"\u003chtml xmlns:o=\"urn:schemas-microsoft-com:office:office\"\r\nxmlns:w=\"urn:schemas-microsoft-com:office:word\"\r\nxmlns=\"http://www.w3.org/TR/REC-html40\"\u003e\r\n\r\n\u003chead\u003e\r\n\u003cmeta http-equiv=Content-Type content=\"text/html; charset=windows-1252\"\u003e\r\n\u003cmeta name=ProgId content=Word.Document\u003e\r\n\u003cmeta name=Generator content=\"Microsoft Word 11\"\u003e\r\n\u003cmeta name=Originator content=\"Microsoft Word 11\"\u003e\r\n\u003clink rel=File-List href=\"2017J18_files/filelist.xml\"\u003e\r\n\u003ctitle\u003eHARMONISATION OF INCONSISTENT PROVISIONS\u003c/title\u003e\r\n\u003c!--[if gte mso 9]\u003e\u003cxml\u003e\r\n \u003co:DocumentProperties\u003e\r\n  \u003co:Author\u003eMuhammad Adil Hafeez\u003c/o:Author\u003e\r\n  \u003co:Template\u003eNormal\u003c/o:Template\u003e\r\n  \u003co:LastAuthor\u003eMuhammad Adil Hafeez\u003c/o:LastAuthor\u003e\r\n  \u003co:Revision\u003e2\u003c/o:Revision\u003e\r\n  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@page\r\n\t{mso-page-border-surround-header:no;\r\n\tmso-page-border-surround-footer:no;}\r\n@page Section1\r\n\t{size:8.5in 11.0in;\r\n\tmargin:1.0in 1.25in 1.0in 1.25in;\r\n\tmso-header-margin:.5in;\r\n\tmso-footer-margin:.5in;\r\n\tmso-paper-source:0;}\r\ndiv.Section1\r\n\t{page:Section1;}\r\n--\u003e\r\n\u003c/style\u003e\r\n\u003c!--[if gte mso 10]\u003e\r\n\u003cstyle\u003e\r\n /* Style Definitions */\r\n table.MsoNormalTable\r\n\t{mso-style-name:\"Table Normal\";\r\n\tmso-tstyle-rowband-size:0;\r\n\tmso-tstyle-colband-size:0;\r\n\tmso-style-noshow:yes;\r\n\tmso-style-parent:\"\";\r\n\tmso-padding-alt:0in 5.4pt 0in 5.4pt;\r\n\tmso-para-margin:0in;\r\n\tmso-para-margin-bottom:.0001pt;\r\n\tmso-pagination:widow-orphan;\r\n\tfont-size:10.0pt;\r\n\tfont-family:\"Times New Roman\";\r\n\tmso-ansi-language:#0400;\r\n\tmso-fareast-language:#0400;\r\n\tmso-bidi-language:#0400;}\r\n\u003c/style\u003e\r\n\u003c![endif]--\u003e\r\n\u003c/head\u003e\r\n\r\n\u003cbody lang=EN-US style=\u0027tab-interval:.5in;text-justify-trim:punctuation\u0027\u003e\r\n\r\n\u003cdiv class=Section1\u003e\r\n\r\n\u003cp class=MsoNormal align=center style=\u0027margin-bottom:12.0pt;text-align:center;\r\nmso-pagination:none;mso-layout-grid-align:none;text-autospace:none\u0027\u003e\u003cb\u003eHARMONISATION\r\nOF INCONSISTENT PROVISIONS\u003co:p\u003e\u003c/o:p\u003e\u003c/b\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal align=center style=\u0027margin-bottom:12.0pt;text-align:center;\r\nmso-pagination:none;mso-layout-grid-align:none;text-autospace:none\u0027\u003e\u003cb\u003eBy\u003co:p\u003e\u003c/o:p\u003e\u003c/b\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal align=center style=\u0027margin-bottom:12.0pt;text-align:center;\r\nmso-pagination:none;mso-layout-grid-align:none;text-autospace:none\u0027\u003e\u003cb\u003eDr.\r\nIlyas Zafar,\u003co:p\u003e\u003c/o:p\u003e\u003c/b\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal align=center style=\u0027margin-bottom:12.0pt;text-align:center;\r\nmso-pagination:none;mso-layout-grid-align:none;text-autospace:none\u0027\u003e\u003cb\u003eAdvocate\r\nSupreme Court\u003co:p\u003e\u003c/o:p\u003e\u003c/b\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-bottom:12.0pt;text-align:justify;mso-pagination:\r\nnone;mso-layout-grid-align:none;text-autospace:none\u0027\u003e\u003cspan style=\u0027mso-tab-count:\r\n1\u0027\u003e            \u003c/span\u003eIn parliamentary systems of government, there are two\r\nmain types of legislation (i) primary legislation and (ii) secondary\r\nlegislation, the former may also referred as Substantive Legislation usually\r\nthrough Act of Parliament and the latter called delegated legislation or\r\nsubordinate legislation, are two forms of law, created respectively by the\r\nlegislative and executive branches of government. Primary legislation generally\r\nconsists of statutes, also known as \u0026quot;Acts\u0026quot; and in case of immediate\r\naction, the President can promulgate \u0026quot;Ordinances\u0026quot; that set out broad\r\noutlines and principles, but delegate specific authority to an Executive branch\r\nto make more specific laws under the aegis of the principal Act. The delegated\r\nlegislation derives its power and legality from the principal/primary\r\nlegislation and any delegated legislation in contravention of primary\r\nlegislation is ultra vires to the Act. The executive branch can issue secondary\r\nlegislation (mainly via its regulatory agencies), creating legally enforceable\r\nregulations and the procedures for implement-ing them and for the sake of any\r\nclarity or to fill grey areas in Principal legislation. The known instruments\r\nof delegated legislation are Rules, Regulations, Bye-Laws, Statutory\r\nNotifications, and Circulars etc. It is cardinal principle of law that the\r\ninstruments made under delegated legislation has force of law and are equally\r\nenforceable as primary legislation.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-bottom:12.0pt;text-align:justify;mso-pagination:\r\nnone;mso-layout-grid-align:none;text-autospace:none\u0027\u003e\u003cspan style=\u0027mso-tab-count:\r\n1\u0027\u003e            \u003c/span\u003eAt present, I\u0027m facing hardship due to misinterpretation\r\nof the formerly inserted provisos of section 153 of the Income Tax Ordinance,\r\n2001 vide Finance Act, 2009, in the case of one of my clients and like to bring\r\nit to the notice of legal fraternity for their help that how they construe it.\r\nThe relevant subsections of section 153 prior to substitution under Finance\r\nAct, 2011 promulgated on July 01, 2011 have been reproduced hereunder:\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-bottom:12.0pt;text-align:justify;text-indent:\r\n.5in;mso-pagination:none;mso-layout-grid-align:none;text-autospace:none\u0027\u003e\u003cb\u003eS.\r\n153. Payments for goods and services--\u003co:p\u003e\u003c/o:p\u003e\u003c/b\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e(1)\u003cspan style=\u0027mso-tab-count:1\u0027\u003e        \u003c/span\u003eEvery\r\nprescribed person making a payment in full or part including a payment by way\r\nof advance to a resident person or permanent establishment in Pakistan of a\r\nnon-resident person---\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-bottom:12.0pt;text-align:justify;mso-pagination:\r\nnone;mso-layout-grid-align:none;text-autospace:none\u0027\u003e\u003cspan style=\u0027mso-tab-count:\r\n1\u0027\u003e            \u003c/span\u003e(a) for the sale of goods;\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-bottom:12.0pt;text-align:justify;mso-pagination:\r\nnone;mso-layout-grid-align:none;text-autospace:none\u0027\u003e\u003cspan style=\u0027mso-tab-count:\r\n1\u0027\u003e            \u003c/span\u003e(b) for the rendering of or providing of services;\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e(c) on the execution of a contract, other than a\r\ncontract for the sale of goods or the rendering of or providing of services,\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003eshall, at the time of making the payment, deduct tax\r\nfrom the gross amount payable at the rate specified in Division III of Part III\r\nof the First Schedule.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-bottom:12.0pt;text-align:justify;text-indent:\r\n.5in;mso-pagination:none;mso-layout-grid-align:none;text-autospace:none\u0027\u003e(2)\u003cspan\r\nstyle=\u0027mso-tab-count:1\u0027\u003e        \u003c/span\u003e(5)\r\n-----------------------------------------------------------------------\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e(6) The tax deducted under this section shall be a\r\nfinal tax on the income of a resident person arising from transactions referred\r\nto in subsection (1) or (1A):\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003eProvided that subsection (6) shall not apply to\r\ncompanies in respect of transactions of referred to in clause (b) of subsection\r\n(1): (emphasis added)\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003eProvided further that this subsection shall not apply\r\nto payments received on account of---\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-bottom:12.0pt;text-align:justify;mso-pagination:\r\nnone;mso-layout-grid-align:none;text-autospace:none\u0027\u003e\u003cspan style=\u0027mso-tab-count:\r\n1\u0027\u003e            \u003c/span\u003e(i) Advertisement services, by owners of newspapers and\r\nmagazines;\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e(ii) sale of goods and execution of contracts by a\r\npublic company listed on a registered stock exchange in Pakistan; and\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e(iii) the rendering of or providing of services\r\nreferred to in sub-clause (b) of subsection (1):\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003eProvided that tax deducted under sub-clause (b) of\r\nsub-section (1) of section 153 shall be minimum tax.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003eIt is pertinent to mention here that subsection (6)\r\nalong with First Proviso has been inserted vide Finance Act, 2006, whereas\r\ncolon at the end of the First proviso was substituted for full stop and the\r\nSecond proviso was inserted vide Finance Act, 2007.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003eThe word \u0026quot;and\u0026quot; at the end of Second Proviso\r\nwas substituted for full stop and clause (iii) along with proviso was added\r\nafter clause (ii) of the Second Proviso vide Finance Act, 2009.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003eNow, the matter before me is that whether the first\r\nproviso is said to be controlled by second or third proviso and the company\r\nwould be made amenable to Minimum Tax in terms of clause (b) of subsection (1)\r\nto section 153 of the Income Tax Ordinance, 2001.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003eI hereunder discuss the impact of these provisos in\r\nthe light of settled rules of interpretation of Fiscal Statute and Circulars\r\nissued by the Federal Board of Revenue.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-bottom:12.0pt;text-align:justify;mso-pagination:\r\nnone;mso-layout-grid-align:none;text-autospace:none\u0027\u003e\u003cb\u003eINTERPRETATION OF STATUTE\u003co:p\u003e\u003c/o:p\u003e\u003c/b\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-bottom:12.0pt;text-align:justify;mso-pagination:\r\nnone;mso-layout-grid-align:none;text-autospace:none\u0027\u003e\u003cspan style=\u0027mso-tab-count:\r\n1\u0027\u003e            \u003c/span\u003eIt is settled principle of law that proviso is added to\r\nan enactment to qualify or create an exception to what is in the enactment, and\r\nordinarily, a proviso is not interpreted as stating a general rule. A proviso\r\nis subject to main provision and is not an independent enactment and is prima\r\nfacie to be read and considered in relation to the principal clause to which it\r\nis attached (2001 SCMR 914).\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-bottom:12.0pt;text-align:justify;mso-pagination:\r\nnone;mso-layout-grid-align:none;text-autospace:none\u0027\u003e\u003cspan style=\u0027mso-tab-count:\r\n1\u0027\u003e            \u003c/span\u003eThus, keeping in view the above definition of proviso, if\r\nI read clause (iii) to the Second Proviso, I find that it ended with a colon\r\nand a proviso. The colon represents continuity/explanation to the clause (iii)\r\nand is followed by a proviso. The use of punctuation and ending of clause (iii)\r\nwith a proviso itself make it evident that the said proviso is not meant for\r\nenumerating qualification as to the applicability of main enactment/subsection\r\n(6) of section 153 of the Income Tax Ordinance, 2001 rather to clause (iii) of\r\nSecond Proviso to which it is a proviso, thus couldn\u0027t be construed as third\r\nproviso to main enactment.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-bottom:12.0pt;text-align:justify;mso-pagination:\r\nnone;mso-layout-grid-align:none;text-autospace:none\u0027\u003e\u003cspan style=\u0027mso-tab-count:\r\n1\u0027\u003e            \u003c/span\u003eIt is pertinent to mention here that colon is substituted\r\nfor full stop at the end of First Proviso vide Finance Act, 2007, when the\r\nSecond Proviso is inserted. However, the substitution of colon at the end of\r\nfirst proviso, under the circumstances, make the former subject to latter. The\r\nreason being that the First Proviso starts with the phrase \u0026quot;Provided\u0026quot;\r\nand Second Proviso starts with the phrase \u0026quot;Provided further\u0026quot;, which\r\ndenotes that in addition to first proviso there is another exception/ exclusion\r\nto subsection (6). Furthermore, both the provisos explicity oust the\r\napplicability of subsection (6). It is because of specially ejecting the\r\napplicability of subsection (6) of section 153 that the Second proviso can\u0027t be\r\nsaid to curtail or give away the effects of First proviso nor could be\r\ninterpreted to render explanation of First Proviso.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-bottom:12.0pt;text-align:justify;mso-pagination:\r\nnone;mso-layout-grid-align:none;text-autospace:none\u0027\u003e\u003cspan style=\u0027mso-tab-count:\r\n1\u0027\u003e            \u003c/span\u003eThe first Proviso expressly and specifically excluded the\r\ncompanies from the domain of subsection (6) of section 153. The Second proviso,\r\nfurther provides an exception to subsection (6) by stating that the said\r\nsubsection doesn\u0027t apply to the advertisement services by owners of newspapers\r\nand magazine, sales of goods and execution of contracts by a Public Listed\r\nCompany and the rendering of or providing of services referred to in sub-clause\r\n(b) of subsection (1).\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-bottom:12.0pt;text-align:justify;mso-pagination:\r\nnone;mso-layout-grid-align:none;text-autospace:none\u0027\u003e\u003cspan style=\u0027mso-tab-count:\r\n1\u0027\u003e            \u003c/span\u003eIt is significant to mention here that in the existence\r\nof First Proviso and that too as an independent exclusion to subsection (6) of\r\nsection 153, clause (iii) of Second Proviso and its appended proviso could only\r\nbe interpreted to refer to exclusion of services rendered by non-corporate\r\nsector, so as to avoid inconsistency between the two provisos and for the\r\npurpose of rendering harmonious construction.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-bottom:12.0pt;text-align:justify;mso-pagination:\r\nnone;mso-layout-grid-align:none;text-autospace:none\u0027\u003e\u003cspan style=\u0027mso-tab-count:\r\n1\u0027\u003e            \u003c/span\u003eThe First proviso if be read with clause (iii) of Second\r\nproviso, make it evident that the latter one to the main enactment applies only\r\nto those cases which are not covered under First Proviso i.e. upon\r\nnon-corporate Sector. The First proviso is in no manner made subject to Second\r\nproviso thus both provisos are independent and object of both provisos are to\r\nrestrict the applicability of subsection (6) to certain establishments. In such\r\na case extending the interpretation of the second proviso so as to include\r\ncorporate sector within its domain is against the set principles of\r\ninterpretation of fiscal statutes and that of harmonised construction. It is\r\ntrite law that inconsistent provisos, if any, should be harmonized and no\r\nprovision should become redundant. It is also a principle that English words\r\nshould be given their true meanings and should drive their colour from those\r\nwords which surround them. Statute has to be read as a whole and a particular\r\nprovision can not be read in isolation. But it is a trite law that the special\r\nlaw (subsection (6) excludes application of general law in the context in which\r\nthe former provision has been enacted. Object and reason for enactment should\r\nbe considered and interpretation should advance the remedy and not to negate\r\nit. The judges should iron out the creases, if any.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-bottom:12.0pt;text-align:justify;mso-pagination:\r\nnone;mso-layout-grid-align:none;text-autospace:none\u0027\u003e\u003cspan style=\u0027mso-tab-count:\r\n1\u0027\u003e            \u003c/span\u003eThe principle to be followed in the construction of\r\nfiscal stature is expressed by Rolatt in Cape Brandy Syndicate v. Inland\r\nRevenue Commissioner cited as [1921] 1 K.B. 64, as follows:\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u0026quot;In a taxing Statute one has to look at what is\r\nclearly said. There is no room for an intendment. There is no equity about a\r\ntax. There is no presumption as to a tax. Nothing is to be read in, nothing is\r\nto be implied. One can fairly look at the language used.\u0026quot;\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003eThis rule is also enunciated in Attorney General v.\r\nSelborne [(1902) 1 K.B. 388 at p.396]\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u0026quot;therefore, the Crown fails, if the case is not\r\nbrought within the words of the statute interpreted according to their natural\r\nmeaning; and if there is a case which is not covered by the statute so\r\ninterpreted, that can only be cured by legislation, and not by an attempt to\r\nconstrue the statute benevolently in favour of the Crown.\u0026quot;\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-bottom:12.0pt;text-align:justify;mso-pagination:\r\nnone;mso-layout-grid-align:none;text-autospace:none\u0027\u003eFor interpretation of the\r\ntaxing provision, the following principles are well-settled.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003ea.\u003cspan style=\u0027mso-tab-count:1\u0027\u003e         \u003c/span\u003eTax\r\ncan\u0027t be imposed without the clear and express language. The subject to be\r\ntaxed must be brought not merely within the spirit but within the letters of\r\nlaw also. Unless, the words are clear, a fiscal enactment should not be\r\nconstrued as imposing tax by implication. 2016 PTD (Trib.) 57, 2015 PTD (Trib.)\r\n319 1972 SCMR 116 and 1971 PTD 200.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003eb.\u003cspan style=\u0027mso-tab-count:1\u0027\u003e         \u003c/span\u003eThe\r\ninterpretation, in fiscal statutes, has to be according to the strict letter of\r\nthe law; and not only in case of doubt, but also in case of beneficial\r\ninterpretation, the rule is to tend in favour of the subject rather the\r\nexchequer. 2015 PTD 884, 2015 PTD (Trib.) 654, 2000 PTD 280, 1977 SCMR 371,\r\n1989 PTD 1048 and 1996 SCMR 1470.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003ec.\u003cspan style=\u0027mso-tab-count:1\u0027\u003e         \u003c/span\u003eThere\r\nis no equity about a tax in the sense that a provision, by which a tax is\r\nimposed, has to be construed strictly, regardless of the hardship that such a\r\nconstruction may cause either to the treasury or to the tax payer. 2015 PTD\r\n(Trib.) 319 and 1993 SCMR 274 = 1993 PTD 69.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003ed.\u003cspan style=\u0027mso-tab-count:1\u0027\u003e         \u003c/span\u003eWhile\r\nconstruing taxing Statute, the Courts must look to the words of the Statute and\r\ninterpret them in the light of what is clearly expressed. It cannot imply\r\nanything which is not expressed, it cannot import provisions in the Statute so\r\nas to support assumed deficiency. 1992 SCMR 663, 2000 PTD 280, 1977 SCMR 371.\r\nThe subject can be taxed only if the revenue satisfies the court that the case\r\nfalls strictly within the provisions of the law. (pg. 403 of the D.P., Bittal\r\nbook).\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003ee.\u003cspan style=\u0027mso-tab-count:1\u0027\u003e         \u003c/span\u003eIt is\r\nwell accepted canon of interpretation of statutes that Courts are presumed that\r\nthe law giver has used each word with a purpose and the same canon applies when\r\nthe Court has to interpret the language used in an Ordinance. In other words,\r\njudges are not legislators or lawmakers, but adjudicators interpreting the text\r\nof the law laid out by legislators and stating what the text means. (1990 PTD\r\n(Trib.) 121)\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003ef.\u003cspan style=\u0027mso-tab-count:1\u0027\u003e          \u003c/span\u003eIf\r\nany provision of a fiscal statute admits of two meanings the more beneficial to\r\nthe assessee/public is to be adopted. Doubt if any is always to be resolved in\r\nfavour of subject and not in favour of the State. It has been held in many\r\ncases if the provision is capable of two alternative meanings, the court will\r\nprefer that meaning more favourable to the subject. (2007 PTD 921, 1990 PTD\r\n(Trib.) 121, 1989 PTD 905 and PLD 1977 Lah. 797 (806).\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003eg.\u003cspan style=\u0027mso-tab-count:1\u0027\u003e         \u003c/span\u003eFurther,\r\neven if two interpretations are equally possible, the one that saves vested\r\nrights would be adopted in the interest of justice, especially where we are\r\ndealing with a taxing statute. Reference can be given in this connection to\r\npage 206 of Maxwell on the Interpretation of Statutes, Eleventh Edition.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-bottom:12.0pt;text-align:justify;mso-pagination:\r\nnone;mso-layout-grid-align:none;text-autospace:none\u0027\u003e\u003cb\u003eCIRCULARS:\u003co:p\u003e\u003c/o:p\u003e\u003c/b\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-bottom:12.0pt;text-align:justify;mso-pagination:\r\nnone;mso-layout-grid-align:none;text-autospace:none\u0027\u003e\u003cspan style=\u0027mso-tab-count:\r\n1\u0027\u003e            \u003c/span\u003eSection 206 of the Income Tax Ordinance, 2001, empowers\r\nthe Board of Revenue to set out the interpretation of this Ordinance through\r\nCirculars for the purpose of achieving consistency in the administration of\r\nthis Ordinance and to provide guidance to the tax payers and the officers of\r\nthe Board. Under aforesaid Section, it is clearly stated that the Circulars\r\nissued by the Board shall be binding on all Income Tax Authorities other than\r\nCommissioner of Income Tax (Appeals) and Taxpayer.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-bottom:12.0pt;text-align:justify;text-indent:\r\n.5in;mso-pagination:none;mso-layout-grid-align:none;text-autospace:none\u0027\u003e\u003cb\u003eSection\r\n206 is reproduced as under:\u003co:p\u003e\u003c/o:p\u003e\u003c/b\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003cb\u003e206. Circulars:\u003co:p\u003e\u003c/o:p\u003e\u003c/b\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e1)\u003cspan style=\u0027mso-tab-count:1\u0027\u003e         \u003c/span\u003eTo\r\nachieve consistency in the administration of this Ordinance and to provide\r\nguidance to taxpayers and officers of the Board, the Board may issue Circulars\r\nsetting the Board\u0027s interpretation of this Ordinance.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e2)\u003cspan style=\u0027mso-tab-count:1\u0027\u003e         \u003c/span\u003eA\r\nCircular issued by the Board shall be binding on all Income Tax Authorities and\r\nother persons employed in the execution of the Ordinance, under the control of\r\nthe said Board other than Commissioners of Income Tax (Appeals).\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e3)\u003cspan style=\u0027mso-tab-count:1\u0027\u003e         \u003c/span\u003eA\r\nCircular shall not be binding on a tax payer.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-bottom:12.0pt;text-align:justify;mso-pagination:\r\nnone;mso-layout-grid-align:none;text-autospace:none\u0027\u003eIt was in exercise of said\r\npowers conferred by Statute under section 206 ibid, that after substitution of\r\n\u0026quot;and\u0026quot; for full stop at the end of Second Proviso and insertion of\r\nclause (iii) along with proviso after clause (ii) of the Second Proviso vide\r\nFinance Act, 2009, the Federal Board of Revenue issued following\r\nguidelines/instructions regarding the aforesaid amendments:\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e(i)\u003cspan style=\u0027mso-tab-count:1\u0027\u003e         \u003c/span\u003eInstructions\r\ndated July 01, 2009 in which LTUs/RTOs were advised that the tax deducted under\r\nsection 153(1)(b) of the Income Tax Ordinance, 2001 was a \u0027minimum tax\u0027;\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e(ii)\u003cspan style=\u0027mso-tab-count:1\u0027\u003e        \u003c/span\u003eCircular\r\nNo. 3 of 2009 dated July 17, 2009 in which it was clarified that\u0026quot; .. tax\r\ndeducted on payments made for rendering or providing of services will be\r\nconsidered as minimum tax and henceforth all the taxpayers falling in the ambit\r\nof section 153(1)(b) shall file return under the normal tax regime instead of\r\nstatement under final tax regime\u0026quot;; and\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e(iii)\u003cspan style=\u0027mso-tab-count:1\u0027\u003e       \u003c/span\u003eCircular\r\nNo. 6 of 2009 dated Aug. 18, 2009 in which it was clarified that the \u0027proviso\u0027\r\ntreating the tax deducted as \u0027minimum tax\u0027 was not applicable to corporate\r\nsector and as such for these taxpayers the provisions of section 113 of the\r\nIncome Tax Ordinance, 2001 would remain applicable regarding \u0027minimum tax\u0027\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-bottom:12.0pt;text-align:justify;mso-pagination:\r\nnone;mso-layout-grid-align:none;text-autospace:none\u0027\u003eNo further\r\nguidelines/instructions/circulars were issued in the context of the aforesaid\r\nprovisions/amendments until April 26, 2011 when further clarifications in\r\nrespect of amendment made in subsection (6) of section 153 of the Income Tax\r\nOrdinance, 2001 were issued by the Federal Board of Revenue vide C.No.1 (25)\r\nWHT/2009 in which it was clarified that:\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u0026quot;The provisions of subsection (6) of section 153\r\nof the Income Tax Ordinance, 2001 has been amended through Finance Act, 2009 by\r\nadding sub-clause (iii) and provisions thereto which read as under:\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e(iii) the rendering of or providing of services\r\nreferred to in sub-clause (b) of subsection (1);\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-top:0in;margin-right:0in;margin-bottom:12.0pt;\r\nmargin-left:.5in;text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003eProvided that tax deducted under sub-clause (b) of\r\nsub-section (1) of section 153 shall be minimum tax\u0026quot;\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-bottom:12.0pt;text-align:justify;mso-pagination:\r\nnone;mso-layout-grid-align:none;text-autospace:none\u0027\u003eThese amendments are aimed\r\nat excluding the tax chargeable on services from the ambit of \u0026quot;Final Tax\r\nRegime\u0026quot;. However, it has been observed that various interpretations as to\r\nthe treatment of tax on services, after its exclusion from \u0026quot;Final Tax\r\nRegime\u0026quot;, are being adopted.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-bottom:12.0pt;text-align:justify;mso-pagination:\r\nnone;mso-layout-grid-align:none;text-autospace:none\u0027\u003eThe matter has been\r\nexamined again and in order to ensure a correct and uniform treatment, in\r\nsupersession of the earlier instructions issued through Circular No. 6 of 2009\r\ndated August 18, 2009, it is clarified that in view of the amendments made\r\nthrough Finance Act, 2009 as referred above, tax deducted on payments made for\r\nrendering or providing of service is to be treated as \u0026quot;minimum tax\u0026quot;\r\nand henceforth taxpayer falling in the ambit of section 153(1)(b) shall file\r\nreturn of income, instead of a statement under Final Tax Regime.\u0026quot;\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-bottom:12.0pt;text-align:justify;mso-pagination:\r\nnone;mso-layout-grid-align:none;text-autospace:none\u0027\u003eThe aforementioned\r\nCircular letter bearing No. C. No.1(25) WHT/ 2009 though have thwarted the\r\neffect of Circular No. 06 of 2009 but the clarification rendered by the Board\r\nunder said Circular seems to have been rendered in a perfunctory and arbitrary\r\nmanner, as while rendering the said clarification the Department has only\r\nconsidered and taken into account proviso to clause (iii) of Second proviso to\r\nsubsection (6) of section 153 and have deliberately ignored to give any\r\nreference to first proviso to sub-clause (6) of section 153. In addition,\r\nthereto, the Board has stated that in view of the amendments made through\r\nFinance Act, 2009 as referred above, tax deducted on payments made for\r\nrendering or providing of service is to be treated as \u0026quot;minimum tax\u0026quot;\r\nand henceforth taxpayer falling in the ambit of section 153(1)(b) shall file return\r\nof income, instead of a statement under Final Tax Regime.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-bottom:12.0pt;text-align:justify;mso-pagination:\r\nnone;mso-layout-grid-align:none;text-autospace:none\u0027\u003eIt is significant to\r\nhighlight the fact that Circular letter bearing No. C. No. 1(25) WHT/2009 dated\r\n26th April, 2011 is said by the Board to have superseded the earlier\r\ninstructions issued through Circular No. 6 of 2009 dated August 18, 2009 but\r\nthey have failed to appreciate the fact that the clarification rendered by them\r\nunder the subject Circular doesn\u0027t rip-off the effect of Circular No. 6 of\r\n2009. In this clarification Board has stated that tax deducted on payments made\r\nfor rendering or providing of service is to be treated as \u0026quot;minimum\r\ntax\u0026quot; and henceforth taxpayer falling in the ambit of section 153(1)(b)\r\nshall file return of income, instead of a statement under Final Tax Regime.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-bottom:12.0pt;text-align:justify;mso-pagination:\r\nnone;mso-layout-grid-align:none;text-autospace:none\u0027\u003eThe Board has malevolently\r\nreferred to the subject \u0026quot;Tax payer\u0026quot; and have not given any indication\r\nto corporate sector. In order to supersede Circular No. 6 of 2009, the Board\r\nhave to state that the Corporate Sector as well as Non-Corporate Sector falling\r\nin the ambit of section 153(1)(b) are liable to minimum tax, but instead of\r\nrendering a clear clarification, the Board has come up with the vague\r\nstatement. The term \u0026quot;Taxpayer\u0026quot; as used by the Board further required\r\ninterpretation in the light of section 153 read with its subsections and\r\nprovisos.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-bottom:12.0pt;text-align:justify;mso-pagination:\r\nnone;mso-layout-grid-align:none;text-autospace:none\u0027\u003eIt is the canon rule of\r\ninterpretation that the Statute is to be read as a whole and not in bit and\r\npieces and that the courts have to proceed on the assumption that each word\r\ntherein was used with a purpose. (PLD 2016 SC 730, 2016 CLD 410). While issuing\r\nthe Circular letter bearing No. C. No. 1(25) WHT/2009 dated 26th April, 2011\r\nand undoing the effect of Circular No. 06 of 2009, the Board has to render\r\nexplanation to first proviso to sub-clause (6) of section 153 or at-least have\r\nto refer to the Corporate Sector instead of using the term Taxpayer.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-bottom:12.0pt;text-align:justify;mso-pagination:\r\nnone;mso-layout-grid-align:none;text-autospace:none\u0027\u003eFrom the above discussion,\r\nI can safely state that the subsequent clarification rendered by the Board on\r\nApril 26, 2011 vide Circular letter bearing No. C. No. 1(25) WHT/2009 to give\r\naway to the effects of earlier clarification rendered under Circular No. 6 of\r\n2009 dated Aug. 18, 2009 lacks the element of judiciousness and tainted by the\r\ncolourable exercise of power and authority.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-bottom:12.0pt;text-align:justify;mso-pagination:\r\nnone;mso-layout-grid-align:none;text-autospace:none\u0027\u003eIt is pertinent to\r\nhighlight the fact that vide Clause (79) (added/inserted on 31st Oct. 2011 in\r\nPart IV of Schedule II of the Income Tax Ordinance, 2001 vide S.R.O.\r\n1003(I)/2011 dated 31-10-2011 and now has been omitted by Finance Act. 2015,\r\nthe provision of clause (b) of the proviso to subsection (3) of section 153 has\r\nbeen made inapplicable to the tax withheld on payments received by a company\r\nfor providing or rendering of services, thus vide insertion of said clause, the\r\npith and substance of Circular No. 6 of 2009 was incorporated in law in the\r\nshape of Clause (79), Part IV of Schedule II of the Income Tax Ordinance, 2001.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-bottom:12.0pt;text-align:justify;mso-pagination:\r\nnone;mso-layout-grid-align:none;text-autospace:none\u0027\u003e\u003cb\u003eThe assessee is not\r\nsupposed to presume that the Clause (79) was inserted mistakenly and have the\r\nvested right to take the benefit as it was a part of the statute. Court cannot\r\nsupply omissions to the statute and no omissions are to be inferred on the part\r\nof the legislature. Clause (79) of Pt. IV of Second Schedule to the Income Tax\r\nOrdinance, 2001 reads as under:\u003co:p\u003e\u003c/o:p\u003e\u003c/b\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-bottom:12.0pt;text-align:justify;mso-pagination:\r\nnone;mso-layout-grid-align:none;text-autospace:none\u0027\u003e\u003cb\u003e(79)\u003c/b\u003e The Provisions\r\nof Clause (b) of the proviso to subsection (3) of section 153 shall not be\r\napplicable to the tax withheld on payments received by a company for providing\r\nor rendering services.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-bottom:12.0pt;text-align:justify;mso-pagination:\r\nnone;mso-layout-grid-align:none;text-autospace:none\u0027\u003eFurther, from the text of\r\nSection 206 of the Income Tax Ordinance, 2001, it is clear that Circulars\r\nissued by the board are binding on the Department and the Department is\r\nprecluded from advancing any argument that is contrary to that interpretation\r\nor otherwise challenging the correctness of said circulars even on the ground\r\nof the same being inconsistent with the statutory provision (2007 PTD 921, 2001\r\nPTD 2587 = 248 ITR 338 Supreme Court of India and 2001 PTD 2253 = 247 ITR 128\r\nSupreme Court of India). On the contrary, the Circular is not binding on the\r\nTax payer which means that the Tax payer could challenge the same, if desires\r\nto do so. It is now established principle of law that if a Circular is of\r\nbenevolent nature, the same would go to the assistance of the assessee. (2002\r\nPTD 63). Correctness of Circulars cannot be challenged by Department even on\r\nthe ground of their being inconsistent with statutory provision. 2001 PTD 2253\r\n= 247 ITR 128. In case of inefficiency of Dept., the benefit should be given to\r\nassessee. 1993 PTD 717. The Govt. can\u0027t withdraw its concessions granted. 1989\r\nPTD 839.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-bottom:12.0pt;text-align:justify;mso-pagination:\r\nnone;mso-layout-grid-align:none;text-autospace:none\u0027\u003eNevertheless, under the\r\nrule of locus poenitentiae, where by virtue of Circulars issued by the Board of\r\nRevenue, a right is created in favour of an individual then that cannot be\r\ntaken away by the Board by exercising the power of modification, rescission,\r\nreliance in this respect is placed upon 2015 PTD 1714, 1993 PTD (Trib.) 147.\r\nFurthermore, it is an established proposition of law that in fiscal matters the\r\ncase of a taxpayer cannot be re-opened merely on account of change in opinion\r\non the part of the revenue authorities (2007 PTD 921)\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-bottom:12.0pt;text-align:justify;mso-pagination:\r\nnone;mso-layout-grid-align:none;text-autospace:none\u0027\u003eThere is also a Legal\r\nMaxim, QUAE NON FIERI DEBENT, FACTA VALENT (Things that ought not to be done\r\nare held valid when they have been done).\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-bottom:12.0pt;text-align:justify;mso-pagination:\r\nnone;mso-layout-grid-align:none;text-autospace:none\u0027\u003eIn the light of above\r\nsettled principles of interpretation, the Order passed by the learned Inland\r\nRevenue Appellate Tribunal cited as 2014 PTD (Trib.) 484 seems to be justified,\r\nspeaking, proper and passed with application of judicious mind and rational\r\napproach.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-bottom:12.0pt;text-align:justify;mso-pagination:\r\nnone;mso-layout-grid-align:none;text-autospace:none\u0027\u003eIn the light of above\r\nsubmissions, I am of the view that section 153(1)(b) and (6) prior to F.A.\r\n2011, are interpreted wrongly through Circular dated 26th April 2011, as\r\nsubsection (6) has excluded its application to the companies. I welcome the\r\nviews of my friends on this issue through izafar@zallp.co\u003c/p\u003e\r\n\r\n\u003c/div\u003e\r\n\r\n\u003c/body\u003e\r\n\r\n\u003c/html\u003e\r\n"