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Petitioner: Messrs K.B. ENTERPRISES, FAISALABAD VS Respondent: CIR (APPEALS), RTO., FAISALABAD
Court Name: Appellate Tribunal Inland Revenue Judge(s): Muhammad Jawed Zakaria, Muhammad Asif, Muhammad Waseem Ch. Title: Messrs K.B. ENTERPRISES, FAISALABAD vs CIR (APPEALS), RTO., FAISALABAD Case No.: M.A. (Stay) No, 127/LB and S.T.A. No, 78/LB of 2015 Date of Judgment:2015-01-31 Reported As: 2017 PTD (Trib.) 324 Result: Application allowed
Judgment ORDER MUHAMMAD JAWED ZAKARIA (JUDICIAL MEMBER).---In the instant case appeal against refusal of stay by the learned CIR(Appeals), R.T.O. Faisalabad vide his Order No, C. No, 879/ST/ CIR/(A)/Fad/2014, dated 16.01.2015 on the ground that the taxpayer has not furnished the valid documentary evidence instantly in support of his appeal and the applicant has failed to make out a case of grant of stay of recovery, has been preferred. 2. Further the applicant has also filed miscellaneous application for stay of demand before this Tribunal against refusal of stay by CIR(A) thereby praying for grant of stay by this Tribunal. The averments made by the Applicant in his application are reproduced as under:-- "1. That the applicant being aggrieved by harsh and unjustified order bearing C. No, 879 dated 16.01.2015 (hereinafter referred to as, "the impugned order") for rejection of stay application by the learned CIR(A), Faisalabad has preferred the titled appeal before this Hon'ble Court which is yet to be fixed for regular hearing. 2. That now the ACIR (Enforcement-1), RTO, Faisalabad and his staff are pressing very hard to recovery of disputed amount of sales tax against which stay has already been rejected by the learned CIR(A), Faisalabad without any plausible and cogent reason. 3. That if the impugned order denying interim injunction is not suspended, the applicant will suffer irreparable loss as a sum of Rs, 6,167,979/- has already been recovered coercively through Refund Payment Order No, 01 dated 20.11.2014 hence, deposit of any additional amount on this account would cause undue hardship to the applicant and the same may therefore be dispensed with. 4. That in case, impugned recovery is not stayed, the object of filing of appeal before the learned CIR(A) will fail and the applicant will suffer an irreparable loss.
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5. That it is apprehended that if the stay against the impugned recovery is not granted well in time, department will coercively recover the same by any precipitate action including attachment of applicant's business bank accounts. 6. That the contents of the main appeal may kindly be read as an integral part of this application. 7. That the applicant has a very good prima facie arguable case in his favour. 8. That the balance of convenience also lies in favour of the applicant. PRAYER: ' Under the circumstances as mentioned supra, it is respectfully prayed that to meet the ends of justice, operation of impugned recovery notice along with order of the learned CIR(A) denying interim injunction may graciously be suspended particularly when final relief is pending at bar. ' Any other relief which this Hon'ble Court may deem fit and proper in the nature and circumstances of the cases may also be granted." 3. Mr. Khubaib Ahmad, appeared on behalf of the Applicant/ Appellant and vehemently argued that the learned CIR(A) was not justified to reject the stay application. The action of the learned. CIR(A) is unjustified and arbitrary without applying judicious and judicial mind and ignoring the fact that despite Rs,6,167,979/- has already been recovered coercively through Refund Payment Order No, 01 dated 20.11.2014 hence, deposit of any additional amount on this account would cause undue hardship to the applicant and the same may, therefore, be dispensed with. The learned counsel for the applicant further submitted that the approach of the First Appellate Authority grossly illegal and improper and that CIR Enforcement and his staff pressing hard and have started coercive measures by issuing notice for recovery of balance demand dues under section 48 of the Sales Tax Act. 4. The learned counsel for the applicant further contended that the provision of section 131(5) and the proviso thereunder is not applicable to Sales Tax Act. The relevant proviso of section 131 of the Income Tax Ordinance, 2001 relied upon by him is reproduced hereunder: Proviso to subsection (5) of section 131(5). "Provided that if on filing of application in a particular case, the Appellate Tribunal is of the opinion that the recovery of tax levied under this Ordinance and upheld by the Commissioner (Appeals), shall cause undue hardship to the taxpayer, the Tribunal, after affording opportunity of being heard to the Commissioner, may stay the recovery of such tax for a period not exceeding one hundred and eighty days in aggregate:" 5. The learned counsel vehemently argued that the case of the applicant relates to Sales Tax Act, hence provisions of Income Tax Ordinance, 2001 are not applicable as is evident from the perusal of the proviso reproduced supra wherein the legislature has specially used the words "recovery of tax levied under this Ordinance and upheld by the Commissioner (Appeals)", therefore, he contended that it is crystal clear that its application is restricted to Income Tax Ordinance, 2001. 6. The learned counsel for the Applicant/ Appellant vehemently contended that subsection (6) of section 132 of the Income Tax Ordinance, 2001 very much applies in this case. The subsection (6) of section 132 ibid is reproduced hereunder:-- "(6) where appeal relates to a decision other that in respect of an assessment, the Appellate Tribunal may make an order to affirm, vary, or annul the decision, and issue such consequential direction as the case may require." 7. The learned counsel for the Applicant/ Appellant laid emphasis on the words "appeal relates to a decision other than in respect of an assessment", he, therefore, prays that as the appeal pertains to other than assessm ent i,e, refusal to grant the stay, therefore, the Tribunal is empowered either to confirm the order, vary or annul the decision and issue such consequential directions as the case may require. He further asserted that it is fit case to annul the order passed by the CIR(A) rejecting the stay. In support of his arguments the learned counsel relied upon the reported judgment of
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Messrs Chenab Board, Faisalabad v. CIR [reported as 2012 PTD (Trib.) 941] wherein the Tribunal while granting the stay observed as under:- "If recovery of the tax demand created as a consequence of impugned order-in-original is not stayed during the pendency of the main appeal of the present appellant before the CIR(A), it will obviously cause irreparable loss to it. In this state of affairs, it will be quite expedient that the same may be stayed. Accordingly, the same is stayed till the disposal of the 'appeal by the learned CIR(A)," 8. In view of the judgment cited supra, the learned counsel therefore, prayed that the Honourable Tribunal may be pleased to, grant stay from recovery of entire demand till the decision of the main appeal by the Commissioner (Appeals) and issue directions to the concerned tax authorities for early disposal of main appeal. 9. The learned DR on the other hand, strongly objected to the stay application. He while rebutting the contention of the learned counsel for the Applicant/Appellant regarding application of proviso of section 131 he drew our attention towards subsection (2) of section 46 of the Sales Tax Act, 1990 which is reproduced as under:-- "(2) The Appellate Tribunal may admit, hear and dispose of the appeal as per procedure laid down in sections 131 and 132 of the Income Tax Ordinance, 2001 (XLIX) of 2001, and rules made there under." 10. The learned D.R. Argued that from perusal of above quoted section 46 the legislature has empowered the Tribunal to admit, hear and dispose of the appeal as per procedure laid down in sections 131 and 132 of the Income Tax Ordinance, 2001, meaning thereby, provision of section 131 would apply while dealing with stay. He further contended that balance of convenience is not in favour of the taxpayer and even otherwise the learned CIR (A) had justifiably rejected the stay application as the taxpayer has failed to produce valid documentary evidence in support of his Appeal/Application. He, therefore, prayed that the Miscellaneous Application for stay of demand be rejected. 11. We have heard both the learned counsel, carefully perused the relevant provisions of laws and record. 12. In order to arrive at the conclusion as to whether the Tribunal can grant stay when the tax levied has not been confirmed/upheld by the CIR(A) we framed the following concomitant questions so that we may arrive at proper conclusion based on the provisions of both Sales Tax Act, 1990 and the Income Tax Ordinance, 2001:- Q1: Whether, in the light of provision of Section 131(5) read with the proviso, this Tribunal is empowered to grant stay to the taxpayer when the tax levied is not yet upheld by the CIR(A) and main appeal on impugned levy/demand is still pending adjudication before the CIR(A)? Q2: Whether, a taxpayer can avail aggregate stay for 390 days firstly, 210 days [i,e, 30 days by the CIR(A) and 180 days by the Tribunal] in the event that the tax levied has not been confirmed/upheld by the learned CIR(A) and the appeal before the Tribunal, and secondly, in case the tax levied has been confirmed by the CIR(A) and against his order, main appeal is filed along with stay application and the Tribunal as per section 131(5) of the Ordinance, 2001 grants the stay in aggregate of 180 days, then in this way the taxpayer could avail 390 days stay (i,e,, 210 days already availed before tax upheld by CIR(A) + 180 days after tax upheld by CIR(A) (30+180+180= 390 days)? Q.3 Whether, on the facts and circumstances of the case, this Tribunal can grant stay against recovery beyond 180 days, as per provisions of section 131(5) of the Income Tax Ordinance, 2001 during pendency of appeal before CIR (Appeals) or subsequently before the Tribunal? 13. First we would like to state the relevant extract from the order of the learned CIR(A) refusing to grant the stay which is reproduced extensor hereunder:-
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"GOVERNMENT OF PAKISTAN OFFICE OF THE COMMISSIONER INLAND REVENUE (APPEALS) Regional Tax Office Buildings, Jail Road, Faisalabad. ' Dated 16.01.2015 ' Subject. Application for grant of stay order against sales Tax Order-in-Original No, 05/2014 dated 26.11.2014 passed by the Assistant Commissioner Inland Revenue (Audit Unit-01), Zone-I, Regional Tax Office, Faisalabad. The appellant, Messrs K.B. Enterprises, P-237, Tikka Gali No, 01, Montgomery Bazar, Faisalabad (STRN: 0890999939691) filed the appeal on 10.12.2014 against Sales Tax Order-inOriginal No, 05/2014 dated 16.11.2014 and submitted Misc. Application for grant of stay of sales tax dues raised in the impugned order. The call notice for hearing of stay application was issued accordingly. 2. The authorized representative of the appellant, Syed Noor-ulHassan, A.R. Appeared on 12.01.2015 and contended that the appellant has a very good prima facie case in his favour, however, he failed to submit valid documentary evidences instantly in support of his appeal. The D.R. Ifran Haider, ACIR also appeared and opposed the arguments of the A.R. Of the appellant. 3. In view of above, I find that the appellant could not make out the case to grant stay of recovery; hence the application is rejected accordingly. However, regular hearing in the appeal case has been fixed on 20.01.2015 4. This order will have no bearing on the final order in the case by the undersigned. (Dr. Khalid Malik) Commissioner IR (Appeals)" 14. To find out the answers of the supra quoted questions relating to grant of stay by this Tribunal, we are of the considered opinion that section 131(5) read with proviso of the Income Tax Ordinance, 2001 equivocally provides that the Tribunal may stay the recovery proceedings for 180 days, if tax levied under the Ordinance and upheld by the CIR(A) the recovery proceedings cause undue hardships to the taxpayer. The said subsection along with proviso is reproduced as under:- - "131(5) Notwithstanding that an appeal has been filed under this section tax shall, unless recovery thereof has been stayed by the Appellate Tribunal, be payable in accordance with the assessment made in the case: ' Provided that if on filing of application in a particular case, the Appellate Tribunal is of the opinion that the recovery of tax levied under this Ordinance and upheld by the Commissioner (Appeals), shall cause undue hardship to the taxpayer, the Tribunal, after affording opportunity of being heard to the Commissioner, may stay the recovery of such tax for a period not exceeding one hundred and eighty days in aggregate: ' Provided further that in computing the aforesaid period of one hundred and eighty days, the period, if any, for which the recovery of tax was stayed by a High Court, shall be excluded." (Underling for emphasizing) 15. From perusal of the provision of subsection (5) of Section 131 of the Income Tax Ordinance, 2001, read with proviso which expressly put embargo and by statute restricts the empowerment of this Tribunal to grant stay of recovery unless tax levied under this Ordinance [Income Tax Ordinance, 2001 or Sales Tax Act, 1990 as the case may be] and upheld by the Commissioner (A). In the instant case tax has been levied but not yet upheld by the CIR(A) , so the empowerment, of Bench of the ATIR while hearing stay application does not emerge in the absence of CIR(A)'s order of upholding of the levy or appeal before the Tribunal against supra order of CIR(A). We may further observe that mere refusal of the CIR(A) to grant stay does not mean that he has upheld the levy of tax under this Ordinance [Income Tax Ordinance, 2001 or Sales Tax Act, 1990] against the appeal which is pending adjudication before CIR(A). Further we are of the view that for the grant of stay under the aforesaid provision is that tax must be levied and upheld by the Commissioner
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(Appeals) . Both the conditions "Tax levied" and "upheld by the CIR(A) " must co-exist simultaneously. Both the limbs must co-exist together at one and the same time. 16. Further, cumulative and conjunctive reading of the above cited provisions of law, the contentions of the learned counsel for the Applicant/Appellant that as per section 131 of the Income Tax Ordinance, 2001 [specifically proviso to section 131(5)] are not applicable. According to him, under this section the Tribunal can apply the provision to section 131(5) and decide the stay application/appeal relating to income tax and not sales tax. Interestingly enough the learned counsel for the applicant has also filed stay application under section 131(5) of the Income Tax Ordinance, 2001 and not under any provision of Sales Tax Act. Hence, the assertions made by the learned counsel for the applicant are not tenable for the reasons discussed hereinafter:-- 17. The relevant provision of law i,e, section 46 of the Sales Tax Act, 1990 which having immense importance to resolve the controversy is reproduced as under:-- "46. Appeals to Appellate Tribunal.---(l) Any person including an officer of Inland Revenue not below the rank of an Additional Commissioner, aggrieved by any order passed by-- (a) the Commissioner Inland Revenue (Appeals) under section 45B, (b) the Commissioner Inland Revenue through adjudication or under any of the provisions of this Act or rules made thereunder. (c) the Board under section 45A, may, within sixty days of the receipt of such decision or order, prefer appeal to the Appellate Tribunal. (2) The Appellate Tribunal may admit, hear and dispose of the appeal as per procedure laid down in sections 131 and 132 of the Income Tax Ordinance, 2001 (XLIX of 2001), and rules made thereunder." From perusal of the above quoted section, there is no doubt in our mind that the Tribunal has powers to dispose of the matter [application/ appeal] of stay which relates to Sales Tax while exercising powers under sections 131 and 132 of the Income Tax Ordinance, 2001. The law in this regard is very much clear. Subsection (2) of Section 46 of the Sales Tax Act, 1990 duly empowers the Tribunal to take up the matter of stay under section 131(5) read with proviso of the Income Tax Ordinance, 2001. 18. As far as reliance placed by the learned counsel for the applicant on the judgment reported as 2012 PTD (Trib.) 941, the same is distinguishable as proviso (1) to section 131(5) of the Income Tax Ordinance, 2001 was added on 26th June, 2012 while in the judgment relied by the learned counsel for the applicant this proviso was not existed as the judgment was delivered much earlier on 15.3.2012 before the insertion of proviso (1) to subsection (5) of section 131 of the Income Tax Ordinance, 2001, hence, the Tribunal has not considered this aspect due to non-existence of this proviso. Hence, reliance placed by the learned counsel on the above judgment is misconceived, distinguishable and not relevant. 19. The other aspect of the case is that the CIR(A) has the power to grant stay only for 30 days in aggregate under section 128(1A) of the Income Tax Ordinance, 2001 and section 45B(1A) of Sales Tax Act, 1990 which are reproduced hereunder:- "Section 128.- Procedure in appeal- Income Tax Ordinance, 2001 (1A). Where in a particular case, the Commissioner (Appeals) is of the opinion that the recovery of tax levied under this ' Ordinance, shall cause undue hardship to the taxpayer he, after affording opportunity of being heard to the Commissioner against whose order appeal has been made, may stay the recovery of such tax for a period not exceeding thirty days in aggregate . Section 45B(1A) of the Sales Tax Act, 1990 - "Where in a particular case, the Commissioner (Appeals) is of the opinion that the recovery of tax levied under this Act, shall cause undue hardship to the taxpayer, he, after affording opportunity
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of being heard to the Commissioner against whose order appeal has been made, may stay the recovery of such tax for a period not exceeding thirty days in aggregate." 20. The above provisions of law clearly show/describe that the stay by CIR(A) would be only for 30 days so far as period/length of stay is concerned, however, the Tribunal has wider power to grant the stay for 180 days. By virtue of section 131(5) read with proviso the Tribunal has subject to express embargo/ restrictions/limitations and some manacles on powers to grant the stay if the stay is refused by the CIR(A) as tax levied is neither upheld by the CIR(A) nor any order was passed by the CIR(A) against the assessment/ Order-in-original, therefore, during the pendency of appeal, if the CIR(A) refused to grant the stay, the Tribunal cannot exercise the powers under section 131(5) read with proviso that would result influx of stay Applications before this Tribunal as each taxpayer may, after its stay application is rejected by the CIR(A) may file appeal and Stay application against the said refusal order before this Tribunal and enjoy 180 days stay what to speak of 30 days being in built limitatioh on CIT(A). If the learned CIR(A) grants the stay for statutory period of 30 days and after expiry thereof, the taxpayer files another application for stay before this Tribunal, in this way he would get. The stay for 210 days i,e, 30 days by the CIR(A) plus 180 days by the Tribunal. Let's suppose the scenario is changed, the CIR(A) grants the stay for 30 days during the pendency of appeal before the CIR(A) and after expiry of 30 days the taxpayer approaches the Tribunal for grant of stay and the Tribunal grants aggregate stay for 180 days then the taxpayer would have availed 210 days stay, subsequently, the taxpayer after upholding the assessment order by the CIT(A) files appeal before the Tribunal along with stay application, the Tribunal exercising powers under section 131(5) read with proviso attached with it grants the aggregate' stay for 180 days in this way the taxpayer would enjoy total stay of 390 days stay (i,e, 30+ 180=210 days already availed before tax upheld by CIR(A) and 180 days after tax upheld by CIR(A) [30+180+180=390]. Therefore, we are of the opinion that when the stay is refused by CIR(A) and tax levied is still sub- judice and not yet upheld, thus, the main appeal is lying before the CIR(A) and consequently tax levied not yet been upheld by CIR(A), the Tribunal's inherent powers have expressly been put to some fetters/embargo/restriction/limitation/barriers upon the Tribunal to grant stay to the taxpayer within the purview of section 131(5) read with proviso of the Income Tax Ordinance, 2001. 21. However, we may observe that an Appeal before the Tribunal may be filed against refusal of stay order by the learned CIR(A) as according to section 46 of the Sales Tax Act, 1990, read with section 131 of the Income Tax Ordinance, 2001, the Tribunal has statutory powers to admit, hear and dispose of the appeal. The procedure for disposal and filing of appeal by the Appellate Tribunal has been prescribed under sections 131 and 132 of the Income Tax Ordinance, read with subsection (2) of Section 46 of the Sales Tax Act, 1990 which are reproduced as under for ready reference:-- 131. Appeal to the Appellate Tribunal.---(I) Where the taxpayer or Commissioner objects to an order passed by the Commissioner (Appeals), the taxpayer or Commissioner may appeal to the Appellate Tribunal against such order. (2) An appeal under subsection (1) shall be- (a) in the prescribed form; (b) verified in the prescribed manner; (c) accompanied except, in case of an appeal preferred by the Commissioner, by the prescribed fee specified in subsection (3); and (d) preferred to the Appellate Tribunal within sixty days of the date of service of order of the Commissioner (Appeals) on the taxpayer or the Commissioner, as the case may be. (3) The prescribed fee shall be two thousand rupees.
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(4) The Appellate Tribunal may, upon application in writing, admit' an appeal after the expiration of the period specified in clause (d) of subsection (2) if it is satisfied that the person appealing was prevented by sufficient cause from filing the appeal within that period. (5) Notwithstanding that an appeal has been filed under this section, tax shall, unless recovery thereof has been stayed by the Appellate Tribunal, be payable in accordance with the assessment made in the case: ' Provided that if on filing of application in a particular case, the Appellate Tribunal is of the opinion that the recovery of tax levied under this Ordinance and upheld by the Commissioner (Appeals), shall cause undue hardship to the Taxpayer, the Tribunal, after affording opportunity of being heard to the Commissioner, may stay recovery of such tax for a period not exceeding 180 days in aggregate. ' Provided further that in computing the aforesaid period of one hundred eighty days, the period, if any, for which recovery of tax was stayed by the High Court, shall be excluded. 132. Disposal of appeals by the Appellate Tribunal.-- ) The Appellate Tribunal may, before disposing of an appeal, call for such particulars as it may require in 'respect of the matters arising on the appeal or cause further enquiry to be made by the Commissioner. (2) The Appellate Tribunal shall afford an opportunity of being heard to the parties to the appeal and, in case of default by any of the party on the date, of hearing, the Tribunal, or may proceed ex parte to decide the appeal on the basis of the available record. (2A) The Appellate Tribunal shall decide the appeal within six months of its filing; (3) Where the appeal relates to an assessment order, the Appellate Tribunal may, without prejudice to the powers specified in subsection (2); make an order to-- (a) affirm, modify or annul the assessment order; or (b) omitted by Finance Act, 2007 (c) Remand the case to the Commissioner or the Commissioner (Appeals) for making such enquiry or taking such action as the Tribunal may direct.] (4) The Appellate Tribunal shall not increase the amount of any assessment or penalty or decrease the amount of any refund unless the taxpayer has been given a reasonable opportunity of showing cause against such increase or decrease, as the case may be. (5) Where as the result of an appeal, any change is made in the assessment of an association of persons or a new assessment of an association of persons is ordered to be made, the Appellate Tribunal may authorize the Commissioner to amend accordingly any assessment order made on a member of the association and the time limit in subsection (2) of section 122 shall not apply to the making of such amended assessment. (6) Where the appeal relates to a decision other than in respect of an assessment, the Appellate Tribunal may make an order to affirm, vary or annul the…
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