ROYAL STEEL MILLS VS The FEDERATION OF PAKISTAN through Secretary Ministry of Law, Islamabad, 2016 PTD-LAHORE-HIGH-COURT-LAHORE 2396 (2016)

Income Tax Ordinance (XLIX of 2001)---

----S. 205----Civil Procedure Code (V of 1908), O. XXXIX, Rr.1 & 2---Default surcharge---Temporary injunction granted/extended beyond the subject-matter of appeal---Validity---Subject matter of the appeal before the Commissioner (Appeals) was in relation to the default surcharge under S. 205 of Income Tax Ordinance, 2001---Commissioner had passed the stay order and later extended the same from time to time---Commissioner, having validly passed the earlier (initial stay) order with regard to the subject matter of the appeal (even if the same had been extended beyond the scope of the subject matter of the appeal), had no power to recall said order---Commissioner, in order to rectify the mistake (stay order extended beyond the scope of the subject matter of the appeal), had committed another mistake while recalling the entire stay order---High Court modified the impugned order to the extent that the stay order would be deemed to have been in operation and not recalled to the extent of the amount of default surcharge which was the subject matter of the appeal---Constitutional petition was accepted in circumstances.

Ajmal Khan for Petitioner.

Sarfraz Ahmad Cheema for Respondents on Court's call.

ORDER

SHAHID KARIM, J.---This petition under Article 199 of the Constitution of Islamic Republic of Pakistan, 1973, lays a challenge to the order dated 16.6.2016 passed by the Commissioner Inland Revenue (Appeals), Sialkot.

2.It is not necessary to go into the historical facts narrated in the petition. Suffice to say that an appeal is pending with the Commissioner Inland Revenue (Appeals), Sialkot in which a stay order was passed by the CIR (A) on 4.4.2016 for a period of 30 days. That order was extended up to 30.06.2016 by an order dated 15.6.2016. A similar order was passed on even date with respect to the petitioner No.2. However; vide the impugned order dated 16.6.2016, the following order was passed:

"As the stay order vide No.318 dated 15-06-2016 has been issued inadvertently therefore the same is cancelled ab initio."

3.It is pertinent to mention that a similar order was passed on the same date with regard to the petitioner No.2 as well. The only grievance raised by the learned counsel for the petitioner is that there is no cavil with the fact that the matter relating to the payment of the tax for the tax years 2009, 2010 and 2011 created under sections 233/161/205 of Income Tax Ordinance, 2001 is not the subject matter of the appeal. However, the default surcharge levied on the petitioner is certainly the subject matter of the appeal. The CIR (A) has, while recalling and canceling the order dated 15.6.2016, proceeded to cancel/recall the entire order of stay granted to the petitioner. It was imperative, according to the learned counsel, that if at all the recall was to be made, it ought to be with regard only to the extent of the tax which was not subject matter of the appeal and it was improper and irrational for the CIR(A) to have recalled the stay order as regards the subject matter of the appeal as well.

4.I have heard the learned counsel for the petitioner as also the learned counsel for the respondents. The learned counsel for the respondents submits that the matter is pending in appeal before the CIR(A) and it ought to be left to the discretion of the forum below to determine whether stay ought to be granted or not.

5.In the first instance, it is difficult to comprehend as to how the CIR(A) has proceeded to review the earlier order dated 15.6.2016. However, I will not go into that question for the present purposes. It is not in issue that the subject matter of the appeal before the ClR (A) is in relation to default surcharge under section 205 of the Ordinance, 2001. It is also admitted on all hands that a stay order was, in fact, passed by the CIR(A) and was extended from time to time. Even if by mistake the stay order was extended beyond the scope of the subject matter of the appeal, there was no power in the CIR(A) to have recalled the earlier order which was validly passed with regard to the subject matter of the appeal. It seems that in his exuberance to rectify the mistake, which according to the CIR (A) was inadvertent, it seems that another mistake has been committed by the CIR (A) while recalling the entire stay order passed in favour of the petitioner.

6.In view of the above, the instant petition is accepted. The impugned order dated 16.6.2016 is modified to the extent that the stay order passed on 15.6.2016 shall be deemed to be in operation and not to have been recalled vide the impugned order to the extent of amount of default surcharge mentioned in para 2 of the impugned order as the said matter is the subject matter of the appeal before the CIR (A). It is expected that since the hearing in the appeal has been finally held, a final order shall be passed expeditiously and with all deliberate speed by the CIR(A).

SL-R-15-LPetition allowed.