Deputy Commissioner of Income Tax/Wealth Tax, Faisalabad and others vs M/s. Punjab Beverage Company (Pvt.) Ltd
This matter originated from petitions filed by the Department against a judgment of the Lahore High Court, which had entertained writ petitions challenging a show-cause notice issued under the Income Tax Ordinance, 1979. The core legal question was whether a taxpayer can bypass statutory departmental remedies and invoke the constitutional jurisdiction of the High Court merely upon the issuance of a show-cause notice. The Supreme Court held that the High Court erred in entertaining the writ petitions. The Court emphasized that the respondent should have contested the notice within the departmental forum rather than rushing to the High Court. The ratio of the decision is that constitutional jurisdiction under Article 199 of the Constitution of Pakistan 1973 should not be invoked to circumvent established statutory remedies provided under tax laws. The Court deprecated the practice of bypassing administrative procedures, noting that such actions hinder the Department's ability to perform its functions, particularly revenue recovery. Consequently, the Court allowed the appeal and set aside the impugned judgment, reaffirming the principle that administrative remedies must be exhausted before seeking judicial intervention.
- Can a taxpayer invoke the constitutional jurisdiction of the High Court to challenge a show-cause notice before exhausting statutory remedies?
- Is it permissible to bypass departmental proceedings and directly file a writ petition against a proposed action by tax authorities?
- Does the issuance of a show-cause notice by the tax department constitute a sufficient ground to invoke Article 199 of the Constitution of Pakistan 1973?
- Section 66A, Income Tax Ordinance 1979
- Article 199, Constitution of Pakistan 1973
ORDER: CHIEF JUSTICE IFTIKHAR MUHAMMAD CHAUDHRY.--(1). These petitions have been filed against the judgment dated 24-2-2003 passed by Lahore High Court, Lahore in Writ Petitions Nos.4408 and 4360 of 2002.
2. Precisely stated facts of the case are that proposed show cause under section 66A of Income Tax Ordinance, 1979, dated 6-3-2002 was issued to respondent who instead of contesting the proceeding before the forum directly filed writ petitions in the Lahore High Court. The High Court accepted the plea vide impugned judgments dated 24-2-2003.
3. Learned counsel for Department contended that as per language of the show-cause notice department had only asked as to why proposed action be not taken, the respondents could not have filed writ petitions in the High Court. They ought to have replied to the notice and contested the same within, the Department. He in this behalf placed reliance on Al-Ahram Builders (Pvt.) Ltd. v. Income Tax Appellate Tribunal 1993 SCM R 29.
4. We have heard learned counsel and have gone through the reported judgment carefully wherein it has been held that tendency of by-passing the remedy provided under law, and resort to Constitutional jurisdiction of High Court was deprecated. In view of the contents of the notice the Department only contemplates to take action against them. The petitioner instead of rushing to the High Court and consuming sufficient time should have submitted reply before invoking the jurisdiction of the High Court. We have held in the judgment that such practice is to be deprecated because if merely on the basis of show-cause notice proceedings are started then in such position department would never be in a position to proceed with the cases particularly the recovery of revenue etc. Thus keeping in view the circumstances of the case we are of the opinion that respondent, had wrongly availed remedy under Article 199 of the Constitution instead of availing appropriate remedy under Income Tax Ordinance, 1979. Therefore, merely for the purpose of convenience, availing the remedy of the High Court under Article 199 of the Constitution cannot be appreciated. Thus for the foregoing reasons petition is converted into appeal and allowed. The impugned judgment is set aside. No costs.