DEPUTY COMMISSIONER INLAND REVENUE VS NEELUM JHELUM HYDRO POWER COMPANY (PVT.) LTD., 2013 PTD-SUPREME-COURT-AZAD-KASHMIR 513 (2012)

(On appeal from the judgment of the High Court dated 29-6-2012 in Writ Petition No.1280 of 2012).

Income Tax Ordinance (XLIX of 2001)---

----Ss.148 & 162---Azad Jammu and Kashmir High Court (Procedure) Rules, 1984, Rr.33 to 38---Seizure of the accounts of the taxpayer/ company---Matter related to the payment of income tax on imported Tunnel Boaring Machine---Deputy Commissioner Inland Revenue, ordered for seizure of the accounts of the company with the banks---Taxpayer company had prayed that assessment order under S.162, of Income Tax Ordinance, 2001, be declared to be without lawful authority and of no legal effect---High Court disposed of the writ petition in limini and granted part of relief---Validity---Writ petition could not be finally disposed of without first admitting the same for regular hearing, providing an opportunity to respondents for filing written statements/objections, documents and affidavits etc. and hearing the arguments---High Court in the present case, had passed order without complying with Rules 33 to 38 of Azad Jammu and Kashmir High Court (Procedure) Rules, 1984---Due to order of seizure of accounts of the taxpayer company by banks, a hardship had been created for the company; and if said seizure order of accounts would remain in operation, a heavy loss would occur to the National Exchequer---High Court, in circumstances, was right in exercising the inherent powers for suspending the order of seizure of the account of the company till they approach the appropriate forum---Such power always vested in every court for doing the complete justice---Supreme Court declared that writ petition could not be finally disposed of without first admitting same for regular hearing issuing notice to other party, seeking objections/written statements, but in peculiar circumstances of the case, the order of the High Court, whereby the notice for seizure of accounts of the company was ordered to remain in abeyance, would remain operative till the time as granted by the High Court.

Messrs Raja Autocars v. Zonal Manager and 2 others Writ Petition No.62 of 1999 decided on 21st January, 2000; Muhammad Inayatullah Cheema v. Sardar Ali Raza Masood Qazilbash 2002 PTD 1195 and Sanofi Aventis Pakistan Limited v. Province of Sindh and others PLD 2009 Kar. 69 ref.

Azad Government and others v. Meher-un-Nisa and others Civil Appeal No.65 of 2012 decided on 15th June, 2012 rel.

Ch. Muhammad Afzal Advocate for Appellants.

Sajid Hussain Abbasi and Sardar Abdul Razik Khan Advocate for Respondents.

Date of hearing: 4th July, 2012.

JUDGMENT

MUHAMMAD AZAM KHAN, C.J.---This appeal by way of leave of the Court arises out of the judgment of the High Court dated 29th June, 2012, whereby Writ Petition No.1280 of 2012 has been disposed of in limine with the direction to the petitioner, respondent No.1 herein, to avail the remedy within a period of two weeks and notice dated 28th June, 2012 issued by the respondents, appellants herein, was ordered to remain in abeyance till the petitioner approaches the proper tribunal for redressal of its grievance. The tribunal was directed to decide the controversy without, unnecessary delay.

2.The precise facts of the case are that respondent No.1 filed awrit petition in the High Court on 29th June, 2012 to the effect that its company is fully owned by the Government of Pakistan and acting as an instrument of WAPDA for the execution of Neelum Jhelum Hydroelectric Project. It has engaged MessrsCGGC-CMEC Consortium (hereinafter to be referred as the contractor) for the execution of civil work etc. for the project. The petitioner, provides machinery and equipment owned byWAPDA to the contractor for the contract work. It was alleged in the writ petition that WAPDA imported two Tunnel Boring Machines in Pakistan and handed over the same to contractor for the development of the project. The machinery and parts were imported in Pakistan and not in Azad Jammu and Kashmir, hence the taxable event of deduction of income tax under section 148 of the Income Tax Ordinance, 2001 (hereinafter to be referred as theOrdinance) took place in Pakistan. The Federal Board of Revenue exempted the machinery from taxation vide letter dated 15th March, 2012. The Deputy Commissioner Inland Revenue Circle 10, Muzaffarabad passed an assessment order under section 162 of the Ordinance on the presumption that the machinery was imported in Azad Jammu and Kashmir by the petitioner and it is liable to advance tax under section 148 of the Ordinance. The petitioner filed an appeal before the Commissioner Inland Revenue, AJ&K. Council, Camp Mirpur. The appeal is still pending and awaiting decision. During the pendency of appeal, the respondents seized the Bank accounts of the petitioner in an undue haste on 28th June, 2012. The learned Chief Justice in the High Court disposed of the writ petition in limine with the direction that the impugned order in the writ petition shall remain in abeyance till the petitioner, respondent No.1, approaches the proper tribunal for redressal of its grievance. The tribunal is also directed to decide the controversy without unnecessary delay. The petitioner, respondent No.1 herein, was also directed to avail remedy within two weeks. Hence this appeal.

3.The learned counsel for the appellants argued that the judgment of the High Court is against the law and the AJ&K High Court Procedure Rules, 1984. At one side the High Court disposed of the writ petition in limine and on the other side it virtually accepted the writ petition and final relief claimed by the petitioner therein has been granted without admitting the writ petition for regular hearing. He contended that the notice for raising the demand was issued to the respondent-company and assessment was made under section 162 of the Ordinance. The respondent, petitioner in the High Court, has challenged the assessments order by way of appeal before the Commissioner Income Tax. The respondent-company has not obtained a stay order from the Commissioner, therefore, the department was at liberty to collect the tax and accounts were ordered to be seized legally. In presence of remedy by way of appeal, the writ petition was not maintainable and the same was liable to be dismissed on the sole ground. He contended that the High Cowl has power to issue ex parte stay order, but that can only he done after dispensing with the notice provided under Rule 34 of the High Court Procedure Rules. The High Court instead of issuing, stay order under Rule 34, at one side disposed of the writ petition in limine and on the other granted final relief claimed by the petitioner therein. He referred to a judgment of the High Court titled Messrs Raja Autocars v. Zonal Manager and 2 others (Writ Petition No.62/1999 decided on 21st January, 2000) and judgment titledMuhammad Inayatullah Cheema v. Sardar Ali Raza Masood Qazilbash 2002 PTD 1195. The learned counsel lastly argued that while disposing of the writ petition, the High Court issued direction to the tribunal for decision of the matter. The tribunal was not a party before the High Court, hence a direction cannot be issued to a party which is not before the Court.

4.While controverting the arguments, the learned counsel for the respondents, argued that the judgment of the High Court is perfectly legal. The High Court has not accepted the writ petition, but it has been disposed of in limine and a protective stay order has been issued with a direction that the petitioner therein shall approach to the relevant tribunal. It was also directed that the tribunal shall decide the matter without unnecessary delay. The learned counsel referred to a case titled Sanofi Aventis Pakistan Limited v. Province of Sindh and others (PLD 2009 Karachi 69). The learned counsel further argued that alternate remedy is not adequate and efficacious. It is no bar for filing the writ petition.

5.We have heard the learned counsel for the parties and perused the record. The dispute between the parties relatesto the payment of income tax on Tunnel Boring Machines which are being used in Neelum Jhelum Hydroelectric Project, which is a project of WAPDA, being executed by Neelum Jhelum Hydroelectric Power Company throughthe aforesaid contractor. The dispute between the parties is that the Income Tax department claims that the Tunnel Boring Machinery has been imported in Azad Jammu and Kashmir and it is liable to advance income tax under section 162 of the Ordinance, while the claim of respondent No.1 is that the machinery was imported by WAPDA in Pakistan and the contractor is using the machinery of WAPDA in the project being executed in Azad Jammu and Kashmir. The appellants raised tax demand and issued notice for payment of the same. The respondent filed an appeal before the Commissioner Income Tax. It appears from the record thatalongwiththeappealnoapplicationforstayorderwasfiledand Income lax Commissioner has not issued any stay order. During the pendency of appeal, the Deputy Commissioner Inland Revenue Circle 10, Muzaffarabad, on 28th June, 2012 ordered for seizure of the accounts of respondent No.1 with the Banks, respondents Nos.2 to 6. The said order was challenged by respondent No.1 through writ petition in the High Court. The following relief was claimed by the petitioner, respondent No.1 herein, from the High Court:--

:It is, therefore, respectfully prayed that the assessment order passed by the respondent under section 162 of the Ordinance dated 7-5-2012 may kindly be declared to be without lawful authority and of no legal effect.

It is further prayed that the seizing of the Bank account by the respondent may also kindly be quashed.

Any other relief deemed fit and appropriate may graciously be granted. Costs may also kindly beawarded."

6.The writ petitions are governed by A.J&K High CourtProcedure Rules, 1984. Part-B of Chapter VII High Court Procedure Rules deals with the writs of mandamus, prohibition, certiorari and quo-warranto etc.A completescheme for disposal of writ petitions is provided in Rules 33 to 38. The rules postulate that whenever a writ petition is filed, it is normally to be heard by a bench consisting of two Judges, however, it can be heard otherwise as ordered by the Chief Justice. If the writ petition is not dismissed at preliminary hearing, then a notice shall be issued tothe respondents for filing objections/written statements, documents, affidavits etc. and after hearing the arguments, the writ petition can be disposed of on merits. The proposition came under consideration of this Court in case titled Azad Govt. and others v. Meher-un-Nisa and others (Civil Appeal No.65 of 2012 decided on 15th June, 2012), whereby in similar circumstances when the High Court disposed of the writ petition in limine and final relief was granted, it was observed by the Court as under:--

"8.Part B of Chapter VII of High Procedure Rules, 1984 deals with the writs of mandamus, prohibition, certiorari, habeas corpus and quo-warranto. Rule 33 provides a complete scheme for initial orders on the writ petitions. We deem it proper to reproduce rule 33 which is as under:--

'(1)Every such application shall be placed for admission before a Division Bench to be constituted by the Chief justice as far as practicable on the next working day or if so directed by the Chief Justice on the day on which it is filed and after its admission shall ordinarily be heard by a Judge sitting alone unless the bench admitting the petition directs otherwise.

(2)Notwithstanding anything herein beforecontained the Chief Justice may if he deems necessary authorize a Judge sitting alone to hear such petition for admission.

(3)A Bench hearing a petition for admission may before admitting the same direct issuance of notice to the party affected to show-cause why the petition be not admitted and may fix a date on which the notice is to be returnable. After service of the notice mentioned above, the petition shall be placed for admission before any Bench constituted by the Chief Justice.'

What transpires from rule 33 is that every application shall be placed before the Division Bench, unless otherwise ordered by the Chief Justice, for admission. The rule further postulates that if writ petition is admitted for regular hearing it shall he heard by a Judge sitting alone unless the bench admitting the petition directs otherwise. The language of the rule leaves no room for the argument that the writ petition can be accepted and final order can be passed without admitting it for regular hearing. It is also laid down in sub-rule (3) of rule 33 that a bench hearing, a petition may before admitting the same direct issuance of notice to the party affected to show cause why the petition may not be admitted for regular hearing. It further elaborates that the admission of writ petition for regular hearing is necessary. Under Rule 35 notice of motion has to be served upon the person to be affected or any other respondent by registered post (acknowledgement). Under Rule 36, after a notice is served upon the person affected and he appears in the Count, he shall file objections and other documents along with at least two copies thereof within a month from the date of appearance unless the Court otherwise directs. When the objections are filed by the respondent, the petitioner may with the leave of the Court, file an affidavit and any document in rejoinder along with at least two copies thereof within a week or such time as the Court may direct and serve a copy thereof on the respondent or his counsel. Under Rule 38, the writ petition has to be finally decided after haring the parties. What is evident, from the above-referred rules is that when a writ petition is filed it shall be placed before a bench. If it is not dismissed summarily and the bench admits it for regular hearing then a notice shall issue to other party, who shall be required to file counter affidavit, documents, objections/ written statements. The petitioner, if so desires, with the permission of the Court may file an affidavit and any document in rejoinder. After hearing the parties the Court may pass any appropriate order on the writ petition. The final disposal of writ petition without admitting it for regular hearing is not covered by the rules. The proposition came under consideration of this Court in a case titled Azad Government and others v. Sardar Muhammad Ashfaq Khan 2001 MLD 514 wherein it was observed as under:--

'After hearing the respective contentions of the learned counsel for the parties and perusing the record, it may be stated that thelearned Judge in the High Court committed a patent error by accepting the writ petition filed by respondent without even admitting the same for regular hearing. The perusal of the interim orders recorded by the High Court shows it beyond any doubt that the writ petition filed by respondent was not admitted for regular hearing and as such the subsequent proceedings on the assumption that the same had been admitted for regular hearing are not sustainable on the said sole ground.'

We may observe here that before the enforcement of Azad Jammu and Kashmir High Court Procedure Rules, 1984, made under section 44-A of the AJ&K Interim Constitution Act, 1974 and section 52 of the AJ&K Courts and Laws Code, 1949. "The Institution of Petitions and Grant of Writ Rules. 1975" were applicable. The scheme of procedure laid down in Rule 3 of the Writ Rules, 1975 is akin to that of Rules 32 to 38 of the High Court Procedure Rules, 1984 relating to writ petitions. There is no conflict between the two rules. Writ Rules, 1975 were framed ender section 52 of the Courts and Laws Code, 1949, while the AJ&K High Court Procedure Rules, 1984 were framed under section 44-A of the Act and section 52 of the Courts and Laws Code, 1949. It is a celebrated Principle of law that if there is a conflict between two provisions of law, then the later provision shall prevail, but in the instant case there is no conflict in both the rules. Since the High Court Procedure Rules, 1984 provide a complete mechanism and these are framed under the Constitution, the writs shall be governed by the Rules framed under the provisions of the Act. Since the High Court has finally disposed of the writ petition, without admitting it for regular hearing, without summoning the respondents (appellants herein), without requiring them to file objections/written statements or counter affidavits and nearing them, the impugned order is not sustainable on the sole ground."

Thus it can safely be held that a writ petition cannot be finallydisposed of without admitting it for regular hearing, without notice to the respondents for filing objections/writtenstatements and hearing the arguments.

7.The order passed by the High Court in the present case amounts to final disposal of writ petition or not needs resolution by the Court. The petitioner in the High Courtprayed for setting aside the assessment order passed by the respondents, appellants herein, under section 162 of the Ordinance. It was also prayed that the order of Deputy Commissioner Inland Revenue, whereby he seized the bank accounts of the company may also be quashed.

8.A perusal of order passed by the High Court leaves no doubt that the High Court disposed of the writ petition in limine and has granted a part relief prayed by the petitioner, respondent herein. As stated above, a writ petition cannot be finally disposed of without first admitting it for regular hearing, providing an opportunity torespondents for filing written statements/objections, documents and affidavits etc. and hearing the arguments, as such the order was passed without complying with Rules 33 to 38 or the High Court Procedure Rules, 16984. The ease law referred to by the counsel for the parties relates to availability of alternate remedy and maintainability of writ petition. Since the High Court has not passed the order after consideringthis aspect, it will not be appropriate for us to dilate upon the proposition and consider the case-law, referred to by the counsel for the parties.

9.The fact remains that due to order passed by the appellants herein on 28.6.2012 a hardship has been created for the respondent. The counsel for the respondent forcefully argued that the Neelum Jhelum Hydroelectric Project is a project or paramount national importance and of one day costs loss of hundreds of million rupees tothe State exchequer per day. If the order of seizure of the accounts by the appellants remains in operation, a heavy loss willoccur to national exchequer. Due to seizure of the accounts, the salaries to the employees of the company and the paymentto the contractor could not be made therefore,the order passed by the High Court is in the interest ofjustice.We have considered the argument of the counsel for the respondent and are aware of the importance of Neelum Jhelum Hydroelectric Project, which is a project of national importance. The Income Tax Department wants to realize income tax from the respondent. The respondent-company is working on behalf or WAPDA. WAPDA has huge assets in the territory of the State. If the tax is hot deposited immediately, the Income Tax Department can recover the same after attaching the assets of WAPDA, but the seizure or the accounts of respondent-company which has to make paymentto the contractor may create an obstacle in the working of Neelum Jhelum Hydroelectric project. After considering the above fact and keeping in view the particular situation, we are of the view that the High Court was right in exercising the inherent powers for suspending the order of seizure of the accounts of respondent-company till they approach the appropriate forum. Such power always vests in every court for doing the complete justice.

10.While reiterating our view expressed in the above referred case of Mehrun Nisa, it is declared that the writ petition cannot be finally disposed of without first admitting it for regular hearing, issuing notice to other party, seeking objections/written statement, documents, affidavits and hearing the parties, but in peculiar circumstances of the case, the order of the High Court, whereby the notice for seizing the accounts, issued on 28th June, 2012, has been ordered to remain in abeyance, shall remain operative till that time as granted by the High Court. The appeal is disposed of in the manner indicated above.

HBT/9/SC(AJ&K)Order accordingl