CIR Mr Muhammad Anwar Vs Ms Gujrawala Food Industries

Stereo. H C J D A 38.

Judgment Sheet

IN THE LAHORE HIGH COURT LAHORE

JUDICIAL DEPARTMENT

Case No: STR No.183547/2018

Commissioner Inland Versus M/s Gujranwala Food Revenue Industries (Pvt.) Ltd.

JUDGMENT

Date of hearing 21.09.2026 Petitioner by Rana Muhammad Mehtab, Advocate Respondents by: Mr. Muhammad Kamran, Advocate Muhammad Ajmal Zahid, J.— Through this Reference Application under Section 47 of the Sales Tax Act, 1990 (“the Act”), the applicant-department has called in question the order dated 11.10.2017 passed by the learned Appellate Tribunal Inland Revenue, Lahore Bench, Lahore (“the learned Tribunal”) in S.T.A. No.676/LB/2012.

2.Vide order dated 21.03.2018, this Court admitted the Reference Application on the following question of law:— “Whether under the facts and circumstances of the case, the learned ATIR was justified to uphold the Order-in-Appeal passed by the CIR(A) by holding that the first appellate authority has rightly accepted the appeal of the registered person after considering the relevant documentary evidence produced before him regarding objections raised by the department, whereas the registered person claimed/adjusted inadmissible input tax on the basis of invoices which were not issued by their supplier; hence the registered person contravened the provisions of Sections 3, 6, 7, 8(ca), 23 and 26 of the Sales Tax Act, 1990 against which no documentary evidence was provided before the assessing officer during the adjudicating proceedings?”

3.Learned counsel for the applicant-department submits that the learned Tribunal failed to properly adjudicate the grounds raised by the department and did not record independent and adequate findings on the controversy. According to him, the registered person had claimed and adjusted inadmissible input tax on the basis of invoices which, as alleged by the department, had not been issued by the concerned suppliers. It is contended that the learned Tribunal, while affirming the order of the learned Commissioner Inland Revenue (Appeals) (“the learned Commissioner (Appeals)”), failed to properly examine the alleged contravention of the relevant provisions of the Act. Learned counsel further submits that the impugned order of the learned Tribunal is non-speaking and does not adequately address the objections raised by the department.

4.Conversely, learned counsel for the respondent supports the impugned order and submits that the input tax was claimed on the basis of genuine sales tax invoices issued by the suppliers and that the corresponding payments were made through banking channels. He submits that the learned Commissioner (Appeals), after examining the documentary evidence available on record, recorded a categorical finding in favour of the respondent, which was thereafter affirmed by the learned Tribunal. According to learned counsel, the controversy essentially involves findings of fact and no question of law requiring interference by this Court arises.

5.We have heard learned counsel for the parties and examined the available record with their assistance.

6.The controversy, in substance, concerns the admissibility of input tax claimed by the respondent and, in particular, whether the learned Tribunal was justified in maintaining the order of the learned Commissioner (Appeals), whereby the appeal of the

registered person was accepted after examination of the documentary material produced in support of the input tax claim.

7.The proceedings originated from the order dated 13.02.2012 passed by the Assistant Commissioner Inland Revenue, Audit Unit, Gujranwala. The adjudicating officer took the view that the respondent had failed to furnish sufficient substantiating evidence regarding the supplies allegedly made by the suppliers. The relevant portion of the order reads as under:— “5. I have examined the case record and come to conclusion that respondents have failed to provide any substantiating evidence with regard to supplies made to them by the above mentioned suppliers. The respondent have provided Sales Tax Invoice alongwith annexure-c of the Sales Tax returns of said suppliers which is showing that all sales were made to un-registered persons in the relevant months except one invoice of M/s Gas Master Filling Station amounting to Rs.129,752/- has declared in the sales tax return of 04-2011. As they are beneficiary of rest of the wrongly claimed input tax adjustment on the basis of invoices that have not been issued by their supplier, Therefore, the charge levelled in the show cause notice is established. I therefore, order to M/s Gujranwala Food Industries (Pvt) Ltd, Gujranwala to deposit the remaining amount of Rs.1,364,247/- as sales tax alongwith default surcharge (to be calculated at the time of deposit) under section 34(1)(c) and penalty of Rs.1,364,247/- under 33(13) of the Sales Tax Act, 1990.”

8.The respondent challenged the aforesaid order before the learned Commissioner (Appeals). Upon examination of the material available on record, the learned Commissioner (Appeals), vide order dated 26.04.2012, accepted the appeal and observed, inter alia, as follows:—

“In view of above said position of the case it is observed that the appellant claimed input tax of Rs.11,19,909/- instead of Rs.14,93,999/- as detailed above on the basis of valid sales tax invoices issued by the above said suppliers and the appellant also made payments to the suppliers through banking channel. I find that the input tax claimed of

Rs.11,19,909/- by the appellant is lawful and based on the facts and also supported with the substantiating documentary evidences. Thus appeal filed by the appellant carries weight which is accepted and the impugned order is vacated.”

9.The applicant-department carried the matter before the learned Tribunal. The learned Tribunal, after considering the challenge raised by the department, dismissed the appeal and maintained the order of the learned Commissioner (Appeals). Thus, the learned Tribunal concurred with the conclusion that the first appellate authority had rightly accepted the appeal after considering the documentary evidence produced by the registered person in response to the objections raised by the department.

10.From the foregoing, it is evident that the learned Commissioner (Appeals) did not accept the respondent’s appeal merely on the basis of a bare assertion. Rather, the learned Commissioner (Appeals) took into consideration the sales tax invoices produced by the respondent as well as the evidence regarding payments made to the suppliers through banking channels and, upon examination thereof, recorded a categorical finding that the input tax claimed by the respondent was lawful and supported by documentary evidence. The said factual finding was subsequently affirmed by the learned Tribunal.

11.The principal objection raised by learned counsel for the applicant-department is that the order of the learned Tribunal is brief and does not independently deal with each contention advanced by the department. We have carefully examined the impugned order in the context of the question referred to this Court. Although the order of the learned Tribunal could have been more elaborate in its reasoning, the brevity of an order, by itself, does not necessarily render the decision legally unsustainable, particularly where the material findings of fact recorded by the first appellate authority have been considered and affirmed by the Tribunal.

12.The jurisdiction of this Court under Section 47 of the Act is confined to determination of a question of law arising out of the order of the learned Tribunal. Such reference jurisdiction does not ordinarily extend to reappraisal of evidence or substitution of the Court’s own assessment of factual matters for concurrent findings recorded by the competent appellate forums. Interference may, however, be warranted where such findings are shown to have resulted from misreading or non-reading of material evidence, are perverse, or are otherwise legally unsustainable.

13.In the present case, no such infirmity has been demonstrated. The learned Commissioner (Appeals) considered the documentary evidence relied upon by the respondent and recorded a specific finding regarding the validity of the sales tax invoices and the payments made through banking channels. The learned Tribunal affirmed that finding. The applicant-department has not been able to identify any material piece of evidence which was ignored, misread or misconstrued by the forums below so as to render their concurrent findings perverse or legally unsustainable.

14.Learned counsel for the applicant-department has essentially invited this Court to examine whether the evidence relied upon by the respondent was sufficient to establish the genuineness and admissibility of the input tax. Such an exercise would necessarily involve appreciation and reappraisal of evidence, which falls outside the ordinary scope of the jurisdiction vested in this Court under Section 47 of the Act. The Reference jurisdiction is not intended to convert this Court into a further fact- finding forum. Reliance in this regard may appropriately be placed upon Pakistan Match Industries (Pvt.) Ltd. v. Assistant Collector, Sales Tax and Central Excise, Mardan (2019 SCMR 906), Army Welfare Trust (Nizampur Cement Project), Rawalpindi and another v. Collector of Sales Tax (now Commissioner Inland Revenue), Peshawar (2017 SCMR 9), and Messrs F.M.Y.

Industries Ltd. v. Deputy Commissioner Income Tax and another (2014 SCMR 907), wherein the limits of reference jurisdiction and the circumstances warranting interference with findings of fact have been recognized.

15.There is another aspect of the matter which is material. Even if the question referred to this Court were to be examined from the perspective urged by the applicant-department, namely, whether the learned Tribunal ought to have recorded more elaborate reasons, answering that question in favour of the applicant would not, in the peculiar facts of the present case, result in any effective relief. The substantive finding regarding the documentary evidence supporting the respondent’s claim of input tax was recorded by the learned Commissioner (Appeals) and expressly affirmed by the learned Tribunal. That finding has not been successfully assailed on the ground of misreading or non- reading of material evidence.

16.It is a settled principle that a Court does not ordinarily determine an academic question where, even if answered in favour of the party raising it, such determination would not alter the ultimate outcome of the proceedings or confer any effective relief upon that party. The principle has been recognized in tax reference jurisprudence in, inter-alia, Commissioner of Income Tax, Companies No.1, Karachi v. M/s Hassan Associates (Pvt.) Ltd., Karachi (1994 SCMR 1321), Commissioner of Income Tax, Rawalpindi v. Messrs Rural Food Products, Rawalpindi (2001 PTD 2306), Commissioner of Income Tax, Companies, Lahore v. Crescent Art Fabric Limited, Lahore (2001 PTD 2553), Commissioner of Inland Revenue, Lahore v. Messrs Sargodha Spinning Mills (Pvt.) Ltd., Faisalabad and others (2022 SCMR 1082), Commissioner Inland Revenue, District Zone, Regional Tax Office, Rawalpindi v. Sh. Ikram Ellahi and 2 others (2025 PTD 137) and Director (ASO), Customs Intelligence and Investigation v. Awais Khalid (2024) 130 Tax 457 (H.C. Lah.).

17.The same principle assumes greater significance where the factual findings of the competent appellate forums have not been shown to suffer from any jurisdictional defect, perversity, misreading or non-reading of material evidence. The finality attached to such findings cannot be disturbed merely because another view of the evidence may be possible. In this context, reference may also be made to Commissioner Inland Revenue v. Messrs Pak Arab Pipe Line Company Ltd. (2014 PTD 982), Messrs Azad Kashmir Logging and Saw Mills Corporation (AKLASC), Muzaffarabad v. Commissioner Income Tax, Inland Revenue, Muzaffarabad (2017 PTD 1058), and The Commissioner of Income Tax v. Messrs Fauji Foundation (2021 PTD 1951).

18.In view of the foregoing discussion, we are of the considered view that the question referred to this Court, although framed as a question of law, does not warrant determination in the manner sought by the applicant-department. The alleged inadequacy in the reasoning of the learned Tribunal, even if assumed for the sake of argument, would not displace the concurrent factual findings recorded by the learned Commissioner (Appeals) and affirmed by the learned Tribunal, nor would it result in any effective relief to the applicant-department.

19.Consequently, the referred question, in the peculiar facts and circumstances of the case, has become academic. We, therefore, decline to answer the question and dispose of the instant Reference Application against the applicant-department. The concurrent findings recorded by the learned Commissioner (Appeals) and affirmed by the learned Tribunal having not been shown to suffer from misreading or non-reading of material evidence, perversity, jurisdictional defect or any other legal infirmity warranting interference, the impugned order is maintained.

20.Office is directed to transmit a copy of this judgment under the seal of the Court to the learned Appellate Tribunal Inland Revenue in terms of Section 47(5) of the Sales Tax Act, 1990.

(Hassan Nawaz Makhdoom) (Muhammad Ajmal Zahid) Judge Judge

APPROVED FOR REPORING

Judge Judge M. Tahir*