Super tax for TDPs rehabilitation: IR commissioner can invoke, utilise provisions of Section 4B, rules LHC

The Lahore High Court (LHC) has ruled that the commissioner Inland Revenue can very well invoke and utilise the provisions of Section 4B (super tax) in case of super tax for rehabilitation of the temporarily displaced persons (TDPs).

It is reliably learnt that in a recent order WP No 1014 of 2018, LHC ruled that the commissioner can very well invoke and utilise the provisions of Section 4B read with Section 122(5A) of the ordinance in case of super tax for rehabilitation of TDPs.

The nucleus of the controversy is the anthropology of Section 4B of the Income Tax Ordinance, 2001 (the "Ordinance") viz-a-viz its character and nature for being a complete code onto itself with the semantic underpinnings as to exclusion of the machinery provisions of the Income Tax Ordinance.

The petitioner company has invoked the constitutional jurisdiction of this court under Article 199 of the Constitution of Islamic Republic of Pakistan, 1973 (the "Constitution") by challenging two show cause notices dated December 22, 2017, and January 03, 2018, respectively issued by the respondent no.3/additional commissioner Inland Revenue on the ground that aforesaid-respondent had no power to issue the same under section 122 (5A) read with 122(9) of the ordinance as the power to issue such notices only laid with the respondent no. 2/commissioner Inland Revenue under Section 4B of the ordinance.

The LHC order states, "Super tax has been imposed for the rehabilitation of temporarily displaced persons for the tax year 2015 and has been extended till 2017."

Noticeably the legislature has envisaged a broad sweep application of the provisions of Chapter X of the ordinance, which entails Section 122 and is clear from the wording of sub-section (3) of 4B of the ordinance.

As a corollary, it follows that Section 4B along with its sub-sections ought to be read in conjunction with the machinery provisions of the Ordinance i.e. Section 122.

Hence, the commissioner can very well invoke and utilise the provisions of Section 4B read with Section 122(5A) read with 122(9) of the ordinance.

The LHC order further added, "To my mind, the legislature has used the words consciously and asymmetrically, so as to give effect to them and to make sure that no word or provisions of a statute is to be treated as surplusage and redundant when interpreted in its literal and ordinary meaning. It is trite law that provisions in a taxing statute must be harmoniously reconciled instead of picking out any inconsistency between the different provisions. Thus, all provisions of a statute have to be read together and harmonious construction is to be placed on such provisions so that no provision is rendered nugatory."

Moreover, it is suffice to observe that Section 4B does not specifically exclude applicability of Section 210 from its purview.

In fact sub-section (5) of Section 4B imports the provisions of Part IV, X, XI and XII of Chapter X and Part 1 of Chapter XI with regard to collection and recovery of super tax and finds mention of the following words, "so far as may be, apply to the collection of super tax as these apply to the collection of tax under the Ordinance."

Section 210 falls under Chapter XI, which finds mention in sub-section (5) of 4B of the ordinance.

It is clear from the language of Section 4B that not only provisions of recovery but provisions of assessment of the ordinance, which collectively could be referred as the machinery provisions of the ordinance have also been made applicable to it.

Bare reading of the section, manifestly lays down that delegation of power could be done under the ordinance subject only to sub-section (1A).

Therefore, without imputing a stretched meaning into the taxing statute, it is clear that Section 210 applies to Section 4B of the ordinance as well.

In other words, all those sections in the ordinance, which deal with the powers and responsibilities of the commissioner, the said powers could very well be delegated by the commissioner as per the mandate of Section 210 of the ordinance.

Section 4B is indeed part of the ordinance being one of the sections, so the applicability of Section 210 cannot be excluded, the LHC ordered.