Next Capital Limited through Chief Financial Officer vs The Assistant
The petitioner, a brokerage house, filed a constitutional petition challenging the imposition of sales tax on consultancy services under the Sindh Sales Tax on Services Act, 2011, for the tax years ending June 2014. The petitioner sought to bypass the statutory appellate forum, arguing that the legal issue was already pending before the High Court in a separate reference and that departmental authorities had consistently ruled against them. The Court held that the mere pendency of a similar legal question before the High Court or adverse departmental rulings does not constitute a valid ground to abandon or bypass the statutory appellate forum provided under Section 57 of the Sindh Sales Tax on Services Act, 2011. The Court emphasized that constitutional petitions under Article 199 are reserved for cases involving fundamental rights violations or challenges to legislative competence. Consequently, the Court directed the petitioner to pursue the statutory remedy against the Order-in-Original while issuing pre-admission notices to examine the specific legal question regarding the taxability of consultancy services in the absence of a specific entry in the Second Schedule.
- Does the pendency of a similar legal question before the High Court justify bypassing the statutory appellate forum?
- Can a taxpayer bypass the statutory appeal process simply because departmental authorities have previously decided similar issues against them?
- Under what circumstances can a party approach the High Court under Article 199 instead of exhausting statutory remedies?
- Section 57, Sindh Sales Tax on Services Act, 2011
- Article 199, Constitution of Pakistan 1973
- Section 3, Sindh Sales Tax on Services Act, 2011
ORDER
1. Granted.
2. Granted subject to all just exceptions.
2. 3-4. Through instant petition, the petitioner operating as a brokerage house, besides seeking declaration to the effect that the consultancy services provided by the petitioner, are not liable to tax under the Sindh Sales Tax on Service Act, 2011, on the grounds that consultancy services have not been prescribed under the Second Schedule to the Sindh Sales A Tax on Service Act, 2011, for the tax years till June, 2014, has also impugned Order-in-Original No.715 of 2019 dated 11.10.2019 passed by the Assistant Commissioner Unit-12, S.R.B. for the tax year July -2013 to June -- 2014, with the request to set-aside the same. While confronted as to why the ONO has not been challenged before the statutory forum of Commissioner (Appeals), S.R.B, in terms of Section 57 of Sindh Sales Tax on Services Act, 2011, learned counsel for the petitioner has submitted that since similar legal issue is already pending before this Court in Spl. S.T.R.A. No.61/2016, which is fixed today for hearing at Sr. No.5, whereas, according to learned counsel, alternate statutory remedy of appeal against the aforesaid Order-inOriginal will be a futile exercise, as the departmental authorities and the Appellate Tribunal Inland Revenue, have already decided such legal issue against the petitioner.
3. We are of the view that pendency of a legal question before this Court in a reference jurisdiction, and similar treatment given by the departmental authorities to a legal controversy alone, cannot be a valid ground to abandon and bypass a statutory forum, which can otherwise decide such legal issue in accordance with law. However, in appropriate cases, an aggrieved party can approach this Court by filing a Constitutional Petition under Article 199 of the Constitution if there is violation of any fundamental right or if some constitutional point is agitated relating to the legislative competence and jurisdiction of legislative body has been challenged.
4. In the instant case, we would issue pre-admission notice to the respondents as well as Advocate General Sindh, to be served through first three modes, for 25.11.2019, only to examine the legal grounds agitated by the petitioner to the effect as to whether, in the absence of any specific entry in the 2nd Schedule to Sindh Sales Tax on Services Act, 2011, relating to consultancy services, sales tax under the Sindh Sales Tax on Services Act, 2011, can be charged from the petitioner as required under Section 3 of the Act, 2011, whereas, the petitioner may seek remedy against the Order-in- Original as referred to hereinabove by approaching the appropriate forum in accordance with law.
5. Office is directed to fix instant petition along with Spl. S.T.R.A. No.61/2016 on the next date.
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