Profit over disputed amount with Nazir released to appellant

KARACHI: The Tax Appellate bench of High Court of Sindh comprising Justice Muhammad Shafi Siddiqui and Justice Mahmood A. Khan allowing an appeal ordered release of profit accumulated on amount deposited with Nazir of Court in relation to a disputed sales tax amount to an appellant.

The bench was hearing a High Court appeal filed by one Wahid Hussain who along with few other persons filed a suit No 825 of 2014 for declaration of provisions of Section 38 of the Sales Tax Act as added by the Sales Tax Amendment Ordinance 2014 being ultra vires to the provisions of Section 3 of the Sales Tax Act 1990.

The disputed amount was secured with the Nazir of the SHC. The appellant filed an application before the single bench seeking release of interest accrued maintaining that department has no lien on the subject amount being interest accrued while the amount remained  with the Nazir of the court.

The DAG and lawyers for the department contended that had the principal amount paid  at relevant time, the department would have enjoyed  this investment and hence they are entitled to the entire amount including profit accrued along with the default surcharge.

The learned single bench dismissed the application by the plaintiff who filed the instant appeal HCA 47 of 2020. Deciding the same, the division bench allowed the appeal holding that

“The respondent cannot be allowed to have a cake and eat it at the same time. After first successful attempt of biting a cherry, the department had made a second attempt over it. If this mechanism is allowed to be justified, it would result in an unjust enrichment and benefitting the department. This is being treated as unjust enrichment in the sense that though the department has received the principal amount alongwith default surcharge as recognized under the law which has not been denied to have been deposited by the agent/SSGC, in terms of letter dated 15.02.2019, yet they opposed orally, the release of profit to appellant. The entities which are creation of statute must remain within the frame and perform within the frame of their law creating them, nothing more or nothing less is expected from such entities”.

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