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Form No: IIC.lD/C-121
ORDER SHEET
IN
THE LAHORE HIGH COURT LAHORE
JUDICIAL DEPARTMENT
Case
No.
W.P. No.
135218/2018
M/s Haier
Pakistan (Pvt) Ltd. Versus Federation of Pakistan
S.No.of order/Proceeding
|
Date of Order/Proceeding
|
Order with signature of
judge, and that of parties or counsel, where necessary.
|
19.01.2018 Mr. Lawyer's Name, Advocate for the petitioner.
1. The learned counsel for the petitioner
states that the tax being paid by the petitioner is a presumptive tax on the
production capacity in terms of entry 52 of the federal legislative list and is
in lieu of tax being paid under entry 47 of the 4th Schedule of the
Constitution of Pakistan under which the tax is required to be paid by the petitioner
in terms of section 48 of the Income Tax Ordinance, 2001. Therefore, according
to the learned counsel, petitioner is not liable to pay tax under Section 4B
which would amount to double taxation and is barred by the Constitution.
C.M.No.01/2018
3.Notice.
C.M.No.02/2018
4.Dispensation sought for is allowed subject to
all just and legal exceptions.______________________________________
4.Dispensation sought for is allowed subject to
all just and legal exceptions.______________________________________
(SHAHID KARIM)
JUDGE
In THE LAHORE HIGH
COURT, LAHORE.
W.P.No.___________ /2018
M/S HAlER PAKISTAN (PVT) LTD;4-B, Q-Block, Old College Road, M M Alam Road Extension, Gulberg-II, Lahore. Through its Company Secretary Mr. Javed Afridi.
Versus ..... ..PETITIONER
1. The Federation of Pakistan, through Secretary Finance, Revenue Division, Islamabad.
WRIT PETITION UNDER ARTICLE 199 OF THE CONSTITUTION OF ISLAMIC REPUBLIC OF PAKISTAN. 1973.
Respectfully
Sheweth:
1 . That the
addresses of the parties are correctly reflected in the titled writ petition and
the same are sufficient for affecting the service of the process of this
Hon’ble Court on the parties.2. That the
petitioner is a private limited company, incorporated under the Companies
Ordinance, 1984, engaged in the business of import, purchase and sales of
electronics goods. Mr. Javed Afridi is the Company Secretary who is fully conversant
with the facts of the case and dully authorized to file present petition. Board
resolution enclosed as ANNEX-A.3. That the
Petitioner is under legal obligation to submit and furnish its returns of total
income, in respect of each Tax Year, before the Tax Authorities appointed under
the Income Tax Ordinance, 2001 (hereinafter called the “Ordinance”), within the
stipulated time and manner provided under Section 114 of the Income Tax
Ordinance, 2001 (hereinafter called “Ordinance”). Therefore, in the stated background,
the Petitioner furnished its income tax return under section 114 (1) of the
Income Tax Ordinance, 2001 for the tax
year 2017before the concerned authorities in accordance with the statutory
stipulations. Return so filed in the manner specified, is treated to be
an assessment orders issued by the Commissioner of Income Tax as provided under
section 1 20 of the Ordinance.
Copy of return enclosed as ANNEX-B.
Copy of return enclosed as ANNEX-B.
4. That the petitioner in
its return has declared two types of income one covered under normal tax regime
(NTR) amounting to Rs.329,5 1 7,795/ and the other covered under presumptive
tax regime amounting to Rs329,517,795/-(Import and local Supplies subject to final tax) In terms
of the judgment of Hon’ble Supreme Court reported as 1997 PTD 1555 (M/s Elahi Cotton Mills Ltd Vs FOP etc) the tax
payable on income covered under normal tax regime is levied under entry 47 of
the Federal Legislative List of the Constitution which provides taxes on income
other than agricultural income and the presumptive tax is in fact akin to
capacity tax i.e. capacity to earn. Therefore, the presumptive tax is levied
under entry 52 of the Federal legislative List of the Constitution which
provides taxes and duties on production capacity of any plant, machinery,
undertaking, establishment or installation in
lieu of the taxes or duties specified in Entries 44 47, 48 and 49 or in
lieu of any one or more of them. The relevant part of the judgment is reproduced
hereunder:-
“However, we may point out that ¡n Entry 52, the key words used
are “in lieu of taxes and duties
specified in entries 44, 47, 48 and 49 or in lieu of any one or more of them”.
In order to understand, the real import of the above portion of Entry 52, we
will have to refer to the meaning of the words “in lieu of” In
this regard, reference may be made to Black’s Law Dictionary, Sixth Edition, Ballentine’s
Law Dictionary, Third Edition; and the Legal Thesaurus by Steven C. De Costa,
which read as follows: -
Black’s Law Dictionary, page 787:
“In lieu of” Instead of; in
place of; in substitution of. It does not mean “in addition to “.
Ballentine’s Law Dictionary, page 628:lieu
of”: In substitution for or in place of. Ordinary implying the existence of something
to be replaced.
Legal Thesaurus, page 266:“In
lieu of“: Proposition as a substitute for, as an alternative, by proxy, or, in
place of. On behalf of, rather than, representing.35. A perusal of the
above-quoted meanings of the above expression “in lieu of” indicates that the
same connote, instead of, in place of, in substitution of, but it does not
mean, in addition to.
If we were to construe Entry
52 of the Legislative list keeping in’ view the above meanings of the
expression “in lieu of”, it becomes evident that the Legislature has the option
instead of invoking Entry 47 for imposing taxes on income, it can impose the
same under Entry 52 on the basis of capacity to earn in lieu of Entry 47, but
it cannot adopt both the methods in respect of one particular tax. Since under
sections 80-C and 80-CC the imposition of presumptive tax is in substitution of
the normal method of levy and recovery of the income-tax, the same is in
consonance with Entry 52.” Hence, the tax paid by the petitioner on its imports and local Supplies is a final tax liability under the Ordinance, 2001 in terms of section 148(7) and 153(3) Income Tax Ordinance 2001, respectively read with section 169(1) of the Income Tax Ordinance, 2001.
5. That Section 48 was inserted by the Finance Act, 2015 in the Income Tax Ordinance, 2001 and seeks to impose a Super tax on income for rehabilitation of temporarily displaced persons. It reads as under:-
4B. Super tax for rehabilitation of temporarily displaced persons.—-(1)
Thus, a super tax has been imposed on income for the rehabilitation of temporarily displaced persons for the tax year 2015 (initially) which was by way of Finance Act, 2017 extended to tax year 2017 at the rates specified in Division II-A of Part-I of the First Schedule on income of every person specified in the said Division. Further for the purposes of the said section the expression “income” shall be the Sum of the income enumerated in clauses (i) to (iv) of sub-section (2) of section 4Bon the basis whereof the super tax is to be calculated. As per clause (iii) of sub-section (2) of section 4B, the sum of imputable income as defined in clause (28A) of section 2 has been added in total income while calculating the Supper tax which is contrary to the provisions of the Income Tax Ordinance, 2001, Entry 52 of the Federal Legislative List of the Constitution and the law laid down by the Hon’ble Supreme Court.
6. That in consequence of the said amendments, the respondent no.4 has issued the notice under section 4B of the Ordinance, 2001 whereby he has been calculating the total income for the purposes of supper tax as under:-
Taxable income declared in normal tax regime as per clause (ii). 329,517,795/-
Imputable income in relation to FTR Receipts as per clause (iii). 876,988,632/-
Total income. Rs. 1 ,206,506,427/-
Supper Tax@3%. Rs. 36,195,193/-.
If the imputable income is not added in the taxable income, the petitioner is not obliged to pay the supper tax as its normal taxable income is less than the income of Rs.500 million. Copy of impugned notice enclosed as ANNEX-C
7. That the impugned clause (iii) of sub-section (2) of section 4B is contrary to the provisions of Income Tax Ordinance, 2001 and Entry 52 of the Federal Legislative List and in consequence thereof the issuance of impugned notice is illegal, void ab-initio and without jurisdiction.
8. That the petitioner submits before this Honorable
Court that impugned clause (iii) of sub-section (2) of section 4Bis contrary to
the provisions of income Tax Ordinance, 2001 and Entry 52 of the Federal Legislative
Listinter alia on the following :-
GROUNDS
A. That in terms of the judgment of the Honorable Supreme Court in the case of M/s Elahi Cotton Mills Ltd Vs FOP etc reported as 1997 PTD 1555 it has been held that the tax payable on income covered under normal tax regime is levied under Entry 47 of the Federal Legislative List of Constitution which provides taxes on income other than agricultural income and the presumptive tax is in fact akin to capacity tax i.e. capacity to earn. Therefore the presumptive tax is levied under Entry 52 of the Federal legislative List of the Constitution which provides taxes and duties on production capacity of any plant, machinery, undertaking, establishment or installation in lieu of the taxes or duties specified in Entries44,47,48 and 49 or in lieu of any one or more of them. Hence, the tax paid by the petitioner on its imports and local supplies is a final tax liability under the Ordinance, 2001 in terms of section 148(7) and 153(3) of the Income Tax Ordinance, 2001 respectively read with section 169(1) of the Income Tax Ordinance, 2001. Hence, the Supper tax is levied on income under Entry 47 of the Federal Legislative List of the Constitution in addition to the income tax levied under normal tax regime only and it cannot be levied on those receipts which are subjected to tax under presumptive tax regime/Final Tax and comes within the ambit of Entry 52 of the Federal Legislative List.
B. That it has been settled by the Hon,ble Supreme Court that the presumptive tax is levied under Entry 52 of the Federal legislative List of the Constitution which provides taxes and duties on production capacity of any plant, machinery, undertaking, establishment or installation in lieu of the taxes or duties specified in Entries 44 47, 48 and 49 or in lieu of any one or more of them. Hence, the presumptive tax paid by the petitioner on its imports and local supplies is a final tax liability under the Ordinance, 2001 in terms of section 148(7) and 153(3) of the Income Tax Ordinance, 2001 respectively read with section 169(1) of the Income Tax Ordinance, 2001. Hence, Supper Tax under section 4B has been levied under Entry 47 of the Federal Legislative List of the Constitution cannot be levied in addition to the tax imposed under Entry 52 of the Federal Legislative List of the Constitution.
C. That the imposition of presumptive tax is in substitution of the normal methods of levy and comes within the ambit of Entry 52 of the Federal Legislative List of the Constitution. Further the provisions of section 169(2)(a) provides that the income covered under final tax regime (FTR) shall not be chargeable to tax under any other head of income in computing the taxable income of the person. Hence, the impugned clause (iii) of sub-section (2) of section 4Bis contrary to the aforesaid provisions.
D. That without prejudice to above and in addition thereto, the levy of super tax on a persons who have been filing their income tax returns under final tax regime is illegal and void ab-initio.
E. That the petitioner challenges the violation of its fundamental rights under the Constitution of 1973. The issue raised herein relates to the interpretation of constitutional and statutory provisions. The Petitioner has no other alternate adequate and efficacious remedy and therefore, the constitutional jurisdiction of this Honorable Court has been invoked.
F. The petitioner reserves the right to urge further grounds at the time of learning of this petition.
PRAYER
In view of the facts and circumstances narrated above, it is, therefore most graciously prayed that this Honorable Court be pleased to declare that;
i. The impugned clause (iii) of sub-section (2) of section 4B which is contrary to the provisions of Income Tax Ordinance, 2001 and Entry 52 of the Federal Legislative List is illegal, unlawful, ab-initio void and ultra vires the constitution of the Islamic Republic of Pakistan, 1973; the same may kindly be read down against the petitioner on the receipts which are liable to tax under presumptive tax regime.
ii. The impugned notice dated 05-01-2018 issued by the Respondent No.4 is illegal, void ab-initio and without jurisdiction.
iii. Prohibit and restrain the Respondents from demanding or recovering any tax from the Petitioner under section 4B of the Ordinance and / or from taking any action or initiating or Continuing any proceedings against the Petitioner, and / or from interfering in the business operations of the Petitioner in any whatsoever.
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