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Petitioner: HABIB BANK LTD. VS Respondent: COMMISSIONER INLAND REVENUE
2017 P T D (Trib.) 2169 [Inland Revenue Appellate Tribunal] Before Muhammad Jawed Zakaria, Judicial Member and Sikandar Aslam, Accountant Member Messrs HABIB BANK LTD. Versus COMMISSIONER INLAND REVENUE M.A. (Stay) No.109/KB to 113/KB and I.T.As. Nos. 637/KB and 641/KB of 2015, decided on 27th May, 2015. (a) Income Tax Ordinance (XLIX of 2001)--- ----Ss. 127, 128(1A), 131(5) & 132---Recovery of tax demand---Stay---Powers of Appellate Tribunal---Scope---Commissioner (Appeals)/ appellate Authority, had refused request of the taxpayer for stay of recovery of tax demand---Taxpayer had contended that appellate Authority had rejected stay sought by him solely on the ground that there was no issue of recovery of demand and that the adjustment of determined refund, would cause undue hardship to it and that the demand had been raised incorrectly---Stay of recovery of entire demand was sought from the Appellate Tribunal till the decision of main appeal by the appellate Authority and directions to the said Authority for early disposal of its appeal---Validity---Order of refusal for grant of stay passed by appellate Authority was not a speaking order, which was against the fundamentals of justice---Quasi judicial order must be a speaking order manifesting by itself that the authority had applied its judicial mind to the issues and the points of controversy involved in the cause---Section 131(5), read with proviso, of the Income Tax Ordinance, 2001 had unequivocally provided that the Tribunal could stay the recovery proceedings for 180 days---Said provision of law had restricted the empowerment of the Tribunal to grant stay of recovery, unless tax levied and upheld by the appellate Authority---In the present case, tax had been levied, but not upheld by the appellate Authority---Mere refusal of appellate Authority to grant stay would not mean that the Authority had upheld the levy of tax pending adjudication of appeal---Tribunal had power to dispose of the matter of stay which related to income tax or sales tax and could remand and direct the appellate Authority to further examine/reconsider the stay application---Appellate Tribunal could direct the appellate Authority for allowing/granting the stay---No automatic stay existed---Pendency of appeal, would not operate as suspension of stay---Recovery of tax levied and upheld by the appellate Authority, in the present case, would cause undue hardship to the taxpayer---Applicant seeking stay was to show that there was likelihood of substantial loss to it, if stay was not granted---Power to grant interim relief was a judicial or at least quasi judicial in nature and the matter of stay was purely discretionary in nature, which was to be exercised judiciously---Powers of the appellate Authority below were of the widest amplitude while dealing with the appeals and stay applications---Appellate Authority had the power of granting stay during the pendency of appeal before him---Taxpayer was not at fault in the present case and it was being penalized and punished for its obedience to law---Appellate Authority had rejected stay application on solitary ground that there was no issue of recovery of demand through coercive measures due to determined refund available to the taxpayer---Appellate Authority, in circumstances could not observe that there was no issue of recovery of demand in the present case despite determined refund---Appellate Authority, was directed by the Appellate Tribunal to grant the stay for clear 30 days against the recovery through any mode of recovery or coercive measures including contra entries and decide the main appeal at the soonest possible time before the expiry of stay order and pass judicious speaking order after application of conscious mind; dispose of appeal and issue the appellate order within 30 days.
Messrs Chenab Board Faisalabad v. CIR 2012 PTD (Trib.) 941 and Messrs Z.N. Exports (Pvt.) Ltd. v. Collector of Sales Tax 2003 PTD 1746 distinguished. 2011 PTD 1290; I.T.A. No.2180/LB of 2014; Adamjee Jute Mills Ltd. v. The Province of East Pakistan and others PLD 1959 SC 272; Gouranga Mohan Sikdar v. The Controller Import and Export and 2 others PLD 1970 SC 158; Mollah Ejahar Ali v. Government of East Pakistan and others PLD 1970 SC 173; Muhammad Ibrahim Khan v. Secretary, Ministry of Labour and other 1984 SCMR 1014; Airport Support Services v. Airport Managerr QIA 1998 SCMR 2268; 2010 PTD (Trib.) 557 and 1996 PTD (Trib.) 388 ref. (b) Administration of justice--- ----Court interpret law for advancement of justice---Law should not be allowed to operate so as to defeat the ends of justice---Court and quasi judicial officer, were required, not only to do meaningful speedy justice, but also must perform their duties in such a manner that justice was seen to have been done. (c) Income Tax Ordinance (XLIX of 2001)--- ----S. 170---"Refund"---Meaning and scope---Refund, would mean returning back to the taxpayer of the amount of tax which was payed in excess of what was due from him---Refund, in essence, would imply and postulate some amount of tax which had already been paid to the department, which had got to be refunded---Refund was simply a repayment of amount overpaid under whatever mode or set of circumstances---Overpayment was recognized by the statute and ascertained for purposes of repayment to the taxpayer---Tendency of the Revenue to take the plea of technicalities or technical plea of limitation as the bar for granting of refund legitimately due to the taxpayer was deprecated---If Government or a public Authority would take up a technical plea, the court had to decide the same and if the plea was well-founded, it had to be upheld by the court---Mere technicalities were not to be the criteria to deny legitimate refund of taxes paid by mistake or otherwise---Determined refund was legitimate money of taxpayer and it could not be treated as Government money and taxpayer was legally justified, not only to claim refund, but also compensation/interest thereon---Legitimate rights of taxpayers could not be seized by the taxing functionaries in any manner or under any circumstances---Seizing/capturing or adjusting of determined refund against super tax demand was nothing, but clearly coercive measure of recovery of tax demand and depriving the taxpayer from the claim of compensation thereon and compensation on compensation---Excess tax paid not only by way of advance tax, but also by way of tax deduction at source, was to be refunded with compensation/ interest---Taxpayer was also entitled to compensation/interest on interest/compensation from date on which the refund was due to the date refund was granted---Taxing Authority was not justified to withhold the legitimate determined refund on frivolous grounds/ technical grounds or illegal objectives/demands raised---Refund was an "Amanat" and the public servants held such amount as an Amanat, and were supposed to refund/return same to the person entitled to it---Non-returning or non-refunding the "Amanat" was tantamount to Khayanat and could be termed as sin and against the canon/teachings/Injunctions of Islam---Willingness and promptness with which the Government was serious in enforcing collection and recovery of taxes by using all the powers vastly conferred, was conspicuously absent when any claim for refund would arise and for that purpose it was immaterial; whether the Authority who had to grant refund was a quasi judicial authority or even the appellate Authority---Appellate Tribunal observed that Inland Revenue Department ought to show same speed for refunding "the refund" as they were showing at the time of levying, collecting, enforcing recovery of taxes. Gujarat Florochemicals Ltd. v. CIT (2008) 300 ITR 328; Pfizer Laboratories Ltd. v. Federation of Pakistan and others PLD 1998 SC 64 and HMM Ltd.'s case (1990) 77 STC 17 SC ref. Syed Shabbar H. Zaidi, FCA and Asra Rauf, FCA for Applicant. Abdul Qadeer Abbasi, D.R. for Respondent. Date of hearing: 26th May, 2015. ORDER MUHAMMAD JAWED ZAKARIA (JUDICIAL MEMBER).---By this single order, we intend to dispose of above titled Miscellaneous Applications along with main Appeals filed by the Applicant/Taxpayer against refusal of request for stay from recovery of tax demand by the learned CIR(Appeals-II), Karachi vide his combined/consolidated single Order No.CIR (A-I)/2015/247 dated: 08 05.2015. 2. Together with main appeal against refusal of stay order, the applicant has also filed Miscellaneous Application for stay of demand before this Tribunal against refusal of stay by learned CIR(A) and thereby praying for grant of stay by this Tribunal. The averments made by the Applicant in his application are reproduced as under:-- "The subject appeal was filed under the cover of our letter DT 4232 Dated May 13, 2015 under section 127 of the Income Tax Ordinance, 2001 [Ordinance] against the combined order No. CIR/Appeals-I/2015/247 dated 8, 2015 of the Commissioner Inland Revenue (Appeals-I) [CIR(A)] rejecting the application for stay. The main appeal is still pending disposal before the Commissioner (Appeals), Zone-I, Karachi Through the order, the CIR(A) has disposed off the applicant's for stay of demand of Rs. 923,342,337/- raised in the order dated April 1, 2015 framed under sections 221/124(1) of the Ordinance passed by the Deputy Commissioner Inland Revenue, Audit Unit-04, Zone I, Large Taxpayers Unit Karachi. Stay of demand has been summarily disposed by the CIR(A) vide the aforementioned combined order dated May 8, 2015 with the remarks that the appellant did not make out his case for stay against demand. The applicant prays that the demand created in the order is unjustified and is expected to be adjusted against the refunds due to the appellant. It is thus prayed that the Hon'ble Tribunal may please stay the adjustment of demand of Rs. 923,342,337/- raised in the impugned order. The status of proceedings before the CIR(A) to date are as follows: (i) Order dated April 1, 2015 framed under sections 221/124(1) of the Ordinance, were received by the company on April 15, 2015. (ii) Appeal was filed before CIR(A) vide letter DT 3894 dated April 22, 2015 on April 22, 2015. (iii) An application for out of turn hearing was filed vide letter DT 3929 dated April 22, 2015 and stay of demand was filed before CIR(A) vide letter DT 3976 dated April 25, 2015. (iv) Applications for stay were simultaneously filed before the High Court in Constitution Petition bearing reference No. D-2285 of 2015. The Court vide order dated April 30, 2015 directed the department 'not to recover or adjust the aforementioned demand with the refund till the stay application is directed by the CIR(A) or the appeals are decided within two weeks, whichever is earlier'. (v) CIR(A) has finally conceded appeal hearing on 21.05.2015, order on main appeal is not yet issued. 3. On the date of hearing the learned A.Rs. vehemently argued that on the basis of facts and circumstances of the case relating to the issue under appeal, favorable decisions, relief to the appellant are expected in the instant case, meaning thereby, the balance of convenience is in favour of the appellant. 4. They further submitted that it is pertinent to mention here that this demand has been raised on gross misapplication of law being unreasonable and not acceptable. They further stated that the impugned order was framed in haste on 'ex parte' basis without allowing sufficient opportunity of being heard to the appellant including rejection of extension was also not given. The respective appeal effect to the order of the CIR(A) in the respective year has been rectified/ amended to disallow the relief. Learned A.Rs. for the Applicant/Appellant further pleaded that the manner in which the proceedings have been conducted suggest a "mala fide intention" to reduce existing refunds of the appellant; an aggregate amount of refund in various tax years of Rs.9.9 billion had not been paid to the appellant and the taxpayer has been paying compensation for delayed refunds. 5. During proceedings before this Court, learned counsel for the Applicant/Appellant contended that the learned CIR(A), through the Order No. 247 dated 08.05.2015 has rejected stay sought by the applicant solely on the ground that "there is no issue of recovery of demand". The applicant prayed that the adjustment of determined refund will cause undue hardship for the applicant and that the demand has been incorrectly raised. It is thus prayed that the Hon'ble Tribunal may please stay the recovery/adjustment of entire demand against determined refund. Learned Counsel for the Applicant/Taxpayer invited our attention that the impugned orders where demands have been raised and there is every likelyhood that the department may adjust such determined refunds against the demands which are disputed in appeal and still subjudice. It appears that the department for meeting the department's budget target the department will endeavour to adjust/recover the demand which unjustly raised. The Learned AR urged that a favorable decisions, allowing relief to the appellant are expected in the instant case/appeal which pending adjudication before CIR(A) despite the appellant has filed out of turn hearing application vide his counsel's letter DT 3929 dated April 22,2015. The CIR(A) had fixed appeal hearing on 18.05.2015 and finally concluded on 21st May, 2015. The appellant order by CIR(A) is still in despondency, meaning thereby, the balance of convenience is in favour of the appellant. This reveals that there is a 'prima-facie' case of stay of recovery till the matter is decided by CIR(A) this demand has been raised on gross misapplication of law being unreasonable and not acceptable, the demand is sought to be recovered on account of the following main issues. The outstanding demand is based on incorrect interpretation of law/incorrect understanding of the facts of the case without taking into account the decisions of the higher appellate authorities. He further contended that there is a 'prima facie' case for stay of demand. It is therefore prayed that this Tribunal may kindly grant stay of demand and restraint the department from adjustment of refund against illegal demand. The learned counsel also respectfully submitted that the clear direction to be given to the learned CIR(A) to issue appellate order which has already been reserved for order on 21st May, 2015. 6. Learned A.R 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 his conscious, judicious and judicial mind. 7. In support of his arguments the learned D.R. relied upon the reported judgment of 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. Learned Counsel for the Applicant/Appellant has placed reliance on a reported judgment in re:89 TAX 177 = 2003 PTD 1746=2003 GST 283 in the case of Messrs Z.N. Exports (Pvt.) Ltd. v. Collector of Sales Tax decided on 03-02-2003 wherein the Hon'ble Court has held that:-- "In all fairness, equity and justice, an assessee should not be forced to pay a demand created by a Revenue authority unless the order creating such demand has undergone the scrutiny of at least one independent forum". 9. The learned AR has further placed reliance on another reported judgment 2011 PTD 1290, of the Hon'ble High Court, Lahore and an unreported decision of the Tribunal in MA(Stay) No.2366/LB/2014-I.T.A. No.2180/LB/2014 [Tax year 2013] dated 26-09-2014 wherein as per his claim the stay was allowed. He further contended that in view of the directions issued by the superior courts, as referred above, that recovery should not be made till disposal of appeal by an independent forum. 10. 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 disposed of main appeal. 11. In finale Mr. Shabbar Zaidi, the Learned A.R. submitted that the taxpayer is the leading banking company/corporate taxpayer, minutely maintain each and every records, accounts are duly adjusted closed and audited by a repute Firm of Chartered Accountants. The case of the Applicant/Appellant is bona fide, prima facie arguable case, balance of convenience is also in favour of the taxpayer and if stay not granted it will cause irreparable loss not only to taxpayer but to the corporate tax culture. 12. The learned DR on the other hand, strongly objected to the stay application and appeal. He while rebutting the contention of the learned counsel for the applicant/appellant regarding application of proviso of sections 131 and 132 he also drew our attention towards 1st provisio to subsection (5) of section 131. The relevant proviso of section 131 of the Income Tax Ordinance, 2001 relied upon by him is reproduced hereunder:-- 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:-- 13. The learned D.R. argued that the case of the applicant/appellant is fully covered by the aforesaid proviso. Hence provision of Income Tax Ordinance, 2001 is squarely 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, it is crystal clear that the power of this Tribunal regarding stay is restricted subject to section 131(5) 1st Proviso to Income Tax Ordinance, 2001. 14. The learned D.R. argued that from perusal of above quoted section of sections, the legislature has empowered the Tribunal to admit, hear and dispose of the appeal as per procedure laid down in sections 131, 132 of the Income Tax Ordinance, 2001, meaning thereby provision of section 131(5) Ist provisio 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 make out his case for stay against demand. Moreover, the learned DR added that determined refund is available for adjustment against demand, therefore, the Miscellaneous Application for stay of demand be rejected. 15. We have heard both the learned counsel and carefully perused the relevant record. The relevant extract from the order of the learned CIR (A) refusing to grant the stay is reproduced extenso hereunder: "OFFICE OF THE COMMISSIONER INLAND REVENUE (APPEALS-I) KARACHI. No. CIR/Appeals-I/2015 /247 Dated: 08.05.2015 To, The Commissioner Inland Revenue, Zone-I, Large Taxpayer Unit, Karachi. Sub: Messrs Habib Bank Limited Appeal Against order under sections 221/124(1)/122(5A) The Income Tax Ordinance, 2001 and stay of demand for the tax years 2007 2008, 2009,2010 and 2011. Please refer to the above subject. Mrs. Asra Rauf FCA and Zara Naeem, ACA the learned ARs attended and requested for stay against demand. During proceedings of stay applications, the ARs informed that there were determined refunds available to the appellant and it is likelihood that the department may adjust such determined refunds against the demand in appeals. Since, there is no issue of recovery of demand through coercive measures, therefore, balance of convenience is not in favour of the appellant for stay against demand. Hence, the stay applications are disposed off with remarks that the appellant did not make out his case for stay against demand. Meanwhile, the main appeal is fixed for hearing on 18.05.2015. Sd/- Commissioner Inland Revenue (Appeals-I), Karachi. (Underlying for emphasizing.) 16. That the aforesaid Order is not a speaking order, which is against the fundamentals of justice, in this regard various judgments were cited by the learned counsel including judgment passed by Honorable Appellate Tribunal in the matter of Mohammad Ateeq and other wherein it was held that:-- "The order cannot be termed as a quasi-judicial order. There is yet another aspect of the case, which can not be ignored. After the examination of the impugned order we find the same is sketchy, slip-shod and devoid of reasons. The said order is not at all a speaking order and cannot be called a "quasi judicial order" within the parameters set up by law. The tenor of the order amply manifests non application of judicial mind and no reasons have been assigned by the learned adjudicating officer in coming to the impugned conclusions. Even it has been enjoined upon an executive authority, as per section 24(A) of General Clauses Act, 1897 (inserted by General Clauses Amendment Act, 1997, Act No.XI of 1997) to give reasons for making the order." 17. That the Honorable Supreme Court of Pakistan time and again unapproved the passing of such perfunctory orders in the causes involving valuable rights of the parties. It is settled law that quasi-judicial order must be a speaking order manifesting by itself that the authority has applied its judicial mind to the issues and the points of controversy involved in the causes. Furthermore, when the reasons would not be forthcoming, obviously the appellate court would be deprived of the views of the subordinate forum. In any way the impugned order which is not a speaking order and devoid of reasons is not sustainable in law being in contravention of law declared by the Honorable Supreme Court of Pakistan in various cases like Adamjee Jute Mills Ltd. v. The Province of East Pakistan and others (PLD 1959 SC (Pak.) 272), Gouranga Mohan Sikdar v. The Controller Import and Export and 2 others [ PLD 1970 SC 158], Mollah Ejahar Ali v. Government of East Pakistan and others [PLD 1970 SC 173] and Muhammad Ibrahim Khan v. Secretary, Ministry of Labour and others [1984 SCMR 1014] etc. After section 24-A GCA the obligation to advance reasons is now a statutory requirement and cannot be casually ignored (Ref: Airport Support Services v. Airport Manager QIA (1998 SCMR 2268). 18. As far grant of stay by this Tribunal/ATIR, we are of the considered opinion that section 131 (5) read with provisio of the Income Tax Ordinance, 2001 (cited supra) unequivocally provides that the Tribunal may stay the recovery proceedings for 180 days, if tax levied under the Ordinance and upheld by the CIR(A) after upholding by the CIR (A) the recovery proceedings cause undue hardships to the taxpayer. The said subsection 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) 19. From perusal of the provision of subsection (5) of Section 131 of the Income Tax Ordinance, 2001, read with proviso restricts the empowerment of this Tribunal to grant stay of recovery unless tax levied under this Ordinance 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 or appeal before the Tribunal. 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 against the appeal which is pending adjudication before CIR (A). Further…
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