‘Literal’ approach required to be adopted: SC

TERENCE J SIGAMONY

ISLAMABAD: The Supreme Court directed that a literal approach is to be adopted while interpreting fiscal or taxing statutes, and that the Court cannot read into or impute something when the provisions of a taxing statute are clear.

A three-judge bench, headed by Chief Justice Yahya Afridi, and comprising Justice Muhammad Shafi Siddiqui and Justice Miangul Hassan Aurangzeb, heard an appeal of the Commissioner Inland Revenue against the Lahore High Court order dated 21.11.2022.

The apex court sent back the case to the Commissioner Appeals, saying he was under an obligation to decide the case within the frame of Section 129 (1) (a) of the Income Tax Ordinance, 2001.

The judgment, authored by Justice Shafi, said that the well-recognised rule of construction or interpretation of any fiscal statute or its particular provision is that the intention of the legislature must be discovered from the words used. If the words used are capable of one construction only, then it would not be open to the courts to adopt any other hypothetical construction. If the words of a statute or any of its provisions are readily understood without any ambiguity, then obviously, it is not for the court to raise any doubt as to what they mean or any contrary view other than implementing the same without any hesitation. A statute or any enacting provision must be so construed as to make it effectual and operational.

The judgment noted that it is unambiguously clear that after the amendment by the Finance Act, 2005, the Commissioner Inland Revenue (Appeals) (CIR-A) may confirm, modify, or annul the assessment order because the CIR-A has wider powers to conduct the inquiry. Therefore, in the wake of it, the Commissioner (Appeals) lacks jurisdiction to go beyond the scope of Section 129 of the Ordinance, 2001, and remand the matter to a lower forum; rather, he/ she is bound to decide the same and may exercise all such powers as available.

Additional Commissioner (Audit), Inland Revenue; i.e., is Assessing Officer, had passed an order under Section 122(5A) of the Ordinance against the respondent (M/s Seven Star Sugar Mills (Private) Limited, Karachi), who being aggrieved of it, filed an appeal before the Commissioner (Appeals) against the order of the Assessing Officer, which held that the amended assessment order was passed in haste and, consequently, was annulled and the matter was “remanded” by the Commissioner with direction to proceed afresh against the respondent.

The respondent having not been satisfied on account of limitation cap preferred an appeal before the Appellate Tribunal Inland Revenue, Lahore, which appeal was accepted and it was held that once the Commissioner (Appeals) held that the amended assessment order was not valid then the direction to carry out proceeding afresh cannot be given, consequently, the appeal of the respondent was allowed.

The petitioner (Commissioner) then filed a Tax Reference under Section 133 (1) of the Ordinance against the order of the Tribunal dated 25.01.2022 before the LHC, which was dismissed through the impugned order, hence the present petition for leave to appeal before the apex court.