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Civil Petitions for Special Leave to Appeal Nos. 96 and 128 of 1968, decided on 30th October 1968.
(On appeal from the judgment and order of the High Court of West Pakistan, Lahore, dated the 20th December 1967 and 18th January 1968, in Civil Miscellaneous No. 1 of 1967/Writ Petitions Nos, 2003 arid 1881 of 1967, respectively),
S. 28‑Assessees taxed on cotton seed but assessing authorities at time did not apply their mind to question of turn‑over in respect of cotton seed oil‑Section 24, in circumstances, held, applicable for re‑assessment.
Noorani Cotton Corporation v. Sales Tax Officer P L D 1965 ,S C 161; Messrs Pakistan Oil Mills v. The Sales Tax Officer Writ Petition No. 2003 of 1967 and Sh. Muhammad Sharif Muhammad Asghar v. The Sales Tax Officer Writ Petition No. 1881 of 1967 ref.
Commissioner of Sales Tax v. Messrs Haji & Company, Chiniot P L D 1966 Lah. 256 and Rajindra Nath v. Commissioner of Income‑tax A I R 1934 P C 30 distinguished.
Abdur Rashid Sheikh, Senior Advocate Supreme Court (Mien Abdul Haq, Advocate Supreme Court with him) instructed by Abdul Karim, Attorney for Petitioners.
Abdul Haq Sheikh, Advocate Supreme Court instructed by Iftikharuddin Ahmad, Attorney for Respondent.
Abdur Rashid Sheikh, Senior Advocate Supreme Court Azimuddin Choudhury, Advocate Supreme Court with him) instructed by Abdul Karim, Attorney for Petitioners.
Abdul Haq Sheikh, Advocate Supreme Court instructed by Iftikharuddin Ahmad, Attorney for Respondent.
Date of hearing : 30th October 1968.
The petitioners in these cases who are owners of Cotton Ginning Factories and were duly licensed under section 8 of the Sales Tax Act, 1951, were assessed for the years 1960‑61 and 1961‑62, respectively, to sales tax on cotton seed amounting to Rs. 46,888 and Rs. 4,912, respectively. The petitioners in Civil Petition No. 96 of 1968 were also assessed to sales tax for the year 1951‑62 at Rs. 86,936.
Being aggrieved by these assessments, they along with other cotton ginners filed writ petitions in the High Court of West Pakis tan. On the ground that sales tax was not leviable even on cotton seed obtained from the ginning of own cotton under a circular of the Central Board of Revenue, issued on the 29th December 1960. These petitions were dismissed. They came up to this Court and this Court by its consolidated judgment in the case of Noorani Cotton Corporation v. Sales Tax Officer (PLD1965SC161) took the view that the assumption of the parties that cotton seed oil was exempt from taxation was wrong.
Thereafter the Commissioner of Income‑tax and Sales Tax, Lahore Zone, by a circular letter issued on the 21st January 1961, instructed all officers working under him to take steps to assess such cotton ginners to sales tax on their production of cotton seed oil under section 28 of the Sales Tax Act, as amended by the Finance Acts of 196 3 and 1966. . In pursuance of these directives the petitioners were re‑assessed to sales tax. They again challenged these assessments by petitions under Article 98 of the Constitution in the High Court of West Pakistan but one Division Bench in the case of Messrs Pakistan Oil Mills v. The Sales Tax Officer Writ Petition No. 2003 of 1967 held that the re‑assessment for the period ending the 30th June 1961, was valid under the said section 28 of the Sales Tax Act, but admitted the petition for examining whether the assessment made for the charge year 1961‑62 was valid.
In the case of Sh. Mohammed Sharif Mohammad Asghar v. The Sales Tax Officer Writ Petition No. 1881 of 1967 another Division Bench took the view that the re‑assessment both for the years 1960‑61 and 1961‑62 were valid under the said section 28 and dismissed the petition in limine.
Both the petitioners have now come up for leave to appeal to this Court and it is contended on their behalf that section 28 was not attracted at all, for, their's was not a case of "escaped assessment," as, they had duly filed their returns, and were taxed on cotton seed. In these returns they had also disclosed their outturn of cotton seed oil but the authorities had, acting under the exemption granted by the Controller, Board of Revenue not asses sed cotton seed oil. In support of this contention reliance, is placed on a decision of the High Court of West Pakistan in the case of Commissioner of, Sales Tax v. Messrs Haji & Company, Chiniot (P L D 1966 Lah. 256) where it was observed that "once a final assessment has been made the Sales Tax Officer cannot go on making fresh computations and issuing fresh notices of demand". The facts of the above‑cited case were, however, deterrent. There is nothing on the record to show that the assessing authority had ever applied its mind to the question of taxing cotton seed oil. The decision referred to has, therefore, no application to the facts of this case.
The reference in this connection to the decision of the Privy Council in the case of Rajindra Nath v. Commissioner of Income tax (A I R 1934 P C 30) is also of no assistance to the petitioners. That was a case where the income of one firm which had been returned for assessment for a particular year and accepted as correctly returned, was subsequently erroneously included in the assessment of another firm which had purchased the first firm. One of these was a registered firm and the other an un‑registered firm. Subsequently, the two incomes were lumped together and assessed but the High Court set aside this assessment on the ground that the income of an unregistered firm could not be assessed along with the income of a registered firm. The incomes of the two firms were then separated and re‑assessed under section 23 (1) of the Income tax Act. This assessment was challenged in the High Court where it was contended that the re‑assessment could only have been made under section 34 of the said Act as an income which had escaped assessment. The Judicial Committee negatived this view‑ and held that the assessment had been made.
In the present cases the turn‑over of cotton seed oil was never before the taxing authorities. They had never applied their mind to the question of assessing the tax on the said turn‑over. These are, in our view, therefore, cases to which section 28 has been, rightly held to be applicable by the High Court.
The next contention of the learned counsel appearing in support of these petitions is that no adjustment has been given fat the tax earlier realised on cotton seed illegally. This, however, is a matter which can still be agitated before the taxing authorities. The petitioners can claim a refund of this amount if the tax on the cotton seed has since been held unlawful.
In these circumstances we see no merit in these petitions which are, accordingly, dismissed.
Leave refused.
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