for the petitioners further pointed out to us that in a similar situation which arose on account .of section 3‑C of the said Act in August, 1976, the question of non‑payment of advance tax on said returns filed in pursuance of section 3‑C of the said Act was considered by Central Board of Revenue by its circular issued in this connection which was published in Business Recorder in April, 1973, which reads as follows :‑‑‑
• The above circular of the Central Board of Revenue fully supports the stand of the petitioners for non‑payment of advance tax for the assessment year 1972‑73. The learned Advocate for the respondent on the other hand submitt ed before us that on account of promulgation of Finance Ordinance, 1972, by which the benefit of tax holiday was taken away by retrospective effect for the assessment year 1972‑73, the petitioners ought to have paid advance tax under section 18‑A and since admittedly such advance tax was not paid, the levy of additional tax under section 18‑A (S) for such non‑payment‑4or the instalment of such advance tax which became due payable, prior to promulga tion of the Finance Ordinance, 1972, the Income‑tax Officer was fully justified in levying additional tax under section 18‑A (8) for such non‑payment. The learned Advocate for the respondent submitted that though this submission of his may seem harsh, but in view of the provisions of Finance Ordinance, 1972 by which tax holiday was withdrawn with a retrospective effect were legal, the Income‑tax officer was fully justified to pass the impugned order in connection there with. The learned Advocate for the respondent further submitted that the petitioners themselves had given up their right to the tax holiday which was evident from revised return of income in which petitioners claimed initial depreciation and further petitioners had paid advance tax amounting to Rs. 3,40,000 for the assessment year 1971‑72, which was evident from the assessment order under section 23‑B dated 15th September, 10'71, and as such the petitioners now cannot take shelter for non‑payment of the advance tax under section 18‑A for the assessment year 1972‑73 on the ground mentioned by them, The learned Advocate for the respondent further submitted, that the impugned order has given cogent reasons for imposition of additional tax under section 18‑A (8) of the said Act, but in spite of this, the petitioners in their letter dated 11th April, 1978 Annexure `J' did not challenge the said reasoning s and therefore they cannot be allowed now to challenge the said impugned order. In support of these contentions the learned Advocate for the respondent relied upon cases reported in P L D 1967 S C 289, P L D 1969 S C 623, P L D 1974 S C 180 and P L D 1977 Lah 797.
• 13. We have carefully considered the submissions of both the learned Advocates and have carefully considered the authorities cited by the learned Advocate for the respondent.
• 14. The authority reported in P L D 1967 S C 289 lays down than the Legislature is competent to make and unmake laws and has authority to legislate with the retrospective effect. The authority reported in P L D 1969 S C 623 lays down that the Legislature, which is competent to make a law, has full and plenary powers in that behalf and can even legislate retros pectively and retroactively and can take away vested rights by clear and unambiguous provisions. The authority reported in P L D 1974 S C 181 lays down that the law applicable to a given case shall be one which is in force an the day, when the given case is being disposed of. The authority reported in P L D Lah. 797 lays down that demand for payment of additional tax under sections 18‑A & 45‑sir of the Act does not amount to imposition of tax but only additional liability for non‑compliance with relevant provision of the Act and further the said authority has held that the provision of sec tion 18‑A and 45‑A are legal and valid. The law laid down by these authorities cannot be disputed by any one. However, all these authorities have dealt with the cases, the facts of which were quite different from the facts of the present case. The petitioners before us, have not challenged any of the propositions laid down by these authorities but their mere contention before us, is, that on 15th September, 1971, 15th December, 1971, 15th March, 1972 and 15th June, 1972, since the petitioners were not liable to payment of income‑tax on account of the tax holidays enjoyed by them, they were not obliged to pay advance tax on these dates for their income of the assessment year 1972‑73, which was fully exempt from payment of income‑tax on account of the tax holiday. The legislation, by which this tax holiday was taken away with retrospective effect, was promulgated on 17th June, 1972, only and consequently it cannot be presumed, that petitioners had legal obligation under, section 18‑A for the said assessment year to pay advance tax under section 18‑A and consequently the impugned order by which additional tax under section 18‑A (8) has been levied on them, for non‑payment of advance tax for the above‑mentioned four dates is not at all legally justified and consequently the said order, in view of the facts of this case is without jurisdiction and no in accordance with the law in force on the said dates. In our opinion the con tentions raised and urged before us, by the learned Advocate for the petitioners, have great force and we are of the opinion that since the above‑mentioned four relevant dates had already passed, before the promulgation of Finance Ordinance, 1972, the petitioners committed no breach of section 18‑A so as to attract to provisions of section 18‑A (8) for levying additional tax. The contentions of the learned Advocate for the respondent that the petitioners voluntarily gave benefit of the tax holiday on account of their revised returns filed by them in respect of the assessment year 1971‑72 and on account of payment of Rs. 3,40,000 as advance tax for the said year has also no force. The position in respect of alleged advance tax paid by the petitioners for the assessment year 1971‑72, is, that the same was paid in view .of Finance Ordi nance, 1971 by which section 15‑BB was amended and on account of said amendment petitioners and other companies enjoying tax holidays were required to make payment of tax in spite of tax holiday and the same was to be adjusted against the tax payable by such companies after the expiry of the tax holiday enjoyed by them. In this connection the Annexure `B' filed with the counter‑affidavit of the respondents shows that advance payment of Rs. 47,45,459 shown in petitioners' return for the year ending 30th September, 1971, though shown under the column of advance payment under section 18‑A, was a pre‑payment of tax for which adjustment was claimed as mentioned on page 2 of Annexure `B' produced by the respondents. Similarly the contention of the learned Advocate for the respondents that petitioners voluntarily gave tip benefit of tax holiday has also no force. It is true, that the petitioners did make such a request to Central Board of Revenue but the same, as admitted by the learned Advocate for the respondent, was turned down.
• 16. The second contention of the learned Advocate for the petitioners, which was urged before us, was that imposition of additional tax under section 45‑A (b) (ii) of the Act by the impugned order, in view of the stay granted to the petitioners in Constitutional Petition No. 706 of 1973, is also without lawful authority and as such the said order be quashed. In support of this contention the learned Advocate for the petitioner, submitted before us, that in view of the confirmation of the stay order passed in Constitutional Petition No. 706 of 1973, the Income‑tax Officer had no justification at all to levy additional tax under section 45‑A (b) (ii). The learned Advocate for the respondents; on the other hand, urged before us that the stay order in question did not restrain tae Income‑tax Officer from adjudicating the case of the petitioner and consequently the Income‑tax Officer had full authority to pass an order under section 45‑A, as he bad done by the impugned order.
• 17. We have considered the above submissions of the learned Advocates of the parties and are of the opinion, that since the matter is sub judice in Constitutional Petition No. 706 of 1973 and the result of the said petition will directly affect the attraction of section 45‑A to the case of the‑ petitioners, the Income‑tax Officer in question ought to have refrained from passing orders under section 45‑A, at least in respect of period from 25th June, 1973 to 20th January, 1976 when the stay order was in force till the disposal of the said petition and consequently we quash the orders under section 45‑A (b) (ii) mentioned in the impugned order as far as the same relates to the period from 25th June, 1973 to 20th January 1976. However, we would like to make it clear that on disposal of the Constitutional Petition No. 706 of 1973, the Income‑tax Officer in question, will be at liberty to pass such orders as he may deem fit, in accordance with law under section 4`3A in respect of .the said period and the Income‑tax Officer will be at liberty to pass fresh order in respect of the period from 6th July, 1972 to 24th June, 1973, as the said period was not covered by the stay order in question.
• 18. The last submission of the learned Advocate for the petitioners, before us was, that the above petition was maintainable in spite of the fact that the petitioners have not challenged the impugned order under the provi sions of the said Act by way of appeal, etc., as provided therein, on the ground that the said remedies available to the petitioners under the said Act are not adequate and efficacious and further the learned Advocate for the petitioners urged that prima facie order passed by the Income‑tax Officer in question, under the provisions of sections 18‑A (8) and 45‑A (b) (ii) were without lawful authority and as the respondents were threatening to take penal and coercive action against the petitioners, the petitioners were fully justified in coming to this Honourable Court. In support of this contention, the learned Advocate for the petitioners, has relied upon case reported in P L D 1972 S C 279; P L D 1971 S C, 2015; P L D 1976 Kar. 481; P L D 1976 Kar. 552 and P L D 1976 Lah. 726. The learned Advocate for the respondents, on the other hand, submitted that the above petition was not maintainable, as the petitioners have rushed to this Court without availing themselves of the remedies provided under the Income‑tax Act and as such the above petition is liable to be dismissed. In this connection the learned Advocate for the respondents relied upon 1968 S C M R 1035 and P L D 1971 Lab. 559 and P L D 1971 Lab. 861.
• 19. We have carefully considered the arguments of both the learned Advocates and perused the authorities cited by both of them. It is now a settled law that the jurisdiction of this Court under Article 199 is always available to the party in cases where the impugned orders are without lawful authority, partial, unjust and mala fide even in case where alternate remedy by way of appeal etc., is available, as held in the case qt Murree Brewery Co. Ltd. v. Pakistan P L D 1972 S C 279 and in the case of Miss Tayyab v. The Controller of o Examinations etc., Board of Intermediate and Secondary Education, Hyderabad. Sind and 2 others P L D 1959 Kar. 471. In the present case as observed by us that the impugned orders passed by the Income‑tax Officer under the provisions of section 18‑A (8) and 45‑A (b) (ii) were without lawful authority and unjust, in our opinion, the above petition is maintainable.

Headnotes / Summary

Judgment & Decree