2018 PLP (Trib (PTD)

MUHAMMAD WASEEM CH., JUDICIAL MEMBER.

These appeals along with additional grounds have been preferred at the instance of the appellant - registered person against two separate orders, even dated 08.09.2015, passed by the learned CIR (Appeals), Multan.

2. The facts, in brief, as recollected from the arguments advanced from both sides and the impugned orders are that the learned Inland Revenue Audit Officer, Audit Unit - 02, Multan Zone, Multan (the IRAO) and the learned Deputy Commissioner Inland Revenue, Investigation and Prosecution Unit - 01, Multan Zone, Regional Tax Office Multan (the DCIR), assumed jurisdiction over the registered person, by, simultaneously, issuing the Show-Cause Notice bearing C. No. 156 dated 3rd September 2014 and Show-Cause Notice bearing C. No. 158 dated 19th September 2014. The registered person made numerous representations before the learned IRAO and the learned DCIR. The said proceedings culminated in passing of the Order-in-Original bearing No. 17/2014 dated 29th December 2014 and Order-in-Original bearing No. 236/2014 dated 29th December, 2014 (the "Impugned Assessment Order"), in terms of Section 11(2) of the Act and section 11(3) of the Act. The Appellant preferred an appeal, in terms of Section 45B of the Act, before the learned CIR Appeals. The learned CIR (Appeals) upheld the treatment meted out by the adjudicating officer. The registered person being aggrieved of the treatment meted out by the learned IRAO and the learned CIR Appeals, preferred second appeal, in terms of Section 46 of the Act, before this Tribunal.

3. The Appellant made an application under Rule 14 of the Appellate Tribunal Inland Revenue Rules, 2010, dated 15th February, 2017 (hereinafter the "Application dated 15.02.2017"), to urge the following additional grounds: i) That the learned CIR (Appeals) has erred in law while confirming the void order been passed by the learned Inland Revenue Audit Officer, Audit Unit - 02, Multan Zone, Regional Tax Office, Multan (hereinafter the "IRAO") who was corram non judice in the absence of a legally passed jurisdiction order. ii) The learned CIR (Appeals) has erred in law while upholding the illegal action of the learned IRAO who disallowed the input tax of purchases made from 'Active Tax Payers' Since the additional grounds taken by the applicant/registered person raise vital issues which are necessary for consideration by this Tribunal for the dispensation of justice, the applicant/registered person is allowed to plead its case on the basis of additional grounds of appeal.

4. The first issue pointed out by the learned AR is that the assumption of jurisdiction by the learned IRAQ and the learned DCIR, according to the learned AR, is illegal in the absence of the legally passed jurisdiction order. Reliance in this regard is placed upon the ratio settled by the honourable Islamabad High Court in re: Zaver Petroleum Corporation Limited v. Federal Board of Revenue (2016 PTD 2332 (Islamabad)). The second issue pointed out by the learned AR is that the simultaneous assumption of jurisdiction by the learned IRAQ and the learned DCIR, which, he stresses, is in violation of Article 13 of the Constitution of Pakistan, 1973 (the Constitution).

5. The learned AR, on the first issue submits that the Federal Board of Revenue vide order dated 15th December 2012 conferred jurisdiction over persons and classes of persons to the learned CIR Multan. It is contended by the learned AR, that the legislature vide Finance Act, 2010 had omitted subsection (2) of section 32 of the Act and as such the learned CIR was stripped of its powers to delegate his powers. The learned CIR in the absence of such powers under the Act passed a jurisdiction order conferring powers to the learned IRAQ and the learned DCIR. The learned AR, while citing the judgment of the honourable Islamabad High Court in re: Zaver Petroleum (Supra) has highlighted the deficiency in the jurisdiction order passed by the learned CIR. He quotes with favour the following extract from the judgment of the honourable Islamabad High Court in the case of Zaver Petroleum (supra): .the order dated 23-01-2014 issued by the Commissioner Inland Revenue was without lawful authority and jurisdiction. The Board had expressly conferred the power of adjudication under the Act of 1990 on the Commissioner vide order dated 21-01-2014. The latter had no authority or jurisdiction to further delegate the power and jurisdiction of adjudication conferred by the Board vide order dated 21-1-2014. It is settled law that if the basic order is void, then any superstructure built thereon is also illegal and liable to fall. The Inland Revenue Officer was, therefore, not vested with power nor had the jurisdiction to issue a show-cause notice under section 11 of the Act of 1990. The Commissioner alone was vested with power and jurisdiction under section 11 of the Act of 1990, pursuant to the Board's order dated 21-01-2014....

21. For what has been discussed above, the instant petitions are allowed. The show-cause notices are declared as having been issued by persons not vested with power or jurisdiction. However, it shall be open for the Commissioner or such officer vested with the powers and jurisdiction to adjudicate under section 11 of the Act of 1990, if he deems necessary, to issue fresh show-cause notices....

6. The learned AR, while advancing arguments on the second issue, has drawn our attention to the Article 13 of the Constitution, section 403 of the Cr.P.C. and Section 26 of the General Clauses Act. The learned AR places reliance over the judgment of the Customs Appellate Tribunal in re: Zain Ali v. Additional Collector of Customs, Quetta (2014 PTD (Trib.) 1389). The learned AR has contended that the Order In Original passed by the learned IRAO and the learned DCIR are not only for the same tax period but they also create the same tax liability. It is the case of the Appellant that he cannot be vexed twice for the same mistake.

7. The learned The learned DR, on the other hand, supported the orders of the Authorities below for the reasons recorded. No new set of arguments has been putforth which may be worth quotation here.

8. We have heard the learned representative, perused the impugned orders and the case law cited at bar. We find ourselves in agreement with the learned AR on both the issues detailed in the pre-paras. We are of the view that while sitting in a sub-ordinate forum wisdom of the higher forum in interpretation is to dominate, this forum is supposed not to make any interpretation in contrary to that of the upper forum rather to obey the same. We are further of the view that this court has a constitutional duty to uphold the protections enshrined in the Constitution. For the foregoing reasons, it is observed that the relevant provisions of law and the case law have either not been appreciated in its true perspective or had been inadvertently ignored. Resultantly, the impugned orders of the learned CIR (Appeals) dated 08.09.2015 are vacated and the Impugned Assessment Orders dated 29th December, 2014 and 2nd January, 2015 are annulled. Order accordingly.

9. The appeal filed by the registered person succeeds. HBT/110/Tax(Trib.) Appeal allowed.