SHV ENERGY PAKISTAN (PVT.) LTD. VS PROVINCE OF THE PUNJAB, 2016 PTD-LAHORE-HIGH-COURT-LAHORE 589 (2015)

(a) Administration of justice---

----Doing of an act---Principle---Where law requires an act to be done in a particular manner, it has to be done in that manner alone---Such dictate of law cannot be termed as technicality.

Muhammad Anwar and others v. Mst. Ilyas Begum and others PLD 2013 SC 255 rel.

(b) General Clauses Act (X of 1897)---

----S. 24-A---Order with reasons---Scope---In every case in which appeal or revision lies, the authority passing order is required to record findings and discuss material available on record, so that appellate court may examine whether the order passed is in accordance with material available on record or there is any misreading or non-reading of evidence or any material evidence available on record has been ignored causing miscarriage of justice.

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; Muhammad Ibrahim Khan v. Secretary, Ministry of Labour and others 1984 SCMR 1014; Al-Hadayat Textile through Proprietor v. Soneri Bank Ltd. 2003 CLD 105 and Waqar Alam Saeed v. District Coordination Officer/Chairman and 3 others 2005 YLR 1742 rel.

(c) Punjab Professionals and Trades Tax Rules, 1977---

----Rr. 3 & 4(4)---Constitution of Pakistan, Art. 199---Constitutional petition---Notice of recovery---Condemned unheard, principle of---Applicability---Petitioner company assailed notice issued by authorities for recovery of professional tax on the ground that the same was passed without providing any opportunity of hearing to them---Validity---Before issuing demand notice in question mandatory provisions of R. 4 of Punjab Professionals and Trades Tax Rules, 1977 were not complied with by authorities---High Court observed that it was expedient for the safer administration of justice and declared the demand notices in question illegal and without lawful authority and remanded the matter to authorities with direction to decide the same through a speaking order, after affording opportunity of being heard to all concerned including petitioner company---Petition was disposed of accordingly.

Muhammad Jameel Das (W. Gopal Das) and another v. The Pakistan through Secretary, Ministry of Communication, Government of Pakistan and others 1999 CLC 541; Federation of Pakistan and others v. Shaukat Ali Mian and others PLD 1999 SC 1026; Hazara (Hill Tract) Improvement Trust and others v. Mst. Qaisra Elahi and others 2005 SCMR 678; Province of the Punjab through Collector District Khushab, Jauharabad and others v. Haji Yaqoob Khan and others 2007 SCMR 554; Overseas Pakistanis Foundation and others v. Sqn. Ldr. (Retd.) Syed Mukhtar Ali Shah and another 2007 SCMR 569; Muhammad Sharif v. Settlement Commissioner and others 2007 SCMR 707; Masal Khan and another v. The State 2010 SCMR 1399; Messrs Gulistan Textile Mills Ltd. v. Collector (Appeals) Customs Sales Tax And Federal Excise, Karachi and another PTD 2010 Kar. 251 Section Officer, Government of Punjab, Finance Department and others v. Ghulam Shabbir 2010 SCMR 1425 and Province of Punjab v. Sargodha Textile Mills and others PLD 2005 SC 988 ref.

Deputy Commissioner of Income Tax / Wealth Tax, Faisalabad and others v. Messrs Punjab Beverages Company (Pvt.) Ltd. 2007 PTD 1347 distinguished.

Muhammad Irfan v. Tariq Mehmood 2011 CLC 1610; Muhammad Maqsood v. Kausar Nisar 2000 YLR 1698; Evacuee Trust Property Board v. Sheikh Abdul Sattar and another 2009 SCMR 1223 and Nazir Ahmad Panhwar v. Government of Sindh through Chief Secretary, Sindh 2005 SCMR 1814 rel.

Muhammad Ajmal Khan for Petitioner (in W.Ps. Nos.7397/2012 and 9426/2012).

Abid Minhas for Petitioner (in W.Ps. Nos. 23428/2011 and 25362/2011).

Shahab-ud-Din for Petitioner (in W.P. No.7986/2012).

Wali Muhammad Khan, A.A.G. and Mian Muhammad Abid, Law Officer, E&T Deptt.

JUDGMENT

MUHAMMAD SAJID MEHMOOD SETHI, J.---This judgment will dispose of the instant writ petition along with following writ petitions, as common questions of law and facts are involved in all these petitions:--

1.W.P. No. 25362/2011. titled "Messrs Shafi Chemical v. Province of the Punjab etc."

2.W.P. No. 23428/2011. titled "Messrs Diamond Industries Limited v. The Province of the Punjab etc."

3.W.P. No. 9426/2012. titled "Habib Rafiq (Pvt.) Ltd. v. Province of the Punjab etc."

4.W.P. No. 7986/2012. titled "Millat Equipment Ltd. v. Secretary Excise and Taxation Department etc."

2.Brief facts relevant for decision of these writ petitions are that petitioners-companies were served with notices issued by Excise and Taxation Officer (Professional Tax)/respondent No.3, calling upon them to furnish the relevant documentary evidence and pay the professional tax. In response to the aforesaid notices, petitioners submitted their replies stating therein that the petitioners are registered/ incorporated outside the territorial limits of respondent department, therefore, they cannot be asked to pay the professional tax at Lahore. Respondent No.3 proceeded to create demand of professional tax through demand notices dated 28.06.2011, 17.02.2012, 17.03.2012 and 23.01.2012, respectively, without passing any order in terms of Rule 4 of the Punjab Professions and Trade Tax Rules, 1977. Through the instant writ petitions the aforesaid demand notices have been challenged with the prayer that respondents be directed to withdraw the respective demand and to declare the impugned demand notices as illegal and unlawful.

3.Learned counsel for the petitioners submit that the Rule 4(4) of the Punjab Professions and Trades Tax Rules, 1977 mandates the respondent No.3 to provide opportunity of hearing before passing any order, which has not been done in the instant case, thus, the impugned notices/demands issued by the respondent No.3 are absolutely void, illegal and without lawful authority. In support of their contention, they relied upon following case law reported as Muhammad Jameel Das (W. Gopal Das) and another v. The Pakistan through Secretary, Ministry of Communication, Government of Pakistan and others (1999 CLC 541), Federation of Pakistan and others v. Shaukat Ali Mian and others (PLD 1999 SC 1026), Hazara (Hill Tract) Improvement Trust and others v. Mst. Qaisra Elahi and others (2005 SCMR 678), Province of the Punjab through Collector District Khushab, Jauharabad and others v. Haji Yaqoob Khan and others (2007 SCMR 554), Overseas Pakistanis Foundation and others v. Sqn. Ldr. (Retd.) Syed Mukhtar Ali Shah and another (2007 SCMR 569), Muhammad Sharif v. Settlement Commis-sioner and others (2007 SCMR 707), Masal Khan and another v. The State (2010 SCMR 1399), Messrs Gulistan Textile Mills Ltd. v. Collector (Appeals) Customs Sales Tax and Federal Excise, Karachi and another (PTD 2010 Karachi 251) and Section Officer, Government of Punjab, Finance Department and others v. Ghulam Shabbir (2010 SCMR 1425).

4.Conversely, learned A.A.G. and Law Officer of respondent department submit that petitioners-companies are involved in professional and trade activities within the Province of Punjab, which is amenable to the levy of tax on professions, trade or employment under section 3 of the Punjab Finance Act, 1977. Further submits that petitioners did not provide requisite particulars as demanded from them and as a result thereof respondent No.3 proceeded to issue the impugned demand notices. Adds that the impugned notices were issued in complete adherence of Rule 3 of the Punjab Professional and Trades Tax Rules, 1977 as well as section 8 of the Act, 1977 and petitioners have failed to point out any illegality or jurisdictional error in issuance of aforesaid demand notices. He submits that impugned notices may be treated as an order under Rule 4 of the Rules, 1977. Further adds that petitioners have alternate remedy against the impugned demand notices, thus, the instant writ petitions are not maintainable in the circumstances. In support of their contentions, they placed reliance on case titled Province of Punjab v. Sargodha Textile Mills etc. (PLD 2005 SC 988), Deputy Commissioner of Income Tax / Wealth Tax, Faisalabad and others v. Messers Punjab Beverages Company (Pvt.) Ltd. (2007 PTD 1347) and judgments of this Court in W.P. No.5692/2009 dated 03.06.2009 and W.P. No.17004/2010 dated 30.06.2011.

5.I have heard the arguments of the parties and perused the record.

6.Under Rule 4(4) of the Punjab Professional and Trades Tax Rules, 1977, respondent authority is under a legal obligation to provide opportunity of being heard to the assessee, before passing any order. The relevant Rule reads as under:--

"4. (1) The District Excise and Taxation Officer, shall subject to the provisions of sub-rules (3), have exclusive authority to determine all questions as to where the tax is recoverable, the person from whom it is recoverable, or the amount recoverable under Section 3 of the Act.

(2)The District Excise and Taxation Officer may require any person who in his opinion is liable to pay the tax, to furnish such particulars and produce such documents as the District Excise and Taxation Officer may require or deem necessary for the purposes of determining whether such person is an assessee and the amount of the tax payable by him.

(3)Any person aggrieved by an order of the District Excise and Taxation Officer made under sub-rule (1) may prefer an appeal within thirty days from the service of the order to the Director, Excise and Taxation, whose decision shall be final.

(4)No order shall be made or decision taken under sub-rule (1) or sub-rule (3) unless the person concerned has been given an opportunity of being heard."

The aforementioned provisions clearly mandate that no order shall be made or decision shall be taken unless the person concerned has been given an opportunity of being heard.

7.The impugned notices issued by respondent No.3 show that these are merely a demand notice calling the petitioners to make payment in National Bank of Pakistan or State Bank of Pakistan within 5 days and furnish a copy of paid Challan. In case of default tax will be recovered under the provision of Land Revenue Act, with 100% penalty.

As is evident from the tenor of impugned notices, the requirements of Rule 4(4) have not been fulfilled and the impugned notices / demands have been created in violation of Rule 4(4) of the Punjab Professional and Trades Tax Rules, 1977.

8.It is well settled principle of law that where law required an act to be done in a particular manner, it had to be done in that manner alone and such dictate of law could not be termed as technicality. Reference in this regard can be made to Muhammad Anwar and others v. Mst. Ilyas Begum and others (PLD 2013 SC 255).

9.The Hon'ble Supreme Court of Pakistan, while discussing the principle of natural justice, in the case of Hazara (Hill Tract) Improvement Trust supra, has given the following esteemed findings, which highlight the importance of hearing within the contemplation of Islamic System of Justice:--

"This principle originates from Islamic System of Justice as evident from historical episode when "Iblees was scolded for having misled Hazrat Adam (P.B.U.H.) into disobedience or Allah's command. Almighty Allah called upon Iblees to explain his conduct and after having an explanation from him which was found untenable, he was condemned and punished for all times to come". Thus, it is held that the principle of natural justice has to be applied in all kinds of proceedings strictly and departure there form would render subsequent actions illegal in the eye of law."

10.Rule 4(3) of the Rules ibid clearly lays down that any person aggrieved by an order of the District Excise and Taxation Officer made under sub-rule (1) may prefer an appeal within thirty days from the service of the order to the Director, Excise and Taxation, whose decision shall be final. Since no appealable order has been passed within the contemplation of Rule 4 of the Rules ibid, appeal cannot be filed against the impugned notices. Thus, the argument of learned A.A.G. and Law Officer of respondent department that the impugned notices are appealable is clearly misconceived, thus, the same is not sustainable. Similarly reliance placed on the case of Messrs Punjab Beverages Company (Pvt.) Ltd. supra is utterly misdirected, in circumstances.

11.The learned A.A.G. has submitted that the impugned notices may be treated as an order under Rule 4 of the Rules, 1977. Suffice it to say that even the said notices cannot be treated as orders within the contemplation of provisions of the Section 24-A of the General Clauses Act, 1897 read with Articles 4 and 5 of the Constitution of Islamic Republic of Pakistan for the reason that order required to be passed under Rule 4 of the Rules, 1977 must contain reasons, it should be objective and not merely subjective in nature. The tenor of the said Order clearly shows that it neither contains reasons nor mentions any word qua the objections of the petitioner. In order to be reasonable there should be a finding demonstrating links between the material on which certain conclusions are based and the actual conclusions. Reasonability can be gauged by examining the findings in the order and if there is no discussion or any finding, it would not be a proper order supported by reasons. Such an order would be a non-judicial, non-speaking and an un-reasoned order.

12.In every case in which an appeal or revision lies, the Authority passing the order is required to record findings and discuss the material available on record, so that the appellate court may examine whether the order passed is in accordance with the material available on record or there is any misreading or non-reading of evidence, or any material fact available on record has been ignored causing miscarriage of justice. In this regard, reference can be made to the judgments reported as 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), Muhammad Ibrahim Khan v. Secretary, Ministry of Labour and others (1984 SCMR 1014), Al-Hadayat Textile through Proprietor v. Soneri Bank Limited (2003 CLD 105) and Waqar Alam Saeed v. District Coordination Officer/Chariman and 3 others (2005 YLR 1742).

13.Even if the impugned demand notices are treated as orders, since these are adverse in nature, the same cannot be passed at the back of the petitioners/affected persons without affording them an opportunity of hearing. Such an order is to be treated as void order having no recognition in the eyes of law. Court is also under a legal duty to wipe out effects of such void order and relegate the parties to position which they occupied before it was passed. Reference in this regard can be made to the case law Muhammad Irfan v. Tariq Mehmood (2011 CLC 1610), Muhammad Maqsood v. Kausar Nisar (2000 YLR 1698), Evacuee Trust Property Board v. Sheikh Abdul Sattar and another (2009 SCMR 1223) and Nazir Ahmad Panhwar v. Government of Sindh through Chief Secretary, Sindh (2005 SCMR 1814).

14.The judgments cited by the learned A.A.G. at the bar are quite distinguishable and are inapplicable in the facts and circumstances of the instant case. In the said judgments, the question before the Court was as to whether the Professional Tax has been validly enacted or not. The issue was not concerning non-compliance of the Rule 4(4) of the Rules ibid.

15.For what has been discussed above, I have come to the irresistible conclusion that before issuing the impugned demand notices, mandatory provisions of Rule 4 have not been complied with by the respondents. Hence, finding it expedient for the safer administration of justice, the impugned demand notices are hereby declared illegal and without lawful authority and matter is referred back to the respondent No.3 with direction to decide the same through a speaking order, after affording opportunity of being heard to all concerned, including the petitioner-companies and fulfilling all the legal requirements, within a period of 30 days from the receipt of this order, under intimation through Deputy Registrar (Judicial) of this Court.

16.With the above observations and direction, all these writ petitions are hereby disposed of.

MH/S-106/LCase remanded.