Ms Bata Pakistan Limited through Amjad Farooq Vs Appellate Tribunal Inland Revenue etc.

Stereo. H C J D A 38.

Judgment Sheet

IN THE LAHORE HIGH COURT LAHORE

JUDICIAL DEPARTMENT

Case No: STR No. 5818/2021.

M/s Bata Pakistan Versus Appellate Tribunal Inland Limited Revenue, etc.

JUDGMENT

Date of hearing 07.10.2026 Applicant by Mr. Waseem Ahmad Malik, Advocate Respondents by: Mr. Shahzad Ahmad Cheema, Advocate Muhammad Ajmal Zahid, J:- Through this Reference Application filed under Section 47 of the Sales Tax Act, 1990 (“the Act”), the applicant-taxpayer has called in question the order dated 26.10.2020 passed by the learned Appellate Tribunal Inland Revenue, Lahore (“the learned Tribunal”) in S.T.A. No.534/LB/2020.

2.Briefly stated, the facts giving rise to the instant Reference Application are that, upon scrutiny of the sales tax returns furnished by the applicant-taxpayer for the tax periods from January 2019 to August 2019, the tax authorities observed that the applicant had charged sales tax at the rate of 14% instead of 17%, allegedly without fulfilling the condition of minimum value addition of 4% prescribed at Serial No.66 of Table-I of the Eighth Schedule to the Act. According to the Adjudicating Officer, the applicant had thereby short-paid output tax to the extent of 3%. Consequently, proceedings were initiated through issuance of a Show Cause Notice. The explanation furnished by the applicant was not found satisfactory and the proceedings culminated in Order-in-Original dated 10.03.2020, whereby sales tax amounting

to Rs.45,757,822/- was demanded, along with default surcharge under Section 34 and penalty of Rs.2,287,891/- under Section 33 of the Act.

3.Aggrieved, the applicant preferred an appeal before the learned Commissioner Inland Revenue (Appeals-I), Lahore, which was dismissed vide order dated 02.06.2020. The applicant thereafter approached the learned Tribunal. Instead of affirming the orders of the authorities below, the learned Tribunal set aside both orders and remanded the matter to the Adjudicating Officer for fresh adjudication. The operative portion of the impugned order reads as follows:

“5. In the light of aforesaid judgment, the ONO passed in the instant case being a non-speaking one is not sustainable under the Law. However, in appeal, the learned CIR(Appeals) remanded the case to the adjudicating officer with certain direction, which in our considered opinion is the requirement of justice to arrive at a fair conclusion. Since, as per prevailing law, the learned CIR(Appeals) is not vested with the power of remand, therefore, we set-aside the orders passed by both the authorities below and remand the case to the adjudicating officer with the direction to provide adequate opportunity to the registered person for production of requisite record and reconciliations alongwith supporting documents including consumption reports. The registered person is also directed to make sure his presence with complete documentary evidence. We order accordingly.”

4.The Reference Application was admitted for hearing by this Court vide order dated 28.01.2021, inter alia, on the following question of law:

“i) Whether the learned Appellate Tribunal has fallen into error of law by not appreciating the dictum laid down by the Honourable Supreme Court of Pakistan in the case of M/s Abbasi Enterprises Unilever Distributor Haripur Vs Collector of Sales Tax and Federal Excise Peshawar reported as

2019 SCMR 1989?”

5.Learned counsel for the applicant-taxpayer submits that the learned Tribunal failed to appreciate and apply the law laid down by the Honourable Supreme Court of Pakistan in Abbasi Enterprises Unilever Distributor, Haripur v. Collector of Sales Tax and Federal Excise, Peshawar and others (2019 SCMR 1989). According to learned counsel, once the learned Tribunal had found the Order-in-Original to be non-speaking, it ought to have decided the legal controversy in accordance with the applicable law instead of remitting the matter for a fresh factual exercise. It is further contended that the impugned order leaves the applicant exposed to the original tax demand, default surcharge and penalty and, therefore, the question of law framed by this Court requires determination.

6.Conversely, learned counsel for the respondent-department supports the impugned order. He submits that the learned Tribunal has not finally adjudicated upon the applicant's tax liability but has merely set aside the orders of the authorities below and remanded the matter to the Adjudicating Officer for examination of the relevant record, reconciliations and supporting documents, after affording adequate opportunity of hearing to the applicant. It is, therefore, contended that no final question of law arises from the impugned order and that the instant Reference Application is premature and not maintainable.

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

8.The principal question requiring determination is whether a Reference Application under Section 47 of the Act is maintainable against an order of the learned Tribunal which sets aside the orders of the authorities below and remands the matter to the Adjudicating Officer for fresh examination and adjudication, without finally determining the substantive tax liability of the taxpayer.

9.Section 47 of the Act confers a specific and limited reference jurisdiction upon this Court. It is not an appellate jurisdiction in disguise whereby this Court may examine every factual or legal aspect arising from an order of the learned Tribunal. The statutory jurisdiction is attracted where a question of law arises out of the order of the Appellate Tribunal and calls for determination by the High Court. The expression “arises out of such order” is of particular significance. The question proposed for determination must emanate from the order under reference and must be one which has actually arisen for consideration and determination before the Tribunal.

10.A distinction must, therefore, be maintained between a final order determining the rights and liabilities of the parties and an order which merely remands the matter for fresh consideration. Where the Tribunal finally determines a question of law arising from the proceedings, such question may, subject to the requirements of Section 47, be brought before this Court. On the other hand, where the Tribunal does not finally determine the controversy but remits the matter for fresh adjudication, a question which depends upon the outcome of such fresh proceedings ordinarily cannot be said, at that stage, to arise for determination by this Court.

11.The reason is evident. Reference jurisdiction is exercised in respect of a question of law arising from the order actually made by the Tribunal; it is not exercised in anticipation of a possible future order. The High Court is not called upon, in reference jurisdiction, to render an advisory opinion on questions which may or may not ultimately arise after the completion of proceedings pursuant to a remand.

12.In the present case, a plain reading of the impugned order leaves no manner of doubt that the learned Tribunal did not finally determine the applicant's liability to sales tax. It did not affirm the

original demand nor did it hold, as a final determination, that the applicant was liable to discharge sales tax at the rate of 17%. Likewise, no final determination was made regarding the applicant's liability towards default surcharge or penalty.

13.Rather, the learned Tribunal found the Order-in-Original to be non-speaking and, consequently, set aside the orders passed by both the authorities below. It then remanded the matter to the Adjudicating Officer with a direction to afford the registered person adequate opportunity to produce the requisite record, reconciliations and supporting documents, including consumption reports. The Tribunal also directed the applicant to appear with complete documentary evidence.

14.The effect of the impugned order, therefore, is not the determination of the applicant's substantive tax liability but reopening of the adjudicatory process for a fresh decision on the basis of the material to be produced by the parties. The original orders of assessment having been set aside, the earlier demand cannot be treated as the subsisting and final determination of the applicant's liability for purposes of the present Reference.

15.The foregoing conclusion also finds support from the approach adopted by the Hon’ble Supreme Court of Pakistan in Mansoor Khan v. Inland Revenue Officer (IR), Hasilpur, Civil Petition No.1306-L of 2023, decided on 29.08.2025. In that case, the petitioner had challenged a remand order passed by the learned Appellate Tribunal Inland Revenue, which had annulled the orders of the authorities below upon finding them to be illegal, unlawful, coram non judice and otherwise contrary to the prescribed procedure, and had then remanded the matter to the assessing officer for de novo consideration. The judgment of the learned High Court affirming the said remand order was assailed before the Hon’ble Supreme Court. The Hon’ble Supreme Court, however,

declined to interfere and dismissed the petition for leave to appeal in the following terms:

“Through this petition, the petitioner has challenged a remand order passed by the Appellate Tribunal Inland Revenue and affirmed by the High Court through the impugned judgment.

2.We are afraid it would not be appropriate for this Court to disturb the findings already rendered. Accordingly, this petition is dismissed and leave to appeal is refused.”

It is significant that the remand in the aforesaid case followed the Tribunal’s finding that the order under challenge was illegal, unlawful and coram non judice. The Hon’ble Supreme Court, while declining to interfere with the judgment affirming such remand, did not find any ground warranting intervention in the fresh adjudicatory exercise directed by the Tribunal. Although the order of the Hon’ble Supreme Court is brief, it nevertheless lends support to the principle that, where an order is found to suffer from a fundamental illegality or jurisdictional defect and the matter is consequently remanded for lawful de novo consideration, such remand is not ordinarily liable to be interfered with merely because it requires the parties to undergo a fresh adjudicatory exercise.

16.The above principle finds support from the consistent judicial approach reflected in Commissioner Inland Revenue v. Messrs RIY Metals Recycling (Pvt.) Ltd. and others (2026 PTD 86), Haji Muhammad Yousaf v. Commissioner of Income Tax and Wealth Tax Companies Zone, Faisalabad (2006 PTD 72), M/s E.M. Oil Mills and Industries Ltd. v. Commissioner of Income Tax (2001 PTD 2708), Islamabad and 3 others v. Income Tax Officer and others (2000 PTD 306), Dr. Abdul Rauf Hamid v. Commissioner of Income Tax, Faisalabad (65 Tax 207), M/s Bostan International v. Commissioner of Income Tax and Wealth Tax, Sialkot Zone v. Commissioner of Income Tax, Zone C,

Karachi (2010 PTD 1275), Commissioner of Income Tax and Wealth Tax, Sialkot Zone v. Messrs Maqsood Ahmad Gill (2007 PTD 1757) and Commissioner of Income Tax v. Bihar Alloy Steels Ltd. (1995 PTD 1189).

17.Learned counsel for the applicant has placed considerable reliance upon the judgment of the Hon’ble Supreme Court in Abbasi Enterprises Unilever Distributor, Haripur v. Collector of Sales Tax and Federal Excise, Peshawar and others (2019 SCMR 1989). There can be no dispute that the law declared by the Hon’ble Supreme Court is binding upon this Court. The question, however, is not whether the principle laid down in Abbasi Enterprises is binding; rather, it is whether the said principle gives rise, in the peculiar circumstances of the present case, to a question of law arising out of the impugned order within the contemplation of Section 47 of the Act.

18.The answer must be in the negative. The impugned order does not finally decide the substantive controversy to which the principle in Abbasi Enterprises is sought to be applied. The learned Tribunal has neither affirmed the assessment nor finally determined the rate of tax applicable to the applicant. Instead, it has set aside the orders of the authorities below and directed fresh adjudication after examination of the relevant record and supporting evidence.

19.The proposed question itself demonstrates the difficulty. It asks whether the learned Tribunal committed an error of law by failing to appreciate the dictum in Abbasi Enterprises. However, no final determination has been made by the Tribunal on the substantive controversy upon which that dictum is said to operate. The question, therefore, effectively seeks a pronouncement from this Court concerning the manner in which the matter should ultimately be decided after remand. Such an exercise falls outside the limited scope of Section 47.

20.It is also material that the learned Tribunal has not recorded any finding which finally forecloses the applicant from establishing its case. On the contrary, the Tribunal has expressly directed that adequate opportunity be afforded to the registered person to produce the relevant record, reconciliations and supporting documents, including consumption reports. The impugned order consequently preserves the parties' rights for determination by the competent authority rather than finally adjudicating them.

21.The mere fact that a tax demand had originally been created cannot alter the character of the impugned order. Once the learned Tribunal set aside the orders of the authorities below and remanded the matter for fresh adjudication, the original assessment ceased to constitute the final determination of the applicant's liability. The question whether any liability is ultimately payable, and if so, to what extent, remains open for determination in accordance with law.

22.The Adjudicating Officer, pursuant to the remand, is required to undertake the adjudicatory exercise afresh. The applicant-taxpayer shall have an opportunity to place the relevant record and evidence before the authority and to substantiate its claim regarding the applicable rate of tax. Correspondingly, the department shall be required to establish its case in accordance with law. At this stage, any definitive pronouncement by this Court upon the underlying controversy would not only be premature but could also pre-empt the jurisdiction vested in the Adjudicating Officer.

23.We may clarify that dismissal of the present Reference Application on the ground of maintainability does not amount to an affirmation of the original tax demand, nor does it constitute an adjudication against the applicant on the merits of the controversy. The consequence of the present judgment is confined to holding

that the impugned remand order does not, in the circumstances of the case, give rise to a question of law requiring determination by this Court at this stage.

24.Needless to observe, if upon completion of the proceedings pursuant to the remand a fresh order is passed and the matter thereafter travels through the statutory appellate hierarchy, the parties shall remain at liberty to avail themselves of all remedies available to them under the law. Any question of law which may validly arise from a final order of the learned Tribunal may then be considered in accordance with Section 47 of the Act. Nothing contained in this judgment shall prejudice such right.

25.For the foregoing reasons, we are of the considered view that the impugned order is essentially a remand order whereby the learned Tribunal, having found the Order-in-Original to be non- speaking, set aside the orders of the authorities below and directed fresh adjudication after affording adequate opportunity to the applicant-taxpayer to produce the relevant record and supporting evidence. The learned Tribunal has not finally determined the substantive tax liability of the applicant, nor has it adjudicated any question of law in a manner which presently calls for determination by this Court under Section 47 of the Act.

26.Consequently, the question of law framed by this Court vide order dated 28.01.2021 does not arise for determination at this stage. The instant Reference Application is, therefore, dismissed as not maintainable.

27.It is, however, clarified that nothing contained in this judgment shall prejudice the rights or contentions of either party before the Adjudicating Officer. The Adjudicating Officer shall proceed with the matter afresh and independently in accordance with law, afford the applicant-taxpayer a reasonable opportunity to produce the relevant record and supporting evidence, and duly consider the material produced by both sides. The matter shall be

decided on its own merits and strictly in accordance with law, without being influenced by any observation contained in this judgment or by the dismissal of the present Reference Application.

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

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

APPROVED FOR REPORTING

Judge Judge

M. Tahir*