2011 THE PAKISTAN TAX DECISIONS 20i1P TDI {Lahore High Court] Before Syed Mansoor Ali Shah, J AL-KARAM CNG and others ersus FEDERATION OF PAKISTAN and others Writ Petition No. 3253 of 2010, decided on 15th June, 2010 (a) Income Tax Ordinance (XLIX of 2001)--- Ss. ISA & 2344---Selling of petroleum products and running of NG Station: tion of tax at source---Provision of Ss. IS6A and S.234A of Income Tax Ordinance, ‘ope: Section 156A of the Income Tax Ordinance, 2001 provides that any person selting petroleum products to a petrol pump operator shall deduct tax from the amount of commission at the rate specified. The said fax deducted shall be the Final Tax on the Income arising from the sale i ale Products. Similarly, advance tax shall be collected on the amount of gas bill for Compressed Natural Gas Station. The tax collected shali be the Final Tax on the income of the CNG Station arising ‘om the consumption of the GAS. Subsection 4 of section 234A further provides that taxpayer shall not be entitled to claim any adjustment of withholding tax collected or deducted under any head curing the tax year. [p. 9] A (6) Income Tax Ordinance (XLIX of 2001)-— 169(2}(a) A & 234A---Tax collected or deducted as final f provisions of Ss.156A and 234A, Income Tax Ordinance, 2001 apply 10 a taxpayer, his income shall not be chargeable to tax under any head of income in computing the taxable income of the taxpayer. bp em(c) Income Tax Ordinance (XLIX of 2001)--- ~~S. 235~-Electricity consumption---Collection of advance tax on the amount of electricity bill of commercial or industrial consumer Scope~-Such collection is not to be made from a person who produced @ certificate of exemption form the Commissioner---Such a tax, in the case of a company is adjustable against tax liability. [p. 9] C (a) Income Tax Ordinance (XLIX of 2001)-- ~°Ss. 147(1)(d), 156A, 234A read with $.469(2)(a)---Constitution of Pakistan, Arts, 23, 24,4 & 10A---Petroleum products--CNG. Station Advance tax paid by the taxpayer--Tax deducted as a final tix-—Right of individuals to be dealt with in accordance with law-—-Protection of Property rights---Sections 147(1)(d), 156A, 234A read with S.169(2)(a) of the Income Tax Ordinance, 2001 clearly show that once the taxpayer has discharged his liability of Final Tax he is not chargeable to tax under any head while computing his taxable income=-Charge of continuous Advance Tax even thereafter under $.235 is therefore in conflict with the. cluster of provisions relating to final tax and conceptionally in disagreement with the legislative intent---Advance tax is an estimated amount which is to be calculated by the taxpayer and paid in advance during the tax year--In the present case, the tax deducted under $s.156A and 234A of the Income Tax Ordinance, 2001 is the final discharge of the tax; in such a situation to demand advance fax from a taxpayér amounts to frustrating the concept of advance tax—-Once the final tax liability is secured, the question of paying advance tax cannot arise which is not the purpose of advance tax under the Ordinance--Prima facie, the constitutionality of $.235 in the face of the final tax provisions under S5.156A , 234 A and 169 of the Income Ordinance, 2001 appears to be suspect--Even a penny charged without lawful authority offends Arts.23 & 24 of the Constitution besides offending due process guaranteed under Arts.4 and 10A of the Constitution---Poor legislative arrangement which fails to resolve such internal conflict seriously threatens economic justice provided under the Objectives Resolution, which is a substantive part of the Coustitation---Taxpayers cannot be deprived of their property because of poor tax governance. [p. 10] D (e) Income Tax Ordinance (XLIX of 2001). ~—-Ss.169, 170 & 235---Transitional advance tax-—-Tax collected or deducted as a final tax-—-Refand---Scope---Facility to obtain refund under 5.169 or 170 of the Income Tax Ordinance, 2001 does not confer @ Tight on the tax authorities to charge tax without any lawful Justification---Refund arises where due to some inadvertence oxcess tax2011) “Karam CNG vy, Federation of Pakistan ¢ Ali Shah, J) is charged or paid; it surely does not grant a licence to the tax authorities to charge taxes which the law prohibits or does not sanction---In the present case inspite of discharge of Final Tax under the Ordinance the taxpayers were veing subjected to deduction of transitional advance tax under 5.235, which was not chargeable and therefore will invariably be refunded---Taxpayer cannot be deprived o lus property just because he was entitled to refund at some later stage: Refund could not be a pretext to charge tax if the tax was not lawfully permissible. [p. 10] pretation of statu ‘here literal construction or plain meaning causes hardship, absur or uncertainty, the purposive or contextual construction is preferred to arrive at a more jest, reasonable and sensible result---very law is designed to further the ends of justice and not to frustrate it on mere technicalities-~-Though the function of the courts is only to expound the law and not to legislate, nonetheless the legislature cannot be asked to sit to resolve the difficulties in the implementation of its intention and the spirit of the law--In such circumstances, it is the duty of the court to mould or creatively interpret the legislation by liberally interpreting the statute---Statutes must be interpreted to advance the cause of statate and not to defeat same. [p. 11] F Interpretation of Taxing Statutes by Mittal (g) Interpretation of statutes. Con, between two _provisions---Resolution heory of wn”---Applicability---Scope n order to resolve the conflict between the two provisions, after the purpose of rely on the interpretative tool of reading down. Theory of 8 down is a rule of interp: resorted to by the courts when they find a provision re to offend a fundam ht or falls outside the particular legislature. [p competence atute the courts will presume that the legislation was intended to be inter vires and also reasonable The rule followed is that the cnactment is interpreted presumption which imputes to th consistent with ihe slature an intention of limiting the direct operation of its enactment to the extent that is permissible Legislature is presumed io be aware of its limitations and is also m0PAKISTAN TAX DECISIONS attributed an intention not to over-step its limits. To keep the Act within the limit of its scope and not to disturb the existing taw beyond what the ject requires, it is construea as operative between certain persons, or in certain circumstances, or for certain purposes only, even through the language expresses no such circumstances of the field of operation, Te sustain law by interpretation is the rule The reading down of a provision of a statute puts into operation the principle that so far is reasonably possible to do so, the legislation should be construed as being within its power. It has the principal effect that where an Act is expressed in language of a generality which makes it capable, if’ read literally, of applying to matters beyond the relevant ve power, the court will construe it in a more limited sense s0 ag to keep it within power. If certain provision of law construed in one ¥ would make them consistent with the Constitution and- another interpretation would render them unconstitutional the court would lean in favour of the former construction. [p. 12] H Similarly, for upholding any provision, if it could be saved by reading it down, it should be done, unless plain words are so clear as to be in defiance of the Constitution. These interpretations spring out because of the concern of courts to always let a legislation to achieve its objective and not to let it fall merely because of a possible ingenious interpretation. The words are not static but dynamic, This infuses fertility in the field of interpretation. inciple of reading down, however, will not be available, where the plain and literal meaning from a bare reading of any impugned provisions clearly shows that it, confers arbitrary, uncanalised or unbridled power. [p. 12] Elahi Cotion Mills Ltd. v, Federation of Pakistan PLD 1997 §C 582 and Introduction to Interpretation of Statues (Reprint Bdition 2007) by Dr. Avtar Singh ref. (h) Income Tax Ordinance (XLIX of 2001)--- & 159(I)-Advance tax mption---Provision af S.235(3) of Income Tax Ordinance, 2001 provides that advance tax shall not be collected if the taxpayer produces a certificate from the Commissioner that his income is exempt from tax---Such certificate is issued under S.159(1) Of the Ordinance if the taxpayer enjoys exemption from tax under the Ordinance.{p. 13} J (i) Income Tax Ordinance (XLIX of 2001)--- ~~-Ss. 53, ISA, 169, 243A, 235(3), 159(1) & Second Sched. Part [u- Exemptions and tax concessions in the Second Schedule of Income Tax Ordinance, 2001---Scope--*Exemption” and “discharge of final v0‘ederation of Pal d Mansoor Ali Shah froleum products---CNG Station-~Tax collected ‘ax—-Exemption or fower certificate by Wer, under $s. 156A ahd 234A read with §.160 argeahitity under the law after dise harge of finat 1 A Ses under the Ordinance stand at higher pedestal than the exemption -clauses- If benefit of exempiio can cability of tax under 8.235(3), the discharge of final also extend the same benefit to the tion” in 8.159 does not have limited Mnatory to limit its meaning by excluding Ordinance-—Sections 159(1) and 235(3) of the » be real down to include “final tax clauses” "8 Of exemption under said sections---Con missioner ssuing an exemption certificate, + consider the 8 under final tax clauses--Prineiples emptions under the Income Tax Ordinance, m section 53 read with Pa t-T of the Second Se: u 2, The purpose of exemption is thal the Payabilicy Stax is testricted in terms o the exemption however the of the tax with section 169 0 Chargeability under 1 law. Final Tax clauses ighet pedestal than the femains. Whereas sections 156A and 234A of the Ordir e axpayer has law after in x under under ina < i hi der and a xemption r ude the chargeability ne discha of final tax under. the id the sam ¢ taxpayer, if not exemption” section = nal harmonizatior under the Ord: @ absence ative integrat between 6A, 234A and section 235, operatic can be achi “Xtending the benefit. available to exemption clauses unde ie ta auses alse, of the ©; dinance can therefore be read dow Kel " within the meaning of exemption under exempt clauses le issuing an final tax @) Income Ma), 159 & 235---Constitution of Pakistan, or tutional petition---Petroleum prodacts-CNG Station- final tax-—-Charge cf transitional bil Income TaxPAKISTAN TAX DECISIONS (20114 Ordinance, 2001---Scope---Exemption or lower rate certificates Scope--Taxpayers (petitioners) in the present case, run and manage petrol pumps and CNG Stations; they purchase petroleum products and CNG from the market; under S3.156A and 234A, Income Tat Ordinance, 2001 the tax deducted in purchasing petroleum products op CNG was the final tax on the income of the taxpayers fram the said business---Contention of the taxpayers was that their sole income was generated by running petrol pump or a CNG Station and once the said income was subject to final tax, transitional advanee tax could not be charged in their monthly electricity bills under S, 235 of the Ordinance---Precise question for determination vas that “as the income of the taxpayers solely arose: from the consumption of petroleum products and CNG at the Petrol Pumps and the CNG Stations, tax deducted under $s.1564 & 234A of the Ordinance amounted to final discharge of income tax, thereafter having heen finally discharged from income tax, advance tax charged under S.235 of the Ordinance was without lawful authority and hence illegat---Validity-—Held, taxpayers (petitioners) were entitled to an exemption certificate under S.159(1) of the Ordinance once it was established to the satisfaction of the Commissioner concerned that the final tax had been Sally discharged under $s,156A & 234A of the Ordinance and that there was no other income of the taxpayer---Said exemption certificate would be valid for the purpose of §.235(3) of the OrdinanceHigh Court directed the taxpayers (petitioners) io approach the concerned Commissioners under $.159(1) of the Ordinance who, on receipt of the application of the taxpayer, will issue exentption certificates after verification that the petitioners had no other income but the one accruing under Ss.156A and 234A of the Ordinance and that the lability of final tax had been fully. discharged---High Court clarified that in case the said certificate was not issued to the taxpayers on the ground that they had other source of income, the amount of income tax in the electricity bills which was stayed during the pendency of the Proceedings shall stand revived and the petitioners shall be liable to pay the same and in such a situation electricity companies were directed to issue the said bills immediately along with the tax liability withheld by Hich Court, fp. 13] L Indus Jute Mills Lid ederation of Pakistan 2009 PTD 1473 distinguished Commissioner of Income Tax, Karachi v. Sir E.H. Jaffar and | Sons (Pvt.) Ltd, 9 Tax Forum 3 ITA No.98 of 1998; Interpretation of Taxing Statutes by Mittal i Cotton Mills Ltd. v. Federation of Pakistan PLD 1997 SC 582 and Introduction to Interpretation of Statues (Reprint Fdition Avtar Singh ref. omAl-Karam CNG y. Federation of F Syed Mansoor Ali Shah Anwar-ul-Hag for Petitioners, hammad flyas_ Ki Muhamme Respondents. Muhammad Nawaz Waseer, Standing Counsel im Zultigar, Charted Accountant as Ami of hearing: 9th, 14th and 15th June, 201 JUDGMENT MANSOOR ALI SHAH, J.---This consolidated judgment cide writ petitic n Schedule A to this judgment ¢ in these cases Brief facts of the case are that the petitioners run and manage tps and CNG stations, They purchase petroleum products and s (CNG) from the market. Under Sections and 234A of the Income Tax Ordinance, 2001. ("Ordinance ) the jeducted in purchasing s or CNG the Final Tax ‘om the said business. The grievance petitioners is that their sole incoma*is gen tated by running petrol pump or a CNG station and o subject to Final monthly clectr Ordinance (advance tax canno: petitioners 3. Counsel for the petitioners submitted that the petitioners have no other source of income and therefore after the deduction of ons 156A and 23. ‘0 pay adve ion 235 of pondents that S6A of the Ordinance. He referr ederation Pakistan (2009 PTD 1473) and submitted nd has already been decided in the said case; He arg esent petition in the ai cited case. He Feontended # D rs should approach the Revenue un invoking the jurisdiction of this is a sub-set of the earlier litigation decided the Ordinance court section’ 235 is an independ VISION a be stopped 5. Mr. Muhammed Asif -Hashmi,. als “FBR heavily on Indus submit ¢ departmer half of Jute Mills ‘ase (supra) to as alread 1 n favour of thPAKISTAN TAX DECISIONS f2oir Mr. Asim Zultigar, Ch ccountant was appointed ag at cases perta running CNG stations or petrol pumps or in « amicus curiae. He submitted 1 to businesses me cases, both. He he Ordinance, petrol supplied ta the petitioners is subject to withholding tax Submitted that under section 156A amounts to final disc! of tax of the petitioners. He submitted tha € are five main suppliers o products in the countr T Oil. Similarly for CNG stations to the said stati ax_under section 234A of the Ordinance two suppliers of CNG in the country Company Limited and Sui Southern Gas Com present case Sul. Northern Gas Company Limit relevant Company. By identifying the supplic and CNG the amicus emphasized that the 1 verifig, rthern Gas | d in. the "d would be the 8 of petroleum products ansaction ca 7 contended that under the law whe th amounts to final discharge, the taxpayer is not supposed a instead has to file a simple statem Ordinance which is considered to be section sessment orde section 169. This is opposed to section 114 of the Ordinan © whereundet a normal it d by the taxpayer. It is contended that once discharg place under. sections 156A of the Ordinance, the charge of advance tax under section 2: icity bills is unlawful because any such amount col ted, if at all, has to be refunded under section 170 of the Ordinance le referring to the decision of the august Supreme Coutt of Pakistar in Commissiones of Income Tax, Kar achi v. Sir A. Jaffer and Sons (Pvi.) Ltd., (9 Tax Forum 35 Vol. 5) it he been contended that in the said case a commercial importer with final discharge of tax under section SO(S) of Income Tax Ordinance, 1979 Repealed Ordinance") However, afler the import when the s importer made local sales, he was again subjected to tax unde: 2 SO(4) at the pte of 3 held by the august Supreme Court of, Pakistan that once the discharged, no other tax ¢ be charged from thi %. Tt wag ax is finally petitioner under the ad. He also placed reliance on judgment dated 303 in LT.A. No. 98 of 1998 by the High Court cndee wBument. It was contended that the said problem can-be under section 159(3) of the Ordinance, He drew Parallel ir Tax Act, 1990 by referring to Sales Tax General Orders Nos 2007 Arguments heard. Record perusedaram CNG v. Federation of Pakis (Syed Mansoor Ali Shah, J) The precise question placed before this court for determination Petitioners is that as the income of the Petitioners sole! m the consumption of petroleum products and CNG at the ‘rol Pump and the CNG Station, respecti ly. Tax deducted under sections 156A and 234A of the Ordinance mounts to final discharge of income tax of the petition feafler having been finally discharged fom payment of income tax, advance tax charged under section 235 of fie Ordinance is without lawful authority and hence illegal Bae, Sections 147, 156A, 159, 2344 and 235 of the Ordinance are pile televant provisions that deal with the Question in hand, The aforesaid Seri’ TePrOduced in Schedule-B to this udement for ready Section 156A of the Ordinance provides that any person selling “trol pump operator (petitioners) shal] deduct, mount of commission at the rate Specified. The said tax 4 shall be the Final ‘Tax on The Income At ing From The Sale of The Petroleum Products, Simila 'y, advance tax shall be collected on the fount of gas bill for Compressed Natural Gas Station (petitioners), The |A HX collected shall be the Final Tax_on the Income of CNG ation Arising fy onsumption of the GAS. Subsection ) of péction 234.4 further provides that t Payer shall not be entitled to claim any: adjustment of withholding tax collected or deducted un pring the tax year. 13. Section 169(2(a) of the Ordinance provides that i betions 156A and 234-4 of the Ordinance apply io a taxpayer, his|p Pont, Shall not be chargeable to tax under any head of income in| Pomputing the taxable income of the person. | 235 provides that there shall be colle ed advance tax at sified on the amount of electricity bill of a commercial or lustrial consumer, Section 35(3) provides that such a Collection is not|C be made from a person Who produces a certificate of exemption from| # Commissioner. Such a tax in the case of a company is adjustable if-heartedly agitated before this court in Indus \v- Federation of Pakistan (2009 PTD 1473). The court "a feeble attempt” because it was Rot made clear if the ly source of income of the Petitioners was solely from purchase of Htoleum products or CNG. The question in hand was raised en Passe in above cited case without the petit aking the position that the ly source of income is tae income generated under sections 1564 and pA of the Ordinance. Therefore this court observed:-- “Thus, the tax collected under ¢ ion 235 of the Ordinance canPAKISTAN TAX DECISIONS [011 be adjusted against any tax due with regard to other income of the _assessee_not covered under the separate presumptive tax egime, and where no such liability of tax exists, then obviously the amount collected under section 235(1) of the Ordinance would be refunded to the company under section 235(4) thereof.” (emphasis supplied) 16. In the present cases the petitioners are not the same, besides they have placed on record their accounts to show that there is no other source of income, except provided in the aforesaid sections. It has been vehemently argued that in the f2 i of Final Tax any charge of further tax is confiscatory and violative of fundamental rights and the concept of economic justice. Therefore, this issue was not central io Indus Jute Mills’ case and cannot therefore be considered to be a binding precedent on this question. 17. Sections 147(1)(d), 156A, 234A read with section 169(2)(a) of the Ordinance clearly show that once the taxpayer has discharged his liability of Final Tax he is not chargeable to tax under any head while computing his taxable income, Charge of continuous Advance Tax even thereafter under section 235 is ther in conflict with the cluster of provisions relating to final tax mentioned above. It is also conceptionally in disagreement with the legislative intent. Advance tax is an estimated amount which is to be calculated by the taxpayer and paid in advance during the tax year. In the present case, the tax deducted| under sections 156A and 234A of the Ordinance is the final discharge of the tax. In such a situation to demand advance tax from a taxpayer amounts to frustrating the concept of advance tax, Once the final ta liability is secured, the question of paying advance tax cannot arise. Iti not the purpose of advance tax under the Ordinance. 18, Prima facie, the constitutionality of section 235 in the face of the final tax provisions under sections 156A, 234 A and 169 appear to be suspect. Even a penny charged without lawful authority offends Articles 23 and 24 of the Constitution besides offending due process guaranteed under Articles 4 and 10A of the Constitution The poor legislative arrangement which fails to resolve this intern conflict seriously threatens economic justice provided under the Objectives Resolution, which is a substantive part of the Constitution] Petitioners cannot be deprived of their property because of poor tax governance 19. Further, the facility to obtain refund under section 169 or 170 the Ordinance does not confer a right on the tax authorities to charge ta without any lawful justification. Refund arises where due to soni inadvertence excess tax is charged or paid. It surely does.not grant2011) Al-Karam CNG y. Federation of Pakistan Syed Mansoor Ali Shah, J) Hcense to the tax authorities to charge taxes which the law prohibits or does not sanction. In the present case inspite of discharge of Final Tax under the Ordinance the petitioners are being subjected to deduction of| transitional advance tax under section 235, which is not chargeable. and therefore will invariably be refunded. A taxpayer cannot be deprived of fis Property just because he is entitled to refund at some later stage Refund cannot be a pretext to charge tax if the tax Is not lawfully permissible 20. ‘The ahead through this legislative impasse can either be fo gauge the constitutionality of section 235 when it comes imo tonflict with the final tax provisions mentioned above and to strike it down or to harmonize the two sets of provisions by usi 8 purposive interpretation of the’ Ordinance and using the interpretative too! of reading down 21. It is settled law that where literal construction or plain m aning| causes hardship, futility, absurdity or uncertainty, th purposive or| contextual construction is preferred to arrive at a mor just, reasonable and sensible result. "Every law is designed to further the ends of justice Fand not to frustrate it on me icalities. Though the function of the courts is only to expound the law and not to lesislate. no nethe-| Hess the legisla cannot be asked to sit to resolve thelE difficulties in the implementation of its intention and the spirit of the Pav. In such circumstances, it is the duty of the court to mould on atively interpret the legislation by liberally interpreting the statute The statutes must be interpreted to advance the cause of statute and nor to defeat it.” Reliance is placed on Interpretation axing Statutes by| Mittal 22. In order to resolve the conflict between the two Provisions, after} pihe purpose of the Ordinance is clear (as is evident from the above teferred provisions), is to rely on the interpretative tool of reading down plustice Ajmal Mian J, in Elahi Cotton Mills Ltd. v. Federation of}. pPakistan (PLD 1997 SC 582) held:.. eS "That theory of reading down is a rule of interpretation which is Tesorted to by the courts when they find a provision read literally seems to offend a fundamental right or falls outside the competence of the particular Legislature In Indus Jute Mills’ Case, Sh. Azmat Saced J. speaking for this Stourt held:-- “37. In view of the above, this Court is confronted with two Possible options; either is to strike down the impugned Section 235 Income Tax Ordinance, 2001 being ultra vires thePAKISTAN TAX DECISIONS 20113 Constitution and fundamental rights of the citizens or in the, alternate, to resort to the time honoured rule of interpretation of employing the theory of reading down and looking beyond the literal meaning of the provision Mittal in [ on of Taxing Statutes writes:~ “The theory of reading down is a rule of interpretation resorted to by the Courts where a provision, read literally, seems’ to offend a fundamental right, or falls outside the competence of the particular legislature. In interpreting the provision of @| statute the courts will presume that the legislation. was intended to be inter vires and also reasonable. The rule followed is that}: the enactment is interpreted consistent with the presumption} which imputes to the legislature an intention of limiting the}i direct operation of its enactment to the extent that is permissible, Legislature is presumed to be aware of its and is also| attributed an intention not to over-step To keep th Act within the limit of its scope and not to disturb the existing] s law beyond what the object requires, it is construed as operativg. between certain persons, or in certain circumstances, or for certain purposes only, even through the language expresses no} such circumstances of the field of operation. To sustain law by interpretation is the rule The reading down of a provision of a statute puts into operation}: the principle that so far is‘ reasonably possible to do so, thi| legislation should be construed as being within its power. It hag the principal effect that wheré an Act is expressed in language df a generality which makes il capable, if read literally, of applying to matters beyond the relevant legislative power, the court will construe it in a more limited sense so as to keep it within power, If certain provision of law construed in one way would make them consistent with the constitution and another interpretatioh| would render them unconstitutional the court would lean i favour of the former construction.” 25. Dr. Avtar Singh in Intr on_to Interpretation of Statues (Reprint Edition 2007) writes:-- “Similarly, for upholding any provision, if it could be saved by reading it down, it should be done, unless plain words are 3 clear as to be -in defiance of the Constitution. .Thesel interpretations spring out because of the concern of courts {gf always let a legislation to achieve its objective and not to let iff fall merely because of a possible ingenious interpretation. Th words are not static but dynamic, This infuses fertility ifAl-Karam CNG v. ion of Pakistar (Syed Mansoor Ali Shah, J) the field of interpretation. The principle of reading down, jowever,- will not be available, where the plain and literal Meaning from a bare reading of any impugned provisions clearly shows that it confers arbitrary, uncanaliscd or unbridled| power, ” 26. Section 235(3) provides that advance tax shall not be collected if phe taxpayer produces a certificate from the Commissioner that his : income is exempt from income tax. Such a certificate is issued under section 159(1) of ‘the Ordinance if the taxpaye enjoys exemption trom fax under the Ordinance 27. Can this facility be available to the petitioners in the present pase? Difference between exemption and discharge of final tax needs to be considered, Exemptions under the Ordinance are provided in section 53 read with Part-I of the Second Schedule to the Ordinance. The Purpose of cxemplion is that the payability of the taxpayer is restricted in terms of the exemption howeve chargeability of the emains. | Whereas sections 156A and 234 when read with section 169 of the Ordinance reveal tha er has no chargeability under. the daw after the discharge of final tax under the law. Final ‘Tax clauses under the Ordinance therefore stand at a higher pedestal than the poemption clauses. [f benetit of exemption can preclude the chargeability of tax under section 235(3),. the discharge of final tax under th FOrdinance can also Surely extend the same benefit to the tax payer, if not It would be _ diser' iminatory to limit the ing of ‘mption” in section 159(1) of the Ordinance by excluding "final tax Provisions" under the Ordinance. In the abscnce of any legislative iegration between sections 156A, 234A and section 235, operational Rarmonization can be achieved by extending the benefit available to exemption clauses under section 159(1) to the final tax (1) and 235 (3) of the Ordinance can therefore be fead down to include “final tax clauses” within’the meaning of exemption under the said sections. The Commissioner, while issuing an] premption certificate, will also consider th falling under final tax F 29. 1, therefe grtificate under section 159(1) o: hold the Petitioners entitled to an exemption} the Ordinance once it is established to e satisfaction of the C mitch r concerned that the final tax has n fully discharged under sections 156A and 234A of the Ordinance id that there is no other income of the petitione! 1c said exemption frificate will be valid for the purposes of section 235(3) of the ediPAKISTAN TAX DECISIONS (2018 30. The petitioners are directed to approach the concemed Commissioners under section 159(1) of the Ordinance who on receipt the application of the taxpaycr will issue exemption certificates afiet Verification that the petitioners have no other income but the onl accruing under sections 156A and 234A of the Ordinance and that tha liability of final tax has been fully discharged Before parting with the judgment it is clarified that in case th ate is not issued to the petitioners on the ground that the have other source of income, the amount of come tax in the] electricity bills which was stayed during the pendency of these petitiotis hall stand revived and the petitioners shail be liable to pay the same. fa such a situation respondent electricity companies are directed to issug the said bills immediately along with the tax liability withheld: by this Court. 32. For the above reasons these petitions are allowed in the abovel terms. M.A.K./A-272/L Petition allowed SCHEDULE A Title ) | Haider Petroleum ! FOP etc Writ Petition No, 1773 of 2010 | Al-Jehad Filling Stati and others v. FOP ete. | Writ Petition No.1774 of 2010 | Brite Way CNG ant | others v. FOP ete, Writ Petition No. 1522 of 2010 | Writ Petition No. 2869 of 2010 | Khalid Petroleum ce FOB etc. } 3 | Writ Petition No.5003 of 2010 | Noor Sons | Stations v, FOP ete. rit Petition No. 5688 of 2010 | AlSadiq CNG” others v. FOP ete Ph oe ee rit Petition No.7956 of 2016 | Muslim CNG Fillim Station v. FOP etc |in f F , f E p Al-Karam CNG. y eration of Pakistan (Syed Mansoor Ali Shah, J) SCHEDULE B ‘8.147. ADVANCE T, ID BY THE TAXPAYER (1) Subject to subsection (2), every taxpayer whose income was charged to tax for the latest tax ycat under this Ordinance or latest assessment year under the repealed Ordinance othe, than. (2) income chargeable to tax under the head “Capital Gains" (©) income chargeable to tax under sections 5, 6 and 7; (ba) income chargeable to tax under section 15. @) income from which tax has been collected under Division It or deducted under Division IM or deducted or collected under Chapter XII and for which no tax credit is allow. ed ds a result of subsection (3) of section 168, Shall be liable to pay advance tax for the yeat in accordance with this section. (2) This section does not apply to an individual o: association of Persons where the individual's or association of persons latest avsessed taxable income excluding income referred to in fiauses (a), (b), (ba), (c) and (d) of subsection (1) is less than two hundred thousand rupees (4) Where the taxpayer is a company, the amount of advance tax due for a quarter shall be computed according to the following formula, namely: (AxB/C)-D Where- (A) is the taxpayer's turnover for the quarter; (B) is the tax assessed to the taxpayer for the latest tax year (C) is the taxpayer's turnover for the latest tax year; and f(D) is the tax paid in the quarter for which allowed under section 168, other than section 155, a tax credit is tax deducted under WA) Any taxpayer who is required to make payment of advance tax 'n accordance with subsection (4), shall estimate the tax payablePAKISTAN TAX DECISIONS by him for the relevant tax year, at any time before the ta installment is due, In case the tax payable is likely to be mor than the amount he is required to pay under subsection (4), th taxpayer shall furnish to the Commissioner an estimate of thed amount of the tax payable by him and thereafter pay suok. amount after making adjustment for the amount (if any) alread paid in terms of subsection (4). 4 (4AA) Tax liability under section 113 shall also be taken into account) while working out payment of advance tax liability under chis section, (4B) Where the taxpayer is an individual or an association of person having latest assessed income of two hundred thousand rupees of more, the ainount of advance tax due for a quarter shall bs computed according to the following formula, namely: (Al4)-B. (A) is te tax assessed to the taxpayer for the latest tax year o latest assessment year under.the repealed Ordinance; and is the tax paid in the quarter for which a tax credit is allowed under section 168, other than tax deducted under section 149 off 155, Advance tax is payable by an individual or an association of persons to the Commissioner:- in respect of the September quarter, on or before the 15th day of September; in respect of the December quarter, on or before the 15th day o December; in respect of the March quarter, on or before the 15th day o March; and @_ in respect e June quarter, on or before the 15th day 9 June. (GA) Advance tax is payable by a company to the Commissioner — (a) in respect of the September quarter, on or before the 15th day 9 October; (b) - in respect of the December quarter, on or before the 15th day 9 January;Al-Karam CNG v. Federation of Pakistan 17 (Syed Mansoor Ali Shah, J) Mote, OF the March quarter, on or before the 15th day of April; and im respect of the June quarter, on or before the 15th day of June, and If any taxpayer who is required to make payment of advance tax Under subsection (1) estimates at any time before the lav installment is due, that the tax payable by him for the relevant {ax year is likely to be less than the amount he is required to pay under subsection (1), the taxpayer may furnish to the Commissioner an estimate of the amount of the tax payable by him, and thereafter pay such estimated amount, as réduced by he amount, if any, already paid under subsection (1), i equal installments on such dates as have not expired (6A) Notwithstanding anything contained in this section, where the taxpayer is a company or an association or persons, advance tax shall be payable by it in the absence of last assessed income oe declared turnover also. The taxpayer shall estimate the amoust of advance tax payabie on the basis of quarterly turnover of the company or an association of persons, as the case may be, and thereafter pay such amount after: taking into account tax payable under section 113 as provided in subsection (4A.A); and making adjustment for the amount (if any) already paid The provisions of this Ordinance shall apply. to any advance tax due under this section as if the amount due were tax due under an assessment order A ‘axpayer who has paid advance tax under this section for a tax year shall be allowed a tax credit for that tax in computing the tax due by the taxpayer on the taxable income of the taxpayer for that year A ‘8x credit allowed for advance tax paid under this section shall be applied in accordance with subsection (3) of section 4 A tax credit or part of a tax credit allowed under this section for ‘ax year that is not able to be credited under subsection @) of tion 4° for the year shall be refunded to the taxpayer in accordance with section 1 SECTION 156-A. PETRO. PRODUCTS.-- Every person selling petroleum products to a petrol pumpPAKISTAN TAX DECISIONS (20 operator shall deduct tax from the amount of comimission discount allowed to the’ operator at the rate specified in Divis VIA of Part III of the First Schedule The tax deducted under subsection (1) shall be a final tax on income arising from the sale subsection (1) applies. CERTIFICATE Where the Commissioner is satisfied that an amount to whk Division II or II of this Part or Chapter XII applies is exempt from tax under this Ordinance; or subject to tax at a rate lower than that specified in the Fir Schedule, the Commissioner shall, upon application in writing by 1 person, issue the person with an exemption or lower ra certificate. (1A) The Commissioner shall, upon application from a person wh income is not likely to be chargeable to tax under ti Ordinance, issue exemption certificate for the profit on dd referred to in clause (c) of subsection (1) of section 151, A person required to collect advance tax under Division II this Part or deduct tax from a payment under Division III of th Part or deduct or collect tax under Chapter XII shall collect deduct the full amount of tax specified in Division II or II] Chapter XII, as the case may be, unless there is in force certificate issued under subsection (1) relating to the collecti or deduction of such tax, in which case the person shall comp with the certificate Che Board may, from time to time, by notification in the offio Gazette amend the rates of withholding tax prescribed under ti Ordinance; or exempt persons, class of persons, goods or class of goods fra withholding tax under this Ordinance. All such amendments shall have effect in respect of any tax yg beginning one any date before or after the commencement off financial year in which the notification is issued and shall no! applicable in respect of income on which tax withheld is trea as discharge of final tax liabilityAl-Karam CNG v, Federation of Pakistan (Syed Mansoor Ali Shah, J) The Board shall place all notifications issued under sub section (3) in a financial year before both Houses of Majlis-e Shoora (Parliament), SECTION 234 A. CNG STATIONS.- collected advance tax at the rate specified in Division VIB of Part IIT of the First Schedule on the amount of bill of a Compressed Natural Gas station The person preparing gas consumption bill shall charge advance tax under subsection (1) in the manner gas consumption charges are charged. The tax collected under this section shall be a final tax on the income of a CNG station arising from the consumption of the a8 referred to in subsection (1) The taxpayers: shall not be entitled to claim any adjustment of withholding tax collected or deducted under any other head during the tax yea SECTION 235 There shall be collected advance tax at the rates specified in Part-1¥ of the First Schedule on the amount of electricity bill 0 a commercial or industrial consumer. The person preparing electricity consumption bill shall charge advance tax under subsection (1) in the manner electricity consumption charges are charged. Advance tax under this section shall not be collected from a person who produces a certificate from the Commissioner that his income during tax year is exempt from tax under this section,— in the case of taxpayer other than a company, tax collected upto bill amount of thirty thousand rupees per month shall be treated as minimum tax on the income of such persons and no refund shall be allowed; in the case of a taxpayer other than a company, tax collected on monthly bill over and above thirty thousand rupees per month shall be adjustable; and in the case of a company, tax collected shall be adjustable against tax liability