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Petitioner: HIGHWAY PETROLEUM SERVICE (REGD.), LAHORE Petitioner VS Respondent: ISLAMIC JUDGMENT
Court Name: Lahore High Court Judge(s): Muhammad Afzal Zullah, Abdul Shakurul Salam Title:HIGHWAY PETROLEUM SERVICE (REGD.), LAHORE Petitioner vs ISLAMIC
JUDGMENT
Reported As: PLD 1977 Lahore 797 Result: Petition dismissed Judgment JUDGMENT ' ABDUL SHAKURUL SALAM, J.-Writ petitions, numbered as, 1. W. P. No, 1953/73, 2. W. P. No, 1954/73 3. W. P. No, 1955/73 4. W. P. No, 1936/73 5. W. P. No, 195 /73 6. W. P. No, 1958/73 7. W. P. No, 1959/73 8. W. P. No, 1960/73 9. W. P. No, 1961/73 10. W. P. No, 1962/73 11. W. P. No, 1963/73 12. W. P. No, 1964/73 13, W. P. No, 1965/73 14. W. P. No, 1966/73 15. W. P. No, 1967/73 16. W. P. No, 1968/73 17. W. P. No, 1969/73 18. W. P. No, 1959/72 19. W. P. No, 196c/72 20. W. P. No, 1230/72 21. W. P. No, 1495/71 22. W. P. No, 84/74 23. W. P, 250/73 24. W. P. No, 480/72 25. W. P. No, 524/72 26. W. P. No, 538/73 27. W. P. No, 526/72 28. W. P. No, 525/72 29. W. P. No, 481/72 30. W P. No, 479/72 31. W. P. No, 539/72 32. W. P. No, 537/72 33. W. P. 102/74 34. W. P. 101/74 35. W. P. 568/74 36. W. P. No, 569/74 37. W. P. No, 1114/75 & 38. W. P. No, 1377/71 were dismissed by a short order dated 19-1-1976. The detailed reasons are given below :- 2. In these petitions, the common questions involved are about the validity of orders passed by the concerned Income-tax Officers demanding additional amounts of tax under section 18-A (6) and (8) and section 45-A of the Income-tax Act, 1922. For facility of reference, section 18-A and section 45-A of the aforesaid Act are quoted as below:- 1118-A. Advance payment of tax.-In the case of income other than income in respect of which provision is made under subsections (2) and (2-B) of section 18 for deduction of income-tax at the time of payment, an assessee shall pay quarterly to the credit of the Central Government on the fifteenth clay of September the fifteenth day of December the fiteenth day of March and the fifteenth day of June in each financial year, respectively, an amount equal to one quarter of the income-tax and super tax payable on so much of such income as is included in his total income of the latest previous year in respect of which he has been assessed under section 23 or, where no
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assessm ent under section 23 has been made under section 23-B, as the case may be, if that total income exceeded twenty five thousand rupees. Such income-tax and super tax shall be calculated at the rates in force in respect of the year in which he is required to pay the tax; and shall bear to the total amount of Income-tax and super tax so calculated on the said total income the same proportion as the amount such inclusions bears to his total income er, in cases where under the provisions of subsection (I) of section 17 tax is chargeable with reference to the total world income, shall bear to the total amount of tax which would have been payable on his total world income of the said previous year had it been his total income the same proportion as the amount of such inclusions bears to his total world income. The tax so calculated shall be reduced by the amount of the tax deducted during the said year under subsections (3), (3-A), (3-B), (3-BB), (3-C) or (3-E) of section 18 : ' Provided that, where the previous year of the assessee in respect of any source of income ends after the thirty first day of March and before the thirty first day of July, the payment of Income-tax and super tax on that source of income shall be made in three payments of equal amount to be made on the fifteenth day of December, the fifteenth day of March, and the fifteenth day of June, respectively: ' Provided further that, if the assessee is a partner of a registered firm and an assessment of the firm has been completed for a previous years later than that for which the assessee's last assessm ent has been completed, his share in the profits of the firm shall, for the purposes of this subsection, be included in his total income on the basis of the latest assessment of the firm: ' Provided further that, if before the fifteenth day of May of the year, an assessment of the assessee, or of the registered firm of which he is a partner, is completed in respect of a previous year later than that on the basis of which the tax was computed under this clause, the assessee shall pay in one instalment on the specified date, or in equal instalments on the specified dates, if more than one falling after the date of the said assessment, the tax computed on the revised basis as reduced by the amount, if any, paid in accordance with the original computation. (2) If any assessee who is required to pay tax under subsection (1) estimates at any time before the last instalment is due that the part of his income to which the subsection applies for period which would be the previous year for an assessment for the year next following is less than the income on which he is required to pay tax and accordingly wishes to pay an amount less than the amount which he is so required to pay, he may send to the Income-tax Officer an estimate of the tax payable by him calculated in the manner laid down in subsection on that part of his income for such period, and shall pay such amount as accords with his estimate in equal instalments on such of the dates specified in subsection (1) as have not expired or in one sum of only the last of such dates has not expired! ' Provided that the assessee may send a revised estimate of the tax payable by him before any one of the dates specified in subsection (1) and adjust any excess or deficiency in respect of any instalment already paid in a subsequent instalment or in subsequent instalments. (3) Any person who has not hitherto been assessed shall, before the fifteenth day of June in each year, if his total income of the period which would be the previous year for an assessment for the year next following is likely to exceed twenty five thousand rupees, send to the Income-tax Officer an estimate of the tax payable by him on that part of his income to which the provisions of subsections (2), (2-A) and (2-B) of section 18 do not apply of the said previous year calculated in the manner laid down subsection (1), and shall pay the amount, on such of the dates specified in that subsection as have not expired, by instalments which may be revised according to the proviso to subsection (2). (4) Where part of the income to which subsection (1), (2) or (3) applies consists of any income of the nature of commission which is receivable periodically and is not received or adjusted by the payer in the assessee's account before any of the quarterly instalments of tax
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become due, he may defer payment of tax on that part of his income to the date on which such income would be normally received or adjusted and if he does so he shall communicate to the Income-tax Officer the date to which such payment is deferred: Provided that, if the tax of which the payment is deferred is not paid within fifteen days of the date on which such income or part thereof is received or adjusted by the pager in the assessee's account, he shall, without prejudice to any other consequences which may follow, be deemed to be an assessee in default in respect of such tax and shall pay an additional amount of tax thereon at the rate of two per cent. Per mensem from the data of such receipt or adjustment to the date of payment of tax. (5) The Central Government shall pay on any amount paid under sub. Sections (1), (2), (3) and (4) simple interest at four per cent. Per annum from the date of payment to the thirtieth day of June of the financial year in which the amount was paid. (5A) The Central Government shall pay on any amount paid under subsections (1), (2), (3) and (4) which is in excess of the tax payable on provisional assessment under section 23-B simple interest at four per cent. Per annum from the date of such provisional assessment to the date of assessm ent under section 23. (6)Where in any year an assessee has paid tax under subsection (2) or subsection (3) on the basis of his own estimate and the tax so paid is less than eighty percent of the tax determined on the basis of assessm ent under section 23, hereinafter called regular assessment, and calculated in the manner laid down in subsection (1) so far as such tax relates to income to which the provisions or subsections (2), (2-A) and (2-B) of section 18 do not apply, an additional amount of tax at the rate of two per cent per mensem from the first day of April in the year in which the tax was paid up to thirtieth day of June of the year next following or up to the date of the said regular assessment, whichever is the earlier, shall be payable by the assessee upon the amount by which the tax so paid falls short of the said eighty percent: ' Provided that- (a) where tax is paid under section 22-A, or (b) where a provisional assessm ent under section 23-B has been made but regular assessment has not been made, ' the additional amount of tax shall be calculated in accordance with the foregoing provisions:- (I) up to the date on which tax under section 22-A or as provisionally assessed was paid; and (ii) thereafter such additional amount shall be calculated at the rate aforesaid on the amount by which the tax as so paid, in so far as it relates to income to which the provisions of subsections (2), (2-A) and (2B) of section 18 do not apply, falls short of the said eighty per cent: ' Provided farther, that, where, as a result of an appeal under section 30 or of a provision under section 33-A or of a reference to the High Court under section 66, the amount on which additional tax was payable under this subsection has been reduced the additional tax shall be reduced accordingly and the excess additional tax paid, if any, shall be refunded together with the amount of income-tax that is refundable: Provided further that, where a business, profession or vocation is newly set up and is assessable on the income, profits and gains of its first previous year in the year following that in which it is set up, the additional tax payable shall be computed from the first day of July of the said year. (7) Where, on making the regular assessment, the Income-tax Officer finds that any assessee has- (a) under subsection (2) or subsection (3) under-estimated the tax payable by him and thereby reduced the amount payable in any of the first three instalments, or (b) under subsection (4) wrongly deferred the payment of tax on a part of his income ; he may direct that the assessee shall pay an additional amount of tax at two per cent. Per mensem, in the case referred to in clause (a) for the period during which the payment was
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deficient on the difference between the amount paid in each such instalment and the amount which should have been paid having regard to the aggregate tax actually paid under this section during the year, and in the case refferred to in clause (b) for the period during which the payment of tax was wrongly deferred on the amount of which the payment was so deferred ; ' Provided that for the purposes of this sub-section any instalment due before the expiry of six months from the commencement of the previous year in respect of which it is to be paid shall be deemed to have become due fifteen days after the expiry of the said six months. (8) Where, on making the regular assessment, the Income Tax Officer finds that payment of tax has not been made in accordance with the foregoing provisions of this section, additional tax calculated in the manner laid down in subsection (6) shall be added to the tax as determined on the oasis of the regular assessm ent. (9) (a) If any assessee does not pay on the specified date any instalment of tax that he is required to pay under subsection (1) and does not, before the date on which any such instalment as is not paid becomes due, send under subsection (2) an estimate of a revised estimate of the tax payable by him, he shall be deemed to be an assessee in default in respect of such instalment or instalments. (b) If the assessee has sent under subsection (2) or subsection (3) and estimate or a revised estimate of the tax payable by him, but does not pay any instalment in accordance therewith on the date or dates specified in subsection (1), he shall be deemed to be an assessee in respect of such instalment or instalments : Provided that the assessee shall not, under clause (a) or (b) be deemed to be in default in respect of any amount of which the payment is deferred under subsection (4) until after the date communicated by him to the Income-tax Officer under that subsection. (10)Any su n other than a penalty or the additional amount of tax paid by or recovered from an assessee in pursuance of the provisions of subsections (1), (2), (3) and (4) shall be treated as a payment of tax in respect of the income of the period which would be the previous year for an assessm ent for the next following the year in which it was payable, and credit therefore shall be given to the assessee in the regular assessment. (11)Any income chargeable under the head "Capital Gains" shall not be taken into account for any of the purposes of this section. 45-k Additional tax for delayed payments.-Where any assessee- (a) fails to pay the tax due from him, or (b) has paid tax under section 22-A and the tax so paid is less than 80 per cent. Of the tax payable as a results of completion of the relevant assessment under section 23, he shall, without prejudice to his liability under any other provision of law, pay an additional amount of tax equal to eight per cent. Per annum of- (I) in ease referred to in clause (a), the amount of tax due from him from the date on or before which it was originally made payable (hereafter in this section referred to as the said date) to the date of its payment; (a) in cases referred to in clause (b), the amount by which the tax paid under section 22-A falls short of 80 per cent. Of tax payable under section 23, from the date of payment of the tax under section 22-A, to the date of completion of the assessment under section 23th Mr. Muhammad Ali, Advocate appearing for the petitioners in all these petitions has argued at length and quoted various rulings of great authority which will be referred to later. He submitted the following propositions, Firstly, that the impugned provisions are invalid for lack of legislative competency on the past of the Federal Legislaturs because the demand of additional amount of tax on the non- paid, or, under-paid tax amounts to taxing the tax and that no tax can be imposed on a tax because the latter is an expenditure and tax can only be imposed on income. It is submitted that
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the insertion of "additional amount of tax' in the definition of "Income-tax" in subsection (14) of section 2 of the above mentioned Act by the Finance Act, 1974 is of no effect either because by defining a term, the Legislature cannot acquire power which is not conferred on it by the Constitution and cannot, therefore, do what it is not authorised to do. It is submitted that the tax can be imposed under section 3 of the Income-tax Act, 1922 by a Central Act, which is done by a Finance Act in virtue of authority granted to the Legislature by the relevant Constitutional provisions. Without such an empowerment, the Central Legislature has no power by an indirect method to impose tax by calling that as "additional amount of tax" and defining the same to be included in the definition of income-tax. Secondly, the learned counsel has contended that the impugned provisions, above quoted, when applied alongwith other provisions, in the Income-tax Act for violation of its provisions, amount to double jeopardy which is prohibited by Article 13 of the Constitution of 1973 and are, therefore, unconstitutional. In reply to an objection raised by the learned counsel for the respondents that the petitioners had not availed themselves of alternate remedies provided under the Income-tax Act the learned counsel for the petitioners has submitted that there is no right of appeal against the impugned orders and that a revision or reference is no right of a litigant Further, that as the impugned provisions are being challenged on Constitutional grounds, inspite of alternate remedies, the petitioners have a right to challenge the same by means of a petition under the Constitution and that, lastly, since the questions raised in these petitions relate in the challenge of the provisions in the Income Tax Act itself, it would not he possible far the authorities created by the Income-tax Act to declare the same to be invalid. It is submitted that a Court interpreting the Constitution finally is an appropriate forum to raise the questions. The submission is obviously sound and is sustained. 3. Before adverting to the contentions of the learned counsel for the petitioners on merits which he canvassed very ably, if I may say so with respect, it may be said straight-away, that he is quite right when he made the submissions about the principles governing interpretation of financial liabilities. On well based judgments, the propositions are stated in Maxwell, Rules of Interpretation, 12th Edition at page 257 as under: "It it well settled rule of law that all charges upon the subject must be imposed by clear and unambiguous language, because in some degree they operate as penalities "(as in penal laws)" the subject is not to be taxed unless the language of the Statute clearly imposes the objection (1) and language must not be strained in order to tax a transaction which, had the legislature thought of it, would have been covered by appropriate words. "In a taxing Act", said Rowlait 3., one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used". But this strictness of interpretation may not always ennure to the subject's benefit, for" if the person sought to be taxed comes within the letter of the law, he must be taxed, however, great hardship may appear to the judicial mind to be." 5. Similarly, Craies on Statute Law, 17th Edn., pp. 112, 115 states the following principles in respect of interpretation of such statutes "If a statute professes to impose a charge, "the rule", said the Judicial Committee in Oriental Bank v. Wright, is "that the "intention to impose a charge upon a subject must be shown by clear and unambiguous language". In Dock Co. At Kingston-upon-Hull v. Browne, Lord Tenterden, C. J. Said: "These rates are a tax upon the subject and it is a sound general rule that a tax shall not be considered to be imposed (or, at least, not for the benefit of a subject) without a plain declaration of the Legislature to impose it." This accords with the view expressed by Parke B. In re Micklethwait: "It is a well established rule that the subject is not to be taxed without clear words for that purpose; and also that every Act of Parliament must be read according to the natural construction of its words". In Partkgton v. Att.-Gen., Lord Cairns said: I am not at all sure that, in a case of this kind-a fiscal case-form is not amply sufficient : because, as I understand the principle
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of all fiscal legislation, it is this: If the person sought to be taxed comes within the letter of the law he must be taxed, however, great the hardship may appear to the judicial mind to be. On the other hand, if the Crown, seeking to recover the tax, cannot bring the subject within the letter of the law, the subject is free, however apparently within the spirit of the law the case might otherwise appear to be. In other words, if there be admissible, in any statutes, what is called an equitable construction, certainly such a construction is not admissible in a taxing statutes' where you simply adhere to the words of the statute." In Canadian Eagle Oil Co. v. R. Viscount Simon L. C. Said : In the words of the late Rowlatt, J. (in Cape Brandy Syndicate v. I. R. C. (1) ) whose outstanding knowledge of this subject was coupled with a happy conciseness of phrase in a taxing Act one has to look at what is clearly said. There is no room for any intendment. There is no equity about a tax, There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One eau only look fairly at the language used." In 1948 in the House of Lords, Lord Thankerton said: "Counsel are apt to use the adjective 'penal' in describing the harsh consequences of a taxing provision, but if the meaning of the provision is reasonably clear, the Courts have no jurisdiction to mitigate such harshness. On the other hand, if the provision is capable of two alternative meanings the Courts will prefer that meaning more favourable to the subject. If the provision is so wanting in clarly that no meaning is reasonably clear, the Courts will be unable to regard it as of any effect." ' Lord Halsbury said in Lord Advocate v. Fleming. '1 am only reiterating what has been said over and over again in dealing with taxing Acts, when I say we have no governing principle of the Act to look at; we have simply to go on the Act itself, to see whether the duty claimed is that which the legislature has enacted"; and in Tennant v. Smith, he said: In a taxing Act it is impossible, I believe, to assume any intention, any governing purpose in the Act except to take such tax as the statute imposes (1) (1921) 1 K B 64 ' Cases, therefore, under the taxing Acts always resolve themselves into the question whether or not the words of the Act have reached the alleged subject of taxation". Lord Han worth M. R. Said: "Either in the clear words of a taxing statate the subject is liable or if he is not within the words, be is not liable". Again, in 1928 Lord Summer said: "The Crown does not tax by analogy but by statute," and earlier, in 1914, Lord Parker of Waddington said : "The Finance Act is a taxing statute and if the Crown claims a duty thereunder it must show that such a duty imposed by clear and unambiguous words". "It is not the function of a court of law t give to words a strained and unnatural meaning," said Lord Simonds, "because only thus will a taxing section apply to a transaction which, had the legislature thought of it, would have been covered by appropriate words." In I. R. C. v. Saunders Lord Reid said: "It is sometimes said that we should apply the spirit and not the letter of the law so as to bring in cases which, though not within the letter of the law, are within the mischief at which the law is aimed. But it has long been recognized that our Courts cannot so apply taxing Acts". "Those cases which decided that taxing Acts must be construed with strictness," said Lord Carine in Pryce v. Monmouthshire Canal Co., "probably meant little more than this, that inasmuch as there was not any a prior liability in a subject to pay any particular tax, nor any antecedent relationship between the tax-payer and the taxing authority, no reasoning founded upon any supposed relationship of the taxpayer and the taxing authority could be brought to bear upon the construction of the Act, and therefore the taxpayer had a right to stand upon the literal construction of the words used, whatever might be the consequence.". ' The rule, while valuable as a caution, cannot be tagen as varying the ordinary rules for construing all statutes including taxing Acts. In Att.Gen. v. Carlton Bank, 34, Lord Russell of Killowen, C. J., said "I see no reason why any special canons of construction should be applied to any Act of Parliament, and I know of no authority for saying that a taxing Act is to be construed differently from any other Act. The duty of the Court is, in my opinion, in all cases the same whether the Act to be construed
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relates to taxation or to any other subject viz. To give effect to the intention of the legislature, as that intention is to be gathered from the language employed, having regard to the context in connection with which it is employed. The Court must no doubt ascertain the subject-matter to which the particular tax is by the statute intended to be applied, but when once that is ascertained its not open to the Court narrow or whittle down the operation of theAct by considerations of hardship or business convenience, or the like". The burden is, however, of course, on the Crown to show that the subject is within the provisions of the Act. Speaking of section 20(1)(c) of the Finance Act, 1922, Lord Greene M. R. Said the burden was on the Crown" to establish affirmatively that the income of a settlement is, not that it may be, payable or applicable to some period less than the life of the child". 6. At this stage principles of taxation the Constitutional system of Great Britain may be referred to as those would be of advantage, became the…
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