M/s Haq Bahu Sugar Mills Pvt. Ltd. VS FOP & others

JUDGEMENT SHEET.

IN THE ISLAMABAD HIGH COURT. ISLAMABAD.

JUDICIAL DEPARTMENT.

W. P. No.3 678/20L5

M/s Haq Bahu Sugar Mills Private Limited Vs Federation of Pakistan etc

Petitioner by: Mr.Munawar us Salam, Advocate.

Respondents: Mr.Saeed Ahmed Zaidi, Advocate.

Date of hearing: 11.1.2016

AAMER F o- l-- Through the instant petition, the Petitioner has assailed order dated g.10.2015, passed by respondent No.2 whereby the case of the petitioner was transferred from Large Taxpayer Unit (LTU) to Regional Tax Office.

2.The facts, in brief, are that the petitioner is an assessee and is subjected to repeated audits and investigations by officials/office of respondent No.2. An enquiry was initiated against the petitioner under the provisions of sales Tax Act, 1990 by Regional rax office on the ground that an ex-employee of the petitioner filed a complaint before the Honourable supreme court of pakistan and report was sought from respondent No.2, in this behalf. The initiation of enquiry was chalrenged by the petitioner by filing a constitutional petition before the Lahore High court (w.P.No.19658/20t3) and upon its dismissar an ICA was filed (IcA No.L20212015). Respondent No.2 vide office order dated 1.10.2015 transferred cases from various Regionat Tax

offices to LTU in the respective areas. The referred office order was issued under section 209(1) of the Income Tax ordinance, 2001, section 30 & 31 of sates Tax Act, 1990 and section 29 of the Federal Excise Tax, 2009. The petitioner,s name in the referred office order appears at sr.No.3B and its case/enquiry was transferred from Regional Tax office Lahore to LTU, Lahore. Subsequent to the transfer the petitioner was fntimated about the change vide tetter dated 3o.1o.zols, 10.11.2015 and Lz.Lt 2015. The Deputy commissioner Enforcement requested the Deputy commissioner Zone-II Regional Tax office Lahore for transfer of the record of the Petltioner's case. Through the impugned letter / order dated 8.10.2015 the enquiry/case of the petitioner was re- transferred to Regional Tax Office and in this behalf vide letter dated 11.11.201s, the petitioner was required to appear before the relevant officer.

3.The rearned counser for the petitioner,interaria, submitted that the re-transfer order has been passed u/s zo9 of the Income Tax ordinance, zooL, sections 30 and 31 of the Sales Tax Act, 1990 and Section 29 of Federal Excise Act, 2005, however, the referred provisions pertain to classes of persons and not to individual, therefore, the impugned re- transfer order is without jurisdiction. It was further contended that re-transfer order has been passed without issuing any notice and granting any opportunity of hearing to the Petitioner. In this behalf reliance has been placed on cases titled Qazi Abdur Jalil Vs N.w.F.p. Forest Deveropment corporation etc (2010 scMR 1933), Liaqat Ali chugtai Vs

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F.o.P etc.(pLD 2oL3 Lahore 4L3), M/s Dewan'sarman Fiber etc Vs Govt. of NWFp etc (pLD 2oo4 sc 441) and Mrs.Anisa Rehman Vs, f.Ir,A.c etc (tgg4 scMR zz3z).t Learned counsel fufther submitted that the impugned order has been passed in violation of section 24-A of the Generar crauses Act, 1gg7 as the same is devoid of grounds/reasons. Reriance was placed on case tiiled Government of pakistan vs Farheen Rashid (20L1 scMR I), Muhammad Din etc Vs Jamat Din etc (2007 scMR 1091). It was contended next that the re- transfer order is in vioration of Articre 1o-A of the constitution as the same is contrary to the setged doctrine exercise of discretion in a structured manner. Reriance was praced on case titred chairman, Regionar Transport Authority Vs Pakistan Mutuar Insurance company Limited (pLD 1991 sc

14)and the recommendations made by Federar Tax ombudsman viz-a-viz exercise of discretion by respondent No.2.

4' The rearned counset for respondents, interaria, submitted that the instant petition is not maintainabre inasmuch as the Directors of the petitioner are fugitive from law. It was further contended that enquiry proceedings and subsequent show cause notice in pursuance thereof were initiated on the direction of Honourabte supreme court of Pakistan. It was further contended that the Intra court Appear No.L202/2015 fired by the petitioner was disposed of as having not pressed. Learned counser further submitted that the exercise of power by the respondent No.2 was u/s 20g Income Tax ordinance, zool, sections 30 & 31 of sares Tax

j Act, 1990' and Federal Excise Act, 20051 and under the j t,) referred Provisions respondent No.2 has ample sr power to : r

transfer or re-transfer the cases. i t' " r

5.The petitioner in the instant petition, is aggrieved of order dated 8.10.2015 whereby show cause proceedings against it have been re-transferred to Regional Tax office from LTU, Lahore. previously on 1.10.2015 respondent No.2 by an office order under the relevant provisions of law had transferred a number of matters / cases pending before Regional Tax office all over pakistan to LTU established in the respective areas. In this behalf the learned counsel for Petitioner has placed on record the policy which guides the determination of cases to be adjudicated / determined by Large Taxpayers Unit. In this behalf the LTU handles all domestic taxes (Income Tax, sales Tax and Federal Excise Duty) which qualify the criteria laid down for summon of cases in LTU and those which betong to various sectors including sugar. Respondent No.2 through the office order dated 1.10.2015 included the proceedings against the petitioner and transferred the same from Regional taxpayer unit Lahore to LTU, Lahore, however, while re-transferring the cases of the petitioner to Regional Tax office Lahore it was only the petitioner whose cases has been re-transferred without assigning any reason. The impugned order does not provide any reason for re-transfer and this is in violation of section 24-A General clauses Act, 1gg7. rn this behalf case law cited by learned counsel for petitioner is lnstructive. In case titled Government of pakistan vs Farheen Rashid (2011

scMR 01) the Honourabte supreme court of pakistan hetd that public functionaries are bound to decide the matterb before them after apprication of mind with cogent reasons within reasonabre time. simirarry, in case tifled Muhammad Din vs Jamal Din (2007 scMR 1Og1) it was observed that the courts have to decide cases after judicial application of mind with reasons. Generaily the office orders do not require the opportunity of hearing to be granted to the persons concerned, however, in the instant case after the transfer of jurisdiction by respondent No.2 the case of the petitioner was being proceeded by LTU as is crear from the various retters appended with the petition, therefore, propriety demanded that before the passing of impugned order the opportunity of hearing should have been granted to the petitioner as its cases was the onry one being re-transferred to Regionar Tax office' It is an estabrished principre that even in administrative matters which adversery effect the rights of a person the principles of natural justice are to be complied with

6' Respondent No.2 under section 2og of Income Tax ordinance, zool, sections 30 & 31 sares Tax Act, 1990 and section 29 of Federar Excise Act, 2005 does not have the absolute jurisdiction to transfer or re-transfer cases. In this behalf Federar Tax ombudsman whire determining such question did observe that there are no rures framed by respondent No.2 for exercise of discretion which is to be exercised reasonabry and fairry. The Honourabre supreme court of Pakistan in case titled chairman Regionar rransport

Authority Vs pakistan Mutual Insurance company (pLD SC 14) held as follows:-

A public office is a pubric agency or trust created in the interest and for the benefit of the people, and since an incumbent of a pubric office is invested with certain powers and charged with certain duties pertinent to sovereignty, the powers so delegated to the officer are herd in trust for the people and are to be exercised on behatf of the Government or of ail citizens who may need the intervention of the officer. such trust extends to all matters within the range of the duties pertaining to the office. In other words, public officers are but the servants of the peopre and not their rules. A pubric officer is amenabre to the rute which forbids an agent or trustee to prace himserf in such an attitude toward the principar or cestui que trust as to have his interest conftict with his duty. Where statute is silent with respect to the time within which an officiar act must be preferred, the law contemplates that the duty must be performed within a reasonable time. A pubtic official who undertakes to perform an act, even an act which is completely discretionary, must do so reasonabry and in comprete good faith without such delay as would frustrate ,ts ultimate objective. one who accepts a pubtic office does so cum onere, or with the burden, and is considered a accepting ifs burdens and obrigations with rts benefits. He thereby subjects himserf to art constitutional and legislative provisions relating thereto and undertakes to perform art the duties of the office, and white he remains in such office the public has the right to demand that the pefforms such duties. The acceptance of every pubic office implies an agreement on the part of the officer

that he wiil execute his duties with dirigence and fiderity. The duty of a pubric officer to furfiil the obligations of his office shourd take precedence over all other matters. Every public officer /s bound to use reasonabte skitt and ditigence in the performance of his officiar duties particurarry where rights of individuars may be jeopardized by his neglect. In other words, he is bound, virtue officii, to bring to the discharge of his duties that prudence, caution, and attention which carefur men usuary exercise in the management of their own affairs.

Wherever wide_worded powers conferring discretion are found in statute, there remains always the need and the desirabirity to structure the discretion.

Structuring discretion means regularizing it, organizing it, producing order in it, so that decisions wi, achieve a higher quarity of justice.

The severar instruments that are most usefur in the structuring of discretionary power and open plans, open poticy statements, open rules, open findings, open reason, open precedents, and fair informal procedure. When tegislative bodies delegate discretionary power without meaningfut standards, administrators shoutd develop standards at the earliest feasibte time, and then, as circumstances permit, shourd further confine their own discretion through principres and rures.

The movement from vague standards to definite standards to broad principles to rules may be accomplished by poticy statements in any form, by adjudicatory opinions, or exercise of the rure- making power. When legistative bodies detegate discretions power without meaningful standards, administrators should develop standards the earliest feasibre time, and then, as circumstances

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permiL should further confine their own discretion through principles and rules.

Even the Federal rax ombudsman while deciding complaint No. 149llslamabad lrr(t2B)l7golzolO observed as follows: - In view of the above judgment of the Supreme Court of Pakistan, the discretion, if any, available under the Sales Tax Registration Rules, 2006, is to be exercised according to some pre-determined parameters forestalling the chances of arbitrariness, willfulness, injustice and decisions contrary to the bonafide interest of the effected parties as the D.R admitted that no such parameters had been framed to exercise the aforesaid discretion, therefore, an appropriate course for the LTU authorities at Islamabad was first to confront the registered person with their contention about their business address and registered address etc. Had the complainant failed to satisfy the competent authority it could have taken any action deemed proper as this had not been done in this case, it tends a tot of credence to the AR's contentions that the FBR and the the authorities of LTIJ have committed an arbitrary and oppressive act to unilaterally, unjustifiabty and unreasonably shift their records to the jurisdiction of LTU Lahore to buy time for implementation of the high court's directive about the refund ctaims of the company within the prescribed timit time of 60 to 90 days.

7.The objection by the rearned counser for the respondents that the petition is not maintainable as some of the Directors are fugitive from law is not borne out from the record especially as learned counsel for the petitioner has

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placed on record copy of the order passed by Honourable Lahore High Couft in Cr!.Misc.No. L54t2'B-2015 whereby the three of the Directors of the Petitioner's company namely Fayyaz Qadeer Butt, Farrukh Iqbal and Azhar Qadeer Butt have been granted bail before arrest.

8.In view of above the instant petition is allowed and the impugned office order dated 8.10.2015 is set-aside.

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IUDGE

D'A;ZAKL

F,-r Gf k?*o-.l Uploaded By :- Engr.Umer Rasheed Dar