Taxation Matters and Jurisdiction of Civil Court

Taxation Matters and Jurisdiction of Civil Court Case Laws Civil Law Customs Excise Income Tax Jurisdiction Jurisdiction - Civil Court Knowledge - Civil Law Litigation & Arbitration Sales Tax Sindh High Court Solutions - Civil Law Tax Mr. Justice Aqeel Ahmed Abbasi in his judgment has decided the issue regarding taxation matters and jurisdiction of civil court in High Court Appeal No. 263 of 2016.

1. Through this common judgment, by consent of all the learned counsel, we intend to dispose of the above mentioned High Court Appeals, which require resolution of similar facts and decision on identical legal issue relating to maintainability of suit in view of statutory bar under a taxing statute.

2. Through High Court Appeal Nos.82 to 85 along with 95 & 96 of 2015, the appellants have impugned a common judgment and decree dated 02.02.2015 and 14.02.2015 respectively passed in Suit Nos.843, 907, 941 and 942 of 2014, whereby, learned Single Judge of this Court while formulating following three (03) issues for determination, has decided the same in favour of the respondents and against the appellant, which are reproduced herein below:

1) Whether the suits are maintainable?
2) Whether the intravenous infusion (IV infusion) manufactured with low density polyethylene of pharmaceutical grade is a “pharmaceutical product” for purposes of the sales tax exemption under SRO 551(1)/2008 dated 11.06.2008?
3) What should the decree be?

3. High Court Appeal Nos.263 to 279 of 2016, have been filed against the common judgment dated 15.07.2016 passed in Suit No.44/2015 (Artistic Denim Mills v. Federal Board of Revenue and others) along with other Suits as detailed in the Appendix attached with the impugned judgment available at page 55, whereby, learned Single Judge of this Court while formulating two (02) issues for determination, has decided the same in favour of the respondents and against the appellants.

4. Whereas, High Court Appeal Nos.321 and 322 of 2017 have been filed against the common judgment dated 05.09.2016 passed in Suit No.1763/2016 (Umer Spinning Mills (Pvt.) Limited & others v. Federation of Pakistan and others) and Suit No.1875/2016 (Sunrays Textile Mills Ltd. v. Federation of Pakistan and others), whereby, learned Single Judge of this Court while formulating the legal issues for determination has decided the same in favour of the respondents and against the appellant.

5. Since the learned counsel for the appellants in above cases have mainly argued on the legal objection as to maintainability of suit in view of specific bar in terms of Section 217 of the Customs Act, 1969, whereas, the learned counsel for the respondents have also made their submissions by supporting the impugned judgment on the issue of maintainability, therefore, we would like to dilate upon the legal issue of maintainability of suits, instead of recording our finding on merits of the claim of respondents regarding exemption of duty and taxes. There are three sets of HCAs arising from three different, however, combined judgments, passed in the suits filed by respondents, however, seeking similar relief i.e. benefit of subject SROs and exemption from duty and taxes. High Court Appeal Nos.82 to 85 of 2015 along with HCA Nos.95 & 96 of 2015 were taken up for hearing earlier in time. It will be advantageous to refer to the order dated 30.03.2015 passed in the aforesaid High Court Appeals, which contained the brief legal grounds agitated by the appellants while filing the aforesaid High Court Appeals relating to maintainability of Suits in terms of Section 217(2) of the Customs Act, 1969, which reads as follows:

Learned Counsel for the appellant at the very outset submits that the controversy raised by the respondents before the learned Single Judge in the aforesaid suits, was also agitated by some of the respondents before this Court through filing Constitution Petitions bearing No. 4804/2014, 3414, 3415, 3806 & 4493 of 2014, which were disposed of by a Division Bench of this Court vide consent order dated 18.11.2014, whereby, the petitioners were directed to raise all such factual as well as legal grounds in support of their claim for exemption from sales tax in respect of the raw material under dispute, which was to be decided by concerned Assessing Officer (not below the rank of Deputy Collector) of the respective Collectorate, who was further directed to decide the same through speaking assessment order(s) in respect of the consignments of the petitioners. Per learned Counsel, the determination regarding entitlement and claim of exemption from sales tax in terms of SRO 551(I)/2008 dated 11.06.2008 is the domain of the revenue authorities, which otherwise, was directed to be decided by the concerned officers vide aforesaid order passed by a Division Bench of this Court, however, such aspect of the matter has not been taken into consideration by the learned Single Judge inspite of the fact that such order was produced before the learned Single Judge for consideration.

Learned Counsel for the appellants further contended that even otherwise, a suit is not maintainable in terms of Section 217(2) of Customs Act, 1969, which provides that “no suit shall be brought in any Civil Court to set-aside or modify any order passed, any assessment made, any tax levied, any penalty imposed or collection of tax made under the Customs Act, 1969”. Per learned Counsel, the determination of tax liability of a person and to consider the claim of exemption from payment of tax or duty etc. is the domain of the revenue authorities under the relevant tax Statute including Customs Act, 1969, which provides complete mechanism and the authorities for determination of liability of duty and taxes, and in case of any grievance, complete hierarchy has been provided, whereby, an aggrieved person can file appeal before the statutory forums, whereas, provision for filing a reference before this Court is also available, therefore, per learned counsel, any intervention by the Court of Civil jurisdiction is beyond the scope and violative of the Scheme of a taxing Statute. Per learned counsel, even on merits, the respondents did not have any prima facie case for grant of exemption from sales tax, therefore, the impugned order has been passed without lawful authority, which may be set-aside.

Contention raised by learned counsel for the appellant requires consideration. Let notice be issued to the Respondents to be served through first three modes of service for 21.04.2015. In the meanwhile, operation of impugned judgment and decree dated 02.02.2015 and 14.02.2015 respectively, shall remain suspended till next date of hearing.”

6. Thereafter, notices were issued to the respondents, who filed their objections and the matter was adjourned from time to time, whereas, vide order dated 07.04.2017, passed by this Court in High Court Appeal Nos.263 to 279 of 2016, the aforesaid High Court Appeals were taken up for hearing by consent of the learned counsel for the parties along with similar High Court Appeals involving the identical issue regarding maintainability of Suits in view of specific bar provided under Section 217 of the Customs Act, 1969.

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