Citation(s): 2015 SLD 1275 = (2015) 112 TAX 332 = 2016 PTD 589

Lahore High Court

W.P. No.7397 of 2012, decision dated: 26-8-2015.

AUTHOR(S): MUHAMMAD SAJID MEHMOOD SETHI, J.

SHV ENERGY PAKISTAN (PVT.) LTD.

Muhammad Ajmal Khan, Advocate, for the petitioner in W.P. Nos.7397/2012 and
9426/2012. Abid Minhas, Advocate, for the petitioner in W.P. Nos. 23428/2011
and 25362/2011. Shahab-ud-Din, Advocate, for the petitioner in W.P. No.
7986/2012.
Wali Muhammad Khan, A.A.G. and Mian Muhammad Abid, Law Officer, E&T Deptt.
Nemo, for the Respondent.
Law: Punjab Professions & Trades Tax Rules, 1977
Section: 4,4(3),4(4)
Law: Punjab Professions & Trades Tax Rules, 1977
Section: 4,4(3),4(4)
Law: General Clauses Act, 1897
Section: 24A

(A) Punjab Professions & Trades Tax Rules, 1977 - Rule: 4, 4(3) & 4(4) - General Clauses
Act, 1897, Section, 24A Constitution of Pakistan, 1973, Articles 4, 7 & 5 - Constitutional
petitions - Companies required to furnish relevant documentary evidence and pay
professional tax - Creation of demand through demand notices by Excise & Taxation Officer
(Professional Tax)/Respondent No. 3 - Petitioners condemned unheard - Validity - Whether
under Rule: 4(4) of Punjab professional and Trades Tax Rules, 1977, respondent authority is
under legal obligation to provide opportunity of being heard to assessee - Held yes -
Whether since no appealable order has been passed within contemplation of Rule 4 of Rules
ibid, appeal cannot be filed against impugned notices - Held yes - Whether suffice it to say
that even said notices cannot be treated as orders within contemplation of provisions of
section 24A of General clauses Act, 1897 read with Arts. 4 & 5 of Constitution of Pakistan
for reason that order required to be passed under Rule 4 of Rules, 1977 must contain
reasons and it should be objective and not merely subjective in nature - Held yes - Whether
is every case in which or revision lies, authority passing order is required to record findings
and discuss material available on record or is there any misreading or non-reading of
evidence, or any material fact available on record has been ignored causing miscarriage of
justice - Held yes - Whether before issuing impugned demand notices, mandatory,
provisions of Rule 4 have not been complied with by respondents, demand notices are
declared illegal and without lawful authority and matter is referred back to Respondent No.
3 with direction to decide the same through speaking order and fulfilling all legal
requirements - Held Yes.

(B) Administration of justice - Act to be done in particular manner - Concept of - Whether it

Cases referred to:

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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); Masai Khan and another v. The
State (2010 SCMR 1399); Gulistan Textile Mills Ltd. v. Collector (Appeals) Customs Sales
Tax And Federal Excise, Karachi and another (PTD 2010 Karachi 251); Section Officer,
Government of Punjab, Finance Department and others v. Ghulam Shabbir (2010 SCMR
1425); 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) 96 Tax 9 (S.C. Pak.); Muhammad Anwar and others
v. Mst. Ilyas Begum and others (PLD 2013 SC 255); 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); Waqar Alam Saeed v. District
Coordination Officer/Chariman and 3 others (2005 YLR 1742); 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).

JUDGMENT

[The Judgment of the Court was delivered by 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 "M/s. Shafi Chemical v. Province of the Punjab etc. "

2. W.P. No. 23428/2011 titled "M/s 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 & Taxation
Department etc. "

2. Brief facts relevant for decision of these writ petitions are that petitioners-companies
were served with notices issued by Excise & 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 & 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 Commissioner and others (2007 SCMR 707), Masai 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 TaxAVealth Tax, Faisalabad and
others v. Messers Punjab Beverages Company (Pvt.) Ltd. (2007) 96 Tax 9 (S.C. Pak.)=
(2007 PTD 1347) and judgments of this Court in W.P. No.5692/2009 dated 3-6-2009 and
W.P. No. 17004/2010 dated 30-6-2011.

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 question 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

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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-rules (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 Messers 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 nonreading 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.

Order accordingly