M/s. Islamabad Electric Supply Company Limited vs Additional
This constitutional petition was filed under Article 199 of the Constitution of Islamic Republic of Pakistan, 1973, by the petitioner, Islamabad Electric Supply Company Limited, seeking to restrain recovery proceedings initiated by tax authorities while its appeal remained pending before the appellate forum. The core legal question was whether recovery proceedings can be initiated against an assessee while their appeal regarding tax liability is still pending adjudication. The Islamabad High Court held that an assessee is entitled to have their disputed tax liabilities adjudicated by an independent forum outside the hierarchy of the respondent department before recovery measures can be enforced. Relying on established jurisprudence, including the Supreme Court's decision in Mehram Ali v. Federation of Pakistan, the Court emphasized the necessity of independent adjudication. Consequently, the Court disposed of the petition by directing the appellate authority to decide the pending appeal within sixty days and ordered that no coercive recovery measures be adopted against the petitioner in the interim period.
- Can tax recovery proceedings be initiated against an assessee while an appeal regarding the tax liability is pending?
- Is an assessee entitled to adjudication of disputed tax liabilities by an independent forum outside the hierarchy of the tax department?
- Does the pendency of an appeal against a tax demand preclude the tax authorities from adopting coercive recovery measures?
- Article 199, Constitution of Islamic Republic of Pakistan 1973
ORDER
Through the instant petition, under Article 199 of the Constitution of Islamic Republic of Pakistan, 1973, the petitioner has sought inter alia direction to respondent No.2 to decide its pending appeal and in the meanwhile restraining respondent No.1 from initiating the recovery proceedings in pursuance of recovery notice dated 02.03.2021 for the tax year 2020.
2. Learned counsel for the petitioner submitted that the impugned notice is illegal, arbitrary and against the law. It was further contended that initiation of recovery proceedings during the pendency of petitioner's appeal is against its fundamental rights guaranteed under the Constitution. It was further contended that it is trite law that unless there is adjudication by one independent forum, no recovery proceedings can be initiated against the assessee. In this behalf learned counsel placed reliance on the case titled "M/s Pak Saudi Fertilizers Ltd. Vs. Federation of Pakistan and others" (2002 PTD 679), "Z.N.
Exporters (Pvt.) Ltd Vs. Collector of Sales Tax" (2003 PTD 1746), "Brothers Engineering (Pvt.) Ltd Vs. Appellate Tribunal Sales Tax" (2003 PTD 1836). Learned counsel further contended that delay in decision of the appeal is not on part of the petitioner, therefore, impugned recovery notice dated 02.03.2021 may be suspended and recovery proceedings be stopped till the final decision of the appeal by respondent No.2.
3. The submissions made by the learned counsel for the petitioner have substance. In this behalf the Hon'ble Supreme Court of Pakistan in case titled "Mehram Ali Vs. Federation of Pakistan etc."
(PLD 1998 SC 1445) has specifically held that there should be adjudication of grievance by an independent Tribunal and even Lahore High Court in numerous judgments has held that an assessee is entitled to adjudication in respect of his disputed tax liabilities by at least one independent forum outside hierarchy of the respondent department.
4. In view of the above, the instant Writ Petition is disposed of with direction to respondent No.2 to hear and decide the appeal within a period of Sixty days and till then no coercive measures shall be adopted against the petitioner by respondent No.1.
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