COMMISSIONER INLAND REVENUE, LAHORE vs COCA COLA PAKISTAN LIMITED, LAHORE Ss

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COMMISSIONER INLAND REVENUE, LAHORE VS COCA COLA PAKISTAN LIMITED, LAHORE Ss.2(54), 21(c), 67, 122(5a), 133 & 153(1)(b)---Income Tax Rules, 2002, R.13---Withholding tax, collection of---Principle---Royalty---amended assessment order---Respondent taxpayer was manufacturer of soft drinks selling its product exclusively by chain of restaurants through their outlets---Dispute was with regard to collection of tax on amount paid in consideration for acquiring rights for exclusive sale of brands of respondent taxpayer---Validity---Consideration of acquisition of exclusive rights, by its nature, did not come within the expression of "services" as used in S.153(1)(b) of Income Tax Ordinance, 2001, rather had come within the ambit of "royalty" defined in S.2(54) of Income Tax Ordinance, 2001---Rebate was reduction against sale consideration and could not be equated with consideration for services simply for the reason that buyers of goods did not render any service to seller---Registered person, as per provisions of S.153 of Income Tax Ordinance, 2001, was only required to deduct tax at the time of making payment to a resident person etc.---When payment was not made actually, physically or practically, possibility of deduction of tax did not arise at all---Only rebate was there and not an actual payment and respondent taxpayer was entitled to deduct amount in question as an expense under S.21(c) of Income Tax Ordinance, 2001---Such was impracticable and impossible to deduct certain amount from an amount which was not paid---High Court declined to interfere in judgment passed by Customs appellate Tribunal---Reference was dismissed accordingly. S.133---Reference---High Court, exercise of jurisdiction---Question of law---Scope---Reference under S.133 of Income Tax Ordinance, 2001, lies before High Court on question of law only and the Court is obliged to answer the same in accordance with a rule of law---Question of law means a question as to what law is on a particular point, which provision of law is applicable to a particular factual situation and what true rule of law is on a certain matter---High Court, in reference jurisdiction, cannot either strike down a provision of law or declare it ultra vires of the Constitution---Any person desirous of a declaration of the kind can very well approach High Court in Constitutional jurisdiction---While exercising reference jurisdiction, High Court confines itself to questions framed / proposed and gives opinion in perspective of facts as found by Tribunal---Constitutionality of a particular provision is not at all required to be entered upon in such matters. Rules---Object, purpose and scope---Rules are subordinate and delegated legislation, deriving authority and legal cover from provisions of main statute and cannot override provisions of the Statute---Rules are meant to deal with details and can neither be a substitute for fundamentals of parent statue nor can add to them---Delegated legislation forms an important part of statutory law, which expounds and explains skeleton principles of parent statute in order to achieve purposes of such legislation---To determine vires of delegated legislation, High Court has to examine whether such delegated legislation was beyond the power granted by enabling legislation and whether such delegated legislation was consistent with parent statute---Rules / regulations continue to be rules subordinate to parent statute---Rules are to be treated as if contained in the statute, their true nature as subordinate legislation is not lost---Delegated legislation can only be struck down if it is directly repugnant to general purpose of the statute which authorized it or is repugnant to well established principle of statute.

COMMISSIONER INLAND REVENUE, LAHORE vs COCA COLA PAKISTAN LIMITED, LAHORE Ss — 2022 PTD 1400 LAHORE-HIGH-COURT-LAHORE

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