Double taxation

Convention between the Government of the French Republic and the Government of the Islamic Republic of Pakistan for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income, Art.4

Tax recovery

Double taxation

Non-resident

Bilateral treaty

Appellant was aggrieved of show-cause notice issued by authorities for recovery of tax

Plea raised by appellant was that he was a tax non-resident and was assessed in France

Validity

Provisions of Income Tax Ordinance, 2001, could not be invoked as Bilateral Tax Treaty between Pakistan and France had overriding effect

Appellant was filing his tax returns in France and in the light of treaty between Pakistan and France no action could be perpetuated in Pakistan by authorities

Appellant was absolved from taxation in Pakistan and no provision of Income Tax Ordinance, 2001, was attracted as he did not have any plausible source of income that could be deemed to have been accrued to him

Provision of S. 111 of Income Tax Ordinance, 2001, was applicable to residents of Pakistan only and could not be extended to appellant who was resident abroad and did not have taxable in Pakistan

Provision of S. 111 of Income Tax Ordinance, 2001, could be invoked on non-residents whose habitual abode was in France and had more personal and economic interest in France than Pakistan and had not earned Pakistan source income

Authorities failed to discharge onus for reinforcement of S. 111 of Income Tax Ordinance, 2001

Appellate Tribunal Inland Revenue set aside the orders passed by two fora below, as appellant was not taxable in Pakistan and S. 111 of Income Tax Ordinance, 2001, was not attracted to non-resident in presence of treaty between Pakistan and France upon applicable tie-breaker text

Appeal was allowed, in circumstances.

Double taxation is not beyond the scope of the relevant legislature, if in substance the levy in question is otherwise properly within its domain

Correct rule is that there is a very strong presumption against double taxation and a heavy burden is cast on the State to show that it has been resorted to

However, if the language of the statute is otherwise clear then the levy cannot be declared unconstitutional on such basis.

Whether the levy/cess imposed under section 7 of the Punjab Finance Act, 2011, in presence of existing sales tax on services charged under Punjab Sales Tax on Services Act, 2012, amounted to double taxation

Held, that in the present case two different statutes were involved, one being the Punjab Sales Tax on Services Act, 2012, and the other section 7 of the Punjab Finance Act, 2011 ('the 2011 Act'), thus, the question of double taxation did not arise

Levy imposed under section 7 of the Punjab Finance Act, 2011 was not ultra vires the Constitution.

Intent of framers of the Constitution cannot be read into Constitution to place an embargo on creation of a second incidence of taxation in relation to the same income or property and consequently the levy of any tax cannot be declared unconstitutional on the basis that it amounts to double taxation

Rule against double taxation is a rule of statutory interpretation whereby a court assumes in relation to a fiscal statute that the legislature cannot be deemed to have intended to subject a taxpayer to double taxation unless it does so through clear and unequivocal words

Double taxation cannot be presumed as a matter of statutory interpretation and the presumption is always against double taxation where the language of the statute is open to interpretation

Where the statute imposes double taxation through clear words, there is no room for interpretation and consequently the clear words used by the legislature making legislative intent plain must be given effect by the Courts.

Question was with regard to exemption of taxpayer from Super tax on the plea that they were otherwise qualified and fell within Double Taxation Treaties between Pakistan and foreign countries

Validity

Super tax as levied was prima facie identical / substantially similar to existing levies expounded in Treaty, therefore, case of tax payers was clinched per Art.2(3) of the Treaty

Super tax was a tax on income and such levy was identical / substantially similar to levies existing at the time that the Treaty was entered into

Tax payers who were otherwise qualified and fell within double taxation treaties between Pakistan and respective foreign countries were either exempt or wherever applicable were liable to pay super tax at reduced rates in terms of their respective treaties

Constitutional petition was disposed of accordingly.

Question before High Court was whether "Lease Key Money" received by taxpayer against lease of an asset, was to be deemed as income under S.12(19) of the Income Tax Ordinance, 2001

Held, that 'Lease Key Money' was not taxable for reason that leasing companies were already offering to tax the same amount in the year of maturity of a lease by considering it as sale proceeds of a leased asset

'Lease Key Money' was initial deposit that was given to a leasing company on getting an asset on lease, which was retained as security deposit against lease of assets and recorded in the accounts under the head of 'Lease Key Money'

'Lease Key Money', if deemed to be taxable, would mean that the same would be taxed twice, once in the year of receipt as taxed by the Department and then at time of disposal of leased assets, by treating the same as 'Sale Price' of leased asset

Intention of Legislature was to tax amounts / payments which were attributable to leasing and not to moneys received as security deposits, adjustable against sale of assets after end of lease period or refundable to lessee

Reference was answered, accordingly.

Assessing Authority, on physical stock taking of registered person under S.38 of Sales Tax Act, 1990, observed considerable difference between declared closing stocks and physical closing stocks of finished goods

Assessing Authority held that difference of stocks was sold out by the registered person without payment of sales tax

Validity

Commissioner Inland Revenue passed impugned order on the basis of stock taking carried out on 11-12-2017 under S. 38 and passed the impugned order pertaining to the tax periods starting from April 2015 to October 2017, whereas the department in earlier proceedings initiated under S. 38 had passed an order on 6-3-2017 wherein sales tax amount of Rs. 5,530,183 was adjudged as payable by the appellant

Issuance of second show-cause notice regarding the same tax periods was imposition of double taxation and double jeopardy which could not be given legal credence

Second show-cause notice offended the Fundamental Right set out in Art. 13 of the Constitution which provided that no person shall be prosecuted or punished for the same offence more than once

Doctrine of double jeopardy corresponded to the principle of "autre fois acquit and autre fois convict" which prohibited a duplicate trial and a duplicate punishment for the same offence

Re-agitating of the same issue by the tax functionaries was against the principles of administration of justice and fair play

Appellate Tribunal observed that in the presence of earlier order, another order of the adjudicating authority could not hold the field for the simple reason that two contrary orders could not exist at one and the same time

Appellate Tribunal declared the subsequent proceedings initiated with issuance of second show-cause notice and adjudication thereon to be patently illegal, null and void ab initio having no legal effect.

Convention for Avoidance of Double Taxation and Prevention of Fiscal Evasion with Respect to Taxes on Income, between Government of Islamic Republic of Pakistan and Government of French Republic, Arts. 4(2) & 25

Notification SRO No. 729 (I) / 96, dated 2-9-1996

Double taxation

Non-resident

Foreign national

Appellant was foreign national filing his tax returns in France and he was aggrieved of attachment of Bank accounts by authorities in lieu of tax default on property purchased in Pakistan

Validity

Appellant was liable to be assessed in accordance with Art.4 of the Convention between Government of Islamic Republic of Pakistan and Government of French Republic for Avoidance of Double Taxation and Prevention of Fiscal Evasion with Respect to Taxes on Income, vide SRO No. 729 (I) / 96 dated 02-09-1996

Once it was established that center of vital interest was not Pakistan, S. 111 of Income Tax Ordinance, 2001 read with S.82 of the Ordinance, were thus superseded by and thus quashed by Art. 4 of Convention between Government of Islamic Republic of Pakistan and Government of French Republic for Avoidance of Double Taxation and Prevention of Fiscal Evasion with Respect to Taxes on Income

Provisions of Income Tax Ordinance, 2001 could not be invoked because Convention between Government of Islamic Republic of Pakistan and Government of French Republic for Avoidance of Double Taxation and Prevention of Fiscal Evasion with Respect to Taxes on Income had an overriding effect on Income Tax Ordinance, 2001

Appellant was filing his tax returns in France, in light of tax treaty between Pakistan and France, no action could be perpetuated in Pakistan by Pakistan tax authorities

Appellant had center of vital interest in France by virtue of his personal and economic interests abroad

Appellant who had his habitual abode abroad and his income was assessed in France, was absolved from Pakistan taxation and no provision of Income Tax Ordinance, 2001 was attracted as he did not have any plausible source of income that was deemed to have accrued to him

Provisions of S.111 of Income Tax Ordinance, 2001 was applicable to residents of Pakistan only and could not be extended to appellant who was resident abroad and did not have taxable income in Pakistan

Appellate Tribunal Inland Revenue deleted levy of tax under S.111 of Income Tax Ordinance, 2001 made by department

Appellate Tribunal Inland Revenue directed authorities to return the amount to appellant which was extorted from his Bank accounts

Appeal was allowed accordingly.

Appellant imported goods which were packed in waxed wrapper and 10 pieces in a packet of paper board, 10 packets in a card and 50 cards in a carton

Examiner reported the weight of goods with addition of waxed wrapper, packet, card and carton

Examiner increased the weight of the goods without reporting any excess quantity or weight

Validity

Examiner added the weight of packing material in the weight of goods in derogation of unit of measurement given in First Schedule to the Customs Act, 1969

Section 25 provided determination of value of "goods" and "category of goods"; S. 25A mentioned "goods" and "classes of goods"

Weight of essential/non-essential packing was immaterial

Addition of cost of essential/non-essential packing material to the value of imported goods was permitted in terms of Sr. No. (iii) of clause (b) of subsection (2) of S. 25 of Customs Act, 1969

Cost of packing could be imposed on importer only when it was confirmed that importer had incurred the cost of packing but had not included the same in the price actually paid

Burden to prove that cost of packing was actually paid by importer was on the Customs Authorities in terms of Arts. 117 & 121 of Qanun-e-Shahadat, 1984

Such addition was in derogation of the provisions of S.25, Customs Act, 1969 and Art.13 of the Constitution and had to be construed as double taxation

Appellate Tribunal allowed the appeal, in circumstances.

Weight of essential/non-essential packing was deemed to be part and parcel of the weight of the goods imported and it had to be construed as unit of measurement/quantity (contents) as mentioned against each PCT Heading of First Schedule to the Customs Act, 1969

Only the weight of imported goods matter and that had to be construed as goods, the weight of essential/non-essential packing could not be considered as an integral part of the goods so imported

Duty and taxes had to be charged/collected on the goods actually imported for use/consumption by the general public

Addition of cost of essential/non-essential packing material in the value of imported goods was permitted in terms of Sr. No. (iii) of clause (b) of subsection (2) of S.25 of Customs Act, 1969

Cost of packing could be imposed on importer only when it was confirmed that importer had incurred the cost of packing but had not included the same in the price actually paid

Burden to prove that cost of packing was actually paid by importer was on Customs Authorities in terms of Arts. 117 & 121 of Qanun-e-Shahadat, 1984

Such addiction was in derogation of the provisions of S. 25, Customs Act, 1969 and Art. 13 of the Constitution and had to be construed as double taxation

Appellate Tribunal allowed the appeal, in circumstances.

Weight of appellant's consignment was found to be 8570 kgs as against declared weight of 7325 kgs i.e. equivalent to 16.99 percent loss to the exchequer

Additional Collector of Customs (Adjudication) converted the contravention report into show-cause notice and ordered for confiscation of imported goods subject to redemption of those upon payment of fine and penalty in addition to determined value of duty and taxes

Validity

Allegation of excess weight was worked out on the basis of self devised procedure by adding tare weight in the gross weight

Duty and taxes had to be levied on the unit of measurement (UOM) incorporated against each PCT Heading of the goods

Plea of department was that gross and tare weight had to be added in the net weight of goods and had to be construed as measurement (UOM) as notified against each PCT Heading

Department's interpretation was inapt and based on misconception of the UOM and in derogation to the First Schedule to the Customs Act, 1969

Contents of imported goods had to be weighed without packing, which was disposed of as trash after unwrapping

Duty and taxes had to be charged/collected on the goods actually imported for use/consumption of general public

Nevertheless, addition of cost of packing material in the value of imported goods had to be made only when it was confirmed that cost of packing was not included in the price of imported goods

Onus to prove that cost of packing was actually paid by importer was on the department and unless it was proved through tangible incriminating evidence, the cost of packing could not be added

Generation of such type of revenue was in derogation of provisions of S. 25, Customs Act, 1969 and Arts. 13 & 18 of the Constitution

Appellate Tribunal vacated the show-cause notice and set aside the order passed thereon.

Rule against double-taxation was a Judge-made law and did not have Constitutional basis, and High Court in the exercise of power of judicial review under Art. 199 of Constitution could only declare a provision unconstitutional if the same ran counter to the express mandate of the Constitution.

Pakistan Telecommunication Corporation Employees Pension Fund ("the Pension Fund") managed by the Pakistan Telecommunication Employees Trust ("the Trust")

Contention on behalf of Trust that deducting zakat from the Trust would amount to double taxation as zakat would subsequently be deducted from the person who eventually received the pension (if he was a sahib-e-nisab)

Validity

Zakat under the Ordinance was collected only once a year

If in one year, zakat was deducted from the Trust, and subsequently an employee/pensioner was determined to be entitled to pension and was made such payment from the Pension Fund, for the next year when such pensioner held and possessed his pension amount, if he fulfilled the conditions of S.3 of the Ordinance and was a "sahib-e-nisab", it was only he who would be liable to pay zakat upon the amount held by him, and not the Trust which had ceased to hold and possess such amount

Possibility of double taxation, thus, did not exist

Appeal was dismissed accordingly.

Provincial Legislature was given exclusive powers under Art.142 of the Constitution, on the subjects not included in Federal Legislative List

Language of Entry No.50 of Federal Legislative List gave the Parliament power to levy taxes on capital value of assets and specifically excluded Parliament to levy taxes on immovable property

Provincial Assembly was vested with exclusive power to levy taxes on immovable property

Federal Legislature, under Entry 50 of the Fourth Schedule to the Constitution, read with Art.142(c) of the Constitution, could tax only capital value of assets

Provincial Legislature was made competent to tax remaining all aspects of immovable property

Interpretation of any legislative entry in Constitution itself had to be broad and liberal

Definition of "taxation" available in Art.260 of the Constitution manifested that competence of Province to tax an immovable property could not be given restricted meaning

Taxation included imposition of any tax or duty, whether general, local or special

High Court declined to interfere with Luxury House Tax levied by Provincial Government

Constitutional petition was dismissed accordingly.

Petitioners assailed show-cause notices issued by authorities for recovery of Luxury House Tax, as imposed under S.8 of Punjab Finance Act, 2014

Plea raised by petitioners was that levy of such tax was double taxation as authorities were already recovering property tax under Punjab Urban Immovable Property Tax Act, 1958

Validity

Two levies in question were charged neither for the same purpose nor on the same basis

Tax sought to be imposed by provision in question could not be termed "double taxation"

Marked distinction existed in both the levies, as tax in question was one time levy on the land and superstructure, whereas property tax under S.3(2) of Punjab Urban Immovable Property Tax Act, 1958, was levied, charged and paid on annual value of buildings and lands in rating areas

All statutory authorities or bodies derived their powers from statutes which created them and from the rules and regulations framed thereunder

Any action taken or exercise of powers by a statutory authority or body, which was in derogation of the statute/rules could be assailed and declared ultra vires

High Court declared show-cause notices issued to petitioners without lawful authority as no assessment was carried out in terms of S.8(1) of Punjab Finance Act, 2014

Constitutional petitions were allowed accordingly.

Provincial Legislature was given exclusive powers under Art.142 of the Constitution, on the subjects not included in Federal Legislative List

Language of Entry No.50 of Federal Legislative List gave the Parliament power to levy taxes on capital value of assets and specifically excluded Parliament to levy taxes on immovable property

Provincial Assembly was vested with exclusive power to levy taxes on immovable property

Federal Legislature, under Entry 50 of the Fourth Schedule to the Constitution, read with Art.142(c) of the Constitution, could tax only capital value of assets

Provincial Legislature was made competent to tax remaining all aspects of immovable property

Interpretation of any legislative entry in Constitution itself had to be broad and liberal

Definition of "taxation" available in Art.260 of the Constitution manifested that competence of Province to tax an immovable property could not be given restricted meaning

Taxation included imposition of any tax or duty, whether general, local or special

High Court declined to interfere with Luxury House Tax levied by Provincial Government

Constitutional petition was dismissed accordingly.

Petitioners assailed show-cause notices issued by authorities for recovery of Luxury House Tax, as imposed under S.8 of Punjab Finance Act, 2014

Plea raised by petitioners was that levy of such tax was double taxation as authorities were already recovering property tax under Punjab Urban Immovable Property Tax Act, 1958

Validity

Two levies in question were charged neither for the same purpose nor on the same basis

Tax sought to be imposed by provision in question could not be termed "double taxation"

Marked distinction existed in both the levies, as tax in question was one time levy on the land and superstructure, whereas property tax under S.3(2) of Punjab Urban Immovable Property Tax Act, 1958, was levied, charged and paid on annual value of buildings and lands in rating areas

All statutory authorities or bodies derived their powers from statutes which created them and from the rules and regulations framed thereunder

Any action taken or exercise of powers by a statutory authority or body, which was in derogation of the statute/rules could be assailed and declared ultra vires

High Court declared show-cause notices issued to petitioners without lawful authority as no assessment was carried out in terms of S.8(1) of Punjab Finance Act, 2014

Constitutional petitions were allowed accordingly.

Unless there is any prohibition or restriction on power of Legislation to legislate on same subject matter, even double taxation cannot be declared illegal or void

Rule of avoidance of double taxation is merely a rule of construction, therefore, it ceases to have application when Legislature expressly enacts a law which results in double taxation of same income.

Unless there was any prohibition or restriction on the power of the Legislature to impose a tax twice on the same subject matter; double taxation could not be declared illegal or void though it may be oppressive and inequitable

Unless there was a clear law imposing tax twice merely by implication tax could not be imposed twice and there should be a clear and specific provision to such effect.

Petitioner challenged the vires of the entire assessment proceedings, the demand notices issued subsequent thereto as well as constitutionality of S. 2(e)(ii) of Wealth Act, 1963 and R. 8(3) of Wealth Tax Rules, 1963

Petitioner's case revolved around some legal aspects as well as factual aspects

Wealth Tax was a Federal Tax and presumption was in favour of the validity of the Legislation and the burden of proof that the same was invalid was on the person who alleged that

Objection, that the department was not justified in assessing the "Association of Persons" (AoP), which amounted to double taxation since respective shares of the wealth had been assessed in the individual hands, was not available to the assessee, since for the tax purposes AoP was always considered to be a separate and distinct entity from the wealth of individual persons

Under S. 2 (3) of the Act, term 'assessee' meant to be a person by whom any tax or any other sum of money was payable under the Act

Under S. 3 of the Act, subject to the other provisions contained in the Act, there would be charged for every financial year commencing on and from the first day of July, a tax in respect of the net wealth or assets on the corresponding valuation date of every individual, Hindu undivided family, firm, association of persons or body of individuals, whether incorporated or not, at the rate or rates specified in the Schedule

Deputy Commissioner/Assessing Authority was empowered to evaluate the land/building on the basis of its letting value

Assessee's objection as to method of assessment was the subject matter of appeal

Section 23 of Wealth Tax Act, 1963 stipulated that if any person was aggrieved against the assessment, the remedy lay with the Appellate Additional Commissioner/Commissioner of Income Tax (Appeals)

Issues with regard to non-ticking of the notice, availability of the refund of previous years, certain rectification matters pending, non-service of the notice on the Principle Officer and other related issued could only be decided in an appeal and not in a constitutional petition, since those issues required factual determination as well as dealt with method of assessment

Assessee, therefore, should have availed the remedy of appeal rather than approaching the High Court under Art. 199 of the Constitution

Assessee, in terms of S. 10 (5) of the Act, after filing the return, was refrained from raising the objection with regard to assumption of jurisdiction that the jurisdiction of the case did not lie with the Assistant Commissioner Wealth Tax, who had passed the impugned orders

Under S. 45-A of the Act, certain mistakes made by the Assistant Commissioner Wealth Tax while passing the assessment order would not vitiate the assessment proceedings

Contention of assessee was that instead of filing an appeal against the impugned assessment orders, he had filed constitutional petition, hence, in case of remand, the issue of limitation would come in the way

Time limit for filing of appeal was 30 days from the date of receipt of the impugned orders; whereas, the petitioner, instead of filing appeal, had filed the constitutional petition within the limitation period

High Court directed the assessee to prefer an appeal against the assessment orders along with an application under S. 14 of Limitation Act, 1908 and directed the Appellate Authority to consider said application sympathetically if appeals were filed

Constitutional petition was disposed of accordingly.

Sugar mills manufacturing white crystalline sugar made its supply to wholesalers and charged sales tax at 16% on such value as fixed and notified by Federal Board of Revenue for period under reference

Rationale behind fixation of value in case of white crystalline sugar and payment of sales tax thereon was that such fixed price at the time of making its supply by sugar mills was to provide a complete ouster appallingly on all its subsequent stages of supply mainly (including) wholesale and retail sale

Sales tax was no doubt a value added tax but this was not the case, in case notified by Board for purposes of sales tax irrespective of value at which its supply was actually made or any addition in its price occurred subsequently in due course of business

Sales tax once paid on basis of fixed value of locally produced white crystalline sugar by Sugar Mills provided a complete exoneration to all persons doing its business as a wholesaler and retailer from payment of any further additional amount on this account and if any effort was made to recover sales tax at any stage of its subsequent supply other than on basis fixed value would defeat the purpose behind fixation of value of locally produced white crystalline sugar and if its demand was created on basis of 'fixed value' again from its wholesaler and retailers despite payment of sale tax on such value by its manufacturing mills would definitely end up with double taxation not permissible in any civilized tax system

Taxpayer was a person making retail sale of sugar and no sales tax should be charged by such person because sales tax had already been paid at primary manufacturing stage on value fixed by Board and if department was bent upon to charge to levy sales tax again on same goods, it would amount to double taxation.

Mandatory to prove as to whether sales tax so charged at purchase stage/level was deposited/paid by supplier company of taxpayer or otherwise

Case could not be said to be the one of double taxation as payment of tax on purchases if any, was adjustable against output tax on supplies in terms of Ss. 7 & 8 of Sales Tax Act, 1990

Taxpayer was under legal obligation to prove genuineness of tax on purchases on basis of substantial documents in support of input tax which was paid on purchase stage that is sales tax invoice, sales tax returns of supplier etc. [Minority view]

Convention for Avoidance of Double Taxation Between the Islamic Republic of Pakistan and the Government of the United Arab Emirates, Arts. 12(3) & 11

Deduction of tax at Source

Double taxation

Payments to non-residents

"Royalty", definition and scope

Petitioner's application to Commissioner Large Taxpayers Unit for permission to make payment to its UAE business partner without deduction of tax at source under S. 152(5) of the Income Tax Ordinance, 2001 on the ground that said partner was a non-resident entity in Pakistan, was rejected

Contention of Department was that said payment was for use of equipment and amounted to royalty within meaning of Art. 12 of Convention for Avoidance of Double Taxation Between the Islamic Republic of Pakistan and the Government of the United Arab Emirates

Validity

By virtue of Convention for Avoidance of Double Taxation Between the Islamic Republic of Pakistan and the Government of the United Arab Emirates, a business concern in a contracting State was to be taxed only in its own country if it did not have any arrangement in the other contracting State

Royalty was an exception to the general scope under said Convention and under said Convention royalties arising in a contracting State may be taxed in the other state and royalties may also be taxed in the contracting State in which they arose and if recipient was beneficiary owner of the royalties, then tax so charged should not exceed a certain percentage of the gross amount of such royalties

"Royalty" as defined in the said Convention showed that the term "royalty", inter alia, included payment of any kind for use of or the right to use industrial, commercial or scientific equipment and definition of "royalty" per S. 2(54) of the Income Tax Ordinance, 2001 was payment for use of, or right of use in industrial, commercial and scientific equipment

Term that had been used in agreement between the parties was rendering of service and service had been defined as well but service that was rendered in the present case depended upon use of equipment and petitioner had the right to use said equipment of its contracting party for which payments were made to it

Scope and definition of word "royalty" was of a wide ambit and included right to use any type of commercial or scientific equipment which may be tangible or intangible

Department, in impugned order, had not interpreted the concept of "royalty" in an unreasonable or irrational manner which could be interfered with

Constitutional petition was dismissed, in circumstances.

Contention of petitioner was that Bus Stands situated within the premises of Adda were part and parcel of the Adda and auction of stands was based on mala fide and was against law

Validity

Stands situated within the premises of Adda were part and parcel of Adda

Only Adda was auctioned and stands were not auctioned individually and minor fraction of amount from the tickets was spent on the welfare and needs of the transporters community

Petitioner was Chairman of Transporters Association registered with the Registrar of Trade Unions and was an "aggrieved person"

Auction was intended as some unauthorized persons were making illegal recoveries which were against the law

Auction was with regard to terminals within the Bus Stand

When Bus Stand had been auctioned then auctioning of its terminals in such a way would amount to double taxation which was prohibited under the law

Vehicles would have to pay once on coming out of terminal to the new contractor under the present auction and would have to pay second time while coming out of main Adda to the previous contractor and general public would suffer and would be taxed twice

When action was without jurisdiction and was illegal then it was not necessary to avail "alternate remedy"

Impugned action of Authority auctioning the terminals inside the Bus Adda was illegal and wrong

All the proceedings including award of contract were declared void and were cancelled

Constitutional petition was accepted in circumstances.

Rule of avoidance of double taxation was merely a rule of construction, therefore, it ceased to have application when the Legislature expressly enacted a law which resulted in double taxation of the same income, however, in the absence of clear provisions stipulating double or multiple levies, the courts must lean in favour of avoiding double taxation

While there could be double taxation if the Legislature had distinctly and expressly enacted it, however, in the absence of such an enactment, where there were general words of taxation, then the Court had to interpret the provisions in a manner where they could not be so interpreted as to tax the subject twice over same

In absence of any impediment specifically created in the Constitution of a country or the Legislative enactment itself, there was a desirability or need to otherwise to avoid such double liability therefore the court, unless there was clear and specific mandate of law in favour of multiple levies, in construing general statutory provisions, must lean in favour of an interpretation as to avoid double taxation.

Scope stated.

Appellant importer imported a consignment of Hot Rolled Deformed Round Steel Bars and got cleared the same without payment of value added tax and income tax

Importer was issued show-cause notice alleging that the goods imported by him had not gone through the process of manufacture, instead had been sold in same state condition, therefore he was liable to pay sales tax in lieu of value added tax

Additional Collector of Customs directed the importer to make payment of short realized amount of value added tax along with penalty amount

Appeal filed by importer before Collector of Customs (Appeals) was also rejected

Contention of the appellant was that he was a registered person under the Sales Tax Act, 1990, principally as a "manufacturer", therefore he was not liable to payment of value added tax at import stage

Validity

Any article imported in the same state condition was either converted into another distinct article or product or is so changed, transformed or reshaped that it became capable of being put to use differently or distinctly or included any process incidental or ancillary to the completion of manufactured product fell within the definition of manufacture or produce and the person or the unit engaged in such activity squarely fell within the ambit of manufacturer or producer

Appellant after importing the goods carried out the process of sorting, straightening, sand blasting, cutting, bending, etc. rendered the goods undergone the process of manufacturing and was not liable to pay sales tax on value addition

Show-cause notice and impugned orders were not warranted as manufacturer was not liable to pay additional tax at import stage, resultantly the impugned orders tantamount to "double taxation", which was not permitted by law which were set aside

Appeal was allowed.

Petitioner company had more than one establishments in different provinces and was already paying professional tax in other province

Plea raised by petitioner was that charging of professional tax by second province was double taxation

Validity

Petitioner company could not point out any defect or legal error nor could refer to any Article of the Constitution or provision of law, which could put any restriction on any Provincial Government to impose such tax on a person

Provisions of Art. 163 of the Constitution postulated that professional tax would not be considered as a tax on income and it had authorized Provincial Government to impose professional tax on any person including any body politic or corporate as defined in Art. 260 of the Constitution

Provincial Government had the authority to impose professional tax on companies having more than one establishments or offices in more than one province, if their work was expanded from one province to another

Levy of professional tax upon petitioner did not amount to double taxation as it was not levy on income of a person

Petition was dismissed in circumstances.